Member of Adelphi University’s Profiles in Success program.
Former Chairman and CEO of the New York Stock Exchange
Passed away on August 4, 2012
Mr. Phelan served in the Marine Corps from 1951 to 1954 and endured a year of combat in Korea from 1951 to 1952. He credits the Marine Corps with teaching him mental and physical discipline. “When I went in to the military, I had lost a lot of weight,” he said. “One day, I was asked to go down to the medical office, and I saw a doctor there who was a major. And he said something about medical discharge, and I said to him, ‘I’d rather die.’ So they kept me.”
The Marines also gave John an enormous amount of responsibility, he said. “I took that out with me—my family, my religion, and my education, and my business were really four major thrusts of my life, and the Marine Corps was one of the significant ones.”
Mr. Phelan, Trustee Emeritus and the first alumnus to serve as chairman of Adelphi University Board, has relied on this resolve in the face of adversity to guide him through a number of challenges throughout his storied career in the financial sector, including successfully overseeing the NYSE’s recovery after “Black Monday,” the stock market collapse of October 1987.
When presenting him with the New York State Business Council Corning Award in the late 1990s, Roger Ackerman, chairman and CEO of Corning Incorporated, said that, “As Chairman of the New York Stock Exchange, John represented equity in a time of debt, prudence in a period of recklessness, ethics in an age of easy virtue.”
An ardent internationalist, he founded several international advisory groups at the NYSE, establishing it as a significant financial institution worldwide. As an extension of his international work, John was appointed chairman of former President Ronald Reagan’s Board on Private Sector Initiatives. In this role, he led 25 experts to China in 1986 to help open the financial market and re-establish the Shanghai Stock Exchange, there, he was given dividends in the Flying Dragon Acoustical Company, a manufacturer of vacuums, making him the first foreign owner of a Chinese company since the 1949 Communist Revolution—a company he still owns stock in today. In 1990, he led a similar mission to Russia at the request of Premier Mikhail Gorbachev to help establish a stock exchange there.
After retiring from the NYSE in 1991, he served as president of the International Federation of Stock Exchanges in Paris until 1993. He has served on the boards of Merrill Lynch, Met Life, Eastman Kodak, Sonat, and Avon.
Today, John is chairman of the board of trustees of Catholic Charities of the Archdiocese of New York and a member of the Archdiocese Finance Committee, positions he holds near to his heart. “Catholic Charities has always been my first love,” he said. He has worked tirelessly to foster religious tolerance over the years. While at the NYSE, Mr. Phelan served as chairman of the Wall Street division of the National Conference of Christians and Jews, which awarded him a Brotherhood Award in 1974.
A: Well, I think the challenging moment for everybody was the ’87 meltdown, which some of us remember vividly. The market was down almost 33 percent for four days; it was worse than the ’29 break. We had a very resilient economy. People who were long upheld at that time by the Federal Reserve, pumped money into the economy itself, and into the banks and the dealers really turned out to be a liquidity crisis brought about by the first real introduction of derivatives. It took a while for the market to adjust to that.
A: That was like having a battle. Before this ever happened, I had anticipated it would happen for two years. I testified in both Houses of Congress. And everyone got so annoyed with me in the industry because I just thought that using futures were really going to cause a problem in the underlying because of the leverage. So we had planned if something like this had happened to not shut down the Exchange, to keep the Exchange open no matter what, but to shut down temporarily stocks that came under enormous pressure. So, at one time, we had probably a little bit in excess of a hundred stocks down, but that meant we had 1,400 stocks still trading. We had a meeting on Monday morning before the market opened, in which I told all the major (people) in the department that we were going to stay open no matter what. The next day, Tuesday, was a significant day because the market opened weak again, down 120 points, and I was concerned if it went down another 800 or 1,000 points, the whole economic framework would come apart. But I went down on the floor about 11:00 AM, and I described it this way—That this was like a hurricane. We were either in the eye of the storm at 11:00 AM on Tuesday or the hurricane had passed. And I correctly assumed the hurricane had passed. And by the end of the day, the market was rallying and the crisis was over.
A: Well, the most rewarding aspect was that I got to do so many things. I was the first one that created a European advisory committee because we were thinking of trying to do more business and more listings over there. Our goal was to make (the NYSE) one of the most important financial institutions, not only in this country, but in the world. I think the big, big event was when I went down to talk to (former Secretary of the Treasury Donald Regan) and convinced him that maybe it would be a good thing if President Reagan visited the stock exchange. He was the first President of the United States to ever visit the stock exchange. He did come up and had a great visit. Everybody loved it; he loved it.
A: First of all, work hard. And continue to learn, even when you get out of school, continue to learn as much as you can. My life was almost kind of like a series of serendipitous events. I went to work when I was 16 one summer for my father who had a small business on the floor of the stock exchange. By the time I went there, paid my transportation from Long Island, had my lunch, and came back, I didn’t have any money left by the end of the week. At the end of the summer, he said, “What did you think?” And I said, “I’ll tell you one thing, I’m never ever going to work on Wall Street.” Lesson I learned was to never say never about anything.