Dillon Read (3): A Rothschild Man

John Birkelund arrived at Dillon Read in September 1981. Born in Glencoe, Illinois, he had graduated from Princeton and then had joined the Navy where he served with the Office of Naval Intelligence in Berlin. While in Europe he became friends with Edward Stinnes, who recruited him after a short career with Booz Allen in Chicago to work in New York for the Rothschild family, considered to be one of if not the wealthiest family in the world.^[10] He started at Amsterdam Overseas Corporation, which then moved its venture capital business into New Court Securities with Birkelund as co-founder. New Court was owned by the Rothschild banks in Paris and London, Pierson Heldring Pierson in Amsterdam and the management. Their venture successes included Cray Research, inventor of the high-powered computers by that name, and Federal Express, the courier company based in Memphis which is the largest recipient of Federal government contracts in Tennessee. ^[11]

A Time Magazine story from December 1981, “The Rothschilds Are Roving” describes a decision by the French Rothschilds in response to the nationalization of Banque Rothschild by President Mitterrand to move significant operations and focus to the U.S. Time reports that they are changing the name of their aggressive venture capital firm, New Court Securities to Rothschild, Inc. and are taking over from the current CEO, John Birkelund.^[12]

Birkelund was tall and energetic. He had piercing blue eyes, a driving and hard working ambition and intelligence. He seemed frustrated by the process of organizing and invigorating Dillon’s club-like culture. There was much about his willingness to try that endeared him to me — a point of view that was not reciprocated. Whatever the reason, I was not Birkelund’s cup of tea. I will never forget one of his early addresses to the banking group. He was full of energy and launched a section of his pep talk, “When you get up in the morning and look into the mirror to shave...” He suddenly froze, looking at me (one of few or possibly the only woman in the room) with fear that his reference to a masculine practice would offend. In the hopes of putting him at ease, I said with merriment, “Don’t worry, John, girls shave too.” The whole room burst out laughing and John turned red.

Birkelund had his hands full after arriving at Dillon Read. In 1982, Nick Brady left temporarily to serve in the U.S. Senate, appointed by Governor Tom Kean of New Jersey to serve out Harrison Williams term. George Schultz left Bechtel to serve as Secretary of State under Reagan. With Brady and Schultz in Washington D.C., the Bechtel relationship stalled. With Brady returning in 1983, Birkelund engineered the repurchase of the firm from Sequoia by the partners and the creation of meaningful venture and leveraged buyout efforts. In 1986, Brady and Birkelund lead the sale of Dillon Read to Travelers, the large Connecticut insurance company that later became part of Citigroup. The relationship with Travelers expanded our capital resources to participate in the venture capital and leveraged buyout businesses. In no small part thanks to Birkelund’s hard work and dictatorial cajoling, Dillon Read would not be left behind in the 1980s boom time.

One of my favorite Dillon Read officers was the son of a former Dillon chairman and, thus, remarkably wise about the ways of the firm. I sought him out after a Birkelund temper tantrum and said that Birkelund was not at all like a “Brady Man” and that I was surprised at Nick’s choice. My colleague looked at me with surprise and said something to the effect of “Brady did not choose Birkelund. Birkelund is a 'Rothschild Man'.” I then said something about Dillon being owned by the Dillon partners, so what did the Rothschild’s have to do with us? My colleague rolled his eyes and walked away as if I was an interloper out of my league among the moneyed classes — clueless as to who and what was really in charge at Dillon Read and in the world.

After all, even Time Magazine had declared that the Rothschild invasion of America was underway.^[13]

FOOTNOTES

[10] See Mayer Amschel Rothschild family in Wikipedia (http://en.wikipedia.org/wiki/Rothschilds).

[11] A recent announcement (http://www.frick.org/assets/PDFs/Press_2005/Board_release.pdf) by the Frick Museum appointing Birkelund to the board describes his resume as follows:

