The Chairman

by Kai Bird

  On October 6, 1961, McCloy had his last meeting with Kennedy as the president’s disarmament adviser. William Foster, whom he had selected to succeed him, was now designated to become director of the new Arms Control and Disarmament Agency. Kennedy was reluctant to see McCloy go, and had offered to make him undersecretary of state in place of Chester Bowles, who had been coaxed to take up his old posting as ambassador to India. But McCloy once again turned down this job, not wanting to work under Rusk.89 Instead, he agreed to serve in the part-time role of chairman of the newly created President’s Advisory Committee on Disarmament. In this way, he could keep his hand in arms-control matters, and simultaneously go back to his Wall Street practice in earnest.

  He had, in fact, already brought a major piece of business to Milbank, Tweed. Important changes were occurring in the global petroleum industry, controlled for so many years by the “Seven Sisters,” the largest of the international oil companies. In 1959, Congress had passed mandatory oil-import control legislation, which had quickly reduced the amount of oil that could be imported from the Middle East and Venezuela. In addition, the Soviets had begun dumping cheap oil on West European markets. In response to reduced demand, the companies in August 1960 unilaterally cut the posted price, a move that galvanized the oil-producing governments to form a cartel the following month in Baghdad.90 From his experience in the 1940s, McCloy was sensitive to the power that the new cartel, the Organization of Petroleum Exporting Countries (OPEC), could theoretically exert on the market. Sometime in 1961, a number of oil-company executives from the “Seven Sisters” approached McCloy to inquire whether they might retain his counsel on how to deal with the infant cartel. “We thought it only logical,” recalled John Loudon, the CEO of Royal Dutch Petroleum Company (part of the Shell group), “then that the seven of us at once get together to see how we could defend ourselves against the common united front of the governments of the producing countries.”91 McCloy was asked to become chairman of a small committee representing the five U.S. international oil companies, British Petroleum, and the Royal Dutch Petroleum Company. The problem with any such legal counsel given by one law firm to more than one oil company was the risk of an antitrust suit. So, in one of his meetings with Kennedy after returning from his summit with Khrushchev, McCloy raised the matter with the president. After McCloy explained the national-security implications of a foreign cartel controlling some 80 percent of the free world’s known petroleum reserves, Kennedy automatically picked up the phone and called his brother the attorney general. Shortly afterward, in a meeting with Robert Kennedy, McCloy emerged with a “business review letter” signifying the Justice Department’s acquiescence to McCloy’s representation of more than one oil company. As McCloy explained it years later, “My job was to keep them out of jail.” Now the chief executive officers of these firms could meet together in McCloy’s law office at One Chase Plaza without any real risk of an antitrust suit.92

  Actually, the threat from OPEC was not very immediate. A CIA assessment of the cartel in February 1961 had concluded that it would be “extremely difficult, if not impossible” for the member countries to muster enough discipline to limit their production, share the market, and thereby increase oil prices.93 McCloy could, however, make a credible argument in the early 1960s that the dumping of cheap Soviet oil on the world market was a national-security threat. “The Free World international oil industry,” he wrote in 1962, “has become the principal target of this Soviet economic and political offensive.” The Soviets were trying to destabilize Western oil markets and support OPEC in the hope that Western oil interests in the Middle East would eventually be nationalized.94 Twenty years earlier, during the war, he had used the same arguments with Stimson to justify an invasion of North Africa. He was still Stimson’s “Mid-Easterner,” determined to defend Western access to cheap Middle Eastern oil.

  If, in retrospect, his fears of OPEC were premature by a decade, McCloy had nevertheless identified a good piece of business for Milbank, Tweed. Over the next ten years, he met with various attorney generals on twenty-seven different occasions to discuss his oil clients and OPEC.95 He was the perfect intermediary; he knew the Middle East, and through his associations with such Texas oil men as Sid Richardson (who had recently died), he knew the domestic oil industry. In addition, he obviously had a special reputation in Washington. There were probably only a handful of men the federal government would trust with such a peculiar arrangement. Though a lawyer representing private interests, he was somehow also an untitled, unsalaried civil servant, the rare kind of man everyone assumed could watch out for the public’s national-security interests while simultaneously serving his corporate clients. For precisely this kind of access to Washington, the oil companies paid sizable retainers. The seven majors now began paying Milbank, Tweed $1,000 a month each, or a total of $84,000 a year.96 In addition to the security of having McCloy’s antitrust waiver in their pockets, the companies received other services. Throughout the next few years, the CEOs from all of the majors attended confidential briefings arranged by McCloy with the CIA and the State Department. At these meetings, both parties—the government’s Middle East experts and the oil-company officers—informally traded information. Though these contacts were not a matter of public knowledge at the time, if they had been, few would have questioned the arrangement or McCloy’s participation. It was all a matter of national security.97

  Soon after returning to New York in the autumn of 1961, McCloy became embroiled in a power struggle for control of the Ford Foundation. In the previous year, the Foundation had given away some $161 million, dwarfing other philanthropic ventures. Dwight Macdonald aptly described the Foundation as “a large body of money entirely surrounded by people who want some.”98 With so much money available, there was considerable contention about the Foundation’s funding priorities.

