Yesterday, Part 1 looked at President Kennedy’s economic policies, and how they were extensions of the New Deal policies of Franklin Roosevelt.
Today, we look at the opposition to those policies.
The "Free Enterprise" Repudiation of Kennedy: The Lucepress
At the time of Kennedy's election, Henry Luce's media empire, then made up Primarily of Time, Life, and Fortune magazines, was one of the nation's most influential opinion shapers. (This media empire has since grown tremendously to include, among other components. People and Money magazines; Warner Studios; Little, Brown and Scott Foresman book publishers; HBO Video; and the Channel One Cable Service.) Henry Luce had started Time magazine in the early 1920s with help from the families of two partners in J.P. Morgan & Co., a relative of a Rockefeller partner, and a number of individuals who had been, with Luce, members of Yale University's elitist Skull and Bones society. Some of these relationships were probably rooted in Luce's family history. His father also graduated from Yale (1892) and was a close personal friend of Mrs. Cyrus Hall McCormick, heir to the International Harvester fortune. The McCormicks became related through marriage to the Rockefeller family and had business associations with the Morgans. There were connections between Time-Life-Fortune and particularly the Morgan interests during Kennedy's presidency.
Henry Luce entered Yale in 1916, was admitted to Skull and Bones in 1919, and went on to study at Oxford. Luce once described himself as "a Protestant, a Republican, and a free-enterpriser." This image is, to say the least, incomplete. That self-description suggests what Richard Nixon might have called "cloth-coat Republicanism," an image of competitive business, small-town values, mainstream Christianity, middle-class politics. In reality, Luce was quite different. Consistent with his personal and family background, Luce's conservatism was more aristocratic. He admired royalty, at times showed open disdain for the Constitution and democracy, and expressed in the 1920s and 1930s an approval of Mussolini's fascism and at least an ambiguous attitude toward Hitler. Luce traveled in the highest social circles in both the United States and Europe. His friends and acquaintances included Prince Bernhard of the Netherlands, the Duke and Duchess of Windsor, Lady Astor, Winston Churchill, John D. Rockefeller III, John Foster Dulles, and Robert M. Hutchins
These are not the social contacts of even most fur-coat Republicans. Luce's lifestyle also often varied greatly from that self-description. Long before drug experimentation became common on university campuses, Luce and his wife were ingesting LSD, at times in the company of such avant-garde drug users as Aldous Huxley and Christopher Isherwood. Luce advocated such experimentation to the top people at Time, Life, and Fortune, and in 1957 Life magazine printed a 17-page article by a J.P. Morgan vice-president, R. Gordon Wasson, praising psychedelic drugs. (Life apparently reversed its position nine years later, after LSD use had spread to the counterculture. In March of 1966 the magazine printed a severe criticism of LSD.)
Luce was obviously far from a conventional, middle-class Republican of the 1950s. He was by education, wealth, and social connections a full member of the upper class. Within that class he was a leading defender of the U.S. position in the world, at times clashing with those who favored greater integration of the U.S. Establishment with those of England and Europe. Luce's notion of the U.S. role globally and his conception of "free enterprise" are, along with his aristocratic leanings, reflected in Time, Inc.'s often vitriolic attacks on President Kennedy's policies.
In February 1963, Fortune observed that the unfriendly attitudes of many businessmen toward "Kennedy & Co." could be explained. Even though Kennedy was pursuing a policy of giving tax relief to business. Fortune suggested there was "some general characteristic of this Administration" that business suspected and opposed, but the reasons for this opposition had not been "clearly formulated." Fortune went on to suggest that the "trouble can be found in the Administration's tendency to employ the vast discretionary powers of the federal government toward whatever ends the men in power consider desirable." In this context, the article cited Kennedy's confrontation with the steel companies, his support of labor in its dispute with companies in the aerospace industry, and the manner in which he pressured private interests to provide the resources to "ransom" the Cubans captured by Castro during the Bay of Pigs fiasco. The Lucepress, both before and after this critique of Kennedy, rejected much more than these specific actions taken by Kennedy.
In June of 1961, Fortune simultaneously criticized Kennedy for being insufficiently activist in foreign policy (i.e., not fully backing the Bay of Pigs invasion of Cuba) and all too activist in domestic policy. Luce's magazine then accused the president of having "little understanding of the American political economic system," of pursuing policies that threatened to "undermine a strong and free economy," and of attempting to implement controls which would "erode away basic American liberties" and lead to "resentment and anger" at his policies.* Fortune said that Kennedy was seeking to implement "a master government plan" in an economy that operates "by means of millions of individual decisions in response to the free play of prices, wages and profits." Specifically, they called his investment tax credit an "elaborate gimmick" and an example of Kennedy's attempts to "manipulate the economy." They criticized the Kennedy tax proposals that continued tax breaks for profits made through productive investment in underdeveloped countries while taking those benefits away from investments in developed countries.
In the following year, John Davenport, one of Fortune's three managing editors, intensified the ideological campaign. Kennedy was now portrayed not only as a misguided, overzealous president, but as a reactionary and a cultist. Davenport's article began with the following:
The trouble with the New Frontiersman is not that he is too radical but that he has missed the bus. In a literal sense he is reactionary; he belongs to a cult that is as old as Diocletian.
(The reference is to the Roman Emperor's efforts at price controls.)
