Zeckendorf

by William Zeckendorf

  I said, "We seem to have more confidence in the neighborhood and in you than you do yourselves. . . . I'll tell you what: the way to make sure you pay a fair rent is to let you have the space rent-free for five years. Whatever volume of business you do in that period will establish what you can afford to pay."

  Their eyes lit up at this until I added, "However, since you don't want to do any gambling and it is we who will carry all the risk, we're entitled to have a share of your profit." When they asked what I meant, I replied that, whereas in most percentage-of-volume deals Woolworth's gave five percent, in this case we would want eight percent, and whatever this averaged out to over five years would be minimum rent. They demurred at first, but what I offered was really a no-risk arrangement. They knew business would be good in that store and finally agreed. As a result, we wound up with almost twice as much profit as we would have had from the original guarantee, which is as it should be. Perhaps it's only appropriate that Woolworth's was penny-wise and pound-foolish.

  What I had long needed at Webb & Knapp was an architect who could help me put into concrete form some of the many ideas I was developing. It was in 1948 that I found my man, thanks to some help from Nelson Rockefeller.

  At that time the second Rockefeller son handled many of the Rockefeller brothers' affairs. As a consultant, I was seeing him regularly, sometimes as often as three times a week. He was then, among other things, revitalizing the Museum of Modern Art, and in his office one day I said, "Nelson, don't you think it is about time that the modern Medicis began hiring the modern Michelangelos and Da Vincis? I plan to go into a great building program on a national scale, and I'd like to put together an architectural staff that could provide new thinking." I told Rockefeller about the kinds of construction and projects we had in mind, then said, "You are interested in modern art and in architecture; can you help?"

  Rockefeller said that he could. He mentioned a man on the museum staff named Dick Abbott who had suffered some debilities from tuberculosis. Because of his health, it would be wise for him to ease out of museum work. Rockefeller stressed how knowledgeable Abbott was and how useful he could be in finding my architectural staff.

  So Abbott came to us for a year as a talent scout to interview architects. I specified that the man was not to be the scion of a wealthy family, because in architecture they too often turn out to be dilettantes. Neither did I want him to be a long-time hack in the back of somebody's office, with his spirit already broken. Therefore I wanted a young man over twenty-five but under thirty-five years old, and of course he must show signs of talent and creativity. Abbott interviewed a dozen or more young men, some of whom were very fine, but none of them was the man I wanted, until he brought along Ieo Ming Pei, a professor at the Graduate School of Design at Harvard. (The architect Philip Johnson says he is the man who found Pei for us. It may be. Perhaps Johnson did recommend Pei to Abbott, but the first time I met Pei was through Abbott in 1948.)

  Pei comes from a fine Chinese family. His father, a brilliant financier, had been a minister in the Chinese Nationalist government and had at times been associated with C. V. Starr, a millionaire insurance man in the Orient. Pei had never built anything, but when he and his charming wife, Elaine, came down for a visit, I could see from his sketches that he was truly talented. I also found him obviously intelligent and very imaginative, as well as a bon vivant and knowledgeable gourmet. It was a case of instant recognition and liking. I wanted him to join with us. Pei was apprehensive about becoming a captive architect, which might lose him a certain degree of professional freedom. He was also torn between returning to China and remaining here as a teacher, but I set to work and soon persuaded him that the kinds of things we were going to do would be so different and so much better than anyone else in the country was doing that as an architect he would not resist the challenge. Helping me, though I did not know it then, was some advice Pei's father had once given him: that the essence of good architecture was the ability not only to conceive of great buildings but also to tie them effectively to finances and economics. Part of Pei's interest in us was the opportunity we afforded to weld design to marketing factors. Through the extensive site planning and design for which he has since become famous, Pei and I made some notable architectural breakthroughs.

