The Chairman

by Kai Bird

  Ironically, during that same spring of 1954, when he was having to defend himself against McCarthy, McCloy was busy brokering a clandestine relationship between the CIA and the country’s wealthiest philanthropical institution, the Ford Foundation. Henry Ford II had personally recruited him onto the Foundation’s board in early 1953, and by the spring of 1954, McCloy was dropping in two or three times a month to talk with Shep Stone or Don Price, a vice-president of the Foundation’s International Areas division. A year earlier, he had arranged for the Foundation to give the Council on Foreign Relations $100,000 to fund its Soviet Study Group, a project undertaken in consultation with the State Department. By now, the Foundation’s funding of projects in the international field was expanding quite rapidly. Soon it became clear that the U.S. government had an obvious interest in some of these overseas projects. Throughout these years, Allen Dulles, Frank G. Wisner, Bedell Smith, and other CIA officials repeatedly approached the Foundation to fund Agency projects and provide access to Foundation officials or fellows abroad for use in intelligence-gathering.76 “I can remember the unease we had over that,” McCloy recalled years later. “I was skeptical about it because it had some risks to the reputation of the foundation. These people were too intelligence-minded. . . . [They] consistently thought of the Ford Foundation as an institution of intelligence-gathering. I was a little nervous about that.”77

  Frank Wisner, the mercurial chief of the Agency’s Office of Policy Coordination (OPC), was particularly zealous. By 1953, OPC had a budget of more than $200 million annually, and Wisner was running clandestine operations all over the world. “Wisner was a great talker,” McCloy recalled, “and he had great ideas about what the Ford Foundation ought to be doing.”78

  The pressure from the Agency was considerable. In one meeting sometime in early 1954, Dulles and Wisner told McCloy and Price that they “hoped the Foundation would take a steady and long-term view.” According to Price’s notes of the meeting, “There were some risks involved, and . . . the obvious limit would be when the government of the host country was really playing the communist game . . . but there were going to be a lot of in-between situations in which you could do business with a neutralist country. It would be great, they thought, if the Foundation were in the Middle East which was a wide open and flexible situation. . . .”79

  Soon afterward, with McCloy’s concurrence, Don Price made the rounds in Washington, seeing Allen Dulles, Wisner, various State Department officials, and Kermit Roosevelt, the Agency man credited with engineering the collapse of Prime Minister Mohammed Mossadegh’s government in Iran the previous summer. Price came away from these meetings believing that, “in general, our [Foundation] objectives and the U.S. national objectives ought to be in harmony although we would not take the word of government officials as to what that harmony ought to consist of [and] we ought not ever to be engaged in joint operations with any U.S. government agency.”80

  McCloy agreed with these general sentiments; he valued the Foundation’s independence and did not wish to see it taken over by the intelligence bureaucracy. “I was conscious of keeping the Ford Foundation’s shirts just as clean as I could,” he recalled. But ever since the Black Tom case, he had always been intrigued with things clandestine, and Allen Dulles’s stories could be quite seductive. Describing Dulles as being buried in the “cloak-and-dagger business,” McCloy recalled how he was “always coming to me to ask me to get the Ford Foundation to help behind the Iron Curtain. . . . He would give me a tale of what was going on, and if it didn’t give me the shivers, it should have.”81

  These discussions with various CIA officers caused considerable debate among Foundation officers and trustees during the first six months of 1954. Finally, on May 21,1954, in an effort to formulate a standard policy within the Foundation on how to handle such government-sponsored projects, Don Price wrote a memo on the whole problem. He set four ground rules. First, such projects would be recommended only when they were already the kind of projects the Foundation “normally supports.” Second, such projects would be “infrequently recommended. . . .” Third, “In all such cases, three members of the Board of Trustees—the Chairman, Mr. McCloy, and the President—will be in possession of all the facts regarding the interest of the government and the action recommended will have their previous approval.” And fourth, “Such projects may then be put before the Board without identifying the government’s interest in them. . . .”82

