The statement follows: In the matter of the purchase of a post-office site in the Forty-second Street area, we have some facts to submit. They concern the people at large. The information was first published last summer that a property covering the New York Central Railroad tracks at Forty-fifth Street and Lexington Avenue had been agreed upon by the railroad company and our Government. The price named was $15,500,000, and $1,000,000 was to be allowed for improvements. We immediately intervened. The price on the floor of the United States Senate was thereupon reduced to $14,500,000 and the bill was railroaded through and obtained the signature of the President of the United States. Thereupon, the New York Central Railroad attempted to get an appropriation to confirm this conveyance, which had never been brought up to the Government in any form for action. When they attempted to confirm this deed, to whatever was sold to the Government, we intervened through Senator Tydings and Senator Hebert. We showed that the property was not worth anything like what they attempted to get for it, and what the Government attempted to pay for it afterward. They had reduced the price to $14,500,000. Mr. WOODRUM. What was asked before that? Mr. HECKSCHER. $15,500,000. That was the amount in the bill at the time. Continuing with statement, this is what happened: The price was $15,500,000, and $1,000,000 was to be allowed for improvements. As I have said, we intervened on the floor of the United States Senate, and, thereupon, there was a reduction of the price to $14,500,000. I know that happened. Mrs. Heckscher was over there at the Senate, watching the proceedings. As I have said, they obtained the signature of the President. The railroad company professed itself publicly as being reluctant to sell, consenting only under the stress of anti-ipated condemnation proceedings. We then pointed out and established by irrefutable expert testimony that the Grand Central Palace at Forty-seventh Street and Lexington Avenue is a better site and a far more valuable building for the Post Office Department. However, we were sidetracked, as is the custom of railroads. A deed has just been recorded without notice or a public hearing, purporting to convey the property at Forty-fifth Street for the sum of $9,000,000. We have already saved our Government in this one transaction, $6,500,000, and we intend to save it more. Under the recorded deed, a copy of which we have obtained, the Forty-fifth Street property is cruelly restricted. Its value is thus immeasurably impaired. The building is a shell-nothing more. Now, we offer a magnificent building, the Grand Central Palace, accessible on four sides and unrestricted as to height or otherwise, except underfoot, for millions less than $9,000,000. We challenge comparison and competitive offers. I could not get any response; the next statement I published was this statement no. 2: I am only a small minnow in the brook, but over the last 65 years in this country, beginning in 1868, I have labored earnestly and tried to do the right. Am I not then privileged to call upon the authorities in Washington, the most highly placed executives, to also play the game? The New York Central Railroad property, at Forty-fifth Street and Lexington Avenue, a shell of a building, is not adapted for the general purposes of a post office. It is cruelly restricted in order to afford light and air to the surrounding properties of the railroad company. A deed has been recorded here which purports to convey its air rights for the sum of $9,000,000 to our Government. The railroad company is reported to have purchased this property, land, air rights and all, about the year 1910 for the sum of $1,100,000. Testifying before Congress last summer, the Fourth Assistant Postmaster General siad: "We do not propose to ask for any appropriations to make alterations. Gentlemen, play the game. There was no answer to that from anybody. We are fairly well known in New York, in the real-estate business, and would have elicited a reply if we could have been answered. The third statement I published in the same way, in nearly every leading paper of the city of New York. It was under the heading "Quo Vadis", as follows: Having proved my case, I might refrain from further criticism of improper methods were it not for the fact that I have quite recently endeavored to study in detail the documents that passed when, in order to circumvent Congress and the President, a transfer of title at 452 Lexington Avenue was attempted by the railroad company and the Treasury Department. As I read these papers, the Government has little if any protection. The railroad company can notify the Government on or before January 1 next to vacate all of the space now occupied with the exception of the building at 452 Lexington Avenue. As to most of this still-needed space, the Government may find itself in the street. It must, however, continue payment of excessive rentals, such payments to be applied on the purchase price. Is not this a most remarkable stipulation to enforce against a solvent debtor? The Government was paying over $3 per foot for space which I would have been glad to rent them for $1.50 per foot. The restrictions which also control the conveyance render the property all but valueless. If these restrictions had been known and duly appraised by the Interstate Commerce Commission when it made its appraisal of $7,000,000, I believe that conveyance would have been refused. Apart from the restrictions in the deed itself, there are two exhibits, A and B, which contain voluminous additional stipulations, restricting and compelling consent by the railroad before the buyer can exercise his rights. I venture to assert that no