The power broker : Robert Moses and the fall of New York

by Caro, Robert A

  The distribution of the insurance premiums on a single Moses slum clearance project demonstrates the use of this criterion. During the mayoralty of Vincent R. Impellitteri, the insurance was handled by one of Impellitteri's backers, Robert Blaikie. No sooner had Impellitteri lost his bid for reelection (to Robert F. Wagner, Jr., the hand-picked candidate of Tammany boss Carmine De Sapio) than Blaikie lost the insurance account—to a broker associated with De Sapio. And the over-all pattern of the distribution of the Triborough Authority's insurance, a pattern revealed by secret records which the public has never seen, demonstrates the criterion even more strikingly.

  The Authority's policies carried premiums of more than $500,000 per year, or a yearly profit to brokers of more than $100,000. And the brokers who received this profit had to do almost no work for it; Spargo was to note in a secret internal Triborough memo that once "the big insurance"—the policies insuring Triborough's bridges and tunnels against collapse or destruction—had been placed with insurance companies, "little if any work on the part of the broker" was required. In 1954, almost twenty years after some of these policies had been written, Spargo could say, "To my knowledge the Authority has spent millions of dollars on premiums and has never filed or collected a claim."

  During the La Guardia era, there was little political profit to be reaped through the sowing of such policies. What there was would be reaped through the Democratic machine, and some of Triborough's insurance therefore was given to C. J. Reid & Co., a firm whose office was on Vanderbilt Avenue but whose connections were on Fourteenth Street, and Reid's general practice was to parcel out its commissions to key Tammany figures—but another major hunk of the insurance was given to the State Insurance Fund, without any broker at all being involved, and still another was given to a broker with no political connections, for no other reason than that he had been an old army buddy of Spargo's predecessor, General Loeser.

  With the machine back in power, however, all this changed. The Triborough policies formerly held by General Loeser's army buddy and the State Insurance Fund were snatched away and given to a new broker. In a frank—frank because he believed it would remain secret forever—internal Triborough memo, Spargo was candid in explaining a key reason for the

  choice of the new broker: "because he was a friend of Tom Shanahan's." Shanahan was Tammany's chief behind-the-scenes financial manipulator for close to a decade, until the mid-logo's. For a decade, the policies were left with Shanahan's friend. The Reid company was allowed to keep its policies, but a closer watch was instituted to insure that its farming out of commissions resulted in the maximum political influence for Triborough.

  By 1954, Carmine De Sapio had solidified his control of Tammany, centralizing in himself more power than had been enjoyed by any boss since Charlie Murphy. He and he alone called the shots for the machine, and, it sometimes seemed, for Wagner. Sometime in 1954 or 1955, De Sapio was invited for luncheon at Randall's Island. On returning to his office later that afternoon, he told a friend that he had found only two men present when he arrived: Moses and Spargo. And, De Sapio told a friend, after mentioning that they knew he was connected with a certain insurance firm, they had offered that firm all Triborough's insurance—the entire $500,000 per year in premiums and $100,000 per year in commissions.

  De Sapio told the friend that he had turned the offer down. "He told me," the friend recalls, "that he was not prepared to exert the degree of influence over the administration and the Mayor that he felt would be required of him in return." That he was not unprepared to exert a lesser degree of influence is indicated by the fact that some Triborough insurance began to be given to a new broker, one whom key Democrats considered close to the leader. But De Sapio's refusal to accept it all left a lot of commissions to be disposed of. Steingut, son of Steingut, spiritual heir to McCooey and boss of the Brooklyn organization that the one-time butcher had carved into shape, received some (and, because a "public authority" was not by customary definition a part of "government," could piously tell an inquiring reporter that he never accepted "government business"). So did the Democratic leader of Queens, the Honorable James A. Roe. In 1953, the year in which the Herald Tribune was stating that authorities "are free from politics," three of the five county leaders of the machine that dominated the city's politics were therefore on Moses' payroll. There were enough insurance premiums left over for Republicans, and at least one of the GOP county leaders, John R. Crews of Brooklyn, received some of them. As for the Legislature, Moses used insurance premiums to insure that his influence there would be exerted not only indirectly through the influence of Roe, Steingut and De Sapio over the legislators they controlled, but more directly through at least one of the small group of "leaders" who really ran the Legislature, D. Mallory Stephens, a poor farm boy from Putnam County who in 1942 became chairman of the Assembly's key Ways and Means Committee, which controls the flow of legislation to the floor—and in 1943 began receiving Triborough insurance business. Stephens continually pressed Moses and Spargo for more business, telling them frankly that the influence he was using on their behalf entitled him to it, and no matter how much he was given he was never satisfied. So insistent became his demands that in a secret memo in 1953 Spargo told Moses: "The only way you can satisfy Mallory Stephens is to give him the business now handled by [Shanahan's

