The bankers that define the decades: David Rockefeller, Chase Manhattan
The first global banker, from the 1970s.
Illustration: Vince McIndoe
David Rockefeller used the power of his family name and his platform as head of Chase Manhattan Bank to push globalization in an era where the world was fractured on political and geographic lines. He had his flaws as a banker. But his vision – that banking could be a force for good – was ahead of its time and one that the current generation of bank leaders has since embraced.
"Looking back, there is no other career I would have preferred,” wrote David Rockefeller in his autobiography, published in 2003. That was just as well, given that he spent 35 years at Chase Manhattan, the last 12 of them as chief executive of what had come to be known as ‘David’s bank’.
There may have been moments in the mid 1970s when Rockefeller was less sure that he had picked the right path in 1946 when he accepted an offer from his uncle, Winthrop Aldrich, to join Chase National Bank.
He later recalled that his heart “sank” when he opened the business section of The New York Times in early February 1976. Describing Chase as “a symbol of the nation’s troubled banking system”, the article openly questioned whether or not Rockefeller had the necessary “managerial talents” to lead “one of the strongest and richest banks in the world”.
By the summer of 1976, the criticism levelled at Rockefeller was becoming increasingly personal. An Institutional Investor piece published in July, which spoke of the “total antipathy” of investors towards Chase, was especially brutal.
“When asked to fix blame for the poor impression Chase has made,” the article said, “analysts unanimously, and almost obsessively, seem to single out David Rockefeller.”
A year later, the influential Fortune writer, Carol Loomis, added her voice to the chorus of disapproval about the performance of David’s bank.
“Its operating problems have at times been terrible, the quality of its loan portfolio exceptionally weak, and its financial performance, by just about any measurement, inferior,” wrote Loomis in a piece published in July 1977.
Granted, all big US banks were suffering at the time. The oil crisis, the collapse of Herstatt Bank, the New York fiscal position and competition from European and Japanese banks were all eating into their earnings in the early to mid 1970s.
But the stock market had a tendency to penalize Chase more severely than its competitors. By 1976, it was trading at a modest five times earnings, compared with price-to-earnings ratios of 11 and 10 at JPMorgan and Citicorp respectively.
At the same time, no US bank boss found himself at the sharp end of personal criticism that came anywhere close to the excoriation heaped on Rockefeller, who had been appointed chief executive in March 1969.
He was an easy target chiefly because of the amount of time he was perceived to have spent hobnobbing overseas, often with heads of state, while his lieutenants grappled with the tedium of mounting home-grown headaches.
Loomis reflected a view broadly held by shareholders, analysts and the media when she said that Rockefeller had been “vigorously criticized for being too often on the go instead of minding the store.”
The suspicion that Rockefeller was more interested in networking internationally than in the humdrum detail of commercial banking may have been strengthened by a strategic decision he had taken in the 1940s.
As a well-connected new recruit with a PhD in economics, the young Rockefeller had seen no reason why he should bother with Chase’s credit training programme, with its dry emphasis on analyzing balance sheets and income statements. Requesting an exemption from this course was a decision he came to regret.
Years later, he reflected that “it only increased the conviction that I was never a real banker.”
Real banker or otherwise, Rockefeller was a sensitive and modest man who was deeply upset by the public mauling he was given in the mid 1970s.
“There is no question that the criticism hurt,” says David Rockefeller Jr, who shared his recollections of his father’s career with Euromoney for this article. “But he was not a quitter. He was a fighter with a mild demeanour.”
Besides, he adds, the bank Rockefeller took responsibility for managing at the end of the 1960s was hardly a model of efficiency.
“I was stunned when my father told me that until the 1960s, Chase did not even have a budget,” he says. “Just imagine one of the biggest banks in the US being run with that degree of informality. It is hard to understand how shareholders, auditors or anyone else could have allowed management to be that cavalier.”
It would not be wrong to define David Rockefeller as the first truly global banker. In that respect, he was ahead of his time - James Wolfensohn, former World Bank president
Rockefeller’s refusal to heed some of the calls in the media to “fire himself” had certainly paid dividends by the end of the 1970s. Cutting costs, disengaging from the bank’s disastrous misadventure in the real estate investment trust market and diversifying into more profitable fee-generating products all helped Chase to engineer a remarkable recovery.
In 1978 alone, earnings rose by 60%, allowing Chase to announce an increase in its dividend in February 1979, the first rise for five years.
