A Modern Gospel of Wealth

THE OPEN MIND
Host: Richard D. Heffner
Guest: Dr. Samuel LeFrak
Title: “A Modern Gospel of Wealth”
VTR: 2/21/87

I’m Richard Heffner, your host on THE OPEN MIND. I think it was The New York Times’ Charlotte Curtis who taught me at this very table that it had been the late, great Sophie Tucker who had said, “Rich or poor, it’s all the same. But rich is better”. Actually, I had always thought that those had been my father’s words…he had said them so often, after all, though, alas. Clearly to no avail as far as this son was concerned.

But rich or poor remains a fascinating dichotomization. One notes the biblical injunction (in the Gospel according to Saint Luke, 18) that, “it is easier for a camel to go through a needle’s eye than for a rich man to enter the kingdom of god”. And years about I was so taken by Andrew Carnegie’s “Essay on Wealth” – the key to what he would have the rich do with their fortunes – that I included it in my Documentary History of the united states. For in the post-Civil War gilded age of great American fortunes, of robber barons or captains of industry (cal them what you will), Carnegie’s Gospel of Wealth loomed so large.

And today, perhaps in the Carnegie mold, I’ve invited to The Open Mind one of this area’s great entrepreneurs: Samuel LeFrak, head of one of the world’s largest building organizations, a major oil driller, and it’s said – though it’s not polite to ask a person how much he’s worth – a near billionaire, give or take a few hundred million.

Well, Sam LeFrak’s interests are remarkably varied. He’s building the largest planned community in the United States. He’s heavily involved I the arts: owns a music business with such stars as Barbara Streisand, Eddie Murphy, Dolly Parton; backs theatrical productions; has serious interests in underwater archaeology and so on and on. But what I want to talk about mostly with Sam LeFrak today is what he told Forbes magazine a few years ago, “I follow the golden rule. Those with the gold, make the rules”. And just how that notion informs his own gospel of wealth, what to do with it all. And that’s really the question, Mr. LeFrak. What to do with it all?

LeFrak: Well, I think that money is only a means to reach one’s objective. We must have to sit down with ourselves and find out what’s our objective and our purpose to life. I mean chemically, we’re all the same, you know. We’re worth about thirty-five cents, if you break it down quantitatively.

Heffner: That was years ago in our early days.

LeFrak: Well, you know that the commodity market, even though the stock market is hitting new Dow Jones levels, the commodity market is hitting new lows. So what you may have felt thirty-five cents may be, okay with inflation I’ll give you a dollar thirty-five. But I think that the important thing is, it’s only a conveyance, money is only a means to what you can do with your life. Three score and ten, that’s what we’re given, the bible says we’re here for three score and ten. Now are we going to waste it? You know we want to make each day count. We want to make sure that what we do is fulfilling to ourselves so that we can communicate and motivate others, so they would be also useful vis-à-vis as I consider myself, I consider myself a teacher, I like to help people, I like to find talent, I heard you mention Barbara Streisand. Twenty-seven years ago I discovered her, today she’s not only a great star, but she’s a superstar, world-wide. I pride myself in building buildings. Not just physical space, but creating an environment where, listen the greatest reward I could get is when I can get a Nobel Prize winner, a Pulitzer Prize winner, a Grammy, a Tony, a whatever, an Oscar, you name it. That to me is the compensation. And by the way, we do very well financially. Now how did I get in the oil business? I didn’t know anything about the oil business, but I was damn angry at the Arabs. I just didn’t like standing no line on even and odd days and reading about all the problems that they had and the violence that was, we were subject to because of this weapon called hydrocarbon oil, which the Arabs are using, politically, no different than their armament or any one of the tanks, or whatever. What basically, I said to myself, “We’re educated people. During World War II, President Roosevelt said to us, listen let’s feed the people, the boys overseas. Grow victory gardens, go in your backyard, plant some vegetables, so we can send more food overseas”. What did we do? We did that, P.S. i went in the oil business. The greatest teacher is the New York Public Library, it’s available to everybody. All you have to do is just read up, where we have oil in this country. And as a result, not only did I go in and make a success out of it, but I found a tremendous amount of oil and gas, which now I could use in my buildings where I have to make people heat and hot water, air conditioning and what not, and I didn’t have to go to the Persian Gulf and I didn’t have to cater.

Heffner: Okay. You knew what you wanted, you knew what the people needed and you got it. The real question is: you talk about three score years and ten. I think we’ve got more than that these days, but let’s use that figure generally. What do you do with it afterwards? That’s been a question that’s been asked, historically, forever. If Luke were wrong and a rich man can get through to the kingdom of god and Carnegie was right, he has an obligation to make use of his money. What’s the answer to the question of what do you do with it now? How do you organize the use wealth? I mean that’s a question one could put to a Rockefeller in another generation, to a Carnegie and we know what he did with the public libraries and I’ve always been intrigued with the possibility of putting it to a contemporary Carnegie. And here he is, at this table.

