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December 21, 2012 7:18 pm
In December 2000, at the final meeting of the board of directors of the old J.P. Morgan & Co – weeks before it merged with Chase Manhattan Bank to become the financial behemoth JPMorganChase & Co – Douglas A. “Sandy” Warner III, the company’s last CEO, was wondering how to commemorate the solemn occasion marking the end of the venerable bank’s 129 years of independence.
It was a simpler time on Wall Street, long before the bank’s future executives were consumed by worries about the near-collapse of capitalism, or the more than $6.2bn trading loss engineered by the so-called London Whale. Back at the turn of the millennium, consolidation on Wall Street was raging. Big banks wanted to get even bigger. Commercial banks wanted to merge with investment banks, obliterating the vestiges of the Glass-Steagall Act, which separated commercial banking from investment banking in the wake of the stock market crash of 1929 (and had brought a measure of stability over the years to the financial markets). By the new millennium, Citigroup had merged with Travelers; Credit Suisse with Donaldson, Lufkin & Jenrette; Morgan Stanley with Dean Witter; and UBS with PaineWebber.
What could Sandy Warner – who denied to the media that he felt a need to sell J.P. Morgan – possibly do for his board to sanctify the passing of such a historic institution? The bank’s head of communications, Laura White Dillon, hit upon the idea of buying each board member an 18-carat gold pocket watch, made by Charles Frodsham & Co Ltd of London.
It was no coincidence. A century earlier the bank’s most famous proprietor, J. Pierpont Morgan, had owned Frodsham pocket watches (as had his father Junius and his son Jack) and would occasionally bestow them upon his partners and employees to recognise their outstanding service to the business or the Morgan family. In May 1883, for instance, Pierpont Morgan gave his butler an 1882 Frodsham gold pocket watch as a wedding present. That same month, Morgan gave his partner, Charles Lanier, a similar Frodsham pocket watch, engraved with Morgan’s initials, Lanier’s initials, an insignia from Morgan’s yacht, The Corsair, and the following inscription: “Charles Lanier from J. Pierpont Morgan, May 1883.” The famous 1903 photograph of J.P. Morgan by Edward Steichen shows the scowling banker all buttoned up in a three-piece suit with his Frodsham fob featured prominently on his ample stomach.
Between 1854, when Junius Morgan moved to London to set up his bank and started buying the watches, and 1934, when Jack Morgan bought his final Frodsham pocket watch (a sign of the hard economic times and the quickly shifting fashion away from pocket watches to wristwatches), the three generations of Morgans purchased about 50 Frodsham pocket watches, both for themselves and as gifts.
. . .
The same year – 1854 – that Junius Morgan established his London bank, Charles Frodsham, 44, was keeper of her majesty’s clocks at the royal palaces. For the next 125 years or so, Frodsham & Co was responsible for the maintenance of the royal clocks and was the last independent clock maker to be allowed to have a workshop at Buckingham Palace. “Obviously Charles Frodsham held an elevated social status,” explains Richard Stenning, one of Frodsham’s two current directors, “and therefore people interested in buying a nice, English timepiece, whether it be a watch or clock, would naturally gravitate towards the royal clockmaker.”
At the Universal Exposition in 1855 in Paris, Frodsham was unanimously awarded the gold medal for his “chronometers, watches and tables of construction”. Between the early 1850s and his death in 1871, Frodsham was a star. “This is the period when we were supplying not only the chrono-meters for the admiralty, but also supplying regulators to the world’s observatories and high-grade watches to discerning clients,” Stenning says. “He was very, very much on top of his game.”
Frodsham watches don’t come cheap, neither when they were originally manufactured nor today in the secondary market, where Frodsham – with a single store on Bury Street, in London – does brisk business buying and selling them. (Frodsham no longer manufactures pocket watches, but for years it has been slowly working on its first wristwatch, which will eventually be available for retail purchase, although it won’t say when or how much it will cost.) In the 1880s, a Frodsham watch cost around £88 to manufacture and was sold to J.P. Morgan and his ilk for about twice that amount, according to Stenning. By 1934, the retail price of a Frodsham pocket watch was £350, the equivalent of nearly $40,000 today. “It was very much a huge sum of money,” Stenning says. “You could buy a house for that sort of money, not just a watch.”
The original Frodsham pocket watches, not unlike those Pierpont Morgan bought for his butler or for Lanier, range in price today, according to Stenning, from £3,000 to £100,000 each, depending on their rarity, condition and complexity. In December 2011, a Frodsham watch, manufactured in 1890, sold at auction at Sotheby’s for £11,250.
Not surprisingly, the watches the Morgans gave their partners more than a century ago rarely come on the market, so a bit of extra effort went into finding the 15 watches Sandy Warner wanted to give out at the final board meeting. Warner was trying to please an elite cast of characters – people who could easily fit the category of having it all and needing nothing else. Board members included Lee Raymond, then CEO of ExxonMobil; Jamie Houghton, chairman emeritus of Corning Incorporated; Hanna Gray, former president of the University of Chicago; Paul Allaire, then chairman of Xerox Corporation; and Larry Bossidy, then chairman of Honeywell International.
With the help of Stenning and his partner, Philip Whyte, Frodsham was able to find the pocket watches Warner wanted. “They had searched for watches that didn’t originally belong to the partners – that would have been impossible – but were the style that he preferred,” recalls Clayton Rose, the former head of investment banking at J.P. Morgan. “It was as close as you could get to having the partner’s watch without stealing it out of the partner’s pocket.” How much Warner paid for the watches, Frodsham decline to disclose.
