The next day at about one o'clock Hughes called. We met in his suite, and he began our discussions by saying, "I am willing to review the situation further only if you offer more cash on the barrelhead."
"What kind of money?" I asked.
"Oh, perhaps one hundred million dollars more."
"Well, that casts quite a new light on this thing. We'll have to get backers into it. I'll have to return to New York and let you know."
Then he said, "Never mind, we'll just forget it. The deal is off."
I told him this was a very shabby way to treat people. We exchanged some more words, but the deal was kept alive by Spyros, and after I returned to New York a number of other negotiations went on. By the time it wound up, the list of supporting characters included the chairman of General Electric, the chief of Lockheed Aircraft, one of the heads of Blythe & Co., the head of Allen & Co., a senior partner of Lehman Bros., and a senior partner of Lazard Freres. Spyros, however, fell sick about this time and had to undergo an operation. That delayed things. Lehman and Meyer, of Lazard Freres, eventually did go out west on their own for a meeting with Hughes, but they were interested only in part of his kingdom. They offered, I think, to buy Hughes Tool. Eventually the whole deal died away. I was not surprised. After those first meetings with Hughes, I never thought he was serious. I think he was trying to find out what he was worth for tax purposes, perhaps in order to make gifts to a foundation. One of the best ways to determine the value of vast holdings is to have someone make you a bona-fide offer for them. However, Hughes' TWA situation was already getting a little sticky, Hughes Aircraft had been having management troubles, and his bankers at Irving Trust had found themselves way overboard on loans to TWA and were pressuring for changes. Hughes may have been checking out a financial counter-maneuver. We'll probably never know exactly what he was up to.
At this writing Hughes is in the process of preparing the greatest supersonic jet port in the world in Las Vegas. I sincerely hope it comes off. Hughes is eccentric, but he has always been his own man, and he has great vision.
Some time after the Hughes episode, I was involved in another quite different kind of adventure. In 1948 I got a call from my old Depression-days friend and mentor Jim Lee at the Chase. He and Mrs. Lee were to attend the opening of South Pacific with us, but two of his granddaughters would be in town from school in Boston, could we get two extra tickets? Lee Shubert let me have two extra tickets. The young ladies, girls in their teens, joined us for dinner at Le Pavillon, and from there we went to see Mary Martin and Ezio Pinza's magical triumph. Jim Lee's granddaughters, two of the loveliest young women I have even seen, later acquired a certain fame. One of them, Lee, after a marriage to one of the Canfields of the publishing family, married a member of the deposed Polish nobility to acquire a coat of jet-set glamour as Princess Radziwill. The other, Jackie, became Jacqueline Kennedy.
I was not to see Jacqueline again for many years, until as Mrs. Kennedy, she interviewed Pei as a possible architect for the John F. Kennedy Memorial in Boston, but in 1956 I not quite inadvertently blocked a power play by one of her in-laws against another New England–New York family, the Reids, then owners of the New York Herald Tribune.
Early in the fall of 1956 I received a call from Mrs. Helen Reid, asking for an appointment. I offered to go visit her, but she insisted she would call on me, and came in soon after. Even before sitting down, she said, "Bill, I need your advice. Would you recommend that I sell my plant for 1.75 million dollars and then lease it back?"
Helping her to a chair, I said, "That depends on the terms of the lease and how badly you need the money."
"The interest would be eight percent."
Since at that time money was averaging between four and five percent, I told her it was a low price for her property and a very high rate of interest, then asked, "By the way, who are you selling to?"
"I don't know whom I am selling to."
"Who is the real-estate broker. Is there one?"
"Yes. John J. Reynolds."
"In that case, Helen, I am going to ask you a very simple question: Would you sell your newspaper to Joseph P. Kennedy for $1.75 million dollars?"
"What do you mean?" she said.
I said, "I mean he's your customer. He is giving you just a little less money than you need—to force you to go broke. He has set the interest rate just a little too high to make sure that you do. Not only will he have your plant, but he will also have your paper, all through a very low-cost real-estate purchase."
"Do you really think that?"
"I don't think it; I know it!"
"How do you know?"
"Because that's the way Kennedy does business."
She said, "What am I to do?"
"You must need the money very badly, Helen."
"I do, very badly."
"Is this life or death?"
She nodded. "Just about."
Sometime during the 1930's the Herald Tribune had begun to fall seriously behind The New York Times in general performance, but its owners and managers could not or would not see that any change was needed. Then, in the mid-1950's, the widowed Mrs. Reid and her two sons found themselves in control of a paper that was losing readership and money. They were trying to turn the property around, with Helen Reid and her eldest son acting as editors-in-chief. Looking at the paper, one could tell they were not doing very well. It was a privately owned company, however, and until now I had not realized she was up against the wall.
"Well," I said, "life or death is another story, but before you give up the ghost, why don't we . . . Have you tried to sell the paper?"
"Yes, but I can't find a decent buyer or a decent bid."
"Then I am going to make a suggestion. The first thing we ought to do is explore the possibility of legitimate finance. I'll make some appointments up in the Connecticut valley, up around Hartford, where you've some of the last remaining old-style Republicans. I am sure they all read the Herald Tribune and would not want to see it go out of business. I'll call my friends at Connecticut General . . . and two other institutions."
