March 28, 2024

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Transcript: Icon Fred Schultz

In September, Florida Trend senior writer Cynthia Barnett interviewed Fred Schultz at his home on Riverside Avenue in downtown Jacksonville. Here’s a transcript of their talk.

| 11/1/2008
I wanted to begin by asking you where were you born and in what year?

FS: I was born in Jacksonville, Florida, in January 1929.

FT: What had brought your father to Jacksonville?

FS: My father was a Harvard-law trained lawyer who’d gone to France in the First World War, came back and went to work for the Great Northern Railroad. They had just bought a small bus company. The bus business was a very new thing at that point. They were having problems, so they sent him out to run it. He got interested in the bus business and came down to Florida in 1921 and went to Tampa. He had saved up enough money to buy a bus, and he ran this bus from the train station out to Davis Island for the big developer of those days, Davis. By the time the Florida crash came in ’25, he had four buses. The real estate just absolutely, totally dissolved. That was a real real-estate crash. So my father started an inner-city bus line and expanded it and bought some other little bus lines in the southeast to create Southeastern Greyhound Lines. He then moved the headquarters to Jacksonville in 1928.

FT: Since teachers become such a key part of your later philanthropy, did you have a favorite teacher when you were a boy?

FS: I did have a favorite teacher. She was Mrs. Sweisgood, whose son (Bill Sweisgood) later became editor of the editorial page of the Florida Times Union. But she was not really the influence that got me interested in education. What happened was, when I was 16 years old, my mother asked me what I wanted to do. I told her I wanted to help people. And she never let me forget that. And as I got older, I was in training to be Playboy of the western world for a fair number of years ...

FT: Was this in high school, or at Princeton, or both?

FS: Both. But when I finally got straightened out ... well, I’d better tell that story, too. I was constantly in trouble at Princeton.

FT: Over what? Girls?

FS: Well that certainly was a major part of it. But a lot of other stuff as well. They finally kicked me out and they said they wouldn’t let me back in. I went to the dean’s office and camped and saw him every day for a month. And he finally said, well, alright. We’ve got an alumnus in Canada who owns a mine up there. If you can go up and work in the mine — and we’ve had others who’ve tried this and nobody’s made it — but if you can go up there and work in the mine and come back with a good letter of recommendation, we’ll let you back in. So I went up and worked in this silver and cobalt mine in northern Ontario, and it was, needless to say, somewhat difficult for a while. I had to get up at 4 and collect the camp garbage and eat breakfast at 5 and go underground at 6.

FT: How far underground were you?

FS: 1,000 feet. I got a good recommendation from the mine manager, Princeton let me back in. My wife had stuck with me all this time.

FT: And you had met her in Jacksonville?

FS: I met her in Jacksonville when she was 14 and I was 16. I don’t really remember, but she was staying at the Ponte Vedra Inn, and she claims that I walked past and she smiled at me and I stopped, came back and sat down and asked her to the dance that night. She was a wonderful dancer, we had a great time and I asked her to go moonlight swimming with me and she said she’d have to go ask her mother. And I said, “How old are you?” She was very good-looking and looked much older. She said that she was 14 and I said Oh my God. She claims I marched her over to her parents’ table, they were there, and I deposited her, and that was the end of that date. We finally got together again when I was at Princeton and she came up to go to college up north.

FT: So did she stick with you during your bad-boy behavior?

FS: She stuck with me. She would get on the train in Northampton and she would study all the way down on the train and then all the way back on the train. So she came back down every other weekend. It was wonderful for me. She says the first thing she would do when she arrived in Princeton was to get me and drag me to the library. She did do that a good deal. She stuck with me. We had a wonderful courtship. And we have had an absolutely remarkable marriage.

FT: That’s wonderful — how many years?

FS: 57 years. It’s been one of those things that’s hard to really understand, how well we fit. I keep telling people, I had a wonderful life because I had a wonderful wife. That’s been far and away the most important thing in my life. My wife. She was just what I needed. She’s very bright and has a lot of common sense and we partner very well. I’ve always looked to her for help and advice and support and she’s always been there for me. I think every day, particularly now that I’ve been through this bout of cancer and chemo and I don’t do as much any more. I can sit and think. It’s just clear, going back over everything, that Nancy has been the key to my life.

FT: That’s just beautiful. Before we leave your childhood, I wanted to ask about your parents and their influence. What were your parents’ names, and what do you most hold from them?

My mother and father were older. My mother wouldn’t marry my father for a long time. They were in college together. My mother and father were both born in 1890. My mother went to the University of Iowa when women didn’t go to college. My father kept asking her to marry him, and finally, it was more than 10 years after they were at school together. My mother got her bachelor’s from Iowa and she didn’t do any other academic work.

FT: But that was remarkable for the time.

FS: Yes, and my mother was a suffragette. My mother was very bright, but my father was exceptional. He got his bachelor’s from Iowa, his master’s from Minnesota, and his LLB from Harvard, all before he was 22 years old.

FT: What were your parents’ names?

FS: My father’s name was Clifford and my mother’s name was Mae.

FT: And what do you carry from them to this day?

FS: My mother was a very interesting person. She was very bright, very well read. She was very disciplined. Straight as a string. And my father was extremely well-read. Wanted to be a doctor rather than a lawyer, but his father was a lawyer so my grandfather pushed him into it. But my father just read about everything and my mother did.

FT: And you’re that way?

FS: Yes, I read a lot. And our dinner-table conversations ... They weren’t warm and fuzzy parents. My father was working very hard, very long hours. And I didn’t see very much of him until later on, when I was very fortunate to be in business with him for a short period of time and really got to be a good friend of my father’s and learned to not only to respect him, which I always had done, but learned to love him as well. But I learned a lot from our dinner table conversations. My father tried to do things with me but he was so busy ... I went to Bolles School. And my father got very interested in Bolles. As a matter of fact he saved the school. The school went broke and he bought all of the debts of the school and gave them back to the school.

