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Arthur F. Burns Papers
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The original documents are located in Box K29, folder "Rockefeller, David (3)" of the
Arthur F. Burns Papers at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Arthur Burns donated to the
United States of America his copyrights in all of his unpublished writings in National Archives
collections. Works prepared by U.S. Government employees as part of their official duties are in
the public domain. The copyrights to materials written by other individuals or organizations are
presumed to remain with them. If you think any of the information displayed in the PDF is subject
to a valid copyright claim, please contact the Gerald R. Ford Presidential Library.
-
GOVERNORS
THE CHASE MANHATTAN FEUERAL BOARD RESERVE SYSTEM 24
National Association
AM AM10:
1 Chase Manhattan Plaza, New York, New York 10015
OFFICE
DAVID ROCKEFELLER Chairman of the Board
f
Dear Arthur:
I thought you would be interested in the enclosed
copy of the letter which we have sent to the
Secretary of the Board.
Sincerely,
Daind
Dr. Arthur F. Burns
Chairman
Board of Governors of the
Federal Reserve System
20th St. & Constitution Avenue
Washington, D. C.
FORD & 077839 LIBRARY
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
February 24, 1972
Honorable Arthur F. Burns
Chairman, Board of Governors
Federal Reserve System
20th Street & Constitution Avenue
Washington, D. C.
Dear Arthur:
I was very sorry to learn that due to a conflict on the Hill you
could not participate in the dinner this past Wednesday. I fully
understand the situation.
I understand that my associate, Joseph V. Reed, and your Miss
Mullady have worked out a date in April for the dinner and it is
my understanding this will take place at 6:00 p.m. at the Knicker-
bocker Club. I will try to get the same group together and look
forward to the dinner.
/630
With kind regards and good wishes,
Sincerely,
Dand
18
april
FORD & LIBRARY GERALD
THE CHASE MANHATTAN BANK
National Association
I Chase Menhattan Plaza, New York, New York 10015
December 1, 1972
Secretary
&
FORD
Board of Governors of the
Federal Reserve System
GERALD
Washington, D.C.
20551
LIBRASA
Gentlemen:
This letter is in response to the statement entitled "Proposed Amendments
to Regulations D and M" which was issued September 7, 1972 by the Board of
Governors of the Federal Reserve System.
We view the proposed reduction of the reserve requirement from 20 percent to
10 percent as a significant improvement. For one thing, a lower reserve re-
quirement will tend to increase U.S. banks' demand for Eurodollars and, there-
by, encourage the dollar's continued use as the foremost international trans-
action currency. For another, at the present time a 10 percent reserve re-
quirement appears perfectly adequate for purposes of monetary control. Fi-
nally, the proposed reduction would tend to lessen (although not eliminate)
the competitively discriminatory aspect of the Eurodollar reserve require-
ment whereby Federal Reserve member banks are subject to a costly require-
ment while non-member banking organizations, including the rapidly expand-
ing agencies and branches of foreign banks, remain completely unregulated.
It is difficult to understand why foreign banks operating in the United
States should be given a competitive edge over Federal Reserve member banks.
Thus, while we strongly urge that all banking institutions doing business
in the United States and employing Eurodollars be treated uniformly, we
welcome and endorse the proposed reduction in reserve requirement to the
more realistic 10 percent level.
At the same time, our endorsement does not extend to the proposed elimina-
tion of the so-called reserve-free base. We view this part of the proposal
as discriminating against those banks, such as Chase Manhattan, which at
considerable out-of-pocket expense and at the urging of the Federal Reserve
have cooperated with the Government's balance-of-payments program.
Back in 1969 when the Eurodollar reserve requirement was imposed for the
first time the choice was between a flat reserve requirement, as tradi-
tionally applied to domestic deposits, and an incremental reserve require-
ment. The Federal Reserve Board selected the latter, thus creating a re-
serve-free base equal to Eurodollar usage during a historical period. The
most critical aspect of this measure was the provision of COPY
Gerald R. Ford Library
BANK,N.A.
To
Page No.
Secretary
2
Board of Governors of the
Federal Reserve System
Washington, D.C.
20551
whoreby a bank's reserve-free base was to be lowered automatically as Euro-
dollar takings were reduced. The objective of this double-edged formula-
tion i.e., an incremental reserve requirement to discourage any increase
in Eurodollar takings and a base reduction to discourage any decrease in
Eurodollar usage was to moderate dollar flows between the United States
and other countries. The increase in the reserve ratio to 20 percent in
1970 was designed to give banks an added incentive to preserve their bases
at substantial levels. And the 1971 amendment to Regulation M permitting
U.S. banks to include within their reserve-free base certain Export-Im-
port Bank and U.S. Treasury securities was clearly an additional incen-
tive to maintain the base, as well as an acknowledgement on the part of
the Federal Reserve that although preservation of the base involved a
very high cost in terms of additional interest expense, it was very much
in the national interest. In sum, the sequence of promulgation and ap-
plication of the concept of a reserve-free Eurodollar base made it quite
clear that the Federal Reserve desired the banks to maintain their bases
at some cost to themselves, and the Board offered them important incen-
tives to do SO.
Aside from a basic desire to cooperate with the nation's balance-of-
payments program, the one and only reason for maintaining any kind of
base during 1971 -- when Eurodollar costs exceeded the cost of raising
CD money by an average 75 basis points was the expectation of having
available a reserve-free base in the future. From an individual bank's
point of view, the value associated with the future availability of a
reserve-free base was a matter of business judgment related to estimates
FORD
of future interest rate trends and deposit requirements. There was never
any assurance that a favorable interest rate differential would develop
enabling banks to recoup in later years the give-up interest expense in-
GERALD
LIBRARY
curred during 1971. But the way in which the Eurodollar regulation was
structured and the manner in which the policy subsequently was reaffirmed
implied an assurance that the reserve-free base would remain available for
a number of years into the future. Indeed, the Eurodollar regulation in
effect during 1971 was logical and equitable only if there was an implicit
assurance of the future availability of a reserve-free base.
The record shows that because of the high cost of preserving the base dur-
ing 1971 most banks in order to protect current earnings gave up their re-
spective bases, thus abandoning support of the balance-of-payments program
and foregoing any possible benefits later. For these banks, the proposed
elimination of the reserve-free base would have little practical effect.
However, for those U.S. banks which persevered and in good faith maintained
their bases at considerable cost, abrogation of the reserve-free base con-
cept would unfairly mullify the earnings sacrifice incurred during 1971.
Thus, the Chase Manhattan Bank incurred considerable cost in 1971 to main-
tain its reserve-free base in the belief that the Federal Reserve Board
would continue the incentive offered long enough to justify the obviously
heavy expense of preserving a base. There was no other justification
doing SO. We could not believe then and cannot believe no COPY
Gerald R. Ford Library
MANHATTAN
To
Page No.
Secretary
3
Board of Governors of the
Federal Reserve System
Washington, D.C.
20551
recognizing the cost incurred by the banks which continued to support the
balance-of-payments program, intended to offer a meaningless incentive
merely to entice banks into cooperation with the program. The record of
the Chase Manhattan Bank speaks for itself:
The Bank's Eurodollar takings for domestic use were a little over $3 bil-
lion in September 1969 when the Eurodollar regulation was imposed. Within
six months the Bank reduced its net takings to its original base of $2.25
billion and then held this amount through most of 1971. As the cost of
preserving the base became truly oppressive in 1971, the Bank sought to
lesson the cost of maintaining the base by (1) borrowing part of its total
net takings through the vehicle of selling under repurchase agreements
foreign obligor loans to its overseas branches and (2) purchasing the
special Export-Import Bank and U.S. Treasury securities offered for in-
clusion within the reserve-free base. Nevertheless, the Bank maintained
during 1971 the use of an average $777 million solely in order to pre-
serve its base at the highest feasible level. This resulted in consid-
erable additional interest expense amounting to millions of dollars. This
large cost was incurred in the belief that the Federal Reserve System
would support its Eurodollar regulation by continuing the concept of a
reserve-free base. In fact, failure to do so, perhaps even the suggestion
that the Board might now eliminate the opportunity to recover costs incur-
red in supporting the Board's program, can only raise doubts as to the suc-
cess of similar programs in the future.
Based on the intent, design and application of the Eurodollar regulation
first imposed in 1969 and reinforced in 1970 and 1971, and based on the
substantial expense incurred in good faith by the Chase Manhattan Bank
during 1971, we respectfully urge the Board of Governors to delete that
portion of the "Proposed Amendments to Regulations D and M" which calls
for the elimination of the reserve-free base. If, because of administra-
tive expense and regulatory concerns, the Board nonetheless feels com-
pelled to eliminate the reserve-free base, we respectfully ask that
special consideration in the form of an extended grace period be accorded
to those banks which have maintained reserve-free bases at great cost to
themselves.
Thank you for your attention and concern.
R.
GERALD
FORD
LIBITED
Willard C. Butcher
President
COPY
Gerald R. Ford Library
from October David 31, Rockefiller 1972
&
Comment on Regulations Concerning the Permitted Activities of
BH
Bank Holding Companies
11/6
In planning expansion under the Holding Company, banks
have delineated a number of business fields in which they seek
to expand. Their underlying philosophy in undertaking such
expansion is to establish financially congeneric businesses
which will enable the Holding Company to respond in a flexible
manner to changes in existing markets and thereby be able to
play an increasingly useful role in meeting the demands of
society in the years ahead.
