The Patriarch (11 page)

Cole signed the distribution deal. Kennedy incorporated yet another new company, the Robertson-Cole Distributing Corporation of New England, issued $100,000 in preferred stock, and purchased $60,000 for himself. The remaining $40,000 remained “unbought” in the “treasury.” He did not put any of his own savings into the project but got $20,000 from Honey Fitz, who borrowed it from the National Shawmut Bank with collateral supplied by Kennedy. He also borrowed $5,000 from his mother’s account, took $5,000 out of his own, and arranged for a sweetheart loan of $20,000 from Columbia Trust. On December 23, 1920, he wrote Ethel Turner, the assistant treasurer of Columbia Trust, who acted as his personal secretary and accountant, outlining the parameters of the deal “so that your records may be clear.” The financial manipulations were so complicated and the terms of the $20,000  loan from Columbia Trust so shaky that he asked Miss Turner to “kindly destroy the letter” after she had read it and executed his instructions.
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In the years to come, Kennedy’s biographers, in attempting to find out how he financed his early ventures, would leap to the conclusion that his investment capital came from bootlegging operations. This, as we shall see later, was not true. Columbia Trust, which the Kennedy family would hold on to until 1945, was his primary source of investment capital in the early years. Kennedy also funded his investments with loans from Shawmut, where Bob Potter was vice president; from Brookline Trust, where E. B. Dane was president; and from Chase National in New York City, where Eugene Thayer had been named president. His initial loan from Chase National was $85,000 for three months, which he renewed every three months for the next year. When Thayer left Chase National in early 1921, after what appears to have been a breakdown of some sort, Kennedy still owed $77,500 on his loan. Thayer visited the loan officer and “asked him to put the soft pedal on for you, and I think they will.” With Thayer’s help, Kennedy got another two months to pay off the three-month loan he had taken out fifteen months earlier.
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Relying on the coffers of Columbia Trust and borrowing from other banks was a risky way to do business—and Kennedy knew it. As long as he was able to juggle collateral and loans, moving paper from one account to another, one bank to another, he could survive. His experience as an assistant bank examiner was invaluable in this regard. He knew precisely how far he could go without calling attention to himself or his bank.

It was never easy to keep all these balls in the air without dropping one or another, especially in a down market. “I really ought to be ashamed of myself,” Kennedy wrote Chris Dunphy in Palm Beach on New Year’s Eve 1920, “for not acknowledging your great kindness in sending us the grapefruit and oranges, but, to be truthful, I have spent most of the days scheming how to keep my friends and myself out of the hands of the ever watchful creditors. The days have been dark and dreary in more ways than one, but it looks now as if the worst were over. At any rate, we hope it is.”
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One of the sources of cash he had relied on to pay the interest on his loans was the Fore River restaurant concession that as assistant general manager he had subcontracted to a company he owned. After leaving Fore River, he had managed to hold on to the concession and in May 1920 signed a new two-year contract. When, that fall, he was notified that the contract was being canceled, he fought back by asking Eugene Thayer, who was on the Bethlehem Steel board, to intervene on his behalf with Eugene Grace, the president.

