The Patriarch (22 page)

—

T
hough Kennedy had scored a big hit with
The Trespasser,
he had no desire to go back to Hollywood and reestablish himself as a studio head. His tenure as a “picture man,” more than three and a half years, had outlasted his previous stints as bank examiner, bank president, assistant general manager at Fore River, broker at Hayden, Stone, and private investor. It was time to move on to something new.

There was, however, one piece of unfinished business:
Queen Kelly
. On returning to Hollywood in November 1929, he gathered his troops to try once again to rescue the project and recoup at least some of the money he had lent Gloria Productions, the company he had organized for Swanson when they went into business together.

He and his advisers entertained dozens of ideas for reshooting or re-editing the picture. They considered hiring new directors and screenwriters, adding slapstick comedy, or, to take advantage of Swanson’s newly discovered singing voice, converting von Stroheim’s dark melodrama into a breezy operetta. They brought in Franz Lehár, the composer of
The Merry Widow,
to write a “
Queen Kelly
waltz.” But with each attempt at rescue they were struck anew by the unwelcome reality that what
Queen Kelly
needed was an entirely new script and new director, and that was going to take hundreds of thousands of dollars. After spending the Christmas holidays in New York with his family, Kennedy returned to Hollywood in February. It would be his last trip for a long time. Rather than continue to pour good money after bad or take on more debt, Kennedy concluded that the project had to be scrapped. In mid-March 1930, it was announced that work on
Queen Kelly
would “not be resumed.”
¹⁶

Two months later, Kennedy announced that he had retired “from active management” of Gloria Productions. His affair with Gloria had also run its course.
¹⁷

In her memoir, published a half century later, Swanson would complain that he had run out on her and ended their relationship when she confronted him, sometime in the spring of 1930, about financial matters and insisted rather bitterly that his creative bookkeeping arrangements at Pathé and Gloria Productions had left him rich and her poor. Despite her charges—and the fact that there was probably some truth to them—Swanson stayed in touch with Kennedy and sought his advice in late 1930 about signing a picture deal with Joe Schenck at United Artists. When that deal went bad, she sought him out again, in October 1932. He made several suggestions to her, including that she hire someone outside United Artists to look over her contracts and verify her earnings: “It might help . . . if they thought someone connected with me was checking. . . . Maybe not. . . . Hope you won’t mind my suggestions. You probably have them all in mind, but I believed they might be helpful.” When in 1935 she (or Bette Davis) became interested in remaking
The Trespasser,
she telegrammed Kennedy to ask that the rights to the film be reverted to her. They exchanged several phone calls, though Kennedy complained that it was “harder to get [her private phone numbers] than the White House” number. She solicited his advice and help in getting an American visa for her ex-husband Henri and his new wife in 1940 and in securing a transfer for her son from one army company to another during World War II. Swanson would, in the years to come, send Kennedy photos of her grandchildren and condolence letters after the deaths of Joe Jr. and Kick. In 1950, after her career was rekindled with the success of
Sunset Boulevard,
she and her advisers consulted Kennedy and his staff in New York on a variety of items, including a proposal for a Gloria Swanson fashion line, a
Sunset Boulevard
sequel, and help on her tax returns.
¹⁸

Only in the late 1950s, pursued by tax bills, did she turn on her former lover and business partner. Struggling to find new sources of revenue to pay her debts, her lawyer came up with the idea of releasing her old pictures—perhaps for television—and completing and reissuing
Queen Kelly.
In an attempt to figure out the “cost basis” of the picture for tax purposes, Swanson’s lawyer contacted Kennedy’s office to find out if he had taken a “tax loss” on
Queen Kelly.
If he had not, Swanson might still be able to do so.
¹⁹

After some delay, Kennedy responded by writing Swanson and belittling the attempt to rescue
Queen Kelly
. “Now, I am not the one to say that anything isn’t possible, but I wouldn’t bet 10 cents in this new proposition.” Still, he made a few suggestions as to how to raise money to complete the film—and even offered “to get some bank to loan the money.” As far as the tax losses, he reported that his accountant didn’t know if any had been taken, but even if they had not, the statute of limitations forbade Swanson from taking them now.
²⁰

