Financial History Issue 132 (Winter 2020) | Page 16

inspires them and makes them passionate, you pay them well enough no matter what level they are in the company (entry level, call center, managers) and you make them owners of your company, then the best employees will flock to your company. And I don’t care what our strategy is at PayPal—if we don’t have great, inspired employees, we will fail because we need to innovate constantly in this dynamic world of technology and payments and financial services. And, so, for me putting employees first is not putting shareholders second. It is actually assuring that over the medium- and long-term, we maximize the success of PayPal and turn it into a great company. I just want to wrap up by saying that this honor, and all of you, inspire me. And I hope I inspire all of you to really stand up and take a moral stance on what we in the financial services industry can do, because there is so much we can do to help underserved populations. Thank you very much for this honor, and thank you for being here. JAMES P. GORMAN Chairman & CEO, Morgan Stanley I want to thank all of our friends here for supporting the Museum. The Museum does great work and helps explain to the broader world what the financial industry does and how important it is to a well- functioning economy, so I appreciate all of our friends for coming out tonight and supporting the Museum. We actually have a table here of our young professionals who spent some time last summer working on something we call our “Strategy Challenge,” which is where a bunch of our young vice president- equivalent individuals spend time working with not-for-profits on trying to help them make their organizations better. So I thank all of them for joining us. I’ve known and admired Dan (Schul- man) not just for his ability to dress casu- ally and look great, or his avid martial arts skills, but for his extraordinary business acumen. And, Peter Cohen, whose career I’ve tracked for 30+ years, has been an icon in the industry. And Bill Donaldson, who not only took the first Wall Street firm from private partnership to public, which was unheard of. I’m deeply honored to share the evening with these gentlemen. John Whitehead appeared at Columbia Business School when I was a student there in 1987, and he had the Whitehead commandments at that point. They were effectively the rules of doing business, and there were two of them that par- ticularly stood out to me. One was that the respect of one man is worth more than the acquaintance of 100. And the second was if you get business, it’s up to you to see that it’s done properly. I’ve always valued those qualities notwithstanding the com- petitive nature of our organizations. To be here accepting the Whitehead Award, given those qualities, is a particular honor. I’ve come a long distance, both figu- ratively and literally, growing up in Mel- bourne, Australia. I was a complete dis- appointment to my parents, who when I was 12 years old they brought me to the living room, and my father said, “James, I want you to be an engineer.” And I had no interest in being an engineer. I looked to my mother with pleading eyes, hoping that she would offer something a little more comforting, and she said, “I would like you to be a priest.” So I said, “I’m going to be a lawyer.” I thought that would please both parties just enough and equally offend both parents. When I decided to come to America, my father said, “I had no idea you were interested in sales.” What Dan was talking about tonight really struck a chord. We’re in an industry which carries a special burden. Before many of you were born, a lot of banks were nationalized. They don’t have a right to exist simply because of their good busi- ness skills because if they get in trouble, 14    FINANCIAL HISTORY  |  Winter 2020  | www.MoAF.org as we saw in the Financial Crisis, the only one who can bail them out is the govern- ment. And the government is the people. We are the people. Banks exist because the people allow them to exist, and sometimes we forget that. Our role is to be conduits of capital— to help issuers and investors meet, and to help savers and borrowers meet. We have three obligations in doing that. One is to do it at a fair price. The second is to do it without discrimination as to who those people are. And the third is to do it without taking unnecessary risk. These are three pretty reasonable asks from society of those whose job it is to be this conduit of capital. We’re supposed to fulfill our part of the bargain. As we saw 12 years ago with the crisis, it can be catastrophic when you don’t. And like in the Jimmy Stewart film, It’s a Wonderful Life, when Mrs. Jones stands up at the window wanting her cash, if it’s already been lent out to somebody for their mortgage, then it doesn’t exist in the bank. And that’s where the government has got to step in; if trust fails and people want their money, and you have a run on the bank. Our own firm had spent 73 years accu- mulating $32 billion of capital. That’s a lot of hard work from a lot of giants on whose shoulders we stand. 11 traders on one desk destroyed $11 billion of that $32 billion in three months because they had the asym- metric risk. If they failed, all they did was lose their jobs. If they succeeded, they got well-paid. The problem was that if they failed, they lost $11 billion of our capital. So it really gets back to culture. Bill Dudley led a cultural challenge to the industry. I remember one speech where he said it’s not a question of are there bad apples, but are there bad barrels? And I took that personally to make sure that Morgan Stanley would never be a bad barrel. We will always have—with 60,000 people—problem children. If you have a town of 60,000 people in America, you have a police force and a jail. But the ques- tion is, is the whole town bad? And our job as leaders is to make sure that we keep the culture pure. So, the question is (and it sort of synchs with what Dan was saying), “Is money the objective or the outcome?” And the essence of a great organization is one that’s wired to