Frank DeFilippo: When Powerbrokers Ruled Baltimore

A tad more than a half century ago, in 1967, The News American published a revolutionary two-part series documenting Baltimore’s power structure, the people and the institutions that made the town tick at a time when it was among the largest in the nation, an ethnic rust-belt manufacturing city that was governed by a WASP elite.

It was a sprawling city of 350 identifiable neighborhoods at a time when serious crime amounted to spitting on the sidewalk or jaywalking, a largely Catholic town where real estate ads were listed by the parish they were in and membership in the Holy Name Society was ritual for political advancement in certain warrens.

The series began: “Describe them by any name – the Power Elite, the Status Seekers, the Organization Men, the Establishment – an inbred and exclusive clique of 133 businessmen and lawyers controls Baltimore, its government, its commerce, its culture, education and social institutions.

Frank A. DeFilippo

“In turn, this select corps of interlocking and overlapping corporate agents is dominated by a half-dozen men who emerge at the apex of the city’s pyramidal power structure.  And where mere men vanish into unidentifiable and untraceable corporate webs, a handful of giant impersonal institutions controlled by the same elite few dominates virtually every aspect of life in Baltimore.” (Shamelessly I admit to being the reporter who researched and wrote the series.)

The men at the mountaintop, calling the shots, included a couple recognizable to the public, the others unfamiliar names and faces. Thomas B. Butler, board chairman of Mercantile Bank & Trust, barely known except within his charmed circle of peers. Lawrence Cardinal Sheehan, a hometown success story and visible presence, leader of a half million Catholics and head of a huge financial and real estate institution, the Archdiocese of Baltimore.

And through the boards of Baltimore’s five major home-grown banks, along with a couple of law firms and corporate sanctums, the power elite fanned out to where the 133 chosen few formed the interlocking network than ran the city, and, while government was starved for talent, they chose to remain outside the messy business of politics preferring, instead, to sniff the sanitized air of board rooms and private clubs.

And if there was a single entity that encapsulated the Baltimore establishment it was the Greater Baltimore Committee wherein the city’s titans came together as a group to make decisions that affected the lives and livelihoods of every Baltimorean and those who lived beyond in the awakening suburban noose around the city, many of them host to the estates and horse farms of those who ran Baltimore. The GBC considered itself virtually an adjunct of the executive branch of municipal government.

Examples: Mercantile was the largest trust bank in the nation. It voted controlling interest in The Baltimore Sun, the city’s newspaper of record. Venable, Baetjer and Howard was one of Baltimore’s two leading silk-stocking law firms. It represented not only Mercantile but The Baltimore Sun as well as Alex Brown, the nation’s oldest brokerage house and the cornerstone of Baltimore’s financial community. It was said at the time that no major financial decision was made in Baltimore without first being cleared with Charles Garland, chairman of Alex Brown.

To illustrate the enormity and the influence of Baltimore’s establishment at the time, the entire state budget was a notch over $1 billion; the assets of Mercantile Bank were $2.5 billion, and its chairman, Thomas B. Butler, sat on 11 boards of directors.

John Leutkemeyer, board chairman of Equitable Trust, doubled as state treasurer and overseer of all state money that poured through his bank. Ditto his son, John Jr., who served as city treasurer, simultaneously with his father, guiding the stream of city deposits to the family bank.

Francis X. Gallagher, attorney for the Archdiocese of Baltimore, served on the boards of two banks, representing the Church’s piles of cash as well as its real estate holdings. Because of Gallagher’s apparent conflicts of interest, service on more than one bank board was later outlawed.

Today, the captains of industry and the institutions they headed are all gone. They began to fade at a time of great convulsive change nationally and locally, in the defiance of authority and the assault on the establishment that highlighted the confluence of the civil rights and anti-Vietnam War movements of the 1960s-70s.

The banks, the law firms, the insurance companies and the major industries either disappeared or were subsumed by larger, out-of-state logos, or, as many of the old titans faded out, the heirs decided to cash in.

For example, The Baltimore Sun was sold to out-of-towners (twice over) because of a family feud – one family of stockholders wanted to sell, the other didn’t. The sellers prevailed. The five major banks – Mercantile, Equitable, First National, Union Trust and Maryland National – were all gobbled up by out-of-state behemoths. And the City’s two largest law firms, Venable, Baetjer & Howard and Piper, Marbury, merged with even larger national law firms.

Venerable Baltimore firms such as USF&G, BG&E, Monumental Life, the B&O Railroad, C&P Telephone are all names that toggle up nostalgia as well as an era, good or bad, when Baltimore was a content, schizophrenic town. Juxtaposed with the factories and blue collars were such genteel institutions as the Social Register and the Blue Book, and proper young ladies had formal coming-out occasions, debutante balls. County and dining clubs were defined by birthright and social status in a kind of hand-me-down inbreeding.

The accumulation of power, in those days, brought with it a certain corporate responsibility and civic obligation. The departure of corporate Baltimore, one way or another, also led to the collapse of corporate giving and the support of charitable and cultural institutions as is evidenced by the financial squeeze of the Baltimore Symphony. The symphony has abbreviated its season because of financial difficulties, according to management, and its players and supporters are asking the state to release $3.2 million recently authorized by the General Assembly, which seems unlikely.

It was usually the local banks that spearheaded civic fundraising drives, not only as a display of civic goodwill and corporate citizenship but because it was good business. They contributed substantially as well as provided the manpower to peel off corporate dollars into civic endeavors. And the trick was that they donated to each other’s pet projects, providing a steady lifeline of financial support to keep cultural institutions alive.

There was a provincial side to the do-gooder impression, though. In one way, local banks stunted commercial development in the city by denying loans to outside interests that wanted to locate in Baltimore. Local money was viewed as vital to establishing a connection to the community, but the local banks were more interested in protecting their fellow Baltimoreans from outside competition. (Recent revelations of insider-dealing at the University of Maryland Medical Systems reflect the old parsimonious way of doing business.)

But such a concentration of corporate power would be frowned upon and unacceptable – and possibly illegal – in today’s world of transparency, community engagement and government regulation. The law books have gotten a lot thicker since the 1960s.

And therein lies part of Baltimore’s inherent problem. Business-to-business communication is probably the most effective economic development tool in the kit. The contraction of Baltimore’s corporate community has left the city with few ambassadors to the business world outside of its borders. And current conditions in the city merely add to the woes.

It used to be a matter of civic pride that Maryland boasted of having either a home office or a branch of every company on the Fortune 500 list. Today it has two, both in Montgomery County – Marriott International and Lockheed Martin. The third, Discovery, which had been based in Silver Spring, recently decamped for New York City.

We can fume and fuss ‘til the cows come home about the decline and fall of Baltimore. But the mojo to reversing the trend just might be to create opportunity and teach people to recognize it when it jumps up and kicks them in the butt, without reverting to the old ways.

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