To accomplish this goal, businesses carried on under
the Holding Company should be of sufficient scale to permit an
allocation of financial resources and management talent to
enable the Holding Company to provide the services needed in
an effective and efficient manner. Secondly, the Bank Holding
Company should be permitted to offer a sufficient range of
services and facilities which would enable customers to enjoy
both convenience and cost savings.
In attempting to apply the above criteria to specific
business areas, it is apparent that the present interpretations
of the Federal Reserve Board regarding "activities closely
related to banking or managing or controlling banks" present
a number of obstacles. This is illustrated below in a dis-
cussion of four fields in which Bank Holding Companies seek
to be active: namely, Business Information, Insurance, Con
GERM FORD LIBRARY
sulting and Real Estate Development.
2
Business Information
A BHC should be a leader in processing and packaging
financial information. Its ability to build and make available
to users significant banks of data on economic, commercial and
financial matters will be of critical importance to customers
in judging future risks and intelligently meeting future finan-
cial and production needs. Section 225.4 of Regulation Y of
the Federal Reserve Board states that the Federal Reserve Board
has determined that certain activities are closely related to
banking, including acting as investment or financial adviser
to the extent of furnishing general economic information and
advice, general economic statistical forecasting services and
industry studies (clause (5) (iv)) and providing bookkeeping or
data processing services for the internal operations of the
BHC and its subsidiaries and storing and processing other
banking, financial or related economic data such as performing
payroll, accounts receivable or payable, or billing services
BERALD FORD LIBHARY
(clause (8) (ii) )
In a footnote to clause (5) (iv) the Board contrasted
the services described with "management consulting" which the
Board defined quite broadly to include provision of analysis
or advice as to a firm's purchasing operations, production
operations, marketing operations, planning operations, personnel
operations, internal operations or research operations, all as
more fully described in the footnote. In Interpretations para-
graph 225.123 (g) the Board stated that data processing activi-
ties are intended to permit holding companies to process data
for others of the kind banks have processed in conducting
3
their internal operations and accommodating their customers,
but are not intended to permit holding companies to engage in
automated data processing activities by developing programs
unless the data involved are financially oriented.
It is apparent that Regulation Y and the Board's
Interpretations leave much room for argument concerning the
permissible areas of activities. A great part of the data
which a bank stores for use in its own commercial banking,
portfolio, and investment management and advisory functions
or for the accommodation of its customers is not solely finan-
cial but includes economic, statistical, marketing, product
development, personnel and other factors which taken together
are useful in arriving at credit judgments or investment evalu-
ations. A reasonable interpretation would allow a BHC to bank
this data and to program it in such manner that random access
can be obtained to specific kinds of information for a multi-
plicity of uses. Hopefully, the interpretation will be that
if the information is of the type that a BHC collects for its
own use or for the use of its customers, then such information
can be packaged in any form and made available to users for
whatever purpose they may wish to acquire the information. We
believe that such interpretation should not conflict with the
prohibition against management consulting which, as defined by
the Board, involves, as a basic ingredient, either analysis or
furnishing of advice and is, therefore, to be distinguished
from the furnishing of the data or information to be analyzed
or on which advice is to be based.
GERALD FORD LIBRARY
4
Insurance
In order to offer effectively and economically loan
services to consumers in the retail area, including mortgage
lending, personal loans, etc., banks will be required to make
available various types of insurance. Insurance is frequently
an integral part of the loan package and, unless a lender can
offer the total package, profitability, customer costs and
convenience and ability to meet the competition of other retail
lenders who can offer total packages will suffer. The Federal
Reserve Board has defined insurance activities permissible in
BHC lending operations. Interpretations paragraph 225.128.
These include (1) insurance that supports the lending operation
(such as credit life and credit accident and health insurance)
insurance that protects the collateral in which the BHC has an
interest; insurance that is part of an insurance package as a
general practice, such as liability insurance sold in conjunction
with an automobile loan or homeowner's insurance sold in conjunc-
tion with a mortgage to the lender; (2) renewal insurance sold as
a convenience to a purchaser so long as the total premiums are
not a significant portion of total insurance premiums; (3) insur-
ance protecting collateral for purchased loans provided the
security interests are purchased on a continuing basis; (4) insur-
ance in connection with bank related services such as loss of
securities or other valuables in safekeeping and in connection
with mortgage servicing but the insurance on the mortgagor may
not exceed the outstanding balance of the loan.
CERALD FORD LIBRARY
5
Although the Federal Reserve Board has determined
that such activities are permissible for a BHC, it is to be
noted that when several mortgage subsidiaries of Bank Holding
Companies recently applied to provide such insurance as de novo
activity the Board suspended the right to enter the field pend-
ing its decision on objections filed by the National Insurance
Association and the decision is still pending.
Assuming the Board will permit BHCs to engage in in-
surance agency activities as prescribed in Regulation Y and the
Board's interpretations, a number of issues remain:
1. Competitors of BHCs in mortgage lending and con-
sumer finance offer insurance as a part of the loan package
and it is believed that insurance commissions received have
a significant bearing on their profitability and the cost
of their services.
2. Customer convenience and protection suffer when
only limited packages of insurance can be offered; for
example, credit life insurance has a declining balance
and may not be as advantageous to the young homeowner as
straight life which remains in effect for the full amount
after the mortgage is paid; as another example, life in-
surance payable to the estate of a homeowner may be more
advantageous than credit life insurance payable to the
mortgage lender.
3. As a matter of customer convenience and profit-
ability to the lender, renewal insurance is a significant
factor even though the loan has been repaid.
FORD & LIBRARY GLRALD
6
It seems to be clear that the insurance area requires
additional consideration in order to accomplish: customer con-
venience and protection, cost saving, profitability and ability
to compete without impairing the capacity of independent insur-
ance agents and brokers to conduct their business.
Consulting
In order to play a constructive and dynamic role, BHCs
must command expertise in areas in which it is socially and
economically desirable for them to be active.
As noted above, the Board has ruled that "management
consulting" is not within the scope of activities authorized to
be conducted by BHCs and has defined the term very broadly.
However, there are specialized areas which BHCs are particularly
fitted to supply needed services and which do not involve the
broad spectrum of the management consultants. Such specialized
areas would include urban and new city development, cash manage-
ment, financial planning and analysis for governmental units,
businesses, charitable institutions and foundations, etc. It
is believed that these specialized activities under the BHC
should be permitted and that this could be accomplished in a
manner that would not place BHCs in a position to exercise undue
influence on customers of their bank affiliates.
BERALD FORD LIBRARY
Real Estate Development
In view of the financial role the banking industry
must play in helping to satisfy the housing needs of the nation,
BHCs through their mortgage banking affiliates should be permitted
to take equity positions in real estate projects. Mortgage
7
banking affiliates of BHCs are now more restricted than their
competitors which are not to affiliated. Urban renewal and
new city projects involve more than housing for medium and low
income groups -- they involve inner cities and new cities with
schools, churches, playgrounds and sufficient industrial, com-
mercial and higher valued private properties to provide an ade-
quate tax base. Since banks seek to serve the total population
and range of commercial and business activity they have an in-
centive to innovate and to participate in community developments
and business growth. BHCs should be permitted to play a more
creative role in bringing to fruition socially desirable pro-
jects. Our Bank's experiences in lending in economically de-
prived areas of New York City demonstrate the need for leader-
ship in the private sector and for direct participation in all
phases of community development from equity participation to
financial counseling of small businesses, new business enter-
prises and home purchasers.
BERALD FORD LIBRARY
Conclusion
In the principal business areas in which a BHC is
permitted to operate, it should be able to offer all facilities
and services necessary to enable it to meet the needs and con-
venience of its customers, to meet competition and to earn such
return on its investment as will permit it to be a vital factor
in its field. For example, in the real estate area, the develop-
ment of new cities and inner cities and urban redevelopment re-
quired to meet present day population demands involve more than
traditional bank type financing. A BHC, through its mortgage
8
banking affiliates, should have the legal capacity to offer
not only traditional financing and insurance agency services
related thereto but also to participate in land acquisition
and rehabilitation, municipal planning and building design,
feasibility studies, financial planning, appraisal and
counseling on civic development. Broadly based service
capability in other areas determined to be closely related
to banking is, also, necessary to promote viability and
vigorous competition in meeting public needs.
SECOND FEDERAL RESERVE DISTRICT
FORD is LIBRARY 076839
from David Reckefelle
October 31, 1972
TBH
Comment on
Regulations Covering Processing Procedures Under the Bank 11/6
Holding Company Act (the Act)
1. Procedures should be clarified so that the
commencement of the 91-day period specified in §§ 3(b) and
4(c) of the Act for processing applications to acquire bank
and nonbank subsidiaries can be determined by applicants.
Comment
Congress specified that the 91-day period begins on
the date of submission to the Board of the complete record
on the application. This indefinite wording has made the 91-
day maximum period illusory. In order to accomplish the
purpose of the Act and to insure that the Board's staff
adheres to the Board's view on this matter, rules should be
promulgated defining the commencement of the period.
