Page 38: PATERNO BUSINESS THRIVES
Ground was broken for the Castle in 1907. That was the year of my birth on November 23, 1907. A lifelong remembrance is that “07” lettering on the leaded glass window of my parents’ large bathroom. This was a three-storied building with 38 rooms and fashioned entirely on the outside with white marble.
***
The inside was impressive and beautiful with a lovely marble circulating fountain in the center surrounded by red carpeting. One could look up from the fountain through the open well to the balcony around the second floor which was covered with oil paintings and also see the ceiling on the third floor.
As you entered the Castle from the porté cochère there was a Japanese card room on the right. I particularly remember the effectiveness of the hand-painted silk screened panels which were lighted from behind. This entire room was hand-decorated by the then famous artist, Buccini.
As one proceeded from the fountain, the winding stairway came down from the second floor with a powder room underneath. Beyond that was the Music Room with Aubusson gilded furniture.
On the other side of the great hall was the library finished in dark oak and overstuffed blue velvet furniture. Opposite the fountain was the Italian decorated dining room with the round…
Page 39: …mahogany table and cherub frescoing. Just forward of the dining room was the large pantry as the remodeled kitchen was actually in the basement.
One could proceed through the dining room into the conservatory, billiard room, swimming pool and greenhouses.
The bedrooms and guest rooms were on the second floor. On the top floor was a large ballroom for parties and the dancing.
***
He Was Opportunistic
It was Dad’s trait to look out for a bargain or opportune situation which he considered would turn around into profitability.
How charming it is to recall the incident when Mother sent Dad to the Aeolian Piano Company to buy two pianos – one for the music room and one for her bedroom. When Dad returned home she was shocked to learn that he had purchased six piano. The purchasing deal for six piano had a price-wise effect of getting two of the pianos for nothing.
***
When I became of school age I had my own room on the second floor in the southwest portion’s over of the great Hudson River.
Page 40: Dad’s Paterno Construction Co. thrived from putting up apartment buildings on West End Avenue and Riverside Drive along the river, this being new and fashionable in that time-frame of Manhattan’s growth. Most of the family served apprenticeships for a year or two before going on their own. Two Paterno sisters, Marie and Christine, married two Campagna brothers, Anthony and Armino. Along West End Avenue from 72nd Street north to 107th, on almost ever block on could see family initial cut in the marble over front door, this being a local custom. Many are still visible.
***
Park Avenue Transformed
Prior to 1918 what is today the renowned Park Avenue Boulevard was a sooty, dirty and slummy surface entrée for coal-fired steam locomotives pulling New York Central trains into and out of midtown Manhattan.
This transformed spectacularly with the electrification of the railroad. In 1918 came the electric locomotives pulling commuter and trunk line passenger trains into Grand Central Station facing 42nd Street. Trackage was below the surface overlay of wide boulevard pavement. From 46th Street northward is seen one of the world’s greatly landscaped broad resplendent avenues which prevails until the trains surface near 96th Street.
This tremendous engineered undertaking was opportune for Paterno Construction Co.
Page 41: Marguery Is Built
Dad had the vision to emplace the ultra-modern Park Avenue’s first apartment high-rise “skyscraper” building. It was the Hotel Marguery and 270 Park Avenue, nearby to Grand Central and a little south of the Waldorf-Astoria which was to come years afterward. His structure spread a block square between 47th and 48th and over to Madison Avenue.
Ultra-modernity, for that time, featured a center drive-in, a decorative inner courtyard and a famous restaurant on the main floor. Even today that restaurant menu listing Filet of Sole Marguery, with white sauce, mussels, mushroom, shrimp and truffles, is a gourmet’s delight in some New York restaurants.
But vibratory shaking and noise from rumbling trains running sub-surface was a vexatious problem affecting the whole structure. The building had engineered super-structural steel columns using different layers of elements having differing coefficients of expansion and vibration. Actually, the building was detached from the sidewalk. As a boy I used to stand inside the building entrance and then stand outside on the sidewalk to feel a difference so discernible.
The Hotel Marguery and 270 Park Avenue were built right after World War I. Wartime had steel being extremely scarce for building so Dad would hire a man to ride on the actual steel laden freight cars as they were often put on a siding to permit higher priority freight trains to go through.
