by John Brooks
But there is something missing.…
December 2, 1953: Crawford Greenewalt [president of du Pont] … introduced me in a speech (in Philadelphia).… He noted that I had entered the chemical business; bearing in mind that I had previously headed the biggest things in America, bigger than [any] private corporations, he was naturally a little nervous about seeing me become a potential competitor. It was kidding, but it was good kidding. And it certainly gave little ole Attapulgus quite a notice.
June 30, 1954: I have found a new kind of satisfaction, and in a sense, fulfillment, in a business career. I really never felt that the “consultant” thing was being a businessman, or engaging in the realities of a life of business. Too remote from the actual thinking process, the exercise of judgment and decision.… In this company, as we are evolving it, there are so many of the elements of fun.… The starting with almost nothing … the company depending on patents alone … acquisition, mergers, stock issues, proxy statements, the methods of financing internally and by bank loans … also the way stock prices are made, the silly and almost childlike basis upon which grown men decide that a stock should be bought, and at what price … the merger with Edgar, the great [subsequent] rise in the price of their stock … the review of the price structure. The beginning of better costs. The catalyst idea. The drive and energy and imagination: the nights and days (in the lab until 2 A.M. night after night) and finally the beginning of a new business.… It is quite a story.
(Later I got a rather different perspective on Lilienthal’s reactions to the transition from government to business by talking to the man he had described as his “business father confessor,” Nathan Greene. “What happens to a man who leaves top-level government work and comes to Wall Street as a consultant?” Greene asked me rhetorically. “Well, usually it’s a big letdown. In the government, Dave was used to a sense of great authority and power—tremendous national and international responsibility. People wanted to be seen with him. Foreign dignitaries sought him out. He had all sorts of facilities—rows of buttons on his desk. He pushed them, and lawyers, technicians, accountants appeared to do his bidding. All right, now he comes to Wall Street. There’s a big welcoming reception, he meets all the partners of his new firm and their wives, he’s given a nice office with a carpet. But there’s nothing on his desk—only one button, and all it summons is a secretary. He doesn’t have perquisites like limousines. Furthermore, he really has no responsibility. He says to himself, ‘I’m an idea man, I’ve got to have some ideas.’ He has some, but they’re not given much attention by the partners. So the outward form of his new work is a letdown. The same with its content. In Washington, it had been development of natural resources, atomic energy, or the like—world-shaking things. Now it turns out to be some little business to make money. It all seems a bit petty.
“Then, there’s the matter of money itself. In the government, our hypothetical man didn’t need it so badly. He had all these services and the basic comforts supplied him at no personal cost, and besides he had a great sense of moral superiority. He was able to sneer at people who were out making money. He could think of somebody in his law-school class who was making a pile in the Street, and say, ‘He’s sold out.’ Then our man leaves government and goes to the Wall Street fleshpots himself, and he says, ‘Boy, am I going to make these guys pay for my services!’ They do pay, too. He gets big fees for consulting. Then he finds out about big income taxes, how he has to pay most of his income to the government now instead of getting his livelihood from it. The shoe is on the other foot. He may—sometimes he does—begin to scream ‘Confiscation!,’ just like any old Wall Streeter.
“How did Dave handle these problems? Well, he had his troubles—after all, he was starting a second sort of life—but he handled them just about as well as they can be handled. He was never bored, and he never screamed ‘Confiscation!’ He has a great capacity for sinking himself in something. The subject matter isn’t so important to him. It’s almost as if he were able to think that what he’s doing is important, whether it is or not, simply because he’s doing it. His ability was invaluable to Minerals & Chemicals, and not just as an administrator. Dave is a lawyer, after all; he knows more about corporate finances than he likes to admit. He enjoys playing the barefoot boy, but he’s hardly that. Dave is an almost perfect example of somebody who kept his independence while getting rich on Wall Street.”)
