A Stronger Bond: Financing the Commercial Exchange Building, Los Angeles, 1 May 1928

by Paul R. Spitzzeri

As noted in other posts on this blog, the use of investment bonds to finance large commercial buildings in downtown Los Angeles was commonplace in the 1920s.  For example, the Edwards and Wildey Building at Grand and Sixth was completed in 1925 using bonds issued by S.W. Straus and Company, a major firm at the time, and a post here highlighted a prospectus and flyer for that issue.

A more recent post highlighted the Great Republic Life Building and minutes of an April 1923 meeting of the National City Holding Company, which included Walter P. Temple, concerning the issuing of bonds.  Temple and his partners in the Town of Temple approved a 1926 bond issue, as well.

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Los Angeles Times, 26 August 1923.

Today’s post is an actual bond for another downtown commercial structure: the Commercial Exchange Building, located on the southeast corner of Eighth and Olive streets, a few blocks west of the Great Republic Life Building and two blocks south of Pershing Square.

As the development of downtown moved further south during that decade, the Eighth and Olive Holding Company, Inc. was incorporated in March 1923, just about the time the Central Finance Building Company was launched, to oversee the project.  The holding company was led by realtor H. Lew Zuckerman (1885-1987), a native of Hungary who, at the celebration of his 100th birthday, talked of the keen memory of reading Emma Lazarus’ celebrated poem (disputed by some anti-immigrant forces today as applicable in the way many like Zuckerman recalled) at the base of the Statue of Liberty as he walked ashore on Ellis Island in 1900.

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Times, 26 September 1923.

Zuckerman said he worked in the cigar trade and as a tailor in New York before he and a brother migrated across the country with stops in Iowa and South Dakota to Los Angeles, where he settled in 1907 and was a tailor where the Biltmore Hotel was later constructed.  He had a cleaning business, also on Hill Street. When he met a laundry wagon driver, Ben Weingart, and the two became partners.  Weingart, too, became a prominent realtor.  Later enterprises included the running of a saloon at Central Avenue and 7th Street, that had a 150-foot long horseshoe bar billed as the largest in the world  (that was curtailed by the onset of Prohibition) and a chain of ready-to-wear women’s clothing shops operated with his two sons.

He told of how he was allowed to keep his stock of alcoholic beverages for personal use when Prohibition shuttered his saloon and stored the cases in his home’s basement.  While in Europe, however, thieves broke in and stole the booze.  Zuckerman, however, let it be known on the black market that he was looking to buy and arranged with police to be present when a delivery was made to his home.  He proved that the liquor was his by pointing out inscriptions in Yiddish he’d placed on the cases.

By the Twenties, Zuckerman launched his commercial real estate business at Western Avenue and 2nd Street, west of downtown, and spoke at his centennial birthday celebration of the Commercial Exchange Building project, noting that “ours was a commercial building with some pretty heavyweight tenants, such as New York Life Insurance which occupied two floors, and in those days we began leasing the space for $2 per square foot to pull in this type of tenant.”

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Los Angeles Express, 20 March 1924.

Construction started on the structure in summer 1923 with the Los Angeles Times reporting in late August that the building was designed by Walker and Eisen, who worked on many downtown commercial projects, including the Great Republic Life and National City Bank buildings in which Temple invested (the firm’s headquarters were in the former, in fact.)  Walker and Eisen also drew up the construction documents for La Casa Nueva and designed many of Temple’s own real estate development projects in Alhambra and San Gabriel.

The Commercial Exchange project was on a property leased for 88 years at $1.6 million for the duration, with a $200,000 payment made in advance ($25,000 in cash and the rest in promissory notes) and the paper noted that Shirley C. Ward, who bought the land ten years prior, did so when the property “was considered far from the business district.”  The frontage on Olive was fifty-five feet, while that on Eighth, where the main entrance was, was 168 feet and the building had a reinforced concrete and steel frame, tapestry brick for facing, and finished with glazed terra cotta on some portions.  Marble was used in the lobby and as six-foot high wainscoting in hallways.  There were ten stores on the ground level and four floors of upper level office suites were already leased when the piece was published.

