In a 2008 interview with the Lake Placid News and The Virginia Gazette, Harry Jacobs Jr., former chairman of Prudential Bache Securities and a governor of the New York Stock Exchange, observed that “the current financial situation is the worst I have ever seen.” He said millions of people who didn’t have the financial resources were buying houses that they couldn’t afford while irresponsible lenders, banks and mortgage companies were lending money to people on “all kinds of crazy terms.”
He considered a third component causing the financial crisis the worst of all. “We have in place a regulatory authority, a whole bunch of them, and they should have worked all together. But instead the regulators were asleep at the switch.”
The reason Jacobs was able to analyze the impending financial crisis with such prescience is apparent from reading his newly published autobiography, “A Gentleman On Wall Street: My Life in Flying, Skiing, Finance, Love And More.”
Although he wrote his memoir first of all for members of his family and friends, it also contains a cautionary tale about “what damage greed can do – and has done — to depositors, investors, taxpayers and public confidence in the financial system.”
Jacobs was born in New York City, the son of a prominent architect. He calls his childhood “totally happy.” At Dartmouth College he received not only an excellent liberal arts education, but also became a competitive skier, and subsequently joined the Civilian Pilot Training Program.
It was 1942, World War II was raging, and Jacobs enlisted as a Flying Cadet in the U. S. Army Air Forces. He earned his wings and was made a lieutenant. He expected to be sent overseas and serve as a bomber pilot. Instead, he was tapped as an instructor.
Once discharged from the military, Jacobs started looking for a job. “I knew exactly what I wanted to do,” he wrote. “Keep flying, commercial airlines such as Pan American.” But he wasn’t the only military flyer with this thought. The waiting line to get hired was too long and he needed a job.
“The next few months were among the hardest times of my life,” he notes in his memoir. Failing to land a job as an airline pilot, he finally took a job at Bache & Co., a retail stock brokerage firm. He hated the job and wanted to quit, but one of the partners at the firm persuaded him to stay and give it another try.
The rest, as they say, is history. His innovative ways to bring new business to the firm were noticed by the partners, and he started his ascent on the corporate ladder, always keeping in mind, the words of one of the Bache partners: “Young man, never forget that handling people’s financial affairs is a sacred trust.”
After the unexpected death of Harold Bache, Jacobs was named the new president of the company and subsequently became CEO. Under his leadership Bache grew and prospered, always adhering to the principle that handling people’s money is a sacred trust.
Jacobs’ memoir provides a swiping view of Wall Street, its ethos, social networking and behind-the scene-intrigues. But it also presents his lifelong approach to investing: “Good securities carefully selected and held for long periods of time will usually turn out to be the best investment a person can make.”
It was a philosophy that sustained him on Wall Street for almost 40 years, earning him great respect. He was a student of the Great Depression, and was always wary of financial instruments he didn’t understand and didn’t made sense to him.
“Excessive leverage combined with lack of regulations over creation of exotic (rhymes with toxic) investment vehicles was a train wreck waiting to happen, and it did,” he wrote.
In the introduction to his memoir, Jacobs expresses his belief that the past informs the present and the future. Thus, he set out to demonstrate that you can rise to the heights of Wall Street, meet a lot of rich and famous people, and still take time to get to know and enjoy your family.
His favorite place to do so was Lake Placid. Jacobs recalls, “We spent summers at a rambling old house on Buck Island my family bought in 1923. Those summers in the beautiful Adirondacks were an endless dream of swimming, boating, tennis and making friends with the local kids who lived there all year round.”
He was married to his first wife, Marie Stevens, for almost 50 years. “To say that my marriage to Marie has been a marriage made in heaven is a severe understatement,” Jacobs wrote. She died of lung cancer.
Years later, during one of his cross-country flights, Jacobs stopped in Sun Valley, Idaho. There, he was introduced to Joannie Patterson. “Just like with Marie, I fell in love with Joannie instantly,” he confesses. Alas, she was also diagnosed with lung cancer. “I had a terrible sense of deja vu… I think about it all the time, that Marie and Joannie both went the same way. It just doesn’t seem fair.”
Then changing the subject, he wrote, “Speaking of Wall Street, I even remember when gentlemen worked there.”
Frank Shatz lives in Williamsburg, Va. and Lake Placid. His column was reprinted with permission from The Virginia Gazette.
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