Joseph P. Kennedy: A portrait of the founder (Fortune Classics, 1963)

April 10, 2011: 9:06 AM ET

He was a capitalist but he had no business in the ordinary sense, and wanted none. His consuming occupation was the advancement of the Kennedy name and fortune.

Editor's Note: Every week, Fortune.com publishes favorite stories from the Fortune magazine archives. The following story -- published in the January 1963 issue -- offers a detailed account of the financial and political rise of Joseph P. Kennedy, who is largely responsible for laying the foundation of one of the most revered political dynasties in American history. On April 3, "The Kennedys," an eight-part television miniseries that focuses on Joseph's painstaking involvement in his sons' political careers, premiered on ReelzChannel to mixed reviews. The series has been criticized by historians and members of the Kennedy family alike, but the attention it has received leaves little doubt over the endurance of this patriarch's legacy.

By Richard J. Whalen

Joseph P. Kennedy, circa 1925

Joseph P. Kennedy, circa 1925

FORTUNE -- In a way that goes deeper than ordinary parental pride, their success is his. For the achievements of Joseph P. Kennedy's three sons, centering on the high drama of the presidency, spring from the father's lifelong drive for money, and for power for his children. He has achieved both ambitions to a fantastic degree. With the seating of his youngest son in the U.S. Senate this month, Joe Kennedy has seen the climax of a political success story without precedent in American history. The dynastic Adamses never did anything like it; neither did the Roosevelts. Inevitably Joe Kennedy's very success moves his own story into the background, and that, too, is the way he wants it. He deserves a more prominent place.

He made his fortune, as his 1908 yearbook at Boston Latin School forecast, "in a very roundabout way": stockmarket speculation, the movies, corporate reorganization, liquor importing, and real estate. He has protected his wealth in recent years by heavy investments in tax-sheltered oil ventures and municipal securities. Including the celebrated trust funds and the family charitable foundation, the Kennedy fortune stands in the neighborhood of $300 million, although some informed guesses put it as high as $500 million. In Joe's brusque public accounting, there is "enough"-- enough so that he confidently numbers himself among the 20 wealthiest men in the country.

Throughout his business career, Joe Kennedy was a smart, rough competitor who excelled in games without rules. A handsome six-footer exuding vitality and Irish charm, he also had a tight, dry mind that kept a running balance of hazards and advantages. Quick-tempered and mercurial, he could move from warmth to malice in the moment it took his blue eyes to turn the color of an icy lake. Friendships shattered under the sudden impact of brutal words and ruthless deeds, yet those who remained close to him were drawn into a fraternal bond. Restless at a desk, he was an instinctive speculator, moving into situations and moving out quickly when the possibilities were exhausted. He was a capitalist, yet one who stood apart from the system of finance, production, and distribution. He left to others the responsibility for enterprises demanding effort in good season and bad alike. He had no business, in the ordinary sense, and wanted none. As he moved from Boston to Wall Street to the chairmanship of the Securities and Exchange Commission and, on to the crowning ambassadorship to the Court of St. James's, his consuming ambition was the advancement of the Kennedy family.

"From the beginning, Joe knew what he wanted -- money and status for his family," says one who knew him intimately in Washington during the New Deal. "He had the progenitor's sense; to him, his children were an extension of himself. Therefore, what he did, he did with them always in mind. He played the game differently than if he had been after something entirely for himself."

The Kennedy Family smile, caught here at the U.S. Ambassador's residence in London, dazzled all England when Joe Kennedy turned on his charm at the Court of St. James's prior to World War II. Standing (from left) : Kathleen (killed in 1948), Joe Jr. (killed in 1944), Jean, Eunice, Rosemary, and Jack. Seated: Patricia, Teddy, Bobby, and Rose. The smiles on both sides faded abruptly when Kennedy publicly down-rated Britain's ability to withstand the Nazis--and ultimately resigned.

Beachhead in a hard land

If Joe Kennedy had been born in another place, in another time, his career almost certainly would have been quite different. By the chance of birth, he made his beginning in a time and a place that crushed the weak and toughened the strong. His birthplace, on September 6, 1888, was East Boston, an expanding beachhead for the waves of Irish immigrants who had been washed up on New England's inhospitable shores following the potato famine more than a generation earlier. Boston in those days was a queer city, no longer what it had been and not quite what it would become. Just before the turn of the century, the city was in the twilight of its reign as the nation's financial center, and the chill certainty of dethronement before, the rising money power of New York caused the leading citizens to be all the more jealous of the encroachments of the energetic aliens in their midst. A reflective friend of Kennedy's, himself a New England Irishman, sets the scene: "Joe got his start in a hard, poor land, among Yankees who had stepped on faces to get what they had, and who knew the meaning of struggle."

Patrick J. Kennedy, Joe's father, could absorb punishing lessons and prosper by them. A quiet, self-possessed man, he started on the docks not far from where his son was born, but soon asserted to the calling that drew spirited Irishmen like the skirl of bagpipes. He went into politics, becoming a state representative at 28 and a state senator at 32. This led naturally into the only fields of enterprise then open to the Irish: partnership in a pair of East Boston saloons, the wholesale whiskey trade, a coal company, and finally neighborhood baking. He sat on the all-powerful city Democratic committee, or board of strategy, which decided who got what, and logically he became Boston's election commissioner. Through a boyhood of improving family fortunes, young Joe had before him an example of a determined man's ability to take the world as he found it, and turn it to his own ends.

Joe's was a comfortable and uneventful childhood. His father had decided early to set him apart from the run of fellow Irishmen. Joe was withdrawn from parochial school in the seventh grade and deliberately thrown into the company of the Protestants from the West Side and the regions of the Back Bay. He attended Boston Latin and was one of the most popular boys in his class. In a day when young Irishmen went to the Jesuits of Boston College or Holy Cross, Joe enrolled at Harvard with the class of 1912. He was now deep behind enemy lines and face to face with the Brahmin foe.

Just as poverty as a spur is inconveniently missing in the Kennedy saga, so one searches in vain for the goad of savage prejudice during his stay in Cambridge. Crude discrimination of the bullying sort belonged to Pat Kennedy's day. His son encountered a more subtle exclusion that a tough-fibered young man could readily learn to ignore. In the first decade of this century, Yankeedom was shifting its defenses, withdrawing from points made untenable by the weight of Irish numbers, and regrouping at the bastions that counted. A sprinkling of Irish in Harvard Yard could be endured.

Of course, Joe was ineligible for the best undergraduate clubs, but then so were all but a relative handful of his classmates, those who had attended the "right" Episcopal prep schools. While young Brahmins danced at debutante balls on Beacon Hill, Joe attended parties with his Irish chums and enjoyed vaudeville from the balcony at the Keith. By his own account, he did "all right" at Harvard. Concentrating on history and economics, he received passable grades in the classroom while turning in a better practical performance over three summers: with a partner, he made $5,000 running tourist buses. He also made Hasty Pudding, D.K.E., the Institute of 1770, and DU (where he pledged with Robert Benchley and Clarence B. Randall). He won his varsity baseball letter by playing the final inning against Yale in his junior year, an episode that surviving teammates still wryly recall. With Harvard comfortably ahead and only one out remaining, the team captain halted play and called Joe from the bench to play first base. The next Yale batter hit a dribbler to the infield and Joe made the final put-out. As the team walked off the field, the Harvard captain, who had assured Joe of his coveted H, asked for the game-winning ball. Joe stuck the ball in his pocket and walked away.

In June 1912, Joe emerged from Harvard into a provincial Boston. The city of the Cabots, Lowells, Lodges, Peabodys, Adamses, and other first families had hardened in a mold they found perfect and meant to preserve against all change. The founders -- adventurous sailing captains and daring merchant princes of the nineteenth century -- looked down sternly from portraits over polished mantels. Had they returned, even these Yankees aglow with the creator's instinct would have found the environment cold and cramped.