FT: What era was that?

FS: That was around 1945.

FT: You said your mom had asked you what you wanted to do, and you said you wanted to help people, and she reminded you of that later?

FS: Yes, she would often mention that to me as I was growing up not doing anything. Even though I was salutatorian at Bolles, I did so without a tremendous amount of effort. She kept trying to get me to focus a little bit more. She would remind me that I had said that, and if I were going to do that I needed to pay more attention at school. It was something that I was not allowed to forget. And my father in his later years became something of a philanthropist. As I say he bought the Bolles School and set up a nonprofit corporation and gave the debts to the nonprofit corporation. And then dad was very interested in St. Vincent’s Hospital where I was born. It was run by the nuns, and there was a very young, very bright nun who was sent to run the hospital. But she didn’t really know very much about how to run anything. My father was chairman of the board of the hospital, and he spent a fair amount of time and a fair amount of money on getting St. Vincent’s Hospital running in better shape. We did talk from the early days about Jacksonville and about education. My father was very interested in education, as was my mother. So I’d have to say that my early interest in education came more from them.

Then when I was at Princeton I did have a favorite professor. When I got kicked out of Princeton, he helped get me back in. His only son had interestingly enough looked a lot like me — he showed me pictures — and he had been killed in the Second World War. So he took an interest in me, and I loved his courses. He was my favorite professor.

FT: What did he teach?

FS: He taught history.

FT: What was his name?

FS: His name was Walter Hall. And he was a famous professor. He was called Buzzer Hall because he wore a hearing aide. He had been one of Woodrow Wilson’s preceptor guys. He was a very flamboyant, very famous professor and a wonderful human being. I had always been interested in history, but he certainly pushed that. I majored in history with an emphasis on the economic side of history.

So Princeton let me back in and Nancy and I were married that summer, we were married my senior year. She had graduated by then. I took a lot of ribbing about that.

FT: So then you were sent to Korea?

FS: When I graduated from Princeton, I had been recruited by the CIA. I had been doing some work to qualify me as an agent for the CIA in the Near East. I did a lot of studying about the Near East and Arabs in addition to my regular history curriculum. But when I graduated, I’d been in ROTC, and the Army decided they needed more observers in Korea than they did agents in the Near East for the CIA. So I went in the Army and I went to Korea and came back and went to law school.

FT: Now just one minute before we leave Korea. I know you were awarded the Bronze Star. So there must be a story there.

FS: There was no real story. I didn’t do anything heroic. After I’d been in Korea for a few months, I was made aide to the commanding general of the 9th Corps Artillery. He’d lost his aide and there were nine of us he called in to interview and he picked me. He was a great human being. I have four heroes in my life: My father, Buzzer Hall, General (Ralph) Cooper and Paul Volcker. As his aide, he had me doing everything. Making a reconnaissance of the front on a lot of occasions. He had me working as a staff officer. I was briefing colonels. It was really something. General’s aide is either the best job in the Army or the worst. Working for him, it was the best. It was exciting.

FT: What was it about General Cooper that makes him one of your heroes?

FS: He had a great feel for his men. He worked hard to not only get the mission accomplished, but to do it with as little loss of life as possible. He really looked out for his men and they all knew that. They really felt that. He was much loved. He wasn’t the smartest man I’ve ever known. But he had great integrity. You know the old saying about being an officer and a gentleman? He was both. But the most important thing about him was his integrity and his feel for his men. I admired that very much.

When he gave me the Bronze Star, the citation was for outstanding performance under difficult conditions.

FT: So what led you to decide to go to the University of Florida law school?

FS: My father, I’d told him I didn’t know what I wanted to do. He said he thought the law was the best thing if you really weren’t sure, because it gave you broad background. He of course had used his law degree in business. I think when he came along the law degree was a better basis for business. There really wasn’t such a thing as an MBA back in his day. In looking back at my life, I think it’s quite clear that I would have done better, been happier, going for an MBA. But he advised me to go for a law degree. And I did well in law school when we were on the substantive law. I did fine first year and a half. But when we got into the procedural law, by that time I decided that I didn’t want to practice law. So I left law school and got a job with Barnett Banks.

FT: You were in their executive training program?

FS: I was. It was a wonderful stroke of luck that the guy who was running the training, he was a year younger than I because he hadn’t gone in the Army. He was a Yaleie and he and I got to be very good friends and we talked a lot. We decided if either one of us went out on their own to do something that they would try to get the other one involved too. So I was in the training department for a year at Barnett. Then I left to go with my father. He had set up an investment business, mostly a family investment business. That was very fortunate because I got the opportunity to spend a little bit more than a year with him. I learned so much and got to be such an admirer of his. He was an extraordinary man, not only brilliant and a very successful business man, but a person of broad intellect and great empathy. I just learned a lot from him in every way. And it was very fortunate because, he and my mother loved to travel and they were on a world cruise and the ship was in Bangkok and he had a heart attack just after the ship sailed and they couldn’t get him off. They finally got him off in Manila. Another thing that happened was there was a major sun storm, the sun spots and the waves, and it interferes with radio communications. My mother couldn’t contact me for two days from the ship and finally contacted me. We tried to get there as rapidly as possible. But in those days the planes were so slow. We had to take an old Pan American clipper. And from Los Angeles to Manila was 46 hours.

FT: How old were you?

FS: It was 1958. I was 29 years old.

Nancy and I started out to get there but it took us almost five days traveling to get there. We were on the plane. We were three hours out of Manila. And I was sitting next to General Carlos Romulo, the secretary general of the United Nations. I had met him once when he was here in Jacksonville. So he and I were talking and the captain came back and handed a radiogram to General Romulo and he read it and turned around to me and he said I’m sorry to have to inform you that your father has died. So that was how I found out.

