Frank Altschul obviously felt betrayed by his partners. But somehow, in public, he managed a stiff upper lip. Four days after the official announcement of his departure, he cabled Robert Kindersley in London: "Many thanks for your friendly message transmitted through Pierre. Stop. Feel sure new set up is most sound and promising New York firm has had in many years. Friendliest seasons greetings to partners and families." In January 1944, Altschul recommended Pierre for membership in the Recess, an exclusive Wall Street social club on the twenty-first floor of 60 Broadway, with a dining room overlooking New York harbor. He also recommended Andre for the same club in March 1945. In October 1944 he wrote a four-paragraph letter to David David-Weill, then in his seventies, wishing the firm's patriarch well and telling him he had thought of him often during the war. He also spoke of his own departure from the firm, putting the best possible spin on it under the trying circumstances. "You no doubt are fully informed about the termination of my long relationship with the firm," he wrote. "As you know, this represented the realization of a desire that circumstances had implanted in my mind almost seven years ago. My only regret is that, as I suppose was inevitable, misunderstandings have arisen which have clouded friendships that I valued." He never received a reply.
In May 1945, Altschul went to Paris. From there, he wrote a gut-wrenching two-page letter in French to Andre about what he had come to learn about the weeks leading up to the death of Jean Gaillard, Michel's half brother. The facts are gruesome: The Nazis captured Jean and sent him to Dora in 1943. Once there, he was immediately forced to work, for between twelve and eighteen hours a day, digging an underground tunnel for seven months without being allowed to come to the surface. The Nazi guards brutalized him and forced him to sleep inside the tunnel. Around May 1944, many of the prisoners, including Jean, were allowed to come aboveground for the first time in many months. But Jean soon developed a heart ailment, which left him feeble. He was given a new job having something to do with electrical work. In this role, he occasionally had the chance to play chess and work out mathematical problems with his fellow prisoners, many of whom, like Jean, were professors and intellectuals. On April 6, 1945, Jean was forced to go by train from Dora to Ravensbruck, another concentration camp, northeast of Berlin. En route, he developed dysentery. Altschul wrote: "The trip was abominable, with 130 men squished together in each car of the train like animals, with nothing to eat, and forced to stand for nine straight days. Few made it to the destination. I don't need to tell you about atrocities that occurred on this train but, suffice it to say, that about 80% of the passengers on the train died before reaching Ravensbruck." Although he almost died, Jean somehow survived and was dumped on the steps of the infirmary at Ravensbruck. He was said to have died in the infirmary on April 15 or 16. A fellow prisoner who escaped Ravensbruck and returned to Paris conveyed these awful--but still officially unconfirmed--details to Pierre David-Weill. But there remained a "very, very tiny glimmer of hope" that Jean had somehow made it to a hospital in an area away from Ravensbruck that the Russian army controlled.
Naturally, this tragic accounting devastated Pierre and Berthe. Altschul, though, asked Andre not to communicate to Pierre or Berthe, or to those close to them, any inkling that Jean was likely dead since they still clung to the faint hope that he was safely in the hospital. Finally, sometime in late June 1945, Pierre and Berthe received confirmation that Gaillard had died in the Ravensbruck concentration camp. Altschul cabled his and his wife's "deepest sympathy in heartbreaking news which you have now confirmed." Pierre cabled back, from the temporary Lazard offices on 5 Rue Drouot, in Paris: "Berthe deeply touched by Helens and yours sympathy. Affectionately, Pierre David Weill."
But clearly--and understandably--the events of the war years had taken their toll on the relationship between Altschul and the David-Weills and between Altschul and Andre. While this may be hard to discern from the direct correspondence between them, the substance of the rift is clear from Altschul's letters to others. For many years after he left Lazard, he wrote often to Ginette Lazard, Andre Lazard's widow, who lived in Neuilly. The depth of Altschul's lifelong hurt at the hands of Andre and the David-Weills fairly leaps off the page of a letter he wrote to Ginette in July 1952, ten days after David David-Weill's death. "It is such a long time since I have heard from you and I think of you so often with affection," he wrote. "I was saddened the other day to hear of the death of David David-Weill, whom I had known since childhood and had been associated with in the friendliest manner until Pierre poisoned his mind against me with his colored story of our late unpleasantness. I should have liked to send a word of condolence to Flora"--David David-Weill's wife of fifty-four years--"which I feel now would only be an intrusion on my part. But enough of this!"
