Wall Street People: True Stories of Today's Masters and Moguls

361 Pages·2001·61.73 MB·English

by  Charles D. Ellis

Wall Street People
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Wall Street People
True Stories of Today’s Masters and Moguls
Charles D. Ellis
with
James R. Vertin
JOHN WILEY& SONS,I NC.
New York Chichester Weinheim Brisbane Singapore Toronto
This book is printed on acid-free paper. @
Copyright 0 2001 by Charles D. Ellis and James R. Vertin. All rights reserved.
Published by John Wiley & Sons, Inc.
Published simultaneously in Canada.
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This publication is designed to provide accurate and authoritative information inre gard
to thes ubject matter covered. It is sold with the understanding that thep ublisher is not
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assistance is required, the services of a competent professional person should be sought.
ISBN 0-471-23809-0
Printed in theU nited States of America.
l 0 9 8 7 6 5 4 3 2 1
J. Richardson Dilworth
Thank you, Dick, for giving me in my early career years
your inspiringe xample of high standards of performance
in service to America’s institutions inb usiness, education,
and the arts-with your gifts of professional skill,
personal grace, and infectious good humor.
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Preface
Enjoyment-and a little learning-are the goals with which this anthol-
ogy has been put together. We hope each reader will share the pleasure
we’ve had in learning more about the fascinatingp eople who have made a
significant difference-for good or ill-as they performed their parts-
sometimes comedy, sometimes tragedy-in the theater of investment and
finance in which we too play our parts.
This anthology is not history. The pieces presented here are colorful
tiles, but they are not a coherent mosaic. And certainly not a complete
one: Many more colorful tiles or stories are yet to be told. Still-after
five years of searching and reading-this book contains less than 1 per-
cent of all that was examined and considered. There are a few patterns
we’ve found worth noting:
Fame is fast fleeting and most players are soon forgotten. Surely
most of those included from this centuryw ould not be included 100
years hence.
Celebrity is not nearleyq ual to significance: Manyo f the most impor-
tant contributors to the development of our profession and industry
have not been celebrated; while, duet o curious circumstances, several
minor characters were.
Notoriety comes most readily to those who misbehave-while thou-
sands upon thousands of able people go about their work conscien-
tiously, effectively, and anonymously.
Finally, the study of significant people refreshes our modesty: Many
exceptional people havep layed important roles very well. While
sharing in their adventures, we learn the power of great commit-
ments sustained over long periods of time, particularly in favorable
environments. We may also learn how to calibrate our own ventures
and achievements.
vii
...
v111 PREFACE
While this collection is certainly not presented as “scholarship,” a rea-
sonable effort has been made to get the stories right and to get the right
stories. Myths grow quickly and familiarity can give false confidence in
their validity-as can our delight in hearing a story told in the familiar
way we’ve learned to like best. Such ap roblem was presented by a popular
Dutch Admiral named Piet Hein-the legendary hero of a favorite Dutch
drinking song, which toasts: “Piet Hein: His name is short; his deeds are
tall. He won the silver fleet!”
Enthusiasm for including Admiral Piet Hein in this collection origi-
nated with hearingt his story: After capturinga huge treasure-laden Span-
ish fleet in1 628 as it returned from theN ew World-instead of engaging
in a boisterous celebration of triumph-Piet Hein retired to his cabin,
solemnly wrote a letter to his wife at The Hague, and then instructed a
skilled young lieutenantt o set sail in a small, fast boat and takthe e Admi-
ral’s letter directly to Madame Hein.
When he sailed into harbor at The Hague, so the story went, the lieu-
tenant dashed up the dock and ran to theA dmiral’s home where he pounded
on the door. When Madame Hein opened the top of the half-door, he ea-
gerly thrust the crucial letter at her. Surprised to see her read it so calmly,
the lieutenant was even more surprised to see her calmly tuck it into her
bodice, smile, thank him-and gently, but firmly, bid him good day as she
closed the door.
What they oung lieutenant wouldn’t see as he walked away was the great