Profits in 1979 weighed in at $310 million, just ahead of the three-fold increase that Rockefeller and his eventual successor, Willard Butcher, had promised in 1976. That performance reportedly earned Rockefeller a standing ovation in the Chase boardroom. It also led Fortune’s Loomis, for one, to change her tune.
“The case for the applause is indisputable,” she wrote in January 1980, in a piece entitled ‘It’s a stronger bank that David Rockefeller is passing to his successor.’
The vilification that had flown Rockefeller’s way in the mid 1970s had not just been premature, it had also been myopic, seen through the distorted lens of shareholders preoccupied by short-term returns.
The Chase stock may have consistently traded at a discount to Citibank, which the bank always regarded as its closest competitor, but that was a gap that Rockefeller worked tirelessly to close by expanding the bank’s global network and creating the foundations for long-term diversification.
Against the backdrop of an industry that until the 1970s had remained highly insular (in 1965, only 12 US banks had opened branches overseas), that made him a notable pioneer.
“It would not be wrong to define David Rockefeller as the first truly global banker,” says James Wolfensohn, the former World Bank president, who first met Rockefeller at Harvard at the end of the 1950s and who remained a close friend until David’s death in 2017. “In that respect, he was ahead of his time.”
This is a view that is echoed by others who knew him.
“David Rockefeller saw an opportunity to make an impact globally, which very few shared at the time,” says Bill Harrison, who became chief executive of Chase Manhattan in 1999 and subsequently of JPMorgan Chase in 2000.
Harrison originally joined Chemical Bank in 1967 and got to know Rockefeller well following its merger with Chase Manhattan in 1996.
“There is no question that he put Chase on the map as a global brand, a major international player,” he adds.
It is easy enough to identify the sources of Rockefeller’s internationalism. A cosmopolitan polyglot, he had travelled extensively as a young man, witnessing at first-hand the rise of Nazism on a series of trips to Europe between 1935 and 1937.
“Visiting Nazi Germany in the 1930s had a huge impact on my father,” says David Jr. “So did the time he spent in North Africa and then in Paris during the Second World War.”
That experience, twinned with the overseas trips he had already made with his parents in the 1920s and the influence of his tutors at the University of Chicago, imbued in Rockefeller a profound mistrust of the isolationism espoused by the America Firsters of the late 1930s and early 1940s.
It also helps to explain why he was committed to internationalizing Chase’s profile almost from the day he joined the bank in April 1946 as assistant manager in its foreign department.
That called for a lot of travelling. Rockefeller began by calling on the bank’s existing offices in London and Paris (crossing the Atlantic by steamer), before turning his attention to Latin America. Accompanied by his wife Peggy, Rockefeller visited Puerto Rico, Cuba, Panama, Venezuela and Mexico in 1948. That set the pattern for a 35-year spell at Chase during which, by his calculations, Rockefeller visited 103 countries, logged five million air miles and ate about 10,000 business meals.
Initially, the process of extending Chase’s international network beyond the nine overseas branches that were operating in the mid 1940s was relatively slow. By 1955, when the old Chase merged with the Bank of Manhattan, this total had risen to 17 (of which more than half were in the Caribbean), while as late as 1960, only 5% of Chase’s total $5 billion loan portfolio was outside the US.
International expansion gathered pace in the 1960s, with the opening of new branches in locations ranging from Nigeria and Liberia to Bangkok, Singapore, Hong Kong, Kuala Lumpur and Seoul, as well as Athens and Milan.
It was after Rockefeller became chief executive in 1969 that the process of internationalization gathered momentum. Between then and 1980, Chase opened 63 new foreign branches and 17 new representative offices, giving it a presence in more than 70 countries. Over the course of the 1970s, income from international operations rose over eight-fold, from just over $29 million in 1970 to $247 million in 1981.
In the five decades since Rockefeller was appointed chief executive of Chase and Euromoney was launched, emerging economies have emerged, frontier markets have put themselves firmly on the map and exotic currencies have become familiar. During that period, regimes that were once hostile to western governments have become popular with tourists. Journeys that used to take days can now be completed in hours.
This all makes it easy to take globalization for granted. But when Rockefeller set out on his journey to internationalize Chase, a number of formidable challenges stood in his way. Foremost among these was the internal opposition he faced, notably from George Champion, who had joined Chase in 1930, becoming head of its domestic corporate banking division in 1953 and president and chief operating officer in 1956.
Champion, who was 11 years Rockefeller’s senior, was a talented golfer and footballer. He was also an accomplished and convivial banker who was very well regarded among US corporate customers.