Continuing in this vein, Davenport accused Kennedy and unnamed advisers of being out of touch with modem history because they didn't recognize that government in "our day" must be restricted essentially to national defense, the maintenance of law and order, and the provision of a sound and dependable currency system. Davenport then referred to Walter Lippman's assertion that anyone attempting to direct the economy was a "reactionary." As it happens, the idea of government being propounded by Fortune is rooted in the seventeenth-century, pre-industrial ideas of John Locke, and Kennedy's originate more in the eighteenth, nineteenth, and twentieth centuries. Ignoring for the moment the absurd argument that Kennedy was a Diocletian reactionary, we will continue to focus on Fortune's objections to his policies.
Davenport argued that people like Kennedy base their political philosophy on economics, and that the economics requires interventionist government. This attitude, he said, permeated Kennedy's messages to Congress and was implicit in his "constant talk" of moving America forward. This is, of course, substantially correct. Davenport singled out for specific criticism Kennedy's intimidation of the steel companies, his failure to heed David Rockefeller's admonition concerning a balanced budget, and Kennedy's determination to keep interest rates down.
In a January 1963 article, Fortune accepted Kennedy's tax reductions even though they would produce a deficit. Fortune did so, however, based on the conditions that the deficit would be temporary and that there would be no increases in government spending. If this was a concession, it was an extremely limited one, for the article continued the Lucepress barrage against Kennedy by advising that the real wise men in economic policy were such enemies of government action as Adam Smith, Friedrich Hayek, and Milton Friedman. (Hayek viewed any and all attempts to use government to mold the economy as threats to freedom. He was opposed to what is known in the U.S. as implied powers, which allow government some flexibility in promoting the interests of the nation and instead suggested limited government operating under fixed rules. Like most supporters of these views, Hayek and Friedman talk as if there were no concentrated private power and, instead, create a fictitious image of a decentralized, market-driven economy.) The article continued by describing as "especially unfortunate" Kennedy's attempt in 1962 to have Congress give the president discretionary powers "to manipulate the tax level against the business cycle." Later in 1963, Fortune encouraged Congress to prevent Kennedy from using tax and budget policy as "instruments for managing the economy" and criticized Kennedy and his advisers, Kermit Gordon and Heller, for using budget deficits to promote growth rather than for the much more limited purpose of countering recession.
It is hard to imagine a more emphatic repudiation of a president, at least within limits normally observed by major media entities. (Indeed, some specific attacks did go beyond even the Fortune characterization of Kennedy as a reactionary.)
Fortune was among the leaders in rejecting virtually every major aspect of Kennedy's domestic economic program. These "free enterprise" assaults on Kennedy were presented in an extraordinarily biased way. The attacks on the president's efforts to steer the economy toward real growth in production were made in the context of two unstated and unproven assertions. One was an implicit notion that there were no parts of the U.S. economy operating on the basis of concentrated economic power and featuring a type of coordination and planning. This was false, ignoring known realities in areas such as commercial banking and the petroleum industry, and, to some degree, the steel and auto industries. The second assumption posited the existence of a clear body of evidence showing that all government measures to shape the economy had historically been failures, and that maximum freedom for private enterprise, even if it is highly organized, had always led to positive results. In the next chapter we demonstrate that both of these assumptions are, to say the least, dubious. The Lucepress was not very interested in a careful review of facts, but was primarily concerned with portraying Kennedy as a threat to the free-enterprise system and to liberty itself. This line of criticism extended to the president's foreign policy. This should not be surprising; as demonstrated earlier, there was a consistency between JFK's domestic and foreign programs. Both were organized around the goal of economic progress.
Early in 1962 the editors of Fortune expressed their concern that the Alliance for Progress and other Kennedy administration programs were being heavily influenced by the doctrine of the Economic Commission for Latin America, a group established in 1947 under United Nations auspices. Fortune charged that this doctrine favored government dirigisme, that is, a type of economic nationalism which included economic planning to achieve rapid growth. Fortune advised that it would be "insane" for the Kennedy administration to embrace this dirigisme and turn its back on those in Latin America who favor "sound money, higher productivity in exportable goods, and internal free enterprise." What this quite literally meant was that Fortune wanted Latin nations to pursue a conservative economic policy focused not on internal development and improving the standard of living, but on fulfilling the traditional role within colonial and neo-colonial relations of exporting wealth and allowing foreign domination of their economies. This was precisely the policy that Kennedy had repeatedly rejected.
In January and March of 1963 Fortune published a series of articles critical of Kennedy's foreign policy. Some of this criticism focused on the president's support of anti-colonialist efforts even where this policy offended powerful interests in Europe. Kennedy was charged with "vulnerable and/or discreditable acts in foreign policy -- such as forcing the Dutch to surrender West New Guinea to Indonesian blackmail" and with "promoting U.N. charter violation in the Congo." In both of these cases President Kennedy was pursuing his policy of opposing continued domination of Third World nations by Western economic interests. The president was also accused of waging the greatest effort in U.S. peacetime history to control and manage the news. This alleged manipulation, it was claimed, was going on in the area of foreign policy and in domestic matters (e.g., Kennedy was accused of trying in 1962 to suppress information about the budget deficit). The primary focus remained, however, JFK's economic policy. In January, Julio E. Nunez, a Harvard-educated, Cuban-American investment banker, accused Kennedy of turning his back on those elites in Latin America who were attempting "to promote sound limited government and free economies."
