In November 1961, Nelson announced that he and Tod had agreed to a divorce. For the family the announcement came as no surprise, but it was a painful time for us all. I have always identified it as the beginning of my disillusionment with Nelson, when the scales fell from my eyes and I no longer saw him as the hero who could do no wrong but as a man who was willing to sacrifice almost everything in the service of his enormous ambition. While I would continue to admire his great vision and capabilities and remained devoted to him to the end of his life, I would never again feel the unalloyed admiration of my youth.
Perhaps Peggy and I had been naive. It often happens that those who are closest are the last to find out. When we first heard about Nelson’s affair with Happy, we were shocked. Happy (her full name was Margaretta Fitler Murphy) and her husband, Robin Murphy, had been among our closest friends for many years.
Robin was the son of Dr. and Mrs. James Murphy, who had a summer home in Seal Harbor where they had long been good friends of my parents. Robin met Happy after the war, and they married in 1948, returning regularly to Seal Harbor in the summers; it was there that Peggy and I became friends with both of them. Robin crewed for us when we raced our international-class sloop in races of the Northeast Harbor Fleet, our local yacht club, and the four of us often cruised the coast of Maine in the Jack Tar.
I helped Robin secure a position as a biomedical researcher at the Rockefeller Institute, and he and Happy moved into a town house directly behind ours on 65th Street. We, along with Nelson, encouraged Father to sell them property owned near the Pocantico estate when they wanted to build a weekend country home. Father rarely sold Pocantico land to anyone outside the family, but he was as fond of them as we were. At the time I thought Nelson was supportive simply because he thought Robin and Happy would be nice neighbors. Later on I learned that Nelson had played an important role in encouraging Father to make the sale.
I have no idea how long the affair had been going on, but while Father was alive, Nelson did not show his hand. After Father’s death, Nelson was liberated from many restraints and free to be himself. He decided before long to follow his strong impulse to divorce Tod and marry Happy.
STRAINED RELATIONS
Of the six siblings only Laurance attended Nelson’s second wedding in May 1963. Sensing our feelings, Nelson had not invited any of the rest of us. He had not only torn apart his own family, he had broken up the marriage of two of our close friends. Happy continued to circulate around our lives in Pocantico and in Maine, but for many years Peggy and I could no longer feel the same affection for her. Time is a great healer of wounds, however, and over the years my friendship with Happy has been restored; today she and her sons, Nelson, Jr., and Mark, are active members of the family.
Robin felt badly burned and would have nothing more to do with any of our family. Peggy and I attended his second wedding a few years later in an effort to keep in touch with him, but basically he vanished from our lives.
Tod had been my friend ever since our trip to Egypt in 1929, during which I pretended to propose to her on Nelson’s behalf. Peggy and I considered her part of our family and had no intention of cutting her off. But matters were not made any easier for Tod by Nelson’s choice of living arrangements. He divided their thirty-two-room duplex apartment on Fifth Avenue in two; Tod lived on one floor, and Nelson and Happy on the other. While they had separate entrances, it was not a comfortable situation for anyone.
Soon after the divorce Nelson and I had our first serious confrontation. My brothers and I did not object when Nelson told us he wanted to move into Kykuit once Martha indicated she didn’t wish to live there after Father’s death. The four of us—Babs and Win were not involved—owned Kykuit jointly, but John, Laurance, and I were comfortably settled in our own homes nearby and not interested in moving. Kykuit’s formal decor and stately setting were more suited to Nelson’s needs as governor.
The problem arose over the furnishings, which Father and Mother had left jointly to the four of us. Nelson took it for granted that despite the terms of Father’s will, John, Laurance, and I would leave all the furnishings and art in place as long as he was living there. I told him that I could readily understand his desire to keep most of the furnishings and I had no thought of taking a great deal, but Peggy and I were particularly fond of several objects and would like to have them for our home. I suggested we follow the same lottery system that we had used in distributing the Eyrie furnishings, but in this case it seemed likely that little would be taken by his three brothers as long as he was living there.