Not surprisingly, Andre gave no thought whatsoever to Altschul's hurt feelings. First, such a sentiment was utterly alien to Andre's persona; and second, there simply was no time to dwell on the past. With the war quickly coming to a close, Andre foresaw in both America and Europe the need to revitalize badly wounded economies and physical infrastructures. Lazard desperately needed to be in a position to help the future leaders of America and American businesses accomplish these goals. To that end, he quickly jettisoned all of the old partners under Altschul. And he assembled a new team: Albert Hettinger from Altschul's General American; George Murnane, a former top partner and deal maker at Lee, Higginson & Company and then with the French financier Jean Monnet at Monnet & Murnane; and Edwin Herzog, a former army officer and employee at Shields & Company, a small brokerage. "What Andre Meyer had in mind, from the start, was the total gutting and rebuilding of Lazard Freres," Cary Reich wrote in Financier. "Lazard's mix of business--which was typical for a firm of its size--he regarded as an unstructured, unprofitable hodgepodge. And Lazard's partners and staff, as far as he was concerned, were largely a bunch of lazy mediocrities. In both areas, he wasted no time in forcing through major upheavals." After dumping the old Altschul partners, he closed the three regional brokerage offices in Boston, Chicago, and Philadelphia. New York, specifically the shabby confines of 44 Wall Street, would be the only Lazard office in the United States. Costs would be reduced drastically, in keeping with Andre's refugee mentality. The firm would no longer spend any of its precious time or capital on retail customers.
In its first hundred years, Lazard had faced repeated brushes with financial disaster, only to barely survive each time. Andre hoped to change that unfortunate pattern now that he was finally and fully in charge. Andre wanted to transform Lazard into a firm focused on rebuilding and growing corporations around the world. "He wanted to make this the leading firm in the business, not in terms of size, but in terms of excellence," the partner Fred Wilson, who began at the firm in 1946, remembered. "He said this many times, that this was his ambition for Lazard."
CHAPTER 4
"YOU ARE DEALING WITH GREED AND POWER"
The Great Men strategy emerged at Lazard after World War II under the leadership of the cigar-smoking Andre Meyer, following his evisceration of Frank Altschul. The peripatetic Meyer chose to live in an elegant suite of rooms at the Carlyle Hotel. "He wanted to be able to go downstairs on any day and check out and leave--to just shut the door, turn in the key, pick up his airplane ticket, and go," Felix Rohatyn said of Andre. Andre's preference for living in a luxurious hotel on the Upper East Side seemed to infect his New York partners. Bizarrely, many of them lived in hotels, too: for about five years in the early 1970s, Felix lived at the Alrae, Simon Alderweld lived at the Stanhope, Engelbert Grommers lived at the Hyde Park, Albert Hettinger kept an apartment at the Westbury, and Howard Kniffin had one at the Berkshire. Lazard itself had an apartment at the Waldorf. As with his partners the David-Weills, fine art was one of Meyer's few indulgences, and his Carlyle rooms were filled with priceless paintings.