  Years later, when asked about this unusual arrangement, McCloy defended it as a means of limiting the CIA’s involvement with the Foundation. “We set up this group so that no one else in the Foundation would be approached. I recall the element of concern that we had—you could hardly get your mind addressed to one thing before another came up, with its ball of fur.”83 Price and McCloy feared that, if there was a blanket prohibition on dealing with the CIA, the Agency would simply recruit individual Foundation officers. Price’s ground rules required the CIA to go through McCloy, and it was made clear to Allen Dulles that any other contacts would jeopardize the Foundation’s willingness to cooperate. Price bluntly told Dulles, “Look, the first time you meddle with our boys, we’ll quit this whole program.”84

  This understanding may have restricted the CIA’s approaches to individuals within the Foundation, but over the next few years McCloy’s three-man committee approved a number of CIA-initiated projects. When the Agency again requested funding for the Congress on Cultural Freedom, McCloy sent Price to talk with Dean Rusk, then president of the Rockefeller Foundation, which McCloy had rejoined the previous year as a member of the board of trustees. Though Rusk was unwilling to have the Rockefeller Foundation get involved, Price came away from the meeting ready to recommend the funding to McCloy. In short order, the Foundation approved a three-year grant of $500,000 to subsidize various magazines published in French, English, and Spanish. Price and other Ford Foundation officers were well aware of the political nature of such activities: the purpose was to make European “intellectual leaders more militant in protecting freedom and combatting Communist effort [s]. . . .”85

  As the years passed, McCloy set some limits to the CIA’s inroads into the Foundation. At one point in the 1950s, the Agency asked for a list of Foundation officers and recipients of Ford Foundation fellowships working abroad. When the CIA indicated that these individuals might be asked to engage in a little free-lance intelligence-gathering, the Foundation again debated whether it should cooperate. Don Price had several long talks with Allen Dulles and his aide Richard Bissell, who himself had worked for a short time at the Ford Foundation. According to Price, he eventually reached an understanding with the Agency: “I had solemn promises from Dulles and from Bissell that they would not meddle with fellows while they were in that status, but they would be free to recruit them later on.” Henceforth, only the names of Foundation fellows whose grants had already expired were regularly forwarded to the CIA.86 Similar arrangements between the CIA and dozens of other foundations quickly became quite commonplace.87

  Throughout the Eisenhower presidency, as he had during the war, McCloy served as Ike’s private political counselor. Unsure of his own political instincts, Eisenhower deferred to the lawyer who had so often extracted him from delicate political problems during the war. Whether the issue of was McCarthyism, Germany, intelligence operations in Europe, or how to handle the controversial Bricker Amendment, Ike listened to McCloy.88

  He was Ike’s hidden vizier, but he was also a simple friend. The two men enjoyed each other’s company, and they often tried not to talk politics. Looking ahead to a meeting in a few weeks’ time, McCloy could write, “I hope we don’t have to talk ‘business’ all the time.”89 Alone, they often shared their mutual passion for Civil War history. That spring, McCloy sent Eisenhower a rare copy of the Freemantle Diary, an eyewitness account of the Battle of Gettysburg. He suggested that the tree from which the author had observed the battle might be found on Eisenhower’s own 246-acre Gettysburg farm. The
president said he would certainly “investigate the matter of the tree.”90 For his part, Eisenhower admired McCloy, just as he admired all such pillars of the business community, for the practical power he exercised. He felt comfortable around businessmen like Pete Jones, Bill Robinson, Bob Jones, Sid Richardson, Bob Woodruff, and Dillon Anderson precisely because these were men of means, and therefore, thought Eisenhower, they could afford to be disinterested about public affairs.I “These were men of discretion,” Eisenhower later wrote in his memoirs, “men, who, already successful, made no attempt to profit by our association.”91 (Eisenhower himself, however, profited enormously from these friendships; some of the same businessmen gave him all his suits, stocked his freezer with food, and built him a summer cabin at Augusta, Georgia.92) Though busy men themselves, they could always find the time to entertain the president. McCloy was not a golfer, and was thus not so visible a member of the president’s “gang” as men like Ellis Slater and Bill Robinson. But he was nevertheless sometimes there, in the background, watching the president play his favorite sport. On at least one occasion, in February 1954, he used a Chase National Bank plane to ferry himself and the rest of Ike’s “gang” down from New York in order to keep a golf date with the president at the Augusta National range.93