Nelson found my suggestion unacceptable and became absolutely livid, angrier than I had ever seen him. He couldn’t believe that I would challenge him. He said that as governor he needed Kykuit to entertain and that he wanted it left unchanged. Nelson claimed that his public service was in the family’s best interest, and for that reason it was essential to allow him to keep Kykuit intact. I was in no mood to give in. In the end the law was on my side, and there was nothing he could do but conform to the terms of Father’s will. He conceded and said each of us should take what we wanted without a formal selection procedure. Typically, once he had lost the battle, Nelson accepted the decision, and it was never mentioned again. He never carried a grudge.
THE CONSUMMATE CAMPAIGNER
Nelson’s political career proceeded apace, as did his need for money to sustain it. In 1962, Nelson defeated Robert Morgenthau, then and now the U.S. Attorney for the Southern District of New York, decisively winning a second term as governor. In 1964 he entered the Republican presidential primary but was swept away by the conservative Barry Goldwater tide. In 1966 he narrowly won a hard-fought campaign for reelection as governor. Nelson made one final try for the presidency in 1968. Although Richard Nixon had a clear lead in the polls and among delegates to the nominating convention, a number of moderate and liberal Republicans, led by Spiro Agnew, urged Nelson to enter the race. In mid-March, after months of vacillating, Nelson seemed to have reached a decision. He had to enter the race immediately if he wanted to demonstrate his popularity in the West Coast primaries.
I had lunch with Nelson at Kykuit at the time and discussed the pros and cons of his entering the race. Nelson knew that right-wing Republicans would violently disrupt his campaign, as they had in 1964. Happy was also deeply disturbed by this possibility, a fact that weighed heavily on his mind. Despite this, and because I knew this would be his last real chance at the presidency, I encouraged him to become a candidate, and by the end of our conversation he told me he was determined to go forward.
He then scheduled a press conference a few days later to make the announcement. But an hour or two before he was to appear, Nelson reached me by telephone in my car as I was making customer calls to tell me that he had changed his mind. His announcement bitterly disappointed and disillusioned his supporters and wrapped up the nomination for Nixon.
I thought Nelson had made a serious miscalculation. The year 1968 was a volatile one, and I think Nelson seriously underestimated his national support, a point underlined when President Lyndon Johnson announced that he would not seek reelection. The disarray in the Democratic Party over the Vietnam War coupled with the surprising strength of George Wallace among conservative voters meant the political center, where national elections are won or lost, was up for grabs. But timing in politics is the most important factor, and when Nelson changed his mind yet again and entered the race at the end of April, it was much too late. Most people saw him as an opportunist and not a politician with a credible set of ideas. His last chance to be elected president effectively came to an end on that day in March when he had failed to rise to the challenge.
Between 1958 and 1970, Nelson ran for office every two years—a total of seven campaigns. The financial cost to him was high, almost ruinously so. I was never a major contributor to his campaigns, and he never pressed me for support. That changed as Nelson’s financial situation grew more and more precarious in the mid-1960s. In 1967 he a
sked me to buy his share in our Brazilian ranch, Fazenda Bodoquena, as a means of generating additional campaign funds. Actually, he didn’t ask, he demanded. Nelson insisted I pay him $2 million for his share.
Lindy Lindquist felt Nelson’s asking price was substantially more than its market value. When I informed Nelson of this, he again became furious. “I have drawn down from the ’34 Trust all that they [the trustees] will let me have,” he said. “I don’t have any other source of funds.” When he was in such a mood, he became very tough and cold. I was ungrateful, he said, given all he had done for me, particularly persuading Father to sell us Rockefeller Center.