"Coming of age in Boston," says a long-time friend, "Joe Kennedy saw early what made the power and gentility he wanted. It wasn't talent; it was ancient riches. Power came from money. Joe had a keen mind, and it was honed against the great cynicisms underlying rank and station in Brahmin Boston."

Life with father-in-law

Young Kennedy's first step in this bleak landscape was a carefully measured one. His father had helped organize, and was a director of, the Columbia Trust Co., a small East Boston bank with capital of $200,000 and a surplus of $37,000. Using his father's influence, Joe got himself appointed a state bank examiner at a salary of $1,500 a year. The pay was unattractive and the hours were long, yet the job seemed to offer a wedge into Boston's leading profession. "That bank examiner's job laid bare to Joe the condition of every bank he visited, and what he learned about the structure and securities of state banks was valuable to himself -- and to others," says Ralph Lowell, a Harvard classmate and now chairman of the Boston Safe Deposit & Trust Co.

Joe pored over other people's ledger books for a year and a half, going to school in the counting rooms of the powerful as Pat Kennedy had done on their streets. Away from his job, he squired the attractive Rose Fitzgerald, the daughter of Boston's mayor, and danced an enthusiastic tango. He took his cronies from among the up-and-coming Irish -- as he would throughout his career. A friend, Henry J. O'Meara, started a real-estate company that did well; Joe invested, was elected treasurer, and left almost immediately with several friends on a vacation jaunt to Europe. Returning, he asked O'Meara if the company had made any money in his absence. "Yes," said O'Meara, "just about enough to pay for your trip."

The apprenticeship in banking ended abruptly in 1913 when a wave of bank mergers threatened to engulf the family interest in Columbia Trust. First Ward National wanted it and was on the verge of taking it over. Pat Kennedy and relatives scraped up what cash they could and turned the counterattack over to young Joe. He borrowed additional money from one of First Ward's competitors, Eugene V. Thayer, president of Merchants National Bank. (When the sharp-trading banker discounted his note, the stalwart O'Meara stepped into the breach with a badly needed $1,200.) With the stock he now owned and the proxies he rallied in East Boston, Joe controlled Columbia Trust and had himself elected president. At 25, he was widely publicized as the youngest bank president in the country. Joe at length grew weary of the "youngest" tag and cut short one interview with a somewhat priggish quip: "Youth is neither a crime nor a novelty."

Present-day public-relations experts would diagnose his testiness as arising from concern with the Kennedy "image." Striving for acceptance, Joe draped his athletic frame in ultraconservative clothes, wore a homburg, and affected an austere scowl. It wasn't all window dressing. He was as quick to foreclose a mortgage as the next moneylender. Success had become more urgent with his marriage to Rose Fitzgerald in October 1914, at a nuptial Mass performed by Cardinal O'Connell. Heavily in debt as a result of the Columbia Trust proxy fight, he borrowed another $2,000 for a down payment on a $6,500 house in Brookline, which filled up quickly as the family began arriving.

The union of the Kennedy and Fitzgerald families combined different, and basically opposing, responses to the Irish situation in Boston, but there never was a question which way Joe would go. Joe's father-in-law, Mayor John F. Fitzgerald, would forever be the irrepressible "Honey Fitz," whose political stock-in-trade was the role of unassimilated outsider. (The fact that his daughter attended a convent school abroad, and returned to form a circle of cultivated Irish young ladies who conversed in textbook French, in no way affected the public posture of Honey Fitz.) On the other hand, Pat Kennedy, who privately characterized his political cohort as an insufferable clown, transmitted to his son a burning wish to explode the Irish stereotype and beat the lordly Yankee on his own high ground.

The way to meet the Saltonstalls

If an Irishman could not wrest social acceptance from the unbending Yankees, who were tightfisted with that commodity even among themselves, he could at least earn respect in the marketplace. Joe Kennedy did just that. "Joe was born mature," says a friend. "He would meet powerful, socially prominent men in passing, and later they would say to each other, 'That fellow has something.'" One thing Joe had was sheer gall. He tried for months to gain a seat on the board of trustees of the Massachusetts Electric Co., and despite rejections kept on trying until he was finally elected. James A. Fayne, a long-time friend and an adviser in Kennedy's New York office, recalls asking Joe why he bothered to force his way onto the board of a moribund company. "Joe replied: 'Do you know a better way to meet people like the Saltonstalls?' I didn't, and I blushed for missing the point of what he was up to."

Charles M. Schwab

One older man who was impressed with this young fellow was a smart Yankee lawyer, Guy Currier. As World War I loomed, he was the lawyer for the Bethlehem shipbuilding interests and saw in Kennedy a likely recruit for Charles M. Schwab. On Currier's recommendation, Schwab hired the young man away from the sluggish banking business and installed him as assistant general manager of Bethlehem's booming Fore River Yard at Quincy. Through the feverish war years, Kennedy worked himself into a stomach ulcer by assuming big responsibilities for what was then big money: $20,000 a year in salary and bonuses. He was never so busy as to miss a moneymaking opportunity. Although Fore River employed some 55,000 workers, eating facilities were almost nonexistent -- until Kennedy turned restaurateur and opened the Victory Lunchroom, which fed 22,000 a day.

The speculator's apprentice

Work at Fore River took Kennedy only eight miles from Boston, yet it might have been another planet. Here, place depended on performance; a name was just that and nothing more. He met other young men on the way up. As a harassed production executive, Joe fought a friendly running feud with an equally harassed official at the government end of the pipeline, Assistant Secretary of the Navy Franklin D. Roosevelt. As in later tests, that man in Washington usually managed to have the last word. On one occasion, Kennedy refused to deliver vessels ordered by the Argentine Government until payment was received, and vetoed Roosevelt's conciliatory formulas for warding off an international row. Finally, the Assistant Secretary dispatched Navy tugs to tow the vessels away from Fore River and the fuming Kennedy.

Toward the war's end, Joe set out to line up civilian shipbuilding orders and laid siege to the offices of broker Galen Stone, chairman of the board of Atlantic, Gulf & West Indies, whom he finally cornered on a New York to Boston train. According to the oft-told tale of that ride, Stone wasn't interested in ships. He was interested in Kennedy, and offered him the managership of the Boston office of Hayden, Stone & Co. The salary was $10,000 a year, quite a comedown from what Joe had earned at Fore River, but the potential was more promising. For quiet, precise Galen Stone, many times a millionaire, was one of the shrewdest speculators along State Street.

Galen Stone

Under Stone's tutelage in the tricky postwar market, Kennedy acquired the skills to go with his instincts, occasionally missing (as when he plunged on an impeccably touted stock that skidded from 160 to 80) but steadily improving his aim. The warm-up for the speculative circus of the Twenties was the Florida land boom, and the Boston real-estate tyro wanted to jump in with both feet. Stone and Matt Brush, another veteran who took a liking to Joe, advised against it, and Kennedy held back, explaining to a friend: "Any man can be wrong, but Galen Stone and Matt Brush can't both be wrong at the same time." Knowing the value of good advice saved Kennedy from being swamped when the bubble burst, and enabled him to grab bargains from the wreckage. Kennedy already was showing his talent for picking the best brains.

At the end of 1922, Galen Stone retired and his protégé struck out on his own. He remained at Hayden, Stone's 87 Milk Street address, moving into a separate office behind a door reading: Joseph P. Kennedy, Banker. At 34 (with five children), Kennedy was now in business for himself, moving as he pleased toward his own ends. The rising breeze from Wall Street bore the unmistakable smell of big money, so Joe followed his nose.