  friend]"—the dilemma was resolved by Stephens' decision to leave the Legislature (for a bank presidency).*

  A charting of the legal fees and other emoluments that Moses distributed to lawyers during the postwar era—a year-by-year analysis of who got the fees, when they started getting them and when they stopped getting them—provides almost a year-by-year chart of the fluctuations in the political influence of certain key Democratic lawyers.

  The influence of two lawyers did not fluctuate. During the entire postwar era, no matter which Democratic factions were in power, it remained, year after year, steady and immense. And, year after year, these two lawyers received a steady flow of legal fees—immense legal fees—from Moses-controlled enterprises. One was Samuel I. Rosenman, who, as a hustling young lawyer a quarter of a century before, had needed a boost from Moses just to stay in public service, but who had then begun drafting speeches for gubernatorial candidate Franklin D. Roosevelt and who in the decades since had become an adviser to Presidents, a small but crucial part of history (in 1970, a political advertisement, seeking to capitalize on Rosenman's endorsement in an election, told voters: "When Sam Rosenman talks, you should listen. Roosevelt did. Truman did. Lehman did"), a judge, a president of the Association of the Bar of the City of New York, a figure of prestige so awesome that it seemed to blot from the memory of even old acquaintances the fact that he had once been "Sammy the Rose, Jimmy Hines' assemblyman," a representative in Albany of one of the most notorious of all the old-line Tammany leaders. The other was a less public figure. Monroe Goldwater was a playmate of Ed Flynn's boyhood. When, in 1922, Flynn became Boss of the Bronx, Goldwater, a skilled attorney, became the Boss's law partner, t During the decades in which Flynn made the power, Goldwater

  * Anyone wondering why Moses' fellow Triborough Authority commissioners proved so complaisant might perhaps find a clue to part of the answer by looking at Tri-borough's insurance premiums. The family of Charles G. Meyer, Triborough commissioner from 1945 to 1950, was the largest stockholder in the Home Insurance Company, a major recipient of premiums from the Moses empire. George V. (the Fifth) McLaughlin, Triborough commissioner from 1934 to 1965, was a director and major stockholder of the Equitable Life Assurance Society, another major recipient. For the first twenty-eight years of his commissionership, McLaughlin invariably rubber-stamped Moses' decisions. In 1963, for personal reasons, McLaughlin took the stamp away, showing signs of increased independence. Moses took the premiums away; in 1963, he transferred the policies involved to Hartford Life. (In Triborough's secret records, Moses stated that the reason for the transfer was that Equitable had requested a 15 percent increase in premi
ums. An indication as to whether or not this was actually the reason may perhaps be found in Moses' reaction to similar Equitable requests in previous years. On March 1, 1959, for example, Equitable was given a long-term Triborough insurance contract for $20,863. Exactly one year later, Equitable requested and received a 35 percent increase in this premium.)

  t "Political" law firms traditionally took only a cut of politically connected "fees"— "farming out" most of the work and most of the money, taking $10,000 of a $50,000 fee for their "in" while giving the other $40,000 to a firm that drew the briefs and pleadings, for example—but Goldwater was too sharp for that. A brilliant, shrewd attorney, he did the legal work as well—and Goldwater & Flynn collected the whole $50,000.

