April 2 (Bloomberg) -- When William “Billy” Salomon started on Wall Street more than 80 years ago at his family firm, trades were often closed with a gentleman’s clasp. Now, with computers completing transactions in microseconds, he says the industry is worse off.
“A handshake or a thank-you on the telephone was a confirmation of a transaction,” the former head of Salomon Brothers said in an interview this week. “Today you have lightning-fast trading which no one understands. It’s a vast difference. It was more of a gentlemanly game.”
Salomon celebrates his 100th birthday today with a 100-person gathering at the Council on Foreign Relations in Manhattan. To mark the occasion, he and former colleagues looked back on an earlier Wall Street, where Salomon said banking partnerships flourished and clients always came first.
“When you are a partnership there is a different atmosphere,” Salomon said. “You’re working for each other.” That discipline helped instill a culture where clients trusted their advisers, he said.
Salomon began working at Salomon Brothers, the New York investment firm founded by his father and uncles, in 1933 and served as a managing partner from 1963 to 1978. He handed control that year to John Gutfreund, who sold the firm to Phibro Corp. about three years later, bringing the partnership structure to an end.
The company is now part of Citigroup Inc. and “unfortunately not a firm anymore,” Salomon said. He said he doesn’t own any stock in the New York-based bank, one of five U.S. lenders that failed the Federal Reserve’s annual stress test last week.
Wall Street’s realignment away from partnerships hastened a breakdown in the industry’s culture, Salomon said. While regulatory action in the early days from agencies such as the Securities and Exchange Commission could threaten a firm’s survival, it’s now considered a cost of doing business, he said.
“I remember when the SEC first started,” Salomon said. “My God, if you got a censure from the SEC, you were practically out of business.”
Salomon put in place the management and structures that allowed the firm to expand and become one of the dominant firms on Wall Street, according to Henry Kaufman, a former partner who ran the research division.
“An important prerequisite was to maintain and protect the client relationship,” Kaufman said in an interview. “In the long term if you did that, even if you weren’t able to extract the maximum fee, the firm would be more successful and would maintain its pre-eminence.”
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