The Patriarch (31 page)

Roosevelt had begun to call on Kennedy more and more now. He enjoyed socializing with him at the White House and Marwood, admired his blunt talk and lack of pretense, and recognized that there were political benefits in the reports of Kennedy’s being one of his close advisers. Simply by consulting with his SEC chairman—and letting the press know that he was—Roosevelt disarmed opponents who portrayed him as having cut himself off from any but the most radical New Dealers. “The President,” Arthur Krock reported on April 28, 1935, “is especially fond of him because of his agreeable personality, his ready laugh, his loyalty, his high ability and his Celtic pugnacity. The two argue constantly over acts and policies, and the President hears more objections than assents from the chairman of the SEC. But he consults Mr. Kennedy on everything, and, when the argument is over, President and adviser relax like two school boys.” Charles Hurd, also of the
New York Times,
identified Kennedy in his May 26, 1935, column as the president’s current “confidante, the individual outside the Cabinet circle” with whom he discussed his “pressing problems . . . the worries of the day.” Exaggerating even more than Krock the position Kennedy occupied in the administration, Hurd reported that the SEC chairman dined “at the White House three or four evenings weekly and he is the last man before whom proposals are laid by Mr. Roosevelt after the President has discussed them with the specialists.”

Had the business recovery been more rapid or more sustained, the president would not have needed Kennedy by his side. But although it was true, as Kennedy had reported in speeches in Chicago and New York earlier in the year, that business activity was on the rise, it was also the case that unemployment remained scandalously high, still over 20 percent, and the “forgotten men” whom Roosevelt had preached to and who had supported him for the presidency in 1932 and in the 1934 midterm elections were losing patience.

The president had several choices: (1) he could stay the course and hope to weather the attacks from left and right until the economy righted itself—if it did; (2) he could move closer to the business community by reducing government spending, easing up on reform, and letting business regulate itself; or (3) he could move to the left, raise taxes on the rich, support labor’s attempts at unionization, and spend more money to put the unemployed back to work.

His decision to take the third option and embark on a new and massive jobs or “work relief” program was intended, in part, to shift attention—and support—away from the grandiose schemes for sharing the wealth and ending unemployment tossed onto the public agenda. Father Charles Coughlin, the Detroit radio priest, had by early 1935 attracted a loyal following of nearly forty million radio listeners and enrolled eight and a half million “persons qualified to vote” for his National Union for Social Justice, which advocated higher taxes on the wealthy, a guaranteed annual wage, the nationalization of public utilities, protection for organized labor, and much more. Dr. Francis Townsend of Long Beach, California, nearly seventy now, was listened to by millions more who believed that his plan to give pensions to every American sixty and over who promised to retire would solve poverty and unemployment. Roosevelt’s most dangerous rival in 1934 was neither Coughlin nor Townsend, popular as they were, but Senator Huey Long of Louisiana, who had his own “Share the Wealth” program, clubs across the country, a mailing list of seven and a half million Americans, and a profound understanding of how elections were fought and won.

