A Woman in Charge (23 page)

Blair explained: “I thought I was a lot smarter than Red and I'd form my own opinion. I was taking so much time away from the law firm that I set up a commodity account for the law firm [and its partners]. We had a holding company called Lawyers Investment Company that held our real estate and stuff and I set the account up in that name. And, because some associates didn't participate in that I set up another account for them that I called the Pups Account, so I'd make them a little money. And then I set up an account for my ex-wife. I set up an account for Diane, who I was dating. I set up accounts for my kids. I set up accounts for her kids. I set up an account for a business associate of mine named Jim Brooks, dear friend, dead now. And then one day I made the fatal mistake. I was talking to Hillary and said, ‘Why don't you let me set you up an account on this? I'm just making so much money it's unreal.'”

Over the next nine months, under Blair's influence and because of Red Bone's machinations, Hillary experienced the highs and lows of the futures market. Then, ahead of the game to the tune of $100,000, she was rescued from margin calls that would have wiped out other less-favored investors. She cashed out just as the cattle futures business was collapsing.

The combination of Blair's smarts and Bone's privileged information proved infallible. While the information Bone received was not necessarily considered insider information within the commodities market, he certainly benefited from Dittmer's position as the chairman of Refco; Dittmer also happened to be one of the country's largest cattle owners. Bone ran the Springdale office of Refco two miles down the pike from Fayetteville. And though at one point he was making a lot of people in Arkansas very wealthy, he ran an undisciplined operation that rarely bothered with the requisite record-keeping.

In October 1978, Hillary, through Blair, made an initial payment of $1,000 to Refco to open a trading account. Three months into her stint in the commodities market, Hillary had realized a stunning $26,000 gain. Other high yields followed—as well as frightening lows. She lost $16,000 in a single trade, a little less than half of Bill's annual salary by then. It would be another thirteen years before questions would arise about margin calls—in which investors are forced to sell stock to cover their losses, thereby restricting their purchasing power—that should have been imposed on her account. At one point Hillary owed more than $100,000 to Refco to cover losses. Bone had been sanctioned by the Chicago Mercantile Exchange in 1977 for failing to follow margin requirements, among other infractions. But Blair served as Hillary's protective barrier. Any client that Blair brought to Bone would be given the same sort of preferential treatment that was extended to Blair himself. Therefore, because Bone never demanded it, both Blair and Hillary were able to make large sums of money without being saddled with large margin call payments. They would simply ride out the lows. Blair was trading millions of dollars and Bone knew he was good for it if the bottom fell out. But they were all on a roll.

Finally, Hillary got cold feet. Blair correctly predicted a dip in the market and sold short, giving Hillary a $40,000 profit in an afternoon. The volatility in the marketplace, she later said, was too much for her, and she closed her account with Refco, keeping her $99,000 overall profit secret until she and Bill, under duress, revealed their tax returns during the second year of his presidency. Hillary returned to the commodities market for a short spell in October 1979, allowing William Smith, her broker in Little Rock, to trade for her. Far more conservative then, her futures account with Smith doubled a $5,000 initial investment. The month after Chelsea's birth Hillary moved her money from the commodities casino to a safer, more assured investment—U.S. Treasury Bonds. Hillary said to Blair that she had become so rattled about the markets that she was worrying about her sugar contracts with Smith as she went into labor with Chelsea.

She was not worried, however, about a nest egg she and Bill had been sitting on since 1978, around the same time she'd gone into the cattle futures business. It was a piece of land they had bought with Bill's old mentor from the Fulbright days, Jim McDougal. The 230-acre parcel on the White River was called Whitewater.

 

B
ILL
C
LINTON'S
dilemma in his thirty-first year was whether to run for governor of his state in 1978, or for the U.S. Senate and seize the opportunity to move himself and Hillary to Washington for the next six years, as Hillary would have preferred. If elected, he would be the youngest member of the Senate. She would be a significant, and desirable, candidate for a job in the administration of President Carter in the capital. Or she could resume her career as a powerful advocate for children with Marian Wright Edelman's increasingly influential organization, now relocated to Washington, or another nonprofit foundation.