After my father died, he left me some money.

FT: Were you already in charge of the family business at that time?

FS: I was heavily involved with it. He was overseeing. But I’d been doing investing ever since I was in high school. He would talk to me about business and investments. He would give me things to read. I had a rather broad background in business affairs and I did a lot of my own investing even during my college years and continued to do it through the law school years. I really had quite a background. But I learned so much more from him. And so it was fairly easy to take over. We didn’t have any real operating company. We had investments in a number of companies. And that’s what led me to get interested in doing some venture capital investing. Nobody was doing venture capital investing in those days. I was one of the very first people in the south to do venture capital investing.

FT: And what were some of the first companies you invested in?

FS: It was a rather broad range. I had had several small ones that didn’t turn out very well. But I had two that turned out to be very successful. One, I had talked to a friend of mine here who was a friend of a partner in the Whitney venture capital firm in New York. He gave me an introduction and I went up there and we talked for a long time. The guy said you know, we don’t do any investments less than $500,000. Which is not a large amount of money today; but in those days $500,000 was a very substantial amount of money. He said I have a proposal here in my desk that’s too small for us. But it’s very interesting, I know the guy well and you might be interested. I looked at it and it was about an 80-page prospectus and I thought very well done. The guy was running a wire rope company out on Long Island. He wanted to start one down here. I went out to see him and we talked for several days and really looked at everything. He came down here and I got a bunch of my friends for a lunch at the River Club and I said here’s a deal that I think is very attractive. You can each take a piece of it and I’ll take the majority. So we set up the company and it proved to be very successful. I think that I made about 20 times my investment on that one. And that wasn’t my home run.

The home run came from -- I was telling you about the guy who’d been in the training department at Barnett. He’d left there and gone to South Florida and become executive vice president of a bank down in Fort Lauderdale. A friend of his in Cincinnati wanted to buy a bank in Florida. He’d asked Andy (Ireland) to look around for him. So Andy found this little bank in Winter Haven, Florida, that he thought was very attractive. He called the guy up and the guy had lost interest. By that time Andy had gotten very interested in the bank. He called me up and said Fred, this little bank, and I’ve looked at it a fair amount, I think it would be a very good buy. Would you be interested? I said sure. So we went to Winter Haven and spent a week going through the bank very carefully. We decided it was a very good bank. The fellow who owned it had died. We bought that. I was the majority stockholder and Andy left his job in Fort Lauderdale and moved to Winter Haven and ran the bank. He turned out to be an exceptional banker.

We started a couple of small banks down there. By that time, Guy Botts here in Jacksonville had become CEO of Barnett. And he wanted to create a statewide holding company. But he needed somebody to run the banks while he was out there finding them and buying them. And he had great respect for Andy’s ability, which had been proven. So he came to me and he said I’d like to buy your three little banks. And I said well I’d be happy to talk to you about it but you really need to talk to Andy. He said the reason I want to buy them, I’ll be frank with you, is that I want Andy Ireland to come to Jacksonville and be president of the whole Barnett banks holding company: to run everything. He went down to see Andy, and Andy, fortunately for me because I was the majority stockholder, he drove a hard bargain. And Guy really wanted him. And he made us an offer we couldn’t refuse. He kept apologizing. He said I’m going to give you stock instead of cash because I’ve got to use what cash I have to expand the holding company. Of course that suited me fine to get stock. It was the perfect time to get it, and he gave us a ton of stock. He gave us so much stock that I became the third-largest stockholder in Barnett Bank of Florida.

FT: How much stock did he give you?

FS: Well I’ll tell you another story. When I went to the Federal Reserve, of course part of that deal is that you have to sell not only all your bank stocks but a number of different kinds of stocks. I had to sell all of my IBM stock, and I’d been a substantial investor in IBM from when I was a very young man. I had to sell all of the stock to go on the Fed Board. Then when I came back, they wanted me back on the Barnett holding company. I’d been on the board for a very long time. I bought back some of the stock. Maybe a fifth of what I had originally owned. And then North Carolina National Bank came in and wanted to do the deal with Barnett. Of course it later became Bank of America. I was sitting at the breakfast table with Nancy, and they had made us a good deal. And Nancy said how many shares of Barnett Bank would you own if you hadn’t sold all of it when you went to the Fed? And I said about 850,000 shares. And she said well how much would that be worth in the buy out? And I said oh between $63 and $64 million. And she said Oh my God! And I said now honey what would you do with all that money? And she said, I can think of things.

When I had to sell my Barnett stock to go on the Fed Board, I sold it for $20 a share. And my cost was 5 cents a share. And that was the home run.

FT: Yes that was a home run. But you still made a sacrifice to serve on the Fed Board.

FS: An enormous sacrifice. When I sold my stock it was a relatively small fraction of what I would have had if I had been able to keep it. At any rate I got into the venture capital business and had these two very successful investments. My father died in 1958. And in 1968, my net worth was 10 times what it was when my father died. It was the Barnett situation. I went on the Barnett board; I became heavily involved in Barnett and was even more heavily involved later on. But essentially, it really freed me from any financial worries. And I began to do with what I called entrepreneurial philanthropy. Rather than just giving money to things, I would try to get involved in their activities and really take a hands-on approach to the things that I was particularly interested in. And of course this was the same period in which I was in the Legislature.

FT: Yes let’s turn to that for just a moment. You start in the Legislature in 1963. You were very young, and your father had died relatively recently. How did you decide to run?