The problem was that he was also a highly conservative lender who had what Rockefeller called a “visceral distrust” of international expansion.
That turned out to be a recipe for what Rockefeller later described as “conflict and indecision” when, in October 1960, he and Champion were appointed co-chief executives of Chase. This was a horrible strategic error which, according to Rockefeller, inevitably led to “delays and missed opportunities”.
Worse, the “extended and often unpleasant struggle for primacy” between Champion and Rockefeller equally inevitably meant that Chase lost ground during the 1960s to its arch-competitor, Citibank, which continued to expand overseas.
“The real competition should have been with City Bank and the other American international banks, not between George and me,” Rockefeller noted, regretfully, in his memoirs.
Champion’s retirement in 1969 left the new sole chief executive, Rockefeller, with far more room for manoeuvre in pursuing a more international strategy, which he did, with characteristic gusto.
Over the course of the 1970s, new branches were opened from Guam to Cameroon. The 1970s also saw the establishment of Chase’s merchant banking operation in London, the launch of its wholly owned subsidiary in Canada and the acquisition of an interest in the Saudi Investment Banking Corporation.
For Rockefeller himself, however, the clear highlights of the 1970s were the opening in 1973 of the first US bank in Moscow since 1929 and the establishment in the same year of banking relations with the People’s Republic of China.
The following year Chase became the first US bank to open an office in Egypt since bilateral relations between Cairo and Washington had broken down over the financing of the Aswan Dam 17 years earlier. That had opened the sluice gates for much Soviet aid to flow into Egypt.
Each of these openings were important landmarks for US foreign policy. They were also notable landmarks for the internationalization of the US banking industry, spearheaded by Rockefeller. This meant that each involved the sort of high-profile overseas trips for which the Chase chief executive would fast become renowned.
Travelling with the backing of the third-largest bank in the US helped to open doors wherever he went. So too did Rockefeller’s energy and charisma.
“David was unique,” says Wolfensohn. “More than anybody else in the 1970s he had access to world leaders because he was David Rockefeller.”
Not that domestic opinion was unfailingly supportive of Rockefeller’s international diplomacy or the overtures he made to countries still regarded in many quarters as being hostile to US interests.
His visit to King Faisal in Saudi Arabia in 1969, for example, reportedly resulted in the bank being “swamped” with letters and phone calls protesting against Rockefeller’s alleged anti-Israeli bias.
His historic trip to China and the meeting he held there with Zhou Enlai in 1973 was also greeted with extensive criticism among domestic commentators uneasy about what some took to represent a tacit endorsement of communism.
Rockefeller’s historic trip to China in 1973 and meeting with Zhou Enlai drew some criticism at home for endorsing communism.
The merit of asking Bank of China for correspondent status was questioned by some observers, given that close to $200 million of US assets remained confiscated by the Chinese, with $70 million of Chinese assets in the US also frozen. Traditionalists might also have asked what the sense was in pursuing banking business in a country that had historically refused to accept loans or export credits from overseas.
Clearly, however, Chase saw potential where others saw a dead end at best and a betrayal of US values at worst. An undated (but pre-1973) internal briefing note in the JPMorgan Chase archive in New York spells out the bank’s agenda for establishing itself as “the leading international financial institution to the People’s Republic of China” and to restore its reputation as “Ta Tung” – “the bank that can do anything”.
The emphasis, unsurprisingly, was on the long-term potential of a country of 800 million people eager to restore good relations with the US.
“Although it is unlikely that we would be asked to provide financing for China in the near future, the improbable seems to be happening,” the briefing advised. “In readiness, therefore, we might consider a guidance limit for China exposure of $100 million for up to five years.”
In what would turn out to be a wonderful understatement, it added that “the Chinese could have larger requirements, and in a different borrowing form, than the present pattern”.
If feelings were mixed about Rockefeller’s Chinese ambitions, opinion at home was equally divided when he visited Moscow in May 1973 to open the first representative office of a US bank in the USSR since Lenin had occupied the Kremlin.
European banks such as Dresdner, Deutsche and Crédit Lyonnais had offices in Moscow by the time of Chase’s arrival. Chase itself had signalled its interest in the Soviet market earlier in the year by signing the first important credit agreement between a private bank and the USSR, which was an $86 million facility to finance the Kama River Truck Foundry.
But the political importance of the opening of Chase’s office at No 1, Karl Marx Square, was not lost on the US press.
“A comrade at Chase,” was Newsweek’s headline.