LeFrak: Well, I don’t know if I’m a contemporary Carnegie. I certainly admire the man for the way he used his money. You know all the libraries and “let there be light”, so he was a man of the book. And he realized that he was denied certain things when he was a young man, but he wanted to give these underprivileged people the opportunity that he did not have. Even though that this may have been the motivating reason for his being so successful. Let’s not forget that he suffered. And he suffered plenty because, remember he realized that he did not start at the same level as others who were born in the wealth or bred in the purple. He was Scotchman that came here, he was underprivileged, he came in there and he worked hard at his craft and he made a big success and he says that it would be a crime not to give my money away in my lifetime. And I think that there’s a story that I could tell you and it’s quite symbolic. A pig said to a dog, said “Dog what good are you? Look at me. From my fur they make brushes, my skin they make leather, my bones they make buttons, and my meat – bacon, ham, everybody loves it. What good are you, dog?” and the dog answered, “You know, you’re right Mr. Pig, but you got to be dead to be appreciated”. Mr. Carnegie realized that he wanted to see it in his lifetime. I like to answer the same way. We also, when I say “we” that’s my wife, who has been my bride for forty-five years, we’re going to be celebrating our forty-sixth wedding anniversary, have decreed that we will endow and subsidize and some of the things would be what we call a very urgent area of and necessary, is education. Education, a mind…a mind should not be wasted. It should be encouraged to develop and find and achieve excellence in its ability. We have a school which is called LeFrak Brick and Mortar College where we take people and we train them. Now we still need bricklayers and we need carpenters and we need plumbers and we need electricians and we take them from the street. Now let’s face it, somebody has to do this thing. When I went to Mott Haven and built on charlotte Street and I worked with the local church, today these people are entrepreneurial because we gave them an opportunity and trained them. In Newport, where I have an open employment contract, whoever wants to come to work, I will get them a card with the union. And they will go through the learning process and they will become full fledged members of the union. All they have to do is sign up.

Heffner: How would you respond to people who say, “Look, Mr. LeFrak, that’s very generous and it’s very entrepreneurial, but education essentially is a function of government. Local government, perhaps, but education is a function of government and what you should be doing is help elect people who are going to be spending their money – government’s money – for educational purposes?

LeFrak: I find that government becomes too political. That it becomes political realities. I’m a free enterpriser. I believe if you want a job done, you go to people who are from the private sector. To me the public sector is…the best way I can compare it is to a can of worms. It’s just mumble-jumble. And from my point of view, as a free enterpriser, and all the things that I’ve done in my life, the government has never been of any help to me, personally. I’ve always believed the straight line is the shortest distance between two points – direct. And as far as I’m concerned, yes, we must have a government. I mean, but let’s face it. I think Calvin Coolidge said, “The business of America is business”. He didn’t say, the business of America is politics. Now you have a man who was President of the United States, and this was a quote directly from him. As far as I’m concerned, if you want to achieve anything and you want to get anything done, you’ve got to do it yourself.

Heffner: Mr. LeFrak, the quotation, “The business of America is business” has been used against those who first said it, he who first said it and those who have repeated it, more than it has been hailed. Do you want to hold on to that notion that the “Business of America is business?”

LeFrak: Well, I think that the business is a means towards achieving other things. Let me go back and say that you asked me about my objectives and my purposes. Well, you know I can’t give you any money until I earn the money. But once I earn it and I have a focus on where I’m going to direct those funds, all I could say to you is, you know these things as you mature, in life, and your tastes change and I know, I’ve gone through different stages, I’m in the dessert of my life right now. This is the best part of my life. Do you realize what I have in my memory bank, my computer? Do you realize how many years of experience I have? And what do we do with people at the age of 65 we put them into forced retirement and we say, “Get yourself a rocking chair and I’ll give a cat, like Whistler’s Mother to put on your lap”. You’ve got great minds that could teach younger people and help younger people from their experience. Now when we say, the “Business of America is business”, I say to you the following. I’ve been blessed.3.i have been blessed, wonderful family, wonderful wife. Actually the way I feel is that some of these blessings that I get, I want to give to others. And I want that same feeling that I could be of help to others. And that’s why I build affordable housing. That’s why I am concerned, and I have sleepless nights, about homeless people. And that’s why I, personally, am so happy to find out that India today is producing enough food to feed its population, china has enough food to feed its population. But the big problem is housing. Building moderate and affordable house.