Shortly after this, Fortune published an extensive and emphatic repudiation of the president written by Fortune editor Charles J. V. Murphy. Murphy had been one of Kennedy's severest critics after the Bay of Pigs failure and would be one of the media's most emphatic supporters of the war in Vietnam. In March of 1963 it was the president's commitment to economic development that was at issue.
Murphy's broadside at the Kennedy program was quite comprehensive, not in detailed analysis but in its overall condemnation of both Kennedy's methods and his goals. Murphy asserted that whatever success was being achieved through foreign aid was neutralized by excessive population growth, but then went on to focus on the basic means and ends of Kennedy's policies. He claimed that the aid program, which was in the form of "technical assistance (mostly grants) and soft loans for long-range economic development" had no "unifying economic policy other than a wearied assumption that the U.S. must somehow .satisfy the universal lust for industrialization and growth. And the process has clearly got out of hand."
What he described as "lust" was, and still is, a desire for a decent life. What he described as a "wearied assumption" was in fact something that had not been the basis of Western policy toward underdeveloped nations. While Kennedy's attitudes about this were probably not unique, they were at odds with a far more "wearied" set of assumptions, ('. e., that the peoples of Africa, Latin America, and Asia were to be perpetually poor exporters of raw materials, agricultural products, and payment on debt.
Murphy made his position clear by suggesting that any economic assistance that might be provided should be accompanied by "a combined effort to organize the capacity of the underdeveloped countries to produce more and more primary commodities for export, the only path for those countries toward true "self-sustaining growth and social stability."
In hindsight, it seems obvious that this was double-talk which attached a couple of nice-sounding words to what was a clear proposal that the economic position of most people in the world should never change. The difference between these views and those of President Kennedy could hardly be more stark. Along with this rejection of Kennedy's attempt to use aid and soft loans to assist economic development. Murphy admonished the president for engaging in negotiations on a nation-to-nation basis, which bypassed the international financial community and co-opted U.S. producers by linking aid to purchases of goods made in the United States.
There was also criticism of Kennedy's failure to attach tough conditions or requirements to these loans. This referred to the demand noted earlier that recipients of loans and aid adhere to a conservative government spending policy and open up their countries to more foreign investment. (These demands are much the same as those known as "conditionalities" in relation to loans to debtor nations made under the auspices of the International Monetary Fund (IMF). The standard package of IMF conditionalities is as follows: abolition or liberalization of foreign exchange and import controls; devaluations of the exchange rate; domestic anti-inflation measures (including control of bank credit, higher interest rates, limits on government spending, higher taxes, elimination of special government subsidies, elimination of price controls); and greater hospitality to foreign investment.). Murphy made some of these points as follows:
No "self-sustained" growth is going to come from the Alianza [Alliance for Progress] billions unless the client nations brace themselves for the most elementary fiscal disciplines. Some technicians suggest that without these the most salutary course for the U.S. might be to give no money at all. But because Kennedy has staked so much of his personal prestige on making the Alianza work, it is doubtful that Bell could nerve himself for so drastic an action, even with governments as profligate as Brazil. Nevertheless, long second-thinking has prompted a basic question: Would it not have been wiser to seek a cure for Latin America's economic woes through an international apparatus that included the major European nations, long bankers to that region and its first market?
(One year after this article was published, Brazil's "profligate" government was overthrown by a clique of military officers. The new military leaders were immediately recognized by the Johnson administration, and the coup leaders were rewarded with financial aid.)
This suggestion that nation-to-nation loans and aid should be dropped in favor of arrangements that would achieve more "fiscal discipline" and greater involvement by European lenders accompanied other criticisms of the role that national considerations were playing in Kennedy's policy.
The Kennedy administration was assisting projects in poorer nations based on an agreement that capital goods and technical services be purchased from U.S. producers. Murphy argued that this practice amounted to a "subsidy for U.S. business and, because it enlisted business self-interest, often supported projects that were inappropriate. Murphy buttressed his assertions by referring to the sources of these criticisms of Kennedy:
a new and formidable criticism is gathering strength in the American business community. That businessmen are critical is not so surprising as the nature of the new criticism; it puts industry itself in a culpable role in foreign aid. This line of attack comes principally from Eugene Black, who retired two months ago as president of the International Bank for Reconstruction and Finance, George Champion, chairman of the board of the Chase Manhattan Bank, and Herbert V. Prochnow, president of the First National Bank of Chicago, himself a former deputy Under Secretary of State for Economic Affairs in Eisenhower’s Administration.
(Both Prochnow and Black had strong connections to Rockefeller interests. Black served as a director of Chase Manhattan, and the First National Bank of Chicago was interconnected with Rockefeller financial interests.)
The critical businessmen were leading bankers; the culpable businessmen were manufacturers who benefited from Kennedy's credit and aid policies. The point of view represented in Murphy's critique of Kennedy, and in other Fortune articles, was, in essence, that of the international financial community.
The criticism of Kennedy's international economic policy was aimed at the purposes of aid and loans, the manner in which the policy was carried out, and the roles to be played by nations and private interests, particularly banks. The Lucepress stated clear preferences. Poorer nations should remain primarily exporters of raw materials and agricultural products. They should not "lust" after industrialization. Those nations should pursue very conservative governmental policy and keep their economies open to foreign penetration. Aid and trade should be left, as much as possible, to private enterprise under the guidance of international finance.
