[TAPE 1, SIDE A]

JOSEPH MOSNIER:

This is an interview with Mr. John Medlin in Winston-Salem, North Carolina on Monday, May the 24th for the southern Oral History Program's North Carolina Business History Series. We're here in Mr. Medlin's office in the Wachovia Building in downtown Winston-Salem. My name is Joe Mosnier. This is cassette 5.24.99-JM. Let me actually just turn off for one quick second. I thought Mr. Medlin we might start this morning just with a quick sketch of what the career landscape looked to you when you were a young man coming out of the Navy and thinking about settling into a job and how you came to chose to join Wachovia.

JOHN MEDLIN:

Well, I graduated from the University in 1956, the University of North Carolina at Chapel Hill and went into the Navy having had joined the Naval ROTC upon going to Chapel Hill and had a three year obligation. Upon completing that, I had no real idea of what I wanted to do to be very honest. I had spent six months tour in the Mediterranean from October of '58 to May of 1959. I had a very short time to find a job. I was mustering out of the Navy in the early part of June. I had gotten married in 1957 and had a new child who had arrived while I was in the Mediterranean and so economic necessity drove things probably more than idealistic career aspirations. I came to North Carolina shortly after arriving back home from being gone six months, kissed my wife, saw my new baby and headed South to look for a job. The first stop was Winston-Salem, Wachovia. I interviewed the people. I knew a little something about the bank and it had a great reputation. I met people like Archie Davis, John Watlington, others who seemed to me to display the kinds of values and principles and philosophies that I had sort of in a younger way thought were impressive and were similar to what I would like to aspire to. I went and interviewed with a couple of other companies and really still had Wachovia on my mind. I called them up and said, 'I'd like to come to work for you.' So I arrived here in June of 1959 and felt very pleased with what I had judged the company to be like and to have the potential for.

JOSEPH MOSNIER:

How in your earlier years growing up, how had you come to gain a sense of Wachovia. Had there been, were these senses you developed mostly studying business at North Carolina at UNC or had other experiences along the way that would've given you a sense of what the bank was about?

JOHN MEDLIN:

I grew up on a farm in eastern North Carolina and didn't know much about banking, had heard the name of Wachovia. It had a mystique about it. It had a good reputation. Read about it in the newspaper. Heard about it at Chapel Hill when I was in college. So when I began to learn more about it,

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that mystique was filled with positive feelings about the company, not with a lot of depth of knowledge but more of an impression than anything else.

JOSEPH MOSNIER:

Can you talk a little bit about your range of values that you brought to the bank in '59 when you arrived, the kinds of experiences that had mostly shaped you, the things to which you were committed, the sort of career you hoped to put together and the values around which career would be structured?

JOHN MEDLIN:

My earlier work experience obviously on a farm was dealing with the perils of the weather, commodity prices and all the things that make farming a difficult business, year in and year out. At the same time I'd learned the importance of hard work, learned the importance of careful analysis to make sure you were on sound financial footing whether it be the farm or your own teenager personal finances. I had also worked part-time for a newspaper, a weekly hometown newspaper in Benson, North Carolina near where I grew up on the farm. I had gotten to know some people there who had an influence on my life, Ralph Delano and a family, the Wilson family that had bought that newspaper and started. I was the only employee. They were people of very strong values, very good journalists and had sort of reinforced my independent spirit and values that I'd learned through the family. So Wachovia was sort of an extension of that. It seemed like a natural extension of what I had done in my early life.

JOSEPH MOSNIER:

How did you measure your career ambitions starting as a young professional banker in '59? What types of opportunities in the bank seemed to lie ahead? Did you have any sense then that one day you would be sitting where you are? Did it seem that this was a place that offered this broad range of opportunity?

JOHN MEDLIN:

I had no ambition to be the Chief Executive Officer when I came to work. I was more humble to that ambitious and humbled from the standpoint of there was so much to learn and so much growth opportunity. A captain I had in the Navy named Chester Nimitz Jr., the son of the World War Two admiral, had a great influence on my values I guess too. He had several expressions that he said along the way that made an impression on me. He said, 'Sonny, when they ask for volunteers for dirty jobs, raise your hand. Those that do the tough jobs and do them well are the ones that get ahead.' Another expression is, 'Knowledge is power. You know, learn everything you can and when we came upon the Japanese submarines in the Pacific, we knew how fast they went, how quick they could turn. We had a great advantage when we came up to torpedo them.' I could relate this to credit analysis. One of my first jobs

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when I arrived was to be a credit analyst in loan administration, which meant focusing in a microscopic way on the facts involving a credit situation and analyzing that and developing your probabilities of success or failure of the enterprise or individual. So all this with my college education, military experience, farming experience, newspaper experience all seemed to sort of move me in a direction. Of course to try to learn what there was to learn about Wachovia and to learn about the profession but not to be concerned about where I was going to be five years or ten or twenty years later.

JOSEPH MOSNIER:

Do you have a quick sketch of the business culture in North Carolina that you encountered in these early years at the bank? The sorts of types of business owners and leaders you are encountering in those years and what their worlds to look like to them as you could measure it, the business world?

JOHN MEDLIN:

I was so far down in the hierarchy of the bank and of the profession that I didn't encounter outside leaders in any direct interpersonal sense. It was more through someone else's eyes or through reading of the press. But my impression was it was a fairly progressive community in lots of ways. At the same time, very traditional and still influenced a lot by the experiences of the Great Depression. That there was a, on one hand a progressiveness and on the other an underlying caution. That was true of Wachovia; that was true of banking; that was true of many other businesses. You occasionally found a visionary who was willing to step out and do something bold and imaginative and new, but that was not particularly widespread I'd say in the '50s or even the '60s. In a sense my generation, the generation I guess that was born in the '30s, grew up in the '40s, educated in the '50s, went to work in the late '50s, early '60s. We were a little bit of a bridge between the people who were either hired or were working in the Great Depression and through World War Two and in the fifties really hadn't changed that much when I arrived at Wachovia. A lot of the things that were done during the '50s, I mean, '60s and particularly in the '70s were challenging those old premises that you couldn't do that because we got in trouble doing it in the '30s. I think we were that transitional generation that eventually gave way to the even more aggressive change of the baby-boomers and those who've come into leadership positions since.

JOSEPH MOSNIER:

Tell me about some of the key early roles as you look back, things you did, roles you had at the bank that really in the end in retrospect seem most significant in helping you gain the wide experience that would carry you forward in your career.

JOHN MEDLIN:

I think both inside and outside the bank, the job as a credit analyst. It was a job where your accounting and finance training in college became very important, that you know the numbers, know what they mean, know how to analyze them and read them. That was very helpful. Then I spent about five years in loan administration as a credit analyst sort of going up to higher responsibility while I was there. Then I was put into an operating job, a lending job. I was actually making loans. I didn't deal directly with customers in loan administration. I had started dealing with customers in the Winston-Salem office in 1965 when I was transferred there. I actually made loans and went to call on customers and started dealing with the public so to speak. I began to see the more realistic implications of what I might have seen in a more theoretical or academic sense when I was behind the scenes looking at someone else's, criticizing someone else's work. Then both during that early career in the '60s, I got involved in a number of civic organizations, mostly notably the Arts Council. I became President of the Arts Council in I think, '79 or '69 or '70, somewhere in there. I ran their fund drive in '68 and began to get somewhat involved in political things or public policy matters and through civic organizations. This was not so much that Wachovia required this of you but they hoped that they'd hired people who cared about the community interest as well as the corporate interest, the individual interest. So I, that was a good launching pad I think for subsequent parts of my career.

JOSEPH MOSNIER:

I guess late '60s as you begin being drawn into these sorts of organizations and contribute your efforts there, Bob Scott's Governor over in Raleigh. Do you remember sort of first taking the measure of the state political leadership in so far as the question of its relationship to business and regulatory decisions say around the issue of business and what measure you took of it in those years?

