The Three Barons

by J. W Lateer

  During the 1930s both realized that the glory days of big money control of government died with the crash. Then they both focused their energies to begin influencing the government where they thought the new financial power lay. But the big similarity between the two was the use of surrogates to control the government. Joseph P. Kennedy operated through his numerous children. Clarence Dillon operated through his younger partners and protégés.

  Clarence Dillon was the owner of Dillon, Read & Co. DR had the outward appearance of a partnership like the other investment company partnerships of the time such as J. P. Morgan and Kuhn, Loeb. The difference was that DR was really a legal corporation and Clarence Dillon controlled more than 51% of the stock. Thus, instead of having to cooperate with partners, Dillon entirely controlled the financial situation of his “partners.” He could set their salaries at whatever level he wished. Likewise, he could decide their commissions and their annual percentage of the profits. But most importantly, he could decide their share of ownership, if any, of the firm and its assets. He could arbitrarily cut a “partner” entirely out of the firm and leave him destitute.

  A famous writer and economist of the time, Eliot Janeway, described Clarence Dillon thus: “Dillon was a mean, miserable bastard; there was not a generous bone in his body.” According to another associate, Hugh Bullock, Dillon was “a mean, tight-fisted bastard.” According to a famous partner of DR by the name of Dean Mathey, “he [Clarence Dillon] was probably the meanest man who ever lived, at least according to his partners.”

  Dillon married into a prominent Milwaukee family and his wife was related to the Dun’s as in Dun and Bradstreet, the financial research company. During World War I, Dillon was connected to the War Industries Board. Leading financiers including Kuhn, Loeb giant Jacob Schiff recommended Dillon to the head of that board, the powerful financier Bernard Baruch. Dillon became deputy to Baruch.

  Dillon entered the investment banking field and took over the firm William A. Read & Co. which had been on Wall Street since the early 1800’s. After numerous power struggles within the company, Dillon took full control and changed the name to Dillon, Read & Co. In 1925, Dillon, Read had 1000 employees and Clarence Dillon got 40% of the profits.

  In the 1920’s one of Dillon’s most profitable relationships was with banker Ferdinand Eberstadt. But in 1928, the two parted company due to a dispute over their shares of the partnership profits. Eberstadt was unique, because he had the intelligence and strong will not to allow himself to be trapped into the one-sided financial arrangements which typified the dealings of Dillon. Eberstadt formed his own separate partnership and was very successful at it.

  In the early 1920’s another star began to rise at Dillon, Read. His name was James Forrestal. Forrestal had been named “most likely to succeed” by his entire graduating class at Princeton, where he had been editor of the important student newspaper, the Daily Princetonian, a breeding ground for successful future journalists. In 1930, Forrestal was given entire management authority over Dillon, Read and Clarence Dillon then “retired,” supposedly devoting full time to the more idle lifestyle of the wealthy. At that time, Clarence Dillon was only 48 years old.

  Between the Wars, Dillon, Read became involved in the floating of international sovereign debt for foreign governments. DR was more associated with German deals while J.P. Morgan was more closely identified with the U.K. Dillon opened a DR office in Paris (which remained open until 1939). In January, 1925, DR floated a loan for the Thyssen company, a giant in German industry. As will be discussed elsewhere, as of 1928, German tycoon Fritz Thyssen is now thought to have been the only source of funds for Hitler’s fledgling Nazi Party. (After World War II, the Thyssen family became neighbors in the Brazilian jungle with Nazi exile Martin Bormann). The most important German deal for DR was the creation of United Steel Works, a German version of U.S. Steel in America.

  Another famous protégé of Clarence Dillon was Paul Nitze. In a conversation quoted by Dillon’s biographers Perez and Willett, Dillon told Nitze that the wealthy held political power only rarely in history. One such period was 1865 to 1929. This conversation between Dillon and Nitze took place before the Great Depression. Dillon predicted that there would be a very long depression and because of that, Washington would take back control from the wealthy. This was basically the “mission statement” by which Dillon operated. From the end of the depression until his death in 1979, Dillon worked non-stop to reverse this situation and help the wealthy to regain the control they had lost in 1929.

