The Patriarch (30 page)

In mid-October, Kennedy visited Rosemary. He was torn now between pushing her to work harder, as he did his other children, and letting her alone. When Miss Newton complained about his daughter’s “bad disposition,” Kennedy gently corrected her: “It is something else besides herself that must be blamed for her attitude. By that I mean, it is her inherent backwardness, rather than a bad disposition.” He assured Miss Newton that he had “a very firm talk with Rosemary and told her that something must be done, and I am sure she really wants to do it. . . . She was pleased because you felt she had improved with her studying, and I think the other things will show an improvement too.” With help from Miss Newton, Rosemary wrote to thank her father for visiting: “I would do anything to make you so happy. I hate to disappoint you in any way. Come to see me very soon. I get very lonesome every day.”
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Miss Newton had suggested that Kennedy get in touch with Dr. Charles Lawrence, the chief endocrinologist at the New England Medical Center, who “had done wonders for a couple of her pupils.” Years earlier, Dr. Frederick Good, who had delivered Rosemary and the other eight children, had discussed “the gland theory as affecting Rosemary.” Kennedy now asked Good to look into the matter for him. Up until now, Rosemary’s care and schooling, like that of his other daughters, had been Rose’s province. But he was intervening now, substituting his judgment for hers while she was away in Europe. He asked Good to proceed with some haste, as he hoped to have the “gland” question fully “investigated before Rose got back on the twenty-eighth. We do not want to leave a stone unturned if there is anything possible to be done.” Good visited Rosemary and Miss Newton in Brookline, checked up on Dr. Lawrence, found his “standing . . . one hundred percent,” and made an appointment for Rosemary to see him.
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Nine days later, after taking Rosemary to see Lawrence, Good reported back to Kennedy the news he had been wishing for: “I am quite hopeful that a systematic treatment with Endocrines will do considerable good—in fact, I will make it even stronger and say that I am very, very hopeful that within a few years, as a result of these Endocrine treatments, Rosemary will be 100% all right.”
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Kennedy was too much of a realist to believe in miracles, but, as he wrote Dr. Lawrence a month later after visiting Rosemary, while he had “told Dr. Good it was probably imagination, I am noticing considerable improvement. It will certainly be a blessing if possible to help her. I will be interested from time to time to hear any observations you may make in connection with the case, and I hope and pray that something can be done.”
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That winter, with Joe Jr. during well at Harvard, Rosemary apparently benefiting from regular “gland” injections, Kick settled in at the Sacred Heart Convent, and Eunice putting on weight and getting over her asthma, Jack resumed his role as the Kennedy family problem child. It was his final year at Choate, and if he did reasonably well, his father had promised to send him to study with Laski in London, as his brother had the year before. Jack, as always, refused to fulfill anyone’s expectations of him. He read what he wanted to when he wanted to and proudly sported the irreverent attitude that the Passionist priests had complained about.

Early in December, Jack wrote his father in Washington to confess that both he and his best friend were ashamed at “how poorly” they had done in the first “quarter, and we have definitely decided to stop fooling around. I really do realize how important it is that I get a good job done this year if I want to go to England.”

His best friend at Choate and, arguably, for the rest of his life was Kirk LeMoyne Billings, or “Lem.” Lem was from Pittsburgh, his father a noted but not terribly wealthy physician who had died while his son was at Choate and left almost nothing behind for him. Lem was a bespectacled teddy bear of a boy with curly blondish hair, glasses, and a perpetual grin. Jack was devoted to him. After his father died, he was virtually adopted and certainly assisted financially by Kennedy. Much later, he would look after Bobby’s children when they were orphaned.