JOHN MEDLIN:

I was not directly involved with Governor Sanford or Governor Moore or Governor Scott really in the '60s. That role was generally assumed by the then Chief Executive Officer, top management, which I was not amongst at that time. But I was more a sideline observer I would guess of what was going on and getting peripherally involved through a project here or there or talking to legislators about public policy issues. I guess the first time I really got involved was in the early '70s when interest rates kept going up and hit the usury limits in North Carolina. Six percent was sort of etched in stone. All bankers had to start to hit the streets and the halls of the General Assembly and start lobbying saying, 'Look. Inflation has

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driven the interest rates beyond what the law permits us to charge, and we can't stay in business.' So that was my first attempt at trying to influence public policy in any major way.

JOSEPH MOSNIER:

Reflect a little bit if you would about that experience. What sorts of reception did you find over there? What types of access were you able to gain? Who were the folks you were talking to as you took the broad measure of the members of the General Assembly in those years?

JOHN MEDLIN:

I was mainly talking to members of the General Assembly and I guess higher ups were talking to the Governor. In North Carolina, the Governor still has limited authority on things like this. He can only use the bully pulpit. I was talking to legislators and trying to convince them that despite the fact that the law, the six percent was sort of a magic number. That this wasn't going to work in the modern world. That had to open up and let banks make a profit, or they weren't going to be able to assimilate and distribute capital. We couldn't pay our depositors enough money to get it. We couldn't charge our loan customers enough money to have a spread and stay in business. It was pretty difficult at first. But finally when you sat down though and really got deep into the issue with most people they understood it. One old legislator I remember. I can't remember who it was, I remember his expression, 'Sometimes you have to forget your principles and do what's right. I'll support your usury bill.' It was early. The regulation of banking became more restraining as time went on as inflation and technology and other factors opened up new services, new opportunities. These regulations held us back. It became a much bigger challenge on a national as well as state scale to try to get some of the barriers to competition removed. They were there mainly to protect bankers from themselves as much as anything because of the behavior perceived out of the twenties and '30s that caused the system to fail. The separation of investment banking and commercial banking and those kinds of things which is still being debated to some extent although it's been pretty much done a way with.

JOSEPH MOSNIER:

Tell me a little bit about the early phases of your being drawn more directly into the top tier of the bank's leadership, maybe the evolving relationship with Mr. Watlington, with Mr. Davis. How those few years evolved that would lead in the early '70s to your being named to top posts.

JOHN MEDLIN:

Well, I guess in 1970, I was named Executive Vice President, put in charge of basically all lending for the company. I was the Executive Vice President reporting to the Chief Executive Officer in charge of lending. It was called the funds management division. The name didn't cover quite all. But it

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was consumer lending, commercial lending, mortgage and the whole business as well as managing the bank's investment portfolio to balance interest rates sensitivity and so forth. It was a very treacherous time. Again, this conflict between the worries about what took place in the '30s and the promiscuous lending. Yet you had to do things to be competitive and to serve the customers and the public interest. There was a time of great turbulence there and policy change in banking that took place as I became the head of lending in effect at Wachovia. Trying to arbitrate that change and present it to the top management and to the Credit Committee and forums like that that had to make big policy changes. It was a challenge to take more risk and to be more progressive and open and doing things, but not so much that it got you in trouble. I think that was the great challenge of our generation. The previous generation had said, 'We are not going to take much risk and therefore we won't get into trouble.' We recognized we had to take more risk, but we had to do it intelligently and based on facts and based on good empirical evidence that could stimulate change. It's the one thing I think that distinguished Wachovia through that transitional period. The banking crisis of 1974 was the most serious one I think in North Carolina and the Southeast since the Depression. There were banks that couldn't fund themselves some days. One noble major one, NationsBank, which has been publicly acknowledged and finally got funding overseas and in New York. Wachovia walked that tight rope between doing too little and too much and was a beacon of light and a pillar of strength during that time when other banks got into difficulty and a number failed. So I think it was orchestrating that policy change and perhaps us younger people were being pulled back somewhat by these old timers who were still basically in charge. Although in 1974 I was made President and Chief Operating Officer and got one step away from the throne I guess you would say. But still the major policy decisions were being made above me.

JOSEPH MOSNIER:

Tell me a little bit about, just to draw you out a little bit more on this issue of navigating those years in the early '70s and those years around '74. Can you sketch your recollection of the bank's board in those years and that generational issue, how it was playing out in the board among the board whom I would presume at that point would have been persons a generation mostly ahead of say you at the time.

JOHN MEDLIN:

The board consisted of people who were peers and of the generation of the top management who had basically grown up, had started doing business in the '30s or after World War Two. They were a

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little more conservative, to put it that way. Except that there were a few who were I think that had the vision of younger people and were more willing to step out and take risk and to effect change. So I think it was to some extent that, calling it a battle is too strong of a word, but that transition from the old to the new took place on the board also. Gradually younger people came on the board as older ones retired. People who by the late '70s that were younger and of a similar mind that change needed to take place.

JOSEPH MOSNIER:

Lessons you drew from the '74 experiences.

JOHN MEDLIN:

A confirmation I guess that the way we were approaching it was the right way. That we had not strayed. We had loan problems like everyone else, but at least the quantity and magnitude of them was not serious as to be threatening to the company. But the lessons I think that we had an obligation to not do extreme and take too much risk because often we saw people who were permitted in fact encouraged in some ways to get in trouble by their banks being too liberal with their lending particularly in the real estate area.

There's one other element that I think I would say in the early part of the '70s that banks still had not, were not very open. There was reasonable competition. There was still a feeling I think that you went in and sort of sat down in the lobby in the bank. You were the subject, and the banker was the king still. We began, we had been improving our technology as we went along, all through the '60s and early '70s. It was apparent that there were going to be lots of ways for people to do business with you that would involve less contact with you. I had been and many of our people had been concerned about not losing the personal contact with customers. We had always been a relationship bank and we still are be it an individual or a corporation. It was something you built on several fronts over time, mutual trust. So we to try to strengthen the personal relationships with the customers, we introduced what we called a personal banker program. That was something of a, it doesn't sound radical or revolutionary, but in truth was. We assigned all of our customers who wanted one a personal banker. We said, 'Their name is on your statement. If you have problems, here's their telephone number. Call them up. They're going to be calling up to tell you about some new things we have from time to time.' It was, it got a lot of publicity. It took the technology to make it possible was developed. Previously you would have to go to this place to find out the checking account balance, and somewhere else to get the savings balance and somewhere else for the loan balance, and somewhere else for the trust relationship. We developed an information system that pulled all of that

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together, retail accounts information system we called it. So the personal banker could punch the buttons and up would come on the screen the full relationship. And this would make it possible to assess, 'Well, you don't have a saving s account with us.' We could call up and say, 'Hey how about a savings account or a credit card' or whatever. It had marketing as well as relationship building elements to it. This was I think something of a stimulant in banking during those times to other banks to compete on that basis. It has been more fully developed now. I think it's pretty generic. They don't call them all personal bankers, some private bankers and those kinds of things.

JOSEPH MOSNIER:

Think back as best you can on what the general business landscape looked like in North Carolina around this time, mid-seventies when you become bank President. I'd be interested in your sense of who seemed to you at the time really to be pushing the boundaries of the expanding North Carolina economy in those years and your sense of where the transition from the traditional sort of textile, tobacco, furniture landscape over to these coming new industries.

