20 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org JOHN WHITEHEAD (1922–2015) Wall Street Titan, Cold Warrior, Friend to Thousands
By Gregory DL Morris
“America was fortunate that John Whitehead walked so many roads for us,” said Henry A. Kissinger at the funeral of his friend in mid-February. “In view of the vastness of John’s interests and the scope of his accomplishments, one is tempted to think of a flamboyant individual operating by eloquence and force of will. The opposite would be true. For John, the call to serve was paired with a reluctance to impose.” Whitehead was born in 1922 and grew up in Montclair, New Jersey. Despite being a mischievous lad, he earned the Eagle Scout award and entered Haverford College, a small Quaker liberal arts institution outside Philadelphia. He was working at the check- out desk of the school library when news came of the attack on Pearl Harbor. He was graduated under an accelerated program in
January 1943 and joined the Navy. Elsa Ruiz Having shown aptitude in small ves- John Whitehead, pictured here at the 2009 Gala, was co-chair of the Museum’s Advisory Board. sels, Whitehead was given command of a small squadron of five landing craft for the Normandy assault on June 6, 1944, and he made one of the first major judg- business development. The idea simmered Deputy Secretary of State. In that role, his ment decisions of his life. “Our orders until 1976 when Whitehead was made effort to cultivate direct and individual were to crash straight ahead to the beach,” co-chairman, along with John Weinberg, relations with Eastern European countries he wrote in his autobiography, A Life in Sidney’s son. was an important element in ending the Leadership (Basic Books, 2005). In the The idea of soliciting business was Cold War. rough waves and dim light, Whitehead almost radical in those days. Business exec- “It was one of the great honors of my saw ahead obstacles that would have torn utives had come to Sidney. It took a couple life to be admitted to John’s friendship,” the bottoms out of his boats. He ordered of years for the plan to gain traction, but said Kissinger in his eulogy. “I met John the squadron to turn and run parallel to it became a roaring success and was soon when, in the last days of the Ford admin- the beach for a hundred yards before find- emulated by other firms. In time, White- istration, he tried to convince me to join ing a clear path. He made many such cool head implemented a similar initiative for Goldman Sachs as a partner. I told him decisions under duress in his life. international business — his second inva- that I did not know enough about invest- With an MBA from Harvard in hand, sion of Europe. There was no gunfire ment banking. Persuaded of my incapac- Whitehead joined Goldman Sachs in 1947. this time, but active resistance from other ity to value opportunity, John settled on Jammed with half a dozen others into partners at Goldman and a chilly reception friendship.” an unventilated former squash court, he from London firms. But as in the domes- Kissinger said he agreed to teach rose quickly on the strength of his dili- tic expansion, time and hard work won Whitehead diplomacy, while Whitehead gent work, scrupulous ethics and dexterity over the skeptics, and Whitehead proudly taught him economics. “This arrangement with a slide rule. Concerned that the firm called Goldman the first truly international stood until John became Deputy Secre- was almost entirely reliant on its legend- investment banking firm. tary of State under President Reagan — a ary leader, Sidney Weinberg, for busi- After a full career at Goldman Sachs, job which he interpreted as an opportu- ness, Whitehead circulated a plan for new he was asked by President Reagan to be nity to fulfill his lifetime commitment to
www.MoAF.org | Spring 2015 | FINANCIAL HISTORY 21 © CHIP EAST/Reuters/Corbis John Whitehead, founding chairman of the Lower Manhattan Development Corporation, watches as construction begins on the 9/11 Memorial, 2006.
