The Profiteers

by Sally Denton

  On August 6, 1945, under orders from Truman, a B-29 aircraft dropped the first atomic bomb in world history on the Japanese city of Hiroshima. Three days later, the United States dropped another nuclear bomb over Nagasaki, bringing a Japanese surrender and an official end to World War II. As one history described the sudden dilemma, “It was only after the bombing of Hiroshima and Nagasaki that the enlightened intelligentsia of the United States began to ask: What should the country do with the capability of destroying the human race, and who should control the weapon?”

  As details of the mass destruction, unspeakable suffering, and deaths of 225,000 civilians began to surface, Oppenheimer and the other Los Alamos scientists fell into bitter disputes about the proper course of developing and controlling this power. The United States now had a weapon capable of ending all of civilization—of wiping out the two billion people then living on earth. “Mr. President, I feel I have blood on my hands,” Oppenheimer told Truman—a remark that infuriated the president, who had little patience for the nearly three hundred scientists who were warning of the dangers of an arms race, nuclear terrorism, and “the impossibility of any defense against the atomic bomb in future wars.” Annoyed by the scientists’ apocalyptic alarms and attempts to influence government officials, Truman sought to muzzle them. His administration labeled anyone who favored a peacetime atomic energy policy a traitor, placed Oppenheimer under surveillance, gagged the scientists, and endorsed a Joint Chiefs of Staff proposal for increasing the production of nuclear weapons.

  World leaders sought new foreign policy approaches to nuclear energy, with the US supporting a United Nations proposal for international control directed toward peaceful purposes. But that plan was rejected by the Soviet Union, which claimed the US had an unfair advantage since it already possessed nuclear weapons. Following the Soviets’ successful detonation in 1949 of its first atomic bomb, Truman had backtracked from the push for international control and began advocating for a strong nuclear arsenal that showcased a “Super” thermonuclear fusion-based hydrogen bomb. On November 1, 1952, the US tested its first H-bomb and Russia followed suit less than a year later. The Cold War arms race had officially begun. In a United Nations speech known as “Atoms for Peace” in 1953, newly elected President Eisenhower called for the world to strive toward a reduction in nuclear weapons and an increase in peaceful applications.

  Despite Eisenhower’s appeals, the nation’s scientific and political communities divided into the arms racers and the arms controllers—what one history described as “two permanently opposed Cold War camps.” Steve Bechtel and John McCone came down on the side of the arms racers. The Hungarian-born Edward Teller, the controversial physicist who had broken with his pacifist colleagues in favor of the massively destructive H-bomb, led the arms racers faction. “More horrific than the atomic (fission) bomb, the Super (fusion) bomb would surely escalate the nuclear arms race,” wrote Kai Bird and Martin J. Sherwin in their definitive biography of Oppenheimer.

  During the 1956 presidential election, McCone, then a trustee of the California Institute of Technology, and an avid sponsor of the H-bomb, had tried to get ten Caltech faculty scientists fired when they came out in support of a proposal to suspend the H-bomb testing. Incumbent Eisenhower’s Democratic opponent, Adlai Stevenson, who had been roundly defeated by Eisenhower in the previous presidential election, had proposed a nuclear test ban treaty. An overwhelming majority of the nation’s scientists had embraced Albert Einstein’s criticism of the international community’s failure to control nuclear weapons, as epitomized by his famous remark: “I do not know how the Third World War will be fought, but I can tell you what they will use in the fourth: rocks.” When questioned during his confirmation hearings about his meddling with Caltech faculty, the stern, silver-haired McCone shared with congressmen his accusation that the professors were exaggerating the danger of radioactive fallout. “Your statement is obviously designed to create fear in the minds of the uninformed that radioactive fallout from the H-bomb tests endangers life,” he wrote to the scientists. “However, as you know, the National Academy of Sciences has issued a report this year completely discounting such danger.”