JOHN MEDLIN:

Well, I guess in the early '70s textiles and tobacco and furniture were king. They were the major industries in North Carolina. The textile industry in North Carolina reached a peak of about 320,000 workers in 1973 right before that recession came. The furniture and tobacco and there was a smattering of outside industries coming in. The Governor's all the way back to Sanford that I was aware of had industrial development programs put out across the country to solicit new workers. In fact at Wachovia, Mr. Hanes who was president in the 1930s traveled across the United States and called on the major automobile companies and appliance companies like GE and said, 'Look how about putting some plants in North Carolina so our people will have enough income to buy your products.' Actually it was successful in getting some businesses. He was both out looking for business for the bank and looking for jobs for North Carolina. As a consequence, Wachovia had a national banking department. We had some people who traveled across the country. In the 1960s we built up that department. We gave it some more staff and gave it some new products, cash management services and so forth in the late '60s. So by the 1970s, we were sort of humming on having a national banking effort. So our people traveling across the country had sort of the dual role of attracting business to where we could lend and do the local banking for the subsidiaries or plants they already had here. The banks in the state got into sort of a public/private partnership on that score. It was really, I did not get really deeply involved in that. My predecessor was, was a member of the

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Economic Development Board under Governor Scott, John Watlington. We had Governor Holshouser there who continued this, but being the first Republican Governor since Reconstruction, he was, and a Democratic legislature, he had a lot of good ideas, but they didn't go as far as if he had been a Democrat. Then Governor Hunt came in in 1977. That was when I first got involved directly. He became Governor about the same time I became Chief Executive Officer. That's when the effort really began. I remember making a speech in 1977 at his first economic development conference and pointing out that we probably had reached the peak of textile jobs and those labor intensive industry jobs were probably going to be heading somewhere else. Textile came away from China to Italy, from Italy to Belgium, from Belgium to London, New England, South and now it's going farther South. They've got 180,000 textile jobs now.

JOSEPH MOSNIER:

Right.

JOHN MEDLIN:

That's some of what happened there. I think the public-private partnership on economic development is still a very vital one. Archie Davis' vision in getting the Research Triangle started in 1959. I remember when I was in loan administration as a credit analyst seeing the loan that we had made to Pinelands, Inc., which was Pineland Incorporated, which was to buy the land, that's now the Research Triangle, all that scrub pine. The bank examiners had criticized it and said that we should write it off. In fact, I think we did have to write some of it off. But the vision to do that and to other banks and insurance companies were brought into it, not just us. But look at what happened starting in the late '60s when IBM came in and Burroughs-Wellcome and Glaxo and many others. That's the shining example of diversification, diversification economically and diversification culturally. Because what those people who came in brought in other ways is just as important as what they brought in jobs.

JOSEPH MOSNIER:

So it sounds interesting. It sounds as if then to what measure you saw it during Holshouser's administration and certainly under Hunt and your work with the economic development Council that the state's leadership both political and business was paying a whole lot of attention to trying to find a way to smooth out this transition away from say the old textile style employment model to a new one, which would necessarily include the introduction of lots of new businesses.

JOHN MEDLIN:

Yes, absolutely.

JOSEPH MOSNIER:

Can you describe a little bit the ways in which the nature of the relationship that you built with Jim Hunt and the sorts of tasks that he asked you to help with?

JOHN MEDLIN:

I think the fact that we became Chief Executives around the same time. I had known him when he was Lieutenant Governor. He asked me I think it was in January of 1977 as matter of fact. He wanted to have a major economic development conference to make the key note address that sort of laid out the challenge for the future of trying not anyway say we don't like the textile industry, our traditional industries, but try to build diversification for growth as well as for protection against those industries declining in future years. I served on the state goals and policies board. I served on an education blue ribbon commission that he set up and did lots of things formal and informal to try to play a role in this private/public partnership that had sort of evolved over—it's always been true in North Carolina. But it had become more public. We also in 1978, Paul Sticht who was then head of RJ Reynolds Industries and I and a few others started what is now called the Governor's Council of Management and Development. It's a fancy name for a group that met once a quarter, twenty, a think the Governor picked twenty major businesses. The Chief Executive Officers met once a quarter for dinner on Friday night for an off the record, no staff present, meeting after dinner and a Saturday through noon meeting of the agenda issues that were important at the time. I would say that was an important influence on Jim Hunt and an important influence on a lot of the business people who didn't understand as well as they might the political implications of things that they felt should be done. How you couldn't do this the way they would like to have it done. That was one of the most important steps for Jim Hunt and for the business community. I think it was '78 that it started, and it continued today on a similar model. But I think the fact that it was so new back then that it gave each a lesson that they hadn't had exposure to before was important.

JOSEPH MOSNIER:

Here's an interesting question that has sort of been suggested by some of these things, I hadn't thought about this before, but you mentioned that folks coming in from outside bring a certain new diversity to the culture that has traditionally prevailed in say the business community. I'm wondering if there was as you measured it early on the relationship with Jim Hunt, he's quite a young Governor. He was a young man when he was elected Governor, a Democrat obviously. Was there some period during which young new Governor Jim Hunt had to work out a relationship with this group of twenty in the one instance you mentioned senior business leaders? Were you all on the same page or was there some time that you sort of had to navigate to get to know one another?

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JOHN MEDLIN:

We had to navigate to get to know one another. I think he was, to use a word that doesn't describe things very well, he was more liberal, and they tended to be more conservative. Despite the fact that most of us were Democrats, there were a few, well Paul Sticht who came from somewhere else outside the state was a Republican. There were some Republicans on the Council, and I think it was good for everyone. We had to get to know each other. I think Jim Hunt became more realistic. I don't think about certain things, taxation and regulation and so forth. I think some of the business people became more sensitive about some of the human issues. I think there was a coming together on some of this. Not that they weren't concerned. I think the Governor got enlightened that business people were concerned about human issues just as much as perhaps he was in some cases. But the best way to deal with human issues is to have jobs and income and so forth too, rather than the welfare satisfaction of human needs.

JOSEPH MOSNIER:

Tell me about in your early years as President and then CEO your assessment of the regulatory environment for the banking industry and the whatever efforts and means you might have used in those years both Raleigh and other places, Washington, to have an influence there.

JOHN MEDLIN:

Well we were very much restrained geographically. You couldn't go outside of your home state except in certain exceptional things. You could go overseas with an office, but you couldn't go to Atlanta. You were restrained in the services we could offer. We were restrained in the interest rates we could pay on deposits for example. It took a lot of work in Washington on all those fronts to eventually get legislative change. But the truth is the market change took place before the legislative change. The Southeast Compact, the efforts to try to make it possible for banks among certain states to merge. There was a similar effort in New England, which really was earlier but not nearly as effective as the one in the South in bringing about national change. It was not until the early '90s, the Reigle-Neal Amendment that sanctioned and legitimized interstate banking on a national basis that this became a matter of acknowledgement by the United State's Congress. Whereas it had been done by some southern legislators and New England legislators. I think banks across the country and politicians across the country realized their banks were not going to be in the game if they didn't have broader geographic regulation. The product change, the product and services change was driven a lot by technology. Money market funds could do business all over the country by telephone, by fax, by computer, and yet banks couldn't. The market had a lot to do with the creativity of bankers and the market participants and the demands of customers really

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drove the change. The politicians tended to be dragged kicking and screaming into acknowledging it ultimately in many cases.

JOSEPH MOSNIER:

Tell me, can you sketch just in a broad way the amount of your time that it was taking those years when you were CEO attending to the whole range of regulatory concerns and sort of a general sketch of the ways in which the bank staffed that issue?

JOSEPH MOSNIER:

I always stopped periodically and said, 'Now, who do I work for?' in a way of ordering priorities and time. Who do I work for? I work for shareholders. I work for employees. I work for customers. I also work for the public interest. In terms of allocating my time, I had to stop and make sure I wasn't neglecting one of these to the exclusion of the other and try on the one hand to know as many people, I tried to know everybody in the company. I tried to know as many customers as possible. I tried to know certain major shareholders and be accessible to certain shareholders. I've tried to participate in the public arena with the Governor or the local alderman or the sheriff, whoever was important. It was possible to delegate obviously a lot of that. People have a way of wanting to talk to the boss or Chief Executive or headman or who ever it is when they call in and have a problem and have a need. So it was a difficult juggling act. You obviously had your family at home too. I didn't list them in my responsibilities, but they obviously take equal priority along with all those others of the constituents I mentioned. I just had to on a given day in a given month in a given year to try to plan and organize my time so that each one got my time and attention and effort.