  In one of Dillon’s trips to France in the 1930’s, he visited the Paris Rothschilds. On their suggestion, he bought the Chateau Haut-Brion. This was one of the five top wine-growing vineyards or estates in France. When Dillon left the active business of investment banking, he did so in order to pursue an even more avid love affair; that was the desire to climb as far up socially in the world as he could. The purchase of the Chateau Haut-Brion was part of that obsession.

  When Hitler overran France in 1940, Dillon’s status in France, both in occupied France and in Vichy France became problematic. Chateau Haut-Brion was in occupied France, and the Germans used it as a base. The famous Condor bombers were based there. These were Focke-Wulf FW 200 airliners which were converted to long range bombers. They sank hundreds of allied ships. Dillon’s biographers stand behind the Dillon claim that the Germans couldn’t find the wine cellar there so none of the wine was seized or lost. Personally, it seems that the Germans (who invented the V-2 and the jet airplane) would be capable of finding the wine cellar in a winery. The argument by Perez and Willett seems a camouflage for possible tacit cooperation between Dillon and the Germans.

  Per Perez and Willett, in the early 1930’s, Dillon “turned his attention to solving global problems.” It would seem more accurate to say that Dillon turned to helping foment global problems. Apparently, Dillon was a lifelong Republican, although he was not noted to be openly partisan regarding electoral politics. In 1932, Dillon offered his services to FDR (who declined them) and in 1936, Dillon met privately with FDR in the Oval Office to offer FDR suggestions, especially regarding matters of taxation.

  Dillon vacationed at a family resort estate at Dark Harbour, Maine. He had friends there who included the Winthrop Aldriches, the Marshall Fields and Charlie Auchincloss. One of his best friends at Dark Harbor was the famous artist Charles Dana Gibson, brother-in-law of Nancy Lady Astor. Dillon, Read partner Paul Nitze speculated on some possible extra-marital activities involved in Dillon’s frequent trips to Europe which included visits to the Astors. Another British person with whom Dillon spent time was Philip Kerr, the British Ambassador to the U.S. who was also a friend of Lady Astor’s.

  At this point, the description of Dillon’s political activities by his biographers goes off the tracks. Their claim was that Dillon sought out famous persons just to meet them out of a sense of curiosity. According to them, Dillon only wanted to share thoughts with these associates. The trouble with this theory is that almost all of these associates were Nazi sympathizers or Nazi collaborators. Especially prominent in this circle were Philippe Petain, who was tried and convicted of treason by the French after the war. Another was Pierre Laval, who was executed by the French as a Nazi collaborator. In his defense, Dillon also was acquainted with Daladier and Reynaud, who opposed the Germans.

  But perhaps the most telling relationship was a three-way conversation reported in his biography involving Dillon, Edward VIII (the Duke of Windsor) and Pierre Laval. Dillon reported that when alone with the Duke of Windsor, the Duke expressed pro-Nazi sympathies and “talked like a child.” Of course the Duke was dethroned by the Royal Family because of his Nazi sympathies and Laval was later executed by the French for the same reason. It’s not clear why Dillon would be involved in a three-way conversation with these two. We do know, however, that Dillon kept open his office in Paris until 1939, continued to own and run Chateau Haut-Brion in occupied France and after the war, continued his banking busine
ss in France.

  Since he had intimate conversations with Vichy France officials like Petain and Laval, the only reasonable conclusion is that he had “one foot in” Vichy France. Like George de Mohrenschildt, who allegedly worked for French intelligence around this same period, the relationship with the Vichy government is never explicitly dealt with, but the omission speaks loudly enough on its own.

  We should briefly summarize the many tentacles which Clarence Dillon had inside the American government:

  First, his long-time former associate Ferdinand Eberstadt had been put in charge of single-handedly writing up and creating the U.S. National Security State including the National Security Council, the CIA, the NSA and the Department of Defense.

  Second, James Forrestal, Dillon’s long time manager of Dillon Read, became the last Secretary of the Navy and the first Secretary of Defense, only to die mysteriously in a presumed suicide after a falling-out with the U.S. government.

  Third, his partner Paul Nitze worked for Nelson Rockefeller during World War II in a private spying operation in Latin America. Under Truman, he became Director of Policy Planning at the State Department. After serving in a crucial role in picking the Cabinet for JFK, Kennedy appointed him Assistant Secretary of Defense for International Security Affairs. In 1963, he became Secretary of the Navy and served until 1967.

