Kennedy

by Ted Sorensen

  QUESTION: Mr. President, at the time of your controversy with the steel industry, you were quoted as making a rather harsh statement about businessmen. I am sure you know which statement I have in mind.

  THE PRESIDENT: Yes. [Laughter] You wouldn’t want to identify it, would you? [More laughter]

  QUESTION: Would you talk about it, Mr. President?

  THE PRESIDENT:…the statement which I have seen repeated is inaccurate. It quotes my father as having expressed himself strongly to me, and…I quoted what he said, and indicated that he had not been, as he had not been on many other occasions, wholly wrong. [More laughter]

  Now the only thing wrong with the statement was that, as it appeared in a daily paper, it indicated that he was critical of the business community, I think the phrase was “all businessmen.” That’s obviously in error, because he was a businessman himself. He was critical of the steel men…. He formed an opinion which he imparted to me, and which I found appropriate that evening. But he confined it, and I would confine it…. I felt at that time that we had not been treated altogether with frankness, and therefore I thought that his view had merit. But that’s past, that’s past. Now we are working together, I hope.

  His correction was ignored and his hope was unfulfilled. Buttons for businessmen appeared bearing the caption “S.O.B. Club.” Bumper stickers appeared reading “Help Kennedy Stamp Out Free Enterprise” or “I miss Ike—Hell, I even miss Harry.” Another said: “Goldwater for President, Kennedy for King of Palm Beach.” A New Yorker cartoon enjoyed by the President portrayed one tycoon saying to another in their lavishly upholstered clubroom: “My father warned me that all Presidents were S.O.B.’s.”

  Most of the jokes circulated, particularly after the May stock market slide, were much more bitter. Typical was the crack: “When Eisenhower had a heart attack, the market went down. If Kennedy had a heart attack, the market would go up.” But the President enjoyed the story of a businessman supposedly visiting at the White House, whom JFK sought to reassure with the words: “The economic outlook is good, no matter what the market says. If I weren’t President, I’d be buying stock myself.” To which the businessman replied, “If you weren’t President, so would I.” And he enjoyed another which had Joseph P. Kennedy staring disgustedly at the ticker tape muttering: “And to think I voted for that S.O.B.!”

  Occasionally the President replied with a little humor of his own. At a New York Democratic rally on his forty-fifth birthday in May, he joked that he had received a wire from Roger Blough reading: “In honor of your birthday, I believe that you should get a raise in pay…. P.S. My birthday’s next month.” In June he revealed that the “nicest” letter he had received in a long time came from a Bethlehem Steel executive writing: “You are even worse than Harry Truman.” And a year later, at another New York dinner, he referred to the fact that down the hall in the same hotel Eisenhower was receiving an award as the man who had done the most for the steel industry that year. “Last year,” claimed Kennedy, “I won the award…they came to Washington to present it to me, but the Secret Service wouldn’t let them in.”

  But there was little humor that summer of 1962 in the attitude of many outspoken executives. As mentioned in the previous chapter, careful analysis made clear that Kennedy’s attitude toward business in general and steel in particular had no more to do with the stock market slide of 1962 than it did with its record climb in 1961 and 1963; but those searching for a scapegoat convinced not only themselves but the nation that the market decline, inasmuch as its worst day was less than two months after the steel fight, must have been caused by it.

  Nor did they stop there. They accused Kennedy of favoring socialism and price controls, opposing free enterprise and profits, and retaining too many antibusiness advisers—mentioning Bob Kennedy, Heller, Goldberg, FTC Chairman Dixon and Arthur Schlesinger, Jr. (although the latter had nothing to do with the steel case or other economic decisions). They assailed Dillon for being a traitor to his class and Hodges for not representing them in the Cabinet.

  To these critics, every conciliatory Kennedy speech was duplicity, every favorable Kennedy move was a menace. They wanted him to oppose inflation in general, but not specific price increases. They wanted him to improve the balance of payments, but not by curbing foreign tax havens. They wanted him to cut back subsidies, but had in mind aid to education and welfare, not the Federal subsidies paid to shipowners, shipbuilders, publishers and sugar importers. They wanted him to reduce corporate taxes, but not with the investment tax credit.

  If he remained calm during the stock market slide, they said he was indifferent to recession. If he sought new antirecession measures, he was power-hungry. If he met their demands to be equally tough on labor, he was intervening too much in private enterprise. If settlements recommended by a panel of impartial Federal mediators cut back union demands for railroad firemen or jet flight engineers, that was the result of simple justice, but if they provided for a union shop in the aerospace industry, that was the result of Kennedy bias. “No matter what he did,” said the head of the Michigan Chamber of Commerce, “I’d be suspicious.”

  Much of this opposition was emotional, illogical, political and inevitable. It was led largely by men who were Republicans or right-wing Democrats by conviction, habit and association. Nothing any progressive President could conceivably do would have appeased them, and Kennedy was not only a progressive Democrat but a stranger to balance sheets and market reports, a friend of labor and—worst of all—an intellectual from Harvard. “He has never attacked Khrushchev or Tito or any other enemy half as hard as he attacked our own steel industry” was one comment more prevalent than relevant.

