The Strong Man: John Mitchell and the Secrets of Watergate

by James Rosen

  In truth, ITT held a decisive advantage in the forum that, for all Geneen’s lobbying across the executive branch, really mattered most: the judiciary. Federal district and appellate courts almost invariably dismissed antitrust cases, and few prominent lawyers besides Mitchell believed that McLaren’s novel extension of Section 7 of the Clayton Act to cover conglomerate mergers would prevail at trial. Now, on September 15, 1970, the government’s case against ITT’s acquisition of Grinnell opened in federal district court in Connecticut. Two days later, Ehrlichman sent Mitchell an infamous memorandum, its condescension matched only by its futility.

  I was disappointed to learn that the ITT case had gone to trial with apparently no further effort on the part of Mr. McLaren to settle this case with ITT on the basis of our understanding that “largeness” was not really an issue in the case…. I think we are in a rather awkward position with ITT in view of the assurances that both you and I must have given Gineen [sic] on this subject…. I would appreciate your reexamining our position in the case in view of these conversations. Gineen [sic] is, of course, entitled to assume the administration meant what it said to him.

  Key was Ehrlichman’s reference to “assurances that both you and I must have given” Geneen: The domestic policy czar knew about his own promises to the ITT president, but was left to assume Mitchell “must have” done likewise—an assumption that proved wrong. As the court proceedings in Connecticut made clear, Mitchell had articulated Justice’s position, Ehrlichman Nixon’s. Therein lay the trouble.16

  On December 31, the federal district court in Connecticut decided the Grinnell case in ITT’s favor. Chief Judge William H. Timbers expressed incredulity at the government’s “paucity of evidence” that the merger would lead to reciprocal dealings by ITT subsidiaries, and “emphatically declined” McLaren’s expansive reading of the Clayton Act as an “invitation to…judicial legislation.”17

  McLaren announced he would appeal the government’s loss in Grinnell to the Supreme Court. He had until March 31, 1971, to file the necessary paperwork. Ten days before that deadline, Erwin N. Griswold, the white-haired, universally respected Johnson-era holdover who served as solicitor general of the United States, and thus argued the federal government’s cases before the Supreme Court, sought and received a routine thirty-day extension. Now McLaren and his team had until April 20 to appeal the Grinnell decision.

  As that date approached, the Geneen machine cranked up again. John Ryan, an ITT director and McLean neighbor of Kleindienst’s, complained to the deputy attorney general about the litigation, “in an almost belligerent manner,” during a party at Ryan’s home. He asked if a company man could visit Kleindienst at his office to discuss the litigation’s damaging economic impact on ITT. Kleindienst agreed, and soon found diminutive ITT director Felix G. Rohatyn, perhaps the era’s premier investment banker, sitting across from him at the Justice Department, pitching him and McLaren on the disastrous effects a government victory would have not only on ITT’s multinational fortunes but on America’s larger balance of payments.

  On Monday, April 19, the day before the Grinnell appeal papers were due in court, John Ehrlichman called Kleindienst and informed him bluntly: “Dick, the president has instructed me to order you to drop the appeal before the Supreme Court in the Grinnell case.” Not one to take Ehrlichman’s intrusions lightly, Kleindienst struggled to maintain his composure. He had approved the appeal personally, he told Ehrlichman. If Nixon wanted to discuss the matter, fine; but for the president’s own sake, dropping the appeal was inadvisable. “Oh, we’ll see about that!” Ehrlichman snapped, and hung up.18

  An hour later, Ehrlichman marched into the Oval Office. He launched into a discussion of the “antitrust thing” by observing that although Nixon was to meet with his attorney general the following day, “by then it might be too late, in a sense, [for] the ITT case, where God knows we have made your position as clear as we could to Mr. What’s-His-Name over there.” “McLaren,” Nixon said; the president knew Mr. What’s-His-Name’s name all too well. Ehrlichman breezily explained the background: how Mitchell had cited a conflict of interest early on and assigned Kleindienst to monitor McLaren’s work on the ITT cases, which the White House aide—conveniently ignoring the relevant facts and case law—described as “an attack on conglomerates, on a theory which specifically had been contemplated by the Johnson administration and laid aside as too anti-business.”19

  Too anti-business? That was all Nixon needed to hear. “Kleindienst is in this?” the president asked. Then he reached for his phone. “Dick Kleindienst,” he barked at a White House operator. While she tracked down the deputy, Ehrlichman explained the looming appeals deadline. “They’re not going to file [the papers],” the president vowed. “Well,” Ehrlichman purred with satisfaction, “I thought that was your position.” A few minutes later, the deputy attorney general was on the line. “Hi, Dick, how are you?” the president asked. Then Nixon—who normally avoided personal confrontations—got down to brass tacks with uncharacteristic speed and bluntness.