  Fourth, Dillon’s son C. Douglas Dillon served as 1) Ambassador to France, 2) Under-Secretary of State for Economic Affairs, 3) Under-Secretary of State in another capacity and finally 4) Secretary of the Treasury for JFK.

  Fifth, Dillon, Read partner William H. Draper II describes his own role in the U.S. Government (in an oral history at the Truman Library) as follows:

  I went to Germany, going to France first, while the war was still on, with General [Lucius] Clay, preliminary to the occupation which he was expecting to take over in Germany under General [Dwight D.] Eisenhower. I was asked by General Clay to take on the responsibility for the economic side of the occupation. Then General Eisenhower left for the United States where he became Chief of Staff of the Army. General Clay eventually became Commander in Chief for the European Theater in addition to handling occupied Germany.

  After about two years in Berlin dealing with the German economy – in July of ‘47 I returned to the United States.… While there, Secretary of War [Robert] Patterson resigned; General Kenneth Royall was made Secretary and he asked me to become Under Secretary, which after consulting General Clay for obvious reasons, I accepted.

  My duties for the next two years were primarily supervision of the three occupations: Germany, Japan and Austria, although I became Acting Secretary when Mr. Royall was away from Washington.

  Immediately after the War, Draper returned to Dillon, Read. Historians treat Draper as “the eyes and ears” of those who had a vested interest in how the ex-Nazis, especially the industrialists like the Krupps, the Flicks and the Thyssens, were treated during and after the occupation of Germany.

  Except for Eberstadt who ran his own firm, Clarence Dillon entirely controlled the financial situation of Nitze, Draper, Forrestal and his son C. Douglas Dillon, basically holding them financial hostages.

  A more candid source of information about Clarence Dillon is a book by Haruo Iguchi about Japan around the period of World War II. On July 3, 1940, the head of Nissan, Ayukawa Toshisuke set up a meeting between his confidante, Miho Mikitaro and Clarence Dillon. In this book, Iguchi describes how Clarence Dillon “thought the China issue [Japanese occupation of China] as far as it concerned the U.S., the U.K. and Vichy France could be resolved if the U.S. and Japan took the same position on the European war.” In contrast to the way his biographers portrayed Dillon, author Iguchi describes in detail how Dillon was intimately involved in trying to avert war with Japan in return for the U.S. to allow Dillon, Read to sponsor massive trade deals with Japan and Japanese-occupied Manchuria.

  When Dillon was negotiating with the Japanese and the U.S. Government, Iguchi mentions his involvement not only on behalf of the U.S. and the U.K. but he also was advocating for the Hitler-dominated puppet government of Vichy France. At the very least, Clarence Dillon was indifferent to fascism and he was probably just as comfortable with Nazi Germany as with any other foreign government. This was especially true if he could benefit financially by doing deals for Dillon, Read. In these international efforts, Clarence Dillon was often working together with ex-President Herbert Hoover. Author Iguchi clearly believes that Clarence Dillon was the last best hope of avoiding war between the U.S. and Japan in 1941.

  After World War II, the strongest lobbying for prioritizing economics over political reform in Japan came from three people. They were Herbert Hoover, James Forrestal and William Draper. This gives an inkling of the behind-the-scenes power wielded by Clarence Dillon in U.S. foreign policy. Iguchi also demonstrates that Dillon was using his massive influence in the U.S. government and U.S. foreign policy to benefit Dillon, Read (and thus himself) financially by gaining priority in business deals.

  Last, but not least, among the likely connections of Clarence Dillon to the JFK assassination was his choice of a vacation retreat. On January 1, 1956, Dillon completed a luxury vacation home on Montego Bay, Jamaica. This home was called “High Rock.” It was located only a mile away from the Tryall Compound of Sir William Stephenson. As most JFK assassination researchers know, The Torbitt File by William Torbitt claims that the JFK assassination was planned at the Tryall Compound in Jamaica.

  This area of Jamaica overlooking Montego Bay was frequented by the wealthy. The British royal family had a retreat there. That retreat was gifted by the royal family to Sir Winston Churchill in gratitude for his role in winning World War II. Sir William Stephenson developed the Tryall Compound on Montego Bay, which some have described as a Fort Knox for spies. It consisted of separate condominiums to which various conspirators could be invited for the planning of covert operations.