Kennedy's initiatives were significantly at odds with all of those preferences. His foreign aid program was supposed to further economic development and free Third World nations from the backwardness and inferiority which were central to colonial and neo-colonial arrangements. He favored nation-to-nation agreements and was willing to bypass the private banks and the "free market." He showed no interest in aggressively demanding that recipients adhere to the other conditions for aid favored by the international banking community.
Those criticisms of international policy were, for the most part, identical with the attacks on Kennedy's national economic program. He was criticized for his attempts to intervene in the private economy for the purpose of stimulating growth. In domestic matters he was labeled a "reactionary" and a Diocletian cultist. In global policy he was accused of feeding the lust for industrialization and for showing a disregard for private interests, free enterprise, and the world's financial leaders.
This series of Fortune articles provides a very clear statement of the disagreements with Kennedy's policies that were being voiced by the financial community. Fortune magazine was directed at people working in the banking and corporate worlds and was preaching to those most easily, or already, converted. The same kind of criticism was displayed in the more widely read Life magazine, The readership of Life was much larger than Fortune's and was more than twice that of Time magazine. Because it was geared to a more general audience, its criticisms were less technical.
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Much of the criticism in Life focused on the federal budget and deficits, but other Kennedy actions were also given less than passing grades. Although the Lucepress generally championed "free enterprise," which would seemingly put it on the side of decentralized and competitive markets, it attacked President Kennedy and the Department of Justice, headed by Robert Kennedy, for blocking or opposing mergers in the railroad and airline industries.
In keeping with its normal rhetoric, Life accused Kennedy of interfering with the free flow of international investments with his proposal to increase taxes on purchases by Americans of foreign securities. In this piece. Life restated its objection to Kennedy's deficit proposals and quoted David Rockefeller's advice to Kennedy, which was contained in the Rockefeller-Kennedy letters published earlier in Life. Finally, the November 22 issue of Life indicated its concern that President Kennedy was disengaging from Vietnam, asserting that, "It is not a time to relax or schedule U.S. manpower withdrawals in time for our 1964 elections." (This comment by Life certainly supports the view that, Portly before his death, Kennedy had indeed decided to reduce or eliminate our military involvement in Vietnam, certainly that the Establishment feared such a move.)
The Wall Street Journal and Others
In light of the severe treatment of Kennedy in Fortune and Life, it makes sense that his reviews would be negative in the Wall Street Journal, a paper strongly associated with leading financial and corporate circles. As with the Lucepress, it is perhaps surprising to see the depth and breadth of the hostility. Also of interest is the extent to which the Journal's condemnation of Kennedy conformed to that in the Lucepress. They were not identical; the Lucepress was, for example, a more enthusiastic proponent of the use of American military power. There was on most issues, however, a similarity in outlook, even to the point of using the same terms and historical referents. Whether this was merely a case of one following the other or of likes thinking alike, or an example of organized propaganda is not completely clear. What is clear is that most, if not all, of Kennedy's critics were associated in some way with the others and were part of a generally coherent group.
The Wall Street Journal was started in 1889 as part of Dow, Jones & Company. Dow, Jones was created in 1882 as a financial news company by Charles Dow, Eddie Jones, and Charles Bergstresser. Control of Dow, Jones passed in 1902 to Clarence Walker Barren and his wife Jessie. Marriage brought Hugh Bancroft into the Barren family in 1907, and from 1912 to 1933 the enterprise was run by Clarence Walker Barren or Hugh Bancroft. (Mary Bancroft, Hugh's daughter, was a long-time close friend of Henry Luce. She was also very close to such notables as psychoanalyst Carl Jung and CIA Director Alien Duties. Mary reportedly clashed with Luce on some issues, with her views representing elites in the U.S. who wanted more cooperation with British or European interests, while Luce favored a leading role for the American Establishment.) In 1930 the various publications of the Barren family and Dow, Jones were organized into a single trust named the Financial Press Companies of America (FPCA).
At the time Kennedy became president, the editorial policy of the Journal reflected the views of the directors of Dow, Jones; the Bancrofts; Wall Street Journal President Bernard Kilgore; and Editor Vermont Royster. The Journal's view of Kennedy was harsh from the beginning. It had already flunked Kennedy for his economic policy before he took office, and an unfriendly exchange occurred in January of 1961 between Kennedy and Royster. Weeks before the inauguration, the Journal editorialized that Kennedy should resist the inclination to create a "planned economy." It noted his comments about pursuing the spirit of the Employment Act of 1946, and advised him that the purposes of that act (i.e., maximizing employment, production, and purchasing power through government action) were purely a response to the depression and were not relevant to the 1960s. Finally, it warned against big spending in either domestic or foreign areas.
The Wall Street Journal's criticisms of Kennedy, beginning before he took office, continued after he was dead. Near the end, the Journal was even more harsh in its condemnation of the president's policies than it had been at the outset. On October 15, 1963, it accused the Kennedy administration of giving mere "lip-service to economic freedom" while pursuing a foreign aid program that favored socialism and a domestic program that led to bureaucratic control of the economy. The paper charged that Kennedy's policies reflected a hostility to the "philosophy of freedom." A couple of weeks later, it continued this assault, repeating what by that time had been almost continuous criticism of excessive spending, budget deficits, and easy money. It characterized the Kennedy administration as following perhaps the "most restrictive and reactionary economic policy" in U.S. history. The Journal claimed that government activity was crowding out private enterprise, that government was overregulating the economy and interfering in private investment abroad. It concluded by claiming that Adam Smith's free-market economy was being replaced by the "corporate state," wherein the State directed everything without necessarily nationalizing the major organs of production and distribution. This, the Journal concluded, "smacks heartily" of eighteenth-century mercantilism.
