38
ON SEPTEMBER 1, 1939, German troops marched into Poland.
One of William’s first reactions was to think of Abel Rosnovski. The new Baron hotel on Park Avenue was already becoming the toast of New York, and the quarterly reports from Thomas Cohen showed that Rosnovski was going from strength to strength. But his latest ideas for expansion into Europe might now have to be put on hold for some time. Cohen could still find no direct association between Rosnovski and Henry Osborne.
William had never thought that America would involve herself in another European war, but he kept the London branch of Lester’s open to indicate which side he was on, and never for one moment considered selling off his twelve thousand acres in Hampshire and Lincolnshire. Tony Simmons, on the other hand, informed William that he intended to close Kane and Cabot’s London branch.
The two chairmen now met regularly, on relaxed and friendly terms since they no longer had any reason to see themselves as rivals. Each had come to use the other as a sounding board for new ideas. As Tony had predicted, Kane and Cabot had lost some of its more important clients when William became the chairman of Lester’s, but William always kept Tony fully informed whenever an old client expressed a desire to move his account, and he never solicited anyone to join him. When they sat down at a corner table of Locke-Ober’s for their monthly lunch, Tony lost no time in repeating his intention to close the London branch of Kane and Cabot.
‘But why?’ asked William.
‘My first reason is simple,’ said Tony as he sipped his imported Burgundy, not giving a moment’s thought to the likelihood that German boots were about to trample on the grapes in most of the vineyards of France. ‘I think the bank will lose money if we don’t cut our losses and get out of England.’
‘Of course you might lose a little money,’said William, ‘but we must be seen to be supporting the British.’
‘Why?’ asked Tony. ‘We’re a bank, not a supporters’ club.’
‘Britain’s not a baseball team, Tony; it’s a nation of people to whom we owe our entire heritage . . .’
‘You should take up politics,’ said Tony. ‘I’m beginning to think your talents are wasted in banking. Nevertheless, there’s another, far more important reason why we should close the branch. If the Germans were to march into Britain the way they have into Poland and France – and in Joe Kennedy’s opinion, that is exactly what they plan to do – the bank will be taken over and we would lose every penny we have in London.’
‘Over my dead body,’ said William. ‘If Hitler puts so much as a foot on British soil, America will enter the war the same day, whatever our ambassador in London says.’
‘Never,’ said Tony. ‘FDR has said again and again, “All aid short of war.” And in any case, the America Firsters would raise an almighty hue and cry.’
‘Never listen to a politician who says never,’ said William. ‘Especially Roosevelt. When he says “never”, that only means not today, or at least not this morning. You only have to remember that Woodrow Wilson never stopped saying “never” in 1916.’
Tony laughed. ‘When are you going to run for the Senate, William?’
‘Never,’ said William with a smile.
‘I respect your feelings, William, but I want out.’
‘You’re the chairman,’ replied William. ‘If the board backs you, you can close the London branch tomorrow. I would never use my position to act against a majority decision, as you well know.’
‘Until you merge Kane and Cabot with Lester’s. Then it would become your decision.’
‘I’ve told you before, Tony, I’d never attempt to do that while you’re chairman.’
‘But I think we ought to merge.’
‘What?’ said William, spilling some Burgundy on the tablecloth, unable to believe what he’d just heard. ‘Good heavens, Tony, I’ll say one thing for you, you’re never predictable.’
‘I have the best interests of the bank at heart, as always, William. Think about the present situation for a moment. New York is now, more than ever, the centre of US finance, and when England is invaded by Hitler, it will become the centre of world finance. In fact, I’d go further and say that given those circumstances the dollar will replace the pound as the world’s leading currency. That’s where Kane and Cabot needs to be. And if we merged we’d create a more broadly based institution, because our specialties are complementary. Kane and Cabot has always done a great deal of ship and heavy-industry financing, while Lester’s does very little. Conversely, you do a lot of underwriting, and we hardly touch it. Not to mention the fact that in several European cities we’re unnecessarily duplicating offices.’
‘Tony, I agree with everything you’ve said, but I still want to keep a presence in Britain.’
‘Exactly proving my point. Kane and Cabot’s London branch might close, but we’d still have Lester’s. Then if London goes through a rough patch, it wouldn’t matter as much, because we’d be consolidated, and therefore stronger.’
‘But Roosevelt’s restrictions on merchant banks would mean we could only work out of one state. So a merger could only succeed if we ran the entire operation from New York, leaving Boston as nothing more than a branch office.’
‘I’d still back you,’ said Tony. ‘You might even consider taking Lester’s into commercial banking, which would solve the whole problem.’
‘No, Tony. FDR’s made it impossible for an honest man to do both. In any case, my father taught me that you can serve either a small group of rich people or a large group of poor people, but not both, so Lester’s will remain in traditional merchant banking as long as I’m chairman. But if we did decide to merge the banks, don’t you foresee other problems?’
‘Very few we couldn’t overcome, given goodwill on both sides. But you’d have to consider the implications carefully, William, because after a merger you’d become a minority shareholder, and would lose overall control of the new bank. That would leave you vulnerable to a takeover bid.’
‘I’ll take that risk, if it means I’d become chairman of one of the largest financial institutions in America.’
William returned to New York that evening, and immediately called a board meeting of Lester’s to outline Tony Simmons’s proposal. Once he found that the board approved of a merger in principle, he instructed each of the bank’s vice presidents to consider the full implications in greater detail.
The departmental heads took three months before they reported back to the board, and to a man they came to the same conclusion: a merger was no more than common sense, not least because the two banks were complementary in so many ways. Moreover, William’s shareholdings ensured that Lester’s would own 51 per cent of Kane and Cabot, making the merger simply a marriage of convenience. Some of the directors could not understand why William hadn’t thought of the idea before. Ted Leach was of the opinion that Charles Lester must have had it in his mind when he nominated William as his successor.
The details of the merger took over a year to complete as teams of lawyers were kept at work into the small hours preparing the necessary paperwork. In the exchange of shares, William ended up as the largest stockholder with 8 per cent of the new company, and was appointed the new bank’s president and chairman. Tony Simmons remained in Boston as one deputy chairman, with Ted Leach in New York as the other. The new merchant bank was renamed Lester, Kane and Company, but continued to be referred to as Lester’s.
William arranged a press conference in New York to announce the successful merger, and he chose Monday, December 8, 1941, to brief the financial world of his vision for the future. The press conference was cancelled when, hours before, the Japanese launched their attack on Pearl Harbor.
An embargoed press release had been sent to the newspapers some days before, but the news that America had declared war on Japan meant that the Tuesday-morning financial pages allocated the announcement of the merger only a few column inches. This lack of coverage, however, was not foremost in William’s mind.
He couldn’t work out how or when he was going to tell Kate that it was his intention to join up.