Memoirs

by David Rockefeller

  I continued to pursue my interest in beetle collecting and even managed to find a sacred scarab, a beetle that lays its eggs in a ball of dung and then buries it in the sand. The ancient Egyptians worshiped the sacred scarab, believing it to be an intermediary between the living and the underworld of the dead. Tod playfully teased me about my hobby, so I bought an inexpensive wedding ring and gave it to her in the presence of my parents and others, claiming that I represented Nelson in asking for her hand in marriage. Everyone except Tod thought this was quite amusing, since we all knew she had high hopes for just such an event. Indeed, soon after we returned from the trip, Nelson did propose, and they were married the following year.

  We also visited the Cairo Museum of Antiquities and found it in appalling condition with mud-encrusted sarcophagi and beautiful ornaments resting on bare shelves, poor lighting, and inadequate identification. In 1925, at Dr. Breasted’s urging, Father had offered $10 million to rebuild the museum in order to provide a better setting for the world’s greatest collection of antiquities. Inexplicably, the Egyptian government refused, and Father always suspected it was the result of pressure from the British government, which was not anxious to see an intrusion of American influence even in cultural affairs.

  We drove on to Palestine through the Nile delta and along the coast. We toured the holy places in Jerusalem and traveled down to Jericho, where I took a swim in the salty Dead Sea, a thousand feet below sea level. We then proceeded north to Beirut through the Jordan Valley and along the Sea of Galilee. The associations of this area with the Bible and the ministry of Jesus Christ made this a deeply meaningful part of the trip for Father and, I confess, for me as well.

  Although Father’s proposal to build a new museum in Cairo foundered on the rocks of international politics, he was much more successful with a similar idea in Jerusalem. Wandering the Via Dolorosa, visiting Bethlehem, the Garden of Gethsemane, the Dome of the Rock, and the Wailing Wall on the site of the Second Temple convinced Father that something needed to be done to preserve the antiquities of the Holy Land after centuries of neglect by the Ottoman Turks. Again, with Dr. Breasted’s encouragement, Father offered to build a museum of archaeology to house these antiquities and provide the facilities for scholars to study them. This time the British government, which controlled the Palestinian Mandatory State, agreed with the proposal wholeheartedly. The Palestine Archaeological Museum, often referred to today as the Rockefeller Museum, still exists in east Jerusalem and houses, among many other marvelous things, the Dead Sea Scrolls.

  Looking back I realize the debt I owe to my parents for my education. While the Lincoln School did a creditable job in providing me with a formal education, my parents did more. They brought to our home some of the most interesting people of the time. On our many trips and excursions they opened our eyes to nature, to people, and to history in a way that expanded our interests and stimulated our curiosity. They made us feel the excitement of the opportunities open to us and recognize the role the family was playing in so many areas. These experiences gave us an education that transcended formal learning.

  *Dr. Goodwin and I hit it off immediately. Father wanted his involvement with the project to remain secret for as long as possible, and so Dr. Goodwin and he used the code name “David’s Father” in their correspondence to throw the press off the scent.

  *Mother and Father decorated a rest house near the Eyrie Garden in Seal Harbor with many of these works of art. The house and its contents remain to this day just as my parents arranged them. This is the only place left that shows Mother’s interest in furnishings coupled with Father’s passion for Southwest Indian artifacts.

  CHAPTER 5

  ROCKEFELLER CENTER

  During my childhood and teenage years Father was involved in a number of major projects in and around New York City. He seemed to have a hand in everything, from the creation of public parks and the preservation of the natural landscape and the building of museums and churches to the provision of adequate and affordable housing for the City’s burgeoning population. Many of Father’s initiatives—the Palisades Interstate Park, the Cloisters and Fort Tryon Park, and Riverside Church—have become part of the City’s incredible physical landscape. Ironically, however, Father will be most remembered for a project he never intended to undertake and that inadvertently led him to become a major real estate developer.

  A NEW OPERA HOUSE

  Father’s most important project was, of course, Rockefeller Center. It was his most visible endeavor and has had a lasting impact on urban design in New York and around the world. The project began quite modestly, but it turned out to be an enormous venture that exposed him to serious financial risks without bringing him any financial return. Yet, paradoxically, Rockefeller Center is, with the possible exception of Standard Oil, the business venture with which my family is most closely linked. I will return to the story of Rockefeller Center again, but this is the place to introduce it—at the beginning.

  Mother commissioned Stefan Hirsch, a promising young artist, to paint the view from my fifth-floor bedroom window at 10 West 54th Street in 1930. Hirsch’s cityscape, Midtown Range, is dominated by the glowing white towers of the Chrysler and Empire State Buildings rising majestically in the distance and punctuated by the graceful spires of Saint Patrick’s Cathedral in the middle ground. The foreground, the neighborhood just to our south, much of it owned by Columbia University, is flat, featureless, and undistinguished.

