While shareholders and public might later he fed a soporific, sugar-coated version of bank policy through elaborately printed annual reports and other means, here, behind closed boardroom doors, was where true objectives were decided in uncompromising terms. It was a reason why discretion and a certain silence were requirements of any company director.
"There is a close-to-home parallel," Heyward was explaining, "between what I have spoken of and what has happened in the church which I attend, through which l make some social contributions of my own.
"In the 1960s our church diverted money, time, and effort to social causes, notably those of black advancement. Partly this was because of outside pressures; also certain members of our congregation saw it as 'the thing to do.' In sundry ways our church became a social agency. More recently, however, some of us have regained control, and decided such activism is inappropriate, and we should return to the basics of religious worship. Therefore we have increased religious ceremonies our church's primary function as we see it and are leaving active social involvement to government and other agencies where, in our opinion, it belongs."
Alex wondered if other directors found it hard, as he did, to think of social causes as "inappropriate" to a church.
"I spoke of profit as our principal objective," Roscoe Heyward was continuing. "There are some, I am aware, who will object to that. They will argue that the predominant pursuit of profit is a crass endeavor, shortsighted, selfish, ugly, and without redeeming social value." The speaker smiled tolerantly. "You gentlemen are familiar with arguments along those lines.
"Well, as a banker I profoundly disagree. The search for profit is not shortsighted. And, where this bank or any other is concerned, the social value of profitability is high "Let me enlarge on that.
"All banks measure profit in terms of earnings per share. Such earnings which are a matter of public record are widely studied by shareholders, depositors, investors, and the business community nationally and internationally. A rise or fall in bank earnings is taken as a sign of strength or weakness.
"While earnings are strong, confidence in banking continues high. But let a few big banks show decreased earnings per share and what would happen? General disquiet, increasing swiftly to alarm a situation in which depositors would withdraw funds and shareholders their investments, so that bank stocks tumbled with the banks themselves imperiled. In short, a public crisis of the gravest kind."
Roscoe Heyward removed his glasses and polished them with a white linen handkerchief.
"Let no one say: this cannot happen. It happened before in the depression which began in 1929, though today, with banks larger by far, the effect would be cataclysmic by comparison.
'This is why a bank like ours must remain vigilant in its duty to make money for itself and its shareholders."
Again there were murmurings of approval around the boardroom. Heyward turned another page of his text.
"How, as a bank, do we achieve maximum profit? I will tell you first how we do not achieve it.
"We do not achieve it by becoming involved with projects which, while admirable in intent, are either financially unsound or tie up bank funds at low rates of yield for many years. I refer, of course, to funding of low-income housing. We should not, in any case, place more than a minimal portion of bank funds in housing mortgages of any kind, which are notorious for their low return of profit.
"Another way not to achieve profitability is by making concessions and lowering lending standards as, for example, with so-called minority business loans. This is an area nowadays where banks are subjected to enormous pressures and we should resist them, not with racial motives but with business shrewdness. By all means let us make minority loans when possible, but let terms and standards be as strict as those for any other borrower.
"Nor, as a bank should we concern ourselves unduly with vague matters of environment. It is not our business to pass judgment on the way our customers conduct their business vis-a-vis ecology; all we ask is that they be in good financial health.
"In short, we do not achieve profitability by becoming our brother's keeper or his judge or jailer.
"Oh, at times we may support these public objectives with our voice low-cost housing, civic rehabilitation, improvement of environment, energy, conservation, and other issues which arise. After all, this bank has influence and prestige which we can lend without financial loss. We can even allocate token amounts of money, and we have a public relations department to make our contributions known even," he chuckled, "to exaggerate them on occasions. But for real profitability we should direct our major thrust elsewhere."
Alex Vandervoort thought: Whatever criticism might be leveled at Heyward, no one could complain later that he had failed to make his viewpoints dear. In a way his statement was an honest declaration. Yet it was also shrewdly, even cynically, calculated.
Many leaders in business and finance including a good proportion of the directors in the room chafed at restrictions on their freedom to make money. They resented, too, the need to be circumspect in public utterances lest they draw fire from consumer groups or other business critics. Thus it was a relief to hear their inner convictions spoken aloud and unequivocally.
Clearly, Roscoe Heyward had considered this. He had also, Alex was certain, counted heads around the boardroom table, calculating who would vote which way, before committing himself. But Alex had made his own calculations. He still believed a middle group of directors existed, sufficiently strong to swing this meeting from Heyward toward himself. But they would have to be persuaded.
"Specifically," Heyward declared, "this bank should depend, as it has traditionally, on its business with American industry. By that I mean the type of industry with a proven record of high profits which will, in turn, enhance our own.
"Expressed another way, I am convinced that First Mercantile American Bank has, at present, an insufficient proportion of its funds available for large loans to industry, and we should embark immediately on a program of increasing such lending
It was a familiar script which Roscoe Heyward, Alex Vandervoort, and Ben Rosselli had debated often in the past. The arguments which Heyward now advanced were not new, though he presented them convincingly, using figures and charts. Alex sensed the directors were impressed.
Heyward talked for another thirty minutes on his theme of expanded industrial lending against a contraction in community commitments. He ended with as he put it "an appeal to reason."
"What is needed most today in banking is pragmatic leadership. The kind of leadership which will not be swayed by emotion or pressured into 'soft' uses of money because of public clamor. As bankers, we must insist on saying 'no' when our fiscal view is negative, 'yes' when we foresee a profit. We must never buy easy popularity at stockholders' expense. Instead we should lend our own and our depositors' money solely on the basis of the best return and if, as a result of such policies, we are described as 'hard-nosed bankers,' So be it. I am one who will be glad to be counted among that number." Heyward sat down amid applause.
"Mr. Chairmanl" The steel-man, Leonard Kingswood, leaned forward with a hand raised. "I've several questions and some disagreement."
From lower down the table the Honorable Harold Austin riposted, "For the record, Mr. Chairman, I have no questions and total agreement with everything presented so far."
Laughter erupted and a fresh voice that of Philip Johannsen, president of MidContinent Rubber added, "I'm with you, Harold. I agree it's time we took a harder line." Someone else injected, "Me, too."