  made the money—millions, perhaps tens of millions—for both of them. During Roosevelt's presidency, Flynn was forced to spend considerable time on delicate presidential missions. While Flynn was at Yalta or in Moscow, Goldwater kept Flynn's machine in line. Flynn's death in 1953 seemed almost to increase rather than diminish Goldwater's influence, freeing it to spread beyond the Bronx until it permeated every center of power in the New York Democracy. A courteous man with a gentle, benign manner, Goldwater was nevertheless master of any political situation, no matter how rough—a fact that could be ascertained with remarkable speed by a contractor whose campaign contribution did not meet Goldwater's expectations. Wagner selected the quiet, elderly lawyer to manage all three of his mayoral campaigns.

  Moses was not interested in Rosenman's prestige or Goldwater's skill with a brief. He was interested in their behind-the-scenes political clout, and he knew that in postwar New York they possessed more of that commodity than any other Democratic attorneys ("enormous," he would say of Rosen-man's influence; he never talked about Goldwater publicly if he could help it). And both of them were consistently on his team. Rosenman was his personal attorney—a job for which he may or may not have received a fee—and "Special Counsel" to his Authority (a title Moses modeled on the one, "Special Counsel to the President," under which Rosenman had served Roosevelt and Truman), on a retainer described as "very substantial." And a retainer was only one of the emoluments Rosenman received from public works with which Moses was connected: a single Title I developer, for example, gave his law firm a legal fee of $250,000. Other attorneys—possessed of lesser amounts of political influence—received Triborough legal fees, but smaller fees, handed out in precise ratio to the amount of influence over the city's governmental structure that they possessed. As Charles J. Preusse became closer and closer to Mayor Wagner, for example, he received larger and larger portions of Moses' largesse. If many of the key Democratic politicians in New York City seemed organized now into a Retainer Regiment, it was Robert Moses who was leading the regiment out.

  In lockstep. Moses' fees did not come free. There was a price attached. He was buying men's influence—and for each dollar he spent, he made sure he received in return full value.

  The price was not demanded outright. Moses did not directly ask recipients of his fees to return the favor by voting in Legislature or City Council for one of his proposals—or by persuading legislators or councilmen to vote for the proposal. He did not ask them directly for support of any kind. Asking would have placed both him and them in violation of the law and of various codes of ethics. And he neither performed himself—nor asked anyone else to perform—any illegal act. Few of the recipients of Moses' fees were as blunt about the services they were expected to render in return as Mallory Stephens, who, asked late one night by his Albany suitemate, Reuben Lazarus, why he invariably supported Moses' legislation while opposing that backed by Austin Tobin, replied, "Because Tobin doesn't give me anything." The exercise of influence was seldom as dramatic as Samuel

  Rosenman's hasty plane trip to Albany in 1957 after Harriman announced that he would veto Moses' St. Lawrence power project because of the preferential contract terms it offered big aluminum producers. (On Moses' instructions, Rosenman flew to the Capitol, went to see the Governor—and that same day persuaded him not to veto Moses' proposal.)

  Moreover, no evidence has been found of specific fees being given for specific favors. Moses did not operate by demanding direct quid pro quo's. Rather, it was a case of being on his team or not being on his team. Politicians and officeholders who consistently supported his proposals were considered "on the team"—and men who were on the team were generally also on the payroll. And the over-all record is very clear. When a Mayor or a Governor turned to a man on Moses' payroll for advice, often not knowing that the man was on that payroll, the advice given was invariably the advice that Moses wanted given. When a Moses proposal was before city or state legislative body, legislators secretly on Moses' payroll, or controlled by men secretly on Moses' payroll, were generally the legislators pushing hardest for adoption of Moses' proposal. If Moses was purchasing influence, these men were peddling influence.

  In terms of money, the terms in which corruption is usually measured, Robert Moses was not himself corrupt. He was, in fact, as uninterested in obtaining payoffs for himself as any public servant who ever lived. In the politicians' phrase, he was "money honest."

  But in terms of power, Robert Moses was corrupt. Coveting it, he used money to get it.