2. The Federal Reserve banks should be granted
greater discretionary authority to handle and dispose of
applications under the Act.
Comment
In order to speed up the processing and determina-
tion of applications, it appears that more authority must be
delegated to the Federal Reserve banks. At the present time
LIBRATY GERALD FORD
2
the Federal Reserve banks have very limited delegated
authority under Regulation Sec. 265.2(f)(19)-(24). More-
over, any action taken by a Federal Reserve bank is sub-
ject to review upon request of a member of the Board
either on his own initiative or on the basis of a
petition for review by any person claiming to be ad-
verse. In effect, the delegated authority relates
only to de novo activities and experience has shown
that, even in this restricted area, the Board's staff,
on occasion, has withdrawn authority from the Federal
Reserve Bank to approve the application.
3. There should be clarification of the
effect of the Board's determinations under $ 4 (c) (8)
of the Act as set forth in $ 225.4 of Regulation Y and
the Board's Interpretations, on the one hand, and appli-
cations to engage in specific activities de novo, on
the other.
Comment
Although the Board has determined, for example,
that certain insurance activities are so closely related
to banking or managing or controlling banks as to be a
proper incident thereto and in Interpretations $ 225.128
has further defined permissible insurance activities,
DERALD FORD LIBRARA
3
nevertheless, authorizations to engage in insurance ac-
tivities de novo of the type specified have been sus-
pended. Apparently, such suspension occurs whenever
an objection has been filed without, at least, any pub-
lished determination by the Board that the adverse
comments are substantive.
4. Processing by Staff
Comment
It appears that the staff of the Federal
Reserve Board is not adequately manned to handle the
volume of applications under the Act, which has re-
sulted in extended delays. This suggests that in
addition to delegation of authority to the Federal
Reserve banks the Board's staff should be augmented
both in legal and banking areas by experienced per-
sonnel.
FORD & LIBRARY
THE CHASE MANHATTAN BANK
us
National Association
is
FOND
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
August 17, 1972
GERALD
LIBRARY
Dear Arthur:
Immediately following the completion of this Septem-
ber's World Bank and International Monetary Fund
meetings in Washington, D.C., Peggy and I will be
holding a luncheon in honor of Ministers of Finance
and Central Bank Governors of the member countries.
We very much hope that you and your wife will be able
to attend this luncheon, which will be held at my
family's estate at Pocantico Hills in Tarrytown, New
York, on Sunday, October 1. Refreshments will be
served at 12:00 noon, with luncheon to follow at
1:00 P.M.
Please let us know if you will be able to join us for
this occasion.
Sincerely,
David
letted
The Hon. Arthur S. Burns
Chairman
Board of Governors of the Federal
alim
Reserve System
Washington, D.C. 20551
May 18, 1972
Dear David:
I am most pleased to have your notedand letter of May 3,
1972 sending along your reply to my request at the FAC
meeting for reactions to the Hunt Commission recommen-
dations. I assure you that both I and my colleagues will
study carefully this informal expression of your bank's
views.
My warm thanks to you for your thoughtful response.
Sincerely yours,
Arthur F. Burns
Mr. David Rockefeller
Chairman of the Board
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10015
FORD & LIBRARY 938870
AFB: RCH:LG:cmn
#589
CC: Mrs. Mallardi (2)
Mr. Holland
Mr. Chase - file/date & original for memo to Board
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
January 26, 1972
DAVID ROCKEFELLER Chairman of the Board
FORD i 076870 LIBRARY
Dear Arthur:
I am delighted that arrangements have been worked
out so that you can come to New York for dinner -
with the members of the Clearing House on Wednes-
day, February 23. May I suggest that we meet in
the Library at the Knickerbocker Club, 2 East 62nd
Street, at 6:30 p.m. I have asked the other
members, as well as Messrs. Hayes and Sheehan;
dress will be informal.
We are looking forward to seeing you.
With good wishes,
april
Sincerely,
Daniel
Honorable Arthur F. Burns
Chairman, Board of Governors
Federal Reserve System
20th Street & Constitution Avenue
Washington, D. C.
JAN 1 8 1972
Dear David:
Thank you very much for your most gracious letter
of December 23. I appreciate having your reaction
to the international monetary realignment and I
want to encourage you to communicate your views
whenever the spirit moves you, even apart from
your participation on the Federal Advisory Council.
I look forward to seeing you and your Council
colleagues at the meeting early next month.
With all good wishes,
Sincerely yours,
(Signed) A. F. Burns
Arthur F. Burns
Mr. David Rockefeller
Chairman of the Board
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10015
CC: Mrs. Mallardi
NB/gkr:l/14/72
FORD i LIBRARY 076830
# X 26
Mrs. Mallandi
DEC 20 1973.
Dear David:
We were pleased to learn of your selection by the Federal
Reserve Bank of New YORK as a member of the Federal
Advisory Council to represent the Second Federal Reserve
District during 1972. On behalf of the Board of Governors
I wish to welcome you into the official family of the
Federal Reserve System and to express the hope that you
will enjoy your now duties and associations.
The nembers of the Board are looking forward to seeing
you at Council meetings and, of course, at any other
time you can drop in to visit us. They join me in
extending best wishes for the holiday season and for
the New Year.
Sincerely yours,
(Signed) Arthur F. Burns
Arthur 7. Burns
Mr. David Rockefeller
Chairman of the Board
The Chase Manhattan Bank
(National Association)
New York, lieu York
CC: Chairman Nickerson and President Hayes
GERALD FORD LIBRARY
JKS:jam
FROM THE DESK OF :
DAVID ROCKEFELLER
September 23, 1971
Dr. Arthur F. Burns
Arthur:
I thought you would be
interested in the attached.
Best to you.
Daniel
DR
FORD i LIBRARY GERALD
September 23, 1971
The President
The White House
Washington, D. C.
Dear Mr. President:
On various occasions in the past, you have paid me the compliment
of asking ray opinion on economic issues of concern to the nation.
You have been kind enough to suggest that you would be glad to
hear from me in the event that I had observations which I felt
it important to communicate to you. Recognizing the appalling
pressures on your time, I have refrained as much as possible
from taking advantage of your invitation.
At the present time, however, I do have some thoughts which I
would very much like to convey to you if you could spare a few
moments. I felt that your August 15 initiatives were timely,
necessary and effective. They brought a new sense of hope and
confidence, not only in this country, but around the world. As
you fully recognize, however, the longer run benefits from your
dramatic actions will depend in large part on interim steps which
are taken or planned in the relatively near future.
Specifically, I have some grave concerns with respect to the evolving
international monetary and trade picture. From talks I have had with
numerous foreign and domestic bankers, businessmen and economists,
I am fearful that in the absence of more positive and prompt initiatives
on our part, there could be & crystalization of ideas and actions both
at home and abroad which could be difficult to undo later and could be
contrary to the best long run interests of the United States. I have
some general thoughts on this subject which I would be happy to convey
to you if you wish me to do so. Needless to say, I would make myself
available to see you any time at your convenience.
With warm good wishes,
Sincerely,
FORD LIBRARY is 077839
David Rockefeller
352-3253-
THE CHASE MANHATTAN BANK
National Association
S
1 Chase Manhattan Plaza, New York, New York 10015
August 25, 1971
DAVID ROCKEFELLER Chairman of the Board
FORD is 9ERALD LIBRARY
Dear Arthur:
This is just a note to confirm the dinner set for
Wednesday, September 15, with leading New York
bankers to discuss the international monetary
situation.
We plan to meet at 6:30 p.m., informal, at the
Century Association, 7 West 43rd Street. I have
asked the guests if they would be good enough to
put together some of their thoughts beforehand on
this problem. I trust it will prove to be an
interesting evening.
Looking forward to seeing you on the 15th,
Sincerely,
David
Dr. Arthur F. Burns, Chairman
Board of Governors
called
Federal Reserve System
per
20th Street and Constitution Avenue
Washington, D. C.
9/10/m
Address by David Rockefeller
Chairman of the Board
The Chase Manhattan Bank
Before the Bond Club
New York, April 15, 1971
NEW COMMUNITIES: A NEW AVENUE FOR SOCIAL-PURPOSE INVESTING
This is the second time I have been invited to address the
Bond Club of New York -- a distinction that I note has been accorded
in recent years to only one other speaker, my good friend John
Lindsay.
I don't know what inferences the political writers may
draw from this. Perhaps that our Mayor will shun both parties to
become a banker!
Since this is a repeat performance, I might point out
that in atomic research, the physicists have discerned two kinds of
risks that also apply, in a sense, to luncheon speakers. When you
invite someone for the first time, you take what the scientists
call a "calculated risk." However, when you extend a second invitation,
it is a "known risk."
So, apparently you are either prepared for --- or resigned
to -- what will follow, and I find that very reassuring indeed!
I know of no group that, over the years, has been more
receptive to new ideas or more willing to undertake formidable tasks
of civic and social benefit than members of the Bond Club. In the
And
FORDO i LIBRARY 938870
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1950's, when there was concern over the exodus of business and
financial houses from Wall Street to midtown Manhattan, firms
represented by your membership joined with others to form what
became the Downtown-Lower Manhattan Association. The efforts of
this group helped immeasurably to turn the tide and bring about an
orderly redevelopment of the financial district.