Swanson, distressed by Kennedy’s lack of enthusiasm and inflamed by her lawyer’s charge that Kennedy had cheated her by taking her tax credit for
Queen Kelly,
drafted a letter, which she may or may not have sent: “It’s about time (the last lap of our lives) that the truth concerning the most important matters in my life had God’s spotlight turned on them, for it is possible that they have contributed to the fact that I have had to continue to work instead of relaxing as you have so many times advised me to do. . . . You know as well as you know your right name that every penny spent on ‘Kelly’ was returned to you
out of the profits
of ‘the Trespasser.’ . . . Moreover, you alone benefited taxwise for I certainly did not.” She blamed Kennedy entirely for her current financial state. He had stolen from her during the brief time they were in partnership together by billing her wrongfully for expenses he had incurred—for travel, entertainment, her bungalow, and, most outrageously, the car he had given actor Sidney Howard as a reward for suggesting the title
What a Widow!
for one of her films. In the early 1930s, after promising to lend her money if she needed it, he had “proceeded to evaporate into thin air . . . leaving me with no alternative” but to give up her only asset, her United Artists stock.
²¹

Swanson claimed in her 1980 memoir that she had trusted Kennedy with her career and her finances and asked no questions. If that was true, she had been a royal fool. Kennedy was in the picture business to enrich himself—and his family. He looked after his interests and expected those he worked with to look after theirs. He could not be faulted if he was better with figures and corporate structures than those he did business with. He had structured his deal with Swanson and Gloria Productions so that he and Pathé, the studio he controlled and in which he had a major investment, would come out ahead, no matter what happened.

What galled Swanson most was Kennedy’s blithe dismissal of any responsibility for the sorry financial state he had left her in. After having refused for decades to admit to herself that she had been bested in their business—and personal—relationship, Swanson lashed out at her former partner and lover, attributing his reprehensible behavior to his Catholicism. He had cheated her without remorse because he knew his God would absolve him. “Speaking of being absolved,” she wrote in the letter she may or may not have sent him, “does one really set oneself free from one’s conscience (on the assumption that everybody possess one) by confession? There is only one God—and Joseph—he is mine as well as yours, though I have not contributed money to his glorification, I have paid for my mistakes (by the sweat of my brow rather than another’s) and my sins, I hope, by my own suffering rather than Christ’s.”
²²

Swanson was wrong. If Kennedy had taken advantage of her financially and felt no guilt about it, it was not because he was a Catholic, but because he was a businessman.

—

W
ith
Queen Kelly
scrapped, his business and personal ties with Swanson at an end, and FBO sold out from under him, Kennedy’s only institutional connection to the picture business was his position at Pathé. The studio was still turning out pictures, but for how long nobody dared guess. The insoluble problem Pathé faced was that it owned no theaters in which to exhibit its films, and after the October 1929 crash, there was not much chance that it would find the wherewithal to purchase any. Kennedy, though nominally in charge of the studio, had paid it less and less attention in recent months. In his absence, the studio’s chances of survival had gone from bad to much worse.

In early December 1929, a fire destroyed the Pathé sound studios in New York. Ten people lost their lives, the newspapers cried scandal (there were no sprinklers installed), and production on new films was halted. That same month, Kennedy discovered that his plan to make Pathé talking films in French, German, Italian, and Spanish to avoid the heavy tariffs placed on American-made products was also going nowhere, in large part because in the aftermath of the stock market crash, it was impossible to raise capital to invest in the project.

On May 7, 1930, Kennedy announced that he was retiring as the active manager of Pathé but would retain his position as chairman of the board of directors. The reason he gave for his retirement was that he had decided to return to banking with Elisha Walker, who had been named chairman of Transamerica, the investment banking conglomerate organized the year before by the merger of the Bank of America and Blair & Co.