***
It was only by this ingenuity that Dad was able to keep track of where his steel cars were, and to get them back on the route. No one in the construction game could figure out how Dad could get his construction steel so promptly for what at that time turned out to be the largest apartment building in the world.
Page 42: All of the ground was rented from the New York Central Railroad. Dad had a 99-year lease on which he paid $600,000 a year. When fully occupied “270” grossed $1,500,000 as operating costs approximated $600,000 annually. The bottom line profit showing was $300,000 a year in the heyday.
***
How To Pay Less And Get More
It is charming to recall this facet of Dad’s innate shrewdness in a business deal. For erecting 270 Park Avenue the four lowest floors were to have outside limestone facing while all those above were to have exterior walls of brick. Dad called for bids on the limestone exterior blocks.
To his surprise the four company bidders submitted identical bids of $140,000. It was plain to him that this was collusive and previously agreed to buy what amounted to a cartel of four firms which would divvy a good profit among themselves.
What did he do?
He had an office associate go to another locale and put in a telephone call to him in his office so that the four bidders would overhear the conversation. The caller was to say nothing. Dad would do all of the talking in a fake telephone discussion and dickering of details over what and how the imaginary fifth limestone supplier would do, and for what price.
The four collusive bidders, sure enough, did overhear and did get the message. Quickly that $140,000 bid fell apart; retreated to $120,000 and then lower. By the time the limestone deal…
Page 43: (Photo) Caption: Dedication ceremony at Castle Village in 1939 attended by many notables. Show here with Dad is Fiorello LaGuardia, Mayor of the City of New York.
Page 44: …was consummated the Paterno Construction Co. paid just $85,000! That was a big difference from $140,000 asked at first!
***
Socialites Attracted
In that World War I period, the Hotel Marguery was the largest high-rise apartment building in the world. Its renting agency was Douglas L. Elliman & Co., still one of New York’s prominent real estate firms. As the first of its kind in quality and size the renting entailed patience and time. A financial arrangement was made with three socialite personages to be its first residents. This brought a sales break-through as others followed until the great new structure was fully occupied.
***
(Photo) Caption: Helen [Helen Laura Ritzmann Cotillo Paterno] at 3 when she took first prize for the prettiest and healthiest in the Annual Baby Show held in Albany, N.Y.
Page 45: (Photo of Carlo Middaugh Paterno & Helen Laura Ritzmann Cotillo Paterno) Annual Palm Beach winter vacation – 1940.
Page 46: Col. Edward Bradley
Col. Edward Bradley was one of the prominent tenants. The Kentuckian was famous for racing thoroughbreds. He owned and operated the top casino gambling and restaurant facility in Palm Beach, Florida, back in the 1920’s when legalized gambling was permitted in Florida. The money realized from the gambling establishment really went into the race horse business.
At Yale I roomed with Albert W. Morton, Jr. (Watty). Watty was then dating Col. Bradley’s niece so I developed quite a friendship with the Kentucky Colonel.
Dad and Mother usually lost quite a bit of money at the gambling tables as they visited Palm Beach every year. They stayed at the Royal Poinciana, a wooden hotel which burned down in the late ’20’s. Dad would always tell Col. Bradley that he would never lose more money than his rent at 270 Park Avenue, so Col. Bradley really had free rent in New York City every year.
***
The great worldwide depression of the 1930’s brought woe everywhere. Hard times in 1930 hit this high-styled residential Marguery property, too. Erstwhile rich tenants could no longer afford expensive, luxurious living. In the economic despair of 1932 the rental income had fallen to $800,000 a year. This meant that land lease payment to the New York Central could not be satisfied. Rather than undergo foreclosure, “270” and the Hotel Marguery were sold to the…
Page: 47: …railroad. The money Dad realized was about what attorneys would have cost in foreclosure proceedings.
***
Castle is Razed
The Castle was razed in 1939 as World War II loomed. The long economic slump was showing recovery and the beginning of war preparedness stirred industrial activity. Our great home of sentimental reminiscences was replaced by five apartment building known as Castle Village. The architect, George Fred Pelham, devised an “X Plan” in lieu of a usual central court. This enabled each apartment to have an overview of the river. As an architectural innovation this succeeded so well that it has been imitated by large insurance investment residential complexes in New York.