Over the phone I made appointments for the two of us and arranged to pick her up in my car at six o'clock on a September morning for the drive to Hartford. The appointed morning was also the morning Hurricane Betsy, one of the two worst hurricanes we ever had, came to New York. When I got up and looked out, the plants on our terrace were lying flat from the force of the wind, but I called for Mrs. Reid anyway. Like two characters in a melodrama, we drove through the heart of the storm in order to keep our appointment with fate. Through the slanting rain we could see trees breaking apart in the wind. Our driver had trouble keeping even my heavy limousine in lane, but we did get to Hartford, and we did get a loan offer of two million dollars at five-percent interest. I told Mrs. Reid not to accept it right away. We went back to New York, and I arranged yet another appointment with the Massachusetts Mutual, who were in Springfield. The president of the company, Peter Comack, said he would be glad to meet with us, but on the day appointed for our visit, a second storm, Hurricane Carla, made her appearance. Again we drove north through ominous weather, but again we were rewarded; the Massachusetts Mutual were very sympathetic. They offered Mrs. Reid 2.25 million dollars at 4½-percent interest, which for a specialty property such as a newspaper building is very handsome, and which, compared to Kennedy's offer of 1.75 million dollars at eight percent, was magnificent.
Under Mrs. Reid's son's leadership, the paper for a time made a comeback, until, while still convalescent, it was shot out of the sky by its own striking employees.
Ironically, if I had not helped Mrs. Reid, the Herald Tribune might still be around today. I am sure that Joe Kennedy planned to take over the paper and use it as a vehicle for pushing the political careers of his sons. The Kennedys undoubtedly would have pumped in vital injections of talent, which, along with money, would have saved the paper, but I could not let anyone who had turned to me for assistance be taken by a maneuver
such as Joe Kennedy had in mind for the Reids.
A continuing series of minor forays and adventures can keep life interesting and sometimes exciting. I certainly got more pleasure from helping Helen Reid out of a tight corner than I would from buying and selling a particular piece of land, but I never let myself forget that these interesting side ventures came about because of our efforts and successes in various major projects. Such a project, and in some respects our greatest adventure of all, was located in Montreal and began in 1955.
▪ 14 ▪Change Comes to Canada
THROUGH THE mid- and late 1950's Montreal, although nominally the financial and commercial capital of modern Canada, had little wealth, dynamism, or modernity to show to the casual visitor. The sure indicator of a town's fortunes, its business district, was especially dowdy. True, the St. James Street area, Montreal's equivalent of London's financial center, the City, was packed to capacity and overflowing, but new office space was being constructed at the rate of only 300,000 square feet per year. No major building had been built for over fifty years, and most large companies had their offices scattered throughout various buildings. Many of these great corporations were quietly in the process of moving their headquarters to booming Toronto. The whole of Montreal real estate was under a pall. It did not help any that Montreal had for generations been burdened by city administrations second to none, not even to Boston's, for venality and ineptness. The town seemed to be at the start of a long, downhill slide.
When we announced plans to build a 3.5-million-square-foot office complex, centered about an open plaza with a forty-two story, cruciform tower, in mid-Montreal, few people believed us, and of those who did, the majority were horrified. Conventional thinking held that such a project would not only fail but would depress the local real-estate market for another generation. Naturally, we went ahead with the project.
We were able to go ahead because I met and worked in Montreal with four men, three particularly strong ones, and one particularly wise one. The first key man was Donald Gordon, president of the Canadian National Railways, on whose land we worked. Gordon is a Scot, a tall man, perhaps six-foot-four, and one of the few men I know who could outdrink me; when he was one-third through, I would have had it. Second was James Muir, president of the Royal Bank of Canada. Another Scotsman, Muir was a fierce and egotistical man who in another age would have been chieftain of a fighting clan. In our time he had to settle for control of Canada's largest, most aggressive bank. Third, a cool-headed and formidable leader of another sort, was Montreal's new mayor, Jean Drapeau. His Worship is a French Canadian, and a political Hercules. He assigned himself the task of first cleaning up, then revitalizing Montreal, and has just about succeeded. The fourth man was Lazarus Phillips, a counselor and the highly respected confidant of many. Phillips was the official leader of the long-established, somewhat introverted Jewish community in Montreal.
The stars must have been right when we met, for each of these men had individual visions about Montreal which matched mine, so we could work together. Each of these leaders laid something, sometimes something as subtle and precious as his reputation, on the line to make our project go. But I was the entrepreneur–risk-taker. I took the multimillion-dollar gamble, which nobody else in that country was willing to take, on Canada and on Montreal's vitality. I was the one who determined that the only way to make the gamble pay was by concentrating it in one massive, imaginative building, and because of what we did, Montreal and Canada will never be quite the same again.