During the final week of Kennedy's life, the Journal acknowledged that there was general prosperity, but claimed there was an uneasiness about Kennedy attributable to his attempts to control the economy, as well as to excessive spending and the growth of government. In a separate article it said that Kennedy's foreign aid often fostered "statist and socialistic institutions." Even after Kennedy's death, the repudiation of his policies continued. The Journal noted its differences with Kennedy concerning the proper role of government and referred to the Kennedy spending policy as "economic nonsense." The paper praised Johnson for his apparent recognition that these policies were mistaken.
Concerning foreign aid, the Journal had repeatedly accused Kennedy of encouraging state planning, statism, and/or socialism. It criticized Kennedy for having increased the Eisenhower administration's practice of providing soft loans (long-term with little or no interest) and recommended that Kennedy follow more closely the policies of the World Bank. The Journal's point of view in foreign policy was less nationalist and less militaristic than most of what appeared in the Lucepress. Like the Lucepress, however, it did take Kennedy to task for betraying European allies (e.g., Belgium and the Netherlands) in the interest of a rigid policy of opposing colonialism.
There were numerous attacks on the Kennedy administration's tax, budget, and monetary policies. There was specific criticism of Kennedy's decision to engage in deficit spending in order to sustain growth, suggesting that Kennedy's policies would "make even Lord Keynes turn in his grave." The Journal's rhetoric suggested that the man in the White House was a dangerous radical, an incompetent, a madman, or all three. Kennedy was referred to as a "potential threat" to the national interest, as "living in a dream-world" and indulging in "deep and damaging delusion," and as a failure on the "economic test."
All of this criticism was part of one overriding accusation leveled against Kennedy: the charge that he was attempting to use the powers of his office and of the federal government to influence and direct economic processes. As we have seen, it was indeed true that Kennedy sought to influence and shape economic decisions in order to increase the nation's capacity to provide a higher standard of living and to solve economic and social problems. Under Kennedy, the Journal complained, the government had become the "self-appointed enforcer of progress." It was this tendency in Kennedy, more than any particular policy, that infuriated the Lucepress and the Wall Street Journal.
The Journal criticized specific policies (Kennedy's actions toward U.S. Steel, his proposal to put a tax on the purchase of foreign securities from foreigners and on long-term loans to foreign borrowers, and his proposal to tax the earnings of foreign subsidiaries of U.S. companies), but saved its most in-depth critique for Kennedy's overall attempt to enforce progress.
In October of 1962 it suggested that Kennedy and his advisers were moving toward a "managed economy." This, they said, was "a flop in the days of Diocletian and of the mercantilists" as well as in various communist and socialist programs. Elsewhere the Journal expressed misgivings about the "effect of the totality of all the Administration's economic and social programs" and claimed that many "can see in the unchecked expansion of Government and its controls the very specter of compulsion that our political institutions were designed to prevent." In the Journal's view, Kennedy's actions were leading toward "all-encompassing Government," a violation of eighteenth-century principles which limited the government's role to national defense, maintenance of order, and preservation of personal liberty. The attempt by Kennedy to shift decision-making power to government was an encroachment on the "grand design of liberty itself."
Other than highly qualified approval of certain tax breaks for business, there was very little about Kennedy's economic policies that the Journal did favor, Even Kennedy's commitment to supporting research and development came under fire. The Journal criticized its size and cost ($14 billion, accounting as of 1963 for two-thirds of all R & D), the rate of increase (a "speed that is staggering"), and its impact on university programs (making them "top-heavy on science at the expense of other disciplines"). There was no praise of Kennedy's commitment to the principles of competition and the free market when his Justice Department aggressively opposed mergers in its 1963 actions against Continental Can Co., ALCOA, and the Colonial Pipeline Company. (The Colonial Pipeline Company was part of the cooperative effort among the major oil companies to control the distribution of oil. The top companies were and are involved in many such joint ventures. According to testimony in the early 1970s before the Senate Subcommittee on Antitrust and Monopoly, Colonial Pipeline Company was jointly controlled by Mobil, Texaco, Gulf, Standard of Indiana, and Atlantic Richfield.) This lack of appreciation for these efforts does make sense. It was not interference with the decentralized, competitive sectors of the economy that was ever at issue; it was Kennedy's effort to shift decision-making away from large-scale, concentrated private powers to the federal government that aroused the ire of opinion shapers at places like Fortune and the Wall Street Journal.
It was on behalf of organized powers that these media forces waged their war of ideas. One of those powers comprised the leading banks in the country, a group whose influence with Kennedy was on the decline in 1963.
As described in the Wall Street Journal in October of 1963,63 there was an ongoing shift within the Kennedy administration on global monetary policy. According to the Journal analysis, the shift began late in 1962, as the "activists" in the administration supplanted the "conservatives." The conservatives were identified as Secretary of the Treasury Dillon, Under-Secretary Robert V. Roosa, and the Federal Reserve Board. The activists, also described as "Kennedy lieutenants" and "the professors," were led by CEA Chairman Walter Heller, former Kennedy assistant Carl Kaysen, Under-Secretary of Commerce Franklin D. Roosevelt, Jr., and Under-Secretary of State George Ball. (Whatever the level of support given by Dillon to Kennedy at the beginning, it appears that they definitely parted ways in 1962. During that year Dillon joined David Rockefeller in pressing Kennedy to reduce government spending, excepting defense. Rockefeller and Dillon were then and later willing accept increases in spending for the war in Vietnam. Rockefeller and Dillon joined in 1965 with fellow Chase Manhattan directors, such as John J. McCloy, to create a formal group to promote the war.)
