Real Lace

by Birmingham, Stephen;

  Chapter 16

  WHY DON’T THE NICE PEOPLE LIKE US?

  One current reason for the pronounced antipathy, among such families as the Murrays and the McDonnells, toward the entire Kennedy clan is the family’s pompous habit of referring always to the late John F. Kennedy as “The President,” as though he were the only one. But another has been that the older-established families considered the founder of the Kennedy fortune, Joseph Patrick Kennedy, a rogue and a scoundrel and, in his business dealings, a double-crosser. Born in East Boston in 1887, the son of a saloon keeper who had elevated himself—though just barely—from the “shanty” Irish status of his immigrant father to where he might have been considered, by Boston’s Protestant elite, “lace curtain,” young Joe Kennedy early showed himself to be a man of restless drive, energy, and ambition, for whom business scruples came second. From a relatively humble position in the Boston office of Hayden, Stone & Company, Joe Kennedy had been able, by 1922, to go into business for himself behind an office door that proclaimed somewhat grandly—and pretentiously—”JOSEPH P. KENNEDY, BANKER.” He rapidly gained a reputation as an aggressive stock manipulator and, two years later, he was ready for New York, “where the real money was.”

  On Wall Street, Joseph P. Kennedy, Banker, was at first placed in the category of such other Irish upstarts as Mike Meehan and Bernard E. Smith. Like others of his generation, who had little education, no social background, but no end of determination to succeed, Mike Meehan got his start by becoming the helpful friend and useful errand boy to Old Guard members of the Establishment. Meehan had started out as a theater-ticket broker, and by wangling aisle seats at Broadway hits for the partners and their wives of such eminent firms as Morgan & Company, Lehman Brothers, and Goldman, Sachs. The partners would not have entertained a Mike Meehan at their dinner tables, but they rather liked his brash and spirited ways, and clearly the lad was smart. When Meehan expressed an interest in becoming a stock trader, several of these men were willing to help him out and to set him up on the Curb Exchange. Meehan turned out to be as clever at cornering stocks as he had been at securing tickets to musicals, and, within two years, he had a seat on the New York Stock Exchange alongside the Morgans, Whitneys, Rockefellers, and Lehmans. Meehan originated the idea of placing brokerage offices on the decks of ocean liners, and his firm established them on the Bremen, the Leviathan, and the Berengaria. By 1929 Mike Meehan was living in a floor-through apartment at the Sherry-Netherland, owned no less than eight Stock Exchange seats and—though he was barely literate—operated from a downtown office whose walls were lined with volumes of Shakespeare bound in calf. Mike Meehan became known as “the mastermind of the Radio pools,” and, in 1929, succeeded in bull-trading RCA up from a 1928 low of 85¼ to an unprecedented high of 549—even though RCA had paid no dividends whatever in the period. It was the most spectacular, and perhaps the most shameful, stock manipulation of the decade. In the process, Meehan became the darling of “little men” investors who, in the wake of such feats, began plunging heavily into the market throughout the twenties—the cab drivers, barbers, and shoeshine men who tossed their savings into RCA may have felt differently about Meehan after the stock plummeted in the Crash (and after Meehan had got himself out).

  Bernard E. (“Ben”) Smith was an even tougher character than Meehan. Ben Smith grew up, around the turn of the century, in a tough Irish neighborhood in New York’s far-west fifties, near the docks, left school without graduating, and for a while bummed around the country selling newspapers, working for a used-car dealer, and finally winding up with a job in a brokerage house. Here he managed to become friendly with some of the firm’s richer customers, who fondly regarded young Ben Smith as “a diamond in the rough.” Rough he certainly was, addicted to simple-minded practical jokes, bathroom humor, and foul language. And yet, in 1926, when Smith was barely thirty, he had none other than such old-line aristocrats as Percy Rockefeller and Stuyvesant Fish to sponsor him for a seat on the Stock Exchange. Throughout the late twenties, Smith was behind some of the biggest bull pools of the day, and made enormous profits—enough for a country estate in Bedford Village and a swimming pool. He became so arrogant and inaccessible that one of his clients, none other than the British Lord Rothermere, was kept waiting, hat in hand, outside his office. Reporters, seeking to interview the financial wizard, often had to wait a week or more before Mr. Smith deigned to return their calls, and, when the calls were returned, they did not come from Mr. Smith or even his secretary but from his personal public-relations person. He had been staunchly on the bull side of the market during the summer of 1929, and was hurt badly in the first wave of the Crash. Then he suddenly reversed himself and became bearish. At one point—it has never been clear quite when—be rushed into his brokerage office and shouted, “Sell ’em all! They’re not worth anything,” earning him the life-long nickname of “Sell-’em Ben” Smith. His huge short sales, and enormous profits in the process, earned Ben Smith a reputation for villainy almost unequaled on the Street as, in the process, he helped the plunge of prices and the destruction of the American economy. As for his old friends who had helped him along a few years earlier, he announced, “To hell with them,” or possibly something even stronger. He had never given a damn for the Wall Street Establishment, or its code, and, furthermore, did not give a damn what the Establishment or the world thought of him or his trading methods. He had been in the stock game to make money for Ben Smith, and no one else. As for America, to hell with that too. What had America ever done for him?

