Memoirs

by David Rockefeller

  The night before we sailed from New York in late September 1937, several friends gave us a farewell dinner at Giovanni’s Restaurant. Our hosts included Benjy Franklin, Dick Gilder, and also Margaret (Peggy) McGrath, the young lady whose company I had long enjoyed but still just considered a good friend. Bill sat next to Peggy at dinner and was greatly taken by her. After we settled into our stateroom on the S.S. Britannic, he said, “What are you waiting for? Why don’t you marry Peggy?” I was more than a bit taken aback, but somehow the suggestion struck a responsive chord. I wrote to Peggy once I arrived in London and to my delight had a prompt response. From this modest start was born a relationship that meant everything to me for the next six decades.

  My father’s connections with the LSE (both the Laura Spelman Rockefeller Memorial and the Rockefeller Foundation had provided sizable grants over the years) helped solve the problem of housing in London. Father knew Sir William Beveridge, the director of the LSE, who was retiring to become master of University College, Oxford. Sir William, to whom I had written at Father’s suggestion, offered to lease us his flat in Elm Court in the Middle Temple, one of the famous Inns of Court nestled just within the ancient walls of the City of London between Blackfriars Bridge and Fleet Street.

  This was a rare opportunity for us, to live in the heart of London only ten minutes’ walk from the LSE and in one of the few Elizabethan buildings that had survived the Great Fire of London in 1666. The flat was quite small, but there were two bedrooms, a dining room, living room, and kitchen. Best of all, Sir William left us his laundress, Leily, who agreed to cook for us and take care of our rooms. In fact, she did everything for us except wash our clothes! Leily was an absolute gem, and her presence allowed Bill and me to entertain guests and live very comfortably.

  Unfortunately, my close connection with Sir William made life more difficult for me in some ways. As I wrote to my parents, Sir William “definitely belongs to a regime that is past and which is none too well liked by the great majority of the staff. . . . Most of the trouble seems to rise out of petty jealousies and school politics. The fact nevertheless remains that I am looked upon a bit skeptically by virtue of being such a good friend.”

  It was not the last time that I would encounter suspicion because of the privileged or controversial company I kept.

  HAROLD LASKI: PIED PIPER OF THE LEFT

  In those days the LSE was widely considered a hotbed of socialism and radicalism. Founded by the Webbs in the 1890s to help achieve their Fabian Socialist goal of a just society based on a more equal distribution of wealth, its walls had always given shelter to men and women who tested the limits of orthodoxy. During the 1920s and 1930s its reputation owed much to Harold Laski, a very popular political science professor who enthralled well-filled classrooms with his eloquent Marxist rhetoric.

  Laski dominated the teaching of government and sociology at the LSE for three decades and was by far the most flamboyant and controversial figure at the school. In person, Laski was a small, sharp-faced man with a powerful and aggressive intellect; in his lectures he spoke in full paragraphs, the final word or phrase of which drew his thoughts together with a sudden and startling clarity. Although Laski was enormously popular with the student body, I found the intellectual content of his lectures superficial and often devious and misleading. They seemed more propaganda than pedagogy; he was indeed a pied piper.

  I had one personal experience with Laski that revealed something of his true character. Before I went to London, William E. Hocking, a professor of religion at Harvard, gave me a letter of introduction to Laski. The two had met when Laski taught at Harvard from 1916 to 1920. During the infamous Boston Police Strike of 1919, Laski sided with the striking police and denounced the authorities, including Governor Calvin Coolidge. Laski became persona non grata at Harvard; people refused to speak to him when they passed him on the street. Hocking befriended Laski and took him into his home during the most difficult period. Though Hocking had no sympathy for Laski’s political opinions, he apparently thought they had become friends.

  When I presented Hocking’s letter to Laski, he scanned it briefly, threw it aside, looked up with a bored expression on his face, and said, “I have no more use for Hocking.” I was appalled! I wrote Father a letter in which I didn’t mention the incident—I think in a curious way I found it almost embarrassing—but I did observe that Laski’s radicalism appeared to come more from “envy of those who are more successful than pity for those who are less well off.”