Early in 1935, Roosevelt convened a meeting to discuss a new work relief effort and public jobs program. In attendance were Harold Ickes, his secretary of the interior; Harry Hopkins, who ran the Federal Emergency Relief Administration; and Henry Morgenthau, secretary of the treasury. Though Kennedy was not a member of the cabinet or director of any of the New Deal relief agencies, he was invited to the first planning sessions. According to Harold Ickes, Kennedy was initially “quite cold on the matter of a public works program,” but during the course of discussion he was “swung over and favored such a program.”
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In January 1935, Roosevelt asked Congress for several billion dollars to put Americans back to work. In April, Congress gave him what he had asked for. Kennedy was called to the White House to advise the president on how to spend the money. “The President has just appointed me to the small Executive Committee for the spending of the $5,000,000 relief fund,” he wrote Jack on April 26, 1935. “I don’t know how in heaven’s name I am going to find any time, but I will stick it out as long as I can. It looks very doubtful, however, if I will be able to finish this job by the first of July,” the goal he had set himself.
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Having secured the funds he needed for his new work relief program, Roosevelt required both a plan and an administrator to implement it. Harry Hopkins and Harold Ickes were the principal candidates and rivals for the job. Morgenthau suggested that to avoid internal bickering between the two, Roosevelt appoint Kennedy. Kennedy turned down the proposal because he did not want to be put in a position where he would have to work with “Honest Harold” Ickes. At age sixty, the crusading midwestern Republican whom Roosevelt had made his secretary of the interior and then entrusted with the Public Works Administration was an indefatigable infighter, smart, ambitious, vain, and incorruptible. Though Kennedy and Ickes would feign friendship at times, neither had any use for the other. Kennedy thought Ickes a duplicitous, gossiping, fuzzy-minded, antibusiness radical. Ickes despised and distrusted Kennedy as a confidence man and stock swindler. He was also a bit jealous of Roosevelt’s affection for and seeming trust in a man he, Ickes, detested.
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A new relief program was a necessity, but it was not in itself going to steal the thunder from the president’s critics. The president had to also demonstrate that he believed in sharing or redistributing the nation’s wealth. The only way to do this was by increasing taxes on inheritances and the income of the wealthiest Americans. Knowing the opposition such a measure was bound to elicit and hoping to defuse it, Roosevelt invited Edmond Coblentz, William Randolph Hearst’s senior editor, to the White House. Over the course of a four-hour cocktails/dinner discussion, Roosevelt explained patiently but passionately to Coblentz that he was fighting not just “Communism [but] Huey Longism, Coughlinism, Townsendism. I want to save our system, the capitalistic system; to save it is to give some heed to world thought of today. To combat . . . crackpot ideas, it may be necessary to throw the forty-six men who are reported to have incomes in excess of $1,000,000 a year to the wolves. In other words, limit incomes through taxation to $1,000,000.” Hearst was one of those forty-six men whose income was about to be “limited.”
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To emphasize that the tax message he was sending to Congress was not a radical but a conservative measure intended to save the capitalist system from its enemies, Roosevelt sent Kennedy to meet with Hearst. Kennedy spent a week at San Simeon in early May, the longest time he had been out of Washington since his Christmas vacation with his family in Palm Beach. Whatever he said did the trick. Hearst cabled his editors across the country asking them to “please hold up articles critical of administration for a while. . . . I think we would be fairer to administration and also more effective in our criticism if we discriminated more and also if we had commendation for some measures.” One of the administration measures Hearst identified as “beneficial to the country” and deserving commendation was the “securities act” that Kennedy administered.
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Franklin Roosevelt was so delighted with Kennedy’s success at San Simeon that he offered to bring him back to Washington “on Battleship through Panama Canal. Happy Landings.”
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There was, unfortunately for the president, a limit to the magic Kennedy could work. The Hearst papers held their fire for a month. Then on June 19, 1935, after Roosevelt had formally requested that Congress raise tax rates on incomes over $1 million, inherited fortunes, and large corporations, Hearst went back on the attack. “President’s taxation program is essentially Communism,” he telegraphed his editorial writers across the country. “It is to be sure, a bastard product of Communism and demagogic democracy, a mongrel creation which might accurately be called demo-communism, evolved by a composite personality which might be labeled Stalin Delano Roosevelt.”
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The Roosevelt administration, with Kennedy in the thick of it, spent the spring and summer of 1935 designing and implementing its $4 billion work relief program, preparing new tax legislation, watching anxiously as the Wagner Act (which provided workers with the government-sanctioned-and-protected right to organize unions) wound its way through Congress, waiting for the Supreme Court to issue its decision on the legality of the National Recovery Act (which it did on May 27, declaring it unconstitutional), and lobbying for a public utility holding company bill.

Kennedy was involved in all these projects, but the one that took the most time and caused the most trouble was the public utilities bill, an essential part of the administration’s rather dramatic turn to the left. The aim of the legislation was to break up the large holding companies that together controlled three quarters of the nation’s privately owned electricity-generating industry. The moment the bill was introduced in Congress in February, Wall Street and the utility companies had launched a mammoth lobbying and misinformation campaign against it, claiming that the legislation, if approved, would halt investment, curtail future innovations, raise consumer costs, and lead to government ownership of the utilities and the ruin of the millions of Americans who had invested their life savings in utility holding company stocks.