One way and another, then—reading through these ambivalent protestations in the journal, and later hearing Greene—I seemed to detect under the exuberance and the absorption a nagging sense of dissatisfaction, almost of compromise. For Lilienthal, the obviously genuine thrill of having a new kind of experience, and an almost unimaginably profitable one, had been, I sensed, a rose with a worm in it. I went back up to the living room. There I found Lilienthal fiat on his back on the Shah’s rug underneath a pile of pre-school-age children. At least, it looked at first glance like a pile; on closer inspection I found that it consisted of just two boys. Mrs. Lilienthal, who had returned from the garden, introduced them as Allen and Daniel Bromberger, sons of the Lilienthals’ daughter, Nancy, and Sylvain Bromberger, adding that the Brombergers were living nearby, since Sylvain was teaching philosophy at the university. (A few weeks later, Bromberger moved on to the University of Chicago.) The Lilienthals’ only other offspring, David, Jr., lived in Edgartown, Massachusetts, where he had settled down to become a writer, as he subsequently did. In response to the urging of the senior Lilienthals, the grandchildren climbed off their grandfather and disappeared from the room. When things were normal again, I told Lilienthal my reaction to the entries I had read in the journal, and he hesitated for a while before speaking. “Yes,” he said, finally. “Well, one thing—it wasn’t making all that money that worried me. That didn’t make me feel either good or bad, by itself. In the government years, we’d always paid our bills, and by scrimping we’d been able to save enough to send the kids to college. We’d never thought much about money. And then making a lot of it, making a million—I was surprised, of course. I’d never especially aimed at that or thought it might happen to me. It’s like when you’re a boy and you try to jump six feet. Then you find you can jump six feet, and you say, ‘Well, so what?’ It’s sort of irrelevant. Over the past few years, a lot of people have said to me, ‘How does it feel to be rich?’ At first, I was kind of offended—there seemed to be an implied criticism in the question—but I’m over that. I tell them it doesn’t feel any special way. The way I feel is—But this is going to sound stuffy.”
“No, I don’t think it’s stuffy,” said Mrs. Lilienthal, anticipating what was coming.
“Yes, it is, but I’m going to say it anyway,” said Lilienthal. “I don’t think money makes much difference, as long as you have enough.”
“I don’t quite agree,” said Mrs. Lilienthal. “It doesn’t make much difference when you’re young. You don’t mind then, as long as you can struggle along. But as you get older, it is helpful.”
Lilienthal nodded in deference to that. Then he said that he thought the undertone of dissatisfaction I had noticed in the journal probably stemmed, at least in part, from the fact that his career in private business, absorbing though it was, did not bring with it the gratifications of public-service work. True, he had not been deprived of them entirely, because it was at the height of his Minerals & Chemicals operations, in 1954, that he first went to Colombia, at the request of that country’s government, and, serving as a peso-a-year consultant, started the Cauca Valley project that was later continued by the Development & Resources Corporation. But for the most part being a top officer of Minerals & Chemicals had kept him pretty well tied down, and he’d had to regard the Colombia work as a sideline, if not merely a hobby. I found it impossible to avoid seeing symbolic significance in the fact that the principal material with which Lilienthal the businessman had been engaged was—clay.
I thought of something else in Lilienthal’s life at that time that might have ta
ken some of the kick out of the process of becoming a successful businessman. His “Big Business” book had come out when he was in the thick of the Minerals & Chemicals work. I wondered whether, since it is such an uncritical paean to free enterprise, it had been construed by some people as a rationalization of his new career, and I asked about this.
“Well, the ideas in the book were rather a shock to some of my husband’s New Deal friends, all right,” Mrs. Lilienthal said, a bit dryly.
“They needed shocking, damn it!” Lilienthal burst out. He spoke with some heat, and I thought of the phrase in his journal—used there in an entirely different context but still in reference to himself—about defensiveness shown by belligerence. After a moment, he went on, in a normal tone, “My wife and daughter thought I didn’t spend enough time working on the book, and they were right. I wrote it in too much of a hurry. My conclusions aren’t supported by enough argument. For one thing, I should have spelled out in more detail my opposition to the way the antitrust laws are administered. But the anti-trust part wasn’t the real trouble. The thing that really shook up some of my old friends was what I said about big industry in relation to individualism, and about the machine in relation to aesthetics. Morris Cooke, who used to be administrator of the Rural Electrification Administration—he was one who was shaken up. He took me apart over the book, and I took him apart back. The anti-bigness dogmatists stopped having anything to do with me. They simply wrote me off. I wasn’t hurt or disappointed. Those people are living on nostalgia; they look backward, and I try to look forward. Then, of course, there were the trust busters. They really went after me. But isn’t trust busting, in the sense of breaking up big companies simply because they’re big, pretty much a relic of a past era? Yes, I still think I was right in the main things I said—perhaps ahead of my time, but right.”