***
Casa Italiana
In the early 1930’s Joe Paterno, Michael Paterno and Anthony Campagna (as Dad’s brother-in-law) built the Casa Italiana at Columbia University. This handsome structure is on the campus at Amsterdam Avenue. Dad furnished the books for the library. Hence it is known as the Paterno Library Building.
***
As long ago as the early 1920’s decade Dad was an innovator for installing a Servel gas-fired kitchen refrigerator in each apartment at 280 and 285 Riverside Drive. This was a “first.” Heretofore the ice had to be delivered daily from an ice wagon which, like the milk wagon, characterized what in hindsight was the horse-and-buggy era.
Page 48: In 1924 Hudson View Gardens were created by Dad as cooperative apartment buildings. These had one of the first central radio receiving provisions for all tenants to use. Each apartment had four electricity outlets for plug-ins to serve the loudspeaker and provide selectivity among four program. A radio attendant was on duty around the clock.
Consider that during the infancy of radio broadcasting, individual radio sets were not purchasable at a store. One could buy batteries and assemble his own radio set and yet not be able to buy one. This pleased the tenants and aided the selling of many apartments.
***
I was the only child, yet Dad and I were not emotionally or temperamentally close. I was the one person in his office having the gumption to disagree, realizing that he would never fire his own son. Other employees worked subserviently to his dominating personality.
In point was my insistence on putting three elevators in each of the five Castle Village buildings. Dad ket saying that two elevators would do. I won my point. After completion, he complimented me by admitting that his judgment on this had been short.
***
In the business despair of 1933 it was my role as oncoming learner/successor/owner of Paterno Construction Co. to sit on the other side of Dad’s desk. Everybody everywhere was having money problems. Dad was shred and persevering enough to…
Page 49: …salvage what he could from repossessions encumbered by second mortgages which he held. Part of my job was making evening calls on tenants to obtain rent payments on apartment properties which he knew were doomed to foreclosure. Other family members went bankrupt, but not Dad.
***
Our Wedding Gift
Dad and I began acquiring distressed apartment buildings in 1934 as the worst of the panicky crisis had passed. At this time one could get a building for about 60 cents on the dollar of practical worth.
One such was 136 Waverly Place. Dad gave this to Helen and me as a wedding gift. Its location in Greenwich Village of lower Manhattan proved to be profitable through the years. In 1969 it went with the package deal of selling all of our New York real estate to Investors Funding Corp., a large New York City based conglomerate.
***
By Low – Sell Higher
In that time of panicky doubt and massive fear, Dad made a bold decision. Today this would be called the “power of positive thinking.” His decision was to put all available cash into a stock market so forlorn, discredited and woefully underpriced. Pessimism prevailed over the future of the dynamism of the American business system.
In truth, this was when the term “capitalism” was a term so discredited that we began calling ours the American “free enterprise” system.
Page 50: Dad was not the kind of entrepreneur to keep putting “good” money into real estate as a futile way to forestall eventual foreclosures. Uncle Joe Paterno did this. Joe tried to prop declining situations due to his mistaken optimism that the worldwide slump of the 1930’s would be short-lived. He nearly went broke.
***
Actually Dad got into the stock market in 1932 at its lowest. He began to devise a sort of automatic or formulated “system” to buy-sell-repurchase common stocks during their fluctuating yo-yo ups and downs. He usually operated on a three-point system.
***
To illustrate, if he bought 1,000 shares of Chrysler at 6 and it rose to 12 then it got into his formulated scheme. After the shares went up to 15 he would sell 100 shares and put in a pre-set new order to buy back at 12. In the yo-yo ups and downs he would buy and sell the same stock three or four times a day. One stock broker’s sole duty was managing Dad’s automaticity of buy-sell account. At the market’s close Luther Orr, our office comptroller, spent hours figuring out just what happened each day.
This was how Dad recouped all of his losses from the depressed real estate situation. By 1939 the American economy was regaining strength under the spur of the approaching war in Europe. That’s when he withdrew from the stock market.
NEXT: CHAPTER VI • HOW ROMANCE DEVELOPED
BACK TO INDEX
