Banking: Man at the top

As he jockeyed aggressively through the torrential chaos of downtown Manhattan traffic, the man hunched over the wheel of the fire-engine red 1956 Continental appeared to be unburdening himself of a steady stream of curses. In fact, he was dictating to the secretary at his side a highly technical memorandum on the need for U.S. banks to give long-term loans to foreign importers so that they might buy more U.S. goods. ‘T am convinced,” he said softly [the Continental’s engine roared as it took off toward the next traffic light], “that to generate this kind of credit in sufficient volume [a screech of brakes to avoid a swerving taxi], say on the order of a billion dollars a year [slow glide toward the light that had gone red], our great financial institutional investors such as the insurance companies, the pension funds and the savings banks must be induced to cooperate [another jackrabbit start toward the next light].” The self-possessed driver was David Rockefeller, 47, one of the world’s richest men, grandson of Oil Baron John D.

Rockefeller and president of the nation’s second biggest bank, New York’s Chase Manhattan. On the strength of his name alone, David Rockefeller is entitled to sit with the powerful, but as head of the Chase he is much more—he is a prime mover in a profession that since the days of the Medici has heavily shaped the course of the world’s economic affairs.

Rockefeller is one of that little group of men who sit at the financial hub of the world’s wealthiest nation and by their nods give the stop or gosign to enterprises from Bonn to Bangkok. They wield vast powers—and yet must correctly size up situations around the world and reckon on economic and social changes bigger than their own power to control. They cannot sit still or their strength diminishes; but when they move, they must be nimble as well as sure.

It takes a peculiar blend of enterprise, prudence, knowledge and dedication, and husky (6 ft., 182 Ibs.) David Rockefeller has shown himself possessed of it. Born to millions, he has used the opportunity that was his by inheritance to apply himself to hard work and public service. Not for him the easy, casual, politically profitable familiarity of his older brother Nelson. ”I work because I enjoy work,” says David, “and because it is my duty to use whatever talent I have for a worthwhile purpose.” He does not question the worthwhileness of international banking.

“U.S. success in the huge effort to expand the economies of the free world,” he reasons, “will depend in the final analysis on the contribution of private business.” More than 5%. For a long time David was one of the four less visible brothers of Governor Nelson Rockefeller (The rest of the Rockefeller Family, including David, take the line that one brother in politics is enough.). But among U.S. businessmen who have come into contact with him, David has in the past few years built a solid reputation for economic intelligence and insight. Now, wherever he goes, businessmen collect to hear what he has to say. (A group of Ohio executives recently drove 70 miles so that they would not miss his address at a Columbus luncheon.) His exchange of letters with President Kennedy on the balance-of-payments problem, in LIFE two months ago, won him attention from the general public as an articulate, sophisticated spokesman of the business community.

Among those in the best position to judge his ability—his fellow bankers-any suggestion that David has got where he has just because his family owns 5% of Chase Manhattan’s stock is dismissed out of hand. “When you are a Rockefeller,” notes President Edward M. Bakwin of Chicago’s Mid-City National Bank, “a lot of people think you are a success only because of family. In the case of David Rockefeller, bankers hold him in high esteem in his own right.” Echoes Harold H. Helm, chairman of Chemical Bank New York Trust Co., an arch Chase Manhattan rival: “David is an effective, able all-round banker, who makes keener competition for us because of his ability.” With a touch of Latin hyperbole, a Caracas banker enthuses: “Rockefeller is the most important and capable banker in New York, therefore in the world.” Painful Burden. Such freely given trib utes to anyone named Rockefeller would have warmed the heart of David’s father, John D. Jr. All his life he was bewildered and embarrassed by the Rockefeller wealth. To John D. Jr., his inherited riches brought an immense moral burden, which he tried to relieve by burying him self in philanthropy; all the while, he doubted his own worth and was painfully conscious of living in the shadow of his dynamic, if ruthless father. But for David, inherited wealth, though a responsibility, is in no way oppressive. “The only question about wealth,” says he, “is what you do with it.” With his four brothers (Nelson, 54, Laurance, 52, Winthrop, 50, and John D. Ill, 56), David does plenty with Rockefeller wealth. Among them, the brothers are active in some 200 causes, ranging from the Rockefeller Institute for medical research to Colonial Williamsburg. Their generous philanthropies and their Inter national Basic Economy Corp., which underwrites businesslike ventures in developing lands, make it possible for helicopters to spray coffee trees in Brazil, low-cost housing to rise in Chile, astronomers to search the skies from Mount Palomar, textile machinery to hum in the Congo, supermarkets to peddle groceries in Milan, and antiquarians to admire the re-created haunts of Socrates in Athens.