. . .
Expensive watches have long appealed to Wall Street’s male bankers, traders and executives, of course – a watch is pretty much the only piece of jewellery that men in the fast-money crowd find socially acceptable to wear. Assuming men in finance want to be taken seriously, pinky rings, bracelets and necklaces should not be worn in business meetings or around the office. That leaves high-end watches – primarily wristwatches, costing as much as $100,000, with timeless names such as A. Lange & Sohne, Baume & Mercier, Panerai, Hermès and Vacheron Constantin – for the Wall Street crowd to collect and to display.
In New York City, along 57th Street and on Madison Avenue, dozens of storefronts are leased to purveyors of fine watches. Indeed, at the crossroads of hyper-expensive New York City real estate – 57th Street and Madison Avenue – sits an enormous Tourneau watch store, offering thousands of the world’s most expensive timepieces. Of course, some Wall Street executives go in the other direction, deliberately wearing modest, downmarket wristwatches even though they can easily afford the more expensive, ostentatious ones. In this category fit three former heads of Goldman Sachs – Hank Paulson, Jon Corzine and Steve Friedman – who wear simple digital Timex “Ironman” watches (retail price: about $40). Paulson’s Timex was a gift from Friedman.
Laura Dillon researched the history of the Frodsham watches, and when Warner presented them at the final J.P. Morgan & Co board meeting, he shared with the board members the ritual the Morgans went through in giving the watches as gifts. Clayton Rose (now a professor at Harvard Business School), who was at the meeting, remembers how moving it was for Warner to commemorate the moment with the Frodsham watches. “It’s a really interesting and important – and touching, actually – link to the past, and to the best of Morgan,” Clayton says.
But a funny thing happened after Warner gave the Frodsham pocket watches out as gifts: the top bankers and traders at the new JPMorganChase decided they wanted a Frodsham watch too.
When Rose left JPMorganChase in March 2001, he hosted a small dinner party at his Manhattan apartment for some of his closest colleagues from the old J.P. Morgan. Among the attendees were James “Jes” Staley, now the former head of investment banking at JPMorganChase, and Ramon de Oliveira, then head of investment management and private banking. At the dinner, Staley and de Oliveira gave Rose a Frodsham pocket watch. “It sits on my desk at home and it’s been with me the whole time,” he says. “I have a little stand for it and I look at it every night and every day. It’s a link to a firm and an ethos and a culture that was very much a part of me.”
In May 2001, de Oliveira left the company and Rose and Staley duly gave him a Frodsham watch. And when Staley turned 50, in December 2006, he got a Frodsham from Rose. “Fortunately, he only turns 50 once,” Rose chuckles. Like Warner, Rose turned to Frodsham to obtain the watches in the secondary market. “I still get a Christmas card from the guy there every year,” he says.
Richard Stenning is far too discreet to share any more details of this latest wave of watch-buying from the House of Morgan. But buying them they are. James B. Lee Jr, JPMorganChase’s longtime uber-dealmaker (known to everyone as “Jimmy”), remembers hosting his annual gathering of the world’s top CEOs and other executives on the 50th floor of the bank’s offices at 270 Park Avenue. CEOs such as Larry Ellison at Oracle, Jeff Immelt at GE, as well as Warren Buffett and Mike Bloomberg, were in attendance.
As the conference was nearing the end of a long day, Jes Staley and Jamie Dimon, the chairman and CEO of JPMorganChase, stood up to make a presentation. Staley started speaking about how J. Pierpont Morgan had recognised his partners’ excellence by giving them a Frodsham pocket watch and how important such moments were to the famous financier. There followed some corporate happy talk about how Morgan made loans based as much on the borrower’s character as anything else. “A man I do not trust could not get money from me on all the bonds in Christendom,” Morgan used to say.
Lee recalls that, at first, he was a bit miffed by the interruption: “I got a little crabby for a second. I said, ‘Wait a minute, we have a tight schedule here. I don’t have time for a bunch of flowery speeches from you guys.’” Then Staley pulled out the box containing a Frodsham pocket watch – J.P. Morgan vintage – and gave it to Lee in front of the gathering. Lee was floored that Staley and Dimon would give him the gift – and so publicly.
“It’s extremely cool,” he tells me, “and I keep it in my office in its box, with the box open. I don’t cry easily, but I was very emotionally affected. It was just a combination of things – Jamie and Jes, partnership, and me knowing a lot about the watch because I have done so much reading about Morgan, and having so much respect for Morgan. I have this view of Jamie that he is sort of a reincarnation of the old man, in his own way. The fact that the old man was a character lender resonates with me” – the bank’s clients have been known to compare Lee with that aspect of Morgan – “and it was just really special. I treasure this watch more than anything I’ve ever received. I’ve been here 37 years, so that’s saying something.”
By all accounts, though, Dimon, the current heir to the JPMorgan throne, does not wear a watch and has not received a Frodsham as a gift. He does, however, own a pair of gold cufflinks with the presidential seal on them – a gift from the White House – and proudly wore them at a June congressional hearing where he had been summoned to answer questions about how his bank could have lost billions of dollars on proprietary trades using its depositors’ money.
William D. Cohan is the author of ‘Money & Power: How Goldman Sachs Came to Rule the World’ and two other books about Wall Street
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