  Most of these bitter businessmen could not agree in their own ranks on any specific complaints or proposals. They talked loosely of S.O.B. references, midnight raids and radical advisers, but, when asked for concrete suggestions on government policy, they tended to complain of Congressional actions that long antedated Kennedy: income tax rates, antitrust laws, big government and regulatory agencies. None of them agreed on what economic policies they wanted him to push. Some wanted a quickie tax cut in 1962 and some didn’t. The President’s bold new transportation program, calling for less regulation and more competition, and pushed by the President over strong opposition from Commerce and the ICC, was regarded as probusiness by the railroads and antibusiness by the truckers. The coal and textile industries liked the investment tax credit but opposed the trade bill. Others supported the trade bill but resented the tax credit.

  One poll of businessmen cited at his press conference showed them two to one for both bills while simultaneously convinced that the administration was hostile to business. Asked “what this apparent inconsistency suggests,” the President said it suggested “that most businessmen, number one, are Republicans, and, number two, that they realize what is in the best interests of business and the country.” A Gallup Poll at the height of the supposed “crisis of confidence” showed fewer than one in five businessmen who thought Kennedy was antibusiness. Nevertheless, most Republican leaders and newspapers continued to say that business was anti-Kennedy (which was only partly true) and that Kennedy was antibusiness (which was not true).

  “I don’t think,” said Douglas Dillon, “that there had been a President in a long time who had basically done as much for business…[but] it took the business community a long time to recognize this.” John Kennedy was no more probusiness than he was prolabor. If appeasing business required suspension of the food and drug and wage-hour laws, or a toleration of inflation and tax loopholes, or a withdrawal of his reforms for stock exchange transactions and for the businessman’s cherished “travel and entertainment” deductible expense accounts—or “if to stop them saying we are antibusiness, we are supposed to cease enforcing the antitrust laws,” he told a press conference, “then I suppose the cause is lost.”

  But more than any previous Democratic leader in this century, he looked upon private enterprise with an ob
jective, unjaundiced eye as an essential, constructive part of the American economy. He stressed repeatedly that his hopes for economic growth, plant modernization and government revenues depended on ample business profits. Corporate profits throughout his administration rose some 43 percent, higher and longer than ever before. Production rose, capacity utilization rose, and business confidence—as reflected not in speeches and newspapers but in actual plant expansion and investment—continued strong throughout his tenure.

  To help keep business costs down and their markets growing, Kennedy pursued policies designed to achieve wage moderation, competitive transportation, low-cost credit, lower tariff barriers abroad, a supply of trained workers, expanding consumer purchasing power and lower taxes. After all their suspicions and criticisms, businessmen found that the investment tax credit increased the profitability on the purchase of new equipment more than an equivalent reduction in corporate income taxes. They found that Kennedy, unlike his predecessor, was willing to promulgate the modernization of tax depreciation rules they had long sought, to relegate the government from senior partner to junior partner in their enterprises through a reduction of corporate income taxes below the 50 percent level, and to reduce top-bracket personal income taxes and transportation excise taxes.

  A variety of other programs extended credit and other aid to small business, to businessmen located in depressed communities or rundown neighborhoods, to bankers, builders, railroads, exporters, textile mills, coal mines, small lead and zinc producers, the lumber industry, the fishing industry and many others. Nor would a President dedicated to “big government” instead of private enterprise have directed that the national stockpiles be drastically reduced, that surplus government plants and installations be sold, that private industry be permitted patents on discoveries Federally financed and that a new communications satellite system be governed by a privately owned corporation. The latter bill, despite built-in protection of the government’s interest and assurances of public participation without domination by any single company or stockholder, was filibustered by Senate liberals as a giveaway to big business at the very time many business spokesmen were assailing Kennedy as a socialist.

  But those who assumed that business hostility to Kennedy began in the spring of 1962 made a mistake which the President never made. Except for an early clash between the Department of Commerce and its Business Advisory Council—resulting in the Council’s divorcing itself from its special position within government—relations between business and the Democratic administration were normal; and normal, for Democratic administrations, meant more suspicion on the part of business than praise. The President recognized this inevitable political gulf. “It would be premature to seek your support in the next election,” he told one business group his first month in office, “and inaccurate to express thanks for having had it in the last one.” “I do not think it wholly inaccurate to say that I was the second choice of a majority of businessmen for the office of President,” he told the U.S. Chamber of Commerce. (“Their first choice,” he added a week later, “was anyone else.”)

  “I’m not sure you have all approached the New Frontier with the greatest possible enthusiasm,” he said to the National Convention of Manufacturers, but he added that he felt reassured upon learning that the same group in earlier years had denounced the Marxist “swollen bureaucracy” and the new “paternalism and socialism” under Calvin Coolidge and Herbert Hoover.