“The trouble was the timing,” Mrs. Lilienthal said. “The book came so close to coinciding with my husband’s leaving public service and going into private business. Some people thought it represented a change in point of view induced by expediency. Which it didn’t!”
“No,” Lilienthal said. “The book was written mostly in 1952, but all the ideas in it were hatched while I was still in public service. For example, my idea that bigness is essential for national security came in large part out of my experiences in the A.E.C. The company that had the research and manufacturing facilities to make the atomic bomb an operational weapon, so engineered that it wouldn’t require Ph.D.s to use it in the field—Bell Telephone, to be specific—was a big company. Because it was so big, the Anti-Trust Division of the Department of Justice was seeking to break the Bell System into several parts—unsuccessfully, as it turned out—at the very time we in the A.E.C. were calling on it to do a vital defense job that required unity. That seemed wrong. More generally, the whole point of view I expressed in the book goes way back to my quarrel with Arthur Morgan, the first T.V.A. chairman, in the early thirties. He had great faith in a handicraft economy, I was for large-scale industry. T.V.A., after all, was, and is, the biggest power system in the free world. In T.V.A. I always believed in bigness—along with decentralization. But, you know, the chapter I hoped would produce the most discussion was the one on bigness as a promoter of individualism. It did produce discussion, of a sort. I remember people—academic people, mostly—coming up to me with incredulous expressions and saying something that started with ‘Do you really believe …’ Well, my answer would start with ‘Yes, I really do believe …’”
One other touchy matter that Lilienthal may have questioned himself about in the process of making his Wall Street fortune was the fact that in making it he had not really needed to scream “Confiscation,” since he had made it through a tax loophole, the stock option. Possibly there have been liberal, reformist businessmen who have refused to accept stock options on principle, although I have never heard of one doing so, and I am not convinced that such a renunciation would be a sensible or useful form of protest. In any event, I didn’t ask Lilienthal about the matter; in the absence of any accepted code of journalism every journalist writes his own, and in mine, such a question would have come close to invasion of moral privacy. In retrospect, though, I almost wish I had violated my code that one time. Lilienthal, being Lilienthal, might have objected to the question strenuously, but I think he would have answered it equally strenuously, and without hedging. As things were, after discoursing on the critical reactions to his book, “Big Business,” he got up and walked to a window. “I see Domenic has been pretty cautious about his rose-pruning,” he said to his wife. “Maybe I’ll go out later and cut them back some more.” His jaw was set in a way that made me feel pretty sure I knew how the rose-pruning controversy was going to be resolved.
THE triumphant solution to Lilienthal’s problem—the way that he eventually found to have his cake and eat it—was the Development & Resources Corporation. The corporation arose out of a series of conversations between Lilienthal and Meyer during the spring of 1955, in the course of which Lilienthal pointed out that he was well acquainted with dozens of foreign dignitaries and technical personnel who had come to visit the T.V.A., and said that their intense interest in that project seemed to indicate that at least some of their countries would be receptive to the idea of starting similar programs. “Our aim in forming D. & R. was not to try to remold the world, or any large part of it, but only to try to help accomplish some rather specific things, and, incidentally, make a profit,” Lilienthal told me. “André was not so sure about the profit—we both knew there would be a deficit at first—but he liked the idea of doing constructive things, and Lazard Frères decided to back us, in return for a half interest in the corporation.” Clapp, who was serving at the time as deputy New York City administrator, came in as co-founder of the venture, and the subsequent executive appointments made D. & R. virtually a T.V.A. alumni association: John Oliver, who became executive vice-president, had been with T.V.A. from 1942 to 1954, ending up as its general manager; W. L. Voorduin, who became director of engineering, had been with T.V.A. for a decade and had planned its whole system of dams; Walton Seymour, who became vice-president for industrial development, had been a T.V.A. consultant on electric-power marketing for thirteen years; and a dozen other former T.V.A. men were scattered on down through the ranks.