Some of you may recall that when I spoke here eight years
ago, I discussed the subject of urban renewal. Today, I would like
to go beyond the renewal of existing cities -- although this remains
a compelling problem -- and talk about the need for a well-planned
and soundly financed program of developing new towns and satellite
cities.
In presuming to consider the future of our cities, I
realize that I open myself to the charge of being a visionary, a
dreamer, certainly an optimist in an era when urban pessimism is
the fashion.
Yet I know I am speaking here today to optimists. When
the Dow was at its low point a while back, I overheard one of your
members being questioned about the possibility of another Great Depression.
"Depression?" he responded increduously. "We are in no
danger of a Depression -- but we sure are having the worst boom in
a good many years!"
To contemplate the immensity of the task we face in dealing
with our growing population and our deteriorating core cities,
it is necessary to recognize some of the basic elements that are
exerting pressures on us.
FORD & LIBRARY GERALD
- 3 -
Today, we have a population of some 206 million. That
figure is expected to increase by 75 million during the next 30
years.
Not only is the population increasing but it is moving
into the areas of great urban sprawl. Prior to 1946, 56%
of the people lived in metropolitan areas. By 1970 it was 66%.
And by the end of the century, it is expected to reach 78% of the
total.
Briefly, this means that we are approaching a point where
more than three-quarters of our population will live on 10% of the
land area of the United States.
The result, as we can see so well, is haphazard growth
in which social and economic ills tend to multiply, both within
the cities and in the suburbs that fringe them. Right here in
New York City, one out of eight persons lives in what are known as
"old law" tenements -- buildings declared unfit in 1901.
GERALD FORD LIBRARY
In the Urban Growth and New Community Act of 1970,
Congress issued a scathing indictment of our present development
policies. If the established pattern continues, it said, the result
will be inefficient and wasteful use of land resources which are
of national and environmental importance. Further, it was contended,
there will be destruction of irreplaceable natural and recreational
resources and increasing pollution of air and water.
Continuing on our present path means diminishing
opportunities for private industry to provide sorely needed housing --
failure to make the best economic use of the potential resources
of the nation's small cities and towns -- further lessening of employment
and business opportunities, particularly among the poor and
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disadvantaged -- greater increases in the distances between where
people live and work, coupled with increased cost and decreased
effectiveness of public and private facilities for urban transportation.
It was evident to the Congress that new community development
has been held back by the difficulties of obtaining adequate
financing at moderate cost, together with the problem of assembling
sufficiently large sites and the timely, coordinated installation
of infrastructure -- streets, sewers and other public facilities.
From this it is obvious there are two critical needs.
GERALO FORD LIBRARY
One is the rehabilitation and redevelopment of our urban
areas, the core cities now bearing the brunt of population pressures.
The second is the development of new communities that will put to
use the undeveloped rural areas and siphon off some of the population
now flowing into the urban centers.
This is not an "either-or" decision. Both must be done
simultaneously.
Recognizing the enormity of the problem, the National Committee
on Urban Growth Policy has recommended the creation of 100 new
communities of 100,000 persons each, and ten additional cities of at
least one million persons each. To implement the proposal, the
Community Development Corporation has been established under the
Housing and Urban Development Act of 1970 to handle some of the
financing of new communities. Unfortunately, its resources are far
from adequate.
To illustrate the immensity of the financing necessary,
there are recent studies showing that the cost of land, planning and
management, and infrastructure for a new community to handle 100,000
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population could require $50 million. These start-up costs --
all, so to speak, before the first cellar hole is excavated -- are
said to be as much as 20 times a developer's total assets.
Interest payments alone on start-up financing of $50 million can
come to $13,000 a day.
If we apply this $50 million estimate to the recommendations
of the National Committee on Urban Growth Policy for 110 new
communities, the start-up funds required would be at the very
least a staggering $10 billion.
The facts we must face are that we are going to have
tremendous population growth and we are going to have to pay for
facilities for these new people. We can't escape it. However, by
developing "new towns" before the full force of the avalanche is
felt, we can effect the savings that usually result from advance
planning and execution.
I find the "new town" concept exciting. There are about
a dozen now underway but I have been particularly interested in
Columbia, Maryland where our own bank participated in the financing.
In this planned community, about half the 14,000 acres are set aside
for residential purposes. A quarter of the land is open space for
parks and recreation. Another quarter is for commercial and
industrial use.
Columbia has several unusual features. Low and moderate-
income multi-family dwellings are almost indistinguishable in design
and character from higher-income units. There are specially designed
individual routes for vehicles and pedestrians. A physician's visit
GERALD FORD LIBRARY
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costs $2.00 and there is psychiatric counseling under a city-wide,
commercially-financed group health plan. Catholic and Jewish
congregations have joined with 13 Protestant denominations to build
facilities for shared use.
The enthusiasm generated among planners, developers and
residents of Columbia indicates that the solution of the "people
problem" through new communities is high on the agenda among
Americans.
This was brought forcefully to my attention in more than
150 letters I received after mentioning "new towns" in a speech last
February. There were many suggestions for implementation -- some
quite novel.
One correspondent suggested that ghettos be cleared by
purchasing trailers and moving families into them while deteriorated
areas were razed and new housing constructed. Another thought new
communities could consist of a cluster of buildings that were built
1,000 feet underground and two miles into the sky --- complete with
everything from supermarkets to churches and recreation areas on
platforms far above the ground.
There were letters from fashion groups and monorail builders;
from students requesting material on which to construct theses and
persons wishing to sell family farms and vast ranches. A number
volunteered their services without pay, including an architect and
a college president.
Dozens of letters praised the "new town" idea -- sincerely
hopeful these would lead to a halt in core city deterioration and a
new way of life.
FORD is LIBRARY GERALD
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To expedite urban rehabilitation and new communities
on a scale that will satisfy our requirements, I believe we need
a "package" approach -- a combination of government and private
enterprise, each playing its separate role.
Government is needed for site acquisition, for revision
of zoning and construction codes, for providing essential services
and tax incentives. Private enterprise is needed to procure the vast
development funds that are required to make "new towns" economically
viable through innovative financing.
To meet these two requirements, I suggest the creation of
two corporations of national scope. One, governmental, would handle
acquisitions and assist in guidance in terms of national land-use
planning. The second, private or quasi-public, would be organized
to provide the predevelopment financing.
The government agency would acquire by purchase, trade,
grant or otherwise, sites for new and satellite communities or core
city regeneration including "new towns in town."
It should have limited powers of eminent domain but with
built-in safeguards at state and federal levels fully insuring states'
rights, and the welfare of people living within the proposed sites.
Only with such protective devices could the program be acceptable
and successful.
The financing arm of this partnership could be a new kind
of non-profit or limited-profit bank, organized regionally in the same
manner as the Federal Reserve system, to mobilize and channel the nation's
private financial resources into this broad new community development
program.
FORD is LIBRARY
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The bank would combine the functions of site approval,
lending, underwriting and market promotion. Branches would be
dispersed in a number of districts throughout the nation.
Its equity would be a reasonable sum paid in by commercial
banks, perhaps apportioned on the basis of the individual bank's
assets. There would be a modest dividend return, payable on the
recommendation of the Board of Governors after all debt service
requirements had been satisfied.
Additional capital would be obtained through the sale of
debentures to insurance companies, pension funds, foundations,
church funds and others. Yields would float with a selected bond
index, say Moody's Aa industrials.
The important consideration is that the bank would provide
a new avenue for a broad spectrum of investing groups to channel
social-purpose funds into a national effort to implement urban
growth on an organized basis rather than doing so entirely through
piecemeal lending.
To some extent, the lending of social-purpose money has
been primarily undertaken by the banking and insurance industries,
with some coming from certain individual corporations or religious
groups. But the sale of debentures by the bank would open the door for
even more members of the financial community to share in a united
effort and play a constructive role in improving our society.
FORD if LIBRARY
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Land development loans would be made to the builders of
new communities for total land acquisition and development costs.
Interest might be 2% above the prime rate on a floating basis.
The loans could mature in 15 years and at least 50% of the cash
flow generated by the developers through sales and leases would
be utilized for debt service.
In the marketing area, the bank would seek advance
commitments among major industrial and commercial concerns. This
is the way it might work. A branch of the bank in a district where
a new community was planned would report on the economic and
political feasibility of the location. Various member banks would
make preliminary inquiries among their industrial and commercial
customers to determine whether they would consider expansion into the
site under consideration.
Given encouraging reports, the bank would agree to under-
write the site acquisition on two conditions. One would be that its
commitment be limited to five years. The second would be that the
site must be delivered free of restrictions that would inhibit
innovative development of a new community.
With underwriting terms met, the bank would then seek
firm commitments for the lease of sites to those firms that had
shown an interest during the earlier exploration. The bank would
select a developer or a consortium of interests and work out the
financing details.
FORD is LIBRARY GERALD
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Once the infrastructure was completed, financing would be
handled through conventional sources. It is at this point that I
feel there would be enhanced appeal to members of this audience.