Chasing bears from a sickbed

To an extent scarcely imaginable in a day of regulated underwriting and policed markets, Wall Street at the beginning of the bull market of the Twenties was a trackless waste where the unwary had no business. It was the closed preserve of insiders, tipsters, and manipulators, ruled by intense men like Jesse L. Livermore, who operated from secret offices equipped with 30 telephone lines, Frank Bliss ("the silver fox"), Arthur W. Cutten ("the novice with a bag of tricks"), and Mike Meehan ("the redheaded buckaroo of Radio"). The absence of regulation threw men on their own resources, and the daily combat rewarded precisely the kind of cool, appraising mind and strong nerves Kennedy possessed.

He became adept at the manipulative technique known as the stock pool. With a few others, he would take options on, say, 100,000 shares of an idle stock at a price of, say, $20 a share. The pool would "advertise" the stock by trading shares back and forth across the tape until outsiders, seeing this activity, leaped at a seeming good thing. At the likely top, perhaps $30, $50, or even higher, the pool would ''pull the plug," selling the gullible public all it wanted of the overvalued stock and pocketing the profits. A refinement of this strategy added the step (and profits) of short selling in the stock on the way down.

Like being a concert pianist or painting a picture worth hanging in a museum, speculation is an art requiring utter self-discipline. Kennedy willingly paid the price for his first millions. In April 1924, for example, he was suffering from neuritis and was concerned over the imminent birth of his sixth child. At a telephone call, he dropped everything to catch a night train to New York and organize the defenses of the Yellow Cab Co. against a bear raid. The stock had been driven down more than 30 points in barely a month. Yellow Cab's John D. Hertz raised $5 million from such Chicago friends as Wrigley and Lasker and put it at Kennedy's disposal. Joe took a room at the old Waldorf, climbed into bed, and picked up the telephone. Four weeks later, after a bewildering succession of buy and sell orders placed around the country, the raiders had lost control of Yellow Cab, the stock had been stabilized with Hertz's $5 million still intact, and Kennedy could climb out of his sickbed and catch a train to Boston to see his newborn daughter.

The radical in the Rolls-Royce

Several months after Kennedy had put a seemingly solid floor under Yellow Cab, the stock plummeted. The break may have been touched off by a poor earnings report, but Hertz suspected Kennedy of pulling away the uprights he had erected. It would not have been unthinkable to those who knew him. His mind always detected the remote gains in immediate tasks.

His politics worked that way, too. In the fall of 1924, Senator Burton K. Wheeler of Montana had returned to his native New England, as the popular running mate of Wisconsin's "Fighting Bob" La Follette on the Progressive party ticket. Massachusetts Democrats were running scared. Arriving in his Boston hotel room, Wheeler received a visit from Kennedy's chief lieutenant, Eddie Moore. Kennedy, it seemed, wished to welcome Wheeler by lending him an automobile for his campaign swing. In his newly published autobiography, Yankee from the West (Doubleday), Wheeler tells of this hospitality:

"Kennedy supplied me with his Rolls-Royce and chauffeur… In swanky Newport, Rhode Island, and in all the principal towns from there to New York, I denounced Wall Street often from the back seat of a Rolls-Royce owned by a Wall Street operator. It occurred to me later on that Kennedy actually might have been trying to undermine me in this fashion."

Wheeler, now practicing law in Washington with his son, heard nothing from Joe after he left the Senate in 1946, until one day early in 1960 when Joe called to ask if Wheeler possibly had newspaper clippings mentioning his modest support of the Progressive party more than three decades before. "Jack was running in the Wisconsin primary," says Wheeler, "and Joe thought it might do some good to tie the Kennedy name to La Follette."

Out of the small, clear puddle

In the phrase of one fascinated observer, Joe Kennedy is an "angle shooter who likes to move around the table." His short, crowded career in the movies consisted of adroitly executed carom shots. Kennedy started on the road to Hollywood by way of upper New England. Soon after leaving Hayden, Stone, he joined with a group of Boston businessmen to buy the Maine & New Hampshire Theatres Co., a chain of 31 small New England theatres, which had the regional franchise for Universal Pictures. In 1926 an angle developed. The British owners of a U.S. film-producing company and its distribution affiliate, Robertson-Cole Studios, Inc., and Film Booking Office of America, Inc., respectively, were caught in a credit squeeze far from home and wanted to sell out. "From the theatre side of the business," says an associate, "Kennedy learned that Hollywood could wring you dry. He wanted to get to where the wringing was done." Eying Robertson-Cole's Hollywood studios, Kennedy raised cash by selling part of his interest in the theatre chain to Paramount, got Guy Currier to put up $125,000, and headed a small syndicate that swung a $10 million deal with the British.

The first SEC Commissioners: Ferdinand Pecora, George Matthews, Joseph P. Kennedy, Robert Healy, James Landis.

Deeply committed in the stock market and now the movies, Kennedy found Boston remote from his scene of operations. He also found its leading citizens stubbornly refusing to recognize this rising millionaire as anyone but the son-in-law of Honey Fitz. Kennedy had been stung by his rejection by the Cohasset Country Club, and his daughters would not be asked to join the debutante clubs -- "not that our girls would have joined anyway; they never gave two cents for that society stuff," he later told reporter Joe McCarthy. "But the point is they wouldn't have been asked in Boston." Kennedy now packed his family aboard a private railroad car and headed for a new home in Riverdale, New York. "This city was a small, clear puddle," says banker Ralph Lowell. "New York was a big, muddy one, and that's what Joe wanted."

Land of make-believe and big money

The muddy pond proved mainly a reservoir of capital in the years immediately ahead. On his frequent trips west, Kennedy discovered in Hollywood, with its pink stucco and palm-studded vistas, and its furriers transmogrified into moguls, the speculator's paradise: a land without substance or system, offering an endless variety of situations capable of being organized to his advantage.

Reorganized as F.B.O., Joe's newly acquired movie property was a moneymaker from the beginning. For one thing, with his financial connections, he did not have to pay the interest rates (as high as 18%) that had driven the British out, and he immediately established a $500,000 line of credit at four banks that provided ample operating capital. The onetime Bethlehem shipbuilder put F.B.O. on a mass-production basis, specializing in Westerns and melodramas starring Fred Thompson and Red Grange that could be cranked out one a week for $30,000 apiece at a time when major features ran up budgets 10 times higher.

From his base at F.B.O., Kennedy reached out for half-formed castles on the horizon. The first arose from the scratchy, exciting soundtrack of Al Jolson's The Jazz Singer, the original "talkie," which touched off a competitive scramble among the manufacturers of sound equipment. Radio Corp. of America started late and decided to make up ground by trying to combine a film-producing company with a chain of theatres and thus form an exclusive market for its Photophone patents. Kennedy liked the sound of that idea, and in late 1927 sold R.C.A. an interest in F.B.O. for $500,000, sealing the bargain with David Sarnoff as they stood one noon at a Manhattan oyster bar.

Edward Albee

In the next step, F.B.O. bought 200,000 shares in the Keith-Albee vaudeville circuit for $4,200,000. According to Douglas Gilbert's American Vaudeville, Kennedy acquired the stock from elderly E. F. Albee at a price of $21 a share (vs. $16 quoted on the market) and within three months it had soared to $50. Albee continued as president, but Kennedy and J. J. Murdoch, Keith-Albee's executive manager, took over the company. Albee's illusion that he was still the boss lasted until he entered Kennedy's office one day to make a suggestion. The conversation, according to Gilbert's account, was short and dagger-pointed: "Didn't you know, Ed? You're washed up, you're through." Albee understood, retired, and died shortly afterward, convinced that he had been betrayed.

For five frenzied months in 1928, Kennedy darted about Hollywood like a figure in an absurdly speeded-up movie. He ran two movie companies and a vaudeville chain, drawing a salary of $2,000 a week from each and profitably operating through options in the stock of all three. Beginning as president of F.B.O., he became chairman of Keith-Albee, supervised the merger producing Keith-AIbee-Orpheum, took over the chairmanship of Pathe Exchange (at the invitation of Elisha Walker, another nimble Wall Street operator) and cut weekly overhead by $30,000, became adviser to First National Pictures at a salary of $150,000 a year in June (and left in August), and through it all kept clearly in mind the grand combination sought by R.C.A.