On December 30, 1920, Grace wrote Kennedy to apologize. “I have, naturally, heard of your bitter feelings toward Bethlehem, occasioned, I understand, by the manner in which relations with you were severed.” Grace invited Kennedy to meet with him in New York. After a few rounds of negotiation, Kennedy accepted a cash settlement he regarded as reasonable and a new two-year contract for $15,000 a year to provide “the management and the food” at Fore River.
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I
n January 1921, Kennedy’s new firm, the Robertson-Cole Distributing Corporation of New England, opened for business at 39 Church Street in Boston. Kennedy enlisted Honey Fitz, still Boston’s most accomplished promoter/performer, to help him promote his first film, a big-budget adaptation of
Kismet
starring Otis Skinner, opening at the Majestic. “There are countless ways you can suggest that we could get publicity, and all that means money in our pocket. . . . Your influence with the Boston newspapers would help us in getting a lot of things that we otherwise could not.”
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Despite Kennedy’s promises and Honey Fitz’s promotions, the distribution deal he had offered Rufus Cole had done nothing to solve Cole’s cascading financial problems. In late March 1921, Cole was visited in New York by the company’s chief stockholders, Sir Erskine Crum and Sir Cecil Graham of Graham’s of London, and a representative of Cox and Co. Kennedy boarded a train for New York, where he pulled off the first act in what amounted to a brilliant but ethically dubious double cross by suggesting to Crum that he rid himself of Cole and his debts by selling the company. Sir Erskine was entranced by the young Boston banker, as Cole had been. He asked Kennedy to keep their negotiations confidential until a plan had been worked out that he could present to his London partners.
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Kennedy broke Crum’s confidence the next day when he boasted to Eugene Thayer that he was “practically representing Cox’s Bank of London and the Grahams of London.” Here was his big chance to break into the picture business—and he was not going to forfeit it. “I remember that you have spoken to me several times,” he wrote Thayer, “about your interest in the Goldwyn Company. As you know, I have made a particular study of this motion picture business, with the idea that sooner or later the motion picture companies would need someone from the banking business who was familiar with the picture business. The time has now arrived . . . to my mind the only thing that can save all of the companies is consolidation of some kind.” The consolidation he had in mind was of the Goldwyn and Robertson-Cole interests. “Of course, the whole thing would have to be confidential as news flies in the picture business. . . . If, however, you think it of any value at all, let me know and I will come to New York and discuss it with you or the men who are financially interested.”
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Kennedy played his cards well. He sought and received permission from Galen Stone to act as Sir Erskine Crum’s confidential adviser. On Kennedy’s recommendation, Crum wrote down Robertson-Cole’s outstanding debt, reorganized it as an American corporation, put Kennedy on the board of directors, and offered him an exclusive option to sell the company. He was to receive $1,500 a month for his efforts and a brokerage fee of $75,000 if he sold the business for $1.5 million or more.
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As exclusive agent for Sir Erskine Crum and Graham’s of London, Kennedy was able to arrange meetings with every major financial player in the picture industry. He met with William Randolph Hearst of Cosmopolitan Productions, Joe Godsol of Goldwyn Pictures, James Hurd of Vitagraph, and later that year, W. W. Hodkinson, the former head of Paramount who operated his own distribution company. He proposed to each of them that they could cut costs and boost profits by merging with Robertson-Cole or, if that was not possible, consolidating their distribution networks.
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The logic of his position was sound, but Robertson-Cole was too small and too burdened with debt to be worth “consolidating with.” In July 1921, with no offers forthcoming, Kennedy recommended—and the London bankers agreed—that instead of selling the company at a loss, they would hold on to it, make more pictures, and hope that finances would improve to the point where they could attract a buyer. Rufus Cole was removed as president, and Pat Powers, an experienced producer who had previously been Carl Laemmle’s partner at Universal, was hired to replace him. The company was renamed the Film Booking Offices of America, FBO for short.

Powers and his second in command, Joe Schnitzer, invested a great deal of their own money in FBO and tried to get Kennedy to do the same. He declined. “Frankly, between you and me,” he wrote Schnitzer in the summer of 1922, “I am all through with putting money in the picture business. Everything I have touched up to date has been very disastrous, and the local exchange up to date still owes me money. In addition to that, I am altogether too familiar with the R-C [Robertson-Cole] situation to be willing—for the present at any rate—to put very much money in as an advance.”
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He preferred, for the time being, at least, to focus his attention on distributing and exhibiting pictures, not making them. That spring, he tried to flatter his way into a business arrangement with Sidney Kent, who was in charge of distribution for Adolph Zukor’s Famous Players–Lasky Corporation. “Personally if I intend to spend any further time in this industry I would like very much to make some kind of a tie up with your organization, because I feel that at the end of a couple of years the industry will be almost entirely in your hands, and I think an unwillingness to tie up the situation here shows an absolutely lack of foresight and vision.”
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No one knew how to play the angles as well as he did. Though still a relative newcomer to the business, with no ties to Hollywood or Broadway, Kennedy had figured out how to use his outsider status to his advantage. The movie business was going through another of its periodic censorship panics. The causes were several, as they always were. There were too many racy films with racy titles like
Luring Lips, The Restless Sex, Short Skirt;
too many Hollywood scandals like the one involving Fatty Arbuckle, accused of rape, molestation, and the murder of a young starlet; and too many local and state censorship boards—with more on the way—stirred up by accusations, sometimes explicit, more often implicit, that the industry was not to be trusted because it was controlled by unscrupulous, money-hungry, immoral Jews.