It was perhaps a measure of how seriously Arkansas took its politics (and of the seniority system in the United States Congress) that a state with a population of fewer than two million people and an antediluvian economy produced five politicians (all Democrats) in two generations who were among the most powerful of the second half of the twentieth century: Bill Clinton, Orval Faubus, Congressman Wilbur Mills, and Senators J. William Fulbright and John L. McClellan. At age eighty-two, McClellan had announced his retirement, and Clinton was his choice to succeed him. When Bill had told McClellan that he was considering running for governor instead, McClellan said it was a bad idea, “that all you did in the governor's office was make people mad. In the Senate you could do great things for the state and the nation.” The governor's office was “a short trip to the political graveyard,” partly because it held a two-year term, and only two of its occupants since 1876—one of them Faubus, who became enormously popular because of his segregationist stand in the schoolhouse door—had served more than four years. The worst that could happen, said McClellan, was that if Bill lost, as the senator himself had done on his first try (early in the century), well, he was young and could win again. This was hardly Hillary's or Bill's outlook. One loss had been enough.

In the fall of 1977, Steve Smith, Clinton's chief of staff in the attorney general's office, phoned an obscure, thirty-year-old political consultant, Dick Morris, who was approaching every Democratic Senate or gubernatorial candidate across the country, seeking employment. Morris, a New Yorker, had never had an out-of-state client, and he was awed by Clinton; like himself, the young attorney general had sideburns, long hair, and a razor-sharp sense of politics. Clinton was fascinated with Morris's unusual polling techniques, recognizing that they were uniquely penetrating and advanced in terms of the underlying meaning of the numbers. Morris was certain he could help Clinton in his decision about whether to run for governor or the Senate. Which office would Bill really prefer? “I'd like to be governor; I feel there's a lot more I can do here,” Clinton answered. “But the real action is in Washington.” If he sought the Senate seat, he would probably have to run against three strong Democrats for the nomination, including then Governor David Pryor, a relatively popular figure.

Morris was aware of Hillary's preference that Bill roll the dice and try to get to Washington. He suggested that he poll Clinton's chances in the two races. The results showed that Clinton might be able to win the Senate race, but victory was hardly certain. He would start perhaps ten points behind Pryor, who (like most of his predecessors) had been weakened in his second term in office. The governorship seemed a clearer shot for Bill. Pryor was pleased when Clinton informed him he would not challenge him for the nomination—a decision that helped keep the state's Democratic Party in reasonably good order over the next decade.

Bill, with Hillary, his mother, and his brother at his side (in the state capitol building he'd driven past the first day Hillary set foot in Arkansas), announced his decision to an excited press corps (already the Clintons were good copy) and enthusiastic supporters, explaining that being governor was what he “really wanted because a governor can do more for people than any other office.” He paused. “Any office except the president.” It was a remark not lost on those present.

Compared with subsequent campaigns, Hillary's involvement in Bill's 1978 gubernatorial race was minimal, just as her fitful involvement in his first term as governor would contrast with her dominance in the two decades that followed. For now, they were a two-career family. “She had a law practice and he had politics,” Morris noted. And she was enjoying her days spent in the company of Vince Foster and Webb Hubbell. At the Rose firm, they were forming almost a private subsidiary, so much did they enjoy each other's company and support. Morris perceived that she meant to keep her independence. “Working at the Rose Law Firm, she seemed no different from dozens of wives (or husbands) of other candidates,” he said. “She wished Bill well, would help him in any way she could, but gave no appearance of having a personal stake in his professional accomplishments.”

