by David Nasaw
His decision to take the third option and embark on a new and massive jobs or “work relief” program was intended, in part, to shift attention—and support—away from the grandiose schemes for sharing the wealth and ending unemployment tossed onto the public agenda. Father Charles Coughlin, the Detroit radio priest, had by early 1935 attracted a loyal following of nearly forty million radio listeners and enrolled eight and a half million “persons qualified to vote” for his National Union for Social Justice, which advocated higher taxes on the wealthy, a guaranteed annual wage, the nationalization of public utilities, protection for organized labor, and much more. Dr. Francis Townsend of Long Beach, California, nearly seventy now, was listened to by millions more who believed that his plan to give pensions to every American sixty and over who promised to retire would solve poverty and unemployment. Roosevelt’s most dangerous rival in 1934 was neither Coughlin nor Townsend, popular as they were, but Senator Huey Long of Louisiana, who had his own “Share the Wealth” program, clubs across the country, a mailing list of seven and a half million Americans, and a profound understanding of how elections were fought and won.
Early in 1935, Roosevelt convened a meeting to discuss a new work relief effort and public jobs program. In attendance were Harold Ickes, his secretary of the interior; Harry Hopkins, who ran the Federal Emergency Relief Administration; and Henry Morgenthau, secretary of the treasury. Though Kennedy was not a member of the cabinet or director of any of the New Deal relief agencies, he was invited to the first planning sessions. According to Harold Ickes, Kennedy was initially “quite cold on the matter of a public works program,” but during the course of discussion he was “swung over and favored such a program.”52
In January 1935, Roosevelt asked Congress for several billion dollars to put Americans back to work. In April, Congress gave him what he had asked for. Kennedy was called to the White House to advise the president on how to spend the money. “The President has just appointed me to the small Executive Committee for the spending of the $5,000,000 relief fund,” he wrote Jack on April 26, 1935. “I don’t know how in heaven’s name I am going to find any time, but I will stick it out as long as I can. It looks very doubtful, however, if I will be able to finish this job by the first of July,” the goal he had set himself.53
Having secured the funds he needed for his new work relief program, Roosevelt required both a plan and an administrator to implement it. Harry Hopkins and Harold Ickes were the principal candidates and rivals for the job. Morgenthau suggested that to avoid internal bickering between the two, Roosevelt appoint Kennedy. Kennedy turned down the proposal because he did not want to be put in a position where he would have to work with “Honest Harold” Ickes. At age sixty, the crusading midwestern Republican whom Roosevelt had made his secretary of the interior and then entrusted with the Public Works Administration was an indefatigable infighter, smart, ambitious, vain, and incorruptible. Though Kennedy and Ickes would feign friendship at times, neither had any use for the other. Kennedy thought Ickes a duplicitous, gossiping, fuzzy-minded, antibusiness radical. Ickes despised and distrusted Kennedy as a confidence man and stock swindler. He was also a bit jealous of Roosevelt’s affection for and seeming trust in a man he, Ickes, detested.54
A new relief program was a necessity, but it was not in itself going to steal the thunder from the president’s critics. The president had to also demonstrate that he believed in sharing or redistributing the nation’s wealth. The only way to do this was by increasing taxes on inheritances and the income of the wealthiest Americans. Knowing the opposition such a measure was bound to elicit and hoping to defuse it, Roosevelt invited Edmond Coblentz, William Randolph Hearst’s senior editor, to the White House. Over the course of a four-hour cocktails/dinner discussion, Roosevelt explained patiently but passionately to Coblentz that he was fighting not just “Communism [but] Huey Longism, Coughlinism, Townsendism. I want to save our system, the capitalistic system; to save it is to give some heed to world thought of today. To combat . . . crackpot ideas, it may be necessary to throw the forty-six men who are reported to have incomes in excess of $1,000,000 a year to the wolves. In other words, limit incomes through taxation to $1,000,000.” Hearst was one of those forty-six men whose income was about to be “limited.”55
To emphasize that the tax message he was sending to Congress was not a radical but a conservative measure intended to save the capitalist system from its enemies, Roosevelt sent Kennedy to meet with Hearst. Kennedy spent a week at San Simeon in early May, the longest time he had been out of Washington since his Christmas vacation with his family in Palm Beach. Whatever he said did the trick. Hearst cabled his editors across the country asking them to “please hold up articles critical of administration for a while. . . . I think we would be fairer to administration and also more effective in our criticism if we discriminated more and also if we had commendation for some measures.” One of the administration measures Hearst identified as “beneficial to the country” and deserving commendation was the “securities act” that Kennedy administered.56
Franklin Roosevelt was so delighted with Kennedy’s success at San Simeon that he offered to bring him back to Washington “on Battleship through Panama Canal. Happy Landings.”57
There was, unfortunately for the president, a limit to the magic Kennedy could work. The Hearst papers held their fire for a month. Then on June 19, 1935, after Roosevelt had formally requested that Congress raise tax rates on incomes over $1 million, inherited fortunes, and large corporations, Hearst went back on the attack. “President’s taxation program is essentially Communism,” he telegraphed his editorial writers across the country. “It is to be sure, a bastard product of Communism and demagogic democracy, a mongrel creation which might accurately be called demo-communism, evolved by a composite personality which might be labeled Stalin Delano Roosevelt.”58
The Roosevelt administration, with Kennedy in the thick of it, spent the spring and summer of 1935 designing and implementing its $4 billion work relief program, preparing new tax legislation, watching anxiously as the Wagner Act (which provided workers with the government-sanctioned-and-protected right to organize unions) wound its way through Congress, waiting for the Supreme Court to issue its decision on the legality of the National Recovery Act (which it did on May 27, declaring it unconstitutional), and lobbying for a public utility holding company bill.