  Pei's first job for us was to re-design our office headquarters at 383 Madison Avenue. I had taken Pei to see Ecker's office at Metropolitan Life, and getting there was half the fun; we had to pass acres of lesser offices to find Fred's, and I explained, "This is what I don't want. I don't want to be buried away in some inaccessible corner."

  Pei had already noted that the great majority of visitors to Webb & Knapp came to see me and then went on to see someone else. His solution, therefore, was to start visitors off directly beside the place most of them wanted to go to—my office. Within the great open lobby and display area of the top floor of our building, he built a twenty-foot-diameter, wood-paneled, vertical cylinder, a headquarters within a headquarters—my office. On the roof above this self-encompassing cylinder we built a small penthouse dining room, which, in view of the transactions closed there, proved possibly the most remunerative investment I ever made. Down below, alongside my office, we laid out some open-air terraces with matched marble side walls and shrubbery and statuary. We ended up with a unique headquarters to which many prominent magazines devoted pages of pictures, all very useful publicity for Webb & Knapp. Essentially, however, our rebuilt headquarters was an office that worked for me, and that office turret today dominates the whole of the twelfth floor at 383 Madison Avenue as effectively as the lone turret of that famous Civil War ironclad, the Monitor, once dominated its own deck and the water for miles around.

  Pei first came to us as an idea man, someone to put into visual form the ideas I was generating, much in the same manner as Harrison had helped me to conceptualize "X City." Then we added a staff and went beyond this phase. The first important outside job that Pei did for us was a Gulf Oil office building in Atlanta, where, learning fast, he persuaded Georgia marble producers to supply facing material at very low cost as a form of advertisement for their product. This move was a prelude to some of the things we would do for the aluminum and other industries.

  Pei's next big job was Denver, which was a prizewinner too, and from there we went from one architectural first to another. We were a great team, each one teaching the other. One of the finest things I ever did was to draw my friend Pei away from the halls of academe and into the world of building.

  Through ownership of the 333 outstanding shares of Webb & Knapp stock, I was sole owner of the company. I was also deeply in debt. But never, except for rare moments, have I ever had my head very far above the financial water, and never have I let this trouble me. We kept the company acquiring property and making profits.

  Our office force was still small enough so that after a quick flight to Europe or a visit to Cuba with Fred Ecker and his wife, Edith, I could bring back special gifts for everyone in the shop. Because we worked long hours, everyone was aware and at least partially familiar with most of the projects under way and their actual or possible interconnections. We had a fine, tight ship that was making excellent headway, but I was still dissatisfied. I wanted to do more, and decided to acquire superpower—American Superpower. American Superpower was an American Stock Exchange-registered company with which we merged and took over. That takeover provided the basis for some grand adventures.

  If it hadn't been Superpower, it undoubtedly would have been some other company. We were ready for the move. Walter Mack, president of the Pepsi-Cola Co. and an investor with us in various ventures, brought Superpower to my attention as a potential corporate shell to shelter Webb & Knapp from taxes.

  American Superpower, formed in 1923, was one of the fabulous and tenuous public-utilities holding companies (a la Insull) of the speculative twenties. Soon after it was organized it controlled a great number of utilities, such as Appalachian Power, Brazilian Power, Consolida
ted Ohio Edison, and Italian Superpower. The crash of 1929 had tumbled this empire. The Holding Company Act of 1933 forced the company to dispose of many of its assets at a loss, and in 1935 Bankers Trust Co. was brought in as consultant and trustee. Henceforth Superpower limped along with various bankers, lawyers, and a federal commissioner on its board. World War II gave it a boost by which it was able to clear up some of its back debts, but this was only a temporary palliative. By 1951 the company was still in trouble, and owed $114.50 on each of its sixty-three thousand preferred shares. The directors were looking for some way to liquidate the whole business to the satisfaction (or equal dissatisfaction) of the various owners and debtors. I showed up as a suitor, and soon thereafter we had a merger under way.