JOSEPH MOSNIER:

Key relationships that evolved in these years with say the congressional delegation North Carolina was sending up to Washington.

JOHN MEDLIN:

It was important if someone was going to be deciding your destiny, it was important to be able to talk with them about it. So back through the years, Everett Jordan, Senator Jordan was a member of our board at one time. So he was obviously, he and Archie Davis were very close friends. I knew him affectionately and reasonably well. Senator Morgan was a senator back in the late '70s when I first became Chief Executive. We were dealing with issues like community reinvestment and the things that took place in the Carter administration where there were attempts to put even more regulations on us rather than taking the old ones off. Senator Helms obviously when he came into office always had good reasonably close relationships. Senator East wasn't there that long but knew him. More recently Senator Faircloth and

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Senator Sanford. But it's always been very easy to talk with them and visit with them and with their staff people and issues of importance to the state and the industry. Some of them were on Banking at one time or another, Banking committees. The congressional delegation was larger and always knew the one from the Fifth District of North Carolina where Winston-Salem is located and others that I may have known but not as much time with them as the Senators. Those were usually worked with by other members of the management, their local constituents in Raleigh or Charlotte or Asheville or wherever they may be. [unclear] would have more contact with them. But we always tried to have communications lines there again not necessarily to get a favor or favored treatment because I don't think you ever can even if you wanted to but at least not to get disfavored treatment.

JOSEPH MOSNIER:

Did you always feel generally fair to see that you got a hearing with these folks, had that kind of access to make your point, make your argument?

JOHN MEDLIN:

Yes. Never had difficulty getting a hearing in Raleigh or in Washington. They didn't always do what we would liked for them to have done.

JOSEPH MOSNIER:

How about the issue about the bank's involvement supporting specific financial candidates with contributions to their campaigns? Was that an issue that was ever difficult to navigate?

JOHN MEDLIN:

No. The bank had a policy of not giving any corporate money to candidates, soft money or hard money, [unclear] or campaign money. The bank had a policy of not in the name of Wachovia supporting anyone. Individual employees had their own personal rights to support whomever they would like. It was also generally a policy that the Chief Executive Officer would not be publicly on the campaign finance committee or closely identified with any candidate because people didn't necessarily distinguish the Chief Executive from the bank. So you'd have more—so we were always very careful to avoid the briar patch of politics. Mr. Watlington, my predecessor was visited with in 1972 by Mr. Stans, Maurice Stans, who was the fundraiser for Richard Nixon at the time. He said that he had Wachovia down, this is all a matter of public record, had Wachovia down for 'x' amount, I can't remember. Mr. Watlington said, 'We don't give.' He said, 'You just find a place to get it.' This was witnessed I think later on when they were investigating and other companies were not as careful. When I say it keeps you out of trouble if you do that consistently. Now I supported candidates because I, I gave money to them. Others gave money to them. We had a PAC at one time, and then decided it was too much trouble, the reporting. Then one was started back five years

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or so ago. PACs have, they get criticized, but this is employees' money. The bank can only provide some administrative cost to keep books and that sort of things, just on the corporate money. But I really have no complaints about the political process. I really think the alternative to what we have would not be better or as good I don't think.

JOSEPH MOSNIER:

Tell me about the principal strategic concerns that were occupying your mind in the mid to late '70s as you were beginning to chart your record of leadership here at the bank. There are early rumblings of some acquisitive strategies in the banking landscape even then. Of course the regulatory question about interstate banking has not been resolved in the early to mid '80s—

JOHN MEDLIN:

I think in the time between, the time around the time I took over, well I was put in charge of a major strategic analysis of our business in 1974, about the time I think I became President and Chief Operating Officer. We went to New York, and we hired a consultant named Lou Gerstner, who happens to be head of IBM now. Lou did a terrific job, McKinsey and Company. We said, 'We don't want your best bank consultant; we want your best consultant.' We interviewed the major firms. Lou seemed to be a young fellow. We did a very soul searching strategic analysis of our business at that time, which was somewhat influenced by regulatory constraints that existed at that time. We had previously bought a big finance company, a title insurance company, an insurance agency and a travel company, lots of sort of—

JOSEPH MOSNIER:

Under that bank holding company umbrella.

JOHN MEDLIN:

The bank holding company structure. Each one of them was, you had to fight the Fed. It was a regulatory. So what we decided at that time was, 'Look. We're spending more money trying to acquire these businesses and protect them from being put out of business as a bank holding company subsidiary, and so we're going to concentrate on the basic banking business. It's a terrific business.

At a time when some of the others were heading in these diverse directions we went to hell bent for leather on basic banking. Our concerns then were the marriage of technology and personal service. How we deal with our business with rampant inflation and high interest rates that are going up and down. Interest rates had not reached their peak. They actually didn't reach their peak until 1982. We had a terrible recession and high money rates to face in the early '80s, which is what really drove deregulation finally in the political scene with the Garn-St. Germain Deregulation Act in Washington and some of those things. So we were on a strategic track that was really intent on our internal growth of our business. We couldn't go

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across state lines. We did open offices overseas. I think we went—I can't remember the exact years but we went to, we had an office in Zurich, Switzerland. We put check-clearing facilities, we put an office in New York City and an Edge Act office—

[TAPE 1, SIDE B]

JOSEPH MOSNIER:

Okay this is side B of the first cassette with Mr. Medlin.

JOHN MEDLIN:

We opened an office in New York City, which was permitted under the Edge Act to clear international transactions. We opened check clearing facilities in Dallas and Atlanta before we were able to go there otherwise and tried to pierce the veil of regulation wherever it was possible to do so legally and expand our business nationally and internationally. But being cautious with the overseas part of it. Witness what happened in the early '80s with the less developed countries lending, and we were involved in that but we weren't involved to the point that it was terribly troublesome. We had covered North Carolina pretty fully. Wachovia, you have to go back a little bit here and point out that Wachovia was founded in 1879. Had its first branch outside of Winston-Salem in 1902 in High Point; in 1903 in Asheboro and Salisbury; 1920s in Raleigh; 1930s in Charlotte. Then after World War Two in the '50s, Wilmington, Burlington, a number of other cities, Goldsboro. Then in the 1970s it pretty much completed the covering of the state, from Andrews in the far West to Elizabeth City in the far East. So there wasn't much place to go in North Carolina. So we were basically intent on using our present North Carolina banks for full service banking and going outside internationally and nationally and cash management and check clearing and those kinds of things where we could have permissible on the ground facilities elsewhere. We eventually put an office in Chicago somewhere along the way. Anyway, this was our growth. We knew that, we thought that somewhere along the way we'd have a chance to do what we did is to go into other states, but we needed to be good at what we were already doing to be ready for that. Our competition, we really didn't, North Carolina, one thing that Wachovia can take credit for is really spawning statewide banking in North Carolina. We had no restrictions since the Civil War. Communities wanted you to come and open a bank. There was no real restriction. The state was still so poor after the Depression and even after World War Two that you had no trouble being kept out anywhere. We really, I think inspired what was then North Carolina National Bank in 1970, in 1960, which was a merger of American Commercial Bank in Charlotte and Security Bank in Greensboro with an office in Raleigh. We were something of an inspiration behind First Union, which was a major Asheville bank, and Charlotte bank that got together and began to have some competition. We have had the experience of statewide banking now for almost a hundred years, ninety-eight, ninety-nine and others for only forty years. Size has never been our goal.

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Excellence and quality is our goal. You put your blinders on and hope you've read the competitive market place well and try to do the best you can with what you're permitted to do and where you're permitted to do it. To be able to look back on what you have done for these constituencies, shareholders. Shareholders don't really care about how big you are. They care about what happens to their stock. Customers don't care about how big you are; they care about the service that you give them. The employees don't care about how big you are as long as they have a good job and growth opportunities and the public interests often cares that you are too big or thinks may have too much economic power and concentration of resources and all that.