  McCone was equally enthusiastic about handing over fissionable materials to private industry—particularly to Steve Bechtel. Described by the Wall Street Journal as a “conservative who believes in the capacity of private enterprise to deliver the goods,” McCone was determined to give Bechtel access to the nation’s most secret nuclear technology. One of the biggest boosters for the AEC funding of commercial nuclear power, as chairman he cleared the way for federal subsidies to pay private utilities for the construction of nuclear plants. Bechtel had long-standing connections with the California utilities, dating back to Hoover Dam, and he had built steam and hydroelectric plants for Pacific Gas and Electric (PG&E). But now he was impatient to extend his reach. “Going nuclear” would be the venue. “Nuclear power was a mechanism for getting Bechtel into the power plant business,” said W. Kenneth Davis, head of the AEC’s reactor program, whom Bechtel lured away, along with several of his top aides, in 1958 to open the company’s new nuclear division. Davis thought his hiring “was a considered move.” Davis ridiculed the naysayers of nuclear energy. He advocated building power plants as close as possible to consumers—such as on the outskirts of New York City—claiming that nuclear power “will not bring undue safety hazards to plant workers or public.” Steve moved to preempt public opposition to nuclear energy, pouring money into a public relations campaign about its safety. A near meltdown of a Michigan nuclear reactor in 1966 inspired the sensational 1975 book We Almost Lost Detroit, which helped spawn the antinuclear movement. In response, Steve “helped finance the opposition to antinuclear referenda,” according to later press accounts.

  Disregarding Truman’s warning that the development of nuclear energy was too dangerous to be driven by profit, the Eisenhower nuclear policy, guided by McCone, embraced its commercialization. Within a few short years—thanks to AEC contracts—Bechtel would be the world’s largest supplier of nuclear power. Not surprisingly, the company, which had developed the boiling water nuclear reactor and built the AEC’s Experimental Breeder Reactor in Arco, Idaho, would receive billions of dollars in government contracts to build the dozens of nuclear power plants being planned throughout the land. Steve Bechtel was one of a handful of people in the world who witnessed the first powering of a light bulb by nuclear fission. McCone—who had swung the Dresden, Illinois, contract to Steve as the first privately financed nuclear power plant in the US—showed up in 1960 at its dedication to praise it as “the largest, most efficient, most advanced” power plant in the world.

  Meanwhile, McCone’s harshest critic, nationally syndicated columnist Drew Pearson, was one of the only American journalists to challenge the revolving door between the AEC and Bechtel. McCone “ignored the legal opinion” of the AEC’s general counsel that a Bechtel project was illegal, wrote Pearson in 1959, “and went ahead with the contract benefitting his former company.” Pearson also criticized McCone for not selling his stock in various private Bechtel-McCone enterprises that continued to do business with the government while he was head of the AEC, describing a “pattern of business links McCone has kept with his old associates and war profiteers.” Wisconsin Republican senator Alvin O’Konski went so far as to accuse McCone of being “merely on leave of absence from his position as Bechtel-McCone Corporation president.” Senator Abraham Ribicoff of Connecticut was also alarmed at how many employees of the AEC were hired away by Bechtel. The AEC had created an industry “so incestuous that it was hard to tell where the public sector begins and the private one leaves off,” Ribicoff complained.

  Pointing out that McCone was involved with the company that operated the first atomic merchant vessel ever built—the Savannah—Pearson called on Congress to investigate McCone’s blatant conflicts of interest. “McCone said he had done ‘a great deal of soul-searching’ and had concluded he could handl
e the AEC chairmanship without any favoritism,” Pearson wrote. “However, the AEC law does not permit a man to search his soul and make the decision. The law makes the decision for him.”

  In the camp of what Pearson called the “big bomb” fans, McCone favored the spread of US nuclear technology to overseas allies. Pearson accused McCone of “telling the public one thing and doing another,” while undercutting international disarmament discussions. During the “world’s last chance to prevent the spread of nuclear weapons,” Pearson wrote, McCone “has been calling on Senators behind Ike’s back to oppose the State Department,” which advocated keeping nuclear weapons out of the hands of other nations.