  Naturally, McCloy and other businessmen who shared Eisenhower’s friendship in these years also shared the president’s political philosophy. No one considered Ike a profound political thinker, but he possessed a coherent and distinctive political philosophy. Like McCloy, he had been a lifelong Republican, and if his professional military ethics had not prevented him from voting, he would have voted Republican in every presidential race with the exception of 1944, when he thought the war effort dictated the re-election of Roosevelt. Drawing on much of Herbert Hoover’s managerial approach to politics, Eisenhower’s political creed in retrospect has been described by one historian as a commitment to a “corporate commonwealth.” Like McCloy, he abhorred any visible signs of class conflict and regretted the “drift toward statism” initiated by the New Deal. Instead, he hoped to see business, labor, and the government work together harmoniously for the greater public good. By and large, of course, only men of means from the corporate world could occasionally afford to appear disinterested, and this may help to explain Ike’s instinctive admiration for the kind of men who stood at the top of corporate empires. Politicians, by contrast, were to be distrusted precisely because they catered to an alleged popular will, which in the view of Eisenhower was no more than the pleading of selfish “pressure groups.” The businessmen to whom he gravitated were invariably the kind of internationalist “corporate liberals” who identified themselves as liberal Republicans. These men were not rock-ribbed conservatives; they did not intend to roll back Social Security, and they believed the federal government had a role to play in the “maintenance of prosperity.” Politically speaking, there could not have been a better match between Eisenhower and McCloy.94

  Eisenhower also felt a certain personal empathy for McCloy. Both men had spent long years in public service, during and after the war, and the president felt almost protective of McCloy’s opportunity now to recoup some financial gain from his position at Chase National. Early in 1954, when Eisenhower learned from a mutual friend that McCloy was being pressured to head yet another government study group, he promptly wrote Foster Dulles a short note saying, “. . . Jack McCloy has made more than his full share of sacrifice through his long period of government service and . . . we should not ‘pressure’ him if anyone else can possibly do the job.”95

  McCloy was indeed busy with Chase business. One day, while he was poring over the bank’s loan portfolio, he noticed that a number of very sizable loans had been made at an unusually low interest rate to two Texas oil men, Sid Richardson and Clint Murchison. He had met Richardson at Eisenhower’s stag dinner the previous year. Feeling a little nervous about the size of such a low-interest loan, McCloy picked up the phone and called Richardson. The expansive Texan had heard that McCloy enjoyed hunting quail, and so he insisted that before they talked business the banker should come down to Texas for a little hunting on his ranch. McCloy accepted the invitation, and took with him to Texas a fine English “Boss” hunting gun he had just purchased from a retiring member of the Chase board. Richardson explained that they would be hunting the quail from a Landrover. McCloy said he’d prefer to walk, but his host insisted that he ride on the front extension of the Landrover—at least in the beginning. Grinning broadly, the Texas oil man said he could “walk” his quail later, if he still wished. They had not gone far when the largest rattlesnake McCloy had ever seen came close enough to attack him. He blasted the snake with his shotgun more than once before killing it. But this was only the beginning. As they bounced across Richardson’s ranch that day, he ended up shooting far more rattlers than quail. After McCloy killed yet another snake, Richardson grinned and asked if he still wanted to “walk” the quail. When a chagrined McCloy quickly declined, Richardson suggested it was time to talk about those loans. He asked if he should shift the loans to one of Chase’s competitors, and when McCloy said no, the Texan told McCloy not to worry, that the loans were secure.