“For years,” another newspaper remarked, “the Soviet Communists used the name Rockefeller as a symbol of the worst of Wall Street and capitalism.” Today, it added, they were rolling out the red carpet to mark the arrival of David Rockefeller – a welcome that would never have been extended to his grandfather.
When Rockefeller returned from Moscow, the welcome was not quite as enthusiastic as it had been in Karl Marx Square. He was subjected to a number of probing interviews by broadcast journalists, one of whom – Mitchell Kraus of CBS – began by asking: “Mr Rockefeller, what’s a Rockefeller doing, doing business in Karl Marx Square, Moscow?”
Even Gabriel Hauge, chairman of Manufacturers Hanover and a lifelong friend of Rockefeller’s, had reservations about Chase’s ambitions in the USSR.
Hauge shared Rockefeller’s commitment to internationalization and was a vocal advocate of freer global trade. Indeed, in 1974 Manufacturers became the first US bank to establish a branch in the Comecon bloc when it opened one in Bucharest. But in 1973, Hauge questioned the point of Rockefeller’s advances towards the Soviet market, which he was quoted as calling a “dubious practice”.
If Rockefeller’s travels overseas were not uniformly appreciated by the general public at home, neither was he always greeted enthusiastically by the press in countries where diplomatic relations with the US remained uneasy.
When he visited Moscow in 1973, for example, one local newspaper warned its readers that he was linked to activities of the CIA. Another argued that Rockefeller was supporting “Zionist plans” to seize oil-rich territory from some Arab lands.
Nor were local immigration or security authorities always accommodating towards Rockefeller and his entourage.
JPMorgan Chase is a bank with a deep interest in its history and it preserves a huge archive of material in its Metrotech Center in Brooklyn, much of which chronicles the life and career of David Rockefeller. Some of the more colourful records held there are those documenting the challenging logistics associated with Rockefeller’s globe trotting.
Arranging flights into cities such as Moscow and Beijing, for example, was far from straightforward, as a number of internal memos written by Joseph Verner Reed attest.
Reed, who would later serve as US ambassador to Morocco and as chief of protocol of the United States under president George HW Bush, was Rockefeller’s assistant until 1981, which gave him an invaluable grounding in diplomacy.
Reporting back on the Chinese authorities’ guidelines for Rockefeller’s historic visit in 1973, Reed advised that “the reply was negative to the use of DR’s aircraft in Chinese air space”.
Reed also discovered that visas were not always easy to procure, even for a family as influential as the Rockefellers. In October 1974, the bank felt that it needed to reassure the visa department of the Indian consulate about the financial bona fides of the Rockefellers and the Reeds.
“Chase Manhattan… undertakes to be financially responsible for all expenses during their visit,” the bank advised its Indian hosts.
While travelling may not have been straightforward in the 1960s and 1970s, Rockefeller clearly relished the opportunity that his Chase Manhattan calling card gave him to see the world, for several reasons, many of which had little if anything to do with banking.
|David Rockefeller during construction of Chase Manhattan Plaza in the Wall Street area. He had an “almost pathological attachment to New York City”
One of these was that it gave him the chance to indulge a number of his extra-curricular passions, which ranged from his love of art to his fascination with beetles. That involved exploring some fairly inhospitable corners of the globe. “He and Peggy were pretty gutsy travellers. Nothing much fazed him,” says Wolfensohn, who has vivid memories of hairy helicopter excursions with the Rockefellers deep in the Amazon Basin while David was well into his 70s.
Travelling the globe also allowed Rockefeller to explore ways of addressing many of the social ills that had preoccupied him for decades. Above all, says Wolfensohn, it gave him an opportunity to explore ways of reducing poverty across the developing world, which would become an equally important objective for Wolfensohn in his time at the World Bank.
“The work that David had done in development and poverty alleviation was like a beacon to me,” Wolfensohn recalls today.
Against this backdrop, it is not surprising that, when he retired from Chase, Rockefeller was seen by some as an ideal figure to lead the World Bank.
“He was certainly very helpful to me when I was at the bank, and he would have been an admirable candidate for the job,” says Wolfensohn. “But by then he was very involved in other things, such as managing the family fortune, so the idea of him running the bank would have been whimsical.”
The alleviation of poverty was not just an issue that Rockefeller was eager to address in the developing world: he was once described as having an “almost pathological attachment to New York City” and was every bit as committed to helping the under-privileged in his home town as he had been to poverty eradication overseas.