So we've sort of gone down that, those were the kinds of things that were reassessed in the mid-70s with strategic analysis of our business. Then we moved ahead into the '70s and '80s, the rest of the '70s and into the '80s. Then arrived at and found ourselves in pretty good shape and it was possible to go across state lines and had not gotten devastated in the credit crisis and the recession of '74. Had not gotten devastated in the, really I'd say was an '80, '82 credit crisis when prime rate went to twenty, twenty-one percent. We had not gotten devastated in the LDC debt crisis and had played in those riskier fields but not to an extent that it was a terminal problem as it was or a serious problem as it was for some. Really were able to buy First National Bank of Atlanta because they still had not recovered from the Atlanta real estate depression of the mid'70s.

JOSEPH MOSNIER:

Before I ask you about that acquisition, obviously it didn't present too profound a challenge to the bank's health, but sketch a little more of the detail of that '80, '82 crisis and how you rode that roller coaster crisis and watched your competitors ride that roller coaster there for a few years.

JOHN MEDLIN:

I guess there was still, banks still had bandages on their fingers from having gotten burned in the mid-seventies. So the southern banks probably did not suffer as much out of the '82 problem as the banks did in some other parts of the country. Although they still got, the ones that had not fully recovered got beaten back down a little bit. The things that we did in the '80, '82 experience saying what should we do to try to deal with the situations that face us. We recognize with rates going up so high that people didn't want to make a mortgage at fifteen percent with the expectation that's what they were going to be paying forever. So that's when we introduced variable rate mortgages, variable rate home mortgages. Set the payment so that there would be something less than a fifteen percent rate assumed for the, that they

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would be able to catch back up when rates went down. We did a land office business in variable rate mortgages in the '80, '82 period.

JOSEPH MOSNIER:

Were you the first bank that brought that to the market place?

JOHN MEDLIN:

We were, I can't say that we were the pioneer but we were right there with—

JOSEPH MOSNIER:

The first tier.

JOHN MEDLIN:

We were the first tier of people who did it in volume. A lot of banks were had problems technologically doing it. We offered a variable rate credit card, which today we still have that is a cheaper one. When the rates came down, we were prime plus. When the prime was way up there, it was a pretty high rate, but it came down. Our dealing with the perils of interest sensitivity in a rapidly rising and falling rate environments I think is something that we were particularly good at. A person named Jack Runnion who was our Executive Vice President and funds management officer at the time was a great source of strength and creativity in that period. We would, our failing to get in trouble as some other banks enabled us to have the flexibility to do some things that other banks couldn't do at that time. When other banks said, 'We can't do car loans anymore, automobile loans', we went out and sort of captured the market for automobile dealers, financing their papers and things like that. It was those kinds of thing, those are short-lived advantages. When rates come back down, they're 'We want your business back.' We'll undercut Wachovia's rates and terms. That's the way the business is.

JOSEPH MOSNIER:

Tell me the measure you took looking towards the acquisition in '85, the measure you took of the Regional Compact in '84, the Southeast Regional Compact and how actively you seemed to think that would change your landscape.

JOHN MEDLIN:

Well we were active in pursuing that. We were active in pursuing that in our legislature and other legislatures. Our putting a check clearing facility in Atlanta some years before we were able to go there with a full service bank was an anticipation that that would be a good idea, and that we could build some business, in anticipation of that whether it would be a smaller bank. We didn't know if we would be able to buy a larger bank or a total bank or open a new bank or what. The opportunity to marry up with First Atlanta came along in 1985. I think I was in, I had gone to an international monetary conference in Hong Kong and had gone to Japan after that to call on customers. I had arrived back here on Sunday. On Monday morning I was in the office, half asleep from being in the Far East for ten days on a twelve hour

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different time zone. I got a call from our attorney saying that the Supreme Court of the United States had sanctioned interstate reciprocal compact legislation. It was legal now to do what, we had gotten the legislatures, but there were suits that said, 'It's illegal.' So within hours we were in touch with our investment banker, and then we were in touch with First Atlanta that night, that Monday night we were meeting to see if we could try to make a deal. The next Sunday both our boards met, and we finished up our negotiations on Sunday morning. We finished our due diligence of each other. On Sunday morning met and reached a final agreement and had our boards meet that afternoon and approve the deal and Sunday night, announced it Monday morning, seven days later, which was a marathon. Then the real work began because we had never done a merger like that big. Neither had they. There were a lot of things, we knew about the South but not necessarily Atlanta was a different, biggest metropolitan area in the south, and we learned a lot over the next few years about big mergers.

JOSEPH MOSNIER:

Tell me about what you thought that merger would do for the bank and how well the integration process unfolded.

JOHN MEDLIN:

Well, we felt it, we would acquire the business of that bank and the state of Georgia. They had some national business that overlapped with ours. They had some similar things that we had. They probably had more things farther south, Florida, Alabama than we did. We thought the synergies—they had been strong in some areas like credit card that we had not been as strong in, as aggressive in. They had taken a bath back in the '70s in credit card. What they had at that time was a good book of credit card business. We had gone more slowly and grown ours more gradually with a higher quality screen. Plus getting into Atlanta, Atlanta is about equal to the combination of Research Triangle, Piedmont Triad, and Charlotte-Mecklenburg MSAs of North Carolina, all in one area. We thought it also, that technologically we needed a larger base of business over which to spread the increasingly high cost of technology. You develop a system one time and you can use it over more customers. We also saw this as the first step in what we hoped would be our ability to cover the Southeast, major states in the Southeast, particularly the ones adjacent to us like Georgia and South Carolina, Virginia. To spread out doing the Southeast to what we had done in North Carolina since 1902.

JOSEPH MOSNIER:

Any particular surprises in the integration, things that caught you off guard or that required some extra measure of new thinking?

JOHN MEDLIN:

Well, I don't think it was surprises. The time it takes to have a cultural consolidation or transition. It's one thing to get up in front of a group of people and say, ' Now here's the way we're going to do business.' And list them off, and they said they understand it that they're going to follow it. But first of all they don't really understand it all the way we understand it. Secondly the degree of enthusiasm for following is not always there, so it takes longer. It costs more money to integrate systems than the estimates usually are at the outset. It's just that it takes a while. They had not, in Georgia, they had only had statewide banking for a short while, and they're banks out in Savannah and Dalton and wherever were not nearly as integrated as we were in North Carolina where we'd been one bank forever. So those are differences. But it was a good lesson in doing major mergers, which we've done since then and made sense and no regrets.

JOSEPH MOSNIER:

How was your, what was your thinking around the time of '86 when McColl does the big First Republic Texas deal, and both First Union and NationsBank are starting to move pretty aggressively to really start buying banks.

JOHN MEDLIN:

I think that was '88.

JOSEPH MOSNIER:

Oh excuse me.

JOHN MEDLIN:

I think First Republic bellied up in '88, I think. After the stock market crash. I remember being in Texas in '87.

Again, I think as I indicated earlier, we have our own strategy, philosophy, values, so forth. Size, once you reach a critical mass, size is sort of on top of that is not important. In fact, it can be a negative. All I know is the best job I ever had was managing North Carolina, managing Wachovia when it was just in North Carolina. It was easy, not easy, but you could possibly cover the state, know the political leadership, the community leadership, know our people. When Georgia came, I had to give up some of that. That you had to move up a level, and you couldn't know everybody quite the way you knew them before. Then you've got another state, and the quality control gets more difficult. Our own strategy and philosophy and values I think are our, work to our disadvantage when it comes to size because first of all there's nobody else that does those things as well as we do. It takes a while to have a cultural transformation, values transformation to do as well. So it, for us it limits how fast you can grow. The fact that others have done it faster and are bigger, really you can't say you don't think about it, but you also can say after thinking about it a little bit and reminding ourselves what our religion is, then it's not something you have to worry about.

JOSEPH MOSNIER:

Tell me a little bit about, it would be interesting to have your sense of how you in your CEOs desk over the years have had to watch the whole technology issue unfold and make probably at times some really important and in cost terms consequential choices about technology systems you're going to employ.