  Laski, who saw the state as “the fundamental instrument of society,” was particularly influential with students from India, who flocked to his classes and seemed bewitched by his rhetoric. In the judgment of many, Laski had a greater influence on India’s and Pakistan’s economic and political policy when those British colonies achieved independence after World War II than any other individual. India’s dominant Congress Party, for instance, was largely controlled by people who had learned socialism at his feet, and his ideology exerted a powerful influence for many years.

  HAYEK AND ROBBINS

  The economists at LSE were much more conservative than the rest of the faculty. In fact, its economists comprised the major center of opposition in England to Keynes and his Cambridge School of interventionist economics.

  My tutor that year was Friedrich von Hayek, the noted Austrian economist who in 1974 would receive the Nobel Prize for the work he had done in the 1920s and 1930s on money, the business cycle, and capital theory. Like Schumpeter, Hayek placed his trust in the market, believing that over time, even with its many imperfections, it provided the most reliable means to distribute resources efficiently and to ensure sound economic growth. Hayek also believed that government should play a critical role as the rule maker and umpire and guarantor of a just and equitable social order, rather than the owner of economic resources or the arbiter of markets.

  Hayek was in his late thirties when I first met him. Indisputably brilliant, he lacked Schumpeter’s spark and charisma. He was a dull lecturer, very Germanic and methodical. His writings were ponderous and almost impossible to read—or at least stay awake while reading. Nevertheless, I found myself largely in agreement with his basic economic philosophy. Personally, he was a kindly man whom I respected greatly. On more than one occasion I remember his taking from his wallet a crumpled, dog-eared paper on which he had written a list of the remaining “liberal economists.” He would look at it sadly and sigh. He was convinced that the list was shrinking rapidly as the older believers in the free market died off and most of the newer economists followed the new Keynesian fashions. I feel sure that Hayek, who died in 1992 at the age of ninety-three, felt greatly reassured by the resurgence in support for the market among the majority of economists and many political leaders in the 1980s. Unfortunately, I never had a chance to discuss this with him or to find out if he had made up a new and longer list!

  My favorite teacher at the LSE was Lionel Robbins, later to become Baron Robbins of Clare Market, who took over as head of the economics department the year I arrived. At that stage of his career Robbins was a firm advocate of the market and dedicated opponent of government intervention. But he was much less dogmatic and more eclectic than most of the other neoclassical economists I met during this time. He stressed logic and sound reasoning over the new fashion of econometrics. He would often say that one should make a distinction between what actually happens in the real economy and what we might wish to happen.

  Robbins clashed with both Laski and Keynes during the 1930s over a number of key political and economic issues. Robbins and Keynes first tangled in 1931 while serving on a government advisory committee examining the problem of unemployment. Keynes pushed his demand-side ideas—public works, tax cuts, and deficit spending—which Robbins successfully opposed. Later, though, Robbins joined the ranks of those favoring an increased role for the state in the management of economic life, calling his earlier disagreement with Keynes “the greatest mistake of my professional
career.”

  Robbins wrote and spoke English with great elegance and style. After the war his interest in the arts began to take precedence over economics, and he became chairman of the National Gallery and a director of the Royal Opera. Lionel was one of the most broad-gauged and cultivated men I have ever known, and I valued his friendship until his death in 1984.

  SOCIALIZING WITH THE KENNEDYS

  Bill and I had a varied and pleasant year. We met a number of interesting people and learned a great deal about the country and its people. Bill was a delightful companion, and we spent weekends bicycling in the countryside, playing golf, or visiting new friends at their country homes. On a few occasions we went to Oxford or Cambridge to see Harvard friends who were also studying in England. On one trip to Cambridge we saw John Kenneth Galbraith and his wife, Kitty. I had known Ken at Harvard when he was a young instructor in agricultural economics. Ken was a great admirer of Lord Keynes and had gone to Cambridge specifically to study under the great man. Although we had sharply divergent views on economics and politics, that never prevented us from maintaining a cordial personal relationship through the years.