When this club was founded, railroad bonds were
important issues. But the transportation systems required both
within the new community, and linking it to others, may well develop
a new bond and a new breed of transportation bond men.
As the community is new, the transportation systems should
be innovative. They might include elevated or underground monorails,
air-cushion vehicles, computerized rapid transit, containerized
passenger-freight vehicles or traveling belt shuttles. Because
such methods of moving people are still to be perfected there are
no statistics. Thus, new concepts of financing may be
required.
Beyond this, would be the underwriting of debentures for
utilities bringing power to the new communities; to corporations
building plants and processes for environmental control on the
commercial and industrial sites; and for other associated ventures
requiring capital funds. I see new towns and satellite cities opening
fresh vistas for the financial community, as exciting as the birth
of a series of new communities.
With reasonable adjustments and modifications, site
selection and financing would be equally applicable to a new community
some distance from the present urban areas, to satellite communities
on the metropolitan fringes or in the ghetto or other deteriorating
areas within core cities.
FORD & GERALO LIBRARY
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Obviously many of the more intricate and innovative areas
of financing can only be fully perfected when the government, and
private or quasi-public, corporations are established and their
respective functions and patterns of operation determined.
However, it is my conviction that we should move at once
to meet head-on the crisis posed by the 75 million or more new
Americans who will be with us by the end of this century. It is
my further belief that the answer can only be provided by the
cooperative efforts of government, to undertake the planning
necessary, and the private sector to meet the needs for financing
and actual development.
We need highly motivated men and women. They must shun
half-measures because anything less than a total effort to relieve
the "people pressure" and correct our national ills is a threat to
our economic and social survival.
It is because I firmly believe this that I suggest each
of you here today take a place in the ranks of those committed to
wipe out our ghettos, renew our cities and establish new towns of
hope. Dedicated to such a cause we can reshape the face of the
nation.
FORD is LIBRARY 976670
20th Anniversary Dinner
NCDH
NATIONAL COMMITTEE AGAINST DISCRIMINATION IN HOUSING, INC.
1865 Broadway, New York, N.Y. 10023 212-265-2780
"
a decent home and a
Dinner Co-Chairmen:
suitable living environment
Vernon E. Jordan, Jr.
for every American family
"
Walter P. Reuther
David Rockefeller
Dinner Committee:
I.W. Abel
Ralph E. Ablon
Morris B. Abram
February 23, 1971
Hon. Winthrop W. Aldrich
Amyas Ames
Mr. Arthur F. Burns, Chairman
Hoyt Ammidon
Larz F. Anderson
Board of Governors of the
Paul S. Armington
Federal Reserve System
Mrs. Max Ascoll
Harry S. Ashmore
Washington, D.C. 20551
Hon. Herman P. Badillo
Edgar P. Baker
Roger Baldwin
Dear Mr. Burns:
Irving Beer
cm
William Beinecke
We especially hope that you, as a Member of the 20th
Joseph A. Beirne
Philip I. Berman
Anniversary Dinner Committee for the National Committee
Mrs. Viola W. Bernard
Against Discrimination in Housing, can participate in
Leonard Bernstein
Eugene R. Black
the Anniversary celebration on Wednesday evening, March
Joseph L. Block
31st, 1971 at the Plaza Hotel, New York City. Myrna
Mr. and Mrs. Robert Boehm
Mrs. Karl A. Bostrom
Loy, Co-Chairman of NCDH's Advisory Council, will preside.
Hon. Chester Bowles
Louis M. Bradford
Herbert A. Brandon
In addition to marking the completion of NCDH's second
Harry Brandt
decade, the Anniversary Dinner will pay tribute to two
Hon. Edward Brooke
Stimson Bullitt
outstanding Americans -- the late Walter P. Reuther and
Hon. Ralph J. Bunche
Dr. Frank S. Horne.
Arthur F. Burns
Benjamin J. Buttenweiser
Mrs. Dann C. Byck
Walter Reuther, who was associated with NCDH from its
Henry B. Cabot
early years, was devoted to the principles of democracy
Alexander Calder
Mrs. Alexander Campbell
in housing. His tireless and unselfish efforts were to
William Polk Carey
secure low- and moderate-income housing for all working
Hon. Matthew G. Carter
Hon. Shirley Chisholm
men and women at prices they could afford to pay. We
Hon. Ramsey Clark
continue his name as Dinner Co-Chairman because of his
Hon. William L. Clay
Dr. Everett R. Clinchy
contribution towards the achievement of these goals.
Edwin D. Cohen
James R. Compton
Hon. John Conyers, Jr.
Dr. Frank S. Horne, national authority in the housing
Gardner Cowles
field, was an initiator of the Federal Government's
Stephen T. Crary
Dr. William H. Crocker
FHA Race Relations Service, the first Executive Secretary
Richard W. Dammann
of the New York City Commission on Human Rights, and
Maxwell Dane
Mrs. Joan K. Davidson
more recently, Assistant Administrator for Equal
Lloyd Davis
Opportunity for New York City's Housing and Development
Eli Whitney Debevoise
Administration. Widely known as the "Dean of Open
Anthony J. De Lorenzo
Max Delson, Esq.
Housing", he was a founder of NCDH, Chairman of its
Hon. Charles C. Diggs
Executive Committee for many years, and is now Honorary
Hon. C. Douglas Dillon
Melvin Dubin
Chairman. Dr. Robert C. Weaver, former Secretary of the
Mrs. Peter Duchin
Department of Housing and Urban Development, will pay
J. Lawrence Duncan
Cyrus Eaton
tribute to Dr. Horne for his long years of service to
David Egger
all Americans in the field of housing.
Ruth Ellington
FORD
Ralph Ellison
Arthur D. Emil
Irving M. Engel
Armand G. Erpf
GERALD
Address
Richard Feigen
Joseph H. Filner
Thomas K. Finletter
(listing continued on reverse)
Contributions to NCDH are tax-deductible.
20TH ANNIVERSARY
DINNER COMMITTEE (Continued)
PAST NCDH PRESIDENTS AND BOARD CHAIRMEN
Harvey S. Firestone, Jr.
Dr. Theodore K. Lawless
Hon Carl T. Rowan
Charles Abrams
George R. Metcalf
Richard T. Fisher
Mrs. Herbert H. Lehman
Arthur Rubloff
Algernon D. Black
Robert C. Weaver
William Clay Ford
Mrs. Salim Lewis
Bayard Rustin
Mrs. John French
David E. Lilienthal
Morris A. Schapiro
OFFICERS AND BOARD
Michel Fribourg
Harold F, Linder
Dore Schary
Robert L. Carter
Madison S. Jones
Dr. Erich Fromm
Hon. John V. Lindsay
Hon, James H. Scheuer
President
George W. Jones
R. Buckminster Fuller
Mrs. Vladimir S. Littauer
Mrs. Dorothy Schiff
D. John Heyman
Tom Kahn
Mrs. W. St. John Garwood
Hon. Henry Cabot Lodge
John M. Schiff
Chairman of the Board
Ruth Kingman
Martin Gerber
John L. Loeb
Melvin R. Seiden
Philip M. Klutznick
William H. Oliver
Ferd Kramer
Bruce A. Gimbel
Mrs. Laila L. Long
Eustace Seligman
Chairman, Executive
Edwin J. Lukas
Mrs. Louis S. Gimbel, Jr.
Myrna Loy
John J. B. Shea
Committee
Benjamin McLaurin
Harry Golden
Stanley Marcus
Theodore H. Silbert
Warren T. Lindquist
Isaac G. McNatt
Paul W. Goodrich
Konrad Matthael
Hon. Samuel J. Simmons
Vice-Chairman, Executive
Cyril Magnin
Katharine Graham
Neil A. McConnell
Robert E. Simon, Jr.
Committee
Donald D. Martin
Armand Hammer
James S. McDonnell
A. Maceo Smith
Edwin C. Berry
Elizabeth J. Miller
Hon. Philip A. Hart
Hermon Dunlap Smith
Vernon E. Jordan, Jr.
William Morris
Joseph E. McDowell
Hon. William S. Hart
Dr. B. T. McGraw
Young M. Smith, Jr.
Henry Lucas, Jr.
Emanuel Muravchik
James Robinson
Richard E. Murphy
Huntington Hartford
Dr. Joseph P. McMurray
Leonard Spacek
Richard E. Young
Woodie Pagán
Ben W. Heineman
Hon. Robert B. Meyner
Asa T. Spaulding, Sr.
Vice-Presidents
Richard Parrish
Andrew Heiskell
James A. Michener
Modie J. Spiegel
Wayne Phillips
Alex Fuller
William E. Hill
Seth M. Milliken, Jr.
C. Maxwell Stanley
William L. Rafsky
Secretary
Ethan A. Hitchcock
Newton Minow
Howard Stein
Richard Ravitch
Arthur D. Wright
Dr. Hudson Hoagland
Hon. Walter F. Mondale
Roger L. Stevens
George M. Raymond
Treasurer
Seymour Reich
Harold K. Hochschild
Rt. Rev. James W. Montgomery
Hon. Adiai E. Stevenson III
Sol Rabkin
Marvin Rich
Kenneth F. Holbert
Mrs. Mollie Moon
Hon. Louis Stokes
General Counsel
Ruth Robbins
Hon. Jerome H. Holland
John Mosler
Edward Durell Stone
Edward Rutledge
Lenerte Roberts
Mrs. Joye S. Hordes
Dr. Emily Mudd
Martin Stone
Jack E. Wood, Jr.