He also had a keen interest in New York’s history and culture. Wolfensohn recalls that the first project he worked on with Rockefeller in the early 1960s was the rehabilitation of the Customs House in lower Manhattan and its conversion into the National Museum of the American Indian.
David Rockefeller Jr also emphasizes the importance of the contribution his father made to social and infrastructural development in New York City.
“He worked with every mayor from La Guardia to Bloomberg, so he was consistently involved in city development,” he says. “For example, by locating the new Chase building at the tip of Manhattan rather than in the bustling midtown area, he had a big impact on growth downtown.”
The most important and memorable feature of Rockefeller’s overseas travels, however, was the role he played as an unofficial envoy for his government, the long-term implications of which were important, if unquantifiable.
“I can’t think of anybody else without portfolio who did more to build bridges between nations,” says Rockefeller Jr. “He believed very strongly that good human relationships were essential for maintaining world peace.”
|David Rockefeller walks out into the hallways of the Chase Manhattan offices in the 1960s. During that decade, he had a difficult relationship with his co-CEO, George Champion, who opposed Rockefeller’s international ambitions
Knocking on the doors of elected and unelected leaders the world over was not always comfortable; many of them were individuals he “personally despised”.
Shaking hands with Saddam Hussein in Baghdad was clearly one of his more unnerving experiences. In 2009, when he began to write his (unfinished) impressions of the 150 most influential figures he had met, Rockefeller described Saddam as “humourless and ruthless”.
“I have met few people in my life who seemed inherently malevolent and treacherous,” he wrote. “That is my sense of Saddam Hussein.”
|Normally unflappable and diplomatic, Rockefeller described Saddam Hussein as one of the few people he had met who seemed inherently malevolent|
Comfortable or otherwise, Rockefeller remained an unflappable and courteous visitor to palaces and parliaments across the world. Indeed, some of his conversations with heads of state in the 1960s and 1970s suggest that he may have been happier as a career diplomat than as a banker.
It was in 1964, on a visit to the Soviet Union, that Rockefeller’s natural aptitude for diplomacy became apparent both to himself and to the US government, perhaps for the first time. Accompanied by his daughter Neva (herself a PhD in economics), Rockefeller had a lengthy meeting with the Soviet premier, Nikita Khrushchev, a fist-pumping champion of communism who was convinced that the USSR’s GDP was poised to surpass the US’s.
Neva took notes at their meeting and the transcript of most of their discussion is reproduced, verbatim, in Rockefeller’s memoir.
Curiously, however, the record of their conversation about the commercial ties between the USSR and the US is absent from the version that appears in Rockefeller’s autobiography. Perhaps the editor regarded this part of the dialogue as too dry for the general public, but the interchange is important because of its insight into Khrushchev’s credentials as a tough negotiator and Rockefeller’s as a persistent Chase Manhattan salesman.
It also demonstrates that although they may have been poles apart ideologically, the two shared a common interest in building closer commercial ties.
“I view trade not only as economic but as political, since it leads to growing confidence between states,” says Khrushchev at one point.
The notes from much of their meeting, however, read less like the minutes from a business negotiation and more like the transcript of a political summit – albeit one that at times became heated.
Neva noted on several occasions that chairman Khrushchev became “irritated” and “agitated” as he lectured his visitor on his government’s policy in Vietnam and warned Rockefeller that capitalism had reached its “sunset”.
Fortunately, Khrushchev and Rockefeller ended their verbal skirmish with an agreement on the need to avoid “unnecessary and irresponsible conflicts which could lead to disaster”.
But given the sensitivity of the discussion that preceded this amicable conclusion, it is little wonder that then president Lyndon Johnson asked to be debriefed, personally, on the meeting.
Seldom, if ever, can a banker have taken it upon himself to act so openly as an ambassador without portfolio for the US government.
David Rockefeller and his daughter Neva with Nikita Khrushchev in 1964. The Soviet leader told Rockefeller that capitalism had reached its ‘sunset’
Was he a banker or politician without portfolio? That would have been an equally hard question to answer when president Anwar Sadat and his wife welcomed the Rockefellers to his private residence in March 1971.
In time, Rockefeller and Sadat would become close friends, but at their initial meeting, Sadat cross-examined Rockefeller as though he were an official representative of a hostile government, haranguing him at one point for bombers the US had sold to Israel.
Subsequent dialogues between the two would be very different and much friendlier. Initially, they would focus principally on Rockefeller’s strategy in the Egyptian banking market. This would become increasingly important for Chase after 1975, when it took a 49% stake in a joint venture with the National Bank of Egypt. Chase National Bank would later become Commercial International Bank, which is Egypt’s largest and most successful private-sector bank today.
