The merger created a financial powerhouse with deposits of $7 billion, capital of $550 million, and total assets of almost $8 billion. Most important, from the point of view of Chase, the number of domestic branches swelled to eighty-seven, the third largest in New York City. In addition, the new Chase Manhattan Bank moved past First National City Bank in terms of total assets—making us the second largest bank in the world, behind only the Bank of America.
SEEKING OUTSIDE GUIDANCE
Prior to opening for business on that April morning in 1955, McCloy and Baker had agreed to an interim corporate structure and division of senior level responsibilities. Jack McCloy had handled Baker’s vanity adroitly by giving him the jobs of president and chairman of the executive committee, while retaining the chairmanship for himself. In a master stroke at the time, but one that would create problems only a few years later, McCloy also agreed to alter the bylaws so that both he as chairman and Baker as president were named co–chief executive officers.
Just below the top level, a new title of executive vice president was created. I was named executive vice president for planning and development with responsibility for all staff functions, and George assumed the same rank and retained control of the commercial banking group.
The complicated task of integrating the personnel and operations of these two large institutions, each with a strong personality and a distinct culture, could not be accomplished easily, but it was essential to do it in a manner that would both heighten morale and maintain momentum.
The merger presented us with a unique opportunity to develop a more responsive and effective corporate culture. Some of us felt strongly that the best course would be to hire one of the established management consulting firms to design a more integrated and effective organizational structure. But others in the bank were opposed, bridling at the idea of bringing in an outside consulting firm to do work that we could better perform ourselves. Once again we were locked in a stalemate between the “old guard” and the “modernizers.” Happily, we found a compromise.
My friend Peter Grace had faced a similar situation with many of his old-line executives in restructuring W. R. Grace and Company. Peter had found a workable alternative by hiring Gerald Bower, an independent consultant who had worked for General Electric for many years. Bower did not bring a large team of experts with him; instead, he asked senior management to assign eight or ten capable officers to work with him in studying the company. Bower found that this procedure assisted the process of analysis greatly and made it less threatening to company management. Although George Champion and most other senior lending officers remained dubious, Jack McCloy was convinced, and we hired Bower to do the study in May 1955, only a month after the merger.
Bower submitted his final report later that year. Basically, it refined the organizational changes that my associate and I had suggested in 1952 by describing more clearly the operational areas of the bank and definitively establishing lines of authority and responsibility. Bower also strongly recommended that we either establish or strengthen a number of specialized departments—corporate planning, personnel, marketing, and public relations—and recruit trained professionals to manage them. During my entire time at the bank these critical staff functions had been relegated to individuals whose only qualifications were that they had not shown a special aptitude for making loans. I thought this had been a grave error, so now as the executive in charge I was determined to give those staff functions proper recognition and authority.
Despite resistance from George Champion and the “barons” in the United States Department who resented the loss of their autonomy, the organizational changes that Bower suggested were implemented by the end of 1956. By streamlining the structure and strengthening the management process, this represented a significant turning point in Chase’s history.
CONSOLIDATING IN LOWER MANHATTAN
In early January 1955, shortly after the merger was announced, Jack gave me another important assignment: figuring out what to do about a new Chase headquarters. It had been clear for some time that we needed to consolidate our widely dispersed activities. Chase had absorbed more than fifty smaller banks over the years, and as a result had operations in nine separate locations scattered throughout the financial district, including our increasingly crowded headquarters at 18 Pine Street. Our looming merger with the Bank of Manhattan made our space needs even more acute.
The issue was not whether we should move—all were agreed to that—but where we should move to. The financial community in lower Manhattan was unhappy with the crowded streets, poor public services, and antiquated buildings, and many had already taken steps to leave the area. Midtown Manhattan was the preferred destination for most. The City had grown enormously in the postwar years, but almost all that growth had taken place above 34th Street, with dozens of corporations relocating there each year. Meanwhile, not one new building had been built in the financial district since the beginning of the Great Depression. Lower Manhattan was stagnating, many of its famous financial institutions were planning to follow their corporate clients uptown, and there was general talk of “grass growing again on Wall Street.”
No one wanted to be the last to leave. We all owned substantial amounts of property, which would have plummeted in value if the financial community began to move northward en masse. First National City had already announced that it would move many of it operations to a new building on Park Avenue that was scheduled for completion in 1959, though the bank’s chairman had assured Jack McCloy that he had no plans to relocate their headquarters. But Chase was perceived as the bellwether; everyone seemed to be waiting for our decision.