In July, 1955, D. & R. set up shop at 44 Wall, and set to work finding clients. What was to prove its most important one came to light during a World Bank meeting in Istanbul that Lilienthal and his wife attended in September of that year. At the meeting, Lilienthal fell in with Abolhassan Ebtehaj, then head of a seven-year development plan in Iran; as it happened, Iran was just about the ideal D. & R. client, since, for one thing, the royalties on its nationalized oil industry gave it considerable capital with which to pay for the development of its resources, and, for another, what it desperately needed was technical and professional guidance. The encounter with Ebtehaj led to an invitation to Lilienthal and Clapp to visit Iran as the guests of the Shah, and see what they thought could be done about Khuzistan. Lilienthal’s employment contract with Minerals & Chemicals ended that December; although he stayed on as a director, he was now free to devote all his time, or nearly all of it, to D. & R. In February, 1956, he and Clapp went to Iran. “Before then, I blush to say, I had never heard of Khuzistan,” Lilienthal told me. “I’ve learned a lot about it since then. It was the heart of the Old Testament Elamite kingdom and later of the Persian Empire. The ruins of Persepolis are not far away, and those of Susa, where King Darius had his winter palace, are in the very center of Khuzistan. In ancient times, the whole region had an extensive water-conservation system—you can still find the remains of canals that were probably built by Darius twenty-five hundred years ago—but after the decline of the Persian Empire the water system was ruined by invasion and neglect. Lord Curzon described what the Khuzistan uplands looked like a century ago—‘a desert over which the eye may roam unarrested for miles.’ It was that way when we got there
. Nowadays, Khuzistan is one of the world’s richest oil fields—the famous Abadan refinery is at its southern tip—but the inhabitants, two and a half million of them, haven’t benefited from that. The rivers have flowed unused, the fabulously rich soil has lain fallow, and all but a tiny fraction of the people have continued to live in desperate poverty. When Clapp and I first saw the place, we were appalled. Still, for two old T.V.A. hands like us, it was a dream; it was simply crying out for development. We looked for sites for dams, likely spots to hunt for minerals and make soil-fertility studies, and so on. We saw flares of natural gas rising from oil fields. That was waste, and it suggested petrochemical plants, to use the gas for making fertilizer and plastics. In eight days we’d roughed out a plan, and in about two weeks D. & R. had signed a five-year contract with the Iranian government.
“That was only the beginning. Bill Voorduin, our chief engineer, flew out there and spotted a wonderful dam site at a place just a few miles from the ruins of Susa—a narrow canyon with walls that rise almost vertically from the bed of the Dez River. We found we were going to have to manage the project as well as advise on it, and so our next job was lining up our managerial group. To give you some idea of the size of the project, right now there are about seven hundred people working on it at the professional level—a hundred Americans, three hundred Iranians, and three hundred others, mostly Europeans, who work directly for firms under subcontracts. Besides that, there are about forty-seven hundred Iranian laborers. Over five thousand people, all told. The entire plan includes fourteen dams, on five different rivers, and will take many years to finish. D. & R. has just completed its first contract, for five years, and signed a new one, for a year and a half, with option to renew for another five years. Quite a bit has been accomplished already. Take the first dam—the Dez one. It’s to be six hundred and twenty feet high, or more than half again as high as the Aswan, in Egypt, and it will eventually irrigate three hundred and sixty thousand acres and generate five hundred and twenty thousand kilowatts of electricity. It should be finished early in 1963. Meanwhile, a sugar plantation—the first in Khuzistan in twenty-five centuries—has been started, with irrigation by pumped water; it should yield its first crop this summer, and a sugar refinery will be ready by the time the sugar is. Another thing: eventually the region will supply its own electric power from the dams, but for the interim period a high-tension line, the first anywhere in Iran, has been put in over the seventy-two miles from Abadan to Ahwaz—a city of a hundred and twenty thousand that previously had no power source except half a dozen little diesels, which seldom worked.”