  On one occasion Randolph Churchill, Winston Churchill’s son, then writing for The Evening Standard, came to interview the “Rockefeller” who had come to study in England, and the next day his column revealed that I was in the country to find myself an English bride. The story was reprinted throughout the British Empire. Within a few weeks I was inundated with marriage proposals, many accompanied by photographs, from scores of prospective brides from as far away as Nigeria.

  Halfway through the year Joseph P. Kennedy arrived with his wife and a number of his children to take up his post as ambassador to the Court of Saint James. Within a relatively short time Kennedy would become very unpopular in Britain, first for his allegedly pro-Nazi sympathies and then for opposing U.S. aid to Britain and France after the outbreak of war. But in early 1938 that was all in the future, and he was liked and respected by the British political and financial establishment.

  The Ambassador quickly became a fixture on the London social scene, photographed often in nightclubs and at gala parties in Kensington. He and Mrs. Kennedy also entertained lavishly at the American embassy. They gave an extravagant dance to introduce their daughter Kathleen to British society, to which I was invited. It was there that I first met John F. Kennedy, who had come over from Harvard especially for the party. Although we were contemporaries at Harvard, we had never met before. Jack was an attractive, sociable young man, slight in build with an unruly shock of dark red hair. He seemed eager to get my impressions of the political situation in Great Britain.

  Kathleen was pretty, vivacious, and a great success in London. She later married William Cavendish, Marquess of Hartington, but that year she was uncommitted, and I enjoyed her company on a number of occasions. Tragically, the Marquess was killed during the Normandy Invasion, and Kathleen died in an air crash in 1948.

  PEDRO BELTRÁN: FUTURE PERUVIAN PRIME MINISTER

  I made a number of enduring friends during that year in London, but the most impressive was Pedro Gerado Beltrán, a man almost twenty years my senior. Pedro came from a prominent Peruvian landholding family and was the owner and publisher of the influential Lima newspaper La Prensa. He had taken a degree in economics from the LSE twenty years earlier and had served as head of the Peruvian central bank by the time I met him. Pedro was in England to take care of family business interests, but he was an intellectual at heart and spent several days a week at the LSE sitting in on economics courses that interested him. A charming, urbane bachelor, he introduced me to some quite beautiful women I probably would not have met otherwise.

  Pedro was such an impressive man that I gave him a letter of introduction to my brother Nelson, who had started to develop a keen interest in Latin America. This proved to be serendipitous a few years later when President Roosevelt appointed Nelson Coordinator of the Office of Inter-American Affairs and Pedro became Peruvian ambassador to the United States.

  REVISITING THE THIRD REICH

  During the Christmas 1937 recess, Bill and I traveled to Germany. I remember particularly the “wool” clothing made out of wood pulp; the real wool, I suppose, had been commandeered by the military.

  In Munich we witnessed the massive funeral procession for General Erich Ludendorff, the virtual leader of the German army during World War I and Hitler’s compatriot in the Beer Hall Putsch of 1923. The largest crowd I had ever seen jammed the Ludwigstrasse, Munich’s main boulevard. Fully armed SS troops, standing rigidly at attention, lined both sides of the street. As Bill and I pushed up to the front, the funeral cortege began to pass with Hitler at the head of columns of goose-stepping soldiers. I snapped his picture with my Leica camera as he swaggered past acknowledging the stiff-armed Nazi salutes and the thunderous cries of “Sieg Heil.” I had never seen anything like the frenzied adulation of that crowd or experienced such an overpowering sense of discomfort at what that adulation represented.