FS: When I was a very young man, 27 or 28 years old, we owned a small office building downtown. They formed a group in Jacksonville called the Downtown Council, and those were the people who had ownership of buildings in the downtown area. And they couldn’t get anybody to head it up. Everybody was too busy. And they finally asked me if I would head it up. Nobody thought it would be of any great importance. And so I took it on. It proved to be of much greater importance than anybody knew, because about a year later we had the Ax Handle Saturday, the race riots downtown. I got very much involved in that. One of the main leaders of the young blacks, I had gotten to know. And he and I met a great deal and tried to mediate between the groups. It was an important position. Then I got interested in Farris Bryant’s campaign for the governorship, and when he got elected, he asked me to be on the Jacksonville Expressway Authority. I served on that for three years and it was a very active time. We build two of the bridges here. And as part of that, we had to sell a lot of bonds to get the money to do it. I had been elected as secretary of the group, and the chairman and I went to New York and worked with the bond houses. So I got a good deal of experience in public financing and in state bonds in particular. That proved to be very important to me when I went to the Legislature. While I was serving on the Expressway Authority it occurred to me that if you really had something to say about what happened in the public area, you had to be a public official. In 1962 there was a reapportionment. There were some new seats up and I ran for one of those seats and was elected and went right to the Legislature. The session started right after the election was over. I got to Tallahassee and Farris already knew me, and they were setting up a joint bond committee made up of three Senators and three House members. They were all older, experienced guys, but they hadn’t had the experience in bond financing that I had, so they asked me to be on that board. Because of the background that I had, I became a fairly important part of that board. I kind of got the reputation as the finance expert in the House. Any time anything would up that related to finance, they’d call on me. I became well-known and had a rather important position in the House, and that’s what then led me to want to try to become Speaker of the House.

FT: What was that process like? We see how sort of ugly it is today, and how long before the speakership that it starts. What was it like at that time?

FS: Since I was just a freshman, I recognized that I had a lot of selling to do to the other members. So I started out and got in my car and I traveled around the state and went to see all of the other members of the House. At that point, the speakership for 1967-1968 had been locked up by a legislator from Pensacola named George Stone. I was in a battle with Bob Mann out of Tampa, an experienced legislator. It looked like I was not going to have much of a chance against Bob. He was being far more successful in his quest for pledges than I. But then George Stone was killed in an automobile accident. Bob Mann decided instead of running for 1969-1970, he’d run for 1967-1968. At that point, he had kind of lost momentum and Ralph Turlington jumped in the race. And that’s when Ralph was able to win. Then Bob Mann jumped back in against me. But by that time I had locked up some more pledges. It was an extremely close race. Dick Pettigrew from Miami was running. Bob Mann had gotten out in favor of Dick. We agreed to have a showdown. We had a legislative get-together in St. Augustine. We went to Terrell Sessums’ room. I had my pledges and Dick had his pledges and it came down to the Hillsborough delegation. And Dick said well I win because I’ve got all of the Hillsborough delegation. And I said I don’t think so, Dick. And so they called for a showing of pledges and he had all the Hillsborough delegation except two and at that point we were tied, and so I won the Speakership by two votes over Dick Pettigrew in this final showdown. But I immediately went to Dick and said Dick, I think you’d make a fine speaker, and I would like to support you for speaker next time. We’ve a huge job ahead of us — because we already knew we were going to have reapportionment, and we were going to have a total change of government in Florida. It was going to be the House that was going to do that. Jack Matthews and I had a very close relationship. Jack said look, it’s going to be easier for me if we (the Senate) take up governmental reorganization after you finally get it set. So I went to Pettigrew and said Dick I’d like you be the chairman of the government reorganization committee. That will be the most important committee this session, and it’s going to take two of us to get it done. I know you’re interested in it and you’d work hard on it and you have my pledge that if you get stuck, I’ll work with you all the way. There were 120 some boards, bureaus and commissions and etcetera and we cut those down to eight.

FT: Is this the issue over which Allen Morris called you the Father of the Modern Legislature?

FS: In addition to that, I totally changed how the Legislature operated. The Legislature was not very important before this. The Legislature met once every two years. It did not operate in between legislative sessions. There were no standing committees. There was no pre-filed legislation. The state was run by the state Cabinet. And they were not interested in change. And this was where the real blood came on the floor. But we were able to do it. We were able to cut it from 120-something down to eight. It was a massive change, a massive job.

Most people don’t realize that was a major change in how this state was governed. Although Claude Kirk didn’t veto it or anything, he didn’t help us much, either, I’ll tell you. It was really what we did in the House. And it was partly also because I had a very good relationship with the minority. I was the first Democratic Speaker to appoint a Republican chairman of a committee. Later on, one of the minority leaders told a good friend of mine — he was without question the fairest Democratic Speaker that the minority ever had. What I did was, we had a leadership meeting every morning. And I included the Republican leadership in that meeting. Don Reed was the minority leader at that time, and I said Don I will never surprise you.

FT: What a change from the partisanship of today.

FS: I think that this is a key point. We had partisan stuff but we’d talk about it in the leadership meeting. And we’d say, our troops our getting a little restless. We need a partisan bill that we can argue about and get this all out in the open. In the meantime, behind the scenes, we were working together amazingly, particularly on reorganization. It was remarkable how well we worked together.

FT: So what do you think about the intense partisanship that we have today?

FS: I think it’s the worst problem we have in the country today, both on the national level and the state level. It just upsets me enormously because we were able to get so much done. Hopefully if Obama is elected, this is going to be one of the things he do; he’ll try hard to cross the aisle. Of course McCain has tried to do that some too, but it does seem to me that maybe Obama has a better shot at it. Under any circumstances, I think it may be the single worst problem in our country today.

FT: Where did this start? Who do you blame?

FS: I’m not entirely sure. Pettigrew tried to carry it on. He tried to have a non-partisan House. He had a little more trouble with it than I. And with each succeeding speaker it seemed to be less.

FT: Do you think you had more luck because you had a Democratic Legislature and a Republican governor, so you had to balance things a bit more than when the Democrats took control afterward?