Jackie Robinson
H.W.Huber
Dr. Stuart Mudd
Anna Lord Strauss
Executive Co-Directors
Joseph B. Robison
Sol Hurok
Louis Stulberg
Flora Rothman
John D. Murchison
Arnold Aronson
Mrs. Raymond V. Ingersoll
Dr. James M. Nabrit, Jr.
Allen P. Stults
W. Byron Rumford
Ben Barkin
Anthony C. Sabatine
Robert S. Ingersoll
Albert Nerken
David Susskind
John Behrens
Seymour Samet
Floyd M. Irvin
Mario G. Obledo
Hon. Percy E. Sutton
Derrick Bell
Howard D. Samuel
Hon. Henry M. Jackson
Dale O'Brien
Ellen Tarry
Peggy Billings
Emil Seliga
Mr. and Mrs. Wagner D. Jackson
Harry Offenhartz
Albert L. Thompson
Yvonne Brathwaite
Boris Shishkin
Marcus H. Caines
Frederick Jaicks
Harold W. Oliver,
Robert A. Thompson
Henry Siegman
Kenneth R. Camp
Frederic Papert
John L. Tishman
Donald S. Slaiman
Eliot Janeway
Marvin Caplan
John Slawson
Benjamin A. Javits
Malcolm E. Peabody, Jr.
Mrs. Ronald Tree
Kenneth B. Clark
Moreland G. Smith
Hon. Jacob K. Javits
Martin Peretz
Gus Tyler
Glenn A. Claytor
Charles S. Spiney
Clarence R. Johnson, Sr.
Peter G. Peterson
Henry H. Villard
Wilbur Daniels
John S. Stillman
Joseph E. Johnson
Mrs. Lewis Pettit
Chauncey L. Waddell
Adrian DeWind
William R. Valentine
Daniel Walker
Hortense W. Gabel
Philip Johnson
Thomas D. Philipsborn
Florence C. Vaughn
Walter W: Glesey
George Jones
Gerard Piel
DeWitt Wallace
Robert Wechsler
Marvin S. Gilman
Harry Kahn
Mrs. Mary D. Pinkard
John R. Wanamaker
Leon N. Weiner
Marvin E. Gilmore, Jr.
Peter Weiss
Kivie Kaplan
Jacob S. Potofsky
Robert Penn-Warren
Jack Greenberg
Charles M. Whelan
Hon. Nicholas DeB. Katzenbach
Dr. C. B. Powell
Dr. Robert C. Weaver
George W. Grier
Jean M. Whittet
Mrs. Jean Kerr
George D. Pratt, Jr.
Mr. and Mrs. Robert C. Weinberg
LaDonna Harris
Bernard Weissbourd
James H. Harvey
C. F. Kettering
Hon. Charles B. Rangel
Walter L. Kidde
Bernard Rapoport
John H. Wheeler
Dorothy Height
Frank S. Horne
Alleen C. Hernandez
Joseph Klingenstein
Hon. Whitelaw Reid
Roy Wilkins
Honorary Chairman
Florence Allen Holmes
Daniel E. Koshland
Frederick W. Richmond
Hon. Franklin H. Williams
Edward L. Holmgren
Myrna Loy
Mrs. Thomas S. Lamont
Robert V. Roosa
Joseph C. Wilson
Paul Jennings
Carl T. Rowan
John J. Larkin, Jr.
James W, Rouse
Leonard Woodcock
Clifton Johnson
Co-Chairmen, Advisory
Frank H. Woods
Council
(Committee in formation)
NCDH NATIONAL COOPERATING ORGANIZATIONS
Amalgamated Clothing Workers of America, AFL-CIO
National Association for the Advancement of Colored People
American Baptist Convention
National Association of Housing Cooperatives
American Civil Liberties Union
National Association of Negro Business and Professional Women's Clubs
American Ethical Union
National Catholic Conference for Interracial Justice
American Federation of Labor-Congress of Industrial Organizations
National Community Relations Advisory Council
American Federation of Teachers, AFL-CIO
National Council of Churches of Christ
American Friends Service Committee
National Council of Jewish Women
American Jewish Committee
National Council of Negro Women
American Jewish Congress
National Education Association
American Veterans Committee
National Urban League
Americans for Democratic Action
Oil, Chemical and Atomic Workers International Union, AFL-CIO
Anti-Defamation League of B'nai B'rith
Scholarship, Education and Defense Fund for Racial Equality
Brotherhood of Sleeping Car Porters, AFL-CIO/CLC
Service Employees International Union, AFL-CIO
Commonwealth of Puerto Rico, Department of Labor, Migration Division
Southern Regional Council
Congress of Racial Equality
Sponsors of Housing Investment, Inc.
Friendship House
Synagogue Council of America
Industrial Union Department, AFL-CIO
Union of American Hebrew Congregations
International Ladies' Garment Workers' Union, AFL-CIO
Unitarian Universalist Association
International Union of Electrical, Radio and Machine Workers, AFL-CIO
United Auto Workers of America
Jewish Labor Committee
United Church Board for Homeland Ministries
League for Industrial Democracy
United Housing Foundation
League of Women Voters of the United States
United Steelworkers of America, AFL-CIO
The Methodist Church
Young Women's Christian Association
NAACP Legal Defense and Educational Fund, Inc.
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At this mid-point of the 20th Century, we are deeply
disturbed, as are millions of Americans, that we have
yet to achieve an "open housing market" that will
give every family equal access to decent housing in
a community of their choice. Your sponsorship and
presence at this Dinner will contribute immensely
to the realization of our goals for democracy in
housing.
We enclose a Reservation Form on which you can list
the number of tickets and the names of your guests who
will attend.
Vernon E. Jordan, Jr. Sincerely, David David Rockefeller Rochipelle
Dinner Co-Chairmen
FORD is LIBRARY
yp
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
December 4, 1970
Mr. Arthur F. Burns, Chairman
Federal Reserve Board
20th & Constitution Avenue
Washington, D.C. 20551
Dear Arthur:
Vernon Jordan of the United Negro College Fund and I are
serving as co-chairmen of the 20th Anniversary Dinner of the
National Committee Against Discrimination in Housing, to be
held March 31, 1971, at the Plaza Hotel in New York.
Before his tragic death, Walter Reuther had agreed to join
us as a co-chairman of the Dinner Committee, and at the
request of his associates we are continuing his chairmanship
as a tribute to him.
As you may know, NCDH is the only national civil rights
organization devoted exclusively to open housing. It has
worked for two decades to carry out programs aimed at
achieving equal opportunity in this field.
Today, when providing adequate housing and eliminating
discrimination are of utmost urgency, continued progress
toward these goals depends more than ever on the strong
support of concerned citizens like yourself.
For this reason, I am asking you to serve with us as a member
of the NCDH 20th Anniversary Dinner Committee. This
commitment will not make any demands on your time, but your
endorsement of NCDH's goals will be of great help in our
efforts to gain clear recognition of the immediate and
critical need for equal housing opportunity.
For your convenience, a reply card and envelope are enclosed.
I earnestly hope that you will join us in this important
endeavor.
With best regards,
Sincerely,
David
GERALO R. FORD AA LIBRARY LIBRA,
New Towns
and
Satellite Cities:
A Proposal
for Development
and Financing
New Towns
and
Satellite Cities:
A Proposal
for Development
and Financing
GERALD R. FORD LIBRARY
An Address by
David Rockefeller
Chairman of the Board
The Chase Manhattan Bank
Before Regional Plan Association
New York, February 16, 1971
From time to time, I am asked what I think about inflation, and
I've never been able to improve upon Milton Berle's definition. Infla-
tion, he said, is when people's money won't buy what it did during the
depression when they didn't have much of it anyway!
Bankers have been forcefully reminded of inflation's impact by sev-
I appreciate enormously the generous recognition that has been given
eral recent developments, including the soaring cost of building and
this evening to the things I've tried to do toward improving this city
outfitting new branches-and you know how many of those are opening
that we all love SO much, even though it causes us anxiety.
up all the time. One survey showed recently that our Avenue of the
To be singled out for acclaim by the Regional Plan Association is a
Americas now has more banks than bars! Some people, I'm afraid,
heartening tribute, indeed, and I am most grateful to you, Rusty Craw-
would not look upon that as a forward step in regional planning!
ford, and all your fine associates.
Friends and I were discussing urban planning recently while watch-
I should warn you, though, that you may be establishing a dangerous
ing the television coverage of Apollo 14. One of the group raised the
precedent at these annual dinners. My brother Nelson was the speaker
question why, since we can put men on the moon, we cannot solve our
at last year's affair, and I myself have that honor tonight. I just wonder
urban problems which are SO much closer at hand.
whether you are aware that there are three more Rockefeller brothers!