I wrote him that I appreciated all he had done for us in the past, but I resented “that on more than one occasion you have chosen to use this as a lever to achieve objectives of your own.” While I agreed to the price he wanted, I insisted that he agree in the future “in any negotiations we might have of a financial nature or otherwise to deal on the basis of the facts at hand without reference to past considerations.” I advised him to remember that “in other ways, at different times, other members of the family have contributed to the common good, sometimes specifically in assisting you in causes of vital interest to you. This is all natural and as it should be. Perhaps the balance of contributions to the family as a whole is still weighted in your favor. I would not wish to argue to the contrary. But I regret on more than one occasion you have chosen to use this as a lever to achieve objectives of your own.”
LARGER THAN LIFE
Even though Nelson’s personal behavior could often be very highhanded, I never lost sight of his enormous talents as a public servant. He had a sure touch and a considerable understanding of public needs. He was utterly self-confident and relished the life of a politician—stumping the state, speaking in every Elks Club he could find, and kissing every baby within reach. He was one of the first politicians to make effective use of television, conducting televised “town meetings,” much like contemporary politicians, moderating them himself and tussling skillfully with the audience. He could broker a deal behind closed doors, knock heads together, and forge a compromise better than any union boss. He had as much love for the game of politics as any ward politician, and just as much charm—something I was just as susceptible to as the average voter.
I remember in particular one Wall Street rally during the 1970 gubernatorial campaign. It wasn’t that common for me to become publicly involved in Nelson’s campaigns, but when he came to “my territory,” I felt a brotherly obligation to appear with him. After I made a few brief remarks, Nelson strode across the stage, his grin enveloping his face, and lifted my arm in the air, eliciting cheers from the crowd. A photograph perfectly captures Nelson’s exuberance and its effect on those around him, including me. I’m not normally inclined to make expansive public gestures, but in the photograph I’m grinning as broadly as he, loving it just as much because I, too, was affected by his charisma.
Nelson taught me invaluable lessons about people and the way the world works. There was a greatness to him that enveloped those around him, and they honestly loved him for it. He loved to give pleasure to others, and he was warmed by their gratitude. He taught me to loosen up, to enjoy, to take pleasure in the “great game” of life. And if my brother sometimes played that game with too much abandon, he helped me play it more ardently and with greater zest.
*At the dedication ceremony in 1963, Chagall told me that apart from Matisse’s Rose Window, the eight nave windows were not of very high quality. Could anything be done about that? he asked. I replied that it certainly could—if he would be willing to do the others. Chagall agreed and suggested the Old Testament prophets as his central theme. Chagall designed one window in memory of Michael Rockefeller, Nelson’s son who had died in Papua New Guinea in 1961, using the text from John’s Gospel, “Seek and ye shall find.” After Nelson’s death the “Joel” window was dedicated to him. In June 1997 the congregation consecrated the “Ezekiel” window in memory of my wife, Peggy.
CHAPTER 15
CREATING A GLOBAL BANK
As the Chase’s president and co–chief executive officer, I was responsible for directing the bank’s strategic planning, modernizing our management structure, and overseeing our domestic and foreign expansion. I suspect that George Champion hoped I would busy myself with planning exercises, organizational charts, personnel seminars, and filling One Chase Plaza with art he disliked, leaving the management of the bank to him. While I did pay a great deal of attention to improving Chase’s corporate structure and the quality and diversity of our personnel, I focused principally on internationalizing the bank, a course that George and others sharply opposed. Their opposition to my efforts to broaden the bank’s foreign business undoubtedly would have continued throughout the 1960s had there not been two fundamental changes in the global banking environment that literally forced Chase onto the international stage.