  Early in 1954, Richardson and his partner, Clint Murchison, were enticed by Robert R. Young, the “Populist of Wall Street,” into a deal that promised quick profits. For several years, Young had been trying to take control of the New York Central Railroad Company, worth in the neighborhood of $2.6 billion. Chase National Bank had some time earlier been appointed trustee of eight hundred thousand shares of Central stock, representing one-eighth of all outstanding shares, a trusteeship that came about primarily because Percy J. Ebbott, who served under McCloy as president of Chase National, also happened to be a director of New York Central Railroad Company. In that capacity, Ebbott had voted along with the rest of Central’s board against one of Young’s earlier takeover bids. By early 1954, Young had readied yet another assault on Central; but he feared that Ebbott would once again vote the eight hundred thousand shares held in escrow by Chase Bank against him. At this point, Young decided to bring in Richardson and Murchison. He arranged for the two Texans to buy Chase’s eight hundred thousand shares without putting up any of their own money. They merely had to vote these shares for Young’s slate on Central’s board, and he would arrange for a temporary loan to buy the shares. The two Texans were also given an option to sell their shares back to Young’s syndicate with a guaranteed profit of some $10 million; Richardson and Murchison had nothing to lose. In an episode that must have reminded him of his railroad-takeover work as a young lawyer with Cravath in the 1920s, McCloy facilitated the sale to Richardson and Murchison of the eight hundred thousand Central shares held in trust by Chase. New York Central’s management considered the unusual arrangement highly improper and lodged a protest with the Interstate Commerce Commission. The ICC held hearings but did nothing to stop the sale. In the meantime, Central’s management fought what they considered to be a hostile takeover and refused to give the two Texans seats on the board of directors.

  When the two oil men arrived in New York for negotiations with Central’s management, they drove straight from the airport to McCloy’s East Side apartment in Manhattan. McCloy served in his usual role as intermediary, and arranged meetings between the Texans and Central’s management. A bitter proxy fight, however, could not be avoided, and eventually Young won control of New York Central. Young’s victory proved to be fatal both for him and the railroad; after sustaining serious losses in early 1958, he committed suicide. New York Central never recovered financially; it eventually merged with the Pennsylvania Railroad, and this amalgamated railroad went bankrupt in 1970. Rarely did such tales of corporate conflict find their way into the pages of The New York Times, but this one did, giving a public hint of how important the Chase chairman was to men of business like Sid Richardson.96 Clearly, what McCloy had done did not serve the public interest, but by the time Penn Central went bankrupt, no one would r
emember his role in the corporation’s downfall.

  Early in 1954, The New York Times published a photograph of McCloy and Averell Harriman talking to Secretary of State John Foster Dulles. The occasion at New York’s posh Hotel Pierre was as much in honor of McCloy’s becoming the new chairman of the Council on Foreign Relations as it was for the dour Dulles. McCloy presided over the Council dinner and introduced Foster Dulles as the evening’s guest of honor and main speaker. More than three hundred of the Council’s members attended this major event on the city’s social calendar. Dozens of McCloy’s oldest friends showed up, including Averell Harriman, Allen Dulles, Ben Buttenwieser, Eric Warburg, Francis Plimpton, George Roberts, David E. Lilienthal, and Cass Canfield, a book publisher and now one of McCloy’s frequent tennis partners. There were also many former colleagues from HICOG days, such as Shep Stone, Robert Bowie, Ben Shute, and Eli W. Debevoise, the last two of whom had returned to their respective law firms. In addition, such old New York acquaintances as Henry Luce, Paul Nitze, Arthur Dean, Roswell L. Gilpatric, Emilio G. Collado, Clarence Dillon, Lloyd K. Garrison, Herbert Bayard Swope, George Ball, Samuel K. C. Kopper, Juan T. Trippe, Thomas J. Watson, Walter J. Levy, Howard C. Petersen, Thomas S. Lamont, and John W. Davis came to celebrate McCloy’s ascendancy to the chairmanship.97 Such a turnout from among the leaders of the New York business and legal communities suggested that under McCloy’s chairmanship the CFR would be stepping outside its clubbish private quarters at Pratt House and assuming a higher profile than ever before.

  Early in Eisenhower’s first term, many Council members had regarded Foster Dulles with skepticism. In Council seminars he was thought to be rigid in his thinking and not a little sanctimonious. McCloy and many other Council members thought his policies simplistic, partly because he was tying U.S. prestige to a string of artificial regional-security pacts stretching around the globe, and partly because he had endorsed a defense strategy based on massive nuclear retaliation for any Soviet act of aggression. Both propositions seemed inflexible and dangerous. Worse, McCloy thought Dulles’s stance actually put the United States on the defensive in the propaganda war with the Soviets. He felt the administration was losing its bearings.