Kennedy, on receiving Jack’s confession that he and Lem were doing less than they could at school, wrote back to say that he had taken “a great satisfaction out” of his son’s uncharacteristically contrite letter. Then, having been given the opening, he launched into an almost standard-issue patriarchal exhortation: “Now Jack, I don’t want to give the impression that I am a nagger, for goodness knows I think that is the worst thing any parent can be. . . . After long experience in sizing up people I definitely know you have the goods and you can go a long way. Now aren’t you foolish not to get all there is out of what God has given you and what you can do with it yourself. After all, I would be lacking even as a friend if I did not urge you to take advantage of the qualities you have. . . . I am not expecting too much and I will not be disappointed if you don’t turn out to be a real genius, but I think you can be a really worthwhile citizen with good judgment and good understanding. I like LeMoyne and think he is a very fine boy, with great possibilities, and I know that if both of you really made up your minds to do what you honestly could do with your talents, you would both be surprised and pleased.”
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Despite his father’s pep talk, Jack quickly got into trouble again. When headmaster St. John referred in chapel to the boys who failed to live up to the school’s behavioral standards as “muckers,” Jack and Lem promptly formed a “Muckers Club” and invited their classmates to join. St. John responded by threatening the “muckers” with expulsion. Kick made matters worse by telegraphing her support to her brother and Lem: “Dear Public Enemies one and two, All our prayers are united with you and the other eleven mucks. When the old men arrive sorry we won’t be there for the burial.” The telegram was intercepted and shown to St. John.
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On February 11, St. John wired Kennedy at his office in New York and at the SEC, “Will you please make every possible effort to come to Choate Saturday or Sunday for a conference with Jack and us which we think a necessity.” Kennedy cabled back that he could not get away on Saturday but would arrive in Wallingford at 12:15 on Sunday.
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Kennedy’s appearance on being summoned by St. John and Jack’s contrition saved him from expulsion. Kick was admonished separately and warned not to send any more incriminating telegrams. “I know you want to do all you can for Jack, but I think I should tell you that one of the serious difficulties he found himself in was his characterization of ‘public enemy’ and that group of his with the frightful name ‘muckers.’ I really don’t think there is anything smart about it and I hope it won’t be the cause of having him expelled. . . . It has all been smoothed out temporarily, but have this in mind.”
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As the school year came to a close, Kennedy was worried that Jack would not make it out of Choate if he didn’t do better. Now thoroughly exasperated at the ups and downs in his son’s scholastic career, he wrote him once again—this time in the harshest terms he could employ: “Don’t let me lose confidence in you again, because it will be pretty nearly an impossible task to restore it—I am sure it will be a loss to you and a distinct loss to me. The mere trying to do a good job is not enough—real honest-to-goodness effort is what I expect. . . . You have the goods; why not try to show it?”
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I
n the pre-SEC days, there had, as historian Thomas McCraw has written, been “no requirement that corporate reporting be certified by independent public accountants. Some companies issued no reports or information of any kind.” This dearth of reliable information on corporate assets, income, expenses, and liabilities had provided insiders such as Kennedy with an unfair advantage that they exploited to the full. Such practices had to cease now, Kennedy argued, and the playing field leveled, if investors were to be induced to get back into the market. The task set before the SEC was to determine precisely what kind of information companies should be compelled to divulge and how to make sure that this information was truthful, complete, and verifiable. “In case after case,” recalled future Supreme Court justice William O. Douglas, “we had to determine whether registration statements filed contained false statements of material facts. Some representations were transparent.” Stock or stock options issued to promoters were disguised; companies falsely advertised ownership of nonexistent timber, gold mines, or oil wells; the accountants who verified the financial statements were company officers. “These and thousands of other artifices and devices had been historically used to mulct the public, and in the early years . . . the mettle of the new agency was tested over and over again.”
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The “blue sky” laws that the SEC wrote and enforced would, Kennedy believed, constitute the single most important tool in restoring confidence in the market by weeding out the crooks and charlatans. He took enormous pleasure in recounting in the articles and speeches he delivered in 1935 the success his lawyers, accountants, and field men had had in uncovering “gyps” perpetuated by the tipsters, swindlers, bucket-shop grafters, and confidence men who preyed on the public by spreading rumors. “Some folks believed they could win quick riches through buying Florida frogs to breed frogs legs and saddles on an enormous scale. . . . There were gold mines galore, because the public became gold-conscious when we slipped off the standard. One mine I recall sold plenty of stock based on an engineer’s belief that a stone picked up by a schoolgirl at play showed rich gold deposits near her home.” There were oil royalty rings and potash syndicates that made outrageously false claims in their prospectuses. These abuses the SEC intended to end—and, in fact, came very close to doing so.
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While bucket-shop gypsters and charlatans fleeced the public by making false claims about their stocks, seemingly reputable corporate directors and officers, exchange officials, investment bankers, and Wall Street’s own brokers, dealers, and specialists had done more damage still by withholding information about their trading practices, manipulating stock prices, and clandestinely buying and selling large blocks of their own stock. Kennedy hoped to curb such “insider trading” abuses by requiring companies to promptly report when trades were executed by directors or officers or individuals who owned 10 percent or more of a stock. Directors and officers were furthermore prohibited from colluding with brokers and specialists to pump up prices or volumes by trading in multiple or falsely registered accounts. Also outlawed were pools, corners, wash sales and match orders (in which excessive volume is generated by the simultaneous sale and purchase of the same stock), dummy sales (pumping up prices on smaller exchanges before listing them on major ones), and all sorts of insider and specialist trading abuses.