FS: We did have a big split over the pay raise. Both Jack Matthews and I had gone to Claude Kirk and asked him, if we passed a pay raise, would he veto it, and he said no. Then the minority leadership went to him and he told them the same thing. Then when we passed it, he vetoed it. Don Reed actually took to the floor and said I want to apologize for my governor. Because he told us he would not veto this legislation. I guess that solidified the bipartisan thing. For a while there it was the Legislature was running the state and not Claude Kirk, because of that split.

It did get worse from there. I guess it really got bad when Martinez was elected governor. You’ll remember the Democratic primary was between Jim Smith and Steve Pajcic. I was very involved with Steve. We were very close friends and he had had a meeting with Jim Smith and I had been privy to it and both of them had agreed that whoever won the primary, the loser would support the other. Steve won the primary and Jim Smith turned around and supported Bob Martinez. It was a bitter kind of thing. It was the only time in my years in politics that I ever felt truly bitter. On the one hand I felt Steve would have been a great governor. But there had been a pledge.

FT: It must have fractured the party.

FS: It fractured the party and it was one of the major issues to cause all the partisanship we had, and ever since then it’s been very partisan.

FT: I was going to ask you to talk about your take on the Republican hold over Florida, and also about Jeb Bush.

FS: I was on the American Heritage Insurance Board of Directors with Jeb, so I knew him. He was a very bright, very smart, very attractive guy. I liked him. But he had an arrogance about him and a very partisan approach. That’s why he lost his first try at the governorship. As you’ll recall, when he ran the second time, he wasn’t any where near as arrogant, and he won. But I think was partisanship was very much in Jeb’s bones.

FT: Before we leave politics, I had to ask you about your race against Lawton Chiles. Looking back on that now, being nearly 80, what context do you put it in? Do you wish that you had won the race? Are you glad you didn’t?

FS: Now from this point of view, I’m glad I didn’t win the race. I decided to run for the U.S. Senate partly because I’d been so successful. It was clear I had some ability to lead a legislative body, to identify important issues and pull together people to deal with those issues. So I started to run. I was the first person into that race. I went to Farris Bryant and asked him if he was going to run and he said no. It looked like the stars were aligned and I jumped into the race. Then other people started getting in. Chester Ferguson down in Tampa with Lykes and George Smathers and Farris were all good friends. Chester and George Smathers decided that I was too much of a maverick and they wanted somebody else as U.S. Senator, so they talked Farris into running. Then Lawton jumped into the race. There was a group of senators who had made a pact that if they ran, if one of them ran for a major job, the others would support him. They’d gotten very close during the Haydon Burns road building thing. They’d been opposed to that. Lawton jumped into the race. Really his basic idea was he would run for the U.S. Senate, he’d get known statewide, and then he’d run for governor. The first poll that I took, I had something like 26% of the vote and Lawton had ½ of 1% of the vote. Then two others jumped into the race: Alcee Hastings and Joel Daves, the mayor of Palm Beach. Joel jumped in because he was opposed to the war. I said Joel, I’m opposed to the war too. I’m a decorated Korean veteran, I think I can be opposed to it. He said but you’re not strong enough opposed to it. I said Joel if you run, and something happens and I don’t get elected, then nobody will be fighting that battle.

Then Alcee Hastings ran because he wanted to get statewide exposure — he knew he couldn’t win. Starting with the work I did back with the race riots in Jacksonville, I had a close involvement with the black community in the state. They were all for me. And Alcee Hastings jumped in the race and I contacted them and they said we’re all for you, we know Alcee can’t win, but we’ve got to support him in the first primary. We’ll be with you in the second primary. I said I may not be in the second primary if you’re not with me. Long story short, Farris Bryant took my vote with the business community and with the people in North Florida. Alcee Hastings took my black vote. He got 100,000 votes; we thought 90,000 of those would have been mine. I lost by 13,000 votes. Joel Daves got 40,000 votes. We thought that practically all of them were mine because the Palm Beach Post was for me and I was popular in that area. Again, I lost by only 13,000 votes. It was a real blow at that time. But I went on to other things.

FT: How was your relationship with Senator Chiles?

FS: He and I had always been friends. When I was nominated to be on the Federal Reserve Board, he took me to the Senate Finance Committee, which approved appointments to the Federal Reserve. He introduced me by saying, “but for 13,000 votes, Fred Schultz would be sitting where I am, but I doubt that I would have been sitting where he is.” Isn’t that a classy remark? He was a classy guy. He and I were good friends. When I was on the Fed board, he used to call me up a lot of times and say, “Fred will you come over and talk to our group of Senators about what’s happening in the economy and why the Fed’s doing what it’s doing?” Because the Fed was running the world at that point.

FT: Let’s talk about that, because people are so intensely interested in this topic right now. You’re on the Fed board from 1979 to 1982, a period of very high inflation.

FS: I was there at the tough time. I became vice chairman two weeks before Paul (Volcker) became chairman. I went through all the difficult times with him. We had a remarkable bond. It was very tough times. He made me in effect the Chief Operating Officer of the Federal Reserve. He was the guy who did the worldwide stuff and the policy stuff and I ran the Fed.

FT: You named Paul Volcker one of your four heroes. What was it about him that made him a hero for you?

FS: I have never known a man of greater intelligence, greater integrity and greater courage. This is an extraordinary human being.

FT: What were some of the things that you guys had to do that required a lot of courage?