  And because he had so much money (in his fields, far more than the city) and so much freedom (in his fields, far more than the city) in spending it, within the city he became the locus of corruption: money corruption.

  Consider his relationship with Tom Shanahan.

  Shanahan's nostrils twitched to a single aroma: the smell of money. Even as a boy at the turn of the century, one of seven children of a poor Irish boilermaker, he had followed that scent to its source: the noses of his Waterbury, Connecticut, playmates may have been flattened against candy-store windows; Tom Shanahan's nose was pressed against the glass front door of Waterbury's Colonial Trust Company; reminiscing forty years later, he would recall vividly passing that building almost every day of his youth and staring inside almost every time he passed; it had been, he would say, a place of "august halls"; from as far back as he could remember, he would say, he had wanted to be a banker.

  He followed the scent down to the great city after high school, but for long years he seemed to have followed it into a trap: the tall, strong young man spent seven years behind the barred windows of tellers' cages. He went to NYU at night, in 1926 earned a degree, but five years later still had a job only slightly better—assistant cashier—at one of the smallest and shakiest banks in the city, the eight-year-old Federation Bank and Trust Company. But when, in 1931, the Depression forced the infant institution to shut its

  doors, it was the assistant cashier who, with Federation's despairing officers ready to liquidate, thought up a complex refinancing plan that reduced the bank's obligations, personally talked a financier into loaning it the money to pay them off, and saved the bank. When it reopened, Shanahan, at twenty-nine, was its vice president and treasurer.

  With authority, Shanahan was able to move Federation into a field from which more conservative bankers shied: loans to construction contractors. The age of huge construction companies was still in the future; during the Depression, most of New York's contractors were small and broke. "Tom would take a contractor who didn't have the salary to pay his workers that week, and back him," an associate recalls. "He went on face value, and he very seldom went wrong." He backed Pete Di Napoli (the story around Federation in later years was that when Di Napoli first came in to see Shanahan he had to borrow a nickel for carfare home to Queens) and the Slattery Contracting Company (which was better off, but barely) and a half dozen others, who were to make immense profits—and who deposited those profits with Federation. He proposed giving junior officers of the bank greater responsibility. More cautious elements protested; the bank, after all, had only one office. Shanahan told them not to worry. He'd bring in the business, he said. He just wanted to make sure that there would be people around trained to handle it. He was as g
ood as his word: by 1944, Federation had $30,000,000 in assets. And, increasingly, Federation's assets were his assets. For years, he had been quietly buying up the bank's stock. When, in 1944, the one-time bank teller was elected bank president, he owned shares worth millions of dollars.

  Shanahan's rise may have been as dramatic as one of Horatio Alger's heroes', but it was less publicized; he shunned fame with the same diligence with which he had sought wealth. Not a single newspaper or magazine story provides more than the most cursory details of his life. And he had reason to shun fame: since 1941, his activities had involved politics as well as banking, and his political activities were not ones that would appear attractive in the spotlight.

  It was not for principle but for profit that he had entered politics. His political philosophy seems to have begun and ended with a violent hatred of "Commies"; the expression on the big Irishman's face would contort into a snarl and the eyes behind the steel-rimmed glasses would glitter with rage when he discussed the "left-wing conspiracy" that he felt was trying to "take over" the city; planning to name him a delegate to the 1952 Democratic National Convention, friends would be embarrassed to learn that he was not eligible because he had not bothered to register to vote. But his dealings with contractors had shown him that their dependence on governmental contracts could be turned to personal financial advantage.

  The contractors owed Shanahan much; he transferred part of that debt to the Democratic Party, raising so much money from them for the party's 1941 mayoral candidate, William O'Dwyer, that when O'Dwyer decided to run again in 1945, he made Shanahan his campaign manager. And soon after O'Dwyer was sworn in, a pattern—a pattern in which politics and

  profit were intertwined—began to emerge on Shanahan's loom: the contractors he had persuaded to contribute to the Democratic Party were being handed lucrative construction contracts by Democratic governmental officials, and were depositing the profits from those contracts in his bank.