burst of energy within the home as Madame Hein-following the careful
instructions she’d just read in theA dmiral’s letter-dashed about, collecting
allt heir casha nd every piece of silver, pewter,o r brass that couldb e
pawned. She went directly to the pawnbroker where she raised all the cash
she could in a hurry and then on to the coffee house where the crowd
bought and sold shares in thec ommon stock of the DutchW est India Com-
pany-her husband’se mployer. Soberly, Mrs. Hein purchased what we
would recognize today as call options on a larbgleo ck of that common stock.
A few days later, when news of Admiral Hein’s triumphant victory fi-
nally arrived, the common stock of the company rose and rose-and rose
to record highs. And the Hein’s call options soared-creating what is still
today oneo f the greatf amily fortunes in the Netherlands.
But is it true? Ord id the Admiral’s fortune come simply from the sale
his share of the loot? I don’t know and have been unable to find out.
of
(We do know the shares of his company rose 225 percent during thep eriod
immediately followingt he victory; the options would surely have soared!)
Some other stories have eluded me: When Kleinwort Benson ran short
of cash during a business recession, Rex Benson is said to have gone to
Monte Carlo and gambled boldly with what was left in the till, enjoyed a
splendid run of luck, and returned to London with plenty to meet the
firm’s payroll for several weeks.
PREFACE ix
Some stories that might have been included are left out because they in-
volve taking-rather than making-a fortune. One of the most amazing, if
true, is of General Tomoyuki Yamashita; “The Tigero f Malaya,” who cap-
tured Singapore and looted temples, bank vaults, and private fortunes
throughout Southeast Asia. He allegedly hid the loot in 172 different sites
on some of the 7,100 islands of the Philippines. None has been found in the
half century since, but the Yamashita treasure is estimated by believers to
be worth at least $100 billion and perhaps as much as $2 trillion. (Esquire,
June 1995, p. 34.)
Some of the pieces in thisc ollection were discovered in quite serendipi-
tous ways. One example began on Pall Mall, where Karl Van Horn and I
were standing on thes idewalk, engaged in the semiserious conversation of
friends. I noticed a burly policeman stopping traffic, apparently for a lady
standing just off the Mall,a nd was pleased as four lanes of traffic came to a
halt, thinkingh ow considerate of one another Londoners are. Assuming the
constable had stopped the traffic toe nable the lady to cross, Iw as puzzled
when she did not move; she simply stood with her bicycle. Just short of
commenting to Karl, I realized the reason the woman, the policeman, and
four lanes of traffic stopped: A motherd uck with six ducklings in a row be-
hind her were waddling their way across Pall Mall so they could reach their
pond. Delighted, Iw aved to thel ady as she rode her bike along the path to
where Karl and I were standing. She stopped, smiled, and asked what was on
my mind.
“Have you ever read Robert McClusky’s Make Way fir Ducklings?” I
asked. She’d not. Ie xplained it was a children’s book that told a similar tale
set inB oston. She was pleased; I said I’d like to send her a copy and askedh er
name and address. A month later, I received a letter from Helen Mann of
The Economist acknowledging receipt of McClusky’s book and explaining it
was en route to her grandchildren living inA ustralia.
Helen Mann received a letter from me a few years later on asking for
help on obtaininga profile of Walter Bagehot,t the great editoro f The Econ-
omist. She very generously sent me the full history of that superb news-
paper, which had the best profile I’ve found on Bagehot.*
My career over the past 40 years-nearly three decades as a partner of
Greenwich Associates in consulting on strategy and its successful imple-
mentation with senior executives at the world’s leading financial service
* Executed on February 23, 1946, as a War Criminal.
t Two years later, driving through Chelsea in a Deux Chevaux with a wonderful sculptor
named Almuth Trebenoff, whose work had caught my eye whileo n display in the area in
front of theT he Economist’so ffices, I mentioned a comment about her work madteo me by
a womana t The Economist, and we were soon exchanging happyt houghts about what af ine
person is Helen Mann, who had sponsored the show.
*
Lombard Street, in which Bagehot explains why central bank reserves must be used boldly
and decisively, is a long-time favorite.