FS: The first thing we had to do: Inflation was getting totally out of control. When I went there it wasn’t so bad, but it started getting worse and worse and worse. Paul got to be chairman, we talked a great deal, he went over to Belgrade to a meeting of the IMF. And they were talking about how crucial it was that the Fed do something. He was already committed. We had a stack of computer print-outs like that to tell us what would happen if we did various things. He came back on a Sunday. He walked into my office on Monday and said Fred, what would you think about us going to a system of carrying out monetary policy based upon the money supply? It sounds simple but it’s not. There are lots of different definitions of money and lots of different things you do. I said Paul, you know more about this than I do, but one thing I know is, we have got to do something. There’s a real flight from the dollar going on and we’ve got to do something. So he went to all the other members of the board and very quietly got their agreement and set up the meeting on Saturday, the so-called Saturday massacre. We expected interest rates to go up dramatically, but we had no idea. The prime rate went to 20. The impact was enormous. Paul made a lot of speeches. But he made more speeches around the world and spoke to the Congress, particularly the Senate. I talked to the House, but I also made a lot of speeches to the American Bankers Association, the Automobile Dealers Association, real estate organizations.

FT: And these were angry audiences, right?

FS: Oh! The mortgage bankers were sending us two-by-fours on which they had written “Lower interest rates!” They sent us so many that they filled a large room at the Federal Reserve. The room was at least 3,000 square feet, filled from floor to ceiling. I’ll never forget I made a speech to the American Automobile Dealers Association. And when I finished I got my normal questions: “You dumb S.O.B. do you have any idea what you’re doing?” Etcetera Etcetera etcetera. Those were easy for me to answer. I went through the problems of inflation and why we were doing what we were doing. And then an older man stood up and said Mr. Vice Chairman, I just want you to know that I’ve been in the automobile business for 35 years, and tomorrow I am closing my doors. Oh. We were human beings on the Fed Board. We did feel the pain. But we were also firmly convinced — and I think history has shown we were right — that it was something we had to do. We had to stick with it until inflation started down, and then we could do it. I was attacked tremendously when I was made credit control czar. Most people don’t remember that, but there was a law on the books that allowed the president to invoke credit controls. He (Jimmy Carter) did so. The law said the Federal Reserve would administer them. When we got the word that he’d invoked it, Paul turned around to me and he said Fred, I’d like you to administer these. I said Paul! My God! You’re my friend! Don’t do this!

FT: What did you have do?

FS: We immediately called a meeting of the 18 largest banks in the United States. They came to Washington. I stood before them and I said gentleman, these credit controls have been invoked. I want you to know that I am going to administer them, and I’m going to do what needs to be done to get credit under control. And I’m going to be pretty tough about this and you must understand that this is going to be pretty stiff. They kind of nodded at first. But it didn’t take them long to understand that I was dead serious. It was very, very difficult. I had about 80 economists working for me. That was when I really began to understand — I think I knew something about the economy before that — but that was when I really understood how complex this economy is. Every time we would put out an edict saying that you could only make such and such kinds of loans and charge such and such, you can’t believe how complex this economy is. Every time one of those would be sent out, within an hour, I’d get two or three calls, saying Mr. Vice Chairman, do you realize what you’ve done to this or this or this? You cannot catch up with the complexities of the economy. People want to fool with the free market, and I say you just really don’t know what you’re doing. You can do things at the edges. You can do certain things that will help. But man, when you start trying to control credit, it’s just not possible to do.

FT: So where were the credit controllers at the beginning of the current crisis? Was there such a thing, and would it have helped?

FS: No and no. That wasn’t what needed to be done. I’m a great defender of the Fed, but I have to tell you, I think the Fed didn’t do the job that needed to be done.

FT: What needed to happen?

FS: Alan Greenspan is a good friend of mine, and I’m a great admirer of his, but he really dropped the ball. He is a free market believer. He’s an Ayn Rand guy. When banks started making loans outside of their normal purview, when they started setting up assets off balance sheet, Alan said: Our job is to regulate banks. Not bank subsidiaries that they’re setting up, and not some of these unusual kinds of derivatives and loans that they’re making. I happen to know that Volcker didn’t agree with that. He felt strongly the Fed needed to do something, that the Fed was losing control. Of course this was many years later, but I think Volcker was proven right. Alan Greenspan was convinced that the free market would make the proper judgment. That they would judge risk. But these were new things. Nobody understood all the risks. If you go into this thing now, even the most knowledgeable people will tell you they didn’t understand most of the risks that were being created. They were making so many loans, they were risky loans, and they enabled them to do things in the credit area that they’d never been able to do before, and we’re paying the price.

FT: Do you have any thoughts about how we’ll get out of this mess?

FS: We’ll have to work our way through it. There isn’t any other way to do it. We’ve had some institutions go broke, we’re going to have more institutions go broke. We’ll have to have much more care in making loans, in the type of loans that are made. Credit unfortunately will not be so easy to get for awhile, although the Fed will help. The Fed understands this thing. I think they’re doing the right thing. Bernake understands it. He has moved, and we’re fortunate to have Paulson. Of all the investment bankers who could be in the Treasury job, Paulson I think is the best. We’re going to make our way through, but there’s going to be a good deal of pain. ... There is pain in the banking system, there is pain on Wall Street, unfortunately there is pain in the real estate area, and there is considerable pain among individuals. People say that they don’t support regulation. But there are certain areas where regulation is important. I’m a great believer in the free market, but regulation is very important in the financial sector. People are enormously creative. Not even some of the experts in the field understand things like credit default swaps. Both Treasury and the Fed understand what needs to be done. We will come through fine. The country in general won’t feel the kind of pain that we felt in the Great Depression. But quite a few banks are going to fall by the wayside, and some of the old-line financial firms aren’t going to make it.

FT: Let’s return to education.