the cause of freedom. John would make throughout the realm as: “Sir John Who and food. John couldn’t resist, the old sup- speeches about the imminent liberation Could Never Say No.” ply officer instincts kicking in.” of the satellite orbit, especially of Hun- “I first met him when he was Deputy “He flew back to America,” Brokaw gary — a prospect which conventional Secretary of State, number two to George related, “persuaded Juan Trippe [presi- wisdom of the time considered premature, Shultz. It was 1986, during a particularly dent of Pan Am] to lend him a plane, to say the least. But prophets are occasion- tough time for the administration, and the loaded it up with war materiel and with- ally recognized in their lifetime. Eastern White House told Shultz that he had to out licensing or landing permits flew with Europe became free in the timetable of appear on that Sunday’s Face the Nation, it to Europe and off loaded it to his friends. John’s vision, not the analysis of tradi- which I was moderating. George did not John chuckled when he told me the story, tional experts.” want to face the nation that week, so he saying, ‘I still don’t know how we got away Whitehead’s dedication to the cause did what men at the top do: he turned to with it.’ John returned to Goldman and of freedom continued after his govern- his number two. ‘John, my man,’ he said. rose through the ranks, quickly earning ment service with many years of philan- ‘What’re you doing this Sunday at 10 am?’ a reputation as a champion of ethics and thropy and leadership at national and So ‘Sir John Who Never Said No’ came on integrity on The Street.” global non-profit organizations that con- the show and brilliantly practiced the fine Not all of Whitehead’s exploits call to tinued for the rest of his life. He lobbied art of cunning evasiveness. He answered mind Han Solo, but they were no less dar- US Presidents tirelessly for the country to 21 questions in 30 minutes, without pro- ing. One, detailed in his book, relates his pay its full United Nations dues, and he ducing one droplet of news. I thought it prescient pleas to Alan Greenspan for the joined the International Rescue Commit- was a disaster; the White House thought it chairman of the Federal Reserve to take tee. Initially he was an assistant treasurer, was a triumph!” steps to deflate the stock bubble of the late but not surprisingly he rose to chairman. Another journalist, Tom Brokaw, 1990s. Those were heroic but unsuccessful. Whitehead’s last great undertaking was as detailed a telling moment from White- The dot-com bust ensued. chairman of the Lower Manhattan Devel- head’s Wall Street career. “Shortly after he The other, not related in his autobi- opment Corporation (LMDC), the group made partner at Goldman he took what he ography, shows that the calmness under responsible for remaking the Financial thought would be a leisurely trip to Europe fire and quick decision-making that District after the terrorist attacks of Sep- and met in Vienna a Hungarian friend first appeared off the beaches of Nor- tember 11, 2001. who was deeply involved in the revolution mandy continued to serve him and his In her eulogy, journalist Lesley Stahl against the Soviets. He appealed to John country in the highest offices of power. said that Whitehead became known for supplies: radios, arms, ammunition In a 2006 conversation with economic
22 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org © Richard Levine/Demotix/Corbis John Whitehead and New York Senator Hillary Rodham Clinton at an LMDC press conference in 2002.
historian Richard Sylla [now chairman of Whitehead explained that it was already and I’m going to put him on.’ So I took the Museum of American Finance], which lunchtime, and Phelan’s problem was that the phone and told Phelan ‘I don’t know was recorded as part of the Museum’s oral many of the big stocks had not yet opened. what you should do, [but] the President history project, Whitehead detailed his “Therefore, there was no market at all. It is not going to close the stock exchange. If momentary but critical role in limiting the was beginning to feel panicky, and nobody any [President] ever did that, he would be damage from the Crash of 1987. could get a quote because with no open- blamed for the market trouble. I don’t want “The next day, after the Crash, was ing price, you couldn’t say whether the it to be Reagan’s crash.’” really a key decision-making day,” said market was down more or up more,” he Whitehead advised Phelan that his Whitehead. “John Phelan, who was said. “Half the Dow Jones Industrial Aver- experience with the stock exchange told the chairman of the [New York] Stock age stocks hadn’t opened, so there was no him that people would rather have some Exchange, called the President. “Purely by average to announce. And his efforts to market than no market at all. He warned coincidence I was having lunch with the get the specialists to open the stocks were him that closing the exchange would President in the upstairs quarters of the unavailing because the specialists weren’t worsen the sense of panic, so he urged White House that day. It was a meeting very bold after losing all that money in him to keep the exchange open. with the visiting president of Mali. In the their inventories the day before.” “He was disappointed, and a little angry middle of the luncheon a messenger came According to Whitehead, Phelan was at me for interfering with his phone call in and asked Reagan to leave the meeting. giving an impassioned plea to the President to the President,” Whitehead said. “But lo Soon the messenger came back and asked to close the exchange, while Baker was try- and behold, within an hour after that call, Howard Baker, Reagan’s chief of staff, to ing to get the President back into the Mali all the stocks had opened; there was a big leave. A couple of minutes later, Baker meeting. “So Howard got the President off rally as you remember.” appeared at the door of the dining room and said he’d take charge of it. I had been Sylla replied, “There was, I remember. and beckoned me.” on the board of the stock exchange for a few There’s some news in that because I’m Whitehead continued, “This was very months just before I went to Washington, not sure it was widely thought that the embarrassing, but I excused myself and and Phelan was a good friend. I was telling exchange would close.” went out. There was President Rea- Howard what he should tell Phelan, which Although that story is not widely known, gan on the phone with Phelan about was to keep the market open. So when the many people who knew Whitehead whether or not he should close the stock Phelan started arguing with Baker, Baker would agree it is typical. David Cowen, exchange. Phelan had asked the President said to Phelan, ‘I don’t know anything president and CEO of the Museum, said to announce he was closing the exchange.” about these things, but Whitehead is here, “The Whitehead » continued on page 38
www.MoAF.org | Spring 2015 | FINANCIAL HISTORY 23 comments were equally abusive. In one would not “attempt to set bounds to the A war had begun — a struggle for the letter he told Madison: “Several merchants daring depravity of the times.” public mind — the political soul — of George from Richmond were here [in Philadel- The enthusiasm of these first investors Washington’s America. At stake was the phia] lately. I suspect it was to dabble in was unquestionably extreme and merited future of the experiment in independence to federal filth.” some concern. But the apocalyptic reaction which he had devoted his life. In another letter to Jefferson, Madison of Jefferson and Madison was even more feared “the stockjobbers will become the extreme. It revealed a profound hostility to Thomas Fleming is one of the best known praetorian band of the government, at once the very idea of public finance. Hamilton’s historians of the American Revolution its tool and its tyrant.” (In ancient Rome, successful intervention in the scrippoma- writing today. He is the author of more the Praetorian Guard was the emperor’s nia bubble enabled President Washing- than a dozen books which have won private army, which could and sometimes ton to remain enthusiastic about the new praise and prizes from readers and fellow did threaten both the unruly populace financial system. He told one correspon- historians. This article has been adapted and the ruler.) Madison was convinced dent that the eagerness to buy shares in the from his new book, The Great Divide: that the stockjobbers could be bribed by Bank of United States was “unexampled The Conflict Between Washington and Congress’s “largesses” or could overawe proof of the resources of our countrymen Jefferson that Defined a Nation (Da it “with clamours and combinations.” He and their confidence in [the] public mea- Capo, 2015), with the permission of the gloomily concluded that his imagination sures” of the new federal government. publisher.