“John P. Birkelund comes to the Board of the Frick as a dedicated supporter of the arts and the humanities. He is a founding member of the new Frick Collection support group called the "Director’s Circle." He has been a strong supporter of The New York Public Library where he serves as trustee and chairs its finance committee. He has also been engaged for many years as a trustee of Brown University and currently chairs the board of Overseers of its Thomas J. Watson Institute for International Studies. Mr. Birkelund serves as well on the board of The American Academy in Berlin and the Phi Beta Kappa Society. He recently retired as chairman of the National Humanities Center and the International Executive Service Corps and has served as a trustee of the Getty Foundation dedicated to the support of the National Gallery in London. Mr. Birkelund, formerly chairman and chief executive of Dillon Read & Co., is presently engaged as managing director of Saratoga Partners, a private equity investment firm that he co-founded in 1984. Corporate directorships have included the New York Stock Exchange, N.M. Rothschild & Co., and Barings Brothers. He is a member of the Council on Foreign Relations and holds an honorary degree from Brown University. In 1990, Mr. Birkelund was asked by President George H.W. Bush to chair the Polish American Enterprise Fund, a federal aid program designed to stimulate the then newly privatized Polish economic sector. The success of this program led to recognition by the Polish government and the U.S. State Department and the creation of the Polish American Freedom Foundation which he presently chairs.”

[12] From Time Magazine, December, 1981 – “The Rothschilds are roving” (http://www.time.com/time/archive/preview/0,10987,925116,00.html; Subscription Only):

“It’s a little bare now," apologizes Baron Guy de Rothschild, 72, waving his hand at the empty black lacquered walls of his office on the 7th floor at 21 Rue Lafitte in Paris….. Reason: the Banque Rothschild is being nationalized by the socialist government of French President Francois Mitterrand, along with the country’s other major banks and holding companies. The Rothschilds, who are stepping out of the bank’s management, have demanded that the government operate the institution without the Rothschild name.

“Nor has their bitterness at being nationalized been quenched by proposed government compensation payments of $100 million, a sum they believe is less than the bank's worth.
“But the members of the French Rothschild clan will not lack for things to do with their money. Unaffected by the nationalization are the non bank personal holdings of Baron Guy and Cousins Baron Alain and Baron Elie, including New Court Securities, a US investment firm based in New York City, which will now receive more of the family’s attention and money. And beginning January 1, 1982, New Court will change its name to a more golden sounding sobriquet: Rothschild, Inc.

“Founded with $2 million 1967, New Court today manages a portfolio worth more than $1 billion, including funds from such corporate clients as General Foods, TRW and Hughes Aircraft. New Court’s other owners included NM Rothschild & Sons in London, which represents the English branch of the family and is headed by Evelyn de Rothschild, 50, and the Rothschild Zurich bank, of which Swiss Cousin Baron Edmond de Rothschild is part owner.

“New Court is an aggressive venture capital firm that has some $200 million invested in fledgling American companies (Author Note: Federal Express was an important New Court venture investment.) Last year its return on current investment of $17 million was 35%. In July, its American chairman John P. Birkelund, 51, asked the Rothschilds for more control over the firm. Instead, the family sacked Birkelund, named Guy and Evelyn as cochairmen and installed a new manager, Family Confidant Gilbert de Botton, 46.

“The new Rothschild man in New York City had previously directed the family’s bank in Zurich, which grew from a paltry $2.5 million in 1968 to its present capitalization of more than $35MM. De Botton is currently investing heavily in sagging stocks of US energy companies, especially those with large domestic reserves of oil and gas. He also plans to strengthen the firm’s venture capital thrust. Says he: The US is the prime market in the world for startup, small and medium size companies.

“That bullishness on America’s prospects is shared by Co-Chairman Guy, who has been commuting monthly since last June between Paris and New Court’s offices in New York City’s Rockefeller Center. Guy will not move permanently to the US and Cousin Ellie’s son Nathaniel, 34, a graduate of the Harvard Business School, is a prime candidate to direct US operations eventually. Says Guy: My great-grandfather sent one of his sons, my grandfather Alphonse, to America in 1848. After returning to France, Alphonse pleaded with his father that the US was the coming country and that there should be a House of Rothschild there. It’s an enormous pity that my grandfather’s advice was not heeded. As far as I’m concerned we should have had a Rothschild bank in the US since the middle of the 19th century. Our involvement in America now is really 100 years late in arriving."

[13] From Time Magazine, December, 1981—"The Rothschilds are roving."

Mapping The Real Deal is a column on Scoop supervised by Catherine Austin Fitts. Ms Fitts is the President of Solari, Inc. http://www.solari.com/. Ms. Fitts is the former Assistant Secretary of Housing-Federal Housing Commissioner during the first Bush Administration, a former managing director and member of the board of directors of Dillon Read & Co. Inc. and President of The Hamilton Securities Group, Inc.

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