Kennedy was involved in all these projects, but the one that took the most time and caused the most trouble was the public utilities bill, an essential part of the administration’s rather dramatic turn to the left. The aim of the legislation was to break up the large holding companies that together controlled three quarters of the nation’s privately owned electricity-generating industry. The moment the bill was introduced in Congress in February, Wall Street and the utility companies had launched a mammoth lobbying and misinformation campaign against it, claiming that the legislation, if approved, would halt investment, curtail future innovations, raise consumer costs, and lead to government ownership of the utilities and the ruin of the millions of Americans who had invested their life savings in utility holding company stocks.
Louis Howe, whose job it was to protect the president politically, asked Kennedy if it was true, as the lobbyists claimed, that five million Americans owned utility company stock. Kennedy thought the number too high but agreed that Americans who had invested in utility stocks were right to worry about the legislation. That, however, was not sufficient reason not to go ahead. “After all, the total number of investors is so much smaller than the total number of the public affected by unjust public utility rates that the interest of the latter must prevail. It goes without saying that greater violence would be done the public as a whole if utility holding companies were allowed to continue as at present than that being done to investors by the proposed legislation.”59
Washington was inundated by more utilities lobbyists than there were senators and co
ngressmen combined. The public utility holding company bill was furiously lobbied, amended, and reamended all that spring and into the early summer of 1935. The bill that was passed by the Senate in June called on the holding companies to voluntarily restructure themselves into regional operating entities. To provide an incentive for such restructuring, the bill contained a “death sentence” provision mandating that companies that had not been so restructured by January 1, 1940, would be dissolved. Though Kennedy privately thought the “death sentence” a bit harsh and confrontational, what concerned him more was that the SEC was to be assigned responsibility for implementing it—this at a time when it was already overburdened with administering the Securities Act of 1933 and the Securities Exchange Act of 1934. “The four of us [Pecora had resigned at the end of his term and no replacement had been named],” he wrote Sam Rayburn, who was steering the legislation through the House, “have been carrying the load here for the last six months and we frankly are all shot to pieces, and need to get some rest before we take on this terrific new job.” He asked Rayburn to amend the bill so that it would become effective on December 1, giving the SEC thirty extra days to prepare. “I just do not see how we can start off by the first of November.”60
Worse was yet to come. Under pressure from the utility company lobbyists and business interests, Rayburn was forced to amend the bill in the House, replacing the mandatory “death sentence” with a watered-down provision that gave the SEC sole responsibility for determining whether the “public interest” was served by permitting a holding company to control two or more “integrated” systems in noncontiguous geographic areas. Kennedy was outraged. As he wrote the president and Burton Wheeler, the sponsor of the bill in the Senate, there were two essential problems with the amended House bill. The “administrative burden” imposed on the SEC in determining whether to dissolve a holding company was “overwhelming.” Even more critical, however, he thought it exceedingly “poor policy to vest in any one group of men [the SEC commissioners] the tremendous responsibility involved in this grant of power. . . . In a matter of this kind where there are at stake the interests of millions of people, investors, and the consuming public alike, I do not believe that any Commission should be given unfettered discretion to decide matters of such transcendent importance.”61
The debate over the public utility holding company legislation and the “death sentence” continued through the summer, to Kennedy’s dismay. He had hoped to get away to Hyannis Port after July 4 but found himself interminably tied up in Washington. “I am spending the weekend here working on the Utility Bill,” he wrote Swope on July 13, 1935. “Anybody could have made a lot of money betting me at odds of 100 to 1 that I would spend a summer weekend in Washington.”62
On July 11, while he was in Washington working on the utility bill, Roosevelt cabled him from Hyde Park with yet another task: “A lot of business men feel that not the least important block to recovery lies in excessive steel prices. Do you want to do a little quiet looking into this for me?”63
Having now spent the largest part of two successive summers in Washington, knowing that come fall he would have to put into operation the public utility legislation, bone weary from having worked twelve-hour days and six-day weeks for the past year, Kennedy decided to resign. After visiting Hyde Park to tell the president of his plans, he delivered his formal letter of resignation on September 6, 1935. He was, he wrote the president, leaving government service for “personal reasons.” He had agreed to serve for only a year but had remained in place for fifteen months. He was resigning now so that his successor would have ample time to prepare for the implementation of the new Public Utility Holding Company Act.64
Franklin Roosevelt had one more favor to ask. Concerned that Father Coughlin, whose radio audience was growing larger by the day, was moving closer to an alliance with Huey Long in preparation for the 1936 elections, the president asked Kennedy to phone Coughlin and tell him the “boss” wanted to see him. Kennedy placed the call while he was with Roosevelt at Hyde Park. Coughlin agreed to come at once, boarded the overnight train from Detroit, and arrived in Albany about four the next morning. According to Coughlin, Kennedy picked him up at the station in his Rolls-Royce and drove him to Hyde Park. When the president awoke later that morning, he greeted both men warmly, then, with a smile, “told Joe to ‘go look at the pigs’—he didn’t have any pigs of course,” Coughlin later told a reporter. “It was just a little joke he used to make. Joe laughed and went out.” Coughlin then presented the president with evidence he said he had received from his bishop that officials in the Roosevelt administration were “helping the Communist cause overseas.”