JOHN MEDLIN:

The big, the first big dilemma I think on that was back when we developed our retail accounts information systems, RAIS they call it. To say, here you're going to spend all this money and all you're going to get out of it is just a little more knowledge about your customers. You're not sure where the revenue is coming from to pay that back or pay for it. Then the automated teller machine is not long after that, automated banking machines. Some of our competitors were in the market place very early on with a thing you'd put a card into and it would pop out twenty-five dollars, and it was not on line, and it was not really much more than getting a Coke type machine service. We were a little late and our surveys told us that people wanted more than that. You weren't going to get much advantage other than short-term PR advantage in having those kinds of machines. So we took the time to work with the manufacturer and develop a machine that was a much more comprehensive banking machine. So when we came to market a couple of years later, we really had something that made sense for us and the customer. We were displacing cost. We were adding value other than a twenty-five-dollar pop on a quick card. Those kinds of decisions, you want to be on the leading edge but not the bleeding edge when the technology is [unclear]. I kind of recognized very early on in my administration that it was very important to have someone in charge of technology that had the mental ability to do this but also the practical sense of what you can afford. We don't just have things that you get awards for at the IBM trade show or something because they're going to sell you a lot of equipment and a lot of software and you're not going to quite ever see where you get the payoff from. Walter Leonard was that kind of person, a person of real strength and creativity and came up through our systems and programming area and when, for example when we had the, when they said, 'We think we've got the automated teller machine now for the future.' I said, 'What sort of customer testing?' 'We haven't'— I said, 'Go out and find a representative group of customers and let them tell you what they think about it before I sign off on it.' So we always try to have at least during my administration, things that work for people that are supposed to benefit them, not something that suits the techies that designed them.

JOSEPH MOSNIER:

Reflections on the big '91 South Carolina National merger.

JOHN MEDLIN:

Well, after, that was a big merger, and it was important merger, but it was sort of boring. After the First Atlanta, all we learned from First Atlanta, it went very smoothly, no real problems. It just sort of fell into the routine things then. But it was important to fill that gap between Georgia and North Carolina. It's gone very well over the years. We bought a good bank and haven't messed it up.

JOSEPH MOSNIER:

Let me turn to a short list here of questions that really turn to a broader context sort of take you outside. Well, one I'll open with a banking question specifically, and we'll certainly touch on banking along the way. But these also sort of range out more generally across the economic history of the region and the nation in the last several decades. First, this question you've probably heard a hundred times, but I'd be interested again to hear what you have to say. Why has North Carolina ended up such a key part of the banking landscape, nationally and internationally?

JOHN MEDLIN:

I think very simply that we, first of all that, we had the opportunity to go statewide early on and have done that. We developed a number of statewide banks that have made each other very competitive. I mean you couldn't get away with anything in North Carolina for very long. And because we had statewide banking, I think the economy of North Carolina has been more dispersed and spread out because. In Georgia for example, if you went to Georgia, if you were an out of state company moving to Georgia, you probably were in touch with First Atlanta or Trust Company or C&S. If you went there, they were probably going to encourage you to go somewhere around metro Atlanta. I think the fact that, if you look at Richmond, you have a similar situation. Atlanta and other cities across the country that tended to build up around where the money was. Because the money was spread out across North Carolina, I think our growth was more diverse. Also, it probably had something to do with the political power being more dispersed. There's not a, you really have three states here, the agricultural East, the industrial Piedmont, the mountainous West and in some respects politically. Neither one of those really has ever probably gotten the upper hand; the farmers probably dominated more some time in the past. It was sort of a pattern of the Governor rotated from East to Piedmont and West. So I think the banking laws had a lot to do with this; our diverse geography had something to do with it. It certainly gave North Carolina banks an advantage when the starting gun on interstate banking came about. We'd been doing this, and it was not different for us to manage banks from here to Atlanta than it was from here to Asheville, which is about the same difference as to Atlanta.

JOSEPH MOSNIER:

By and large your assessment of the state's role in enabling this record of tremendous economic growth of all sorts, assessments that this state has worked very favorably on behalf of business.

JOHN MEDLIN:

Yeah. Yeah I think the fact that political power has been dispersed. Like I said, it really hasn't been a dominant group. It has made it cleaner. We haven't had big scandals in modern times of political corruption and that sort of thing that has made politicians I think more responsive to all the people. I don't think business has ever gotten a big break in North Carolina nor has it gotten ignored. It's sort of a good balance I think. We tend to be a higher tax state in some respects. We've got lower real estate taxes and higher income and sales taxes. We spend a lot of money on education. We probably spend a disproportionate amount of money on higher education than on K to twelve education. That'll show up in the numbers. The one thing that we still need to do better on is that K through twelve education, which is a problem all across the south. We maybe, we've made progress, but we've still got to make more progress.

JOSEPH MOSNIER:

I'd be interested to draw you out a little bit more on that issue. But let me first ask, any of the state, the State Secretaries of Commerce who stand out in your mind as being particularly aggressive or particularly in successful in selling North Carolina as a place for businesses to open up?

JOHN MEDLIN:

I think the Governor's probably stand out more on that than the Secretaries of Commerce. You're talking about North Carolina Secretary of Commerce?

JOSEPH MOSNIER:

I am.

JOHN MEDLIN:

Certainly Lauch Faircloth under Jim Hunt did a fine job. If I could remember the others, I could probably say they did too. I think Dave Phillips during his more recent administration under Governor Hunt did a fine job. But the Governor tends to be I think the leader of delegations going across the country and the world selling North Carolina. Jim Hunt certainly stands out as having worked very hard at that in his first eight years as Governor and certainly continues to in his second eight years. But Jim Martin, the Republican Governor for eight years was a tiger on that too. The art and the effort really hadn't gotten as fully developed back in the Scott, Moore and Sanford administrations. I think they tended to be a little more internal than they have since being aggressive outwardly.

JOSEPH MOSNIER:

Reflect if you would on the measure outsiders, those could be folks not too far across the state's borders or folks as far as Tokyo and Hong Kong, have taken of North Carolina across this span of

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thirty or forty years. Have you witnessed a significant transition in the way that people perceive North Carolina?

JOHN MEDLIN:

I've never gotten an impression anywhere, I really didn't start traveling outside the state representing Wachovia that much until the early '70s or outside the country. But I've never been anywhere that there wasn't a pretty good impression of North Carolina and Wachovia. Wachovia was, we go to Japan; we go to Europe. You're from Wachovia. 'Oh what a wonderful bank. Oh that wonderful state.' Companies that have, mostly the companies that I would call on would be ones that have plants or some facilities here—

JOSEPH MOSNIER:

They were familiar.

JOHN MEDLIN:

Overseas. I think they all give it good reports and good marks.

JOSEPH MOSNIER:

Oh sure. You mentioned the issue of the relative spending, the state's priorities on Higher Ed and K through twelve. I'm wondering just generally if you would contribute your reflections on the issue of the state's fiscal priorities of that sort, how happy you are with the state's tax policies as they have unfolded in the last couple of decades and on the spending side as well.

JOHN MEDLIN:

Well, my comment on spending more on higher education doesn't say we should spend less there. But it's a, our present resources there probably is a higher percent spent there than other states would spend on higher education. That probably relates to the fact that we have a sixteen campus university system that really includes some institutions that probably stretch a little bit to call them a university and that, are not in the same league as UNC-CH and NC State and so forth. The politics of that consolidation have cost the state some money that probably could have been spent on K through twelve education. I think we collect about all the taxes we ought to try to collect. I wouldn't say that we necessarily ought to try to cut them either. The needs are there and the budget is tight, and we need to continue to spend to have equal and quality education for everybody. I firmly believe that the way to solve most of society's remaining problems is if everyone gets a good education from Kindergarten up through whatever higher level they deserve to or need to go in a professional training and some of that would divert off into other fields after, during high school or after high school rather than necessarily a liberal arts education. Then I think we'd make a lot of progress on the race problems. If you dig into the race issue, its economic

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inequality is bred by educational inequality. It may not solve every problem, but it would certainly solve a lot of them.