Anwar Sadat questioned Rockefeller on US arms sales to Israel at their first meeting in Egypt in 1971. But they became friends.
As the mutual trust between Sadat and Rockefeller grew, the Egyptian president’s attention turned to trying to persuade Rockefeller to advise him on an economic recovery plan for Egypt. Rockefeller declined, saying that while he was “pleased and honoured” by the request, this was a job that the IMF and the World Bank would be better resourced and qualified to undertake than he was.
Another notable summit Rockefeller held with a head of state in the early 1970s was with Zhou Enlai in Beijing in 1973.
Rockefeller later recalled that Zhou, who was Chinese premier from 1949 to 1976, was one of the most “impressive... broadly cultured, philosophical, charming people” he had ever met.
Surprisingly, given China’s relative isolation in the early 1970s, he was also one of the most interested in western economies and financial systems. The result, Rockefeller wrote, was that at 11pm, he was still explaining the Bretton Woods agreement to the Chinese premier.
Rockefeller’s admiration for his Chinese hosts appears to have been returned, which attested once again to his statesman-like credentials. The local press was certainly very favourably impressed by Rockefeller.
Newspaper comments describe Rockefeller as “gentlemanly, cultured, refined, modest, soft-spoken and extremely intelligent,” read a telegram sent by Chase’s Hong Kong office to Peter Bakstansky at the bank’s public relations team in New York. “Rarely in recent years has western personality been so warmly accoladed in Asian Press.”
By the end of the 1970s, initiatives such as his Moscow, Beijing and Cairo visits meant that Rockefeller’s associations with banking and diplomacy were seen to be inextricably intertwined. So much so that when Indira Gandhi was ousted as prime minister of India, a joke doing the rounds in the financial world was that he was preparing to offer her a post on the Chase board.
It was not just in the developing world that Rockefeller was seen as an influential and charismatic figure capable of energizing the people and places he visited. In 1979, Berlin’s mayor, Dietrich Stobbe, invited Rockefeller to visit the divided city.
“Your presence would make a deep impression on the people of the city and could considerably enhance Berlin’s reputation as an economically efficient city,” Stobbe wrote.
It is doubtful, however, that David Rockefeller would have felt entirely fulfilled as a diplomat rather than as a banker.
“We spoke about possibilities such as going into government or taking on an ambassadorial role,” says David Rockefeller Jr, “but I think my father always believed that as a banker he would enjoy much more flexibility to carve out his own world view. He would have been more encumbered had he been an ambassador, representing the president’s views rather than his own.”
In any case, Rockefeller was not always prepared to toe the government’s line. One of the occasions on which he most memorably allowed his passion to overcome his tact was in the aftermath of the overthrow of the Shah of Iran in 1979.
He was famously distressed by the reluctance of the Carter administration to allow the Shah to come to the US for medical treatment. Rockefeller argued that for the US, which had been a beneficiary of the Shah’s friendship for 30 years, to close its doors to a sick man would represent a “sell-out” and a “moral outrage”.
This prompted a furious response from the State Department.
“Please remind Mr Rockefeller,” it admonished, “that if the Shah comes to the US, all US interests will be in jeopardy.”
This may have been an oblique reference to Chase’s own business in Iran, which had expanded rapidly over the course of the 1970s, with trade finance booming and Iranian deposits topping the $1 billion mark in 1978.
I think my father always believed that as a banker he would enjoy much more flexibility to carve out his own world view. He would have been more encumbered had he been an ambassador - David Rockefeller Jr
In the aftermath of the Iranian hostage crisis, when some $9 billion of Iranian assets were frozen, Chase was the subject of a furious backlash over its role as an agent on a defaulted Iranian $500 million syndicated loan. As Rockefeller says in his memoir, as part of the comprehensive deal freeing the hostages in early 1981, all funds owed by Iran were repaid. But in the wake of the default, Euromoney’s first cover story of the 1980s described the Iranian loan mess as “one of the most serious crises in banking history”.
The broadside from the State Department may also even have been a hint that Rockefeller himself stood to gain from supporting the deposed leader. If so, it was a suggestion that he bitterly resented.
“There was no personal or corporate financial interest to be served by my recommending humanitarian steps to help the Shah,” he wrote in April 1981.
The lending and depository business built over a 20-year period by Chase in Iran, he added, was established and maintained “solely on the basis of competitive terms and prudent banking practices”.