such transaction as is here before us has been accepted by a solvent Government at any time anywhere. Mr. BROIDO. Mr. Heckscher, you have been one of the leading real-estate operators in the city of New York for a long time. You have been in that business for a great many years. Mr. HECKSCHER. Yes. We held $34,000,000 worth in 1929, but it is probably not over $5,000,000 now. Mr. BROIDO. Have you any opinion as to the value of the site that the railroad company occupies, with everything that is conveyed to the Government, giving it only the right to use that building on steel stilts over the railroad property? Under those conditions, what would it be worth to a buyer for use as an office building? I do not mean now, but at the time this deal was made. Mr. HECKSCHER. I would answer that in this way. They purchased that property in 1910 for $1,100,000. With the company retaining the subsurface, and selling only the air rights, I would say that the value of the property, restricted as it is between the Government and the railroad company, would not be in excess of $2,000,000. It would be nearer $1,000,000. Mr. BROIDO. Am I right in understanding that you have a building on Park Avenue, built over the tracks? Mr. HECKSCHER. Yes. Mr. BROIDO. You are familiar with air-right developments. Mr. HECKSCHER. Yes. My son also built up that whole area between Lexington Avenue and Park Avenue, and Forty-fifth and Forty-sixth Streets. If you desire the fee, between Forty-sixth and Forty-seventh Streets and the air rights, to the entire block, which is 425 feet by 200 feet, including two buildings, the Grand Central Palace and another building, that could be done. The buildings cost about $6,000,000. That would be for the buildings, in addition to the air rights. If you acquired the block, with the air rights, without restrictions, you would have 85,000 square feet of space, or just about 2 acres. You could get the fee, and the rentals for the air rights are now properly $130,000. You could acquire the first mortgage, which is in foreclosure. In my judgment, you could acquire that for less than $4,000,000. You could also acquire the mortgage which we own. I bought the Grand Central Palace from the New York Central in 1920, and I paid then about $3,000,000 for it. Since then we have put a new building costing some $2,700,000 on the Park Avenue frontage. You could acquire the entire property containing these two separate buildings. You would thus acquire our rights also which cost me personally $3,000,000 for $1,000,000. You should acquire the mortgage now held against the premises, the first mortgage which is ahead of our interest, for $4,000,000. You would thus acquire the fee of the two buildings on the entire block, $6,000,000 worth of buildings, and they are modern buildings, capable of being used. You could acquire the whole thing for about $9,600,000. I would be glad to buy one of them back from you. For the balance you will then have a finished building, altered for the purposes of the railroad company and for the Government. If you would care to try for less, you could condemn; you would be buying under the law which permits condemnation. The comparison is as follows: The entire property from Fortysixth to Forty-seventh Streets and between Park and Lexington Avenues, buildings and air rights, free and clear, should be purchased for $9,600,000. This includes the Grand Central Palace Building which we have been discussing as a possible post-office site and also a new 20-stone office building on Park Avenue, a building that has cost us nearly $3,000,000. As I stated, this building could be disposed of and the Grand Central Palace kept for post-office purposes. The very much smaller and less valuable property at Forty-fifth Street corner of Lexington Avenue (No. 452 Lexington Ave.) will cost when alterations are completed $12,000,000. I have no hesitation in saying that our property at Forty-sixth and Forty-seventh Streets, approximately double the area, fully improved and with the Grand Central Palace Building rebuilt and reconditioned for the purposes of the Post Office Department is worth approximately double what the Forty-fifth Street parcel now belonging to the New York Central Railroad will be when fully improved for the purposes of the Post Office Department. Mr. BROIDO. Does not that mean that your property, with about 85,000 square feet, is paying $130,000 in ground rentals? Mr. HECKSCHER. Yes. Mr. BROIDO. Taking half of that annual rental, and capitalizing the air right in this other property would be worth about $2,000,000. Mr. HECKSCHER. I was asked what the property was worth in 1932, when this nefarious transaction took place. I was asked what the property was worth without the buildings. I have stated above that with the company retaining the subsurface and selling only the air rights and with the property restricted as it is between the Government and the railroad company the value would not be in excess of $2,000,000 and would be nearer $1,000,000. Mr. WOODRUM. We thank you for your statement. Mr. WOODRUM. Senator Thompson, we will be glad to hear any statement you desire to make. STATEMENT OF HON. GEORGE F. THOMPSON, ATTORNEY FOR ANAHMA REALTY CORPORATION, NEW YORK CITY Mr. THOMPSON. Of course, gentlemen, this matter has been pending in one way or another ever since 1932, and even before that. My first connection with it was in June 1932 when the bill had passed the House, and was then pending in the Senate. It was too late to do anything in the Senate. Somebody saw Senator Blaine about it, and I think Senator Reed made an objection on the floor when Senator Blaine was not present. He asked that the bill be not acted on in the absence of Senator Blaine. After the objection