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Lou Reed wrote this song for Andy Warhol to cheer him up after he was shot by Valerie Solanis. It’s many just a silly song to make him laugh but also tell Andy that he still cared about him, because they did have a sort of falling out.
The song describes some of the weirdos that hung around the Factory. The title literally refers to the scar on Andy’s chest following the incident, but I also took it to mean like another kind of chest, a treasure trove of sorts, a trove of weird characters.
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