The Patriarch (26 page)

Moley did not accept Kennedy’s offer, but he stayed in Washington long enough to recommend that Kennedy join him as a member of the delegation to the London Monetary and Economic Conference, scheduled to open on June 12. James Warburg, the young New York banker from the famous banking family whom Roosevelt had appointed to oversee conference planning, vetoed Moley’s suggestion outright. He wanted no donors, no Wall Street speculators, and certainly no one like Kennedy, who, he had learned from businessman Harrison Williams, had been “spreading malicious stories about the President.” When Moley raised Kennedy’s name a second time, Warburg declared firmly that he would refuse to go to London if Kennedy was part of the delegation.
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S
hut out of Washington, Kennedy returned to doing what he did best: making money on Wall Street. The Twenty-first Amendment (repealing Prohibition) had been approved by Congress during its lame-duck session but would not take effect until it had been ratified by specially called conventions in three quarters of the states. No one had any idea how long this was going to take. In the meantime, there was money to be made by those prepared to act quickly.

In June 1933, Kennedy joined a syndicate organized by Elisha Walker with Kuhn, Loeb; Lehman Brothers; and Walter Chrysler of the Chrysler Corporation to purchase sixty-five thousand shares in the Libbey-Owens-Ford Company, with options for tens of thousands more. With the repeal of Prohibition now set in motion, investors were lining up to purchase “repeal” stocks. One of the most popular was Owens-Illinois, which made glass bottles. Libbey-Owens-Ford was an entirely separate company, which manufactured plate glass for automobiles, not bottles, but its name was close enough to the bottle glass company to fool unwary investors.

The syndicate, of which Kennedy was the largest individual investor, placed its Libbey-Owens-Ford stock orders in the hands of two pool managers, who divided them into several parcels and began trading them wildly on the New York Stock Exchange. As one of the pool managers later admitted under questioning by Ferdinand Pecora before the Senate Committee on Banking and Currency, the enterprise was constructed on the correct assumption that if the pool managers pumped up volume by buying and selling shares to one another, investors would take notice and start buying shares of Libbey-Owens-Ford on the mistaken belief that they were buying shares of Owens-Illinois, the bottle manufacturer.
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Kennedy profited enormously from the stock pool and invested some of his profits in Owens-Illinois. He also bought sixty-three hundred shares of National Distillers at an average price of $8.64. By year’s end, after the repeal of Prohibition, National Distillers was selling at $26 a share.
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National Distillers specialized in blended ryes and bourbons, which could be produced domestically, as could gin and, of course, beer. Scotch whiskey would have to be imported.

There was no shortage of Americans poised to compete for the right to import Scotch whiskey as soon as it was legal to do so. But none had the advantages Kennedy enjoyed. He was known in London banking circles as the American who had purchased and revitalized the British film company FBO. He was fabulously wealthy, with abundant cash to spend. He was a brilliant businessman and a consummate salesman and promoter who could be counted on to get the whiskey into the right hands—for the right price. And perhaps most important of all, he had connections to the Roosevelt administration, which would determine import duties and issue licenses.

In the fall of 1933, Kennedy sailed to London to negotiate an agreement with the Distillers Company, which had a near monopoly on aged Scotch. To demonstrate the strength of his Washington connections, he brought with him the president’s oldest son, Jimmy. “I did help him get the business going,” Roosevelt recalled in his memoirs. “But I did not expect to become part of the business. . . . Joe and I never had an agreement to that effect.” What Jimmy, who was starting out in the insurance business, got in return for his help were the contracts to insure the Distillers Company imports from fire (always a great risk in shipping huge quantities of alcohol).
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In early December, Kennedy was awarded contracts by the Distillers Company to import Haig & Haig and Dewar’s Scotch whiskey and to distribute Gordon’s gin and some secondary liquor brands that were imported in bulk, then bottled in Linden, New Jersey. Kennedy called his new company Somerset Importers, borrowing the name from the Somerset Club, the “proper Bostonian” establishment in the city he had left five years earlier.
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On December 5, the Prohibition amendment was fully ratified, and the Federal Alcohol Control Administration began issuing new licenses for the import of wines and spirits. One of them went to Kennedy’s company. Days later, Somerset Importers was granted one of the first state “wholesaler’s license” to sell in New York.

