Built for Business: Midtown Manhattan in the 1920s A swirl of development, spurred on by Grand Central Terminal's construction, shaped New York City's central business district as a major epicenter of American capitalism.
By Donald Miller Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
The 1920s were a transformative period for New York City business, especially for Manhattan. The rebuilding of Grand Central Station on East 42nd Street ignited a capitalist revolution in Midtown Manhattan. This construction and commercial boom transformed the area around the rail terminal into an epicenter of American capitalism.
For 300 years, Lower Manhattan had dominated the city's economic life. But in the 1920s Midtown was transformed, suddenly and spectacularly, from a commercial backwater into a business district that rivaled Wall Street in power and consequence.
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Reimagining a railroad yard.
The impetus for this transformation was the completion in 1913 of Grand Central Terminal on East 42nd Street, on the site of Commodore Vanderbilt's former Grand Central Station. The worst train disaster in New York City's history set the Grand Central project in motion.
Barreling through one of the station's smoke-filled tunnels, a commuter train slammed into the rear of another train that not entered the rail yard. The driver failed to spot the warning lights. The carnage was terrible, and the state legislature forced New York Central Railroad, which owned the station, to electrify its former steam locomotives.
William J. Wilgus, the railroad company's brilliant chief engineer, oversaw the electrification of the trains and the burying of the tracks and then convinced the New York Central company to build a new state-of-the-art terminal, a great people-moving machine -- a building with shop-lined underground passageways to the city's subway system and to adjacent hotels and commercial buildings.
Wilgus went further, masterminding the building of a miniature city around the new terminal. For half a century, an enormous train yard had fanned out from the station and stretched northward from 42nd Street to 56 Streets for nearly three-quarters of a mile, obliterating cross streets and forcing pedestrians to cross the yard on iron catwalks, braving swirling smoke and ash.
Seeing this problem as an opportunity, Wilgus suggested that New York Central Railroad build a new Park Avenue by leasing land to commercial builders where the old rail yard had stood. This would be on the roof of the new terminal's smokeless tunnels.
In 1927, the project was completed. The reconstituted Park Avenue was "straight as a sunbeam," in Zelda Fitzgerald's words -- and flanked by tall apartment buildings of restrained design, the world's first skyscrapers built for permanent living. The New York Central accomplished this by selling its "air rights" -- a new thing at the time -- to real estate developers who built neoclassical apartment towers that still line the city's Street of Dreams, the most exclusive residential enclave in America.
With "revenue plucked from the air," in the words of Wilgus, the New York Central transformed its unsightly rail yard -- an urban eyesore -- into a commercial and residential district that contemporaries called Terminal City. Almost forgotten today, the engineer Wilgus was also an inspired city planner and the founding genius of today's Midtown Manhattan.
Wilgus' terminal provided for the efficient movement of automobiles as well as trains and people. An elevated roadway, or viaduct, ran over East 42nd Street and connected with a "collar" road that encircled the terminal. When completed in 1927, the road carried northbound and southbound traffic. Cars entered or left north Park Avenue by passing through arched portals built directly into the New York Central's new headquarters building. This golden-domed beauty, completed in 1929, is the world's first "drive through" building.
A number of the residents of the new Park Avenue were migrants from the old Fifth Avenue, which was also undergoing seismic changes.
The widows of the Vanderbilt tycoons who had built the New York Central Railroad sold their ponderous mansions on Fifth Avenue -- urban châteaus that lined "Vanderbilt Alley" from 42nd Street to Central Park -- to real estate speculators like Benjamin Winter and Frederick Brown. These women moved to luxurious apartment hotels on Park Avenue, quarters that were far easier to maintain.
Fashioning an aristocratic shopping district.
Winter and Brown tore down the mansions within days of buying them and transformed this stretch of Fifth Avenue into one of the most exclusive shopping districts in the world, or "the aristocrat of shopping thoroughfares" as the WPA Guide to New York City called it.
Two large and exclusive shopping emporiums came to command the avenue: Bergdorf Goodman's, directly across from Central Park on the former site of the city's biggest Vanderbilt mansion, and Saks Fifth Avenue, a few blocks south of it, the newest large store on the avenue.
Edwin Goodman, owner of Bergdorf Goodman's, had bought out a partner, Herman Bergdorf, long before this. For Goodman to move his exclusive women's clothing business further north on Fifth Avenue to its new site was a risky move. The lease was more than his accountants said he could afford and his competitors were certain he was overreaching. After all, he was moving his shop farther north on the avenue than anyone in the retail clothing trade had previously ventured.
Young Adam Gimbel, CEO of Saks, made an equally audacious move, aggressively expanding his emporium, Saks & Co., and relocating it considerably north to 49th and Fifth Avenue from a successful location on Herald Square. But like Goodman, Gimbel wasn't satisfied with solid success. Both wanted to be merchant princes.
At the same time, two small, handsomely built business buildings appeared on a regal stretch of the avenue just south of Bergdorf Goodman's: the beauty salons of merchandising visionaries Elizabeth Arden and Helene Rubinstein. Extending their market for cosmetics across the world, Arden and Rubinstein created the modern beauty business, one of the 10 largest industries in the United States at the time.
