Memoirs

by David Rockefeller

  While development pressure in farming communities has continued to intensify, the AFT has made a significant difference in protecting vulnerable areas across the nation. Nineteen states now have easement purchase programs, and hundreds of localities have imposed agricultural conservation zoning ordinances or created land trusts and other creative programs to enable farmers to remain on the land.

  By the early 1980s, Peggy and I had developed different interests, all time-consuming and with little overlap among them. This might have caused the two of us to gradually drift apart—leading separate lives and seeing less and less of each other. We had both seen it happen to close friends and family members, but we did not let it happen to us. We made a conscious effort to understand each other and support each other’s interests and activities. Since we also had many interests in common, there was a fortunate balance in our lives. I was happy to provide financial support for her organizations, and she was helpful to me with the ones of my special interest. Our partnership was enduring and endearing, and Peggy was the perfect partner.

  GOVERNMENT

  I suspect my relationship with Peggy would have been threatened had I pursued any of the opportunities I had to enter politics. As it was, my career at Chase required extensive travel, attendance at many public functions, and enormous amounts of entertaining. Peggy was often at my side for these events, but it was not something she enjoyed. The even more onerous obligations of a political career might well have been more than she could accept. I am glad I did not put the issue to a test, but I did pass up some fascinating opportunities.

  The most unusual was Nelson’s offer to appoint me to Robert F. Kennedy’s United States Senate seat after Kennedy’s assassination in June 1968. To this day I have no idea whether Nelson was serious, since he also asked a number of other people, including my brother John and my nephew Jay Rockefeller. While I was certainly tempted, I recalled how President Kennedy had been criticized for choosing Bobby Kennedy as attorney general in 1960, and was not eager to be subjected to charges of nepotism, so I declined Nelson’s offer.

  I also had to decline the cabinet-level appointments that were offered to me during the 1960s and 1970s. Richard Nixon made two of them. The first was in November 1968 as the president-elect assembled his cabinet. Nelson told me that Nixon wanted me as his Secretary of the Treasury. I told Nelson I preferred not to be considered because I had just been elected chairman of the Chase and could not in good conscience step aside at that critical moment. Nelson passed along my decision to Nixon and his advisors.

  A few days later I made a courtesy call on the new president at the Pierre Hotel in New York. John Mitchell, the attorney general–designate, whom I had known for many years, and Bryce Harlow, Nixon’s chief political advisor, were also present. Although we spoke for almost two hours and the conversation ranged across many topics, including relations with the Soviet Union and measures to control inflation domestically, I found it surprising that Nixon never mentioned or even obliquely referred to the Treasury position. He disliked being turned down, and I suspect this was his way of showing his displeasure.

  Five years later Nixon more formally offered me the Treasury post. In late January 1974, in the midst of the first Arab oil embargo and as the Watergate scandal entered its penultimate phase, I was on a bank trip in the Middle East. I had just arrived in Kuwait and was about to leave for an audience with the emir when I received a phone call from General Alexander Haig, then an assistant to President Nixon. Haig informed me that George Shultz was stepping down as Secretary of the Treasury, and Nixon wanted me to be his successor. The General asked me to return immediately to Washington to meet with the president. I told him that I was only at the midpoint of my trip and still had scheduled engagements with senior government leaders in Saudi Arabia, the Persian Gulf states, and Israel, as well as a critical meeting in Cairo with Anwar Sadat. In light of this, I explained, it would be awkward to cut short my trip. Haig was insistent, emphasizing that Nixon himself had made the request. I assured him I would come to Washington immediately after returning to the United States.

  The morning after I returned from Cairo in early February, I flew to Washington to discuss the appointment with Haig. It was clear from our conversation that if I accepted, I would be expected to carry out the President’s commands and that my own input on the development of policy would be limited. A few years earlier, in a futile effort to wring inflation out of the economy, Nixon had imposed wage and price controls, and I sensed there would be more of that kind of thing in the offing. Since my own inclination was to allow the markets to have freer rein, I wondered what role I could honestly play as a member of Nixon’s cabinet.

  With all the serious economic problems looming on the horizon—worsening inflation, flagging productivity growth, a widening current account deficit in our foreign trade, and the oil crisis itself—tough measures would be required. I felt it would be awkward, at best, for a Rockefeller to impose these measures on a reluctant public and that I might well end up a scapegoat for unpopular policies. Furthermore, since the Chase was itself confronting a number of challenges, I questioned whether it would be right to leave at that critical time. All things considered, I respectfully declined the President’s offer. A few days later William Simon, formerly Treasury undersecretary, who was serving as the “Energy Czar,” was appointed Shultz’s successor.

  While political considerations had a great deal to do with my declining these offers (as was also the case when President Carter talked to me about both Treasury and the chairmanship of the Federal Reserve in the summer of 1979), so did my commitment to the bank. It wasn’t just a convenient excuse. I felt an intense loyalty to Chase and a sense of obligation to those I worked with and for. Furthermore, I thoroughly enjoyed my job and believed I would be able to accomplish much that would benefit the United States as an “ambassador without portfolio.”