The liquor would soon come flowing in and with it the profits. In 1934 alone, Somerset would import some 130,000 cases of Scotch, with gross sales of $3 million and gross profits of $536,000 (equivalent to $8.73 million in purchasing power today). By 1936, profits had doubled to more than $1 million. For the fiscal year ending December 31, 1940, Paul Murphy, who oversaw Kennedy’s operations in his New York City office, conservatively estimated Somerset net (not gross) profits at “approximately $560,000 to $600,000,” somewhere around $9 million today. Until 1946, when Kennedy sold the company, Somerset would function as the family cash cow.

To protect his Somerset income from taxation, Kennedy established nine new “irrevocable trusts” on November 28, 1936, and transferred into them ownership of most of his Somerset stock. Because Rose and his children were already comfortably provided for by the 1926 trusts, the new ones were designed with the grandchildren in mind. The boys could begin to withdraw annual income from the trusts when they reached the age of thirty-one (Joe Jr., the eldest, would not reach thirty-one until 1946); the girls would have to wait until the age of forty-one. The corpus of the trusts would be distributed to the grandchildren on the death of their parents.
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ith Rose vacationing in Europe for much of the fall of 1933, Kennedy stepped in to watch over the older girls, Kick and Eunice. Kick, small, brown-haired, with a gorgeous dimpled smile, full of energy, and always the most popular girl in her class, had been transferred from the Riverdale Country School to the Sacred Heart Convent at Noroton that fall. “She was quite pretty,” Rose remembered, “and was getting altogether too popular with boys, which she enjoyed. She was on the telephone with them for hours at a time and was being distracted from her schoolwork and other duties. . . . My answer to the situation was to send her away to school.”
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Kick, with Joe Jr., Jack, Rosemary, and Eunice, spent her Christmas holidays with her father in Palm Beach. She had no trouble adjusting to the delightfully schizophrenic life she now lived, shuttling back and forth between the highly disciplined, tightly scheduled, cloistered life of the convent and the almost no-holds-barred sociability of the clubs and house parties in Palm Beach. “Now I suppose you are glad you have me stuck back behind convent walls,” she wrote her father after returning to the convent in January. “I am all safe and sound now and can’t go skipping around to ‘El Studio’ or the ‘Everglades,’ etc. . . . I am already counting the days until our week-end Feb. 16. In fact the whole school is. And then spring vacation and Palm Beach again. Thanks loads for the wonderful vacation Daddy. It was the best one I have ever had. Each one gets better. I hope we go to Palm Beach next Xmas again in fact anytime is alright with me. Jack confided to me that he would rather go to Palm Beach than stay in Bronxville. So I guess you will have no peace in Florida any more. I feel very rested and everyone thinks I look very well so a few parties never did anyone any harm.”
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Kick wouldn’t have long to wait. In January, she had her appendix removed, and Rose took her to Palm Beach to recuperate along with Eunice, who had been ill most of the fall and suffered from chronic stomach problems (she would later be diagnosed with Addison’s disease).

Kennedy’s major concern was Jack, who was now at Choate. The problem with the boy, his father was convinced, was that he was too lighthearted, too whimsical, and too smart for his own good. Kennedy had tried everything—as had Jack’s headmasters, masters, tutors, teachers, and housemasters—but failed to turn him around. In November 1933, he wrote Joe Jr. and asked him to intervene. Kennedy had just returned from Choate, where he had watched “Jack play football with the Juniors. . . . Jack plays tackle and played very well, but still with that careless indifference of his. . . . I wish you would write Jack and really set forth some ideas that will give him a sense of responsibility. . . . It will be too bad if with the brains that he has he really doesn’t go as far up the ladder as he should. If you can think of anything that you think will help him, by all means do it.”
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Kennedy also wrote George St. John, the Choate headmaster, who he feared wasn’t pushing Jack hard enough. Jack was doing well in those subjects he cared about, particularly history, but “the happy-go-lucky manner with a degree of indifference that he shows towards the things that he has no interest in does not portend well for his future developing. I realize that you have many problems and that each parent’s problems seems to him to be the most important one of the day. Nevertheless, I do wish you would give this some extra consideration to see if we can’t devise some method of developing Jack’s sense of responsibility.”
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St. John replied with an overlong but artfully crafted letter. The gist of it was that he was not “seriously uneasy or worried about Jack. The longer I live and work with him, and the more I talk with him, the more confidence I have in him. . . . Jack has a clever, individualist mind. It is a harder mind to put in harness than Joe’s—harder for Jack himself to put in harness. . . . A more conventional mind, and a more plodding and mature point of view, would help him a lot more right now; but we have to allow, my dear Mr. Kennedy, with boys like Jack, for a period of adjustment.” The headmaster intimated that Kennedy might be expecting too much of his second son. For the moment, at least, Jack was working hard in plane geometry and in French, but with little effect. It was possible, the headmaster suggested, that Jack might not be “as able academically as his high I.Q. might lead us to think. . . . I think we over estimate Jack’s present academic ability.”

