U.S. Business: Banking the Blue Chips

Though its $6.3 billion in assets makes it the sixth largest U.S. bank, and its blue-chip list of clients qualifies it as perhaps the most patrician, Manhattan’s Morgan Guaranty Trust Co. insists on the homely dictum that its principal wealth is its men. Last week the bank chose a new chairman and chief executive who is gilt-edged enough to decorate both sides of that bill: Thomas S. Gates Jr., 59, a Main Line millionaire’s son who left his post as a Philadelphia broker to serve as Under Secretary, then Secretary of the Navy and later as President Eisenhower’s last and ablest Secretary of Defense.

Gates, who joined Morgan Guaranty four years ago and has been its $181,760-a-year president since August 1962, has been running things for the past four months while illness kept Chairman Henry Clay Alexander (TIME cover, Nov. 2, 1959) away from “The Corner,” the bank’s famous headquarters at 23 Wall Street. Alexander, 62, Morgan Guaranty’s chief since 1959, will step aside June 1 to assume the title of chairman of the executive committee. Says Gates: “My first concern will be to develop the kind of people we need to keep our standing where it is.”

Famed Empire. Descendant by merger of the famed banking empire of J. P. Morgan, Gates’s bank is the world’s largest “wholesale” bank, serves 97 of the nation’s 100 largest corporations. It caters to a clientele of companies, trusts and pension funds, accepts no savings deposits and runs no “retail” offices with high overhead (it has, in fact, only four U.S. branches). By concentrating on blue-chip business, Morgan Guaranty handles $1 billion a day in short-term investments, more commercial loans than the next five banks combined, and the largest volume of any bank in U.S. Government bonds. One result: its ratio of net earnings to gross income is the highest of any major New York bank—25.7% last year.

Cut off by its traditional policy (which Gates expects to maintain) from banking’s explosive growth in consumer loans, Morgan Guaranty is busy expanding overseas. To its long-established branches in Paris, London and Brussels, it recently added a representative’s office in Beirut, next month will open branches in Frankfurt and Antwerp. Through two subsidiaries, it owns a share in banks, investment houses and development companies in 24 foreign nations from Argentina to Taiwan. Washington’s recent curbs on bank-lending abroad, Gates admits, “will create a pause in this kind of growth.” Morgan Guaranty has already begun promoting a variety of services to fill that gap. Among them: a real estate unit and a group of specialists who are ready to advise corporations about acquisitions and diversification.