NELSON’S REVENGE
Death does not always soothe passions or put an end to hostilities. Ironically, John’s death actually reignited them. Nelson learned that John’s will did not include the $5 million provision for Pocantico; he was beside himself. As the pertinent provisions were read to us, I could see Nelson’s eyes harden with anger. It made no difference to Nelson that John had finally included the $5 million in his will; all that counted was his failure to have signed it. As far as Nelson was concerned, Johnnie had double-crossed him, and he wasn’t going to put up with it.
Nelson promptly summoned his lawyers and rewrote his will, removing the $5 million for the Pocantico endowment, leaving his share of the open spaces to Happy, and bequeathing his portion of the historic area specifically to the National Trust for Historic Preservation. He provided his executors with no flexibility to modify these provisions in the event of his death.
Nelson did not inform either Laurance or me about these changes until almost six months later, in December 1978. At that time he called us to his office and informed us that if we wanted to proceed with the Pocantico plan as originally negotiated, we would have to buy his portion of the open spaces from Happy after his death. I was outraged and told Nelson so. Nelson retreated a bit when he saw how angry I was. He said his will was not final, and he hoped we would be able to get things back on track. But it wouldn’t turn out that way.
When I asked him why he had made these changes, Nelson explained that Carl Humelsine, the head of the National Trust for Historic Preservation, had assured him the trust, by congressional action, would be the recipient of millions of dollars from the sale of offshore oil leases and would easily be able to develop and maintain Kykuit for historic preservation and public visitation; therefore, none of us would have to put up any of our own money for the endowment.
I shook my head in disbelief. Nelson knew enough about the promises of politicians (he had made a number of them himself) to know that such things are subject to change—as, sure enough, they were. The legislation appropriating these funds did not pass Congress. Nevertheless, motivated by a desire to strike back at John and show who was in command, Nelson did not change this provision in his will and provided his executors with no discretion in the matter. His will automatically transferred his interest in the historic area to the National Trust. Nelson’s final gesture would cost me, and to a lesser degree Laurance, many millions of dollars and even more headaches over the next fifteen years.
NELSON’S FINAL MONTHS
As Nelson’s drive to take over the Family Office and the RBF was thwarted, he drew back from family affairs. He devoted his time instead to two colorful new enterprises.
The first was a company that made reproductions of objects in his personal art collection and sold them to the public. In some ways this was quite appropriate since Nelson’s greatest hobby and form of relaxation was collecting art. Nelson had come across an amazingly accurate process for reproducing art and speculated that there might be a fairly large market for high-quality reproductions—especially if his name was linked to them. To that end he reproduced many of his finest works and sold them from a shop that he leased on 57th Street in Manhattan and through Neiman-Marcus stores. Although the company soon began to show a modest profit, most of us in the family, with the exception of my wife Peggy, looked on the idea with considerable skepticism.
The second project was even more ambitious. Together with George Woods, a former president of the World Bank, Nelson formed the Saudi Arabian–American Corporation (Sarabam). In partnership with a few prominent Saudi businessmen, Woods and Nelson planned to use Saudi oil revenues and American managerial expertise to carry out social and economic development projects in the Middle East. They hoped to persuade the Saudi government and a few other Arab producers to invest a billion dollars of their surplus funds and then give the partners 50 percent of the profits for managing it. While directing Arab oil money into more productive uses than bank CDs and government bonds certainly made sense, it was naive to think that Arab governments would put up all the money and then share evenly in the profits with Nelson and his partners. It was a grandiose scheme, characteristic of Nelson, but I wasn’t surprised when the Saudis backed out.
Nelson always wanted to make money, and he greatly respected those who were successful in business. It was largely for that reason that he and Peggy had a rapprochement. One Sunday at lunch Peggy told him she had sold one of her prize Simmenthal bulls for a million dollars. One could see Nelson’s expression change at the news; he looked at Peggy with a newfound respect and was exceedingly interested in all the details of her business. It was curious that after all the years of a respectful but formal relationship, Peggy became the person in the family with whom Nelson felt most comfortable.
In the final months of his life Nelson struck me as a very unhappy man. He was fatalistic about many things and seemed to have lost the will to live. He had heart problems, but he never told Happy and refused to see a heart specialist. He consulted only Dr. Riland, who would put him on his table to manipulate his back and limbs three times a week. In mid-January 1979 I left on a Chase trip to the Middle East. Before departing I called Nelson, and I remember thinking at the time that he was warmer and more solicitous than he was wont to be when I was just going on a trip, which, after all, was a frequent occurrence for both of us. I remember wondering if I would ever see him again. It was, in fact, the last time we ever spoke.