The Journal suggested that the conservatives wanted to deal with U.S. balance-of-payments problems by reducing the amount of money available in the economy and cutting government spending. The activists rejected this, arguing that it was counterproductive for "the U.S. or any other nation" to adopt such policies to deal with transitory balance-of-payments problems. Around these kinds of issues the battle to see who would determine policy was being waged. According to the Journal, the activists didn't "entirely trust bankers," and Kennedy had come to the same view. Rightly or wrongly, the article concluded, "Mr. Kennedy has come increasingly to believe that large and global banking problems are too important to be left entirely to bankers."
Around this time, the Bank for International Settlements, one of the most influential of international financial institutions, recommended that the Kennedy administration allow all interest rates to rise. While Kennedy seemed to be in no mood to have policy dictated by bankers, he must have been sensitive to the significance of this institution. It represented the wishes of the central banks of the leading economies of the world, including the U.S. Federal Reserve Bank. While Kennedy thought that banking was too important to be left to bankers, the members of this international bank thought that financial policy could not be left to nations and their politicians. The Wall Street Journal was in agreement with that view.
The Lucepress and the Wall Street Journal were, based on both the extent of the coverage and the importance of the publications, the leading critics and media opponents of Kennedy's policies. Such criticism did, however, appear in other media. One of these, Newsweek magazine, was owned by what some thought of as the "liberal" or even "leftwing" Washington Post. Whatever its image might have been in various sectors of American society, its views of Kennedy were almost identical to those of the Lucepress and the Journal. The opposition to Kennedy was expressed primarily in the regular column, "Business Tides," written by contributing editor Henry Hazlitt. Hazlitt took the president to task for a multitude of sins. Among these were Kennedy's attempts to increase his own discretionary powers, his tax policies (including the proposed tax on earnings of U.S. business abroad and the withholding tax on dividends and interest), "reckless" welfare spending, allegedly discriminatory application of anti-trust laws, and excessive support of unions. Like Fortune and the Wall Street Journal, Hazlitt's articles contained frequent and emphatic criticisms of budget policy, deficits, easy money, and excessively low interest rates. Foreign aid was criticized for directly promoting national planning, socialism, and welfare-statism.
The Lucepress, the Wall Street Journal, and Newsweek hammered away at President Kennedy's policies, condemning specific actions as well as Kennedy's use of presidential powers to shape the economy. In doing so, they spoke not for the country nor for business in general, but for highly concentrated economic power organized around America's leading financial institutions. They were not defending competition and the free play of entrepreneurship, but were rather engaging in a conflict with Kennedy over whether it would be private or public power that molded the future. The interests of old money, of status and privilege, came into confrontation with the most direct expression of a democratic republic -- an elected and popular president acting on behalf of the nation's interests. Actually, these publications were more than just mouthpieces for financial groups and oligopolistic oil companies, they were part of the network of families and institutions that are at the very top of what is generally called the Establishment.
The Lucepress, the Wall Street Journal, and Morgan-Rockefeller
As was noted at the beginning of this chapter, Time, Inc., was more than just "Lucepress." While the available evidence indicates that Henry Luce was indeed a force within this media empire, it is just as clear that other powerful forces were part of this operation, perhaps the dominant part. These others are part of a network of individuals and families who tie together a wide assortment of institutions and organizations, stretching from top banks and oil companies to foundations, think tanks, the media, and the intelligence community.
At the center of this network, and highly visible in the Time complex, were people associated with the two most significant financial groups in the United States -- Morgan and Rockefeller. (In the discussion that follows these two groups will be identified simply by the family names. There is a great deal of information available on both groups, but it is also incomplete. The Morgan group, which is not family dominated, has its origins in the mid-nineteenth century banking and trading business of Junius Spencer Morgan. In the 1850s and 1860s Junius and his son, John Pierpont, also became involved in London banking, establishing a U.S.-British connection of immense importance. In the early 1960s the Morgan group included Morgan Guaranty Trust, Morgan Stanley, and the London-based Morgan Grenfell. These institutions and the families involved in them were in control of or interconnected with dozens of other companies, including some of the largest insurance companies and industrial corporations in the world. The Rockefeller group emerged in the post-Civil War period as leaders of the Standard Oil Trust. In Kennedy's time the center of this group comprised the Chase, Chemical, and National City Banks. Like Morgan, however, these interests controlled or were tied to a multitude of other financial and corporate interests, and the Morgan and Rockefeller groups themselves were intertwined. Readers not familiar with this history might look at the following works listed in the bibliography: Chernow; Collier and Horowitz (1976); Kotz; Lundberg (1937); Medvin; Myers; Quigley (1966,1981).)
Writing about the early years of Time, Inc., Ferdinand Lundberg pointed out that in the 1920s Luce got financial help to start the company from Harry Davison, a Morgan banking partner and classmate of Luce's at Yale, and from other wealthy people including E. Roland Harriman. Lundberg went on to say that Time, Inc. in the 1930s was "owned by the inner circle of contemporary American finance, and the policies of its publications down to the smallest detail consistently reflect its ownership."