"The explanation is simple," said another. "We know where the
Actually, father was a strong supporter of this Association. At one
moon is!"
time, he stipulated that funds he provided for land acquisition and an
In reflecting on this comment, I couldn't help feeling that it pretty
extension of the Palisades Interstate Park System, in the area north
well summed up the difficulty we have in coming to grips with that
of the George Washington Bridge, be used in accordance with the First
tangled complex of problems we call "The Urban Crisis."
Regional Plan of 1929.
As the Regional Plan Association found out early in its very useful
When Nelson originally ran for Governor, I suspect he had occasion
life, the urban crisis is not just a single problem. Rather it is a kind
to feel sorry that father was SO self-effacing. He found to his dismay
Multiplicity of
of witches' brew, blended from all the major ills of our time-inadequate
that the name most frequently associated with Palisades Park was
Problems
educational systems, hard-core unemployment, poverty in the midst
Harriman!
of plenty, antiquated transportation, shameful housing, insufficient
Seeing David Frost here as Master-of-Ceremonies reminded me that
public facilities, and all the rest.
my place on the program this evening had improved considerably over
This evening I'd like to touch briefly on some of the problems we
the last time we met. On that occasion, David invited me to appear on
face-problems that have been starkly delineated in the Association's
his TV show, and of course I was happy to accept. I didn't mind SO
recent and comprehensive Second Regional Plan. Then I'd like to
much waiting in the wings while he interviewed two famous Hollywood
explore a concept of development and financing that seems to me to
actors-but I did think David carried the "upstaging" bit a little too
have application not only to our urban areas but also to the exciting
far when he then brought on the Prime Minister of Sweden!
development of "new towns" and "satellite cities."
As Rusty Crawford can testify, it is particularly reassuring these
I should tell you at the outset that I personally am not a devotee
days for a banker to hear anybody say nice things about him because,
of the new fashion of urban pessimism. This is the dispirited and dis-
frankly, in these inflationary times, we have been getting far more
illusioned cult that never ceases to predict an early and ignominious
2
brickbats than bouquets.
3
end to all our cities.
Such an attitude, in my judgment, does much less than justice to the
Though
romantics
may
still
am of the glories of small-town life,
thousands of dedicated civil servants, determined businessmen and
thousands of Americans continue by preference to pour into our great
concerned citizens who have opted for enterprise and ingenuity as their
urban regions to take advantage of the unparalleled opportunities they
response to a troubled era. To me, it would be both impractical and
do, in fact, offer. To the country lover, it may seem surprising that
unthinkable to surrender to frustration at a time when there is so much
nearly all the increase in our national population over the past decade,
constructive work to be done.
took place in metropolitan areas-in the central cities and especially in
I spoke earlier of how difficult it is for the average citizen to see the
the suburbs.
urban crisis in perspective. Perhaps it helps if we think of the United
In view of this trend and because of the huge investment we have
States as two broad geographical areas.
in our existing cities, it is the height of folly to think-as some do-
One is rural America, a region SO huge that, if it were a separate
that we can ignore the refurbishing of our present metropolitan areas
The Rural-Urban
country, it would rank in area as the world's ninth largest. Yet, at
in favor of creating new cities away from the congested corridors. Real-
Picture
the same time, a region SO low in income that, by itself, it would be
istically, we have no choice but to do both.
the world's sixth largest underdeveloped nation.
Today we have a population of some 206 million. Projections show
This rural America contains the highest proportion of our poverty,
that we are likely to add as many as 75 million more people by the
the lowest average per capita income, the most inequitable distribution
end of this century-less than 30 years away. While this represents
of educational opportunity, the bulk of our inadequate housing.
a lower rate of population growth for the United States than in the
The second geographical element consists of six large urban-and-
past-and is substantially lower than that of the developing nations-
suburban sprawls: the Boston-Washington corridor down the Atlantic
it still means that we must assimilate vast additional numbers of people
seaboard; from Buffalo along the Great Lakes beyond Chicago; the
in our country. In short, our urban problems will grow, not diminish,
spill-out of Los Angeles engulfing over half the California Pacific; the
in the remaining decades of the 20th century.
Florida spread; the Atlanta-Piedmont crescent; and the Fort Worth-
Seldom does a day pass that we don't hear the question: "What's
Dallas-Houston complex.
the solution?"
Statistics confirm the pattern that the nation's urban areas ac-
But I wonder if a more realistic query wouldn't be: "What's the
commodate 70% of all Americans on about 10% of the land.
best approach to these problems?"
Thus, in our rural areas, we have more room than people-more
Experiences I have had in relation to Morningside Heights, Lower
than enough space to expand, and in addition a real need for the ad-
Manhattan and urban activities of our own bank is recent years suggest
vantages that business and industry can provide.
that the right approach is all-important.
On the other hand, we have the urban areas with far more people
I might add, parenthetically, that this lesson on the proper approach
than room. In these areas, we have seen haphazard growth in which
was reinforced, at least in my own mind, when I tried to convince some
social ills tend to multiply.
of my associates, at our friendly little loan company, to decorate their
Given these disparities, it is only natural to ask: Why don't we get
offices with contemporary art. That's a job that definitely calls for the
people to move from congested metropolitan centers to sparsely settled
right approach!
rural areas?
At any rate, in approaching urban problems, it is absolutely vital
In a regimented society that might be a good way to do it, but it is
to gain the cooperation of three elements: private business, govern-
hardly the American way.
5
4
ment, and the local citizenry. Unless these three can reach a broad
sensus, even the finest plan will become ching more than a blue-
This is just one example of expanding corporate trend toward
print for failure.
direct participation in community improvement that is becoming na-
I believe that the basic task of urban rehabilitation is one for private
tionwide in scope. I am not suggesting, of course, that business single-
enterprise. But it must be a cooperative venture. Government must
handedly-without government assistance-can solve the problems of
lend support through zoning, through supplying essential services,
our cities. However, it can take-and is taking-a livelier interest and
and through tax incentives. Furthermore, the goodwill of the local
is playing a larger role. And I believe it will do even more as it becomes
residents and their concurrence in the program is an indispensable
convinced that its efforts will receive encouragement and support from
ingredient.
government and the community.
Clearly, the business and financial community has a growing stake
One promising area for future collaboration between public and
in the economic health of our cities. Good zoning, traffic control, and
Exciting New
private sectors is in the exciting planning and development of "new
Communities
adequate water supply are essential to the entire community but they
towns" and "satellite cities."
The Job For Business
also bear directly on the success of businesses located there. To attract
I say exciting because this represents a dramatically new concept of
and retain top talent, willing to live and work in our cities, business
urban building. Look at any of our present towns and cities and you
needs progressive community leadership that is alert to problems which
can see unmistakable reflections of the way they were built piece by piece.
exist and is prepared to do something about them.
How much better it would be to have an overall concept of the
Conversely, cities need the help of business if they are to expand job
community which can shape the development right from the outset.
opportunities and generate an adequate tax base. During this decade of
That, in essence, is the new town idea. An imaginative builder comes
the Seventies, we must create jobs in the United States for about a
in with a comprehensive plan and works out the details in cooperation
million-and-a-half men and women who will be entering the labor force
with local government.
every year. Since most of these jobs must be in metropolitan areas
The location of the community center is carefully selected. You don't
where the population is concentrated, a basic function of any city must
have the situation many of us are familiar with today where one munici-
be to encourage and to support the business and commercial activities
pality waits for its neighbor to provide the shopping and community
that provide its economic base.
facilities for both. Housing is planned to meet the needs of all those
It goes without saying that in performing its primary role of pro-
who will be working in the community. You don't run into situations
ducing goods and services efficiently, business is accomplishing a vital
where one municipality drags its feet, hoping the next town will provide
function of great public importance. Beyond this, however, more and
the low- and middle-income housing, while it accommodates only the
more businesses are coming to recognize that they have a responsibility
well-to-do.
to assume a larger share of the social burden as well, hand-in-hand
with government. A notable recent example of business initiative,
GERALD FORD VIBRARY
In recent years, there have been about a dozen communities started
which can be classified as "new towns"-that is, politically new and
which went beyond the conventional role of a strictly profit-oriented
independent units with a wide range of options for housing, employ-
project, was the case of nine commercial banks which are cooperating
ment, worship, education and recreation. Perhaps the outstanding
with the City in providing nearly $75 million for the construction of
example of a new town in this country is Columbia, Maryland, halfway
the Waterside housing development. This will accommodate some 1,500
between Baltimore and Washington. Because Chase Manhattan par-
low-and moderate-income families, on a novel six-acre platform over
ticipated in its construction financing, I have followed this particular
6
the East River.
7
"new town" with special interest.