The elements of the biggest prize came together in October 1928. F.B.O. and Keith-Albee-Orpheum, both headed by Kennedy, were merged with R.C.A. Photophone to form Radio-Keith-Orpheum. Radio traded its previously purchased F.B.O. stock for 20% of the stock in the newly created R.K.O., and won a market of some 200 theatres for Photophone equipment. Kennedy cashed in his stock for more than $5 million -- and pocketed an additional $150,000 for bringing about the merger.

Forget the top dollar

Having taken huge profits, Joe Kennedy was no longer interested in the movie business. He kept the chairmanship of Pathe for a couple of years, but ran the company through such lieutenants as Pat Scollard and E. B. Derr while he divided his time between New York and Palm Beach ("I really began to make money," he once told a friend at poolside, "when I came down here to sit on my butt and think"). And he independently produced a pair of films -- one a $950,000 fiasco, the other a moneymaker -- starring Gloria Swanson, whose attentive manager he had been since 1927. But the stripped castles of Hollywood had served their purpose; his interest now shifted back to the muddy pond where a tidal wave of speculation was gathering momentum.

With cold professional detachment, Joe Kennedy bet against the crowd. Beginning in 1928, he quietly liquidated his holdings ("Only a fool holds out for the top dollar," he remarked to a friend). He came through the crash with his wealth intact and made important money in the aftermath. Stories of short-selling profits running to a wildly improbable $15 million surround this period of Kennedy's career. In retrospect, the figure (whatever it was) isn't as interesting as the fact: Kennedy was immune to the heady talk of "a New Era" that sent some of the most important names on the Street tumbling after inflated stocks.

By way of explanation years later, he liked to tell of having to elbow his way into jammed brokers' offices in the frantic summer of '29, and of having his shoes shined in the financial district by a boy who called the turn on that day's trading; he decided a market everyone could play, and a shoeshine boy could predict, was no market for Kennedy. That sounds like the act of a hunch player, making a snap judgment and turning on his heel. Associates agree emphatically that Kennedy was no gambler.  Says a retired broker: "Joe wasn't interested in the day-to-day shifts of the market and the chance to make a few points here or there. He was interested in situations, in values. There's all the difference in the world between being a speculator and a gambler."

Elisha Walker

Kennedy, in the judgment of a broker who shared an office with him, had the ideal temperament for speculation -- "a passion for facts, a complete lack of sentiment, a marvelous sense of timing." There was also something about him that went unnoticed as he mixed well in all kinds of company, against every background. He was at ease with Street figures like "Sell 'em Ben" Smith, Barney Baruch, Jeremiah Milbank, and Elisha Walker; with corporation bosses like G.E.'s (GE) Owen D. Young and Radio's David Sarnoff; with press lords like Hearst, Roy Howard, and Colonel McCormick. He could enjoy the company of celebrities at the Astor Roof and roistering theatrical unknowns at Bertolotti's in Greenwich Village. Kennedy moved through many worlds, and only the keenest observer would be brought up sharp by the realization that this gregarious man was profoundly detached, and belonged to no world but his own.

A colorful Wall Street figure, Henry Mason Day, discussed Kennedy before the Senate Banking and Currency Committee in 1933. Day was a partner in the now-defunct brokerage house of Redmond & Co., which had secretly received capital from Kennedy that year. Day had included Kennedy in a pool in the stock of Libbey-OwensFord Glass Co., which ran up known profits of $395,000 in four months in 1933. (With repeal of prohibition imminent, the public falsely believed L-O-F to be a whiskeybottle manufacturer, when in fact it made plate glass.) Kennedy, who had not put up a cent for the L-O-F pool, had received $60,800 from it, and committee counsel Ferdinand J. Pecora was curious.

PECORA: Who is Joseph P. Kennedy?

DAY: Mr. Kennedy is a capitalist, or well-known private citizen.

PECORA: Do you know what his business is?

DAY: I do not think he is in business ... My understanding of a capitalist is somebody who has considerable funds and does not have to work.

Except in the sense of routine drudgery, Joe Kennedy was not free of toil; his greatest work was just beginning. But he was remarkably free of entangling allegiances.

The capitalist with the coal scuttle

That being the case, Kennedy could enlist without qualm in the New Deal that promised to "reform" capitalism and the business society. It was an alliance that probably would have amused Pat Kennedy. He and Honey Fitz and other ambitious Irishmen had honestly exploited the politics of underdoggery to escape the bottom and gain some money and influence. Now his son, who had gone beyond his father's dreams, was caught up in a new politics ringing with old promises of social justice. Figuratively speaking, the rich son had picked up the coal scuttle and free turkey and continued to climb the stairs.

Prime Minister Neville Chamberlain

Kennedy observed that he was probably the only man in the country with more than $12 in the bank who was for Roosevelt. He also said he would give up half his wealth in order to be assured his family could enjoy the other half in peace and safety. In 1932 he contributed $25,000 to Roosevelt's campaign, lent the Democratic party $50,000 more, and raised $100,000 among his friends. Beyond providing these urgently needed funds, he rode the campaign train with F.D.R., rooming with brain-truster Ray Moley, and scouted the whistle stops and cities as an advance man. After Roosevelt's election, he waited for the call to Washington and, he hoped, the Treasury seat in the Cabinet. But no call came, so he made the most of his time.

In September, 1933, Joe and Rose Kennedy took ship for Europe with Jimmy and Betsy Roosevelt, on a trip combining pleasure and profit. By midsummer, enough states had ratified the repeal amendment to ensure the end of prohibition in 1933. Joe was turning his tidy profit in the Libbey-Qwens-Ford pool, which exploited public expectations of repeal, and he now wanted to be in on the liquor boom when it came. Although representatives of British distillers were already in the U.S. lining up distributors, Kennedy went to the top in London, taking along his friend, the son of the President. He was appointed the U.S. agent for Haig & Haig, Ltd., John Dewar & Sons, Ltd., and Gordon's Dry Gin Co., Ltd., which meant millions of Americans thirsting for good Scotch and honest gin would get it through Kennedy. Copying a gambit used by others, he arranged for his newly organized Somerset Importers to import and stockpile thousands of cases of liquor, the stuff coming into the legally dry U.S. under "medicinal" licenses.

What of Jimmy Roosevelt? He had a pleasant ocean voyage. Some said he had foreseen a profitable partnership with Kennedy in the liquor business, and had been told by Joe: "You can't do that; it would embarrass your father." In any event, Kennedy, as usual, had no partners, and his reply to criticism of the deal was short and tart: ''Kennedy was doing all right by himself before he ever met Jimmy Roosevelt."

Kennedy had another nonpartner in the liquor business, according to a stilt brought by one John A. McCarthy in November 1934. McCarthy, a pre-prohibition brewer in Boston, alleged in a complaint filed with Suffolk County Superior Court, that he and Kennedy had had an agreement to go into the liquor-distribution business together, sharing equally in the profits. Kennedy had indeed gone into the liquor business in Massachusetts, forming New England Distillers Corp., a company with the regional distribution agency from National Distillers Products Corp. According to the account in the Boston Transcript, McCarthy's suit claimed that while Kennedy was allowing McCarthy to believe he was doing everything for the benefit of McCarthy, he in reality was working secretly to get the agency … " McCarthy's suit dragged on for two years and was eventually dropped.

Still eager for a place in Washington, Kennedy finally swallowed his pride and went to see F.D.R., who greeted him blandly: "Hello, Joe, where have you been? I thought you'd gotten lost." Kennedy's reward had been delayed by opposition at the White House, chiefly from F.D.R.'s waspish secretary, Louis McHenry Howe, and by Roosevelt's own uncertainty about where to put this man of strong opinions. In a typically Rooseveltian stroke, he decided to make the celebrated speculator the cop on Wall Street's corner.