  During the Suez Crisis in 1956, British Prime Minister Sir Anthony Eden moved the official seat of government to Montego Bay. As part of the World War II lend-lease program, the U.S. military had constructed an airfield there. Many of the world’s largest airlines had direct flights to Montego Bay. Perhaps the most famous resident was Ian Fleming, who wrote the James Bond novels at Montego Bay. Fleming owned a vacation home there beginning after World War II. Fleming was an employee of British Intelligence as well as a journalist. Some experts have theorized that the James Bond novels themselves were part of a propaganda campaign. This campaign popularized the concept of SMERSH and the supposed Soviet assassination program (which was blamed by some for the JFK murder).

  So, the prior paragraphs establish the motive, means and opportunity of Clarence Dillon to have a major involvement in the JFK assassination. The major opportunity lay in the fact that his son and banking partner C. Douglas Dillon, as Secretary of the Treasury under JFK, controlled the Secret Service. And Clarence Dillon controlled C. Douglas Dillon, so this is not such a stretch as it might at first seem.

  Also, as Treasury Secretary, C. Douglas Dillon controlled the function of the ATF, which was a major presence in Dallas and was in the middle of the Oswald weapons controversy. The ATF worked through its agent Frank Ellsworth who was involved in the Lee Harvey Oswald weapons scenario.

  Kuhn, Loeb

  The investment bank which had the most sinister reputation between the Wars was Kuhn, Loeb. This began with Kuhn, Loeb partner Jacob Schiff who financed the Russo-Japanese War. Partner Paul Warburg invented the Federal Reserve System. According to author Ron Chernow in The Warburgs, Paul Warburg sat down in a comfortable easy chair one day with a pencil and paper and wrote out the Federal Reserve Act off the top of his head.

  Between the wars, international investment banks were divided into Jewish banks like Kuhn, Loeb and M.M. Warburg of Hamburg, Germany, and Protestant banks like J. P. Morgan. Kuhn, Loeb was perhaps the most financially successful of all the international investment banks on Wall Street. Kuhn, Loeb suc
cessfully resisted all attempts of writers to publish information about it. The best source for information on Kuhn, Loeb is the aforementioned book by Ron Chernow The Warburgs.

  Another prominent partner of Kuhn, Loeb was Sir William Wiseman. Like Clarence Dillon, Wiseman owned a villa at Montego Bay. Wiseman was the man who ran the British intelligence which was successful in bringing the U.S. into World War I on the side of the British.

  Another famous Kuhn, Loeb partner was Lewis Strauss. Strauss was a right-wing figure who was prominent from the World War I period up to the time of the Kennedy administration. He began as a colleague of financier Bernard Baruch in World War I, who was an advisor to the U.S. government. Strauss had worked on financing certain technological projects. Through this avenue, he was passed off as an expert on science. During the Eisenhower Administration, he was the chief scientific advisor to Ike despite the fact that he lacked even a college degree in any subject.

  During the Eisenhower administration, Strauss became embroiled in a feud with physicist Robert Oppenheimer, the father of the hydrogen bomb. This feud smacked of the familiar theme in many Western movies, where Washington wasn’t big enough for both Strauss and Oppenheimer and one of them had to go.

  Strauss was successful in branding Oppenheimer a Communist and because of that he was denied a security clearance and fired from his job. In 1959, in the waning days of the Eisenhower administration, the newly elected 86th Congress, infused with Liberal Democrats, refused to confirm Strauss as Secretary of Commerce when he was nominated by Eisenhower. This confrontation which had erupted between conservative Republicans and Liberal Northern Democrats lasted right up until November 22, 1963.

  After being accused of being a Communist and resigning in disgrace, Robert J. Oppenheimer was nominated during the Kennedy Adminstration for the Enrico Fermi award, which was viewed as an attempt by JFK to rehabilitate the reputation of Oppenheimer. This award was granted by LBJ in the week after the assassination. There is no evidence, however, that Strauss or any other Kuhn, Loeb partners (except perhaps Sir William Wiseman circumstantially) had any role in the death of JFK.