  Joseph P. Kennedy, however, was to turn out to be of not quite the same breed as Meehan and Smith, who were roughly his contemporaries. Kennedy wanted to make money, yes, but money to him appears to have been only an incidental item, a tool. He also wanted power, which, according to an old Chinese proverb, has been denned as “ancient wealth.” Kennedy wanted his money magically to acquire the patina of age as quickly as possible. He wanted prestige also, and to be liked and well thought of by the men he intended to make his peers. Inside him, an Establishmentarian was trying to get out; his ambition, or at least a good part of it, was to be instant Old Guard. In this, he was assisted by his personality—an affable surface good nature and reserve, a charm equal to that of a Thomas Fortune Ryan, poise, good looks, a clubman’s good manners, and a speaking voice which he did his best to rid of its East Boston accent. On the surface, Joseph P. Kennedy appeared to be, of all things, a gentleman, or at least a man trying very hard to be one.

  Kennedy’s first big New York assignment, in 1924, was to defend John D. Hertz’s Chicago-based Yellow Cab Company against a raid from the bears that was seriously threatening the company’s owners. Hertz himself offered to raise the money for a bull pool, and Joe Kennedy was thereby relieved of the terrible burden of raising his own money, which had undone Allan Ryan a few years earlier. Kennedy hurried down to New York from Boston, and set himself up in a suite at the Waldorf-Astoria, where a battery of telephones and a ticker-tape machine were hastily installed. He managed his bull counterattack so skillfully that he was able to collect an important commission for himself as well. To be sure, a few months later Yellow Cab stock dropped again, and this time Hertz suspected that Joe Kennedy himself was the principal bear behind the raid. Hertz was so enraged at Kennedy that he threatened to “punch the s.o.b. in the nose” if he ever encountered him. The punch in the nose was never administered, nor has the Kennedy double-cross ever been definitely proved, though Kennedy’s biographer, Richard J. Whalen, has said in The Founding Father, “It would not have been unthinkable.” Kennedy was that sort of trader. In any case, in 1926 Kennedy moved his family—including his sons, John F., aged nine, and Robert F., less than a year old—to New York, where they settled in a large house in the fashionable Riverdale section of the Bronx (and later in even more fashionable Bronxville, in Westchester County). Throughout the rest of the decade, Joseph P. Kennedy was known as one of Wall Street’s ablest and most agile wheeler-dealers—bullish or
bearish as suited his purposes—specializing in the then glamorous and lucrative motion picture company stocks.

  By 1929 Kennedy was rich and, with his hail-fellow personality, was able to do business not only with the likes of Meehan and Smith (often referred to as “The Underworld of Wall Street”) but also with the Street’s upper crust, including such Social Register-ites as Jeremiah Milbank and the patrician Owen D. Young of General Electric. But there was one man whose shell Kennedy could not crack. Early that year, he strolled casually into the redoubtable offices at 23 Wall Street and asked to see Mr. J. P. Morgan. Kennedy must have expected that Morgan, by now, would be curious enough about the Street’s new genius to receive him, for Kennedy was not a man to risk being snubbed unnecessarily. But he had miscalculated. He got no further than the receptionist. After telephoning her boss, she told Kennedy that Mr. Morgan was too busy to see him.