Penny for a Weed. An obligation to serve society was instilled in the Rockefeller brothers by their father, and has taken in varying degrees. John D. Jr. taught his boys that the Rockefeller money belonged to God and that the Rockefellers themselves were merely its stewards. “Father never allowed us to feel that we would ever have unlimited sums of money,” David recalls. At seven, David spent eight hours raking leaves on the spacious grounds of the family’s Pocantico Hills, N.Y., estate to earn $2. Other times he pulled weeds out of the terrace of the Seal Harbor, Me., summer home at a penny a weed. He also received 25¢ a week allowance, which he was obliged to keep track of in an account book that John D. Jr. checked over weekly. (Inaccuracy brought a nickel fine, exceptional accuracy or neatness a nickel reward.) “Father’s strict rule,” says David, “was that we should save 10% of our money and give away 10%.”

David was also taught that excess of any kind was intolerable in a Rockefeller. Soon after his tenth birthday, he wanted a toy sailboat and took it upon himself to order one from a carpenter. When his father found out about it, he deducted the $4 cost from David’s allowance over a period of months. A devout Baptist, John D. Jr. neither smoked nor drank and did everything in his power to impress upon his sons the evils of both practices. (David enjoys a martini or two before dinner, but has never taken up smoking.)

Beetle-Bearing Bankers. Education began for David at New York’s Lincoln School, an experiment set up by Columbia University Teachers College to try out the progressive techniques of Philosopher John Dewey. Lincoln’s students were consciously drawn from every level of society, from the richest to the poorest. “The progressive education,” Rockefeller says today, “was an exhilarating experience.

The idea was to fire our imaginations, and I think it worked.” But he adds ruefully, “It failed to teach me to read fast or to spell correctly, and I’ve never been very good at either.” For all of John D. Jr.’s efforts to bring his sons up as normal children, the brothers could never escape the fact that they were Rockefellers. When David, at five, insisted on roller-skating to school like the other children, he was allowed to do so—but to his chagrin a nurse tagged along and a chauffeured limousine cruised near by in case he got tired. And from childhood on, wherever he went, David was continually coming up against institutions that his family’s money helped to keep open. It was at one of these, the New York Museum of Natural History, where David worked for three schoolboy summers, that he acquired his passion for collecting beetles. Today he has 40,000 specimens carefully mounted on pins in cabinets in the basement of his Pocantico home. The beetles offer an easy answer for people who want to give a present to a Rockefeller; foreign bankers often arrive at the Chase New York offices bearing packages of beetles for David. “The rule is to cut the string and stand back,” says David’s long-suffering secretary, Mrs. Edna Bruderle.

The Summum Bonum. When he entered Harvard, in 1932, David began to grow up socially. A friend remembers that “he was a pudgy 17, and every ambitious mother in Boston was pushing her daughter at him.” At a dance during his freshman year, he met Peggy McGrath, the vivacious daughter of New York Lawyer F. Sims McGrath. Eight years later he married her, after a courtship consisting largely of dancing dates (“He is still the dreamiest waltzer in the world,” says Peggy) and endless phone calls.

Harvard also aroused in him a desire to learn more about economics; so he signed up for graduate courses (among his classmates: Economist Paul Samuelson). Then he studied for a year at London’s liberal (and Rockefeller-supported) School of Economics, and earned his doctorate at the Rockefeller-founded University of Chicago. He is thus the best schooled of all the Rockefellers—as well as the most intellectual by nature. In his thesis the young David struck the note that still underlies his liberal capitalistic philosophy: “The sutnmiim bonum is to be achieved through a maximum of individual freedom of action consistent with behavior which is not predatory or antisocial.” Advice from Beyond. After winning his Ph.D., David sought education of a different kind, signed on as a dollar-a-year political “intern” on the staff of New York’s fiery reform mayor, Fiorello La Guardia. The main accomplishment of his 18-month stint: suggesting that merchan dise display cases be set up at La Guardia Airport to increase city revenues, and using his formidable name to convince businessmen that they should lease space.