  The matter often arose at his press conferences:

  QUESTION: Mr. President…The other day General Eisenhower described the Republican Party as the party of business. Now, do you consider this fair or accurate…?

  THE PRESIDENT:…I dislike disagreeing with President Eisenhower, and so I won’t in this case.

  QUESTION: Mr. President, there is a feeling in some quarters, sir, that big business is using the stock market slump as a means of forcing you to come to terms…their attitude is, “Now we have you where we want you.” Have you seen any reflection of this attitude?

  THE PRESIDENT: I can’t believe I am where business, big business, wants me!

  Many liberals advised the President to be more indifferent to business complaints. Asked at a special news conference with business editors and publishers whether his administration was “unduly sensitive to the alleged hostility of the business world,” he replied, “We are—unduly and alleged, I would say.” But he also recognized, as Keynes warned Roosevelt in 1938, that a climate of bitter hostility between Main Street and the White House—in which businessmen were convinced, however incorrectly, that their profits would be curbed and their efforts harassed—might well reduce their willingness to invest and expand, and adversely affect the economy, the stock market, the Congress and the elections.

  In June of 1962, when the attacks reached almost the point of hysteria in some quarters, he asked me to prepare an analysis of his administration’s business relations and all possible means of improving them. Inasmuch as the opposition was more psychological than substantive, the recommended means were also—for the President had no intention of changing either the personnel or the policies under attack. The memorandum led the following month to the President’s request that I lead a discussion with the Cabinet on its role in improving relations, and I introduced a list of possible steps each Cabinet member could take with the following observations:

  We cannot do much about most of the emotional and political criticism, which focuses on personalities and clichés. Nor can we discharge every appointee that comes under attack, withdraw our legislative program, relax our enforcement of the law or join the Republican Party….

  Nevertheless it is both possible and desirable for each member of the Cabinet… to take certain steps designed to show both business in particular and the public in general that this administration is not engaged in an unfair, unreasonable harassment of American businessmen.

  The steps suggested, which were then listed in a memorandum sent to each Cabinet member, included informal luncheons and dinners with the business clientele of each department, formal business advisory groups (such as the Defense Industry Advisory Council), more speeches to business organizations, temporary avoidance of controversial remarks not cleared at the White House (such as Hodges’ speeches on business ethics and an Archibald Cox speech on wage-price machinery), better liaison with the business press, and a reasonable, nonhostile attitude on the part of those employees engaged in law enforcement. Top aides were dispatched to all meetings of the Business Council, and other business organizations similarly received high-level speakers from the administration, all stressing the need for cooperation—as they had in fact since 1961.

  Also planned were a series of off-the-record seminars in cities throughout the country, bringing together leading administration spokesmen and leading businessmen to exchange views and increase understanding. The first of these was a success in Denver. But the political campaign and the Cuban missile crisis postponed a followthrough, and by the start of 1963, with the market climbing, the economy expanding and a tax cut in the offing, much of the meanness in business attitudes had ebbed.

  When smaller and more selective price increases were initiated by the Wheeling Steel Company in April of 1963, on the anniversary of the previous fight—a date the President doubted was coincidental—there was a brief revival of tension. New memoranda were prepared in the White House on the industry’s economic position. New secret meetings were suggested by self-appointed intermediaries. New calls were placed to other companies by administration officials. And new crisis meetings were held in the Cabinet Room. The President, reported in the press only as watching the situation “with great interest,” made a point of postponing by one day his departure for an Easter vacation while the steel companies waited and watched.

  But unlike the previous year, no affront to his office and no abuse of his good faith were involved, and the President confined himself, after a long and heated debate within the administration, to releasing a
low-key statement which strongly opposed a general across-the-board price increase of the kind attempted the previous year but recognized that

  selective price adjustments, up or down, as prompted by changes in supply and demand, as opposed to across-the-board increases, are not incompatible with a framework of general stability and steel price stability and are characteristic of any healthy economy.5

  But both the reasonableness and the warning reflected in this statement helped U.S. Steel and Bethlehem announce smaller and more selective increases, and Wheeling and all other producers adjusted back to their level, resulting in an average increase of little more than 1 percent. Only a third of all steel products were involved, and selected price reductions several months earlier largely offset the over-all effect. Actions on both sides, in short, prevented another massive confrontation, and both reflected and continued the improvement in government-business relations which had taken place during the previous twelve months.

  This whole “take a businessman to lunch” campaign, stressed particularly in the last six months of 1962, appears in retrospect an unusual effort to woo a single segment of the electorate, but it was comprised largely of better communication, not substantive concessions, and in a sense it only matched the attention already received by other segments of the electorate from a Democratic administration. Nor was it a hypocritical act to beguile business. For the major burden of this effort, as always, rested with the President, and he neither started nor stopped it in the summer and fall of 1962 when the hostility was at its peak. Both for political and economic reasons, he had preferred from the start of his administration to neutralize the hostility of those business executives he could not win over, rather than merely denounce them as other Democrats had done.