Joseph P. Kennedy believed in capitalism, the market, the good sense of investors, and the honesty of most of those in the securities business. His primary task, as he never ceased to repeat, was a conservative one: to get the markets and the economy going again by pumping in new investment capital. He directed that the registration rules for new issues be rewritten to make the process less expensive and less cumbersome. He then took to the road with John Burns, the SEC counsel, to reassure corporations and underwriters that it was safe to return to the market and offering them assistance in writing up their registration statements. “You have been told when you sought to raise money or readjust corporation finances by refunding,” he lectured Chicago business executives on February 8, 1935, “that the labor expense, and legal liabilities involved, imposed upon the issuer of new securities unbearable hardships. Gentlemen, I ask you now to disregard those warnings and to forget that bogie. Do your business as usual. Come down to Washington in person and present your problems to us, and I am confident that we can show you how to do new financing legally, pleasantly, and inexpensively.”
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He saw his task as that of cheerleader, Wall Street enthusiast, civic booster. “In all frankness, I must say that this ace of American cities,” he declared at a speech in New York City, “is not giving a good account of its stewardship as the pace-setter of business enterprise. . . . Gentlemen, I am deeply concerned about the low state to which courage and confidence among business men have fallen. . . . I urge you to seize the torch of leadership in this necessary crusade. . . . New York, which has been holding back largely because of misapprehension and unwarranted fears, we hope will provide that timely leadership.”
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His tough talk in New York earned him front-page coverage and support in the editorial pages the next morning. “Most men of sober judgment will consider that [his] rebuke was merited,” the
New York Times
declared.
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O
n February 19, after the Supreme Court had decided, in a 5–4 decision, that Congress had acted constitutionally in removing the nation from the gold standard, a decision that, had it gone the other way, would have caused chaos in the stock markets, Roosevelt playfully agreed to Kennedy’s request that he take a week off. “In view of the sleepless nights and hectic days of the Chairman of the S.E.C., in view of his shrunken frame, sunken eyes, falling hair, and fallen arches, he is hereby directed to proceed to Palm Beach and return to Washington six hours after he gets there AND AFTER TEN INTERVENING DAYS HAVE PASSED BY (FOOLED AGAIN!)”
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Kennedy flew to Palm Beach but was back in Washington within the week. The workload was grinding him down, but he reveled in his new insider status. “Have important meeting White House tonight,” he wrote Bernard Baruch, who had invited him to his South Carolina estate for the weekend. “Correspondents’ dinner tomorrow night. Going to New York on midnight, coming down in time to join the Boss on
Sequoia
[FDR’s yacht] Sunday afternoon. . . . I hope I live long enough to see you back here. At the clip I am going it won’t be long now.”
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