In early summer, Kennedy and Walker opened negotiations with Hiram Brown, the president of RKO, which was the only company large enough and rich enough to buy Pathé and the only one that required additional studio space. Kennedy valued Pathé’s assets at $12.7 million, which included $6 million for its stake in the DuPont-Pathé Film Manufacturing Corporation, which produced raw film stock. Hiram Brown recommended to David Sarnoff that instead of buying the entire company for $12 million, as Kennedy proposed, RKO should purchase its studio, stars’ contracts, and newsreel operation for $5 million.
²³

A deal was struck in early December. The purchase price was large enough to cover the redemption of the company’s 7 percent bonds, but not to buy back its common or preferred stock. The stock prices fell immediately and dramatically: the common, which had been priced at 1
¹
/
₉
at the end of the year (12 percent of its pre-crash price of 9), to 25 cents; the preferred from 2
⁷
/
₈
to 1
¹
/
₈
. Kennedy had disposed of his stock before the October 1929 crash and his bonds in August and September 1930, so he was not affected. Elisha Walker, whose investments were in bonds, not stock, would be fully compensated. “Deal signed six forty-five tonight,” Kennedy wrote Walker on December 4, 1930. “Think it magnificent one for us. I am happiest because I know you will like it.”
²⁴

“I can’t tell you what a relief it is to me to get this cleaned up,” he wrote his friend and former business associate J. J. Murdock five days later. “It was so loaded with dynamite over the last three or four years that anything could have happened at any time. I think we have worked out a deal for the Pathé security stockholders which can’t help but make them all more than satisfied. I believe this has probably taken another five years off my life. I am going to stay around until the Stockholders’ Meeting in January and if there is anything left of me then, I am going away for three or four months.”
²⁵

Kennedy and his associates might have been delighted with the RKO deal, which protected their investments in bonds. Not so the thousands of stockholders who were left holding near worthless Pathé common and preferred shares. As chairman of the board and Pathé’s most visible executive officer, Kennedy was bombarded with angry letters, many of them handwritten and addressed to him personally, such as the ones from Margaret Walsh of Brighton and Anna Lawler of Jamaica Plain, each of whom claimed that she had bought Pathé stock because Kennedy was involved with the company. “Knowing your father, the late P. J. Kennedy [and Honey Fitz],” Anna Lawler wrote, “I put my money into your enterprise, only to see where you are willing or trying to pass it over to another concern for about nothing. This seems hardly Christian-like, fair or just of a man of your character. I wish you would think of the poor working women who had so much faith in you as to give their money to your Pathé.”
²⁶

Kennedy thanked Margaret Walsh—and the others—for their letters but emphasized that as an inviolable practice, he “never urged any of my friends to buy securities of any company in which I may be interested. . . . I honestly believe that this proposed trade will be of great benefit to the corporation and I urge you to send along your own proxies with those of your friends.”
²⁷

Other communications were not nearly as polite as Walsh’s and Lawler’s. Some stockholders threatened to sue unless the company bought their stock from them, which it did in some cases, on the advice of its attorneys, Cravath, de Gersdorff, Swaine & Wood. A few threatened violence. “We are not going to plug you or we are not going to stick you in the back, but we are going to cut your throat from ear to ear as a warning to others what pulls the same deal. Now you may go to Florida or Europe or any other place but we will get you anyway when you least expect it.”
²⁸

On January 5, 1931, “at a boisterous meeting, at which,” according to the
New York Times,
“heavily armed private detectives were unable to preserve order, although they did succeed in preventing physical violence,” the Pathé stockholders gathered to consider the RKO deal. The deal’s opponents were livid beyond words at the way Pathé officials had “‘rushed stockholders off their feet’ to induce them to sign proxies.” When Joseph P. Kennedy, considered by most to be the evil mastermind of the deal, “entered the room, he was greeted with epithets from minority stockholders, who questioned and heckled him when he tried to reply to them. The shouts of the irate minority carried through the partitions into the elevator corridor.” Kennedy was asked directly “if it were not true that directors of Pathé were also directors of R.K.O., implying that the sale had been engineered by an interlocking directorate. Mr. Kennedy said that some directors, but not all, were on the boards of both companies.” He answered as many questions as he thought he had to, then made his exit before the balloting began.
²⁹