In the early 1960s various financial services were provided to Time by Morgan Guaranty Trust, Drexel & Co. (long affiliated with Morgan), and Chemical Bank (Rockefeller). Time's historical relationship with Morgan interests and the Hammans and the more recent connection to Rockefeller were also reflected in the makeup of Time's board of directors and management. For example, Maurice T. Moore, one of Time's directors who was married to Henry Luce's sister, was a member of the law firm of Cravath, Swaine & Moore (previously known as Cravath, Henderson, Leffmgwell and de Gersdorff). This law firm worked closely with J.P. Morgan, Hamman's Union Pacific Railroad, and Brown Brothers & Co. before it merged with the Harriman bank. Handling most of this work for Cravath was John J. McCloy of whom we will see more below. A partner in that law firm, Russell Leffingwell, became chairman of J.P. Morgan in 1948, Leffingwell also served as chairman of the Morgan-Rockefeller-led Council on Foreign Relations from 1946 to 1953 (he was succeeded by McCloy). In addition to these connections to Morgan, Moore was a director of the Rockefeller-controlled Chemical Bank.
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...McCloy was chairman of the Chase Manhattan Bank, of the CFR, and of the Ford Foundation; president of the World Bank; High Commissioner in Germany after World War II; and a representative of the major oil companies. McCloy played a significant role in the creation of the Office of Strategic Services, forerunner of the CIA, and later helped to work out a relationship between the Ford Foundation and the CIA that allowed the foundation to fund CIA activities. Also, in the 1950s McCloy helped to initiate a practice whereby private banks cooperated directly with the International Monetary Fund in establishing conditions for loans to other nations, an arrangement circumvented by Kennedy policies. McCloy's close friends ranged from the Rockefeller family to Texas oilman Clint Murchison and included the top men at institutions as varied as the Washington Post and the CIA. (According to McCloy's biographer (Bird, pp. 496, 542), McCloy never thought much of Kennedy and was sensitive to the fact that Kennedy had never sought ties to Establishment institutions or with people at the CFR.) It is this network for which Time-Life-Fortune spoke, as did the Wall Street Journal.
Lundberg once described the Wall Street Journal as the "central organ of finance capital." In the early 1960s the Journal's parent company, Dow, Jones, utilized the services of Morgan Guaranty and First National City Bank. The chairman of First National was James Stillman Rockefeller, a descendant of the William Rockefeller wing of the family, who was also related to numerous wealthy families, including the Stillmans, Dodges, and Carnegies. (An early rivalry between Morgan and the Stillman-Rockefeller interests came to a head in a contest over control of the Northern Pacific Railway. The National City Bank was backing E.H. Harriman in his attempt to wrest control from Morgan-backed James Hill. The resolution of this conflict also ended the general rivalry, with Morgan becoming a stockholder of City Bank in 1909 and J.P. Morgan, Jr., serving for a time as a director of the City Bank (Kotz, pp. 38-39).)
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By the early 1960s the Council on Foreign Relations, Morgan and Rockefeller interests, and the intelligence community were so extensively inbred as to be virtually a single entity. The Morgan and Rockefeller groups had always been dominant forces within the CFR, Morgan people being more prominent until the early 1950s, when the Rockefeller interests filled the positions of leadership. The CFR was also from the beginning tightly interconnected with leaders of the British establishment. The connection to England and the overall internationalist nature of the CFR reflected, in part, the English-American origins of Morgan Banking and the worldwide banking and oil activities in which both Morgan and Rockefeller were (and are) deeply involved. Not only has the Rockefeller family continued to have significant holdings in the oil companies that once were part of its Standard Oil Company, but also the major oil companies and major banks, especially Chase, National City Bank, Morgan Guaranty, and Morgan Stanley, had become extensively intertwined by Kennedy's time. These banking and oil interests by themselves make the Rockefeller and Morgan groups leaders of the internationalist sector of U.S. banking and business. Both groups are also tied to other upper-class groups around the world, from London and Paris to Saudi Arabia and Kuwait. Like their colleagues and friends at the Bank for International Settlements, they would have little tolerance for a president who interfered with their decisions or made their interests secondary to the needs of nations or of people in general.
The global interests of the Morgan and Rockefeller groups led to a natural involvement in the formation and development of the Central Intelligence Agency. A full account of these relationships would require a separate book. The relationships were extensive and covered the entire history of the CIA and of its forerunner, the Office of Strategic Services (OSS). For example, William Donovan, who is usually credited with organizing the OSS during World War II, began his intelligence career working as a private operator for J.P. Morgan, Jr. Allen Dulles, who was in 1963 the most senior member (since 1927) of the board of directors of the Council on Foreign Relations, was director of the CIA from 1953 until his dismissal by Kennedy. Dulles was associated with both the Rockefeller and Morgan groups.
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Kennedy faced external opposition in the media attacks on his policies, and be was saddled with an intelligence community that had more enduring connections to his opponents than to him. This problem of opposition from both outside and inside the administration can be illustrated by looking at David Rockefeller's criticism of Kennedy and the split that existed within the Kennedy administration.
David Rockefeller and the Internal Opposition to Kennedy
During Kennedy's presidency, David Rockefeller was emerging as one of the leaders of the financial community and of the upper class in general. He was president of Chase Manhattan Bank -- in line to become its chief executive -- and he was vice-president of the Council on Foreign Relations.