  The ensuing tirade, among the most infamous on the Nixon tapes, marks the moment when two years of simmering friction between the Nixon White House and Mitchell’s Justice finally boiled over. “I’m going to talk to John [Mitchell] tomorrow about my general attitude on antitrust,” Nixon began, “and in the meantime, I know that he has left with you the IT-and-T thing because apparently he says he had something to do with them once.”

  NIXON: Well, I have, I have nothing to do with them. And I want something clearly understood, and if it is not understood, McLaren’s ass is to be out within one hour. The IT and T thing—stay the hell out of it. Is that clear? That’s an order.

  KLEINDIENST: Well, you mean the order is to—

  NIXON: The order is to leave the Goddamned thing alone. Now, I’ve said this, Dick, a number of times, and you fellows apparently don’t get the me—the message over there. I do not want McLaren to run around prosecuting people, raising hell about conglomerates, stirring things up at this point. Now you keep him the hell out of that. Is that clear?

  KLEINDIENST: Well, Mr. President—

  NIXON: Or either he resigns. I’d rather have him out anyway. I don’t like the son-of-a-bitch.

  KLEINDIENST: The, the question then is—

  NIXON: The question is, I know, Dick, that the jurisdiction—I know all the legal things, Dick, you don’t have to spell out the legal—

  KLEINDIENST: [Inaudible]—appeal filed.

  NIXON: That’s right.

  KLEINDIENST: That brief has to be filed tomorrow.

  NIXON: That’s right. Don’t file the brief.

  KLEINDIENST: Your order is not to file a brief?

  NIXON: Your—my order is to drop the Goddamned thing, you son-of-a-bitch! Don’t you understand the English language? Is that clear?

  KLEINDIENST: [Laughs] Yeah, I understand that.

  NIXON: Okay.20

  Ten minutes later, Haldeman scribbled notes that, previously unpublished, captured Nixon’s determination to bring the Antitrust Division to heel.

  must smoke disloyals out of the woodwork […]

  ie anti-trust—P. won’t stand for it

  P. now into ITT case—shldn’t have to be21

  Kleindiest’s first move was to call Mitchell. Susie Morrison told Kleindienst the attorney general was in the middle of a meeting and couldn’t be disturbed. Kleindienst threatened to interrupt the meeting unless Mitchell immediately took the private elevator connecting their offices. Minutes later, for the first and only time in their three years of government service together, Mitchell walked into his deputy’s office. “I told him, ‘John, if I’ve got to follow this directive, I’ve got to resign,’” Kleindienst recalled in 1992. McLaren and Griswold, he warned, would also resign. “That fucking Ehrlichman is putting Nixon up to this,” Kleindienst spat. “Just take it easy,” Mitchell replied. At his suggestion, Kleindienst agreed to call McLaren and Griswold into his office and as
k them, without explaining why, to seek a second filing extension on the Grinnell appeal. That would give Mitchell time to work on the president.22

  The next day, Justice John Harlan granted Griswold’s request.23 Mitchell kept a scheduled appointment with Nixon on April 21. The attorney general’s mission was a delicate one: to persuade the president to revoke his order to Kleindienst, allowing the Grinnell appeal to proceed to the Supreme Court, while enabling Nixon to feel as though his forceful assertion of executive authority hadn’t been in vain. “I would like to get some time to talk to you, Mr. President, about this antitrust business,” Mitchell began, “because this is political dynamite.” When Nixon brought up McLaren, the attorney general wisely steered them to the area he knew the president prized most: politics.

  MITCHELL: I’m talking about the whole picture of this ITT—what can develop out of this Senate investigation [by the Antitrust and Monopoly Subcommittee] and so forth, if you don’t need it. You don’t need it for these bastards up there to burden us with it. I don’t know who’s been giving you the information, but it’s a bad political mistake. I’m not talking about the merits of it, either.