  What we came up with was a reverse merger, American Superpower first changing its name to Webb & Knapp, Inc., a Delaware corporation, then absorbing my Webb & Knapp, Inc., a New York corporation. In exchange for my stock in the New York Webb & Knapp, with a net worth of forty-two million dollars, I received one million shares of junior preferred stock plus eleven and three-quarter million shares of common stock in the new Delaware Webb & Knapp.

  The old Superpower's sixty-three thousand shares of senior preferred (now Webb & Knapp, Delaware, preferred) had a claim on 13.2 million dollars on the merged company's assets. Superpower's common shareholders, whose assets had previously had a negative value, now held stock in Webb & Knapp, Delaware, with an asset value of sixty cents per share. As a result of this transaction, I lost (on paper) ten million dollars, because, whereas previously I had as sole owner of Webb & Knapp a claim on forty-two-million dollars of net worth, I now had, as a result of dilution by merger, a claim on only thirty-two million. Nonetheless, I now had a publicly listed company. By sale of some of my stock I could clear my personal debts. The new company had a useful tax credit by which we could conserve and reinvest a greater share of our earnings. Then too, Superpower also provided ten million dollars in new working capital when we sold off its various stockholdings.

  The merger was one more deal where all involved ended up better off than when they started. I now had a vehicle for my ambitions and started on phase two of my career.

  Two

  ▪ Prologue

  ON JOINING Webb & Knapp, I had, through some of my partners, been introduced to a segment of one of New York's many interlocking social and business circles. Drawing on these connections, plus others of my own, and greatly extending both, I became a national rather than a local business figure. In the process I also became aware of parts of the fabulous and shifting topography of American society.

  Just as a man living in a mountain valley sees and is closely aware of only a few of the nearest great peaks above him, so, too, is it with a man comfortably settled at some modest elevation in our own society. If he begins to climb, however, he will soon notice from his new perspective that there are actually a great many peaks on all sides around him. What's more, once he has reached a high enough altitude, he will discover something else. He will see that many of the greatest peaks—interconnected by high ridges or narrow plateaus—are, at this new level, readily accessible each one to the other. The temptation to keep moving on this high ground can be irresistible.

  Part Two of this book is an account of my travels and dealings among some of the denizens inhabiting the elevations and peaks of American society.

  The importance to me of being on the heights was that in an hour I could achieve what previously would have taken a year or more of effort to perform. Otherwise I found the dwellers on the heights little different from their less advantageously placed brethren. There is a selection process which sees to it that a significant number of upper-level people are smarter, more aggressive, and in some ways more self-assured than the average, but a good many dwellers on the heights got there entirely by accident. They were born there. Others, like lowland birds blown far up a mountain by a sudden storm, found themselves at heights they never expected to reach but which they managed to adapt to. I did find numbers of tough, strong men who had worked their way up from the very bottom, but most had started out from a place within hailing distance of the height they reached.

  Since it is generally pleasant to be rich, famous, powerful and influential, the great majority of people, who achieve some prominence have a profound interest in maintaining, if not improving, their position. To these ends they sometimes join with and at other times ruthlessly undercut their fellows. Since there are some quite precipitous slopes and occasional ice slides on the various routes to and about the heights, most people there are at core conservative and very much against anyone in any way disturbing their perch or their surroundings. I found it possible to join their ranks without discommoding or unsettling them, for one way to succeed is by aiding and supporting the position of others through new or ingenious ideas or projects. This usefulness to others is in large part the reason for my own success, though there were times when we quite consciously upset other groups for our own and quite often for their own good.

  After taking over American Superpower, I launched Webb & Knapp across a grand range of great projects: from privately financed urban redevelopment to federally financed urban redevelopment and a whole spectrum of special opportunities. Because of the opportunistic nature of many of our ventures, it is difficult to say that at any given time Webb & Knapp went in such and such a direction. It was more a matter of my own urge to build, and the fact that one project led to another. Our first step toward private urban redevelopment, for instance, began in Denver in 1945 when we were still, even in our own eyes, almost purely buyers and sellers of property.