For Kennedy, the crisis was a godsend because it gave him the opportunity to ride to the rescue as a white knight of sorts. True, he was not a midwestern Protestant Republican like Will Hays, the former postmaster general who had been hired to represent the industry as president of the Motion Picture Producers and Distributors of America at the outrageous annual salary of $150,000, but he was a Harvard graduate, a Boston businessman and banker, a family man, a practicing Christian, and decidedly not a New York City Jew.

In 1922, censorship bills were introduced in thirty-two of the forty-eight states of the Union. The key battle was in Massachusetts, where a state referendum had been called for election day in November. Kennedy offered his services—and political connections—to Will Hays, who was coordinating the campaign against the referendum. “Everything passed off very satisfactorily in Springfield,” Kennedy wrote Hays after the Massachusetts State Democratic Convention had reaffirmed its commitment to the First Amendment. “From all indications,” he continued, “we will have little trouble here in Massachusetts.”
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At the same time he was assuring Hays that there would be “little trouble” in Massachusetts, he was using the censorship threat to frighten Famous Players–Lasky into selling him, a native Bostonian and politically connected banker, the Paramount Theater in Lowell, Massachusetts. “As you know, in New England practically no political or banking influence is behind any phase of the picture industry. I have been trying to interest people of both banking and political influence in houses, in order that they may see that it is an industry that should be supported, and get all the help that it could.” Though his proposal to buy the Lowell theater was turned down, he was able to buy smaller theaters elsewhere. He purchased one in Stoneham, Massachusetts, for $15,000 and bought a 50 percent interest in the company that owned and operated two theaters in New Hampshire.
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K
ennedy was now spending more evenings in Boston, where the theater district was still vibrant, thriving, and expansive, entertaining and being entertained by the actors, actresses, managers, theater owners, and aspiring picture producers he hoped to do business with. Rose sometimes accompanied him. “It was all,” she remembered a half century later, “a completely new and different environment, gay, exciting and quite different and quite breath taking to me, who was a convent bred girl. I had heard that chorus girls were gay, but evil, and worst of all, husband snatchers. But nothing shocking happened. The people whom we met all seemed to have their own personal problems in which they were deeply involved, so we enjoyed the fun and excitement and novelty of the life in musical comedy. We even went to a skating party in the Boston Arena to celebrate the first birthday of [Fred Stone’s
Jack O’Lantern
] show, and we skated around quite naturally with all the lesser and greater luminaries of the stage.”

More often, however, Rose stayed home with the children and the servants while her husband went out. She claimed, again in retrospect, that she had no problem with any of this. “One characteristic of my life with Joe was that we trusted one another implicitly. If he had occasion to go out with theatrical people, he told me he was going and he went. There was never any deceit on his part and there was never any doubt in my mind about his motives or behavior.” His socializing, she believed, was always in the interest of concluding one or another business deal. Still, she noted that Joe was becoming more and more attracted to “the life that revolved around Arthur Houghton” and to lots of show people he did not introduce her to.
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One of his new acquaintances was Vera Murray, producer Charles Dillingham’s secretary, whom he had met through Arthur Houghton, Fred Stone’s manager. Learning that Murray would be in Boston with Dillingham on August 15, 1921, for the opening of a new comedy at the Colonial Theatre, Kennedy telephoned, then wrote to ask her for tickets and to invite her to dinner with him, Eddie Moore, and a third friend. “At this dinner at 7 o’clock you might state what is your pleasure for the balance of the evening and the three Boston youths will try, insofar as they can, to make things pleasant for you during your stay. . . . Not knowing what the functions are of the right-hand man [Vera was Dillingham’s chief assistant on the road] to the powers that be, I don’t know how close you will be obliged to stick to your boss tonight. I know how close you would have to if I were your boss.”
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