  As one Foundation officer put it, “McCloy chose to be the first among equals and regarded all the other [board] members around as potentates and he was simply the first baron among barons.”99 He never hesitated to push his own agenda, urging funding for such projects as the Free University in Berlin, the Council on Foreign Relations, and various “Atlanticist” projects such as conference grants for things like the Bilderberg Group gatherings. And he still thought of the Foundation as a quasi-extension of the U.S. government. It was his habit, for instance, to drop by the National Security Council in Washington every couple of months and casually ask whether there were any overseas projects the NSC would like to see funded.100

  The Foundation’s president, Henry Heald, could not hide his annoyance at such instances of interference by the trustees. With his academic background, Heald was inclined to give priority to university funding. Over the years, McCloy began to feel that Heald “was a little too prone to confine the benefactions of the Ford Foundation to conventional university academic areas. . . .”101 Moreover, as chairman, McCloy felt no compunction about holding Heald personally accountable for grant decisions he felt to be inappropriate. This was illustrated in an incident that took place in late 1959. The New York Herald Tribune ran a frontpage story reporting that the Ford Foundation had commissioned a communist to compose an opera on the Sacco-Vanzetti case and had requested the Metropolitan Opera to produce it. That morning, McCloy happened not to have read the newspaper, and when he arrived at his luncheon club he was immediately collared by one of his Wall Street friends, who said, “So this is how the Ford Foundation wastes its money; getting ‘commie’ operas written and reopening the whole damn Sacco-Vanzetti case.” McCloy was visibly upset and “raised Cain” with Heald.102 There were many other conflicts.

  As president of the Foundation, Heald made it clear that he thought funding decisions should be initiated only out of his office. The board of trustees received the impression that his attitude toward them was, “Take it or leave it.”103 As the years passed, the Foundation’s professional staff found themselves drifting into Heald or McCloy factions, depending on whether t
heir particular program had the backing of the president or the chairman. One Foundation officer who more often than not was identified as a Heald supporter recollected McCloy and his exercise of power over the Foundation: “That coalition of power that the Ford Foundation trustees represented both was an asset and a liability. The assets were that these were men of affairs, were wired in, that when Ford moved everybody knew there was more than its money that was going; it was symbolic; if, for example, they would go into social affairs, that was a powerful statement that this was important. The liabilities of it were all equally obvious. . . . McCloy was a guy who had to be accepted at the White House. He loved his role of running around the world and being the God. He watched everything from that point of view. . . . Clearly those guys thought politically. There’s no question about it.”104

  Eventually, tensions between Heald and the trustees were such that McCloy felt he had to do something to reassert control over the Foundation’s policies. So, one day, he walked into Heald’s office in New York and announced that he wanted to make a statement to the principal officers of the Foundation. A few minutes later, in the presence of Heald, McCloy told a gathering of some eighteen program directors that he had a statement to make about his role and the role of the president in the operating of the Foundation. He then announced that henceforward the doctrine of the Foundation would be a policy of direct fraternization between themselves and the trustees. Small groups of trustees, he said, would regularly meet with individual program officers to discuss their priorities and needs. When he finished, McCloy turned to Heald and asked him if he had anything to add. Obviously shocked, the president muttered, “No,” and walked out of the room. But he still did not resign, despite this open usurpation of his authority.105

  For the next eighteen months, Heald hung on to his job. He had, however, little authority within the Foundation. Most program officers felt that he was on his way out. Morale was dismal. Only those program directors who had cultivated their own constituencies within the board of trustees had the power to get things done. An uneasy truce developed between Heald and the trustees, but as a result the Foundation began to drift, hiring few new personnel and developing even fewer new programs.106 One of the exceptions was a grant to fund a campaign to save the redwood forests of California, a pet project of McCloy’s. He rammed it through the board of trustees over the objections of Heald. Finally, in the spring of 1965, more than four years after the conflict had begun, McCloy told Heald he had to go.107 They agreed that Heald could publicly announce that he was simply retiring in six months, and that in the interregnum McCloy would head a search committee to select his successor. In the event, McCloy made the decision himself, selecting his old friend McGeorge Bundy, who had finally decided to leave his job as national-security adviser.

  Though he was absorbed by these intermittent problems at the Ford Foundation, the years of the Kennedy presidency still found McCloy active in a number of quasi-public roles. Early in 1962, he made a quick trip to Germany, where he held talks with Adenauer on the status of Berlin. Germany was always on his mind. But there were other issues as well. As usual, he presided over various seminars at the Council on Foreign Relations, and wrote an article for Foreign Affairs criticizing the neutral bloc of nations’ reaction to the Soviet resumption of nuclear-weapons testing the previous autumn. In early April, he had a short meeting with Kennedy, and on the following day was formally sworn in as the chairman of the General Advisory Committee to the Arms Control and Disarmament Agency, a post he would occupy for the next fifteen years. This was a part-time position, which only required him to attend meetings in Washington three or four times a year. But it gave him access to the most secret of national-security information and entitled him to briefings in the CIA and the Defense Department on the status of American and Soviet nuclear arsenals.