Early in wartime 1942, Rockefeller enlisted in the Army. His original idea was to serve unassumingly as an enlisted man, but noble resolve wore thin after a few months of sharing a barracks with a man who took care of the colonel’s horses (“I couldn’t breathe”); so David applied for officer’s training. His fluent French got him a military-intelligence assignment in North Africa. After Paris was liberated, Captain Rockefeller was attached to the U.S. embassy to report on French political and economic developments. Another World War II veteran who served in the same organization recalls reporting for duty, determined to be unimpressed by the Rockefeller name; but his resistance melted when David met him at the airport and carried his suitcase to a waiting jeep. (To this day David makes a fetish of carrying other people’s bags for them.) After his Army discharge, David, now 30, began wondering what career to follow. The decision had in fact been made ten years before during a weekend visit to the Ottawa home of an old Rockefeller family friend and adviser, Canada’s late Prime Minister William Lyon Mackenzie King. King strongly advised David to follow his bent for economics and foreign affairs by becoming an international banker.* The bank was easy to choose: David’s uncle, Winthrop Aldrich, had headed the Chase since the early 19305. In 1946 Rockefeller joined the Chase staff as assistant manager of the foreign department.

Family Bank. At the time, the Chase was a “wholesale” bank that took deposits almost wholly from other banks and from large corporations. Oddly enough, there had never been a Chase prominently connected with the bank. Founder John Thompson, a Wall Street financier, named it the Chase National Bank in 1877 because of his deep admiration for the policies of Lincoln’s Treasury Secretary Salmon P. Chase. It became a “Rockefeller bank,” and Aldrich moved in when it merged with John D. Jr.’s Equitable Trust Co. Aldrich, in 20 years in charge, saw the Chase safely through the Depression, but after World War II he let it slip along haphazardly without even so much as the formality of a budget to guide it. Moving with the times. Chase’s archrival, the First National City Bank, surged ahead, setting up branch offices all over Manhattan to attract the “middle millions” of small depositors, and widening its lead in international banking.

Aldrich’s successor, John J. McCloy (now one of President Kennedy’s chief disarmament advisers), put the Chase into retail banking by merging in 1955 with the Bank of the Manhattan Co., which had 67 branches and a venerable history.

(It was an offshoot of a corporation founded with the help of Alexander Hamilton and Aaron Burr to build Manhattan’s first water works; the pistols from the Hamilton-Burr duel now sit in a glass case outside Rockefeller’s office.) Inside the bank, David was making his mark as head of a committee to straighten out organizational problems—defining job areas, setting lines of authority, establishing a budget. When McCloy retired nearly two years ago, Rockefeller moved from vice chairman to president with chief responsibility for forward planning and international business; George Champion—a onetime Illinois farmboy, with 30 years in Chase service—became chairman with responsibility for day-to-day operations.

Ice Cream & Salad Bowls. The Chase that Rockefeller and Champion head is vastly different from the bank that once looked down its nose at any account less than $5,000. Oldtime Chase executives would be surprised to see the razzle-dazzle the bank now goes through to get customers, e.g., passing out ice cream “checks” to kiddies, giving such homey gifts as salad bowls and picnic coolers to new depositors, spending a stiff $3,400,000 a year on advertising to persuade clerks and plumbers that whenever they want a $200 personal loan “you have a friend at Chase Manhattan.” And where once Chase was the last to try anything new, it recently was the first major U.S. commercial bank to raise interest rates on savings accounts to 4% in a move to fend off competition from savings and loan associations and mutual savings banks. This week Rockefeller is sending forth a team of 75 “financial counselors,” i.e., hard-sell salesmen, to comb the country for commercial accounts. Says Stewart Hawes, president of Wall Street’s Blyth & Co.: “There’s a spirit of energy at the Chase now. They’re more original, more broad-minded than they used to be.”

The Chase’s new energy has paid off well: its savings accounts will hit $1 billion this year, v. $22 million 15 years ago; personal loans totaled $166 million last year, v. a paltry $9.8 million in 1947; net profits have climbed 211%, to $70.5 million last year. Yet, like almost all big city banks, the Chase is fighting a stubborn profit squeeze. Reason: rising costs and stiffening competition. The competition comes not only from other savings institutions but from a new generation of corporation treasurers who, instead of putting their idle cash into banks, earn more interest on it by buying commercial paper and U.S. Treasury bills. Says Rockefeller: “We in the city banks need a broader base in retail banking.”

Locked Doors. One way to achieve this would be to let city banks spread out, through branching and mergers. In California, where banks are free to branch all over the state, the Bank of America has spread an umbrella of more than 700 branches, built its asset base up to $12.7 billion to make itself the largest bank in the nation (though it makes fewer loans to business than the Chase). But in New York, state laws long kept the big metropolitan banks cooped up within the five boroughs of New York City, forcing them to look on helplessly as their old customers moved in droves to the suburbs. The result is that an ever-increasing share of New Yorkers’ savings has gone into suburban banks. One of the fastest growing banks in the U.S. today is Long Island’s

Meadow Brook National Bank, which in only ten years has boosted its deposits 14-fold to $605 million and has now audaciously set up branches in Manhattan itself.