Heffner: Well let’s stay right here. I know you have an interest in India, I know you’re going to China and will spend some time there. Let’s talk about this country, where in a number of major cities in this country, probably every major city in this country, there is a problem of the homeless. I wonder what your own position has been on this notion that the homeless, those whom we see on the streets, we’re taping this program right here in New York City on a cold winter day, there is going to be a question tonight if the temperature goes down far enough whether the police should be authorized to take people off the streets. What do you think about that?

LeFrak: Well, I think that some of these people are very proud and some of them have certain mental problems. I think that that’s where the government should step in. but I don’t think that we’re going to solve this by politics. I think, if you want to have it muddled and you want to have this thing, you know, solved by debate or committees, it’s never going to happen. But if you’re going to go to a natural resource, come to a LeFrak who’s built more of New York than anybody else.

Heffner: Yeah, but look. I appreciate that and I respect that. But you’ve been here and I’ve been around for some time and yet we now have the problem, every single winter night of many homeless people. We’ve had a government in place that has been essentially a lineal descendant of Calvin Coolidge. And yet we have all of these homeless. How do we make these things jibe? What would you have us do that’s different?

LeFrak: Well, I think we have a number of hospitals in New York that are empty because we have too many beds. I don’t see why they don’t take some of these homeless people and bring them into some of these empty hospitals. I don’t see why Governor Cuomo should sit with two hundred million dollars of surplus in his budget and have people homeless without giving some of that money to the City of New York so we can house these people.

Heffner: So you do think that here is where government has a function?

LeFrak: Absolutely. Absolutely, but if you want the problem solved, go to the resource, go to the people who know how to get things done. Robert Moses, our master builder of the City of New York who built parks and our beaches and our highways and our byways and our bridges and our tunnels, he got things done.

Heffner: Not in the private sector.

LeFrak: He used the private sector. I apprenticed with Robert Moses, he was my boss. He was one of my teachers.

Heffner: But now wait a minute, are you telling me that Moses accomplished all the things he did and as a New Yorker I know what he accomplished, that he did so essentially in the private sector? Or essentially because he mobilized the force of government?

LeFrak: Well, let me say he used the force of government as a threat to get…he had a dossier on everybody. J.Edgar Hoover was a very close friend of his. And if you stayed in his way, he was ready to call the press. And you would fail. Or you would melt away. So, he got things done. We have an emergency here in New York, we’ve got people lying all over our streets. If I was a farmer, and I refused to grow crops and the government said, “Look, we’ll give you a subsidy, go out and grow crops, otherwise we’ll starve”, we have the same emergency now. But I don’t hear a thing about…all I hear is like Mark Twain says, “Everybody talks about the weather, nobody does a thing about it”. Now I have been trying to build two thousand units for the homeless. I have been on television, I am in negotiations now, it’s like a debate. I’m a builder, I’m an engineer, I’m an architect, I’ll build you affordable and moderate housing. And the answer is that it’s deaf ears. I’m dealing with bureaucrats. Nothing happens. Nothing happens.

Heffner: Yes, but there you are. You’re the private sector, you’re the builder, you’re the man who has built Lefrak city, you’re the one who has done all of these things. Why don’t you do them? What is standing in your way?

LeFrak: Because I need a permit, there are laws. You can’t just go out and “I’m going to build a house”, you’ve got to go through…there’s a process. There’s all kinds of environmental…there is the ULURP, there is the community boards. Listen, I am finishing now James Tower on Columbus and 90th Street. Took me twenty-four years to build that building. Twenty-four years.

Heffner: Well let me ask you, what would you do about the social concerns, seriously, that these delays seemingly represent. They represent a concern about the environment, they must represent many other legitimate concerns. What will you do about them? You’re talking about a huge nation, a quarter of a billion people almost. You’re talking about a very complicated business. What would Sam LeFrak do…

LeFrak: Sam LeFrak would do what the late Franklin Delano Roosevelt did when he called in Professor Einstein. He called in Professor Einstein and he said, “Professor Einstein, Intelligence tells us that an atom bomb is being developed by the Germans. Is it possible”? And professor Einstein said, “Yes, Mr. President”. And he said to him, “what do you need to build an atom bomb”? And he says, “I need an umbrella operation called Manhattan Project”. Then what he said, “How much is it going to take?” he says, “A billion dollars. “And he picked up the phone and called Sam Rayburn and said, “Sam, I need a billion dollars, Professor Einstein is going to get us an atom bomb.” And Professor Einstein got his billion dollars, he delivered the atom bomb, saved millions of lives and as a result, we won the war.

Heffner: What does Professor LeFrak need to build those houses?