Uncharacteristically angry, he concluded by saying that: “The reports of billions of dollars of the Shah’s assets, taken from Iran and reposing in the coffers of the bank, and of my personal role as a financial advisor to the Shah, were totally without foundation.”
Rockefeller Jr says that his father’s concern about the Shah’s health transcended his banking interests and was symptomatic of the natural empathy that was a conspicuous feature of his personality. This, says Rockefeller Jr, extended to a more general respect for human rights.
“He believed that he was not just a bank leader,” he says.
“He was also very conscious of his responsibilities as an employer of human beings and as a member of the local as well as the global community.”
Rockefeller adds that his father famously had an abhorrence of stuffiness in all its forms and was years, if not decades, ahead of the curve in his commitment to gender and racial equality, as well as to environmental, social and governance issues – ESG – long before the acronym had entered the banking lexicon.
David Rockefeller and Fidel Castro in 1973. Later in life, Rockefeller became like a diplomat without portfolio.
On his retirement, Rockefeller was happy to pass the baton on to the 53-year-old Butcher, who had been president of the bank since 1972. Butcher recognized that Rockefeller was inevitably a hard act to follow, telling Euromoney in May 1980 that: “I have said in print that no one is going to emulate David Rockefeller and not fail at it.”
It was not just having to operate in Rockefeller’s shadow that Butcher had to grapple with when he stepped into his predecessor’s shoes. There were plenty of other challenges to manage, most notably the Latin America debt crisis of the 1980s, which by the end of the decade would leave Chase saddled with hundreds of millions of dollars of bad debts.
For Rockefeller himself, retirement certainly did not mean inactivity, which was just as well, because he would have almost four decades to fill between his retirement in 1981 and his death in 2017. As he indicated to friends and former colleagues, when he announced at the end of 1979 that he was stepping down six months ahead of schedule, he had no intention of going gently into the good night of retirement and old age.
“I have, as you know, relinquished many of my responsibilities to Bill Butcher, but I have become ever more active in the efforts I have recently undertaken on behalf of the City of New York and its business community,” he wrote to friends such as Wolfensohn in March 1980. “I’m terribly optimistic about the future of our City and I plan to be part of it as long as possible.”
Rockefeller was true to his word.
“My father remained very involved in the marketing arm of business,” says Rockefeller Jr. “He remained chair of the international advisory board and continued to travel for Chase well into the 1980s. But he was also very active in the local economy, setting up the New York City Partnership in 1979, for example.”
While it is impossible to quantify what Rockefeller’s mixture of diplomacy and banking achieved for Chase in particular or for the global banking industry in general, his legacy can be gauged in other ways.
One of these is that in identifying the potential of economies such as India, China and much of Africa, he acted as a pioneer in the emerging world. In doing so, he would make an incalculably important contribution to global economic development and integration.
“Until 2000, about 80% of the world’s income was controlled by 30 countries, and China and India weren’t among them,” says Wolfensohn.
James Wolfensohn, former World Bank president
He adds that Rockefeller recognized early that this imbalance would be reversed sooner rather than later: “He saw that these countries were going to develop, and he was determined that Chase would be part of that development. He didn’t see the world as 30 countries, but as 200.”
China’s breathless development over the last 40 years may make this seem obvious in retrospect; but you only need to glance through the handwritten notes from Rockefeller’s trailblazing trip to China in 1973 to see how fabulous the notion of its subsequent development would have appeared to the bankers of the early 1970s.
“No outdoor advertising except slogans,” was one of his notes jotted in no particular order on stationery provided by the Mandarin Oriental Hotel in Hong Kong. “Never allowed to talk, walk with masses other than preplanned maneuvers”; “Mao is a god – he adorns the interior of all buildings as Jesus adorns a church”; “No toys”; “No private cars”; “No handicapped person admitted”; “No mosquitoes”; “No air conditioning”; and “every 4th child in the world is Chinese”.
An equally striking legacy is that in spite of the criticism thrown at him by shareholders in the 1970s, Rockefeller was able to support development while preserving and building the magnetism of the Chase brand. That the distinctive Chase brand and logo has emerged from the last two decades of exhaustive consolidation in the US banking industry owes a lot to David Rockefeller.
“Chemical was outperforming Chase when the banks merged in 1996,” says Harrison. “But it was an easy call to retain the Chase name because the global brand that David had built was so powerful.”