My personal view was that it was vital to keep the financial district intact in the Wall Street area and that Chase had to take the lead in the process. This was partly sentiment. The area was rich in history; it included the original Dutch settlement of New Amsterdam; it was where George Washington had taken his oath of office and Congress had convened for the first time. The New York Stock Exchange had begun its operations there in 1817. Grandfather’s Standard Oil headquarters had been located at 26 Broadway for many years. But sentiment should never be the basis for a business decision involving many thousands of people and hundreds of millions of dollars. I also felt there were compelling practical reasons for Chase to remain in lower Manhattan. The concentration of the financial industry in such a small area along with the New York Federal Reserve and the major stock and commodity exchanges created enormous efficiencies. Together we formed an integral and increasingly critical part of the world’s financial nervous system. These strengths would be jeopardized if any more of the major institutions left. And there were signs that some were seriously considering that option. Even the board of the New York Stock Exchange had indicated that it would move to New Jersey if a threatened stock transfer tax were imposed. If the major banks left lower Manhattan, the Stock Exchange would have added incentive to depart, and that, I felt, would have precipitated a general business diaspora, which would have been an economic and financial disaster for New York.
I persuaded Jack McCloy to hire a qualified outside firm to assess the business climate and potential downtown. This comprehensive review confirmed that the area was in the midst of a profound economic transition. The major shipping firms, long a mainstay of lower Manhattan, were moving to other cities, and other businesses were leaving for midtown Manhattan and New Jersey. Most financial institutions—banks, brokerage houses, and insurance companies—were feeling nervous and giving indications that they might follow their customers to other parts of the City or even out of state. Our consultants concurred with me that Chase should remain downtown but urged that we do so “in a sufficiently definitive and dramatic way that people would recognize it as a decisive move on our part.”
AN OPPORTUNITY WE COULDN’T REFUSE
The clinching factor in the decision to remain downtown turned out to be an opportunity we simply couldn’t refuse. I had been working with
Bill Zeckendorf, the flamboyant, larger-than-life real estate mogul who a decade earlier had sold my father the land on which the United Nations built its headquarters. Bill was an enormous man in all senses—three hundred pounds of energy and ideas—who operated from a round penthouse office in a building he owned on Madison Avenue in midtown. Bill and I had been exploring ways in which Chase could dispose of its scattered properties and find a single location for our new headquarters. Bill had already proposed a number of solutions, but none seemed workable. I became discouraged about the prospects of remaining downtown.
Then at seven o’clock one morning in late February 1955, Bill telephoned me at my home on 65th Street with urgent news. I was just finishing breakfast and about to grab the paper to head off for the subway. He said he would pick me up in his limousine so we could talk on the way to the bank.
Bill, who was familiar with every major real estate deal in New York, had just learned that the Guaranty Trust Company was about to sell a building it owned that occupied the block between the Federal Reserve Bank of New York and Chase’s main building on Pine Street. As soon as I settled in the back of his seven-passenger limousine, Bill sketched out his imaginative game plan. The first step would be for Chase to acquire the Guaranty Trust building. Then we would begin to acquire all the other buildings on the block east of our headquarters on Pine and at the same time sell our many properties dispersed throughout the Wall Street area. If everything went according to plan, we would then ask the City to give us permission to close Cedar Street between our two blocks so that we would have a large parcel—especially by Wall Street standards—on which to build a new headquarters. Bill pointed out that this was the last opportunity to assemble a space in lower Manhattan that would fit our needs. But we had to move quickly because he had learned the Guaranty Trust was closing the deal that very day. I was astonished by the audacity of his proposal, but he convinced me that we should do it. The question was whether we could persuade Jack and the Chase directors to move swiftly on the matter.
We arrived at Chase and rushed up to Jack’s office on the fourth floor. Jack was impressed by Bill’s presentation and immediately called the president of Guaranty Trust, who confirmed that the deal would be completed within a few hours. Jack was able to persuade him to delay the sale for twenty-four hours to give Chase a chance to make a counteroffer. Within a few hours Jack contacted Director Frederic W. Ecker, head of the Chase Real Estate Committee. Ecker, experienced in real estate matters, immediately saw the importance and desirability of the proposal and agreed that we should pursue it. The other members of the Real Estate Committee concurred with Ecker’s view, and the $4.4 million purchase was closed within a day of Bill Zeckendorf’s urgent call to me. Chase would remain downtown.
A DRAMATIC NEW BUILDING
Once Chase had acquired the land, we turned our attention to the kind of image we wanted to project and the kind of building that would be sufficiently striking to make the statement we needed to encourage others to remain in lower Manhattan.
I called Wallace K. Harrison for advice. He was the architect who had first come to prominence for his work on Rockefeller Center and later became a principal architect for both the United Nations and Lincoln Center. Wally had become a friend over the years, and in retrospect I’m a bit embarrassed because Wally could well have assumed that he was the best architect for the job. In any case, he graciously accepted my explanation that since we were such good friends, I wanted to select someone else to avoid the appearance of favoritism. Wally unhesitatingly recommended the firm of Skidmore, Owings & Merrill.
The Skidmore firm had come to prominence in the late 1940s with its innovative international-style designs. The most influential of these in New York was Lever House at Park Avenue and 53rd Street, which embraced the pure functional style that Mies van der Rohe and Le Corbusier had pioneered two decades earlier in Europe to take advantage of new construction materials such as aluminum and sheet glass and new technologies such as air-conditioning.