New Dealers were astonished. Secretary of the Interior Harold L. Ickes wrote in his diary: "The President has great confidence in him [Kennedy] because he has made his pile ... and knows all the tricks of the trade. Apparently he is going on the assumption that Kennedy would now like to make a name for himself for the sake of his family, but I have never known many of these cases to work out as expected."

In July 1934, Kennedy was appointed to a five-year term on the newly created Securities and Exchange Commission. The other SEC commissioners -- Ferdinand Pecora, James Landis, George Mathews, and Robert Healy bowed to F.D.R.'s choice and elected Kennedy Chairman. Scripps-Howard's Washington Daily News blasted the appointment ("a slap in the face to his most loyal and effective supporters") and Pecora not too privately expressed shock at sitting with the man who had made a killing in Libbey-Owens-Ford only a year earlier. A man of charm when he wanted to be, Kennedy began winning over his distrustful colleagues by inviting them to lunch and asking point-blank: "Why the hell do you fellows hate me?"

The power to purge

If Kennedy was disappointed at not being named Secretary of the Treasury, he soon recovered. A man who knew him well says: "Joe analyzed the increments of power and cut away the fuzz on the edge until the bare bones showed. He had the sense to recognize the opportunity offered by the SEC. While the Secretary of the Treasury symbolized power and prestige, here, in the new SEC, was the real power. The Treasury was the tent, hung with trappings, but the SEC was the sword of command, the power to purge. Joe could tell the moneymen in New York what they would do, and they damned well better do it, or he could sweep them into the sea."

Another friend describes Kennedy as "an anti-Establishment man," who had little respect for Wall Street because he thought it deserved little. Speaking for himself in 1936, in his campaign book, I'm for Roosevelt, Kennedy recalled the Senate investigation of 1933-34: "For month after month, the country was treated to a series of amazing revelations which involved practically all the important names of the financial community in practices which, to say the least, were highly unethical.

The belief that those in control of the corporate life of America were motivated by honesty and ideals of honorable conduct was completely shattered. Privately, in less elegant language, he had things to say about businessmen in general that echo to this very day.

Prominent New Dealers soon warmed up to Kennedy. Says Jim Landis, now a New York attorney: "By the time Kennedy came along, I'd been pounded for a year by the financial interests and I knew how difficult it was going to be to get the SEC off the ground. Kennedy was impressive. They would take things from him that they wouldn't take from us reformers." Leaders of the financial community were invited to Washington to be informed of what they intuitively knew but dreaded -- Wall Street could no longer be autonomous -- and to be persuaded of the wisdom of self-policing. After consultation, the New York Stock Exchange registered under the Securities and Exchange Act, adopting as its own essentially the trading rules set forth by the SEC.

More difficult was the task of restoring the capital market. Wall Street underwriters, claimed angry New Dealers, were waging a strike of capital, hoping to force the SEC to relax its regulations. "Nobody could ever blackmail Joe," says an experienced Washington hand. "He would have you on your back and your head off in nothing flat." According to awestruck New Dealers, Kennedy neatly decapitated the underwriters. In early 1935, Swift & Co. asked SEC approval of a $43-million bond issue, a fat figure in those-lean days, but the crucial fact was that the underwriters, Salomon Bros. & Hutzler, were persuaded to sell the issue directly to the public rather than through other investment houses; the underwriters took as their commission a fraction of a point, instead of the customary two or three-point spread, a procedure that made financing cheaper. That alarming break with the traditions of banking suddenly brought a flood of new financing. By the end of 1935, corporate underwritings had totaled $2.3 billion (vs. $491 million in 1934).

Silent lieutenants and boon companions

Joe Kennedy's wealth, ability, and good fellowship exerted a powerful magnetism. He also had an extra charm that attracted topflight assistants and important friends. Says a ranking New Dealer: "Joe led people into camp. It was the showman in him. You were riding with human destiny when this glamorous personality beckoned you to his side. "

At the SEC and elsewhere, Kennedy demanded maximum security about his affairs. He surrounded himself with a circle of tight-lipped lieutenants, a fraternity of Irish cronies who could be trusted. Among those who came to Washington were faithful Eddie Moore, once secretary to Honey Fitz; Jim Fayne, a former partner at Hornblower & Weeks; Joe Sheehan, a baseball teammate at Boston Latin School; and Johnny Burns. A brilliant lawyer, Burns had been the first Roman Catholic on the Harvard Law School faculty and a Massachusetts superior court justice at 30; he left the bench to become the first counsel of the SEC. A Harvard classmate who did not accept an invitation to join Kennedy sums up what it meant to be Joe's man: "You have to be sharp and alert, but not too sharp. Above all, you have to take orders. Joe has the habit of command. "

In Washington, Kennedy was by turns a driving taskmaster and a boon companion to those around him. Each evening he and his aides repaired with packed briefcases to Marwood, a rented estate deep in the Maryland countryside. Often a special outsider would show up. F.D.R. liked to slip away from the White House to sip double martinis and watch movies in Marwood 's basement projection room. Joe sometimes relaxed by listening to classical records on the terrace. "You bastards don't appreciate culture, " he retorted when cronies begged for jazz as a change of pace.

A restless, impatient man, Kennedy had fixed a target date for departure from the SEC . He disliked being away from his family, and away from chances at the big money. (His government salaries, he once groused, just about paid the telephone bills.) The Supreme Court's overthrow of the NRA upset his schedule by four months, but he finally resigned in September 1935, earning from F.D.R. a "Dear Joe" letter praising his "skill, resourcefulness, good sense, and devotion to the public interest." It was well-merited praise; even the SEC's critics were coming to regard it as the New Deal's most constructive reform. Kennedy's 431-day tenure as overseer of the financial community had sent his prestige soaring. And his influence now made him a sought-after, and expensive, corporate consultant.

His first client was David Sarnoff's Radio Corp. of America. Once the bellwether of the great bull market, Radio now was imprisoned by a capital structure that bore no relation to the company's earning power. Watching arrears mount, two classes of preferred stockholders jealously warred with one another and with the common stockholders, who had never received a dividend. The result was stalemate and slow stagnation.

In the space of six weeks, Kennedy and his staff drew up an ingenious compromise, delicately balancing one stockholder interest against another. Essentially, the plan called for 2.5% bank loans to retire outright one class of 7% preferred stock, and creation of a new preferred stock to be swapped for an older issue, which could eventually be converted to common. The dilution of the latter was sweetened by the realistic prospect of dividends. At R.C.A.'s meeting in April 1936, President Sarnoff announced that the stockholders had approved the plan by a 1,000-to-one majority. Someone asked what the Kennedy Compromise had cost. Sarnoff prudently turned to Kennedy. "At the SEC we always demanded the truth, and I guess some of you will get a shock," said Kennedy, smiling. "My fee was $150,000, from which I paid $30,000 to accountants." The stockholders were either so shocked or so well satisfied that they asked no further questions.

Consultant Kennedy now turned to a sick movie company, Paramount, and diagnosed an acute case of inefficiency. The tone of his long report to the board was severely avuncular: "Out of total overhead expenses of $5,500,000 at the studio last year [1935], $2,275,000 represented provision for losses in respect of stories purchased and scenarios written, later abandoned, and in respect of artists' salaries for idle time and excessive time spent on pictures ... It would be little short of criminal if, on the threshold of a period of prosperity for the industry, this opportunity to eliminate waste and substitute profits were to be passed by without action." Paramount's directors swallowed their medicine, paid Kennedy his fee ($50,000), and began a recovery program based on his recommendations.

