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