Though Hillary was not present for the polling and strategy sessions with Morris, she remained involved enough in Bill's campaign to critique his speeches and suggest how, as a candidate, what he did and said to get elected might smoothly lead to policy once in office. She knew how to look out for her husband's interests. But the experience of his first campaign for Congress, when his advisers had wanted him to steal the election if necessary, still cautioned her to put some distance between herself and his aides. “Bill sees the light and sunshine about people, and Hillary sees their darker side,” Clinton's 1978 campaign manager and chief of staff in his first term, Rudy Moore, said. “She has much more ability than he does to see who's with you, who's against you and to make sure they don't take advantage of you. He's not expecting to be jumped, but she always is. So she's on the defensive.” Later, her expectations invariably put her on the offensive.

All Bill had to do to coast to the governor's mansion, according to Morris's numbers, was keep the big lead he was starting with. Though Hillary's public contributions to the campaign were comparatively sedated—“She did not do so much on the campaign trail that year. A woman was expected to smile and not give speeches,” Morris said—for the first time she herself became an object of considerable enthusiasm by many voters inclined to support Bill. Already, the Rodham-Clintons were being perceived in the electorate and the press as a package and a partnership, smooth, smart, and idealistic. The promise of what they might be able to do together to improve the lives of Arkansas made some people's skepticism fade away. Others seemed frightened, or incensed.

As would increasingly become the case over the next twenty years, Hillary was seen by many as a polarizing figure. For the first time, she became the object of intense dislike and verbal abuse. Clinton's opponents criticized him for having a wife with a career—a lawyer to boot—who was so independent-minded that she wouldn't take her husband's name. The “name issue” would become one of the most talked about of the campaign. Men and women around the state argued publicly and privately about it. “People thought even his wife didn't like him enough to take his name,” said an acerbic political columnist for the
Arkansas Democrat-Gazette,
Meredith Oakley, who would make a name for himself writing about the Clintons. Within the campaign itself and among supporters, there were a number who urged Hillary directly to change her mind.

Despite the name issue, Clinton easily won the Democratic primary with 60 percent of the vote and was in a solid position to win the general election. In the final months before election day, Bill and his top campaign aides, Steve Smith, Rudy Moore, and Hillary, started planning Clinton's gubernatorial agenda. Hillary would perform the same role—formulating policy ideas and reviewing candidates for her husband's staff—that she would play during his transition from president-elect to president, with disastrous consequences. Increasingly, his staff would bear her imprimatur, to the point where it became impossible to see clearly where the influence of one Clinton began and the other ended.

Though Bill and Hillary were thrilled at the prospect of his imminent victory, two ominous events occurred in the final weeks before the election that would haunt them in the years to come. The first was a press conference by retired Air Force Lieutenant Colonel Billy G. Geren, who accused Clinton of dodging the draft during the Vietnam War. Geren, a Republican, charged that Clinton had obtained a draft deferment in 1969 by signing up for the University of Arkansas ROTC, but had broken this agreement by returning to Oxford University for a second year of study. Clinton denied that he received a deferment, saying that when he did not attend ROTC training his name had been placed back in the draft. Fortunately for Clinton in 1978, his history with the draft remained an issue in the governor's race for only two days.

Frank Lady, an evangelical Christian with backing from Moral Majority voters, meanwhile, became the first (but hardly the last, as Bill noted) Clinton opponent to attack Hillary both for being a lawyer (as Pat Buchanan would remind Republicans at their 1992 national convention) and keeping her maiden name. Here were some early traces of the vast right-wing conspiracy, fueled by Lady's charges that she had used her position as a corporate lawyer to win clients favors from the state government in which her husband served as attorney general.

In fact, the potential conflicts were obvious and almost unavoidable in a state in which a single law firm represented the enormously wealthy few (“the ArkoRomans,” in local parlance) and maintained close friend-and-family relationships with members of the political class. Hillary had done work for the Little Rock Airport Commission, which was headed by Seth Ward, whose son-in-law was Hillary's colleague Webb Hubbell. Hillary herself represented a subsidiary of the Stephens empire in court, despite the regulation of many of the parent company's assets by Bill's office. Meanwhile, he was receiving campaign contributions from Tyson, Stephens, and other ArkoRoman enterprises his office had to deal with.