Hotel Commonwealth, Nova York, Estados Unidos

Hotel Commonwealth, Nova York, Estados Unidos
Nova York - Estados Unidos
Fotografia - Cartão Postal

New York has always been a city of ambitious plans, dreams and schemes. But there are few rivals to the grandiose project for a hotel which was to be the largest in the world with 2,500 rooms and set up on a cooperative system to be owned by common investors.

The promotional brochure proclaimed:

TO BE BUILT BY THE COMMON WEALTH
TO BE MANAGED FOR THE COMMON GOOD
TO BE OPERATED FOR THE COMMON BENEFIT

The Hotel Commonwealth was to be situated on Broadway between 55th and 56th Streets. The description on the back of this 1918 postcard pictured above contains early 20th century ballyhoo of the highest order:

Hotel Commonwealth – “Greatest thing of its kind on earth.” The Commonwealth will be the first important building to be erected in conformance with the new building law to conserve light and sunshine for the general public. Through its 28 stories which will contain 2,500 rooms, it will rise 400 feet in the air in graceful terraces, or “set-backs” as the zoning law calls them, the flowering plants and shrubs upon each terrace giving the monster hostelry an unusual beauty of architecture, rivaled only by the ancient Hanging Gardens of Babylon.

The planned 2,500 rooms would be 500 more rooms than the largest hotel ever built. Plans were drawn up by Starrett and Van Vleck, and King and Campbell, architects. The 34 story hotel (6 floors more than the postcard stated) would have unparalleled views of the city. The uppermost floors would contain the Commonwealth Club for member investors, and would have a space which would house reception rooms, libraries, and reading and smoking rooms for men. The hotel would contain a spacious gymnasium, an indoor golf course, Turkish and Russian baths, billiard rooms, handball and squash courts and the largest swimming pool in the United States.

The most unique feature of the Hotel Commonwealth was that it was to be built as a co-op. When plans were first announced in October, 1916 the promoters of the enterprise, William J. Hoggson, Charles H. Ingersoll, Theodore C. Visscher, Edward Slosson, Charles F. Kinsman and R.A. Skinner proudly declared that the Commonwealth would be the first building of its type “to be owned by the people.”

Their plan was to raise from investors $15 million necessary to buy the land, build and furnish the hotel. No one person could buy more than $1,000 of ownership at $100 per share. The number of  investors needed to build was initially pegged at 150,000 but that number fluctuated throughout the long development phase.

William J. Hoggson, President of the E.L. Barnett Company played a dual role as he was engaged in selling shares for the Commonwealth Hotel Construction Company to erect the hotel and he was also in charge of the construction company that was to build it. Money started pouring in from investors. By mid-1918 more than $3 million in shares had been subscribed and the promoters spent $3.75 million assembling 31 parcels of land that made up the site from Broadway to Seventh Avenue between 55th and 56th Streets. It was announced construction was to begin as soon as 50,000 shares had been sold.

But there was trouble brewing by 1919. If potential investors were reading those tiny judgment notices in the financial section of the newspapers, they would have noticed several court summary judgments against the Commonwealth Hotel Construction Company for non-payment of bills to various companies. One investor, Harriet Swan filed suit to recover her entire $3,000 investment on the grounds of misrepresentation. The broker who had sold the shares to her claimed she would make a huge profit if he resold them. Miss Swan had also somehow managed to buy thirty shares of the stock when the most you were supposed to be able to buy was ten.

Lawsuits would continually plague the Commonwealth Hotel Construction Company, but in October 1921 plans were finally filed with the Department of Buildings for a 30 story version of the hotel. At the same time more red flags arose. Fred F Lawrence the Bank Commissioner of Maine in prescient language laid out all the reasons the Commonwealth venture was not on solid ground and denied them from selling stock in Maine.

In November, a mortgage was obtained on the acquired land and some old buildings were torn down and 6,000 cubic yards of rock were excavated on the 56th Street side for the hotel’s foundation. After the excavation, the project came to a standstill.

The New York Tribune began warning readers in several issues of the paper’s financial section about the Commonwealth venture. In a November 6, 1922 column, a reader asked about the condition of her investment in Commonwealth stock. The Tribune columnist responded by writing “inquire for yourself” at a dinner being held for investors that night by the developers. The Tribune columnist then brought up several irregularities that probably would have frightened anyone who had invested in the project. The columnist concluded the article by mentioning that the current $125 par value of a Commonwealth share should be checked with a broker specializing in unlisted stocks. The price would be – 58 bid, offered at 64!

Buildings sitting on the Broadway parcels of land were never demolished. Controlling interests squabbled among each other. A new corporation was formed in March 1923 to expedite construction on the hotel. Finally, on April 24, 1925 the Commonwealth was forced into receivership.

On May 27, 1925 the Commonwealth’s land was auctioned off without anything ever being built upon it. The final gavel price was $2,640,000 for the Broadway frontage which was purchased by a syndicate headed by John Gerosa. The remaining property on the Seventh Avenue side was later sold for $1,902,501.

The losers would be the 22,000 stockholders spread throughout the country. Of the nearly  $4 million that had been raised in stock subscriptions, financial malfeasance had wiped out most of it. The receivers on behalf of the stockholders sued to regain their investments and find out where all the money went.

In 1927 in court, an accountant hired by the receivers, Benjamin F. Tanner, examined the financial books of the Commonwealth Hotel Construction Company and E.L Barnett, the fiscal agent selling the stock. Tanner discovered almost all the money from the investors had been diverted improperly in fees, kickbacks and payoffs. Large fees amounting to hundreds of thousands of dollars were paid to realty men who assembled the plot. Stock “insiders” got $100,000 and the promoter, E.L Barnett and Company took $890,862 in commissions.The stockholders had been defrauded.

On August 1, 1928 the court case ended and the amount awarded to divide among all the stockholders was just $525,477. Considering the blatant duplicitous actions of the promoters of the Commonwealth, New York Supreme Court Justice Townley strangely concluded, “The collapse of the enterprise resulted, in my opinion, not because of the misconduct of the officers and directors, but because the basic idea of the corporate financing was so faulty that it never could have succeeded.”

If you are wondering which hotel is currently the largest in New York City, it is the New York Hilton on Sixth Avenue and 53rd Street which opened in 1963 with 2153 rooms. A renovation in 1990 reduced the number of rooms to 1980. In comparison to other hotels around the world it is the 60th largest.