Andre began collecting art modestly for his apartment on the Cours Albert Premier, overlooking the Seine. "Andre was not a rich man then," said his friend Francis
Fabre, who helped to keep Lazard together during the war, "but he was a man in a very good situation." He put together a "respectable collection" before the war, but when he fled Paris before the invasion, he did not take the time to protect the art. What the Germans confiscated has not resurfaced. Undaunted, Andre started collecting anew for his apartment at the Carlyle, but this time with far more passion--not necessarily for the art itself, but for the idea that a man in his position, as head of Lazard Freres & Co. in New York, should have a world-class art collection. Andre was well aware of the admiration, status, and respect that George Blumenthal's passion for art had bestowed upon him in New York, where he was the first Jewish board member of the Metropolitan Museum of Art and had made one of the largest contributions ever of both money and art. After his death, Blumenthal even donated to the Met (where it remains) the magnificent, enclosed, two-story balcony from a sixteenth-century Spanish castle that he had imported and reassembled in his own Park Avenue mansion. Andre's friendly rival Bobbie Lehman--who had taken Blumenthal's seat on the board of the Met to become the second Jewish director--had a world-class art collection, too, as of course did the David-Weills. "The difference between Bobbie Lehman and Andre," a former Lehman partner once said, "was that Bobbie was truly interested in art. For Andre, it was like hunters hanging antlers on the wall." Still, when Lehman would visit Meyer at the Carlyle, he would rarely fail to mention his admiration for Andre's collection. "You know, Andre," Lehman would say, "you have a beautiful collection." Engaged in his own dance with Lehman, Andre would deflect the compliment. "It's nothing," he would reply. "It's nothing compared to yours." Actually, according to the many Lazard partners who would be summoned daily to Andre's lair, his art collection was quite something to behold. There was Manet's Woman in a Fur Coat, Rembrandt's portrait of Petronella Buys, and Picasso's Boy with a White Collar. There were priceless works by Renoir, Cezanne, Degas, Bonnard, and van Gogh. He once paid $62,000 for a Pissarro landscape, at the time a record price for the artist.
He also collected sculptures by Henry Moore, Picasso, and Rodin. He had Greco-Roman bronzes and ancient Chinese wine vessels and six bronze Buddhas. The apartment's furniture was a seemingly endless collection of Louis XV and Louis XVI pieces, as were the various ephemera he displayed.
Like David David-Weill, Andre would often stop by galleries and auctions to look for his latest acquisition. He did not have David-Weill's insatiable appetite for art, and he was more inclined to haggle, but he was always on the lookout nonetheless, in keeping with his attitude that collecting priceless art made an important statement. He also encouraged his partners, on occasion, to buy art for their homes as well (but never for their offices).
Andre's art-filled Carlyle apartment was in perfect keeping with the Lazard credo that all evidence of partners' increasing wealth should be reserved for their private homes and never revealed at the offices, which were considered ratty at best. "The Lazard offices are the last word in facelessness," the Times observed in 1976. "The conference room, the lobby and most of the other rooms are painted beige, with beige carpeting, beige wallpaper and beige leather chairs (or are they vinyl?). Except for Meyer's office, there is no great art on the walls, no minor art, no art at all. Just a lot of beige. At 12 feet by 15 feet, Rohatyn's office is about as big as they come."
Andre Meyer became the confidant of kings and presidents and of the late Jackie Kennedy Onassis. According to the New York Times, "in some rarefied social circles" Jackie Kennedy's marriage to Aristotle Onassis was "jokingly" referred to "as a Lazard Freres marriage" because of the rumor, denied by Meyer but believed by most everyone else, that he had authored the marriage contract between the two. "In many ways, he is the most creative financial genius of our time in the investment banking field," said David Rockefeller, his longtime friend. "He's really a very extraordinary man. He has an enormous sense of integrity and honor, and great pride in the reputation of the firm." Rockefeller hired Andre often to advise him and his bank, Chase Manhattan, on potential deals. Andre in turn invited Rockefeller into his venture capital deals.
Ralph Waldo Emerson once observed that "an institution is the lengthened shadow of one man." Emerson's insight is especially true in the case of Andre Meyer and Lazard. "He had kind of a crazy passion for Lazard," remembered Francois Voss, who was related to Andre by marriage and whom Andre invited to join the Paris firm in 1958. "Lazard for him was his god. A kind of statue to be worshipped. The name of Lazard was more important to him than anything. For him, it was everything, everything, everything." But Andre was also a complex personality: he possessed the angst of a refugee and, when it suited him, the skills of a diplomat on the world stage. "He works at the top of Rockefeller Plaza, a wizened brown nut of a man," the British writer Anthony Sampson once observed about Meyer, "with a pulled-in mouth which can suddenly turn to a grin; he switches suddenly from apparent passivity to bursts of energy, striding across the room or picking up a telephone, gripping it like a gun, muttering 'yes' or 'no' and plonking it down. He rules by the telephone; he gets up at five in the morning, and does his business with Europe before reaching the office; bankers complain that if they ring him up at 5:30 a.m. the number is likely to be engaged." But like many a successful investment banker, his charm with clients and the powerful could evaporate instantly around his partners and subordinates. He often referred to them as "clerks" in his quest to get "the ultimate buck." Felix explained Andre's volatile behavior as a symptom of his insecurity. "Behind that stern, forbidding, and sometimes theatrical facade lay a man who was really yearning for affection," he once said. He added years later: "Andre carried with him the complexes of a Jewish refugee in the face of French aristocrats."
