How First National Passed Republic
and Other Stories of the Banking Game
(Page 7 of 7)
Banks and Dallas: The Common Vision
Dallas was, is, and probably always will be a booster’s town. From the extravagant designs of founder John Neely Bryan’s frontier outpost to the outlandish visions of the backers of the Dallas-Fort Worth Airport runs a common strain: if we close our eyes, relax our vigilance, whisper our doubts, then Dallas will simply disappear. Poof. Dallas has no natural advantages, its soil is relatively poor, there are no concentrations of minerals, no outlets to established trade routes, nothing to fall back on. Beyond the confidence, the boosting, the incantations of greatness chanted across the plains, lies . . . what? It is a question Dallas leadership has not felt comfortable asking. In fact, several generations of Dallas leaders have ignored such limitations, and combined extraordinary vision and hard work to create a city from a town otherwise destined to be about the size of Nacogdoches.
At the center of this truly unmatched civic strongmindedness and dedication have always been the bankers. They have for several generations bankrolled wildcatters and dreamers, oiled the gears for the movement of capital into North Texas from Europe and the East, and forsaken the banker’s traditional gimlet eye for the booster’s gleam. Oh, bankers have been vital to Houston as well, and the natural advantages of its boggy, pestilential swamps were not made clear until its own dreamers arranged the dredging of the Houston Ship Channel in 1914. But in Dallas the bankers combined with the key business leaders to run the city, and to run it the way they ran their banks, their businesses, their oil fields, and their insurance companies. In the process the general needs of Dallas came to be identified with specific business needs, but even so the spirit remained as James Aston described it: “We’ll fight tooth and nail for business, but when we go to the Citizens Council we put all that behind us and work for the good of Dallas.” In Houston, in Atlanta, in every other major city, the key business executives are rarely so intimately involved in running the city. Traditionally the major institutions are represented on chambers of commerce and civic bodies by passed-over elder statesmen or young executives in seasoning. Exactly the opposite is true in Dallas. The number one men get together and decide how things will be. Or, rather, they used to.
The Dallas establishment dates from 1936, when one day R. L. “Bob” Thornton (head of Mercantile), burst into the office of Nate Adams (head of First National), long arms waving like a scarecrow, and exclaimed, in his own idiosyncratic way: “What we need is the boss men organized so we can act quick . . . dydamic kind of organization . . . stupendjious effort . . . people doin’ things!” Adams’ response, the story goes, was a calculated nod of his well-groomed, well-controlled head; he had, after all, been thinking the same thing himself. And so the Dallas establishment was formed—not by politicians, not by businessmen, but by bankers. Over the years that initial push by Thornton and Adams matured into a guiding hand. When Fortune magazine chose the most powerful people in Dallas in 1964, among the nine businessmen and civic leaders they listed three bankers: Karl Hoblitzelle (then chairman of the board at Republic), James Aston (Republic), and Robert Stewart (First National).
For 40 years the yes and no men of Dallas have been meeting together to do good and to keep their city in safe hands. Adams and Hoblitzelle pushed decent housing projects for blacks in the Forties, just as their counterparts in the Fifties and Sixties would take an active, if not necessarily advanced, role in effecting Dallas school integration. Fred Florence’s pet project was the Southwest Medical Center, where his successor, James Aston, is still actively involved. The opera, the theater center, the struggling symphony orchestra, and a string of cultural and civic projects the bankers have sponsored are apparently of comparable importance to them as their business dealings. And while some members of the Dallas establishment may have made the odd million here and there on the side, the business-dominated government of Dallas has had basically a clean record.
Today the Citizens Council, the formal arm of the establishment, still meets, but its grip is loosening, at least in the political area. New groups, like blacks and young professionals, are being heard, and Dallas is entering a period when it may be more popularly governed. But these political realities do not dim the ardor and the dedication of Dallas bankers for fulfilling their civic duties. Such a lifestyle is still good for Dallas. It is also, one should add, good for business. We plain folks like to know our bankers are going to be around, and that they care more about what happens to our town than even we do. Somehow it makes our savings accounts seem a little more secure when the bank’s leaders are community men.