For all its eventual great success and for all the enduring friendships that grew out of our Canadian adventures, it was no honeyed love feast which we seated ourselves at in Montreal. This, possibly the greatest of our ventures, had more than its share of tension and drama, though it began quietly enough around the table at my New York office. Here two visitors were Senator Thomas Viene and Rudolph Lemire, both Canadians and residents of Montreal. The senator was a most distinguished man, a bon vivant of considerable charm and sophistication, as well as an astute practitioner in the field of French-Canadian politics. Lemire, his associate, was a competent and articulate real-estate man. My guests had with them a map showing the holdings of the Canadian National Railways (CNR) in Montreal. They suggested that we acquire the lease and build up these twenty-two acres of downtown land. On this centrally located property, just north of the main station, was the "hole," a great, soot-stained, angry-looking, open cut where railroad tracks ran out of a three-mile tunnel under Mount Royal. Since the 1920's the CNR had devised a number of grandiose plans to cover the scars and develop the air rights around this equivalent of New York's Grand Central Station, but nothing came of them. During the depression, the CNR deepened parts of the "hole," and during World War II it had built a new station, but this is as far as it got.
The CNR is the survivor of a number of bankrupt railroads whose stock was taken over by the government after the end of World War I. A "Crown Property," it is operated like a private company, but its directors are appointed by the government. In 1950, when Donald, a banker, took over as president, the CNR tried once again to get a large-scale project under way on its land. Finding no interested developers among well-to-do, ultraconservative English Canadians, Gordon turned to Lazarus Phillips to see if someone in the Jewish community might be interested in a major project on the property. Here, too, he drew a blank. No one in Canada would tackle the job. But, my visitors suggested, maybe Webb & Knapp would be interested.
Any real-estate man is interested in twenty-two acres of singly owned midtown city property. What was frightening most people off was its size, plus the owner's insistence on an overall rather than a piecemeal development. But it was this very aspect of the situation that intrigued me. I decided I had better take a firsthand look at the area and meet this fellow Gordon. I called up, and then flew up with my son. Gordon walked us around for a look at the site and a view of the city. What I saw persuaded me. As Gordon now says, "I thought I was going to have to sell Zeckendorf, but after a walk around the place he was selling me."
A few weeks later Gordon came down to New York. He wanted to see what sort of outfit we had and whether we were big enough to take on the job he had in mind. Webb & Knapp in 1955 was already deep in the enormous southwest Washington urban-redevelopment project, and looking into projects in other cities. We were about to commence the Wall Street Maneuver, which would keep Chase and most other major banks still headquartered in the Wall Street area. Seeing our 240-man staff at work and the plans and models of projects already under way gave him plenty to think about. So, I suppose, did the constant flow of business calls coming to me over the phone. Naturally, he had made inquiries among the banking and insurance people about our past and present projects. The critical factor, however, was his reaction to me and my reaction to him. Here we hit a happy note. It was hard not to like and respect a man as forceful as Gordon. During the day, over drinks at lunch, and later in the evening, I recognized that here was a strong man with whom one could deal confidently. The clincher for an eventual agreement came when I suggested that Webb & Knapp, at our own expense, design a plan for the entire Canadian National Railways holdings in Montreal.
Gordon raised his brows a bit and asked, "Without obligation?"
I answered, "That's right."
He replied, "Based on that, of course I will."
We promised an integrated development plan for his whole property. The CNR was then building a great new convention hotel on part of the site. We came to some early conclusions about the hotel vis-à-vis our location. "Project Canada" was now under way. And now that we were to become Canadian investors, I began to learn my first lessons about things Canadian and about the facts of life in part-English, part-French, bilingual Montreal.
Like a great many of my fellow citizens, I had long thought of Canada, when I thought of it at all, as an extension of the United States. I very soon discovered that Canadians rightly resent this inaccurate generalization and that they have
a unique culture; in fact, they have two, which often clash. It is useful at times to think of Canada as two countries enfolded in one nation. I consciously say "enfolded" rather than "mixed" or "blended." Although French settlers founded Canada, English settlers then took over and developed it. Today, Canadians of French descent account for three-quarters of the population of the province of Quebec, but Quebec is only one of ten provinces and two territories. French Canadians represent only one-third of Canada's population of twenty million. For a mixed bag of historical, political, and cultural reasons, control of commerce and industry in Canada today lies almost entirely in the hands of the English, meaning Canadians of English, Scottish, or Irish descent. These key leaders, who went to school together or have known each other socially for many years, tend to form a close-knit group which is conservative in both thought and deed. However, it must be remembered that U.S. firms control over fifty percent of the country's manufacturing and resource-development assets.
Montreal is an island tucked far inland at the meeting of the Ottawa and St. Lawrence rivers six hundred navigable miles from the sea. The first European settlement in the area was named Ville Marie by its founding group of missionary priests and nuns. It was taken over by soldiers, fur trappers, and merchants, rebuilt, renamed Montreal, and, thanks to the St. Lawrence, which gave access to the Great Lakes and the center of the continent, became the greatest port in North America. For two hundred years Montreal completely overshadowed New York as a port and metropolis. It was not till after the opening of the Erie Canal and the subsequent development of U.S. railroads that a great flow of Western goods and produce down the Hudson Valley allowed New York to pass its northern rival, and permitted John Jacob Astor, whose descendants I dealt with, to multiply his fortune via New York real estate.
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