PAYING FOR DEPOSITS
The first change involved the cost and availability of funds—the lifeblood of banking. Beginning in the 1930s the Federal Reserve had strictly regulated the amount of interest commercial banks could pay on time deposits and prohibited the payment of interest on demand deposits, which then became the primary source of funds used for lending. Thus, the vast bulk of our lendable funds cost us very little and increased bank earnings. In the late 1950s, however, this system began to change as the United States entered a period of economic expansion, which was accompanied by a dramatic increase in the demand for credit. Neither Chase nor the other commercial banks could sustain the growth in deposits necessary to keep pace with the surge in demand for loans. As bank credit became less available, corporations turned to non-bank financial sources, such as insurance companies, and began to issue their own commercial paper. Banks reacted to this competitive threat by purchasing additional funds in the market—largely by means of a recently developed financial instrument called the “negotiable certificate of deposit” and by entering the “Eurodollar” market.
Certificates of deposit (CDs) are time deposits on which a bank has agreed to pay a fixed amount of interest for a specific period of time. In 1961, in an effort to make CDs more attractive to corporations, the major New York banks, with City Bank taking the lead, issued these traditional bank instruments in negotiable form. As an added inducement, banks created a secondary market so that investors could sell their CDs for cash. In short, corporations could earn interest on their working capital while retaining full liquidity. Banks gained access to a new source of lendable funds, but only at a substantial new cost.
During this same period American banks also began to enter the market for Eurodollars (U.S. dollars that circulate outside the United States) in search of additional lendable funds. Since Eurodollars were not subject to Federal Reserve regulations on interest rates or reserve requirements, American banks took advantage of this new source of “unregulated” deposits for lending overseas. Banks could borrow more favorably, and depositors could obtain better rates on their money.
While the emergence of CDs and Eurodollars solved the “availability of funds” problem, we now had to pay interest on a much larger portion of our lendable funds. As a consequence CDs had a negative effect on bank profits. Since we could not pass on to our customers the full cost of the higher interest rates we now paid for lendable funds, we were caught in a profit squeeze. This fundamentally transformed the role of commercial banks in the United States—away from their historical role as the prime lenders of funds to corporate America and toward becoming brokers of loans and sellers of fee-based services. Consequently, banks had to look beyond the United States for additional sources of income.
THE EMERGENCE OF MULTINATIONALS
A second fundamental change—the expansion of the world’s major corporations beyond their national borders—put even more pressure on banks to expand overseas. Many U.S. corporations were building production and sales facilities in Europe and Latin America, and wanted their U.S. bank
to be there with them. At the same time many European and a few Japanese companies extended their operations into the United States and were competing for markets in Asia, Africa, and Latin America. In order to satisfy the needs of both American and foreign multinationals, commercial banks had no alternative but to provide a full range of banking products and services overseas as well as at home.
Competition among U.S. and foreign banks for this new multinational business was intense. If Chase wanted to maintain its leadership position at home, it had to compete overseas for the business of foreign corporations even if this alienated our foreign correspondent banks, as the old guard predicted. But gradually the need for fundamental policy changes that allowed us to lend to foreign corporations and implement a strategic program of global expansion became more widely accepted in the bank. This change in attitude strengthened my hand in dealing with George Champion.
MIXING BUSINESS WITH FRIENDSHIP
Establishing contact with key local businessmen and government officials in the countries where we wished to do business was a sine qua non if Chase was to build an effective international presence. And that meant my foreign travels assumed an added importance.
During my thirty-five years at Chase I visited 103 countries; this included forty-one trips to France, thirty-seven to England, twenty-four to West Germany, fifteen to Japan, fourteen each to Egypt and Brazil, and three extensive tours of sub-Saharan Africa. At home I called on bank customers in forty-two of the fifty states. I logged more than 5 million air miles (the equivalent of two hundred round-the-world trips), ate approximately ten thousand business meals (more if you count the ones that I consumed in New York), and participated in thousands of customer calls and client meetings—as many as eight to ten a day when we were on the road. I also met more than two hundred heads of state and government, many of whom I got to know on a personal basis. Though at times the pace was a bit hectic, I found these trips productive and enjoyable, and essential to the globalization of our operations. Fortunately, I was blessed with the Rockefeller traits of energy, stamina, and good health!
Memoirs Page 25