  Unlike his friend Ben Smith, Joe Kennedy did not make extra millions through selling short during the 1929 Crash, but there is no evidence that he lost any substantial amount either. In September, according to his biographer, Kennedy was “standing at a safe distance” from the market, and had commented, “Only a fool holds out for top dollar.” He himself wrote later, “In those days I felt and said I would be willing to part with half of what I had if I could be sure of keeping, under law and order, the other half.” But there is no evidence that he lost anything even close to half in the Crash, and, in fact, during that winter of Wall Street’s greatest discontent Joe Kennedy casually removed himself from the financial community entirely and retired to the pleasant purlieus of Palm Beach, where his thoughts seem to have turned from the making of money to the uses of it—to acquire power. A few months later, through the good offices of his friend Henry Morgenthau, Jr., Kennedy arranged an invitation to lunch at the Governor’s Mansion in Albany, New York. He emerged from that meeting with the announcement that he believed Franklin D. Roosevelt would be an excellent Democratic candidate for President, and that he, Kennedy, would do everything in his power to see that Roosevelt was nominated and, in due course, elected.

  Roosevelt’s reward to Kennedy, after his election in 1932, was to name Kennedy Chairman of his newly created Securities and Exchange Commission, designed to regulate and control just such speculators as Kennedy had himself been. At first, Roosevelt’s New Deal supporters were dismayed with the appointment; it struck them as a complete sellout to Wall Street. Here was a man no better than the notorious Smith and Meehan; could he possibly be expected to “regulate” such villains? Wall Street, on the other hand, was delighted with the appointment, deeming it “wise and just.” Kennedy, after all, was known as a wily trader, and the Street was certain that any control he attempted to apply would be minimal. What happened, of course, amounted to another Kennedy double-cross because Kennedy did an about-face, turned his back on his old Wall Street cronies, and proceeded to initiate a long series of stiff and much-needed reforms. He began by requiring the registration of the country’s 24 stock exchanges, their 2,400 members and their 5,000 listed securities. He then tackled the biggest exchange of them all—the New York—instigating the first of many legal actions by the SEC against manipulators who would not hew to the hard SEC line. “Traitor to your class!” Wall Street cried, as even such sacred figures as Morgan began to feel the force of the Kennedy pinch. Instead of the “friend in government” Wall Street had hoped to find in Kennedy, it found a dreaded enemy, a “henchman” of “that Man in the White House.” None of these activities endeared the Kennedys to such Wall Street families as the McDonnells.

  Kennedy, meanwhile, with his new friends in the White House and Cabinet, was able, quietly, to be of service to his old friends in the motion picture industry in ways small and large. Early in the Roosevelt administration, Joseph M. Schenck, head of Twentieth Century-Fox in New York, was able to report to his friend Sam Goldwyn in Hollywood that, through State Department channels—and in coded cablegrams (which Kennedy let Mr. Schenck see)—Kennedy was working out a formula by which the movie industry could withdraw, and transfer out of England, all the money that it was likely to earn there. The money would come out of England in dollars, not in pounds, which was important since at the time the pound was in a weakened state. Originally, a five-million-dollar ceiling had been in force for such withdrawals. Kennedy, however, had assured Schenck that this limit could be raised to between twenty and thirty million. Schenck also warned Goldwyn not to interfere with Kennedy, since Kennedy was a testy customer and resented anyone who attempted to go over his head, or that of the State Department. Kennedy, in his ambassadorial role at the Court of St. James, would deal directly with the British Chancellor of the Exchequer, Sir John Simon.

  In terms of his personal morality, Joseph Kennedy also managed to offend such First Irish Families as the Murrays and the McDonnells. While the F.I.F.’s were determined to create an aura of the strictest moral rectitude around their activities and private lives, Joe Kennedy’s private life did not meet their standards. There was, to begin with, his much publicized association with the actress Gloria Swanson, the leading glamour figure of her day, whom Kennedy had met on one of his jaunts to Hollywood. He and Miss Swanson became the talk of both coasts, and appeared together at parties in both New York and California. Joe Kennedy became Miss Swanson’s banker and adviser. Her husband, the French Marquis de la Falaise de la Coudray, was often in Europe on some project for Pathé Pictures.