  During my years at the bank I regularly met senior political leaders in the countries I visited on behalf of the bank. Perhaps for that reason the State Department and occasionally the President asked me to perform official or semiofficial missions on their behalf. For example, I helped maintain a back channel to the Wojciech Jaruszelki government after the suppression of Lech Walesa’s Solidarity Movement in Poland; and in early 1981, at the request of President Ronald Reagan, I rallied the American business community to support the newly elected conservative government of Edward Seaga in Jamaica.

  During my years at Chase there were many who claimed these activities were inappropriate and interfered with my bank responsibilities. I couldn’t disagree more. My activities resulted in establishing better relations with foreign governments as well as forging strong public-private partnerships within the United States. Moreover, my so-called outside activities were of considerable benefit to the bank both financially and in terms of its prestige around the world.

  I have never been particularly dogmatic in my political or economic beliefs. Rather, I have supported effective people and backed practical policies. It is clear to me that both government and the private sector have important roles to play in fostering economic growth and providing a more secure and prosperous society both in the United States and around the world. Relying on either government or the market alone to solve all problems and cure all ills has always seemed to me to be more doctrinaire than realistic. Government should set and enforce the rules, but implementation should be left to the private sector. The best results occur when there is close cooperation between the two.

  PHILANTHROPY

  One of Father’s favorite New Testament stories was the parable of the Good Samaritan. Most people are familiar with the story of the man who is attacked on a lonely road, beaten, robbed, and left for dead. Other travelers pass him by until a Samaritan—a member of a group considered, during biblical times, to be untrustworthy and dangerous—stops to help and saves his life. Who is your neighbor? What are your obligations to him? That is the point of the story. To Father the
moral was clear: Everyone is your neighbor. He would emphasize that point over and over again at our prayer sessions before breakfast each morning when we were children: You must love your neighbor as yourself. The story of the Good Samaritan—it was the theme that Marc Chagall chose for the window memorializing Father at Union Church in Pocantico Hills—epitomized Father’s life and inspired his philanthropy. For him philanthropy was about being a good neighbor.

  Father, drawing on Grandfather’s earlier actions, established a powerful example for all members of the Rockefeller family, including me. In addition to donating most of his personal fortune to charity, he also demonstrated that philanthropy—the “third sector”—could play a seminal role in helping society find solutions to its most pervasive and persistent problems and serve as a valuable bridge between the private and public sectors. In my opinion, that is his most important legacy.

  I have tried to emulate Father by contributing to a variety of not-for-profit organizations throughout my life. I have also been closely associated with The Rockefeller University for more than sixty years, an involvement that has given me intense satisfaction.

  The university’s mission—“to benefit humankind throughout the world”—was an ambitious goal, reflecting the depth of Grandfather’s and Father’s concerns that their wealth be used wisely. They recognized that progress in public health was critically dependent on scientific advances in the understanding of the human body and the nature of disease. And to accomplish this, Father and his associates assembled the most outstanding scientists working in the fields of physiology, anatomy, biology, and medicine, and provided them with the best facilities and equipment, insisting they be totally free from outside pressures or influence in their work.

  The university has been in the vanguard of the scientific revolutions that have swept through the life sciences during the course of the twentieth century. The discipline of cell biology was born in its laboratories; it was here that Peyton Rous first demonstrated that viruses cause cancer; and it was where some of the mysteries of the structure of DNA’s double helix began to be unraveled. Today the university’s eighty laboratories, each headed by a senior scientist, have come a long way from the half-dozen that were operating there a century ago. Molecular geneticists, theoretical physicists, neuroscientists, immunologists, molecular biochemists, biophysicists, and many other scientists use the most advanced technologies—the latest generation of magnetic resonant imagers and high-speed computers among them—to constantly push back the frontiers of human knowledge. They have contributed to our increased knowledge of cellular functions, helped map the human genome, and charted the underlying chemistry of human life—work that holds promise for not only the defeat of mankind’s most ancient enemies but the extension of life itself.

  The Rockefeller University continues to rank as one of the half-dozen leading medical research institutions in the world, and twenty-one Nobel Prize winners have served on its faculty over the years. My family’s support for the university over more than a century illustrates how individuals with substantial financial resources can promote and enhance the general welfare and advancement of society through regular and generous philanthropy.

  CAPITALISM

  Contrary to the views of many, the ability to make profits is a critical element in society’s progress. The lure of profits generates employment, creates wealth, and empowers people in ways that no other social or economic system has been able to. That is why no one should feel guilty about making money.

