Rockefeller and Britannica - 19 May 1995

Imagine our Victorian great grandparents waking up one morning, opening the paper at the breakfast and saying: "Hello! I see the Bank of England has collapsed and we're now going to have to say something is a sound as a rupee."

Consternation would have been a mild world to use at such news and at a time when most institutions, from the churches to empire day, seemed set forever, it was also a time when the bankruptcy of a firm or an individual was equated with failure, was generally regarded as shameful. Today, it's more frequently looked on as a mark of shrewdness. Prudence, anyway.

I've not noticed anyone registering consternation, only something between a sigh and a slight shock at the news that first Rockefeller Centre has been put into bankruptcy by its – naturally – Japanese owners and secondly, the Encyclopædia Britannica, a Chicago publication, but venerable nevertheless, is fed up with continuous losses and dwindling sales and has been put up for sale by its owners – who are by the way, not Japanese but the heirs or managers of a foundation set-up by a long dead senator from Connecticut. When questioned why the sudden decision to sell off the 227 year old fount of knowledge, an executive gave a refreshingly old fashioned answer: "Well," he said. "The company is short of cash".

There were rumours about the wobbly plight of the Britannica in the early spring and the company responded quite understandably as all companies in trouble do, by boasting of a nice profit before tax. But the net income has been going down for the past three years and more depressing figures came out later: that in 1990, the Britannica sold a 117,000 sets, last year only 51,000. A near 60 per cent drop in sales obviously sounds the alarm bell for any business: why did it happen? The answer seems to be the one you'd expect, the villain of the piece is, right, the CD ROM. But then you ask why didn't the Britannica anyway convert to all its learning in to a CD ROM version? They did, the result cost just under $1,000. Still the cruel realists of the financial world look on and say stonily they converted too late like all established institutions they ignored for too long the upstart who is about to take their place.

The history of the Britannica is almost a model, a prototype of the history of institutions that started in the 18th century, which, in this century had to adapt to technology or go under. The Britannica came out first in 1768 and was published in one of the most famous European seats of learning, Edinburgh, by a bunch of scholars calling themselves the Society of Gentlemen, which is an odd title for democratic Scotland. I don't know how long the Scots held onto the encyclopaedia but it prospered long enough to be lusted after in the early 1920s by the American department store owners more famous for their annual mail catalogue than anything else: Sears Roebuck & Company. They bought and held it for 20 years or so when the senator from Connecticut a democrat William Benton – a prosperous advertising man who'd gone into politics – bought it outright and devoted all its profits to a singular and admirable purpose: he ran it as a charity on behalf of the University of Chicago. The University has been very grateful for the tune of 125 million dollars, but recently of course, has become a sorrowful onlooker. However, in a memo that accompanies the sales pitch, the Britannica bravely foresees a rosy future for an online service. All it needs now is somebody very rich who wears the same rose coloured spectacles.

The Rockefeller Centre story invites as much nostalgia as surprise and regret. When its first 14 buildings went up between 1931 and 1940, it was then regarded and still is by some of us as the best integrated collection of buildings and architecturally the most distinguished and effective in New York City. Their style and their success were due you could fairly say to the Wall Street crash of 1929. It all started way back in 1927, when the Metropolitan Opera House, finally exasperated by its cramped quarters on 40th Street and Broadway, heard about some land 12 acres little further uptown and on 5th Avenue, a much townier address than old Broadway. The land was owned by, of all very absentee or remote landlords, Columbia University. It was, need I say, not open land, not in 1927 on 5th Avenue, bang opposite St. Patrick's noble Cathedral. In fact, the land and its tenants presented something of an eyesore. Some seedy rooming houses, some speakeasies – it was the high mark of prohibition – and adjacent brothels. The Met looked around for a benefactor and thought they'd found him in the son of the great, the awesome, John D Rockefeller, the very synonym of American wealth. Old John D. was by the way still alive at the time of 1927, at the age of 89, pottering around a golf course with a nine iron and subsisting on a diet of gruel and graham crackers. The son John D. Junior had taken over the family's many businesses, which by that time has become the business of far flung philanthropy in medicine education mostly. The Met hoped for a gift from Rockefeller of the land to be made into a plaza leading up to the new opera house. Rockefeller had another idea: to lease the land himself leaving the centre of the plaza for the opera house and subleasing the rest to commercial interests. Came then black Thursday and the stock market crash and the ensuing great depression.

The Met, like many another company college business, dropped all plans for a new building. Rockefeller Junior was left with the land and its dingy properties on a 24 year lease, renewable by options into the middle of the 21st century. In harsher terms, he owned just under four billion dollars of property that yielded less than half a million a year. He was the one who then had the vision of a commercial centre to be built on the ashes of 228 destroyed buildings to conform to a uniformed design with skyscrapers spaced around the plaza, surmounted by one towering monolith, the monotony of the style to be relieved by setbacks at intervals as the central building rose. He hired a team of architects, which luckily included Wallace Harrison and Raymond Hood. "Let it be," Mr Rockefeller requested "as beautiful as possible." And so it was, and so it remains a complex of 19 buildings, theatres, plazas, streets, underground passageways and shops, the first architecturally coordinated development in the city.

The news of the bankruptcy was certainly a shock to New Yorkers who hadn't noticed any substantial news about Rockefeller Centre since 1989 when it made noisy news indeed. The Rockefeller sold 80 per cent of their shares in the centre to Mitsubishi, the Japanese real estate giant. There was a tremendous to-do here about the Japanese stopping just short of invading the United States, and black jokes about when they would buy the White House.

Anyway, Mitsubishi paid 1.37 billion dollars for a stake that this week a Wall Street commentator called 'vastly overpriced'. The guess in 1989 was the fatal guess, that rents would go on rising forever. They didn't. They began to fall but during the last year or so when the crunch of the mortgage began to be felt, they were desperately raised again. As one tenant put it, a famous bank that departed from its headquarters there, and went over to the comparatively affordable Park Avenue. I said Park Avenue. The rents became preposterously high, but they were too low to service the huge mortgage. Various subterranean deals were suggested and ideas floated, not the least of which as far as Mitsubishi was concerned, was the suspicion that the Rockefellers' were ready, heroically, to assume the whole debt if they could buy back the whole caboodle cheap. Mitsubishi must have looked back bitterly at that colossal 1.37 billions they paid out – not again no more – so Mitsubishi put the whole project into bankruptcy. The Rockefellers' have kept about 2 billion, the Japanese have had the new experience of losing their shirts.

A few days after we heard about the plight of Mitsubishi's Rockefeller Centre, the United States – which of course means the Clinton Government –set 100 per cent tariffs on 13 of Japan's luxury car models, making them, the United States hopes, unassailable in this country, though the first reaction of the top three victims was to hold the high price and wait and see if the United States is crying wolf. The tariff will go into effect on Saturday morning the 20th, but the White House was quick to say that if the two countries which are involved in more or less continuous talks or squabbles come to an agreement by the end of June, then the tariffs would be rescinded. The Japanese say they will appeal to the World Trade Organisation in Geneva, an institution to which the United States belongs, but to which it pays about as much attention as it gives to the rulings of the International Court of Justice at the Hague. Meanwhile, I wonder. You don't suppose the Japanese are going to turn nasty? Surely they'll remain good sports and pay out once a month as usual, the interest on the American national debt.

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