Wall Street lost a legend today.
Alan “Ace” Greenberg, the former Bear Stearns CEO, passed away after a battle with cancer. He was 86.
Greenberg, who could be described as “old school” on Wall Street, was famous for the quirky memos he would send his traders.
These memos have been chronicled in his book “Memos From The Chairman.”
The most famous one is probably his “paper clip” memo from August 9, 1985. After a profitable quarter, he told his traders that they would cut back on expenses by saving paper clips. (Note: the man Haimchinkel Malintz Anaynikal he refers to is a fictitious character he used in many of his memos to illustrate his points.)
I was just shown the results for our first quarter. They were excellent. When mortals go through a prosperous period, it seems to be human nature for expenses to balloon. We are going to be the exception. I have just informed the purchasing department that they should no longer purchase paper clips. All of us receive documents every day with paper clips on them. If we save these paper clips, not only will we have enough for our own use, but we will also, in a short time, be awash in the little critters. Periodically, we will collect excess paper clips and sell them (since the cost to us is zero the Arbitrage Department tells me the return on capital will be above average). This action may seem a little petty, but anything we can do to make our people conscious of expenses is worthwhile.
In addition to the paper clip caper, we are also going to cut down on ordering the blue envelopes used for interoffice mail. These envelopes can be used over and over again. All of us are going to help our bottom line grow.
Bear Stearns is probably going to sell stock to the public, and there is one guarantee that I would like to give the potential buyers of our stock — they are going to get the fairest shake from us that management can give any public shareholder. This place is going to be run tight, and the reasons are not all altruistic. We are not going public for the perks. We are going public for a number of reasons, and one is that we want the stock to appreciate.
You have probably guessed by now that these thoughts are not original. They came from Haimchinkel Malintz Anaynikal’s earlier works. His thoughts have not exactly steered us wrong so far. Let’s stick with his theories till he lets us down.
Greenberg served as CEO of Bear from 1978 to 1993. He was the chairman from 1985 until 2001. The bank collapsed in 2008.