Columbia was started in 1963 and is
el
cted
to
be
completed
in
or if they had been in more critical locations, this could have undercut
1980. By that time the population-now about 10,000-should reach
the whole project. The chanciness related to land acquisition is much
110,000. Of its 14,000 acres, about half are for residential use. A quarter
too great as things now stand.
of the land is for open space, while another quarter is for commercial
The other need is for new sources of financing to provide the enor-
and industrial purposes.
mous sums required before new towns get underway and begin col-
A core community is surrounded by what ultimately will be a dozen
lecting revenue on their own.
tree-shaded villages. Each village has been subdivided into racially
To take care of both these needs, I would suggest the creation of two
integrated neighborhoods of about 1,000 families, with homes in a
corporations, nationwide in scope: one public, the other private or
variety of styles and prices, clustered around churches, shops and
quasi-public.
schools. There are transportation loops around the villages that con-
To deal with the problem of land acquisition-and perhaps provide
nect with Columbia's central core. Industrial sites are situated on the
guidance in terms of national land-use planning-we need either a new
outskirts but with easy access routes to residential and shopping areas.
federal agency or an existing agency supplied with special additional
The city is designed to be a balanced community with recreational and
powers for planning and obtaining sites for new towns.
social facilities to satisfy the human needs of urban living, in addition
Such an agency might well require the power of eminent domain.
to the businesses which provide employment and the economic base.
But sufficient flexibility and safeguards should be built in SO that the
Seeing Columbia evolve, one can readily understand the growing sup-
rights and desires of those already living in proposed sites would be
port for new towns which is springing up all across the country.
protected, and SO that there would be no improper infringement on
As an example, the National Committee on Urban Growth Policy
states' rights. Whether it be an Executive branch mechanism or a
has recommended the creation of 100 new communities the size of
creation of Congress should be a matter for sober reflection. But the
Columbia and, in addition, ten new cities of at least one million people
plan would call for a federal agency with the ability to determine sites
each.
and projects in a manner consistent with the economic needs and goals
The Housing and Urban Development Act of 1970 set up a Com-
of the communities involved as well as those of the nation. Thus, a
munity Development Corporation to handle the financing of new
single agency would handle land acquisition and site location.
communities, and provided some of the funds to get them started.
The second agency, either private or quasi-public, would be orga-
These steps are very much in the right direction, but the funding
nized on a non-profit basis to provide the predevelopment financing.
presently available is still far below the waterline of adequacy to get
Possibly a new kind of bank could be devised which would seek its capi-
the job done.
tal from commercial banks, insurance companies, industry and other
I have been giving considerable thought as to how the process of
sources. To do so, the new bank would need to offer long-term deben-
A Specific Proposal
promoting new towns can be expedited. I have come to the conclusion
Close Cooperation
tures with a modest interest return that would make possible full devel-
that additional legislation will be required as well as added financial
Essential
opment of a new town, and yet be sufficiently remunerative SO as to
support. Specifically, it seems to me that two steps are needed.
assure a continuing flow of capital for other new towns. If the new com-
One is a mechanism to help in acquiring land SO that sufficiently large
munities are well conceived, there is every reason why the bulk of the
and contiguous tracts can be put together. In the case of Columbia,
capital could come from private sources.
a few parcels could not be acquired and, in the end, the planners just
The two agencies would need to work in close cooperation-to see
8
had to design the city around them. If more parcels had been held out,
9
that the site locations of new towns met the public standards desired for
national growth, and also to make sure that they would be attractive to
In conclusion, I would like to suggest that in tackling urban prob-
residents and to industry.
lems, we should keep five points in mind:
Working together, these two agencies could create a whole series of
First, that because these problems are SO closely interrelated, they
new, independent communities, providing adequate housing at reason-
call for the establishment of overall national goals and guidance.
able cost and bringing together both the white and blue-collar work
Second, that federal and state assistance must be closely coordinated
force required for industrial expansion.
to stimulate responsible local action and serve the best long-run in-
Aside from the building of new towns, the plan I have outlined could
terests of the overall community.
readily direct investment into existing core cities where our national
Third, that the amount of state and local building and rebuilding
Core City Support
growth policy determined that programs of redevelopment or rehabili-
required is SO vast that it will make necessary the expenditure of a
tation were desirable.
steadily increasing share of our total national income. Both private
Perhaps the greatest benefit would be the harnessing of private
and public funds will be needed. Since states and municipalities are
financing sources, which up to now have not been attracted by urban
already straining their taxing powers, I believe the Federal government
investment, and directing them into responsible urban developments
will have to bear a larger share than in the past. That is why I per-
that are not only profitable but that enhance the environment as well.
sonally applaud President Nixon's proposal for what he calls "general
Obviously, the building of new towns is an expensive venture. One
revenue sharing." The idea of giving local governments greater flexi-
recent study estimates that a community the size of Columbia might
bility in spending a larger portion of federal tax revenues on urban
cost as much as $50 million in predevelopment charges alone-in land
development is eminently sound and I would hope that the President's
acquisition, planning and management, and infrastructure such as
approach would eventually find the broadly-based support it deserves
streets and utilities.
on Capitol Hill.
These start-up costs are the very ones that the developer finds SO
Fourth, that it is imperative for any new town or redevelopment
burdensome under present conditions, and the ones that the proposed
project to include enough profitable activities, whether in housing,
new financing agency would be designed to handle. As a new town
commercial development or industry to generate tax revenues sufficient
project moves ahead, it can obtain funds in the conventional money
to make the project viable with a minimum of public subsidy.
market or-in the case of lower-income housing-from various govern-
Fifth and finally, that the task of refurbishing our existing core cities
ment programs or the new National Corporation for Housing Partner-
and building new towns can best be accomplished if public and private
ships. But the predevelopment costs are the big roadblock.
efforts are creatively combined in such a way as to win the support of
If we use this $50 million as a base figure, then the recommendation
the community.
of the National Committee on Urban Growth Policy for 100 communi-
In shaping our cities of the future, we are limited only by the intensity
ties of Columbia's size, and ten of one million people each, could cost
of our concern, the reach of our inquiring minds, and the strength of
in the neighborhood of $10 billion.
our determination to provide a better life for all our citizens.
Standing by itself, this is an imposing figure, indeed. Yet it is less
than half of what we have already spent on the man-in-space program.
And as great as the benefits from that program have been, I believe
that the advantages of new town development-certainly in human
GERALD FORD VIBRARY
10
terms-could be incalculably greater.
11
The Chase Manhattan Bank, NA
1 Chase Manhattan Plaza
New York, New York 10015
THE CHASE MANHATTAN BANK
National Association
1 Chase Manhattan Plaza, New York, New York 10015
DAVID ROCKEFELLER Chairman of the Board
January 29, 1971
Mr. Arthur F. Burns, Chairman
Board of Governors of the Federal
Reserve System
Washington, D.C. 20551
Dear Arthur:
I am delighted that you will be able to join as a member of
the 20th Anniversary Dinner Committee for the National Committee
Against Discrimination in Housing. Your support means a great
deal to this undertaking.
Further details will be sent to you shortly regarding the
arrangements and program for the Dinner.
With kind regards and much appreciation,
Sincerely,
David
FORD is LIBRARY 018470
30 Rockefeller Plaza
New York, N.Y. 10020
B CIrcle 7-3700
Room 5600
November 4, 1970
Dear Arthur:
When we came up in the plane together the other day, I
mentioned to you a telegram which George Hinman sent to the Vice
President following some uncomplimentary comments the latter had
made with regard to Senator Goodell. I enclose a copy of the
telegram as I promised to do.
I greatly enjoyed having a chance to see something of you
both at Hot Springs, and during the day we spent together in
Washington and New York. I can assure you that it gives great
comfort to many of us to know a man of your wisdom, character,
and courage is at the helm in the Federal Reserve.
Sincerely,
Daw
David Rockefeller
Hon. Arthur F. Burns
Federal Reserve Board
20th Street & Constitution Avenue
Washington, D. C. 20551
FORD i LIBRARY GERALD
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HONORABLE SPIRO T. AGNEW
OCTOBER 8, 1970
THE WHITE HOUSE
WASHINGTON, D.C.
REASONABLE MEN CAN AND DO DIFFER ON SENATOR GOODELL, BUT NO
FAIRMINDED PERSON CAN DO ANYTHING BUT DEPLORE YOUR REFERENCES
TO HIM TODAY IN NEW ORLEANS. THERE IS A LIMIT WHICH DECENT
OPINION DRAWS TO VILIFICATION IN POLITICAL DEBATE. IT IS A
MATTER OF THE DEEPEST REGRET TO ONE WHO IS BOUND TO OUR PARTY
AND TO OUR NATIONAL ADMINISTRATION BY DEEP TIES OF FRIENDSHIP
AND LOYALTY, TO HAVE OUR PROUD BANNER SO LIGHTLY DIPPED IN
FILTH AGAINST ANOTHER REPUBLICAN WHOSE ONLY OFFENSE IS AN
INDEPENDENT VIEW OF THE ISSUES OF LIFE AND DEATH IN OUR TIME.
GEORGE L. HINMAN
REPUBLICAN NATIONAL COMMITTEEMAN FOR NEW YORK
WU1206(R2-65)
BERALOR FORD LIBRARY
October 23, 1970
Dear David:
I enjoyed our visit on the plane and at your home,
and I am most appreciative of your thoughtfulness.
Please convey my regards to Mrs. Rockefeller.
I like her Maine project and I hope it goes well.
Sincerely yours,
Arthur F. Burns
Mr. David Rockefeller, Chairman
The Chase Manhattan Bank, National Association
One Chase Manhattan Plaza
New York, New York 10015
AFB/jah
FORD i GERALD LIBRARY