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Times, 18 May 1924.

Zukerman was joined by other investors, including David Trattner, Julius Berman, Benjamin Platt of Platt Music Company, Rudolph Rosenberg, Hyman Harrison, and M. Lowis in the Eighth and Olive Holding Company and took stock in the corporation to transfer the lease.  First mortgage bonds, at denominations of $100, $500 and $1000, returning 7% interest with coupons payable on 1 January and 1 July and totaling $550,000, were issued by the Union Mortgage Company of California, run by Trattner and Berman, while $200,000 in a second trust deed was used for construction financing.  The Union Bank and Trust Company served as trustee for the bonds, which came to maturity in 1925, 1928, 1931, 1935 and 1938.

The issue of the first mortgage bonds was heavily marketed by Union, starting in the fall, with a 26 September ad in the Times showing the architectural rendering of the building and proclaiming “Nowhere Can You Find Better Security Than This!”  The firm averred that the building provided safe and secure investing more than utilities and the first mortgage on a structure in such a high-demand area was secure, especially because the expected net income was four times bond interest and rent requirements.

The following day, an ad in the Los Angeles Express asked, “Can You Visualize 8th and Olive Ten Years From Today?” as Union assured potential investors that the Commercial Exchange Building “will be in the center of business activity in less than that time.”  It was noted that the property’s value was more than twice the bond issue and that “safeguards of various kinds, protecting these bonds, are exceptionally stringent and thorough.”  Other ads stressed the profitability potential of the structure’s highly desirable and centralized location.

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San Pedro Daily Pilot, 15 November 1924.

As completion neared, realtors Metcalf and Ryan, who had the exclusive leasing contract, took our ads promoting spaces in the buildings, called “a modern edifice of dignity and beauty.”  The firm highlighted the fact that the Commercial Exchange was “free from the noise of street car traffic, with plenty of light and air” and added that “if you have to circle your office building for a half and hour each day to find a parking space, it cuts down your working efficiency at least one-sixth and your patrons will suffer similar inconvenience.”  Yet, time limits on parking in the area around the building was two hours during daytime hours, not 45 minutes, “a great factor to be considered by the business and professional man.”  It was added that about a third of the building was “fitted up with service for dentists, with a northern exposure” on Eighth.

By mid-May 1924, construction was completed at a cost of some $650,000 and two floors were leased to the Southern California Telephone Company.  In addition to the remaining 220 office spaces, it was expected that a cafeteria would be built in the basement.  The bonds continued to be sold after the structure was finished and among the tenants were Young’s Shoe Company, realtors, land companies, an auto painting firm, an amusement company planning to build an indoor ice skating rink at Vermont and 1st streets, the American Portland Cement Company, brokers, the American Radio Exposition Company, and the Pedestrians’ Protective League.

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Times, 11 April 1926.

The league included Harold Ryerson, formerly with the Los Angeles Traffic Commission, among its leaders and was launching “a gigantic campaign . . . to reduce the number of fatalities and accidents in the city and county of Los Angeles.  An approving editorial in the San Pedro Daily Pilot opined:

Few people have thought that the time would ever come when men (note, men) would ever have to organize for the protection of their God-given legs and their inalienable right to use them according to the dictates of their conscience . . . well, times change, and if the new organization can educate folks in the art and science of walking so as not to interfere with the gay and careless man at the wheel, more power to them.

In April 1926,  a husband and wife who invested in the Union Mortgage Company sued over what it called illegal practices by Trattner and Berman in receiving shares as a bonus for organizing the firm and then distributing these to the other directors “with no consideration other than that these directors support them in their demands.”  There was an apartment building project on Wilshire Boulevard cited in the complaint, as was the Commercial Exchange Building, for which all the principals in the Olive and Eighth Holding Company were named defendants in the suit.

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Times, 2 July 1928.