THE DEATH OF NELSON
I was in the Sultan of Oman’s anteroom in Muscat when I learned Nelson had died. I was shocked, but I felt it only courteous to see Sultan Qabus briefly. He expressed his sympathy in the warmest terms and even offered to have me flown back to New York in his own 747. Although grateful for his offer, I returned on the Chase plane. When we touched down at the White Plains airport, Peggy was waiting on the tarmac. She took me aside to tell me the circumstances surrounding Nelson’s death, all of which would soon appear in the papers. It was a sad ending for a man whose career had been so distinguished. But with the passage of time, memory of this unfortunate episode has faded, and Nelson’s extraordinary accomplishments have been properly recognized and understood.
From the time he was a teenager Nelson seemed to know what he wanted to do in life and how to get there. While he greatly admired both of our grandfathers, politics—Grandfather Aldrich’s calling—intrigued him the most. And once embarked on that course, Nelson set his sights even more firmly on the ultimate position of power: the presidency of the United States. He understood that leadership within the family would be critical to his plans. After graduating from Dartmouth he played active roles with Mother at the Museum of Modern Art, and with Father in building Rockefeller Center. Nelson was also the driving force in organizing his brothers into a cohesive unit.
From the time of his service as President Roosevelt’s Coordinator of the Office of Inter-American Affairs, Nelson demonstrated the qualities that would become legendary: hard work, great ingenuity, and personal magnetism. He learned to speak Spanish fluently and could even hold his own in Portuguese. Nelson became an expert on the politics and security needs of the region, and earned the lasting friendship and admiration of many Latin American leaders. Indeed, in many countries he was looked upon as a hero.
After the war Nelson worked briefly for President Truman, served as the first deputy secretary of the Department of Health, Education and Welfare, and finally as a special assistant to President Eisenhower. Through it all Nelson proved himself to be an able administrator and an innovative policy maker on both domestic and international issues.
His greatest public contributions, however, were made during his four terms as governor of New York. He believed, as did I, that government had an essential role to play in creating a more humane and progressive society. Although a Republican, Nelson established close and enduring ties with organized labor and minority groups. Never one to let tradition stand in his way, Nelson transformed the nature an
d function of New York State’s government by reforming its structure and infusing it with a spirit of change and innovation. Among his many accomplishments was the development of the state’s system of higher education, a dramatic expansion of its parks, and a thorough revision of its system of taxation. Under Nelson, New York became a model of progressive state government.
Nelson hoped to translate his successes in New York into enduring national power. But in this he failed. He was never quite at home in the National Republican Party. He was also considered too liberal on social issues for the emerging conservative wing of the party. To this day “Rockefeller Republicans” are anathema to staunch right-wingers. Finally, Nelson’s divorce from Tod and marriage to Happy set him back both in the party and in the polls, and he never recovered.
Nelson was a strong, creative leader and one of the most effective American politicians and administrators of the twentieth century. He was also one of the few visionary international statesmen that our country has produced. He would have been a magnificent president.
*Years later at a public dinner I attended in New York, Ford acknowledged that dropping Nelson from the ticket was one of the biggest mistakes of his political career and that in his opinion Nelson’s presence would have made the difference in his winning the 1976 election.
CHAPTER 24
THE SHAH
It is ironic that of all the people I have known during my life, the only nonfamily member to whom I feel compelled to devote a chapter in these memoirs is the Shah of Iran. While I admired the Shah, he and I were little more than acquaintances. We had a cordial but formal relationship; he addressed me as “Mr. Rockefeller,” and I addressed him as “Your Imperial Majesty.” The primary topic in all our meetings was business. I felt my having contact with the Shah would enhance Chase’s stature with the government of Iran; the Shah saw Chase as a financial resource that was useful in his efforts to quicken his country’s economic growth and improve its social well-being. In fact, my relationship with the Shah was similar to those I had with most national leaders in countries where Chase operated.
My association with the Shah became the subject of intense public scrutiny only after the seizure of the American embassy in Tehran in November 1979. As the “hostage crisis” unfolded, the search for scapegoats to blame for the debacle began. Media reports about my alleged role in “forcing” President Jimmy Carter to allow the Shah to enter the United States for medical treatment in October 1979 provided the American public with an inaccurate picture of my relationship with the Shah and his regime.
The media, learning that Henry Kissinger and I, along with a few others, had helped the Shah find sanctuary, first in the Bahamas and then in Mexico, concluded we had “pressured” the President to allow him into the United States. “For eight months,” Bernard Gwertzman would write on the front page of the November 18, 1979, New York Times, “Mr. Carter and Mr. Vance had resisted intense lobbying from American friends of the Shah, such as David Rockefeller, the Shah’s banker, and former Secretary of State Henry Kissinger, to stop treating the deposed ruler like, in Henry Kissinger’s words, ‘a flying “Dutchman” unable to find a safe haven.’ ” Others would claim my motive was greed—the desire to retain the “Shah’s billions of dollars” for the Chase.
Actually, I had no contact with the Shah until two and a half months after he was forced to leave Iran, and then only because the Carter administration had seemingly turned its back on him. Several months later when I learned the Shah had cancer, I informed the Carter administration of this fact, but my communications with the U.S. government were brief and formal.