Louis Howe, whose job it was to protect the president politically, asked Kennedy if it was true, as the lobbyists claimed, that five million Americans owned utility company stock. Kennedy thought the number too high but agreed that Americans who had invested in utility stocks were right to worry about the legislation. That, however, was not sufficient reason not to go ahead. “After all, the total number of investors is so much smaller than the total number of the public affected by unjust public utility rates that the interest of the latter must prevail. It goes without saying that greater violence would be done the public as a whole if utility holding companies were allowed to continue as at present than that being done to investors by the proposed legislation.”
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Washington was inundated by more utilities lobbyists than there were senators and congressmen combined. The public utility holding company bill was furiously lobbied, amended, and reamended all that spring and into the early summer of 1935. The bill that was passed by the Senate in June called on the holding companies to voluntarily restructure themselves into regional operating entities. To provide an incentive for such restructuring, the bill contained a “death sentence” provision mandating that companies that had not been so restructured by January 1, 1940, would be dissolved. Though Kennedy privately thought the “death sentence” a bit harsh and confrontational, what concerned him more was that the SEC was to be assigned responsibility for implementing it—this at a time when it was already overburdened with administering the Securities Act of 1933 and the Securities Exchange Act of 1934. “The four of us [Pecora had resigned at the end of his term and no replacement had been named],” he wrote Sam Rayburn, who was steering the legislation through the House, “have been carrying the load here for the last six months and we frankly are all shot to pieces, and need to get some rest before we take on this terrific new job.” He asked Rayburn to amend the bill so that it would become effective on December 1, giving the SEC thirty extra days to prepare. “I just do not see how we can start off by the first of November.”
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Worse was yet to come. Under pressure from the utility company lobbyists and business interests, Rayburn was forced to amend the bill in the House, replacing the mandatory “death sentence” with a watered-down provision that gave the SEC sole responsibility for determining whether the “public interest” was served by permitting a holding company to control two or more “integrated” systems in noncontiguous geographic areas. Kennedy was outraged. As he wrote the president and Burton Wheeler, the sponsor of the bill in the Senate, there were two essential problems with the amended House bill. The “administrative burden” imposed on the SEC in determining whether to dissolve a holding company was “overwhelming.” Even more critical, however, he thought it exceedingly “poor policy to vest in any one group of men [the SEC commissioners] the tremendous responsibility involved in this grant of power. . . . In a matter of this kind where there are at stake the interests of millions of people, investors, and the consuming public alike, I do not believe that any Commission should be given unfettered discretion to decide matters of such transcendent importance.”
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The debate over the public utility holding company legislation and the “death sentence” continued through the summer, to Kennedy’s dismay. He had hoped to get away to Hyannis Port after July 4 but found himself interminably tied up in Washington. “I am spending the weekend here working on the Utility Bill,” he wrote Swope on July 13, 1935. “Anybody could have made a lot of money betting me at odds of 100 to 1 that I would spend a summer weekend in Washington.”
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On July 11, while he was in Washington working on the utility bill, Roosevelt cabled him from Hyde Park with yet another task: “A lot of business men feel that not the least important block to recovery lies in excessive steel prices. Do you want to do a little quiet looking into this for me?”
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Having now spent the largest part of two successive summers in Washington, knowing that come fall he would have to put into operation the public utility legislation, bone weary from having worked twelve-hour days and six-day weeks for the past year, Kennedy decided to resign. After visiting Hyde Park to tell the president of his plans, he delivered his formal letter of resignation on September 6, 1935. He was, he wrote the president, leaving government service for “personal reasons.” He had agreed to serve for only a year but had remained in place for fifteen months. He was resigning now so that his successor would have ample time to prepare for the implementation of the new Public Utility Holding Company Act.
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