His next call took him to the debt-ridden Hearst empire, where he worked out a comprehensive plan of reorganization at the fabulous salary of $10,000 a week. But by this time Kennedy was discovering that he missed the thrill of being part of great events. In an earlier conversation with F.D.R., he had remarked: "I'll take any job you want me to and even work for nothing at it so long as it's interesting. I never want to be bored." Bored by business, Kennedy hit the 1936 campaign trail for F.D.R., his sights set on a return to Washington. After all, he told friends, he deserved some excitement for the $600,000 a year he paid in taxes.

"Your sweetheart was just in here"

Roosevelt's re-election brought a job for Joe Kennedy, a dirty task deep in the engine room of government. He was asked to take over the Maritime Commission and see if a respectable merchant marine could be created out of the high-cost, low-efficiency, strike-plagued shipping industry. So eager was the Senate to have him take the job that a resolution was passed, waiving the conflict-of-interest requirement that he sell his 1,100 shares in Todd Shipyards Corp . (He sold the stock anyway.)

As he arrived in April 1937, the new Maritime Commissioner faced an enormous chore: A new law required that ocean mail contracts be replaced with direct government subsidies, and only 73 days remained to settle the shipping operators' mail-contract claims against the government. Some shippers tried to stall and win fatter settlements as the deadline neared, but Kennedy would not be bluffed. He refused to bargain over a subsidy until a line had settled its mail contract. In one case, he decided not to bargain at all, rejecting a staff recommendation that a line be paid a nuisance settlement of $25,000 and offering instead precisely nothing. "I had a hunch," he said later, "that this boy was trying to razzle-dazzle us into giving him something for nothing. So I called him in, told him his claim wasn't worth a cent, and we'd fight any suit he brought for any amount; and when he swallowed that and settled for nothing, I knew he'd been trying to razzle dazzle us." Using such brassknuckle tactics, Kennedy settled the $73-million claims of 23 shipping companies for less than $750,000, and did it within 73 days.

He had other problems. Burly Joe Curran, head of the C.I.O. Maritime Union, marched into Kennedy's office. A little later Secretary of Labor Frances Perkins got a phone call from the Commissioner.

"Your sweetheart was just in here," said Kennedy.

"Oh," replied Miss Perkins, "Joe's a nice boy."

"Not in my book, he's not," snapped Kennedy, "and don't send any more bums like that in here trying to tell me what my authority is."

The realist's blind spot

Such plain-speaking earned Kennedy the enmity of the left wing of the New Deal-Miss Perkins, Harry Hopkins, Felix Frankfurter, and others -- which had never trusted the man from Wall Street. Aware that Kennedy wanted his job, Secretary o f the Treasury Morgenthau played razor-edged politics at the White House, too. But Roosevelt saw an obvious need for practical men in an Administration with more than its share of philosophers, and he used Kennedy for jobs that had to be done. F.D.R. also prized his money sense and financial connections abroad; in 1935 he had sent him on a tour of Europe's banking centers to confer with friends like Montague Norman, head of the Bank of England. Then, just before Christmas 1937, he summoned Joe and gave him a glittering reward for his cash support and hard work: the ambassadorship to the Court of St. James's.

Like the earlier appointment to the SEC, the choice was pure Roosevelt. It shattered tradition, which dictated that U.S. envoys to London should be distinguished gentlemen of Anglo-Scotch blood and Protestant faith. It had a practical side, in the looming necessity to bargain hard with the British on trade and maritime interests. Most important, it gave Roosevelt a trustworthy and personally loyal

Joseph Kennedy with two of his sons, John F. Kennedy (left) and Joseph Kennedy Jr. (right), in London in 1937.

Joseph Kennedy with two of his sons, John F. Kennedy (left) and Joseph Kennedy Jr. (right), in London in 1937.

eavesdropper on the mounting rumors of war in Europe. And so the first Irish-Catholic Ambassador to England -- with, by this time, nine children, to boot -- was dispatched to London as 1938 opened. Any man would have congratulated himself on using his wealth and work so well, but the trip across the Atlantic was especially triumphant for one who had failed to stir the small, clear puddle back in Boston.

Kennedy began brilliantly in London, being dubbed "Jolly Joe, the Nine-Child Envoy" by one tabloid and displacing George Washington as "the father of his country" in a music-hall routine. But he ended badly, almost three years later, leaving a lingering bitterness expressed by one Briton who recalls him as "that fellow who wrote us off in the war and went back to America and left us in the lurch." Only a sizable book could encompass this part of Joe Kennedy's career in adequate detail, but one element of his failure in diplomacy may be isolated: his cold logic, which allowed no weight for qualities of the human spirit.

Although in Britain as in the U.S. he moved with ease in all sorts of company, Kennedy naturally drew closest to men who manipulated money in the City and to those who gave that interest political voice. As war approached, he was drawn, therefore, to the appeasement-minded Neville Chamberlain. Early in his ambassadorship he publicly urged coexistence between the Western democracies and Hitler's Germany. At the time of Munich, he took up the cause of the appeasers and used his influence at the office of Will Hays in Hollywood to have a Paramount newsreel censored. The scenes deleted showed two British newsmen talking sympathetically with heartsick Czechs in Prague. His cables grew increasingly pessimistic and private notes to favorite newsmen (which invariably leaked into print) were more bluntly candid.

"Joe thought war was irrational and debasing," says a friend. "War destroyed capital. What could be worse than that?" Another describes Kennedy as "a supreme realist, who wanted the facts, and not his own or somebody else's opinions, to determine his decisions. This caused a blind spot on intangibles. He looked at Britain's situation in cold, hard terms of pounds sterling, and believed that when her reserves ran out, Britain would be finished." Others recall transatlantic telephone calls from Kennedy, at the height of the blitz, telling them in so many words that the jig was up. He later expressed admiration for Britain's stand, but made a trip to the U.S. in the fall of 1940, determined to keep this country out of the war. Shortly after his arrival, he bought radio time and friends believed he intended to come out for Wendell Willkie; instead he endorsed F.D.R.'s bid for a third term, arguing that Roosevelt alone could keep the U.S. out of war . It was one of the most important speeches of the 1940 campaign. But his break with F.D.R. was imminent.

Accounts of his ambassadorial downfall center on a famous newspaper interview Kennedy gave to Louis Lyons, then a reporter on the Boston Globe and now curator of the Nieman Fellowships at Harvard. Kennedy later said his remarks had been off the record; Lyons insisted he had observed the ground rules. In any event, Kennedy, in the phrase of another newsman, showed "the bare bones of what he thought" and flatly declared that "democracy is finished in England." That sensational indiscretion, published in the Globe on November 9, 1940, and widely reprinted, finished Kennedy's diplomatic career. Commonly ignored is the fact that a homesick Kennedy had secretly submitted his resignation to F.D.R. three days before the Lyons interview, making it plain that this was no formality but the act of a weary man who wished to bow out gracefully. His enemies at the White House, armed with the interview, gleefully saw that his wish was granted.

Buying at the bedrock

Returning to private life, Kennedy made a few radio speeches ("This is not our war"), but his voice trailed off as the guns began to roar. For reasons he would never quite comprehend, Kennedy had been badly out of step with the shifting mood of the country, and would never quite recover the public prestige he had worked so hard to achieve. These were dark years, etched with personal sorrow. Three sons went off to war, the last taking the place of Joe Jr., the father's favorite, who had been killed in action. Joe was also deeply hurt by his estrangement from F.D.R. He had lost his place on the great stage.

Kennedy transferred his residence from New York to Palm Beach, and decided to dispose of his Bronxville mansion. Cardinal Spellman suggested the broker who handled the Archdiocese's real estate, John J. Reynolds. Kennedy's mood had turned intensely bearish; he was accumulating cash and wanted his investments in "safe places." Reynolds, naturally, could think of nothing safer than real estate, particularly Manhattan real estate, which had fallen to what looked like bedrock prices in the 15 years since the last building boom. Almost in spite of himself, Kennedy made more money in real estate alone during and immediately after the war than he had in the previous three decades: by Reynolds' estimate, $100 million.