John Whitehead continued from page 23 rule was to leave things better than you Donaldson said. “John was a dear friend brother Gregory and me being brilliant found them. John was full of wisdom. and a shining light in all things. But that conversationalists. So during dinner Dad I liked the way he solved problems. He light was brightest around his integrity.” turned to me and asked, ‘So, Anne, what did never got upset, and he was a phenomenal Many of Whitehead’s friends refer to you think of the Kosygin-Gromyko Pact?’ I listener.” his sense of humor, but none so fondly as was in fourth grade! But Dad said we should Whitehead himself stressed the impor- his daughter Anne. “He had a great sense know the headlines in the paper every day.” tance of listening many times in his book. of humor, a zany, fun sense of humor. He Anne Whitehead became a successful A frequent expression was “you can never loved the operettas of Gilbert & Sullivan, corporate attorney specializing in merg- learn anything when you are talking.” and would sing along to all the songs. He ers and acquisitions, but she still keeps up That listening was hardly passive, though. was passionate about music. He was also an on world and national news. “It became a Cowen said Whitehead was an archetype of avid sailor. We used to race sunfish on Nan- strong bond between Dad and me. When shibumi—a Japanese word meaning literally tucket, and would charter sailboats — always my ex would see me rifling the newspapers “effortless perfection” but taken in business sailboats — up to 60-footers.” he would ask, ‘Oh, are we meeting with to mean “authority without domination.” Not surprisingly, Whitehead was a your father today?’” Whitehead was co-chair of the Muse- mentor to succeeding generations, just Duncan Niederauer, former CEO of the um’s Advisory Board, and Cowen noted as he had been fostered by some of the New York Stock Exchange and recipient of that “he loved being co-chair of our Advi- giants of Wall Street. In particular, Anne the Museum’s 2014 Whitehead Award for sory Board, just as he was co-chairman recalls a time when Janet Hanson joined Distinguished Public Service and Financial at Goldman.” Elaborating on the shibumi the Whiteheads on a family vacation. Leadership, said Whitehead left a lasting theme, he added, “John treated everyone Hanson was the first woman promoted impression on everyone he encountered. with respect, regardless of their position in to management at Goldman Sachs. She “His principles of putting the client life. He was very generous with his time, founded 85 Broads, an important organi- first, leaving every situation better than but he always kept the big picture in his zation of women executives named after you found it and fulfilling one’s obligation mind. That is leadership. And there was Goldman’s address at 85 Broad Street. It to pay it forward are among those that also always a touch of elegance with him.” has since been renamed Ellevate. “Dad will stay with me throughout my life,” William Donaldson, chairman of the was a mentor of Janet’s and a long-time Niederauer said. “He was a man among Advisory Board at Perella Weinberg Part- friend,” said Anne. She remembers fondly men, a leader among leaders, a hero ners and co-chair of the Museum’s Advisory how her father feigned great indignation among heroes and, most importantly, a Board with John Whitehead, said Whitehead when Hanson beat him at bridge. citizen among citizens.” was a leader in everything he undertook. Another fond memory blends Anne’s “That ran from World War II to leading affection for her father with admiration Gregory DL Morris is an independent Goldman Sachs through growth and a rep- for his holding high standards for himself business journalist, principal of Enter- utation for integrity. After his long career and everyone. prise & Industry Historic Research on Wall Street he led a life of continuing “I was in fourth grade or so, and when (www.enterpriseandindustry.com) and contribution to numerous causes, especially Dad was home for dinner we would dress an active member of the Museum’s edito- the Lower Manhattan Development Corp.,” for dinner. Mom was hell-bent on my rial board.
38 FINANCIAL HISTORY | Spring 2015 | www.MoAF.org