Until now I have never provided the full story of my involvement in this controversial episode.
MOHAMMAD REZA PAHLAVI
Mohammad Reza Pahlavi owed his seat on the Peacock Throne to foreign intervention during World War II, and for the next four turbulent decades Iran’s enormous oil reserves and proximity to the Soviet Union ensured that it would be in the interest of the Western powers to keep him there. For the first three decades of the Shah’s reign, Great Britain exercised predominant political and economic influence in Iran, as it had for more than a century throughout the Persian Gulf. This changed in 1968 when Prime Minister Harold Wilson announced his country would withdraw its military forces from east of Suez by early 1971. The task of containing the Soviet Union and protecting the vital oil reserves of the region now devolved on the United States.
The Nixon Doctrine, which called for smaller regional powers supported and supplied by the United States to carry the burden of defense against Communist expansion around the world, became the controlling policy, and in the Persian Gulf the “twin pillars” would be Saudi Arabia and Iran.
The Shah took action to bolster his own position. He systematically eliminated political opposition and centralized control of Iran’s economic affairs in his own hands. The Shah sought to transform his traditionalist Islamic society by introducing a public health system, establishing public schools throughout the country and making education compulsory for women as well as men, and instituting universal suffrage, giving women the right to vote for the first time.
The Shah’s modernizing reforms met strong opposition from Muslim clerics and the bazaar merchants. They inveighed constantly against what they saw as the degradation of Iran’s Islamic culture through the effects of westernization and prosperity: the short skirts, jeans, movies, and discotheques.
In the early 1970s when huge amounts of oil revenue flooded into Iran, the Shah poured money into infrastructure: roads, ports, airfields, electrification, hospitals, and schools. And he emphasized the diversification of industry, producing an enviable economic growth rate that was unparalleled in any other country at that time, at least for a few years.
While the Shah did much to transform Iran into a modern state, there was a dark side to his regime. SAVAK, the secret police, repressed those who opposed the regime or simply demanded a more democratic political order. Over time he became more and more isolated from the realities of life in his own country, and his regime became increasingly inflexible and repressive. Therein lay the seeds of his demise.
MEETING ON THE SLOPES
Prior to the 1970s my contacts with the Shah were confined to two brief meetings: an audience in Tehran in 1965 and a dinner in 1968 when Harvard awarded him an honorary degree. Chase, on the other hand, had long maintained strong correspondent relationships with the Bank Markazi, Iran’s central bank; the Bank Melli, the largest commercial bank; and a dozen other commercial banks. More important, by the mid-1970s we had become the lead bank for the National Iranian Oil Company (NIOC), the state-owned corporation that dominated the country’s economy. We had even been able to briefly penetrate Iran’s highly protected domestic banking system by setting up a development bank there in partnership with Lazard Frères in 1957. However, the Iranian government subsequently restricted both our ownership percentage and the operations of the institution, snuffing out a promising opportunity.
For the next decade I looked for a way to establish a direct commercial banking presence in Iran, but with no success. A realistic opportunity finally emerged in the early 1970s, for which we needed the permission of the Shah to proceed.
In January 1974, only a few months after the first “oil shock,” I stopped off to see the Shah in Saint-Moritz with some Chase associates and my son Richard. We were on our way to the Middle East and had learned the Shah was skiing in Switzerland. Richard took notes of the meeting, which lasted nearly two hours and covered many subjects.
The Shah believed the price of oil should be determined by the cost of extracting oil from shale, a price even higher than the one artificially imposed by the OPEC cartel. He pointed out that petroleum was a nonrenewable resource that would be depleted within a finite number of years; therefore, a high price would be good because it would force the world to develop new sources of energy. Oil’s most valuable use, he said, was for petrochemicals, and we should use other en
ergy sources for fuel. He insisted that high oil prices were a favor, not a disservice, to the industrial world.
The Shah envisioned a golden future for his country as a result of higher oil prices. Iran, he assured us, would become an industrial power and, within twenty-five years, one of the top five economies in the world, alongside the United States, Russia, China, and Brazil. He claimed incorrectly, but I did not challenge him, that Tehran had already replaced Beirut as the financial center of the Middle East and that before long it would rival both London and New York.
Our two-hour conversation—the longest I would ever have with him—touched on many topics, from Soviet designs on Iran to President Nixon and his Watergate troubles. Henry Kissinger had told me the Shah was an exceptionally able man with a strong grasp of international affairs. I certainly found this to be the case, but there was also an arrogance that underlay his pronouncements on many of these issues; they lacked plausibility and betrayed an alarming isolation from political and economic reality.
The Shah seemed to think that because he believed something, it was automatically a fact. The term hubris occurred to me as I sat listening to him outline his startling vision of an imperial Iran reclaiming the ancient domain of the Medes and the Persians. He seemed unconcerned about the havoc the oil price increases had already caused in the global economy, let alone what his extravagant proposals would generate.
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