LeFrak: I need politics to get out of my way. I need, as I sit here eyeball to eyeball, directly to you, to talk to the Mayor or talk to his designated individual who I could agree or disagree. I have bee now negotiating with the Mayor, who wrote me in December of 1986 or ’85. And he said, “After World War II you built all this housing for the returning veterans, why can’t you build me housing that would rent from three hundred to twelve hundred dollars a month for people who earn from fifteen thousand to forty-eight thousand”. And I wrote him back, “I will build you two thousand units without a profit. I will deliver the first in twelve months. I am ready, willing and able. Where is the land?” And what happened there is they said, they hold the largest land bank in the city of New York and I said to them, “twenty-two years ago you designated me a sponsor on a certain development. And I have been wrestling with the community, it’s been like a war zone. For twenty-two years, let’s get on with the work.”

Heffner: Now are you suggesting that other LeFrak’s in Chicago and in Minneapolis and in many other cities of this country are going through the same process and that’s why there is homelessness throughout the country?

LeFrak: Absolutely. And I attribute it to one thing, politics.

Heffner: When you say politics, what do you mean? Politics is the life-blood of our nation.

LeFrak: I know bureaucrats who refuse, they’re like struck by lightning, especially this town with all the scandals. Nobody’s…nothing’s moving.

Heffner: Yes, but this is happening all over the country.

LeFrak: Yeah, it’s gridlock. Gridlock. But what do you want? You know, we don’t do things like that in the private sector. The private sector, we set our objectives and boy, we’re at war. You either win or lose. And remember you’ve got your money at stake. You’re not in there on the dole. You’re not an arrogant beggar. You’re putting your money up. What I offered the Mayor of the City of New York is to build him housing without a profit. And I wanted them to go ahead and do the following, it’s very simple. We have a lot of city housing in five boroughs. We have a lot of over-income people there. They don’t belong there. Under the law, they’re illegal. Should a landlord do this they would indict him and put him in jail, but a bureaucrat can get away with it. Now what happens is I said, “Let’s get two thousand of these families. We will relocate them in our development with fine, beautiful housing at a price they can afford to pay.” Now I’m freeing up two thousand units for the homeless, these poor people that are just unfortunately lying in the parks or in the subway, at Grand Central Station, wherever. But we will take those people out of city housing and the other people we will blend them in the five boroughs. Those hundreds and hundreds of thousands of units that you’ve got scattered all over the five boroughs of New York.

Heffner: What do we have then? A bunch of dummies in government or thoughtless people who don’t care? It doesn’t sound right. It doesn’t sound as though it makes that much sense.

LeFrak: Well, you know, they’re all looking at the same thing.

Heffner: What’s that?

LeFrak: Retirement. They all are counting the hours when they can get out and get their pension. You read the newspapers. And usually that last year, you know, they get all that overtime and they fatten up the pension. And when they do, on retirement they get a gold watch and a one-way ticket to Fort Lauderdale. Getaway money.

Heffner: Spoken like a self-made man. Well not quite self-made, but a man who’s made his own with this notion of the freedom of enterprise. It interests me though, the way you sort of idolize Robert Moses, with his capacity to get things done because he knew where the bodies were buried and he could push people around.

LeFrak: Absolutely.

Heffner: Do you approve of that?

LeFrak: Absolutely. I don’t care what weapon, as long as there’s no violence. I don’t care what weapon you use. We all have an objective and we have to run for daylight. It’s like in football, if you can’t go through the ground, you go through the air, you mix up your plays but you run for the goalpost. The goalpost is to get your work done. And I have no time to procrastinate. At my stage of life, I’m now down to a precious few. I don’t want to waste my life. I’m here to do good for others. I’m here to motivate young people. I’m here to inspire and encourage other people. I’m here to do a job and you know what my objective is, it’s heaven. I’m going to heaven. Because I’m going to do such a great job here that, you know, when I go heaven there’ll be a cloud for me.

Heffner: It’s not a cloud, it’s not a stroke of lightning, but I’m getting the signal that our time is up. I hope that doesn’t relate to your promise of where you’re going. Thanks so much for joining me, Mr. LeFrak. And thanks, too, to you in the audience. I hope you’ll join us again next time. And if you care to share your thoughts about today’s program, please write to THE OPEN MIND, P.O. Box 7977, FDR Station, New York, NY 10150. For transcripts send $2.00 in check or money order. Meanwhile, as another old friend used to say, “Good night and good luck.”

Continuing production of this series has generously been made possible by grants from: The Rosalind P Walter Foundation; the M. Weiner Foundation of New Jersey; the Mediators and Richard and Gloria Manney; the Richard Lounsbery Foundation; Mr. Lawrence A. Wein; and the New York Times Company Foundation.

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