The New York State legislature, at the urging of Governor Nelson Rockefeller, finally relented two years ago, grudgingly passed a bill that gives the city’s banks the right to expand into the adjoining suburban counties of Westchester and Nassau. But, complains President R. E.

McNeill of Manufacturers Hanover Trust: “The law has so many limitations, it’s like telling a boy he can run out to play, then locking the door before he gets through it.” When the Chase and First National City tried to make up for lost suburban business in a hurry by merging with established banks in Westchester and Nassau, they ran afoul of the Federal Reserve Board and Controller of Currency James Saxon, who declared that if city banks want to go into the suburbs, they should do so by the tedious, costly route of building new branches of their own.

Merger Muddle. Even in cases where Saxon and the Fed have approved bank consolidations, eager Justice Department trustbusters—though the law gives them no clear authority to prevent bank mergers—have tried to stop them. Justice has filed test cases against the proposed marriage of Continental Illinois National Bank and the City National Bank in Chicago, against the merger of the Philadelphia National Bank and the Girard Trust, and against that of the First National Bank and Security Trust Co. of Lexington, Ky.

Small-town banks, many of which have grown fat and lazy under laws protecting them from competition, spearhead the fight against expansion of city banks. Controller Saxon, despite his New York decision, is a big-bank man from Chicago and wants the power to approve expansion of the national banks under his authority, regardless of state laws. The small banks, with their powerful voices in Washington as well as in the state capitals, should have no trouble defeating Saxon’s proposal this time. But First National City President George S. Moore is sure that eventually there will be a federal law that sets national standards for branching.

“The country is too big and our economy too interrelated for banks to be inhibited in their growth,” he says. “The last thing I want to see is nationwide branching, but I think eventually we’ll see statewide branching, and I think we should be allowed to branch within logical economic trading areas and not be limited by state lines.”

Man on the Spot. Balked in their attempts to expand at home, big city banks have increased their interest in expansion abroad. First National City, which already has 92 branches abroad, began operating its new Brussels branch last month even before the upper floors of the building were finished, and will open another new branch in Milan next week. The Bank of America (95 branches abroad) will invade Amsterdam next month, and bankers predict that “First National City is sure to follow.”

David Rockefeller and the Chase are expanding just as eagerly abroad, but in a different way. The Chase has 28 foreign branches of its own, but more important, it has a globe-encircling string of 50,000 correspondent banking offices. It acts as a clearinghouse for them, lending them money when they need funds for local borrowers and providing a host of worldwide services for them in exchange for the use of funds deposited with it by the correspondents. Rockefeller frequently hops about the world cementing the Chase’s relations with its correspondents and encouraging them to be more openhanded with loans to good local risks. On a visit to Manila last spring, he quickly had Philippines bankers calling him “David” (he is not the sort to be called Dave), and gave President Macapagal his personal assurance that the Chase would support the Philippines’ economic program with hard cash. In Malaya he assured Prime Minister Tengku Abdul Rahman that the Chase would back the new federation of Malaysia with investment capital. And in Panama, where a top government official says the Chase’s loans to cattle raisers “have done more for Panama’s cattle industry than all government agencies put together,” David, in sports shirt, tried his hand at branding cattle.

On almost every continent, Rockefeller has daringly encouraged Chase to invest in businesses that other banks often would not touch: bowling alleys in Europe, a bus line in the Virgin Islands, petrochemicals in Argentina, steel in Turkey, textiles in Nigeria. Currently, he is leading a determined drive to expand Chase activities in Latin America. This year he braved Brazil’s rampant inflation to buy for Chase part-ownership of Rio’s Banco Lar and laid out $6,500,000 for a 49% interest in Venezuela’s third largest bank, the Banco Mercantily Agricola. But he is far from starry-eyed about the risks in underdeveloped countries, and has a stern conviction that a business venture that cannot be made profitable will not be viable or useful. He also sees to it that his travels show a profit for Chase in the U.S. A first-class economic reporter, he is frequently consulted by businessmen anxious to know whether a particular country is safe for U.S. investment. When he has given his answer, John D. Rockefeller’s grandson is not above asking: “Don’t you think it’s about time to open an account at the Chase?”