Kennedy's real-estate transactions in Manhattan were routinely spectacular: he bought a property at 51st Street and Lexington Avenue for $600,000 and later sold it for $3,970,000; another at 46th Street and Lexington cost $1,700,000 and sold for $4,975,000; still another at 59th and Lexington cost $1,900,000 (only $100,000 in cash was needed) and skyrocketed in value to more than $5,500,000. Kennedy also invested in office buildings in White Plains and Albany, New York, and in shopping centers around the country. In 1943 he bought a 17% interest in Hialeah from the estate of Colonel E. R. Bradley, and later sold at a profit. Some of his real-estate transactions were handled through Kennedy companies, two of which are Park Agency Inc. and Ken Industries.

In his real-estate operations, says an associate, Kennedy exploited the strategy of "leverage on equity." It worked this way: Kennedy would buy a commercial building for, say, $2 million; being Joe Kennedy, he could borrow as much as $1,800,000 at around 4%. Annual interest on the loan would come to $72,000. Assuming a rental income on the building of 6% of the purchase price, or $120,000, Kennedy would net $48,000 over interest charges on his original $200,000 cash outlay, a return of 24%.

As well as being a shrewd investor, Kennedy clearly was a landlord who recalled his days as a small banker. In September 1944, the general welfare committee of New York's City Council heard complaints of rent gouging against Kennedy from tenants in a West Side loft building he had bought the previous year. A garment manufacturer said his rent had been raised from $42,500 a year to $73,000, under a compulsory five-year lease that the landlord could cancel after two years. Another small businessman said he had been informed his rent would be boosted from $15,000 to $30,000 on a 10-year lease; when he balked, he said, a lease on his premises had been given to another concern.

The biggest bargain

By the end of 1945, Kennedy owned New York real estate with an assessed value of $15 million. But these acquisitions shrank beside his biggest bargain -- Chicago's Merchandise Mart. Real-estate men still marvel over the deal that made him owner of the world 's largest commercial building.

Opened by Marshall Field in 1930, the 24-story Mart boasts 93 acres of rentable space. In 1945 it was carried on the books of Marshall Field & Co. at more than $21 million, but the company saw

Chicago Merchandise Mart, 1946

Chicago Merchandise Mart, 1946

compelling reasons for selling. Federal and state government agencies occupied more than one-third of the office space at relatively low rentals, and Marshall Field & Co. no longer needed the building for its operations, but could use cash to retire funded debt and a sizable loss on the sale to offset wartime excess-profits taxes.

Not since his days in Hollywood had Kennedy come upon such a situation. He bought the Mart for $12,956,516, borrowing $12,500,000 on a mortgage from the Equitable Life Assurance Society. Figuring commissions and legal expenses, his cash outlay was approximately $1 million, which he got back rapidly. Just four years after the purchase, in 1949, he replaced the Equitable mortgage with one for $17 million from the Prudential Life Insurance Co. of America, thus enhancing his equity by some $4 million. In advance of the purchase, Kennedy had received assurances from Washington that the federal agencies would move out as their leases expired, and he lined up private tenants at higher rentals. (The Field Company had feared the government tenants would move out, leaving behind unrentable space.) It was a daring deal, boldly conceived and executed, in which Joe Kennedy flashed his old form. Now valued at $75 million and producing annual rentals of $13 million (more than the original purchase price), the Mart is the biggest single part of the Kennedy fortune.

In 1946, Kennedy decided to pull out of the liquor business. He had never played an important role at Somerset Importers, visiting the office only occasionally and leaving the operation to a pair of cronies, Ted O'Leary and Tom Delahanty. Kennedy sold Somerset for some $8 million in cash to Renfield Importers; that represented a handsome return on his original $100,000 investment in the company. He had done well during his 13 years in the liquor business. Trade sources estimate Somerset's average annual net for this period at around a quarter of a million dollars. Old friends who had become almost members of the Kennedy family, O'Leary and Delahanty had hoped for a crack at the business. Instead, each received a bonus.

Friends and enemies

Any man who makes a great deal of money cannot help making his share of enemies. Unhappily, Kennedy's huge fortune is in proportion to his broken friendships. An unbridled tongue drove the more sensitive away. Misunderstandings over money led to many falling-outs. John Burns, the onetime SEC counsel, parted with Joe in the early 1940s when Kennedy, in an economy move, cut Burns' annual retainer from $6,000 to $3,000; the disputed sum seemed trifling to mutual friends, but the break could not be mended. Soon after Burns died, in 1957, a friend approached Kennedy for a contribution to a memorial room at the Harvard Law School. Joe refused.

"If Joe likes you, you're tops -- no matter what anybody else thinks," says Jim Fayne. "If he stops liking you, you simply don't exist any more. Some people are hurt, but not Joe. He's seen so many come and go." On the other hand, a newspaperman, recalling kindnesses, says Kennedy has often been hurt and disappointed. "He would go out of his way for people, and sometimes he'd get their finger in his eye."

It is true, Kennedy's generosity has enlisted some intense loyalties. Jim Landis, for instance, learned from President Truman in 1948, just before his term ran out, that he would not be reappointed to the Civil Aeronautics Board. He had about $1,000 in the bank and no prospects. Kennedy heard the news and called from Palm Beach. "Hell," said Joe, "come on down here and join the Kennedy enterprises." Landis asked what they were. "Well, dammit, I don't know," came the reply, "but come on down and we'll figure it out." Landis went, lay in the sun for three weeks, and joined Kennedy's legal staff.

Oil ventures and tax advantages

It would have taken all of three minutes to discern the strategy underlying "the Kennedy enterprises" in the late Forties: make the most of opportunities created by the tax laws. "It would have been criminal if a man of his wealth had not taken advantage of the tax laws," says Fayne. As fast as he moved into real estate, Kennedy got his money out by mortgaging his properties to the hilt; much of the money generated went into oil ventures offering the benefits of depletion allowances. Like many another eastern investor, Kennedy started by joining syndicates backing wildcatters. The famed Kennedy luck ran hot and cold. "Joe had 11 dry holes in a row, then a dozen that hit," says an associate.

Kennedy has never liked investing with a crowd. Around 1949 he found an arrangement he liked. Transwestern Oil Co. of San Antonio, Texas, had spun off Transwestern Royalty Co., which held producing and nonproducing oil royalties. Transwestern Royalty had been bought by Raymond F. Kravis, a Tulsa petroleum engineer, and the partners of the New York brokerage firm of Reynolds & Co., who promptly split the company between them -- Kravis calling his half Roytex, the Reynolds partners naming their half Arctic. When their investment qualified for capital-gains tax treatment, the Reynolds partners put it up for sale. Kravis talked Kennedy into buying it for some $3 million. Kravis and Kennedy then liquidated their companies, but retained their royalty interests and gradually went into drilling and exploration.

Kennedy acquired other oil and gas interests in Texas. In 1952 he formed Kenoil, a Houston-based company holding leases, portions of leases, and royalties. Tax advantages soon lured him into drilling and developing. He teamed up with Jack Modesett, a Corpus Christi oilman who had been operating the Conroe Drilling Co. Kennedy's capital and Modesett's drilling company became the basis for Mokeen Oil Co., Inc., which took its name from the combined names of the partners. (Modesett ran the companies until his death in an automobile accident last April.) Described by oilmen as "very aggressive," Mokeen (estimated 1962 sales: $3 million) is now managed by Armond H. ("Lucky") Jones of Corpus Christi, but key decisions are made at Kennedy's New York headquarters.