  One of McCone’s projects while at the AEC was his attempt to provide Bechtel with small nuclear reactors that could be used for building tunnels and extracting oil. “McCone was positively rabid about the notion,” according to one account. “Think, he asked, of the things a Bechtel . . . could do with a few atomic bombs in its toolbox!” But Eisenhower quashed that scheme with a resoundingly simple, “No.”

  CHAPTER NINE

  McConey Island

  No one was more representative of the business and political culture of Bechtel in the modern era than John McCone. His grasp of the world oil economy and the cultivation of Arab states was singular. His vision of American exceptionalism, of corporate capitalism unfettered by regulations and interference, and of the symbiosis between government and private industry, would set the stage for Bechtel’s operations during the second half of the twentieth century. McCone would ascend from the AEC to the CIA, where he would oversee the expansion of that agency—a reshaping of the US intelligence complex that would result in yet more staged coups and global interventions. Bechtel would benefit immensely.

  In addition to directing highly profitable contracts his way, McCone enhanced Steve Bechtel’s national and international influence by bringing him into Eisenhower’s inner circle, where he would play a furtive, largely unseen role. During McCone’s tenure at the AEC, Bechtel—who had been a significant supporter of Eisenhower’s presidential campaign—was a familiar face at the White House. Eisenhower appointed him to a position on the President’s Business Advisory Council, and at a confidential White House dinner held to “discuss implications of the Sino-Soviet economic offensive and what the US can do to counter it,” Steve underscored to Eisenhower the national security necessity of a close relationship between government and private business, according to a confidential White House memorandum.

  Eisenhower, Bechtel, and McCone golfed together at exclusive all-male clubs and exchanged admiring notes. “Steve Bechtel is the kind of American you want to have on your side,” Eisenhower advised his vice president, Richard Nixon, recommending that Nixon consider Bechtel for a Cabinet appointment should he accede to the presidency. “There were many chores Steve Bechtel and his company would perform for presidents, many favors they would do—and had done—for the organs of government,” wrote Laton McCartney in Friends in High Places, “including, though few knew it, the Central Intelligence Agency.” Eisenhower brought Steve to Washington to assist Undersecretary of State C. Douglas Dillon in determining policy for the distribution of foreign aid and development loans—financial aid that would line Bechtel’s coffers. It was Dillon who had arranged contracts for Bechtel with the Saudi Arabian government. In 1958 the president invited “two oil men,” including Steve, to serve on a secret panel to study “Soviet economic warfare”—an invitation that Secretary of Commerce Sinclair Weeks feared would be “very bad” if any publicity exposed it. Steve was also a clandestine presidential advisor on “the intelligence structure of the government,” according to a later declassified, top secret White House memorandum.

  An FBI background report described McCone as one of Eisenhower’s closest personal friends and an ardent believer in the president’s domino theory: a notion that if one country succumbed to Communism, other countries would follow. Presidential administrations used his concept from the 1950s through the 1980s to justify American foreign policy exploits and interventions around the globe.

  As a charter member of the San Francisco–based National Committee for a Free Asia—a covert action organization determined to “roll back the dark forces of Soviet imperialism,” according to its 1951 originating prospectus—Steve Bechtel’s anti-Communist credentials matched those of McCone. The New York Times would later expose the committee as a front organization for the CIA, which was but one of many deep and long-standing affiliations between Steve and the intelligence community which he proudly embraced. He also served as the CIA’s liaison with the Business Council—what a renowned sociologist described as “the unofficial board of directors within the power elite.” In that capacity, Steve provided regular reports to the CIA based upon intelligence information culled by him and other council members, which included top executives from the nation’s largest multinational corporations.