  Nor should anyone feel guilty about taking prudent risks. This is a fundamental truth that I learned from Joseph Schumpeter, who believed that without entrepreneurs willing to bring new products and ideas to the market and investors ready to finance them, it would be impossible to achieve real economic growth. The alternative, as we have learned to our sorrow in the twentieth century, is government control of the factors of production with results that can be seen in the devastated landscapes and abandoned factories of Russia and Eastern Europe, and the scarred lives of billions of human beings throughout Asia, South America, and Africa.

  My long-standing investment in Rockefeller Center, throughout its various stages of uncertainty and crisis, is an example of my willingness to take risks commensurate with the prospect for gain. Perhaps even more so has been my experience with what some have called “Rockefeller Center West”—Embarcadero Center in San Francisco.

  The Embarcadero project grew out of San Francisco’s effort to revitalize its decaying central business district along the waterfront through the federal urban renewal process, which provided for a substantial write-down in the cost of the land in order to attract qualified developers. By the mid-1960s much of the downtown area east of Montgomery Street was filled with dilapidated slums, produce markets, and flophouses. The San Francisco Redevelopment Agency (SFRD), under the capable leadership of Justin Herman, was formed to revive this historic area. Justin had a vision that was strikingly similar to Father’s hopes to revitalize Midtown Manhattan through the construction of Rockefeller Center.

  In 1969 I joined a partnership that included Texas developer Trammell Crow, Atlanta architect John Portman, and my brother Winthrop to bid on a portion of the land that the SFRD was offering. We proposed building a hotel and four office towers linked by plazas and walkways that would include substantial retail space for restaurants and shops. It was a creative design, and SFRD quickly approved the proposal. Our contract called for taking down each piece of land separately and sequentially, and erecting the five buildings over a ten-year period. We persuaded the Prudential Insurance Company to become a 50 percent partner and to supply the construction financing.

  We began construction in 1971 and over the following three years completed the first two office buildings and the Hyatt Regency Hotel, with a signature Portman atrium at its center. Unfortunately, by the time we completed construction, the recession had crippled San Francisco’s real estate market.

  With the second Embarcadero office tower half empty and not a single tenant signed up for the third 700,000-square-foot tower (EC3), Prudential declined to take an equity position in EC3, although it was still obligated to provide the mortgage financing if we proceeded with the building. So in 1976, with both Crow and Portman out of Embarcadero because of financial problems elsewhere and the executors of Winthrop’s estate unwilling to put up more money, I faced a dilemma. I could either drop out of the project or go it alone. If I dropped out, the agreement with the SFRD would prohibit me from participating in the construction of EC4. However, financing it myself would require me to provide the full $60 million—the equivalent of my personal net worth outside of the trust—and an additional $1 million a month until things turned around. Thus, if I went ahead with the project and the recession persisted, I ran the risk of personal bankruptcy.

  Even though Dick Dilworth and my other advisors counseled me not to take on this additional risk, I decided to take it. I was convinced that once the recession lifted, space at Embarcadero Center would be in great demand. Nonetheless, the risk in continuing alone was awesome.

  The first three months of my sole ownership were not promising. The building remained empty long after its completion in the summer of 1976. We kept the lights on at night so the tower wasn’t dark, but it was little comfort to peer out the windows at the Hyatt Regency and realize that, except for the night watchman, there wasn’t a living soul inside to pay rent.

  Thankfully, sooner rather than later the San Francisco market turned around, and tenants began taking space in EC3. By mid-1977 rents had reached a level that put the building on a profitable basis. The Prudential agreed to provide the mortgage financing for EC4 and begged me to allow them to take their proportional share in the equity financing as well. I agreed, but only if they bought back their 50 percent share in EC3 at its new and higher valuation. This resulted in my recapturing my investment not only in EC3 but in the entire Embarcadero Center project. The risk I had taken in staying the course had p
roved exceedingly rewarding.

  Some years later we expanded by building Embarcadero West (EC West), only to discover that the new investment was jeopardized by a real estate recession and the Bay Area earthquake of 1989. By the early 1990s, with a huge bank loan to repay, EC West teetered on the precipice of bankruptcy. But I continued to believe in San Francisco’s long-term prospects, and despite my advisors’ hesitance, I was determined to persevere.

  By mid-decade the real estate market had recovered, aided by the citizens of San Francisco, who were alarmed by the city’s rapid growth and voted to drastically restrict new commercial construction. In 1998, Boston Properties, the real estate firm controlled by Mort Zuckerman, purchased all of the Embarcadero Center office buildings for $1.8 billion. Since I received payment in the form of obligations from Boston Properties, I retained an indirect stake in Embarcadero but in the process diversified my investment to include prime properties in key areas around the country.

  My thirty-year association with Embarcadero Center has been profitable for me and has helped spark the renaissance of San Francisco’s historic downtown and waterfront. As with the development of Rockefeller Center, Embarcadero illustrates the benefits that can flow to the community when thoughtful government leaders join with risk-taking capitalists to improve the urban environment.