  NIXON: John, the problem we’ve got is this: that we’ve got is that—I don’t give a damn about the merits either. But we have a situation—and Connally has spoken to me about it—but where the business community, for, for—believes that we’re a hell of a lot rougher on them in the antitrust than our predecessors were.

  MITCHELL: All right. Now let me—

  NIXON: And they don’t think you are, they think McLaren is.

  MITCHELL: Well, there, there are reasons for it.

  NIXON: Because he leads you to believe this.

  MITCHELL: And it wasn’t McLaren, you know, that started all this. It was your Council of Economic Advisers and [Federal Reserve Chairman] Arthur Burns, and it was done in order to help cool this economy and the stock market, and I could go on a lot of other things. And the things that they’re accusing McLaren of are just—made out of whole cloth. It’s just not true. There are antitrust cases here, but what I want to talk about is the political aspects of it…. You just can’t stop this thing while up at the Supreme Court because you will have Griswold quit, you will have a Senate investigation…. There are other ways of working this out.

  NIXON: Okay. You—

  MITCHELL: But I’m—I want to ta—I want to—

  NIXON: Well, go ahead, you could—yeah, I understand that. If that’s the problem politically, go ahead.

  Here was one of Mitchell’s finest hours as a public servant. Within minutes, he had talked Nixon down from the ledge on the Grinnell appeal, taken a shot at Ehrlichman (“I don’t know who’s been giving you the information, but it’s a bad political mistake”), and defended his own man (“the things that they’re accusing McLaren of are just made out of whole cloth”). At Justice the next day, Mitchell called his deputy aside. “By the way,” the attorney general bemusedly told Kleindienst, “your friend at the White House says that you can handle your fucking antitrust cases any way you want.”24

  Ten days later, on the first of May, John and Martha Mitchell attended the 1971 Kentucky Derby as personal guests of Republican governor Louie Nunn. After the race, the Mitchells and scores of other guests repaired to the governor’s Beaux Arts mansion in Frankfort for a lavish buffet dinner. Also on hand was an ITT lobbyist, a regular at Governor Nunn’s Derby bashes, named Dita Davis Beard.

  An irrepressible character in her mid-fifties, twice divorced with five children, the gray-haired Beard had been a hard-drinking, chain-smoking, foul-mouthed fixture on the Washington political scene since 1961, when she joined ITT’s new capital offices. It was Beard who “put ITT on the political map,” plying congressmen with corporate catnip: rides to and from their districts on ITT planes, free limousines and booze, ghostwritten floor speeches. With her nerve and verve, Beard transcended the era’s limitations on women. And she had one other thing going for her: a mutual admiration society with Geneen, whom she, uniquely among the corporation’s top executives, freely called “Hal.” The ITT president adored his lady lobbyist, admiring her pluck, fattening her expense account, and invited her to deal directly with him—an arrangement resented by her boss, Bill Merriam.25

  From their mutual friend, Governor Nunn, Beard knew in advance that Mitchell would be attending the Kentucky Derby dinner. She and Mitchell had never met. When she first approached him, Mitchell listened politely as Beard complained about DOJ’s pursuit of ITT; he patiently explained that he had disqualified himself from the litigation and therefore “could not and would not” discuss it with her. Mitchell later estimated the exchange took all of “two minutes at the most, possibly three.” But Dita Beard wasn’t done. Minutes later, as the Mitchells and Governor Nunn filed through the buffet line, “Mrs. Beard again approached me,” Mitchell later testified, “with the same harangue….”

  I repeated my desire not to discuss the subject matter and advised her that I did not appreciate her pressing the subject. We went…to the dinner table and sat down, and while we were eating our dinner it is my recollection Mrs. Beard approached us again…. I lost my sweet disposition…. I said in no uncertain terms that I didn’t appreciate her pressing me on the subject and said, in effect, “Shove off.”