  Kennedy loaned large sums of money to Miss Swanson’s Gloria Productions, Inc., and financed a number of her motion pictures. The first was called Queen Kelly, a legendary flop, and a revealing study of the character of the producer. Erich Von Stroheim had been hired to direct, and both Kennedy and the Hays Office had approved the script, but, during the shooting, Miss Swanson became alarmed. The mercurial Von Stroheim was improvising scenes, adding new material, and changing the story line entirely. She telephoned Kennedy in Palm Beach in an agitated state and said, “There’s a madman in charge here. The scenes he’s shooting will never get past Will Hays.” Kennedy hurried to Hollywood and asked to see the rushes. What he saw horrified him. One scene portrayed a young priest administering the Last Rites to a dying madam in a bordello in Dar es Salaam. Another showed a young convent girl being seduced. All this was to be offered under the banner, “Joseph P. Kennedy Presents.” Kennedy hastily consulted Sam Goldwyn and Irving Thalberg, who suggested that Edmund Goulding be brought in to try to save the film. But Von Stroheim had shot over twenty thousand feet of celluloid, and very little could be done to tame Queen Kelly. In the end, though he had invested some $800,000 in the picture, Kennedy did not dare release it in the United States, though it was distributed in Europe.

  For months afterward, Kennedy told everyone who would listen how he had “lost a million” on Queen Kelly. It is often as much fun for a rich man to lose money as it is to make it. Actually, Mr. Kennedy had lost little or nothing on the venture. He might admire Miss Swanson personally, but his contract with her was strictly businesslike and stipulated that losses on Queen Kelly be offset by profits on future films. At length, Miss Swanson grew tired of hearing her friend talk about his “failure,” and announced the actual state of affairs to the press.

  Kennedy next sponsored Miss Swanson in her first “talkie,” The Trespasser, and personally hired Hollywood’s leading dramatic coach, Laura Hope Crews, to guide the star through every syllable of Edmund Goulding’s script. The Trespasser was a huge box office success, handily repaying the losses on Queen Kelly, and Kennedy went on to produce a second sound film for Swanson called What a Widow! Critics were disdainful (“A comedy of sorts,” sniffed the New York Times), but crowds, as they usually did for a Swanson film, formed long queues outside the box office, and again Kennedy made money. What a Widow! marked the end of Joseph Kennedy’s career as a Hollywood angel, and his relationship with its star came to an abrupt end shortly afterward. “I questioned his judgment,” Miss Swanson commented. “He did not like to be qu
estioned.”

  The association with Gloria Swanson might be over, but not Joe Kennedy’s reputation as a rake. In Catholic circles in New York, it was inevitable that the Kennedy children should meet and mingle with the children of the older-established Murrays and McDonnells, and pretty Charlotte McDonnell became a close school friend of the Kennedys’ daughter, Kathleen “Kick” Kennedy. In the days when both girls were of debutante age, Charlotte McDonnell Harris recalls (Kathleen was later killed in an airplane crash) an instance when Mr. Kennedy was staying in his Waldorf-Astoria apartment and Mrs. Kennedy was ensconced in a suite at the Plaza. One evening before a party, Charlotte called for her friend at the Waldorf apartment and was met by Mr. Kennedy. After a few pleasantries, Mr. Kennedy jogged her arm, winked mischievously, and said, “Leave your coat here. Will Hays is coming by in a little while, and I want him to think I’ve got a girl in the bedroom.” At around the same time, Kick Kennedy fell madly in love with a young man of whom her father disapproved. The senior Kennedy got columnists like Walter Winchell to dig up “dirt” about the young man and print it, thus stifling the romance.

  But perhaps the fact that irked families like the Murrays and McDonnells most about the Kennedys was their social pretensions. It was patently clear that both Mr. and Mrs. Kennedy wanted places in New York society for themselves and for their children, and the McDonnells have always felt, and resented, the Kennedys’ attempts to “copy” them. “They copied us by coming to New York in the first place,” one of the McDonnells says. “In New York, they tried to copy every move we made.” In New York, Murrays and McDonnells and Cuddihys had not only made it to the top of Irish Catholic society, through such institutions as the Catholic Big Sisters and the Gotham Ball, but were also receiving society-page attention in connection with Protestant affairs, and were listed in the Social Register. Quite obviously, the Kennedys were striving for the same sort of recognition.