  In September 1962, Kennedy tried to persuade McCloy to take on a full-time job as his trade representative. But the lawyer preferred to stay in New York, where he could keep his hand in many issues and not become ensnared in the federal bureaucracy. On the other hand, he was always willing to undertake temporary assignments, particularly if they involved issues of concern to his Milbank, Tweed clients. So, with the administration’s encouragement, he planned a trip to Europe in which he intended to hold discussions with various European oil companies and their governments on the still-troublesome matter of Soviet oil exports. On October 5, 1962, a State Department cable went out to a number of U.S. embassies in West European capitals informing them that McCloy was “proceeding to Europe on matter in which Government is interested. Would appreciate anything you can do for him. . . .”108 The following evening, McCloy boarded a Pan Am flight for London, where he planned to spend a week meeting with British and Dutch oil-company officials before moving on to Rome and then Germany.

  CHAPTER 24

  The Cuban Missile Crisis

  ‘Well, Mr. McCloy, we will honor this agreement. But I want to tell you something. The Soviet Union is not going to find itself in a position like this ever again.”

  VASILY KUZNETSOV DECEMBER 1962

  Shortly after nine o’clock on one of those balmy Indian-summer mornings peculiar to Washington in mid-October, John Kennedy called his brother over at the Justice Department and asked him to come right over to the White House. When he arrived, Bobby Kennedy was told that a U-2 photoreconnaissance mission over Cuba had just come back with evidence that the Soviets were installing medium- and intermediate-range missiles on the island. “I had no doubt,” recalled the thirty-six-year-old attorney general, “we were moving into a serious crisis.”1

  The Kennedy brothers were both surprised and puzzled by the Soviet move. The CIA had for some months monitored the shipment of Soviet weapons to Cuba. But in the wake of the failed Bay of Pigs invasion, and the subsequent numerous strafings of Cuban ports by CIA-backed Cuban exiles in high-speed motorboats, it was no surprise that the Soviets were building up the Castro regime’s military defenses. However, as recently as mid-September, the president had publicly warned Khrushchev against the installation of anything more than defensive weaponry. Now he could not understand why the Soviet leader, who he thought had “demonstrated a sense of caution” during the Berlin crisis the previous year, would risk so much over Cuba.2

  Whatever Khrushchev’s intentions, the president immediately knew that the discovery of Soviet nuclear missiles ninety miles offshore was political dynamite. The country was less than three weeks away from a congressional midterm election. It had been a hard-fought campaign so far, and the Republicans had made the Kennedy administration’s apparent tolerance of Castro’s regime a major issue. Only a week earlier, the Republican senator from New York, Kenneth Keating, had announced that he knew from his own sources of information that the Soviets were constructing six intermediate-range missile sites in Cuba.3 This had elicited a firm denial from McGeorge Bundy, the president’s national-security adviser, that there was “no present evidence” or likelihood that the Soviets would attempt to install an offensive capability in Cuba. If, in fact, it now turned out to be true that the Soviets had covertly managed to sneak such missiles into Cuba, the Democrats could pay a heavy price at the polls.

  Baffled and disturbed, the president told “Mac” Bundy to call together an abbreviated session of the National Security Council (NSC) for a meeting in strictest secrecy at 11:45 a.m. He told Bundy he wanted only a few men present and listed Dean Rusk, Bob McNamara, and a dozen other top officials. Then, in an effort to get his bearings before meeting with them, Kennedy asked his secretary to track down private citizen John McCloy. By this time, McCloy was in Rome, halfway through his quick tour, seeing a variety of European officials. It was late afternoon in Rome when Kennedy was put on the phone with his former disarmament adviser. The president informed him in guarded language of what he had learned only a couple of hours earlier. McCloy’s initial judgment was characteristically uncomplicated and sharp: he favored an air strike to take out the miss
ile sites, to be followed up, if necessary, by a full-scale invasion.4 After a brief discussion, Kennedy told McCloy to keep in touch, that he might be needed in the next few days. The president already sensed that, as a matter of domestic politics, the missiles could not remain in Cuba. But this brief phone conversation confirmed to him that the country’s foreign-policy establishment would regard the introduction of such missiles into the Western Hemisphere as a grave development.

  On one level, McCloy instinctively regarded the Cuban missiles as a new and dramatic military challenge. Sometime after talking to Kennedy, he wrote out his thoughts in longhand: “The size, character and speed of the nuclear build-up really staggers the imagination.” But more frightening than the missiles themselves was that the Soviets obviously thought they could get away with this challenge. He was absolutely appalled that they could think the world would accept this “dagger at our throat” as a defensive maneuver. “What do they take us for?” he wrote. He had already forgotten that only the year before he had written the president’s speechwriter Theodore Sorensen and asked, “Even if the Soviet Union had missiles in Cuba—which it hasn’t—why would we have any more right to invade Cuba than Khrushchev has to invade Turkey—where we do have missiles?” Instead, the Soviet challenge now brought to his mind the 1938 lessons of Munich, and this time the West had to stand firm. The missiles had to come out, and fast. There could be “no doubt about our willingness to accept the risk of nuclear conflict rather than to permit this massive attempt to disturb the nuclear balance.”5