In the mid-Fifties, Kennedy took another partner in the oil business. He bought an interest in the Sutton Producing Co. of San Antonio, run by William Franklin (Bill) Sutton, who had been drilling land owned by the Continental Oil Co. on a sharing basis. Sutton, 45, is one of the more successful independents in South Texas and describes his operation as "medium-sized." As in the case of Mokeen, Sutton Producing Co. takes its orders from New York, chiefly from Tom Walsh, an aide who joined Kennedy in the early Fifties.

Surveying Kennedy's ventures, a Corpus Christi oil executive says: "He hunted up a couple of strong, small drilling companies and went in with them for the tax benefits. In a typical deal, he is allowed to take off, say, 60% of the intangible drilling costs, while benefiting by 60% interest in the oil they hit. It has worked out just fine for him." In addition, Kennedy's income from oil production benefits from the 27.5% depletion allowance.

The price of prudence

For all his postwar success in oil and real estate, Kennedy remained wary of other new risks. Landis tried to interest him in National Airlines, but Joe wanted no part of operating responsibility or possible labor problems. "He told me he didn't want his money in troubled places," says Landis. To a proposed apartment project in Caracas, Venezuela, Kennedy objected: "I'm not going into places I don't know anything about." In the late Forties he also toyed with the idea of buying the New York Sun before it was taken over by Scripps-Howard, and he made an offer for the Boston Post, which went instead to speculator John Fox before it folded. ("He once had it in the back of his mind that Jack might make an editor," muses Landis.) With his son's entry into politics, wariness went hand in hand with extraordinary prudence. In 1953 the group putting together Litton Industries paid a call at Kennedy's 230 Park Avenue headquarters in New York and advanced a proposition that would have given him control for some $250,000. Joe turned it down; the company would be so deeply involved in government work that it might prove politically embarrassing. Says Fayne with a sigh over a proposition that now has sales of $250 million: "We had it right in our hands."

Kennedy, of course, can afford to let such prizes slip. Upwards of $300 million is quite sufficient to the needs of the Kennedys and their heirs. The allocation of the family fortune is a closely guarded secret, but friends and associates trace the rough outlines. Trust funds for Kennedy's children and grandchildren, established in 1926, 1936, and 1949, and the Joseph P. Kennedy Jr. Foundation, set up in 1946, probably account for one-half of the fortune. (In 1961 the foundation carried its assets at $6,501,800 -- a fraction of their real value and made gifts totaling $1,981,200. Since 1946 it has given away some $16,500,000, chiefly in the field of mental retardation.) Real estate makes up at least one-quarter. The remaining one-quarter consists of oil holdings, tax-exempt municipals, corporate stocks and other securities, and millions in cash reserves, which Kennedy holds as a speculative asset. "From 1929 to 1933," says Landis, "Joe was liquid when others were not, and he was able to take advantage of situations." Kennedy believes hard cash has its uses in hard times.

It's virtually certain that Kennedy has availed himself of every legal device to ease the tax bite on his estate. For example, he has followed a familiar strategy and has sold promising assets to the foundation and trust funds at cost. Only a few intimates know how the Kennedy wealth will be managed in succeeding generations. Some friends of the family foresee a "committee" arrangement. The key men at the Park Avenue office (moving soon to the new Pan American Building) are Steve Smith, husband of Jean Kennedy and scion of the Cleary tugboat and barge fortune; the indefatigable Jim Fayne; Tom Walsh, accountant and tax expert; and Paul Murphy, who supervises the family real estate. Another son-in-law, Sargent Shriver, formerly entrusted with running the Merchandise Mart and currently heading the Peace Corps, may play an important business role in the future. Notably missing from the "committee" that friends envisage are Joe's sons. As Kennedy himself told a reporter in 1960, "None of my children has the slightest interest in making money; not the slightest."

It takes money, money, money

This is the way Joe Kennedy wanted it. Money was never discussed in the household. Instead, Kennedy educated his sons to relish the competition and rewards of public service. He saw that the lessons took.

"I got Jack into politics, I was the one.," Kennedy told a reporter some years ago: "I told him Joe was dead and that it was therefore his responsibility to run for Congress. He didn't want to. He felt he didn't have the ability and he still feels that way. But I told him he had to."

In that first campaign for the House in 1946, it was sometimes hard to tell who the figure on the way up actually was -- the father or the son. Joe was on the telephone constantly. He checked every key decision. He supervised the cash box. According to Ralph G. Martin and Ed Plaut (Front Runner, Dark Horse; Doubleday), Kennedy enlisted his cousin, Joe Kane, to tutor his son. At one

John F. Kennedy files his first nomination papers in Boston to run for Congress in 1946.

John F. Kennedy files his first nomination papers in Boston to run for Congress in 1946.

strategy session, wrote Martin and Plaut, Honey Fitz ambled in. Kane shouted across the room: "Get that son-of-a-bitch out of here." Young Jack looked startled: "Who? Grandpa?" Hearing of the incident later, Joe smiled and told Jack he would not have lasted three hours with Honey Fitz calling the signals.

Jack Kennedy won the first test easily. Asked why the candidate's father had spent so heavily, Joe Kane said: "It takes three things to win. The first is money and the second is money and the third is money."

The little lady in Worcester

In the race for the Senate in 1952, Joe Kennedy took personal command. A volunteer who had managed Jack's first two campaigns, Mark Dalton, began at the same post in 1952, this time as a paid worker. He had been at work just two weeks when the elder Kennedy stopped by to examine the books, disagreed with the way the money was being spent, and flew into a rage. Dalton quit and Bobby Kennedy replaced him. "When Bobby came in," a campaign worker remembers, "we knew it was the old man taking over. What had Bobby done up to that time politically? Not a damn thing and all of a sudden he was there as campaign manager, waving the banners." Says another worker: "Sometimes you couldn't get anybody to make a decision. You'd have to call the old man. Then you'd get a decision."

After Jack's Senate victory, all the more satisfying to Joe because he defeated a Lodge, the elder Kennedy decided the climb could continue without him -- at least publicly. "Joe knows he's controversial, so he stays out of the way," says a Boston businessman. "He's like a caterpillar; he couldn't quite become a butterfly, but his boys would fly, no matter what." From 1952 on, his role was mainly to supply the single element in the Kane Theory of Victory. When the drive for the White House began in earnest in 1958, Kennedy opened his checkbook wide, spending and raising millions over the next two years to elect his son President. Knowing how much the highest prizes cost, and being willing to risk the price, is part of the Kennedy money sense. Kennedy unashamedly threw the weight of his wealth behind his sons, yet the glib equation of wealth and power does not balance without the human factor. While making money, Kennedy managed to raise three attractive, persuasive sons who come easily to leadership. Wealth made their arrival easier; it didn't guarantee it.

Neither Jack nor Bobby Kennedy was enthusiastic, for perfectly obvious reasons, about their younger brother's decision to run for the Senate. Joe was, and laid down the law: "You boys have what you want, and everybody worked to help you get it. Now it's Teddy's turn. I'm going to see that he gets what he wants."

Joe Kennedy, through no fault of his own, could not work to keep that promise. In December 1961, he suffered a severe stroke, leaving him partially paralyzed. But his wish, and Teddy's turn, were respected. Was the democratic process also respected? Joe Kennedy would snort and say: "Look at the returns." Some, who fear a dynasty founded on cold cash and colder calculation, linger over the recollection of an incident of Teddy's 1962 campaign. As Teddy marched by with his brass band, an elderly woman in Worcester darted from the curb and kissed his hand.

"I like Joe Kennedy," says an Irishman long in Washington, "but I have no illusions about him. He understands power. Everywhere he went, from Brahmin Boston to the Court of St. James's, he saw great hypocrisy about the philosophy of those who rule. Power is the end. What other delight is there but to enjoy the sheer sense of control? He would say, 'Let me see any other motive in the people who command.' Joe thinks like a king, and kings aren't always nice guys."

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