FS: When I was Speaker of the House I was very involved in education. I helped pass the first reform of the funding, I helped pass the Just Value Bill, etcetera, etcetera. When I ran for the U.S. Senate, education was a strength of mine. And when I lost, I went to Harvard as a Kennedy Fellow and spent a semester up there. In the meantime I had written Reubin (Askew) a long letter, talking about the need for changes in our educational system. I told him I thought we needed a major study. A few months after he took office, he wrote me. He caught me on vacation with my family in Istanbul, Turkey. He said Fred, I think you’re right, we need this commission. I’m going to appoint it and I want you to be chairman. I said great. I accept. And he said well I want you to do it right away. He said I need to have you come home right now. I said Reubin I’ve got my whole family here in Istanbul, Turkey, and we’re on vacation, and if I come back now, we’re going to miss Italy, Spain and Portugal. You just can’t do this to me. He said I’ll make a deal with you. I’ll give you a veto over any member of the commission if you’ll come home now. I said Reubin, that’s ugly. That’s a dirty trick. But O.K. So back I came. We worked two years. I spent at least half of my time for two years. We turned out a report that had 104 recommendations. The Legislature implemented 91 of them. I think it was very successful. I worked very closely with Bob Graham. He was chairman of Senate Education. I was lobbying, and as a former Speaker, there was a lot I could do in the House and in the Senate.

FT: Still that’s amazing that 91 passed out of 104. Because usually these commissions come up with wonderful reports and nothing happens. How you got 91 passed ... it sounds like you made this your full-time job?

FS: I worked very hard. It was certainly almost full-time. And then after we were successful, Reubin came to me and asked me to be chairman of the Democratic Party. He said look you were so close before, I think you can make it this time if you want it. If you spend a couple years as chairman of the Party, you can establish your base and I think you’ve got a really good chance. At the same time, Guy Botts asked me to be chairman of a new investment management subsidiary of Barnett. And so I put the choice to the vote of my family: What do you want me to do, do you want me to be a United States Senator, or do you want me to be the head of this investment management firm? And they voted unanimously for me to be head of the investment management firm. That then helped very much lead to the Fed thing. When Carter got elected, he appointed me to the policy-making board of the National Institute of Education, which I enjoyed. It wasn’t near as hard as being head of the Florida Commission, and we were ahead of them in a number of ways. When Carter and the Senate and House created the Department of Education and the job of Secretary of Education, I was one of a fairly long list of people who were under consideration for secretary. In those days, Charlie Kerbow was head of one of the major law firms in Atlanta and he vetted any major appointments. He asked me to meet with him in Atlanta and we talked for about 45 minutes and he finally said would you come to Washington for anything else? And I said no, I don’t think so. He said would you be willing to be on the Federal Reserve Board? And I said I’d be interested in that. I found out that they wanted a banker from the South. But they had tried the heads of the three major banks in the South — Barnett, Wachovia, SunTrust — and the CEOs at each one of those banks had turned it down because they would have to sell all their bank stock. Their main net worth was in their bank stock. So they couldn’t do it. They asked me. The next thing I know, after meeting with Kerbow, within several days, I get a call from Bill Miller, who was then chairman, asking me if I would come to Washington to talk to him. This was on a Wednesday. I went to Washington and had lunch with him on Friday. We spent a couple hours together. He said if we were to offer you this job on the Fed Board, would you accept? I said I’ll have to talk to my wife about it. He said when can you let me know? I said Monday. I came home and talked to Nancy about it and she wasn’t all that crazy about it, but she’s always been willing to go along in almost anything. I called Bill back on Monday and said if they would ask me I would accept. He said okay you have to be vetted by the vice president and the secretary of the Treasury. I said okay. He said when can you come to Washington? I said whenever you want me to. He said can you come tomorrow? I flew to Washington, I met with Mondale, I met with Blumenthal, and I flew home. The next day, Wednesday, I get a call saying that they have approved my nomination. It has gone to the President. I thought, this will take a while. On Friday I get a call saying the President has approved my nomination, and there will be a press conference Monday to announce. I think the press conference was called for 1 o’clock. At 11 o’clock Monday morning, I got a call saying the President was going to nominate me not only as a governor of the Federal Reserve, but as Vice Chairman of the Federal Reserve.

FT: What a whirlwind.

FS: It was a real whirlwind. But then, things slowed down dramatically, because Senator (William) Proxmire wanted one of the existing board members to be Vice Chairman. He was willing to approve me as a governor, but not as Vice Chairman. It took several months before he was willing to bring it up, and it was a really hard-fought battle. I had to go to the meeting of the American Bankers Association, meet with all of the different states that had a Senator on there. I had written a monthly economic letter in my job as chairman of investment services.

FT: So were they parsing those letters?

FS: Parsing them? When they finally called the meeting and Reubin took me to introduce me, a few of the members had questions, then they left, and Proxmire started. For almost three hours, he had seven staffers behind him and one of them would hand him a question, he would ask me the question, then he would immediately reach back and get another question to ask me. He beat on me for three hours like that.

FT: How’d you make it through that?

FS: The Fed had prepared me. I had a 500-and-some page briefing book, which I had studied diligently and I was up to snuff. I really was. So he couldn’t trick me up. And finally after about three hours I said Senator, I’m willing to stay here and answer your questions as long as you want to ask them, but I’d very much appreciate it if you would listen to the answers.

FT: Was he angry?

FS: Nah, he was a tough guy. He was down on me hard enough. The night before the vote, the Federal Reserve’s lobbyist had checked on how the vote stood, and it was 12-10 opposed to my being vice chairman. There were some calls made that night from some of the major bankers around the country, and they changed two votes. So when the vote went on the next day, it was 12-10 in favor.

FT: So you were the only Fed board member ever from the state of Florida, correct?

FS: Yep.

FT: Does that make a big difference — did it help Florida to have you there, and would it now, in these recent years, have helped to have someone from Florida?