  The reality was even grittier. As commercial activity surged northward through Manhattan during the first decades of the twentieth century, older residential areas were overwhelmed and transformed. Columbia’s property, bounded by Fifth and Sixth Avenues between 48th and 51st Streets, was composed mostly of four-story residential brownstones, many of which were being converted to small retail businesses or subdivided into small apartments. With the advent of Prohibition in the mid-1920s, nightclubs and speakeasies selling bootleg liquor also appeared, and there were rumors that a number of brothels had opened as well. The neighborhood, once the exclusive preserve of the Vanderbilts and Astors, had become seedy and down-at-the-heels. Father owned substantial property just to the north and was concerned about the deterioration of property values.

  By the mid-1920s the neighborhood had become a prime candidate for redevelopment. Columbia University received little income from the properties, and with most of the leases expiring between 1928 and 1931, the trustees decided to look for a builder who could develop the entire parcel. An attractive potential tenant, the Metropolitan Opera Company, also appeared on the scene.

  At the time, the Metropolitan Opera House was located in the heart of the Garment District, at 39th Street and Broadway, a part of town not much different then from what it is today. Built in the early 1880s, the house also had become inadequate for the needs of the company—especially its crowded backstage areas and poor sight lines. For some time the Met directors had been searching for a site on which to build a new opera house. Thus, in early 1926, when Otto Kahn, the Met’s chairman, learned that Columbia wanted to improve its midtown property, he decided to explore its potential for the opera.

  At that point, in early 1928, Father came into the picture. He was impressed by Columbia University’s aspirations and the opera’s plans to build a new opera house as the centerpiece of a carefully planned commercial and residential development on the Columbia property. This would be just the thing, he felt, to upgrade the area and safeguard his own properties.

  After months of consultation with real estate experts, architects, and businessmen, followed by detailed negotiations with the university and the opera, Father signed a Definitive Agreement and Lease with Columbia on October 1, 1928, agreeing to rent the twelve acres of Columbia’s land for an initial period of twenty-four years at an average rent of $3.6 million a year. The agreement with Columbia gave Father the option to purchase the central block for $2.5 million, but only if the construction of an opera house was firmly committed. I
f the opera house plans failed to materialize, the land would revert to Columbia, which would then be free to incorporate this block in the broader lease. Although Father assigned the lease to a holding company, the Metropolitan Square Corporation, he remained “liable as a principal and not as a surety on all of the covenants and promises contained in the Agreement.” This was a fateful clause in that it made Father personally responsible for all financial obligations related to the development, whether or not it reached fruition.

  All participants agreed that the project would be called Metropolitan Square because of the opera’s role as the “anchor tenant.” The first site plan placed the opera house on the western portion of the central block between 49th and 50th Streets—where 30 Rockefeller Plaza now stands. Father proposed, and the leaders of the Met and Columbia agreed, that the eastern portion of this block, fronting on Fifth Avenue, would be developed as a small park with an open plaza to give the opera house the proper setting, after which the park would be donated to the City. This first plan envisioned apartment buildings, department stores, and hotels on the two blocks adjacent to the opera house, which would be subleased to developers who would be responsible for financing and constructing their own buildings.

  When Father signed the lease in 1928, everyone believed the plan would go forward as originally envisioned: The opera would sell its old house, and Father, having bought the land from Columbia, would transfer the title to the Met, which would reimburse him for the cost of the land and his expenses. The Met would then finance the construction of its new facility, and Father would be off the hook financially for the central block of the site.

  In short, Father saw his role in the project as that of a facilitator. He considered it neither a real estate investment nor a charitable gift. He had no thought of making money from the deal, but he didn’t expect to lose anything, either. He knew there would be carrying costs between the time the lease went into effect in 1928 and when the area was fully developed, but depending on the subleases negotiated, he expected to come out even. Things did not work out that way.

  GOING IT ALONE

  A year after Father signed the lease with Columbia, the stock market crash changed the situation totally. The first domino to fall was the Metropolitan Opera. The Met board found it impossible to sell its old house and went to Father with a take-it-or-leave-it proposition: Unless he donated the land to them outright and helped finance the construction of the new opera house as well, they would withdraw from the project. Father was outraged and promptly rejected their proposal.

  Losing the opera was bad enough, but with the deepening economic depression, the individuals and businesses that had earlier expressed interest in building on the other blocks also began to back out, even Standard Oil of New Jersey. For Father it was the worst of all worst-case scenarios. Columbia refused to renegotiate the lease or even to modify it significantly. Father was stuck with leasing the property on the original terms—with no tenant. For the university, of course, the deal was a bonanza that would turn out to be its principle source of income for the next fifty years. Columbia had Father over a barrel and was very content to keep him there.

  The situation Father faced in the first months of 1930 must have been frightening. If he did nothing to improve the property, he stood to lose about $5 million a year (counting rent, real estate taxes, and other expenses), which over the twenty-four years of the lease would amount to approximately $120 million. Developing the land without the firm promise of tenants, however, posed even greater risks. The construction cost for a project of this kind was enormous, and given the state of the economy, there was no assurance that tenants could be found once the buildings were completed.