  ▪ 9 ▪The Town that Time Forgot

  WITH TONGUE but partly in my cheek, I can say that I found Denver brick and left it soaring steel, concrete, and glass—with here and there a touch of marble.

  When I first arrived there, Denver had no major building more than twelve stories high. Too spread out to be quaint and too ugly to be pleasant, the center of town was a relic of pre- and post-Civil War construction of the most depressing type. The various key business areas and the encroaching tenderloin district (the same people often owned sections of both) were difficult to distinguish one from the other. Most structures were fading five- and six-story brick affairs, often with cheap storefront façades built over the first story or two. Boosters told you Denver was a growing city, but the growth was in the suburbs. Denver, like so many other cities, was decentralizing so rapidly that its dry-rotted core had begun to fall in on itself.

  We at Webb & Knapp reversed this centrifugal trend by creating some well-planned and badly needed building masses and open spaces in the core, which served to draw people and businesses once again to the center of town. As a result, Denver, which today boasts at least nine genuine skyscrapers, has a healthy city core that is much in use.

  Very strictly speaking, the metamorphosis of Denver from a Cinderella city of brick and cinders into a genuine princess of the plains was not all our doing: others also built in Denver. But it was Webb & Knapp who saw the possibilities and led the way. We got there first to set the pace, and we set the standards for others to try to follow. In effect, we provided the first dose of intellectual and financial adrenalin to stir Denver out of its somewhat uneasy nineteenth-century slumbers into the present. Shaking this sleepy, self-satisfied town into reaching toward its potential as a city took many more years and many more millions of dollars than we first expected. There were times while we were in Denver when it seemed wise to take a quick profit and get out, but we never did this. I had made certain public promises to the city of Denver, and in the face of great difficulties, despite much public doubt and a good bit of pillorying by newspapers, we kept these promises—even though the majority of the well-established economic leaders in Denver did little or nothing to help this local development, in spite of the fact that their families had been living in and off the area for generations and, therefore, had most to gain from a renaissance of the town. In fact,
it was the very hostility and resentment we met with that helped persuade me to see the job through. So, in a rather negative way, the local "leaders" did help the town and their townspeople to get ahead, by their active desire not to do so.

  Locally, in terms of urban redevelopment, and regionally, in terms of the effects of well-placed seed money, our Denver project proved to be one of Webb & Knapp's most significant undertakings. Directly through our investments and construction and indirectly through the increased land values that drew other investors and new businesses to Denver, we created many thousands of new jobs. By putting millions into the area, we made some men rich. And as is the nature of things, we made even more people who were already rich even richer. Most important of all, however, at a crucial time we caught and quickened the pulse of an American city. For me this is the story of Denver, and for me that story began one day in March, 1945, when a wraith of a man in a wide-brimmed Western hat ghosted into my office to suggest a deal.

  The man was B. B. Harding, a gaunt-faced Denver real-estate broker of sardonic humor and a likable if feisty disposition. A distant cousin of President Harding, B. B. originally hailed from Indiana. One of the Bs in his name was for a famous progenitor, Aaron Burr, and B. B. evidently took after his ancestor, for he was at least as prickly as Burr and sometimes behaved with the strange combination of desperation and indifference of a man living on borrowed time. In B. B.'s case the borrowed time, though on a favorable longterm lease, was real. As a young man he had contracted tuberculosis and had moved out to Denver in 1910 expecting to die, but proved either too mean or too curious about the world to die young. Aided by the good climate, he recovered, to go into insurance and real estate. With his independent, go-to-hell ways, Yankee humor, and acerbic personality, B. B. never entered into the fold of the local Denver satraps and the lowerarchy of their dependents and hangers-on. Instead, he ranged out at the edges of the herd, swinging in once in a while on a likely target, and over the years doing moderately well. He was involved in the land assemblage for the present-day Denver airport, for instance, and was active in Colorado Springs.