  After this chilling encounter I spent the rest of the holidays in Frankfurt with a close Harvard friend, Ernst Teves, and his father, a prominent German industrialist. We attended a number of parties, including an elaborate costume ball where the Frankfurt socialites seemed almost frantically bent on having a good time. From my conversations I learned that many people believed Hitler’s aggressive demands for the return of German territory would lead inevitably to war, although no one wanted to protest. It also appeared to me that the growing regimentation of daily life, the menacing Nazi ideology, and the flagrant persecution of Jews and others had produced a strong undercurrent of fear and anxiety. People seemed to be afraid of saying or doing the wrong thing. “Heil Hitler!” was the mandatory greeting for everyone. Swastikas were everywhere, and people deferred obsequiously to Nazi party officials whenever they encountered them. The gaiety of the parties I attended seemed forced and hollow. I returned to England feeling depressed about the future.

  THE DALMATIAN COAST AND GREECE

  During our Easter holiday in 1938, Bill and I joined three Harvard friends for a trip down the Adriatic. We took all of the passenger accommodations on an Italian freighter sailing from Venice. The cabins were small but clean and comfortable, and the food surprisingly good, considering that the entire five-day voyage cost each of us five pounds (then $25), everything included! We stayed for a few hours each in Trieste, Zara, Split, and Dubrovnik in Yugoslavia and Durazzo in Albania, and ended the trip in Bari, Italy.

  We flew from Bari to Athens where we rented a car and drove through the Peloponnesus to Sparta and Mount Parnassus and then back along the Gulf of Corinth to Delphi. While having a drink at the bar of the Grand Bretagne Hotel in Athens, I ran into Professor Kirsopp Lake, who was famous for his popular course on the Bible at Harvard. He asked me to go with him, his wife, and stepdaughter, Silvia Neu, to Salonika by overnight boat. From there he and I would take a smaller boat to the peninsula of Mount Athos, where he would be looking for manuscripts in the libraries of orthodox monasteries. The invitation was too tempting to turn down.

  Silvia Neu turned out to be a very agreeable companion on the boat trip, and the three days on Mount Athos were unforgettable. We stayed each night at a different monastery as the guests of the monks, many of whom Professor Lake knew from earlier trips. The monasteries, built during the Middle Ages, are perched on the slopes of Mount Athos, with the incredibly blue Aegean spread out below. At night the stillness was broken by the hauntingly beautiful chanting of the monks, and the air was thick with incense. To my disappointment, because I found Silvia quite appealing, the monasteries were exclusively male; females—human, animal, or otherwise—were strictly forbidden. As an entomologist, however, I was amused to discover a number of copulating beetles.

  I had expected to spend several days in Rome with Ambassador William Phillips and his attractive daughter, Beatrice, but that part of the trip had to be cut short because of my trip with Professor Lake. My plane from Sal
onika to Rome stopped unexpectedly in Tirana, Albania, where I found there were no hotel rooms available. By good chance I ran into an entomologist working for the Rockefeller Foundation on a malaria eradication program, and he offered to share his small house with me for the night. It had been a memorable vacation.

  THE UNIVERSITY OF CHICAGO

  After a year in London I was eager to return to the United States to complete my graduate work at the University of Chicago, which boasted one of the premier economics faculties in the world, including such luminaries as Frank Knight, Jacob Viner, George Stigler, Henry Schultz, and Paul Douglas. I had heard Knight lecture at the LSE and found his more philosophical approach to economics quite compelling. Lionel Robbins knew Knight well and urged me to study with him. The fact that Grandfather had helped found the university played a distinctly secondary role in my choice.

  The Chicago “school of economics” has gained a great deal of fame and not a little notoriety over the past fifty years for its unwavering advocacy of the market and strong support for monetarism. These ideas are intimately associated with Milton Friedman, whose views have now come to symbolize a Chicago School that is strongly doctrinaire in its insistence that government should not interfere at all with the market and the natural pricing mechanism. Friedman also argues that business should concentrate exclusively on optimizing profits and should not be sidetracked by involvement in outside activities that are “socially responsible.”