In that case, it was alleged that Union Mortgage arranged the deal “to make the down payment and guarantee the promissory notes without security.”  The plaintiffs requested that “a trust be impressed [formed] on this property for the benefit of the stockholders of the mortgage company.”  The plaintiffs also filed suit to recover $70,000 that they said was received by the defendants “as a secret share of commissions from the sale of stock in the mortgage company several years ago.”

Two weeks later, the couple filed another suit asking for the voiding of 100,000 shares of Union stock, claiming “the defendants conspired to have the so-called promotion stock issued and divided among themselves” by issuing them to two of the syndicate for purported services to the company that never took place.  Nothing, however, was found concerning developments in these legal matters and Union and Eighth continued to own the building.

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Times, 29 August 1935.

When the firm, however, put together another bond issue on 1 May 1928, the bonds were sold by S.W. Straus and Company, the same firm that handled the Great Republic Life and Edwards and Wildey buildings mentioned above.  The issue was for $825,000 and interest was 6% with semi-annual maturities from 2 1/2 to 15 1/2 years.  The bond in the museum’s collection was for $1,000 and signed by Platt as president and Harrison as secretary.

Attached interest coupons were in $30 denominations with Trattner’s signature on it and the first seven were redeemed and removed, while the remaining fifteen to have been paid out each May and November from 1932 to May 1939 were cancelled and remain with the instrument.  A stamp states that the bond was declared due on 25 October 1932 and has the name of the trustee, while another, with same trustee’s name on it, notes that the Commercial Exchange Building was sold at a trustee’s sale on 24 January 1936.  Just under $700 of the indebtedness for the bond was paid towards it from the sale proceeds.

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Not long before the sale and while the Eighth and Olive Holding Company still owned the structure, a strange remodeling project took place.  It received press coverage for the highly unusual nature of the work and the ingenious method by which it was accomplished.  The City of Los Angeles decided to widen Olive Street and required that a five-foot easement be cut from the building, but, to meet that requirement would have meant the loss of some 3,000 square feet of space and an enormous disruption to tenants.

Zuckerman, however, worked with an engineer from Stanford University and, as he explained it as his 100th birthday, “the plan we had was to remove a five-foot section where one wing joined the main section of the building and to move that wing five feet back.”  In other words, they cut a portion out towards the mid-section, not at the Olive frontage, though a Times article and accompanying photo referred to a ten-foot section being removed.

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In any case, the paper went on to report that, “when the work has been accomplished, cement runways will be built under the west half and the huge mass will be slipped to the east and the two halves reunited.”  Zuckerman added that there was use of whistle signals for the inch-by-inch move and workers had jacks on each floor to accomplish the move.  He noted,

there was fear that the building might topple, but we were so confident it would work, that myself, my wife and my son Ted stood in the basement during the operation.  It was a feat that was widely publicized.

The Times did not mention that the Zuckermans were in the basement during the move and it stated that “the architects and engineers, Walker and Eisen, , who are supervising the Kress House Moving Company’s job, said yesterday that the work of actually sliding back the front half will require about twelve hours.”  The cost for this remarkable project was pegged at $60,000.

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Zuckerman was an early benefactor of indigent Jews living during Passover at the county poor farm in Downey, but worked with others to provide permanent housing and a home for Jewish seniors was established at Grand Avenue and Temple Street in 1912, becoming the Jewish Home for the Aged in Boyle Heights on the former estate of Andrew Boyle and then his daughter and son-in-law, William Henry Workman, nephew of Homestead founders William and Nicolasa Workman.  Today, the site is Sakura Gardens of Los Angeles, a Japanese senior living facility.

Later known as the Jewish Homes for the Aging, the facility moved to Reseda in the early 1960s and became Zuckerman’s residence even as he continued to work in real estate and was known as the oldest realtor in America, as the article for his 100th birthday reported.  He died there in late November 1987 at the age of 102, having lived a remarkable life, including the development of the Commercial Exchange Building, which is now a hotel called the Freehand and which was placed on the National Register of Historic Places in 2019.

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