by Senator Reed, the price was reduced by $1,000,000. Thereafter I went before the executive officials and stated that we were interested in another site, the Grand Central Palace, which was available. Gross misrepresentations were made, and if you gentlemen will take the time to go through the hearings and note the number of misrepresentations that were made before the Public Buildings and Grounds Committees of the Senate and House, you will realize how gross they were. One of the misrepresenations that struck me as the meanest was one to the effect that there was no other available site in the neighborhood of the post office, and that the Grand Central Palace was not available. Mr. TABER. Are tracks available at the Grand Central Palace? Mr. THOMPSON. When that statement was made, every track that was under 452 Lexington Avenue was also under the Grand Central Palace. Not only that, but mail cars were standing then under the Grand Central Palace and being unloaded at that time. It was the most gross misrepresentation I have heard of. We employed an engineer after that to look into the matter. We spent over $18,000 on engineering work in ascertaining the facts. They found that those tracks were available. As I have said, mail cars were standing on them, and I think that today mail cars are being unloaded under the Grand Central Palace. The conditions are exactly the same as at the other building, so far as tracks are concerned. The only difference that it would make, and the expense of that would not be great, perhaps not more than three or four hundred thousand dollars, is that express trains come in on the regular tracks, where on the platform they have elevators that drop to a tunnel under the tracks which extends eastward to the present post office. This tunnel can be extended to Grand Central Palace, and, as I have said, provision could be made at the Grand Central Palace at a cost of three or four hundred thousand dollars for so handling the mails. The entire cost, and complete plans and specifications, are available for the inspection of the committee. We filed them in 1932, with estimates of the cost. We can show conclusively that the Grand Central Palace was and is entirely available. This building has everything that they have, and much more. It is accessible on four sides. This other building fronts Lexington Avenue from a kind of basement, and the ability to get to the street surface trucks is limited over there. At the Grand Central Palace you would have everything that could be desired for handling the post-office business. Mr. BACON. What do you want for the Grand Central Palace, or what could the Government purchase it for? Mr. THOMPSON. It was offered at $6,000,000, but, of course, the Government can condemn if it desires to do so. The same facilities could be provided at Grand Central Palace as here. In serving in the State senate it has been my experience that when any public body like this really wants a railroad to do something, they generally do it. I do not think the Government would have any difficulty in handling that in reference to the Grand Central Palace, or at any other site. Now, the circumstances under which this was done were really bad. The situation was bad at the time. I do not believe there was any legal agreement made at that time. The whole thing just smells, and it should be investigated. The Government ties itself up by this. Our engineer, I think, is the best man there is for this work. His name is Holt, and he is a construction engineer. He helped to build the Grand Central Depot. He says that the cost to the Government to house the post office at 452 Lexington Avenue is excessive. You are only securing housing to the extent of 60,000 feet. The exact footage is 209,872, and there are only 60,000 feet of it in this building. Most of it is in 466, and there is some in the Graybar Building. This building would cost $3,000,000 more than the Grand Central Palace. In the Grand Central Palace, you would have double the space, and could house other activities of the Government. The memorandum that has been filed will make all of the facts available to you. Mr. Broido has presented the whole matter fully. I will be glad to furnish you any additional information you may desire, and I hope we may have more time on some other day to go more into the details. Mr. WOODRUM. We are very much obliged to you for giving us the information you have presented. The committee has the brief you have left, and we will go into the matter in executive session. Then, if the committee believes that the matter justifies further consideration by our committee, or by some other committee, we will be in a position to give it proper direction. LETTER AND MEMORANDUM IN RE GRAND CENTRAL TERMINAL POST OFFICE BUILDING JULY 6, 1937. Hon. M. C. SHEILD, Clerk, Committee on Appropriations, House of Representatives. MY DEAR MR. SHEILD: I am returning herewith the transcript of the testimony taken on May 26, 1937, before the Committee on Appropriations with reference to the purchase of the Grand Central Station Post Office Building in New York City. I am also enclosing a memorandum briefly answering the contentions made by Mr. Broido. Very truly yours, C. J. PEOPLES, Director of Procurement. MEMORANDUM IN REFERENCE TO CERTAIN CONTENTIONS MADE BEFORE THE HOUSE APPROPRIATIONS COMMITTEE BY LOUIS BROIDO, AN ATTORNEY REPRESENTING CERTAIN INTERESTS IN NEW YORK CITY WHICH ARE OPPOSED TO THE PURCHASE OF THE BUILDING KNOWN AS 452 LEXINGTON AVENUE 1. Contention 1 (p. 172), that the Government paid twice what the property is worth. The Treasury Department secured two paid appraisals of the property from outstanding realty firms in New York City, and in addition the Department se |