Roosevelt listened intently but did not take the matter nearly as seriously as Coughlin had hoped. He didn’t have to. That morning, he had learned that Huey Long had died in a Louisiana hospital after being shot in the abdomen in the corridor of the Louisiana Capitol. As a Canadian and a priest, Coughlin could not run for president and was thus rendered infinitely less of a threat to the president with Long out of the picture.
At the end of their conversation, Roosevelt asked Father Coughlin and Kennedy “to stay for dinner,” but Coughlin replied that the two men had “already made plans to drive up to the home of a friend of ours in Great Barrington. On the way up I told Joe most of the story, and when we got there Kennedy asked the butler to bring him some writing paper . . . and wrote out his resignation as chairman of the SEC.”65
Most of the story rings true, though the letter of resignation Coughlin claims Kennedy wrote in Great Barrington had been delivered earlier. Coughlin may have misremembered the details. More probably, Kennedy had implied that he was so concerned with Roosevelt’s move to the left that he was resigning because of it.
Whatever he may have intimated to Coughlin or, later, to other Roosevelt critics, Kennedy was not resigning because of any policy differences, but because the thought of continuing in place, and gearing up to administer yet another congressional mandate, the Public Utility Holding Company Act, was more than he could stomach. Drew Pearson and Robert Allen, in their “Washington Merry-Go-Round” column, insisted that in the end it was boredom as well as overwork that had forced his hand. He was resigning because the SEC was “functioning smoothly. ‘And,’ says Joe, ‘it is darn boring to sit around deciding whether a clerk receiving $3,200 should now get $3,600.’”66
The news of his resignation prompted an outpouring of praise for the man, his family, and the swell job he had done. In its July 22, 1935, cover story on Kennedy, Time magazine had already crowned the SEC with “the distinction of being the most ably administered New Deal agency in Washington.” Reporters and editorial writers from around the country agreed. “The financial community’s high esteem for Mr. Kennedy,” the Literary Digest opined on August 24, 1935, “is remarkable, perhaps unique. It involves a considerable measure of gratitude, since it is felt that his understanding attitude has made the rigors of SEC control not only bearable but, in many respects, acceptable.”67
“He was,” syndicated conservative columnist Frank Kent reported on September 25 in the Wall Street Journal and elsewhere, “more consistently and unanimously praised by the press than any public official of his time. . . . Mr. Kennedy happened to be in a class entirely alone” among Roosevelt appointees and supporters. “He stood out among these giddy New Dealers and carefree money-scatterers like a lighthouse in a fog. . . . Instinctively, Mr. Kennedy, fond as he was of Mr. Roosevelt personally, did not belong to the New Deal crowd, did not pretend to be one of them, did not believe in the New Deal hokum.”68
His greatest success, as the Kent article demonstrated, had been in maintaining and promoting, with the help of influential friends like Arthur Krock, his unique political persona as the plainspoken, always honest, nonideological, nonpartisan businessman who had come to Washington to do a job for the president and, having completed it, was leaving. Unlike other members of the administra
tion team, he had refrained from commenting publicly for or against the programs and proposals that characterized Roosevelt’s turn to the left: the Wagner Act, the income tax proposals that had so angered Hearst, the massive deficit-spending work relief programs, or the “death sentence” provision of the public utility holding company legislation that he was rumored to oppose. If his conservative friends took his silence as disagreement with the administration, that was all to the good. It maintained his standing as their liaison to the White House, while keeping open the door to his return to Washington in some other role.
Thirteen
REELECTING ROOSEVELT
Kennedy sailed for Europe on the Normandie on September 25, 1935, taking Jack, Kick, and Rose with him. Jack would remain in London to study with Harold Laski, as his brother had. Kick was on her way to a convent school at Neuilly, outside Paris. Rose had shopping to do.
Unwilling to abandon his role as an administration insider, Kennedy, on resigning his post at the SEC, had lobbied for a new and special assignment from the president. He intended to spend that fall negotiating with officials in the European capitals for the registration of foreign stocks and bonds on the New York Stock Exchange. Befitting his position as presidential emissary, he was preceded by letters to the American ambassadors in Great Britain, the Netherlands, Germany, Italy, and France, asking them to arrange meetings with “one or two of the important people” in government and “also those in opposition.” Arthur Krock wrote the New York Times bureaus and reporters, asking them to assist Kennedy as well.1