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Wall Street Lessons: Dillon Read’s James Forrestal
James Forrestal, President of Dillon Read & Secretary of Navy and Secretary of War (Photo courtesy Wikipedia)
James Forrestal’s oil portrait always hung prominently in one of the private Dillon Read dining rooms for the eleven years that I worked at the firm. Forrestal, a highly regarded Dillon partner and President of the firm, had gone to Washington, D.C. in 1940 to lead the Navy during WWII and then played a critical role in creating the National Security Act of 1947. He then became Secretary of War (later termed Secretary of Defense) in September 1947 and served until March 28, 1949. Given the central banking-warfare investment model that rules our planet, it was appropriate that Dillon partners at various times lead both the Treasury Department and the Defense Department.
Shortly after resigning from government, Forrestal died falling out of a window of the Bethesda Naval Hospital outside of Washington, D.C. on May 22, 1949. There is some controversy around the official explanation of his death — ruled a suicide. Some insist he had a nervous breakdown. Some say that he was opposed to the creation of the state of Israel. Others say that he argued for transparency and accountability in government, and against the provisions instituted at this time to create a secret “black budget.”[32] He lost and was pretty upset about it — and the loss was a violent one. Since the professional killers who operate inside the Washington beltway have numerous techniques to get perfectly sane people to kill themselves, I am not sure it makes a big difference.
Approximately a month later, the CIA Act of 1949 was passed. The Act created the CIA and endowed it with the statutory authority that became one of the chief components of financing the “black” budget — the power to claw monies from other agencies for the benefit of secretly funding the intelligence communities and their corporate contractors. This was to turn out to be a devastating development for the forces of transparency, without which there can be no rule of law, free markets or democracy.
I studied Forrestal’s oil painting with his solemn stare during many a private lunch — each time reminded that government service was an important duty and honor in the Dillon tradition but it was a dangerous business. Congressional Committees had roughed up Clarence Dillon. Forrestal had died. Douglas Dillon was Secretary of the Treasury when Kennedy was assassinated.
Because I wanted to understand how the world really worked, I listened carefully. Over years of private lunches and dinners and conversations I watched and listened to hundreds of lessons on how to be careful — the tricks of predator evasion in Wall Street and Washington. In the midst of many knowledgeable teachers, Forrestal’s leadership was a guiding light that was to serve me well in the years ahead.
Wall Street Lessons: The Power of the People
Another thing I learned on Wall Street is the extent to which those who appear to have little material power can have significant power when they organize to do so. My rise to partnership at Dillon Read was fueled by a steady stream of intelligence from loyal secretaries, print shop personnel, drivers and staff whose generosity, street smarts and hard work was a constant reminder that the rise to Wall Street’s board rooms was not necessarily based on performance as opposed to privilege. One of the greatest challenges as an associate at Dillon Read was knowing where to invest our time when multiple partners were pressing us to give priorities to their projects. Hence, a heads up from someone’s secretary that they were trashing me in the year-end reviews was insider intelligence worth its weight in gold. Giving first priority to those who supported us in year-end reviews and compensation could be the difference between failure and success.
Right after I became a partner, I got a call from a personnel department director who was looking for a new secretary for me. The person who called said they were interviewing someone who has been with a Canadian Broadcasting office in New York for seventeen years. This was her first interview since they shut the office down. She was absolutely excellent and if we wanted to recruit her we needed to make her an offer right away. The personnel director said, “The only problem is that she is Jamaican (of African descent), but she is very light skinned.” I was stunned and said something to the effect of “Who cares?” The personnel person said, “If I sent a black person to be interviewed with most of the partners in this firm, I would be fired.” And so I hired Pat Phillips to work for me and was the beneficiary of her extraordinarily overqualified talent until her death twelve years later, by which time she was a Hamilton shareholder and Secretary of our board.
Many years later, after I had started my own investment bank in Washington, D.C., I got a call from a driver at one of the car services that we used to use when I was at Dillon. He said, “Are you doing a deal with Ken Schmidt?” I explained that, yes, I had proposed working together on a fairly large complex transaction. It would take a lot of work but if successful would be great business for both firms. The driver said, “He was in the car last night. He was bragging about how he was going to screw you. Here is what he is going to do.” This was the same Ken Schmidt who had confessed the Dillon partners conversations with my ex-husband. Ken was still blubbering indiscreetly about his bad deeds. And so the driver saved me from my mistake of attempting to partner with my old firm.
The above is on page 7 on the following link