FS: Yes, it might have because of my knowledge of the banking situation. John “Jack” Uible was head of Pierce Uible company. The Florida National Banks — Ed Ball was dead — there were a lot of good people there, but it wasn’t being run anywhere near as aggressively as it needed to be. So Jack made a deal to buy Florida National Banks. And it came to the Fed for approval. And our Bank Regulation Division sent it to the board disapproved. They did it on the basis that it would interfere with competition. And I said: You don’t understand what this situation is. I’m speaking against the best interests of my own bank, and here’s a good reason why they make you divorce yourself. I said I will tell you that Florida National Bank will be much stronger competition to Barnett once Jack Uible gets a hold of it and there’s a much more aggressive approach. And so it came to the board and I talked all of the other board members into voting to approve. They were all ready to disapprove it, which wouldn’t have been the best thing for banking in Florida or this area. There weren’t any other bankers on the board. I was the only one who’d had banking experience, and I think that’s valuable. There were several other instances where the bankers would come to me to talk over issues, and I could understand them better than the other members. And I think the same thing would be true now. If you had a Fed board member who really understood banking in Florida, it could help the situation.
FT: I’m going to jump to the Schultz Center, because when the Schultz Center for Teaching and Leadership was created, you said at that time, that of all the things you had done — the Fed work, Speaker of the House and so on — that education was the thing you most wanted to be remembered for. Do you still feel that way, and why is that?

FS: I happen to think education is the most important of all public service, with the possible exception of protection — police, fire. I think education’s the most important thing. And it seemed to me it had gotten more important as time went on. And we were doing a much worse job than we used to. The last 20 years, we have been slipping in terms of how we are ranked. The United States has just got to do better in this area. I felt like the most important thing we could do to improve education in the United States was to improve the quality of principals and teachers. Schools of Education in this country I thought were weak and getting weaker. I thought it was vital that we had something. So I looked around the country and found a few other instances of efforts that were being made. I heard about it originally from the fellow who was chairman of Proctor & Gamble, who was very active in Cincinnati. John Pepper. Good guy. They had a so-called Mayerson Academy in Cincinnati that trained teachers that they thought was very important. I went up and looked at it and I thought we could do a better job. I thought they were doing a good job, but I thought we could do better. So I came down and I developed support. John Fryer set up a study group. We went around the country and looked at others and set up the Center. And it’s worked out even better than I had thought. We’ve had wonderful leadership. The principals and the teachers have loved it. Last year we did 456,000 man hours of instruction for teachers. And our leadership institute for principals, assistant principals and aspiring principals is going gangbusters.

FT: Let me take you back one step, because we talked about that amazing commission that you led under Reubin Askew, and 91 of those recommendations end up passing the Legislature, like the School Advisory Councils and all those things. Did those things not work, after all?

FS: No, I think we did do them and they are doing them. The parent advisory councils, the school report cards. It did work. But we weren’t doing the rest of the things that needed to be done. We weren’t supporting education financially. Most important we weren’t doing what needed to be done to improve leadership of both principals and teachers. Our Schools of Education weren’t strong enough, we weren’t doing things that needed to be done to beef those up, and we didn’t focus on that enough. That was one of the areas where we didn’t do a good enough job. Now, we’ve got a situation where so many things that need to be done are in place. But they’re nibbling at the edges. Teach for America is doing a great job. KIP (Knowledge is Power) schools are doing a great job. These are things that improve the quality of teachers and the quality of principals, but they’re not done in a broad enough way. Much more needs to be done. I think the Schultz Center is the way that we have to go. We’ve got to improve the quality of teaching and leadership. We have to pay our teachers better, and we have to have merit pay in some form for teachers. We’ve got to be able to reward people who work hard, continue their education, know what needs to be done. It’s a tough thing to do, but I think by and large we know what needs to be done. It’s just getting it done.

FT: What do you think of colleges of education today? Do we need them anymore?

FS: That’s a good question. I have thought about that considerably and I think that at this point in time, I come down on the idea that we do need Colleges of Education because pedagogy is something you need people to learn. There are things that you need to learn about how to transmit knowledge between people. The whole idea of pedagogy is something that needs to be taught. But somehow we need to find a way to make some of our better college students interested in going into education. Teach for America is doing a great job of that, and we need to do a better job of expanding those efforts. They’re relatively small around the country. Do we need colleges of education? I guess the answer is yes, but we also need to put more emphasis on substance. The things you actually study. On the curriculum itself rather than on pedagogy.

FT: So the last area I wanted to talk to you about is Jacksonville itself. You have spent your entire life here and been a leader here, from the Chamber on. I wanted to ask you, how you think Jacksonville is doing and how it’s changed?

FS: Jacksonville was in terrible shape; that was one of the main reasons I ran for the Legislature in the early 60s. Almost half of our elected officials were either indicted or in jail. Our schools were disaccredited. It’s hard to imagine a community in much worse shape. When I ran for the Legislature, I said publicly that my goal was to try to make Jacksonville the best place in America to work and raise a family. I really feel a lot of pleasure and pride because we’ve made a lot of progress. We’ve made a lot of progress in education. We passed laws like the Just Value Bill that allowed us to get re-accredited. We passed consolidated government, and this was a tough, major thing to do. I really worked hard on that. Once we got consolidated government in place, after I lost the Senate race, I became head of the Chamber and we put on the Amelia Island Conference, which worked remarkably well. I put it on because the community was so fragmented. We didn’t have a good feel for where we needed to go and what we needed to do. That worked very well: We were able to put organizations in place that have enabled us to move forward, like JCCI and Leadership Jacksonville. The culture of this community has changed. You have people who are really working hard to bring the community together as a whole and to move forward together. I have just been enormously pleased with what has happened. We’ve got a ways to go. We’re still certainly not where we need to be in education, although we’re making real progress. Incidentally the Schultz Center is doing work for school districts around the state, and we’ve got contracts around the nation. I think Jacksonville has made enormous strides. We’re well-positioned now. Our economy is doing well, particularly in the logistics area, our port, and secondly the healthcare ar

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