Another recent Skidmore building—a small branch bank for Manufacturers Trust on Fifth Avenue at 43rd Street—had attracted my attention. Completed in 1954, this small architectural gem created a sensation because it was such a departure from traditional bank buildings in both form and feeling; it was a simple glass box with an aluminum skeleton. The door to the giant vault—usually the sacred and secret core of the bank, hidden away in the bowels of the building—was visible from the street! But it was the light, almost ethereal quality of the building that caught everyone’s attention.
I contacted my friend Nathaniel (Nat) Owings, one of the founding partners of the firm, whom I had met while a student at the University of Chicago. I told him that we wanted to create a “statement building” to reflect the fact that Chase was a progressive institution, willing to blaze new trails in architecture that would symbolize dramatic changes in management style and culture. Nat and I spent many hours with Bill Zeckendorf discussing the two very different alternatives available to us: The first was to construct two separate conventional buildings on our two blocks. The second, the one Bill Zeckendorf had envisioned from the beginning, was to combine the two parcels by closing the section of Cedar Street between them and erecting one building—not another massive, hulking office building but a shimmering skyscraper set on a large open plaza. It would introduce a revolutionary new city planning concept to lower Manhattan.
The financial district at that time was a solid mass of buildings jammed along the narrow streets close to Trinity Church: Wall, Cedar, Pine, Nassau, and William. For more than a century this had been the most valuable real estate in the world, and when new structures were erected, the owners used every square inch permitted by the building code. The canyons of Wall Street may have been picturesque, but they also created a crowded, dark, and almost claustrophobic feeling at street level. The wind-tunnel effect could be ferocious as well, and hordes of dignified lawyers, bankers, and stockbrokers pursuing their escaping homburgs and derbies was a common sight on a blustery day.
Zoning laws now mandated that a new building had to fit within an “envelope” determined by its size and location on the block. This meant an office building had to be stepped back as it rose in height to let in more light and air into the streets below. The higher you went, the less usable space there would be. The result was inefficient and architecturally unappealing buildings. To encourage more open space, skyscrapers of any height were permitted as long as they occupied no more than 25 percent of a lot. No one on Wall Street had been bold enough to commission this type of building. They felt it wasted valuable land and cut down on the amount of usable building space.
Bill, Nat, and I were not convinced by these arguments. Nat assigned Gordon Bunshaft, the architect responsible for both Lever House and the Manufacturer’s branch, to the project. After studying a variety of possibilities, Gordon proposed a sixty-story rectangular tower with no setbacks on a large plaza. To maximize flexibility and efficiency, the building’s structural columns were placed outside the skin and inside around the elevator shafts. This provided each floor with a more uniform and unobstructed working space than traditional buildings provided. Gordon also intended to use modular construction, which allowed the installation of the electrical wiring and plumbing, heating, and air-conditioning ducts in a regular pattern in the floors and ceilings. This innovation, which has become the industry standard, would afford versatility in office layouts and make renovations quick and inexpensive.
Another ingenious aspect of Gordon’s design cleverly blunted potential criticism that too much valuable space would be lost by building on such a small portion of the land. The foundation for the building would be dug eighty-five feet below the surface to bedrock, allowing for an additional five floors—each with three times the work space of the tower floors—underneath the plaza. The main banking floor would be located underground and lit by natural light from an open-air sunken pool. Floors below that would contain a garage, audit
orium, cafeteria, the gigantic bank vault, and storage space.
Gordon’s design was the first head office of an American bank in the contemporary style and the first building in lower Manhattan surrounded by a large open plaza. This building would make the definitive statement that I thought essential.
Jack McCloy became an ardent supporter of the one-building approach. Fred Ecker, although in his eighties, also embraced Skidmore’s unconventional design. With those two powerful backers, we had little trouble, despite the grumblings of a few in the old guard, in getting the Bunshaft international-style design approved by the board of directors.
Now we needed the City to agree to close part of Cedar Street so we could build on the two-block parcel. The key to getting the plan approved was to have the support of Robert Moses, whom I had known since my days with La Guardia and more recently at the Morningside Heights project. I went to see Moses, who, among many other official positions, was the chairman of the City Planning Commission. Much to my relief, Bob proved to be an easy sale. He believed that a dramatic gesture was needed to save Wall Street, and he liked the concept of opening up more space and letting a little more light into the gloomy downtown streets. Once we had his okay, other needed approvals came easily. In exchange for the City’s yielding the land under Cedar Street, we agreed to widen all the sidewalks around the new One Chase Manhattan Plaza.
Soon after construction began, we turned our attention to interior decoration. Gordon noted that the new building would be cold and unappealing without special decoration. Neoclassical buildings, he pointed out, were embellished by columns, pediments, and ornamental sculpture, but none of these decorative elements could be incorporated into our building. He felt that Chase should consider buying contemporary works of art to enhance the public spaces inside the building.
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