  In later years Father would be praised for his courage in going forward with the project. He once said to a friend: “Often a man gets in a position where he wants to run, but there is no place to run to. So he goes ahead with the only course open to him, and people call that courage.” That may be so, but it still took a lot of courage for Father to face the risks and uncertainties that confronted him. All of a sudden he found himself thrust back into the world of business where he felt no special interest or aptitude, and once again was faced with the prospect that he might not be able to live up to the role he had been assigned, that he wouldn’t be able to fulfill his obligations. But as Father had demonstrated at Ludlow when he found himself with his back against a wall, he accepted the challenge and moved forward unflinchingly to do what had to be done.

  Father consulted with the several distinguished architects and builders who had worked with him in developing the original project, and an alternative proposal was quickly devised. The new plan—the second iteration of what would now be called Rockefeller Center—in contrast to the original envisioned an entirely commercial development.*

  To finance the project Father negotiated a $65 million line of credit from the Metropolitan Life Insurance Company, the largest such arrangement any insurance company had made up to that time. Father was furious at the 4.5 percent interest rate and told everyone that Fred Ecker, the chairman of Met Life, had forced him to pay an exorbitant premium. But it was the best deal he could get, and the high rate was in itself an indication of the riskiness of the project. Met Life also insisted that Father give his personal guarantee on the loan, making him the ultimate guarantor of both the lease and the loan.

  The Met Life loan took care of cash flow problems, but it did not relieve Father of his own financial obligations to the project. For more than five years in the 1930s during the main period of construction, Father spent between $10 and $13 million a year on the Center, which he financed from his personal income and through the sale of oil stock, sometimes at very depressed prices. Father’s expenditures on construction, taxes, lease payments, and other aspects of the project from 1929 to 1939 totaled $125 million, or the equivalent today of more than $1.5 billion. It might surprise people to learn that although he lived until 1960, Father received no income from this massive investment and recouped less than half of the capital he had invested.

  But Father’s cost in building Rockefeller Center cannot be measured only in dollars. As with everything he did, he applied himself singlemindedly to the task, agonizing over minor details and meticulously supervising the work of the architects and builders. Constant worry took its toll. He was plagued by migraines and would often come home from the office in such a state of nervous exhaustion that he would have to lie down on his couch, not to be disturbed for an hour or more in the evening before dinner. He often used the service of a Swedish masseur who seemed to bring some relief. He suffered recurrent bouts of bronchitis and other ailments, which the stress he endured probably exacerbated. I recall that he was physically tired during much of this time, and he and Mother spent several weeks each winter either in Taormina, Sicily, or Tucson, Arizona, trying to get some rest and relaxation from the ordeal.

  Nevertheless, he persevered and in the process provided thousands of jobs for New Yorkers during the worst part of the Depression. Union leaders were vocal in their appreciation of Father, and years later my friends in the building trades—men such as Harry Van Arsdale and Peter Brennan—still spoke with deep gratitude of Father’s courage and generosity.

  RESCUING THE PROJECT

  For the project to be viable economically, Father needed tenants. The turning point, undoubtedly the salvation of the project, came in the summer of 1930 when David Sarnoff, chairman of the Radio Corporation of America (RCA), and Owen D. Young, chairman of General Electric, which held a controlling interest in RCA and also owned Radio-Keith-Orpheum (RKO), a major producer of motion pictures and a chain of movie theaters across the country, agreed to lease one million square feet of office and studio space in the project’s major building at $2.75 a square foot and to pay an annual rent of $1.5 million for four theaters that would be built on the property. With this major tenant in place, architectural planning could move ahead for most of the site. Just as important, by linking a real es
tate project with radio and motion pictures, two of that era’s most dramatic new technologies and growth industries, an excitement and cachet was created that would not have been possible with the Metropolitan Opera. When the deal was announced, David Sarnoff spoke enthusiastically of a “Radio City” rising on the site, a name that caught on almost immediately.*

  Securing NBC as the principal tenant of the main building was critical, but the other sites remained open. Congress agreed to special legislation that provided duty-free status for goods imported by firms taking space in the Center, and a number of foreign firms took long-term leases in some of the smaller buildings. This allowed construction to proceed on the British Empire Building and La Maison Française, the two low-rise buildings on Fifth Avenue between 49th and 50th Streets. The press immediately christened the garden in between them the Channel Gardens, à la the English Channel.

  The Center had an enormous amount of space to fill, and this produced an intense competition for tenants with other landlords in the midtown area and even further afield. The Chrysler Building and the Empire State Building, both completed in the early 1930s, were especially strong competitors because of their proximity, superb architecture, and modern conveniences. The Empire State Building even had mooring posts for blimps!

  As Rockefeller Center neared completion, Father persuaded Standard Oil of New Jersey, in which he was still the largest individual shareholder, to lease all of the final building that would be built on the original site. Other companies and institutions with which Father had a close identification also took leases. For example, Chase National Bank agreed to open a branch, on condition that it would have exclusive banking rights throughout the Center for a number of years. The Rockefeller Foundation, the Spelman Fund, and Industrial Relations Counselors—Father was chairman of each—also rented small amounts of space in the Center.