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Rockefeller's concern for what he called "fiscal responsibility" was also expressed in a report issued around this time by another influential group with which Rockefeller was involved. This was the Committee for Economic Development, which was created in the early 1940s and largely made up of leaders from the major non-financial corporations in the U.S., including two of the directors of Time. In 1958 this organization created a Commission on Money and Credit, which included David Rockefeller as a member, to do a study on national economic policy with a focus on money and credit. Although the report, issued in 1961, contained a multitude of diverse recommendations, probably reflecting input from a large staff, there was some continuity in theme. The report claimed that the government's spending, taxation, and monetary policies should be geared to stabilization of the economy. In this view, actions such as tax reductions and increases in money supply were only appropriate during downturns in the economy. In these basic areas, the recommendations were in direct conflict with the course Kennedy would eventually take. There was also a difference in emphasis on the topic of international economic relations. The commission wanted the government to make free trade and private initiative central in U.S. foreign policy. This and related issues brought Rockefeller into conflict with Kennedy over the Alliance for Progress.
Rockefeller was opposed to Kennedy's foreign policy from the beginning, critical of what he viewed as too much government involvement in and too little emphasis on the creation of the right kind of investment climate. These views were expressed in personal statements and in a report issued in 1963 by Chase Manhattan.
In 1966 Rockefeller reacted to criticism of U.S. activity in Latin America in an article he wrote for Foreign Affairs, the official publication of the Council on Foreign Relations. In defending the contribution to Latin economies by U.S. business. Rockefeller noted the investment figures for 1964 and said that the main reason for alleged recent success was a change of the "policy which prevailed in the early years of the Alliance of placing too much emphasis on rapid and revolutionary social change and on strictly government-to-government assistance." He later referred to the "overly ambitious concepts of revolutionary social change which typified the thinking of many who played an important part in the Alliance in its early years."
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As noted above, there was a clear split within the Kennedy administration over economic policy. The Kennedy group, which included Walter Heller and FDR, Jr., opposed the Dillon-Federal Reserve group, which spoke for the major banks. Dillon was a close associate of David Rockefeller's and a director of the Chase Manhattan Bank. The Federal Reserve, particularly the New York regional bank, has always been tightly interconnected with Morgan and Rockefeller banking. William McChesney Martin, the Fed's chairman, would become a supervisor of the Rockefeller family's trust fund.
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In these conflicts, as well as those discussed earlier, Kennedy was coming up against those people variously referred to as the East Coast Establishment, Wall Street, finance capital, the higher circles, etc. The label is not important. In the end they all refer to Morgan interests, the Rockefellers, and the many other wealthy and influential families allied with them (including Harriman, Cabot, Lodge, Dillon, Bundy).
Kennedy's ideas about the responsibilities of the presidency, his attitude about economic progress and the role of the federal government in achieving that progress, his view of foreign aid and foreign policy, and his recommendations and actions in a variety of specific areas disrupted or threatened to disrupt an established order. In that established order, in place for most of the century, major government decisions were to serve or at least not disrupt the privately organized hierarchy. Many in the upper levels of this hierarchy, most emphatically those in and around Morgan interests, were -- and still are -- involved in a special relationship with the British establishment. Their ideas about the world are similar to, if not direct imitations of, those of that older British elite rooted in inherited wealth and titles and organized in the modern world around control of finance and raw materials.
In this worldview, the Anglo-American upper class should maintain its global position by suppressing progress elsewhere and by preventing or containing disruptive changes within England and the United States. Important decision-making power should be kept in private hands, or, if necessary, in government agencies under their influence. From this perspective, Kennedy must have looked like a wild man. Economic growth, scientific and technological progress, expanding opportunity, development in the Third World, and social justice were the goals for Kennedy, not preservation of the class structure. Not only were the government policies he undertook intended to further this disruptive agenda; in many specific instances those policies meant that decision-making power was being taken over by the author of that agenda. Even where Kennedy's efforts meant only changes in the rules, these changes were intended to alter investment patterns and tax burdens in a way not in tune with upper-class interests.
Seen in this context, the rhetoric of the Wall Street Journal, Fortune, Life, and Newsweek makes sense. Also understandable is the unusual spectacle of a private establishment figure such as David Rockefeller going public to personally challenge the president. Rockefeller's Life magazine admonishment was polite; the polemics elsewhere were not. To label a popular president a cultist, a reactionary, a threat to freedom, was to engage in serious conflict with the democratically elected leader of the Republic. It suggested great anger, and it indicated a frustration produced by Kennedy's failure to heed the criticism.
President Kennedy's refusal to surrender to the pressures from such powerful forces was a demonstration of courage. In discussing the meaning of courage, Kennedy said, "A man does what he must -- in spite of personal consequences, in spite of obstacles and dangers and pressures-and that is the basis of all human morality." His repeated efforts on behalf of economic progress and justice demonstrated the highest form of morality. (In one of the supposedly definitive books on President Kennedy, Arthur Schlesinger, Jr., managed to write over a thousand pages which never touched on most of Kennedy's economic initiatives, never mentioned Morgan or David Rockefeller, and barely touched on the attacks on Kennedy. In this way he could wind up portraying the John Birch Society as a prime opponent of President Kennedy.)
Dr. Gibson noted that there is one distributor who has a few hundred copies of his book, which may be purchased through Amazon.com.