St. John suggested that the father might be contributing to the boy’s problems. “I asked Jack if he had a good chance to talk with you when you were here, and he said that there really wasn’t very much time. He said you had more time to talk with some of his Masters than with him, and that when you talked with him you were of course ‘rather peeved.’ Jack said there wasn’t very much time to talk things over. That may or may not be so, my dear Mr. Kennedy. It may be a young boy’s point of view; and he may be attributing his embarrassment and inability to express himself to some other cause—especially to a lack of time.” But whatever the case, Kennedy had to pay more attention to Jack. “(1) Follow him up and check him up all the time for the best work he can do; (2) Treat him as man to man, and show him that we have confidence in him. I believe Jack will respond. . . . In all our work with Jack, we ought to show absolute confidence, and absolute vigilance; and if we are as good parents and teachers as we ought to be, I’ll bet Jack will prove to us that he is the right kind of person, and that we don’t need to worry about him.”
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As had happened before—and would happen again—Jack Kennedy was rescued from the plight of overexpectations when, in early February 1934, he collapsed and was rushed to the New Haven Hospital with a nasty case of hives, a frighteningly low blood count, and a very high temperature. Kennedy took the train north from Palm Beach to be with his boy, leaving Rose behind. On arriving, he “called in a conference of Boston doctors and doctors from Mayo Clinic” to examine the boy, but they could reach no consensus on what ailed him: he was variously diagnosed as suffering from leukemia, hepatitis, and “agranulocytosis, a rare disease that impairs the production of granulated white blood cells by bone marrow.” Fortunately, his condition improved as magically as it had developed, but it left him jaundiced and seriously underweight. It was agreed that he should spend the rest of his fall semester in Palm Beach, regaining his health and, with the help of private tutors, keeping up with his schoolwork. All past grievances were forgotten—by headmasters and parents. “He has been having a very miserable time,” Kennedy wrote Joe Jr., “and has handled himself very well. . . . The doctors have very definitely told me that he has got to go very light on all athletics for at least six months, in order to get his strength back, but he is a good sport about it and seems pretty well reconciled.”
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I
n his First Hundred Days, Franklin Delano Roosevelt, with a large Democratic majority in Congress, passed a great many bills with relatively little criticism.

By November 1933, a year after his election, the honeymoon was over. Critics from the press, the Republican Party, the banks, and the business community accused him of being too far to the left of the rest of the country and under the control of the radical left elements in his administration. His opponents, according to
New York Times
columnist Arthur Krock, believed that he had “definitely decided that State collectivism is the only solution of the nation’s problems; that he will attempt to end the profit system, as we have known it; that the government, so long as controls it, will take control of all capital investment. . . . These same people insist that the President intends to introduce even more radical ideas and, by 1936, as the head of an extreme Left, set up the equivalent of a Labor Government in the United States.” Krock did not discount such scenarios as being either far-fetched or conspiratorial. On the contrary, he buttressed them by pointing out that since his inauguration, Roosevelt had distanced himself from the conservative thinkers, bankers, and businessmen he had been “in close intimacy with” as a candidate. Joseph P. Kennedy was identified as among those former advisers who “rarely enter his office doors.”
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