JOSEPH MOSNIER:

Right. Right. Let me ask you for a few further thoughts on the whole race question. I guess during your tenure as CEO here, you would've witnessed not the very beginnings but a substantial portion of the integration of African-Americans, women into the Wachovia workforce and watched it happen in the workforce more generally in North Carolina. Can you talk about sort of managing that process, observing that process, key things that stand out in your mind about that whole part of our history?

JOHN MEDLIN:

Well, by the time I went into senior management in 1970, it was sort of an accepted fact that we did not discriminate based on race, sex, blah, blah, blah, blah, blah. Some added, additional, some things have been added since then. But yes it was something. By the time certainly in my divisional area and later on in the whole company, that I worked very personally, very hard at to the point of actually doing a good bit of interviewing of people coming in because in those days you still had to not only do some selling inside, you had to do some selling of the people to come in. Do you really mean what you say? And if they heard the head of the, Executive Vice President say it or the Chief Executive Officer, they maybe took it a little bit more seriously than some recruiter. So I think, trying to make sure we got good people that we got the best people. It's something I worked very hard on, and we had goals on. We made progress on and the difficulty always was keeping. If you hired somebody and they turned out to be very good, it was also recognized by outsiders too and keeping them became a problem as much as hiring, getting them in the first place. About all the good minorities and women who had gone to seek other fortunes over the years. We have a good retention rate; don't get me wrong. This is not unusual. We have more in the upper reaches now. We have two [unclear].

JOSEPH MOSNIER:

Reflecting back, was it a process that presented any undue hurdles or complications, fairly smooth pattern of integration across those years.

JOHN MEDLIN:

Well, we had a class action suit in 1974—

JOSEPH MOSNIER:

I wasn't aware of that.

JOHN MEDLIN:

After considerable frustration with our attorneys that were talking to other class action attorney that happened to be Julius Chambers, prominent civil rights attorney. I finally got in my car one day without the knowledge of our attorneys and went down to see Julius and said, 'Julius, look who has

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done a better job of hiring minorities in North Carolina than Wachovia?' He said, 'Nobody.' I said, 'Well, why in the world would you want to pick us out?' He said, 'Because if we get you then they know the rest of them are going to be even scareder.' I said, 'How do we settle this damned thing? We don't deserve this.' So we eventually once the conversations were opened and we got it settled, and it was not representative of what we had done. It was just the publicity. I don't care. You go to any company in this country and if you can't find a case that can be made and can look very bad, I'd be surprised because of what somebody on the line down there somewhere does that you don't know about. You can make speeches and have policies and write memos, and you're not going to get one hundred percent perfection. Those are the kinds of things that we got caught in. Your numbers are never going to do—you start doing average salaries and all that stuff, and you're going to still have problems. No. It was not without its anxieties and frustrations and worries. It was something that I think we had a good record on.

JOSEPH MOSNIER:

How about, you mentioned that a generation ago, twenty or thirty years ago, you had folks down working in the front lines in the company, any company here or elsewhere. There's a mindset that prevailed at the time among some small number of folks that could cause these kinds of problems. Today and not just Wachovia, generally, do you think that that's much less significant of an issue? Does it prevail still as a problem in a significant way? Has the corporate and business mindset really fundamentally changed?

JOHN MEDLIN:

Well I'm five years out of the trenches so to speak having really retired from management at the end of '93. I think it's a less significant problem. To say there aren't some of those problems there would be not true, I think, because there are still people with attitudinal failings that built up over years, just plain carelessness sometimes with some of the kinds of remarks that you hear people make. They aren't really racist, but they say stupid things and some of those do stupid things. I think the trend line is good.

JOSEPH MOSNIER:

Here's a question that might, I don't know if I put this quite right in the notes I sent to you before hand. I'm very interested in how a person who's leading a major business enterprise like Wachovia over the years, where you get your source. What you draw upon as sources of information and perspective to help you both, obviously the particular information you need about the bank mostly will come from

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inside and maybe from near tier banking associations and trade groups. But to help you think more widely, where are you reaching out for sources of perspective. How do you put that together?

JOHN MEDLIN:

Well, I think that changes as you go up the ladder. In my own metamorphosis in that regard as I said earlier, accounting and finance, things you learn in business school are important early on. When you get to be Chief Executive Officer, philosophy and political science and psychologically, the liberal arts education becomes a lot more important. Where you get that information, professional part of banking I guess became sort of second nature, almost secondary as Chief Executive Officer. You still had to understand what was happening to the business. You didn't worry as much about the transactional, operational part as you did the strategic issues. The strategic issues then begin to border on these humanities courses and disciplines, liberal arts courses, history obviously is one of those. I always read. I read several newspapers a day. Always the New York Times, the Wall Street Journal, and some local papers and Atlanta when we got to Atlanta, so you knew what was happening, what was being said by people, editorials and whatever. But to read all kinds of things that you get your hands on. One of the more interesting books I've read in recent years, really since I've retired, was a book about the Renaissance about how—it's called The Worldly Goods by Lisa Jardin who talks about some of the economic aspects of the Renaissance. Amazing similarities to and some of the, you can look at a period like that and maybe you see where things go in the [unclear]. You take the printing press mid 1400s very similar to the computer in terms of information explosion. The explorers going across the world a lot like international trading trading with NAFTA and so forth. She makes the point, made the point that you often think about the art with the Renaissance, but it didn't have art until you had wealth. Leonardo da Vinci was a surveyor until, 'By the way I can do pictures too' or paintings. I think you get some sense of these things. The merchant banking, the Venetian merchants, Medici and really Columbus was financed ostensibly by Ferdinand and Isabel. But they just were the names on the syndicate. A group of Jewish merchant bankers really put most of the money up. But those are the kinds of things that happened back then. Financing of satellites and aircraft. So I think reading history is a shorter winded way of saying what's happened before us. Economic history but also other kinds of history.

JOSEPH MOSNIER:

How much has a identifiably regional character persisted in today's economy? Is there still a southernness to Wachovia, a southerness to the business in North Carolina in the region? Is that coming less relevant, still quite relevant?

JOHN MEDLIN:

I think there's still a southernness, whatever that means. I've married a young lady that grew up on Long Island who I met at Chapel Hill. We argue periodically about what that means. She has different view sometimes than I do. When something bad happens, 'Agh, that's the damned southerners.' I talk about the damned Yankees too. But no. I think there's a, I'd like to say a gentility, a niceness, something friendlier that would characterize the southern term still. But what was more southern is less southern as witness the Research Triangle. Cary probably has a minority of southerners living in it now.

JOSEPH MOSNIER:

I suppose that's true.

JOHN MEDLIN:

A city that's built over the last twenty years by Research Triangle people moving in from somewhere else. So I think the blending, there's strength in the blending too. I think we have a stronger family by having a northerner and southerner as mother and father. I think there are aspects of that that have a durability and have value long run. There are aspects of it that are parochial and probably can be dispensed with, some of the traditional things. So hopefully we'll keep the best and get rid of the worst.

JOSEPH MOSNIER:

The last general area I wanted to explore a little bit with you is the whole issue of corporate civic responsibility and married to that the role of the modern chief Executive as someone to whom a society turns to seek leadership on these issues that aren't business matters directly at all. And how, what you're experience was like in those regards and your views on those issues. How you charted a course for Wachovia and yourself on those fronts.