Harrison adds that while Rockefeller was supportive of the next big merger in 2000, which saw JPMorgan and Chase join forces to create the largest bank in the US, he may have been disappointed with the branding of the new entity.
“I remember when I called him in 2000 to tell him that Chase was buying – not merging with – JPMorgan, I could sense some disappointment that we were naming the bank JPMorgan Chase, rather than the other way round,” says Harrison.
In light of what his internationalism helped to achieve, there is no question that like many of the luminaries of the 1960s, 1970s and 1980s, Rockefeller would be horrified by global political developments in the last three years.
He wrote in his memoirs that isolationists wanted to “wall off the United States by rejecting participation in such constructive international activities as the WTO and Nafta”.
“David would have been appalled by recent events,” Wolfensohn reflects. “But he would have taken a long-term view of them and looked at them in the context of a decade rather than a year. Whatever president [Donald] Trump says or does, China will still be doing very well in 10 years’ time.”
The most appropriate postscript on his career as a banker, sometime-diplomat and mentor is probably the one he wrote in his memoirs: “Some... believe we are part of a secret cabal,” he noted, “conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”
In naming him the most influential banker of the 1970s, Euromoney echoes Rockefeller’s guilty plea.
And the Rockefeller who passed away at the ripe old age of 102 in 2017 would no doubt have been proud of the status of JPMorgan Chase as the pre-eminent global bank. It’s what he set out to achieve with Chase when he took over the bank in 1969.
Eventually his vision, his tireless networking and his spirit of adventure came to fruition.
How David Rockefeller viewed banking in 1979
There was a tidy symmetry to the article that David Rockefeller contributed to Euromoney in June 1979. Just as the magazine was celebrating its 10th birthday, so Rockefeller was celebrating his 10th year as chief executive of Chase Manhattan.
In it, he reflected on the progress that the capital markets and the global banking industry had made over the previous decade, and looked forward to the challenges and opportunities ahead. Of the key issues he addressed, it is no surprise that the accelerated internationalization of the banking industry was closest to Rockefeller’s heart.
“Not many years ago,” he wrote, “the international arm of most banks served principally for handling foreign exchange, commercial letters of credit and collections, or in providing personal banking services for their domestic customers travelling abroad. Moreover, most banks were content to limit their aspirations primarily to domestic markets and projects.”
Chase and others, Rockefeller added, swept such parochialism aside in the 1970s, reflecting the “increasing recognition of the economic interdependence of nations”. Contrary to popular opinion, international expansion of banking in the 1970s had focused less on less-developed countries (LDCs) and more on “mid-range nations, such as the Republic of Korea, and upper LDCs, such as Brazil and Mexico.”
Product innovation had been another notable trend in the 1970s. Until recently, Rockefeller wrote, banks had shown “little imagination” in exploring new products and services. In the 1970s: “Commercial banks in particular have expanded... into a far greater range of capabilities and services. Many, Chase included, have taken steps to acquire and develop greater expertise in financial advice and management, syndication leadership, private placements [and] project finance.”
Domestically as well as internationally, competition was keen, “with insurance companies [and] foreign banks” increasingly formidable competitors.
Among the most notable innovations of the 1970s had been the Eurodollar market, which Rockefeller described as of “enormous importance for modern banking”, providing “a mechanism for supplying funds to industrialized and developing countries”.
In particular, Rockefeller added, since 1973 the “potentially troublesome problem” of petrodollar surpluses had been very efficiently addressed by the Euromarket.
Computer technology, alongside “modern communications, automated equipment and associated processes” had all combined to increase efficiencies and reduce costs in areas such as cash management and the global capital market: “The ability of commercial banks to operate in the complex and sensitive international markets such as the Eurodollar market is increased by access to modern techniques and new technology.”
Foreshadowing challenges that would only intensify later, Rockefeller drew comfort from the fact that “a high level of integrity, prudence and responsibility” had been maintained “even when operating in a relatively unregulated environment”.
Looking to the 1980s, Rockefeller predicted evolution rather than revolution.
“It is not likely that continued expansion into new markets will continue to play the large role it has in the recent past. Some new markets will become available, but they will not have the scope, magnitude and loan potential of new markets a decade ago.”
“The increasing development of international business [resulting] from more extensive service to present clients, and from the expansion of business in current markets” would lead to more aggressive marketing and allow commercial banks to expand into merchant banking operations. Rockefeller was far too modest to recognize it, but perhaps he was describing his own legacy when he concluded that: “Commercial banking has not only adapted effectively to a changing world; it has, in the process, helped change that world.”