Andre was also a control freak and had his finger in nearly every aspect of Lazard. For instance, every Christmas he ordered up a bushel of same-sized Brooks Brothers shirts and handed them out as gifts to the firm's employees, regardless of their size. The task then fell to Mel Heineman, the firm's longtime general counsel, to obtain a list, right before Christmas, of all the employees who had written a thank-you note to Andre. Failing to write a note of thanks could be grounds for dismissal. Andre also had no patience for anything but hard work. He hated it when anyone took a vacation, something he himself did rarely. When George Ames, a partner who worked at Lazard for more than sixty years, refused to curtail a family vacation in the late 1960s to California and Hawaii, Meyer appeared to have fired him over the telephone. When he was back in New York, Ames returned to his desk at Lazard. Andre "chewed me out for things I hadn't done," Ames recalled. "But he never fired me, and I never paid any attention to it." From this experience, Ames concluded that the only way to achieve long-term success at Lazard was "to fly a half-inch below the radar screen." In keeping with Ames's observation, the onetime Lazard partner Frank Zarb recalled being invited to lunch with Andre and the international financier Siegmund Warburg, perhaps as a reward for using Zarb's Washington connections (he had been President Ford's energy czar) to extricate the son of the Paris Lazard partner Antoine Bernheim from Nicaragua to the United States when the younger Bernheim did not have a U.S. visa. Zarb just sat and listened--"I wasn't dare gonna say a word, not a damn word," he said--while the two banker warriors lamented the professional failings of their younger partners. Warburg and Meyer were also known to sit around Meyer's apartment at the Carlyle and engage in mutual admiration. "Andre, you are the most brilliant man in Wall Street," Warburg said. To which Andre replied: "Siegmund, you are without question the most brilliant man in London." Andre Meyer was said to be the only man Siegmund Warburg actively feared.
Andre alone made the decisions about who would become a partner at Lazard, and when, knowing full well that a partnership at the firm was highly coveted for its ability to bestow prestige and vast wealth. There were no known criteria for his selection process, other than the anecdotal preference Andre seemed to show for matching established industrialists with young deal executors.
The experienc
e of the longtime partner David Supino seemed to be illustrative of Andre's idiosyncratic approach. Supino credits his own spunk as the key to being elevated--after seven years as an associate--to the Lazard partnership ranks. For a few years after Harvard Law School, he worked at the Wall Street law firm Shearman & Sterling, slogging through tedious loan agreements day after day. But the ponderous life of a legal associate proved unbearable.
One day in June 1968, Supino had lunch with the Lazard partner E. Peter Corcoran. At the end of the lunch, Corcoran asked him to join Lazard. Not knowing much about the firm, but having a vague sense from being a Wall Street lawyer that it was "a dangerous place to work," Supino told Corcoran he wasn't interested. "Also," Supino said, "I told Corcoran that I had heard Felix Rohatyn was a shit. Those were my exact words. So, 'thank you,' I told Peter, 'but no thank you.'" Corcoran went back to the office after lunch and reported the conversation to Andre, including Supino's characterization of Felix. Andre's response: "You must hire him."
A month later, Supino agreed to go to Lazard, with compensation three times what he had made as a lawyer. On his first day at 44 Wall Street, which he described as a "very serious place" but also "very dismal, bare with drab walls," he wondered to himself, "Now what? What am I going to do?" He quickly figured out "you had to invent what you were going to do." One of his first assignments was to write a white paper on why synergy was good for corporate America, in effect a massive justification for the merger activity that Lazard was facilitating and dominating.
The last tycoons: the secret history of Lazard Frères & Co Page 9