In the business arena, this sort of civic commitment has led to bankers going the last mile with the managers of fledgling Dallas businesses, men of vision and determination like themselves, but needing the one thing the bankers had—money. Texas Instruments, Sedco, University Computing Company, Electronic Data Systems, Dr Pepper, and a host of independent oil men and general business operators might never have either formed or survived without lenient, supportive bankers. Fred Florence of Republic used to pride himself in his motto, “The last thing we say is no,” which he contrasted with other bankers who said no first and then had to be convinced.
Bankers have also kept a watchful eye on their colleagues in the business world, most notably in the case of an upstart dropout with a Mandarin’s eye for high finance named James Ling. Ling’s Byzantine business and personal finances permeated the Dallas elite. When his empire began to totter, Ling was not only the largest employer in the Dallas area but vitally linked to insurance tycoon Troy Post, Sam Wyly of University Computers, The Texas Bank, and a grabbag collection of insurance, computer, and other companies. Clearly Dallas itself was at stake. And who should step in? None other than Robert Stewart of First National. Stewart used his leverage to push Ling out of control of LTV, and to install himself as a caretaker chairman of the board until confidence could be restored and Ling’s empire sorted out and placed under other leadership. Stewart’s actions could easily be justified and understood on purely business terms, but considering Dallas there were more than likely other motivations, perhaps unquestioned and even unconsidered, which prompted such a revolt. Ling was an upstart and never accepted in the Establishment, even though he made periodic overtures to it. And so the bankers exercised their power, even as they had earlier exercised their benevolence, on behalf of shareholders, creditors, and . . . Dallas.
New Powers, Old Responsibilities
Whether James Ling will be toppled from control of his empire is the sort of decision the leaders of these two giant banks are called upon to make: will this business grow and prosper, can this man really pay off a large loan, has this developer really thought through his plans? Not by choice and inclination alone do they play such a vital role in the future of Dallas and of Texas. It is inevitable that the leaders of these institutions, even as they are turning increased attention to their own empires, will continue to decide the basic economic direction of this region. These decisions naturally translate into who succeeds and who doesn’t, but also into whether anti-pollution devices will be manufactured, whether a firm to use garbage as building material will be set up, and whether a certain area of town will be developed. The leaders of these banks also establish, by policy and example, the attitude of their institution toward smaller customers.
Strolling amid the giant buildings the two banks have built in the past twenty years, the ordinary citizen may be unaware of First’s newly-won reputation, of the nuances of who will succeed James Aston at Republic, of the impact the holding company era will have on him or on his state. But it is the ordinary citizen who religiously puts a few dollars away in a savings account each month; who may need money for a car or for an operation or for a new business; who struggles to balance his checkbook. As they move their offices and embark more ambitiously on their course of empire, the key men at both of Dallas’ largest banks are moving to higher floors, further from the citizen on the sidewalk and more removed from the day-to-day life of ordinary people.
Men like Robert Stewart and James Aston have a problem keeping in touch. The president of an airline can travel on it to sample the service, just as the president of a soft drink company can drink his product to see how it tastes. The head of a bank cannot become an ordinary customer, cannot experience the feeling many people have about banks, a feeling close to fear. Banks after all are where the buck stops, where we all find out if our plans will come to anything, where a society based on credit must ultimately be rooted. Behind the smiling manner and the endless advertisements of how banks “understand your needs,” beyond the public relations, lies pure power.
And so in many ways the rivalry between First International and Republic is not the real story about banks in a community. The real story should probably be told by the customers, both those frustrated by the banks and those aided by them. Our hypothetical airline president and soft drink manufacturer cannot refuse a citizen a plane ticket or a drink if he can afford it; nor do they stand in judgment of his character prior to each transaction. Banks can and do. Thomas Jefferson was considering the potential for misuse of that power when he wrote that “banking establishments are more dangerous than standing armies.” Very seldom does criticism of how Dallas banks use their power get very far. It appears that the two largest Dallas banks have really been sincere when they talk of their dedication to building Dallas. The dedication is based on sound business principles. Mighty banks seldom prosper in stagnant communities.
And so the energies for empire continue, with new banks joining the lists of acquired and target banks each day. The holding companies are talking about becoming financial supermarkets in the future, where the customer could find one-stop service for banking, insurance, management consulting, data processing, leasing, investment counseling, mortgages, or travel arrangements. Such developments will not come without controversy and considerable struggle. But Texas bankers today are not a timid lot. Their eyes are to the future, and its potential seems boundless. Texas banking will never be the same again.
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