JOHN MEDLIN:

As I've said earlier, I've always seen public interest as one of my, and the Wachovia Chief Executives have had that tradition, of seeing the public interest as one of their responsibilities and providing leadership to issues that cut across the community lines, the political lines, whatever, is very important. It's something I think that it takes sort of self-interest forms that you don't want to do business in a place that is socially undesirable or disrupted or whatever. There is a certain amount of self-interest, but there is also altruistic interest in that too. Things that I have done since I retired have tended to tilt more toward that public interest, chairing a commission to evaluate and try to reform and improve the court system in North Carolina, which is no direct self-interest. But it is something that I have spent a couple of

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years on and still can't get it through, much of it through the legislature. But we keep working on it, those kinds of things. Back on the Research Triangle Foundation board, the Winston-Salem Foundation Board. Very important and it is an American tradition and practice, as you go across other parts of the world it is still somewhat unique, our civic institutions. I became most starkly clear when I was in Eastern Europe last year, Czechoslovakia now Czech Republic. They were talking about how they were trying to reestablish their, or establish the kinds of volunteer. They don't have a United Way or social organizations that we do. There are political forces that say you don't want to start them either.

JOSEPH MOSNIER:

Right. Interesting question.

JOHN MEDLIN:

And we had a forum several places talking about that. But it's something I think that's uniquely American, and it's very important to continue. I would be unfair to say that the generation that preceded me was not as civic minded, but I think it was more patriarchal. It was more patriarchal. It was sort of what your forebearers did and you did. But now I think it's probably a more humanistic flavor to it, more altruistic flavor.

JOSEPH MOSNIER:

Do you think that the demands that are made on an institution like Wachovia are fair to the bank. I'm thinking of things like the Community Reinvestment Act, just the number of calls that must come in when you're Chief Executive asking for your time, your efforts, your money? Is that all happening in a way, in a shape that seems reasonable and fair? Are there other better ways that this could be worked out?

JOHN MEDLIN:

I think where things like CRA end up, if we had had what the activists along those lines wanted, we'd have something that would be bad. If we'd have had what the banks maybe wanted at the outset which was nothing, that maybe was not good either. There were a lot of banks around the country, including ours, that were already doing CRA type things without being required too. There were a bunch that weren't. So I think you had to accept some requirements along those lines to be part of an industry that was doing what it should. But I don't consider that, I think we learned to live with all that. I think we consider it, I don't think, I certainly didn't during my time, consider it unreasonable. Although the paperwork part of it was. Now that you have the form, there is more concentration on form than substance. Your paperwork could look good, and you still weren't doing much because you've got some numbers up. I don't consider it unreasonable. There's always a problem of priorities and time. We can't do everything

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that we want to do. It's sometimes have to say no. I can't do that. I don't have time to do that. No we don't have any money left. We're up to our ears in competitive banking. But there has been a time or two like back in the '80s, John McNair that was running the North Carolina bank for me at that time, was in charge of the branches. We were getting all these requests coming and said, 'We don't have enough money to do all of these. Let's do something we want to do.' So we sent out the word and gathered, had a little study done. So we decided we wanted to start giving scholarships to community colleges. They've never asked us for anything. There were people going to these colleges a lot of them single mothers that didn't have enough money. They were having to work. They didn't have enough money to eat or have a car or a sitter or whatever, day care. So we started giving scholarships, and this has been one of the greatest things we've ever done. Some upwards of two thousand of these scholarships since then across our one hundred counties. The other things with the education system, we said, 'How do you, what's one of the most important ingredients in having a good K through Twelve education system, a good principal, great school.' We started the Wachovia Principal of the Year program, which was a way to have a competition and putting the spotlight on principals. Gave them $2500 for their school and a $2500 bonus for them for the ones that were selected principal. To do things like that, to reach out and try to deal with some issue that presents itself that isn't coming at you is part of the responsibility I think.

JOSEPH MOSNIER:

One last question from my side, across the, if you run your mind all the way back to '59 when you started with Wachovia and here we are today forty years later. Has the experience of being involved with this industry and the roles and all of these experiences that being CEO has opened up to you, all of these wider parts of the world, civic and otherwise—

[TAPE 2, SIDE A]

JOSEPH MOSNIER:

This is side A of the second cassette with Mr. John Medlin in his office in the Wachovia Building in Winston-Salem, North Carolina on Monday, May 24, 1999 for the Southern Oral History Program's North Carolina Business History series. My name is Joe Mosnier. Since this is the second cassette, it is tape number 5.24.99-JM.2. One last question here to finish up from my side.

I'm interested in as you take in the broad sweep of the forty years you've been involved with the bank and all of the experiences that you've had across the years in virtue of the leadership role you've had at the bank. I'm wondering if there's any trend line or evolution you could point to. Maybe it would be the fact that there hasn't been much change would be the interesting observation in your broad outlook on this state's prospects, on the region's prospects, on the society's prospects in continuing to make progress in certain social problems. I'm thinking to here with the rapid globalization of our economy and our culture, I suppose, just sort of how your thinking has unfolded broadly.

JOHN MEDLIN:

Well I think that today, 1999, we have a much better Wachovia, North Carolina, nation, world than we had in 1959 when I came to work here. I think the trend has been good on virtually all fronts, whether it be human rights or economic prosperity or standard of living or personal freedom, all those things that are important to mankind. I think the quality of service of a bank, the technological advancements that we have made that have been good for people as well as for efficiency. Good progress and good trend very much I think in a position to power forward on all those fronts to continue improving. One thing I have learned is pessimists most often are wrong. This is a nation and I think our bank, we're optimists. People with positive, creative views of the future are more likely to be right. While I think you can take some measure of worry in some of the things you see in society today on the moral front and those kinds of things, never the less I'm impressed by the young people that we have in our company today. I still see some, despite I'm retired, I'm very impressed with the young people I see and my grandchildren. So I think there's a great future for Wachovia, for America, for our society, and for our whole nation if we just continue to keep our eye on the values and fundamentals that have made life better will make life better. That could make life better in the future and not get too carried away with technology but continue to do those things, make progress on a scientific front where it has human benefits. One of the organizations I'm involved with is the National Humanities Center is trying to make sure that we put a few drops of humanity

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back into the mainstream of education and society wherever we can. So that maybe the next century we won't have the brutality and the things that we had during this century where many people have been murdered and slaughtered. That we can maybe have a twenty-first century that will be a little better along those lines. I think it can. I think it can.

JOSEPH MOSNIER:

Are there matters that you would like to spend a few minutes or as much time as you like talking about that we haven't touched on today that you think are important to these sorts of reflections and spanning the—

JOHN MEDLIN:

Well, one of the things that maybe I haven't touched on as much as I would like to and with as much passion I think is that an organization like Wachovia and one of the reasons I was sort of subtly attracted here and as dedicated to doing a good job as I was during my lower life and upper life in the company is that Wachovia has something of a heart and a soul and a spirit. We all feel, I know the present Chief Executive Officer, Bud Baker and I felt and my predecessor felt, Archie Davis and before him, it was very important to preserve. Going off and merging too far and too fast, you tend to lose that. There are people who have told me that the state of North Carolina would not have been able to meet its payroll and obligations during the '30s had it not been for Wachovia, which was one of the only banks that was available and had the money to step up when the times were really tough. We have a role in society like that. We have a very sacred trust with the people who put their money here and expect to get it back whether the Year 2000 works or not. I think that's an important note to close on too. There's something more than just a bank here. There's an institution. There's something that's important not just in North Carolina now, but to the other states that we have bought major banks in and likewise have a right to look to us the same way that North Carolina always has. The best way to ensure that is the kind of people we hire and the values that they have when they come to us and the values that we reinforce them when they're here. They don't get distracted by the transient and the expedient along the way. It's very easy to do at times, to follow the fashions and the fads in banking or whatever else is going on in society. That's one of the things that was passed on to me by people like Archie Davis and John Watlington and I think likewise to them by Mr. Robert Hanes and those people who were such an important part of our heritage. We've got a legacy here that's important to pass on in a stronger fashion than we took charge of it.

JOSEPH MOSNIER:

Well I certainly want to thank you in being so gracious and generous in your contribution of time and thoughtfulness to the session. It's really a great contribution. Thank you so much.

JOHN MEDLIN:

It's been a pleasure chatting with you.