Compulsive Overcommitment. Doing his job for the Chase and keeping up with all the Rockefeller outside interests keeps David going at a bone-tiring pace. One typical day recently, he followed up eight hours at the office by acting as host at a reception for 25 ambassadors from foreign countries, then went on to a late evening meeting of one of his charities, and wound up with a midnight session at the Rockefeller Institute. Somehow he manages to start all over again at the Chase at 9 the next morning. Says Wife Peggy; “He has a compulsion to be overcommitted. He shows less strain when he is under strain than anybody else I know.” This summer, David’s chief relaxation has been active weekends at Seal Harbor with Peggy and their six children.

(The children, four girls and two boys, are seldom photographed for fear of kidnapers.) At Seal Harbor, David swims, golfs (in the low 80s), and sails on one of his three boats (a 36-ft. sloop, a 40-ft. Bermuda yawl and a 40-ft. cabin cruiser).

In Manhattan he humors his wife’s love for music by going to concerts with her, but, says a close friend, “concerts are David’s sleeping time.” On Sundays, at the Baptist Church near his Pocantico estate, he gives forth with a lusty off-key baritone that can be heard several pews away.

No Mouthpiece. At work, Rockefeller is an unruffled, soft-spoken executive. “I make some outrageous boners,” says key Aide Dick Dana, “but the worst David ever says to me is, ‘I’m a little disappointed, but I can understand what happened.’ ” To another aide, who he sensed was disheartened by the failure of a pet African project, David scrawled a note: “Don’t feel bad. You must expect disappointments when you are pioneering in an area such as this.” Although he is surrounded by expert and expensive advice, no one ever accuses David of merely mouthing his advisers’ ideas—a charge that has sometimes been leveled at Brother Nelson. David went against all his aides to buy into Banco Lar: “If things were good in Brazil,” reasoned he, “they wouldn’t need us. Besides, the terms are very good.” And it was his own decision to invest $130 million in the new, 60-story glass and aluminum Chase office building, which opened last year in Manhattan’s financial district.

Salesman & City Saver. The new Chase headquarters building combines the familiar Rockefeller urge to improve New York City with the more practical aim of selling Chase spectacularly. While other banks were deserting the crowded downtown financial district for roomy midtown offices, David defiantly bought a chunk of downtown land that Morgan Guaranty Trust had decided was too waterlogged to build on. The result: the Chase Manhattan Plaza, where lower Manhattan’s first good-looking new building in half a century sits in the midst of a spacious, tree-studded terrazzo terrace. The new Chase headquarters has the nation’s biggest bank vault in the biggest underground banking area, the biggest automatic check-sorting center, the biggest air-conditioning unit. As a visible gesture in public relations, the building has done more than anything else to proclaim that Chase Manhattan is big, bold and forward-looking. And, says Chemical Bank’s Chairman Helm, “Rockefeller has added strength to the financial community by locating it downtown.” David Rockefeller has also enhanced the financial strength of the art community by pouring $500.000 of Chase Manhattan’s money into paintings, sculptures and many other knickknacks to decorate the new building. Most of the art is the contemporary abstract kind considered proper by that other Rockefeller institution, the Museum of Modern Art, and runs heavily to framed smudges of color (in David’s private washroom, there is a Cézanne lithograph). Few Chase executives try to understand their boss’s artistic acquisitions, and his family does not share his tastes. Peggy and the children recently assembled a Rube Goldberg statue from pipes, wrenches, tubes and scrap metal and presented it to David in all solemnity as their own latest artistic find. Tolerant of the teasing, David defends his selections: “They might not mean anything to you now, but if you look at them for three or four days, you will find them very soothing.’1 No Nostalgia. All the time, talent and dedication that David Rockefeller devotes to the Chase earns him nothing financially, because his $175,000-3-year salary merely adds to his mammoth tax burden. However, he says cheerfully, “it allows me to give more to charity.” More important, the Chase is a potent showcase for his conviction that private enterprise has a major contribution to make in solving the world’s economic and social problems. “The profit motive has been the prime generating force producing economic growth since the Industrial Revolution,” he says. “Business leaders must point out forcefully and persuasively those government policies or actions that prevent the private economy from achieving its full potential and making its maximum contribution to the common good. But to be effective, the approach must be forward-looking and realistic—not mere nostalgia for the past or a rearguard action to preserve positions of narrow self-interest.” If businessmen do not develop such an approach, warns David Rockefeller in his earnest and low-voiced way. or “if they do not concern themselves with the full spectrum of problems civilization faces, they will find themselves, a few years hence, living in a very different and less congenial world.”

* After King’s death, Rockefeller learned to his chagrin that the Canadian Prime Minister was a spiritualist, who sought counsel at seances with his dead mother.