  Governor Nunn, present for the entirety of Mitchell’s exchanges with Beard, later confirmed his version. That night, Beard collapsed to the floor, apparently in a drunken stupor, and was removed from the mansion after being revived by Nunn’s aides.26

  Mitchell would hear more from Dita Beard—but for now, he still had to contend with John Ehrlichman. The White House aide was still seething over Mitchell’s success in convincing the president to reverse his blunt orders on the Grinnell appeal. Ehrlichman wrote Mitchell on May 5, a time when both men were consumed by the May Day riots, demanding a three-way meeting with McLaren, at which they might discuss “the present status of the ITT cases, in order that we can achieve the agreed-upon ends discussed by the president with you.”27

  Mitchell simply ignored Ehrlichman’s provocations, a luxury the attorney general could afford because of his own unique standing with the president. Settlement negotiations between Justice and the conglomerate were hurtling forward, anyway: Felix Rohatyn, the Lazard Frères investment banker and ITT director, had been briefing Kleindienst and McLaren on the adverse consequences that divestiture of the Hartford Fire Company would impose on ITT—and on the country. Kleindienst later remembered he was “quite taken by” Rohatyn, not least because the banker conceded at once, as a legal matter, that “McLaren was right and ITT was wrong.”

  Anybody else who ever came in to talk to me about IT-and-T, they’d say, “You’re wrong, Goddamn it!”…[Rohatyn] came up for the first time with the approach of what kind of effect this would have on ITT, and ergo the economy…. I said to him, “This is the first time anybody has ever mentioned that, and I would like to have you go down and meet with Mr. McLaren.” And thereafter, Mr. McLaren conducted those meetings. You know, he kept me informed on what the progress of them was, until that final day when they came up with that settlement.28

  Critics later made much of Rohatyn’s mysteriously persuasive effect on McLaren. Why was the antitrust chief suddenly willing to countenance ITT’s retention of Hartford, a company the conglomerate had gone ahead and acquired despite repeated warnings by DOJ? As McLaren himself told Kleindienst in June 1971: “ITT’s management consummated the Hartford acquisition knowing it violated our antitrust policy; knowing we intended to sue; and in effect representing to the court that [it] need not issue a preliminary injunction [barring the merger in advance] because ITT would hold Hartford separate and thus minimize any divestiture problem if violation were found.”

  Yet in the same memorandum McLaren conceded Rohatyn’s arguments that forcing divestiture of Hartford now would “cripple ITT financially and seriously injure its 250,000 stockholders,” leading to the loss of “well over $1 billion” in stock
value and a likely “ripple effect” across Wall Street and the economy. McLaren “reluctantly” concluded that the government must “weigh the need for divestiture in this case—including its deterrent effect, as well as the elimination of anti-competitive effects…against the damage which divestiture would occasion.” The government, moreover, had already lost two of its three ITT cases—Grinnell and Canteen—at trial.29

  McLaren always maintained that he alone had decided to settle the ITT cases, and that the final deal—while allowing the conglomerate to keep Hartford Fire—represented a triumph for the government. Senator Philip Hart, the Michigan Democrat whose subcommittee probes of antitrust policy Mitchell had pointedly warned Nixon to avoid, later claimed the final settlement was “not substantially different” from terms the antitrust chief had rejected back in November 1970. Yet this was demonstrably false: Where ITT’s 1970 settlement proposal had offered to divest the company of Canteen, the industrial piping division of Grinnell, the domestic operations of Levitt and Sons (a huge home construction company ITT owned), and other assets, the final consent decree—signed on July 31, 1971, and approved by the federal district court on September 24, thus spelling the end of the ITT cases—forced the conglomerate to sell off Canteen, Grinnell’s fire protection division, Levitt’s domestic and foreign operations, 46 percent of Hajoca Corporation (a plumbing company that provided synergy with other ITT assets), and all foreign and domestic operations of the Avis Rent A Car Company.

  In addition, ITT agreed to a ten-year injunction forbidding the conglomerate from acquiring any insurance companies, as well as any company worth more than $100 million, or any company that posted $25 million in revenues while cornering 15 percent of a given market. Neither these ten-year restrictions nor the divestiture of Avis or Hajoca was contemplated in the 1970 proposal. All told, the final consent decree imposed divestiture of some $937 million in 1971 sales, 56 percent more than what ITT proposed in 1970; and divestiture of some $792 million in forsworn assets, 58 percent more than what ITT proposed in 1970. Indeed, ITT’s stock dropped 14 percent in the first two days after the settlement was announced. “We didn’t halt prosecution—they caved in,” McLaren declared. Solicitor General Griswold, a figure of unquestioned integrity, said later: “We got 100 percent of what we asked for.”30