  The relationship went both ways. Among the more shadowy operatives that moved between the two entities was a sartorially elegant, British-based Standard Oil consultant named Cornelius Stribling Snodgrass, who became a key executive at Bechtel. A “dashing figure in Savile Row suits,” as one account portrayed him, the West Virginia native once described his position to King Saud’s finance minister, Abdul Suleiman, as “in charge of all affairs and relations between the Saudi Arab Government and International Bechtel, Inc.” In that capacity, Snodgrass would brief his handlers in both the CIA and State Department on Bechtel’s activities in Saudi Arabia, while also gathering information from his contacts about not only government interventions in international hotspots but also about projects being undertaken by Bechtel corporate rivals. While on the board of Bechtel, Snodgrass participated in National Security Council (NSC) and CIA meetings where top secret covert operations such as the Iranian coup were planned, and then provided Bechtel with classified intelligence that would further its business interests.

  When Snodgrass officially left Bechtel in 1952, he formed a small energy consulting firm called LSG Associates that was a Washington-based CIA proprietary firm. He also founded a lobbying firm, with Bechtel as a top client. “With the assistance of Snodgrass and his similarly well-connected successors . . . Bechtel’s operations increasingly mimicked those of the CIA,” as one account depicted the synergy between Bechtel and national intelligence, as well as the compartmentalization common to covert operations. “The company drew up its plans and plotted its business operations with the same devotion to secrecy and clandestine intelligence-gathering as its governmental associate, much of them based on reports furnished by friends at the CIA and the Departments of State, Commerce and Defense.”

  The CIA reciprocated in kind by providing Steve with information about economic and political developments overseas from which Bechtel could profit. The foreign countries in which Bechtel operated—and where the company was often considered an exploiter—did not always welcome the interdependent relationship between the company and the agency. Bechtel was generally seen as the most brazen of those at the heart of what one national security advisor described as the “inequitable modernization by U.S.-purchased oligarchies.” Perhaps nowhere was this clash vented so starkly as in the violent murder in Iraq of Bechtel Senior Vice President George Colley.

  On Bastille Day in 1958, the Iraqi army laid siege to the royal palace in Baghdad and killed the US-sponsored ruling family. Seen as a symbol and manifestation of venal Western imperialism, Colley was seized by soldiers while breakfasting at the luxurious Baghdad Hotel, and shoved into a waiting black limousine along with several other American and Jordanian hotel guests. In a few blocks, the car was surrounded by fifty Iraqi civilians, who pulled some of the occupants out of the car and began stabbing, beating, and bludgeoning them. Colley was last seen being dragged from the vehicle, stoned, and dismembered by the mob. CIA agents on the ground—who had supported the corrupt monarchy overthrown by the revolutionaries—tried to retrieve Colley’s body. In the f
ollowing days, an Iraqi army search of all hospitals and morgues failed to find any trace of him. Even Allen Dulles, CIA director at the time, was powerless to help, cabling Bechtel “MY FRIENDS REPORT THAT COLLEY STILL MISSING BUT THAT SEARCH IS CONTINUING.” Iraqi officials concluded he had been “buried in a common grave,” along with other Americans taken that day. The swashbuckling Colley had been one of Dad Bechtel’s earliest hires, for a road job in Nevada, and had long been Steve’s closest personal friend. Steve was never able to talk about Colley’s death without tearing up, and his deep-seated animus toward Iraq’s revolutionary leaders would never subside.

  The McCone connection in Washington seemingly became even more valuable to Bechtel after 1962, when President John F. Kennedy called McCone off a California golf course where he was playing with JFK’s archrival Nixon, and asked him to replace Allen Dulles as director of the CIA. “The Agency and the company have rarely pursued separate interests since then,” as one journalist put it. A fellow Catholic with a reputation as a “hard-nosed executive who could get things done quickly and efficiently,” according to authors David Wise and Thomas B. Ross, McCone impressed JFK’s brother, US Attorney General Robert Kennedy, who had been looking around for a successor to Dulles after the disastrous Bay of Pigs. The previous year, a CIA-sponsored paramilitary group launched an invasion of Cuba to overthrow Fidel Castro. The invading force was defeated within three days, prompting an infuriated and humiliated President Kennedy to blame Dulles and a bungling CIA. JFK is reported to have said he wanted to “splinter the CIA into a thousand pieces and scatter it into the winds,” and sought a tough-minded reformer to rein in what he thought had become a rogue agency.