In the 1920s, merchants and developers came to consider the entire section of Midtown embracing Fifth, Lexington and Park avenues as a single, continuous region of luxurious living and shopping. "Its area is one and one-half miles -- the richest and most desirable shopping center in the United Sates, probably in the world," The Magazine of Business reported in 1928.
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Creating the Valley of the Giants.
Meanwhile the new Grand Central Terminal fundamentally changed the dynamics of business in this section of the city. Property values in Terminal City soared when construction began on new skyscrapers -- the tallest towers in the world -- in the area around Grand Central. Before 1919, no terrifically tall buildings had stood north of 42nd Street. By 1929 half of New York's skyscrapers were located there. In one year alone --1927 -- 30 skyscrapers were built in Wilgus' new Midtown, a record that still stands.
Also that year, Detroit auto magnate Walter Chrysler began looking for a site near the terminal for his new company's international headquarters. In 1928 he acquired land adjacent to the terminal and built the world's tallest building -- or so it remained for 11 months, when the Empire State Building topped it.
By the early 1930s, the area along 42nd Street, directly north and south of Grand Central had become known as the "Valley of the Giants," home to three of New York City's six tallest skyscrapers: Walter Chrysler's silver spire, real estate king Irwin Chanin's eponymous building across from the terminal and the white-faced Daily News Building. Designed by celebrity architect Raymond Hood for newspaper publisher Joseph Patterson, it housed the operations of The Daily News, the first American tabloid.
These freestanding towers, or "cloud houses," as French writer Paul Morand referred to them in his book New York, were built further apart and therefore more conspicuous than the bulky monoliths further downtown that were "huddled together in a massive range of manmade mountains," as a New York Times article pointed out.
No longer the northern frontier of Manhattan's built-up area, 42nd Street had become the commercial, hotel and transportation hub of New York, a "City of Incredible Towers," said Swiss architect Le Corbusier. It served as a province of "great masters of economic destiny up there like eagles in the silence of their eminences." Making money and moving it was everything.
East 42nd Street had become to the American service industry what Detroit was to the country's auto industry. Its buildings and those of its commercial tributaries -- Lexington and Madison Avenues -- housed prestigious law firms, big advertising agencies, headquarters of national and international corporations and branch offices of downtown banks and brokerage houses. Most of these businesses had recently moved to Midtown to be near Grand Central Terminal and its unsurpassed subway connections.
These were business in which "speed was the essential thing," wrote The New Yorker's Morris Markey, adding, "swift movement, swift thinking."
"Ten thousand typewriters clattering breathlessly," Markey added. "Men and women leaning over desks, intent, eager, utterly forgetful of any world beyond their own vision. Business, business, business -- the only end of living."
The careers of merchandising impresarios Adam Gimbel and Edwin Goodman are both inspirational and instructive, as I point out in my new book, Supreme City. They were successful because they balanced risk taking with astute analysis of rapidly changing business conditions in the following ways:
Mitigating risk.
Edwin Goodman, who had started out in the women's dress business as a lowly garment worker, knew he was making a potentially perilous decision in moving to an expensive location far up Fifth Avenue. But like many sagacious risk takers, then and now, he covered his bets. He leased rather than bought the land, and divided his new store into shoplike sections that he could sublet should business at the new location falter or fail.
Goodman also undertook a comprehensive study of the area he was moving into. Locating there, he decided, would put him close to "the greatest buying power in the world," as The New York Times reported. His new Bergdorf Goodman store was in excellent proximity to new, highly exclusive Park Avenue, which was undergoing a high-rise building boom just as he signed the lease on his new site.
When sales doubled one year after his new store opened its doors, Goodman doubled the size of his store and eventually bought the land it stood on, the entire block between 57th and 58th Streets on the west side of Fifth Avenue. This made the former garment worker from Rochester, N.Y., the new prince of the avenue.
Planning a business for the future.
Adam Gimbel was also a restless innovator, quick to follow hunches and take long chances, but only after deliberate study. A close observer of mid-Manhattan's changing commercial geography, he saw "a new society" rising on Park and Fifth Avenues after the completion of Grand Central Terminal, "a society made up of women who willing to pay well for things a cut or town above the ordinary," as a 1938 Fortune article observed.
Eager to attract them, Gimbel and his statuesque stylist Sophie Haas Rossbach, his future wife, decked out Saks in the newest Art Deco style and made its widow displays and merchandise counters the envy of the avenue. Within a year after moving to its new site, Saks became a magnet for style-conscious shoppers.
Like Edwin Goodman, Adam Gimbel had picked a perfect location. While thousands of Saks customers lived in the vicinity of the store, most of them were women from the affluent suburbs of New York, Boston, and Philadelphia. Saks was in the thick of mid-Manhattan's burgeoning new hotel and theater district and a short cab ride from Grand Central Terminal. Gimbel considered these commuters, in town for a day or weekend, "the cream of the buying population of the whole United States," as a business monograph of the time called them.
