The Devil's Chessboard

by David Talbot

  In October, still puzzling over McCone’s selection, Schlesinger brought up the subject again with Kennedy in the Oval Office. He asked the president if he knew McCone well. Kennedy admitted that he was not very familiar with his new appointee, but he seemed undisturbed by the prospect of working with him. Kennedy then began to vent about his outgoing CIA chief. “He was very critical of Dulles,” Schlesinger later noted, “and implied that, after Dulles, anyone would do.”

  If Kennedy thought that he was getting, in McCone, a respectable Republican front man who would readily do his bidding at the CIA, he was sorely disappointed. In May 1962, Schlesinger fell into conversation at a French embassy party with his friend, banker-diplomat W. Averell Harriman, the old Democratic Party wise man who had served as FDR’s ambassador to Moscow and was now serving JFK as a globe-trotting ambassador at large. Harriman gave Schlesinger an astringent evaluation of the new McCone regime, which he saw as little changed from the Dulles days. This was clear, Harriman confided, from looking at the policy maneuvers around Laos, the Southeast Asia sideshow in which Kennedy was determined not to get embroiled. JFK’s policy of neutrality was being “systematically sabotaged by the military and the CIA,” Harriman warned. “McCone and the people in the CIA want the president to have a setback. They want to justify the [intervention] position CIA took five years ago. They want to prove that a neutral solution is impossible and that the only course is to turn Laos into an American bastion.”

  Harriman, a veteran of Washington infighting, then advised Schlesinger how the White House should handle the CIA and military seditionists in its midst. “General [George] Marshall once told me that, when you change a policy, you must change the men too. [The] CIA has the same men—on the desk and in the field—who were responsible for the disasters of the past, and naturally they do things to prove they were right. Every big thing the CIA has tried in the Far East has been catastrophic . . . and the men responsible for these catastrophes are still there.” Kennedy’s purge of the CIA, Harriman made clear, had not been sweeping enough.

  The president had lopped off the heads of the top three men at the CIA, but Dulles’s loyal deputies—like Helms and Angleton—were still running the show at Langley. And McCone, a CIA outsider who largely shared the former regime’s views, was more or less content to go along with the old Dulles policies. “McCone has no business in the New Frontier,” Harriman told Schlesinger in March 1963. Dulles’s successor “doesn’t believe in the administration,” said Harriman, and “was full of mischievous ideas and projects.”

  Two years into McCone’s tenure as CIA director, syndicated newspaper columnist Henry Taylor published a surprisingly critical piece about the intelligence agency, calling it a “sick elephant” and urging it to “quit stalking through foreign political backrooms and . . . building its own empire.” A few days later, Dulles wrote his old colleague a letter, letting Taylor know that he viewed his column as a personal betrayal and as “a direct attack on me [since] most of what you say [about the agency] happened while I was Director.” Taylor quickly replied with a long, groveling telegram, pleading that nothing he had written—or ever would write—was critical of the spy agency under Dulles’s leadership. “Certainly you must know that any attack on you by me is inconceivable. . . . No one has served this country with greater distinction, selflessness and success than you.” But Dulles made it clear to Taylor that he was still running the show at the CIA, so any distinction the columnist tried to draw between his tenure and McCone’s was false. “Since my retirement,” Dulles told Taylor, “there have been few important policy changes, and I am wholly in support of its new chief and of its recent work.”

  This is precisely what Schlesinger was afraid of when McCone took over the CIA in November 1961: that the Dulles era would continue undisturbed. That month, as Kennedy’s special assistant contemplated the new administration’s progress, he could not help falling into a glum mood. Recent conversations with liberal friends and colleagues, he wrote in his journal, “made me face up to the fact that there is no such thing as the New Frontier. We came in last January after a campaign which promised the American people a new beginning [but] we have really done damn little in the way of bold, new initiatives. JFK has given marvelous speeches, but they are almost too marvelous. The words kindle splendid hopes; but the reality remains as dismal as ever.”

  Schlesinger grew anxious whenever he began to sense that the old “Eisenhower-Dulles continuities” were “beginning to reassert themselves.” He yearned for Kennedy to break free from the political past, to “ignore the wisdom of the Establishment and accept the implications of his own campaign and his own instincts.” The liberal counselor’s wishes were soon to become true.

  By 1962, President Kennedy was challenging the bastions of American power on several fronts, including the corporate elite’s control of the economy. The steel industry crisis that erupted that spring laid bare the growing tensions between JFK and the Fortune 500 circle. On April 6, after yearlong negotiations between steel companies and unions—which involved the personal participation of the president himself—a deal was announced that prevented the rise of steel prices. The steel agreement—which was based on labor concessions that Kennedy administration officials had helped wring from the unions—was a major victory for JFK. The three-way pact hammered out by industry, labor, and government ensured stability throughout the economy, since rising prices in the core industry had been the biggest inflationary factor in the postwar period. “Every time steel prices jump, your pocketbook jumps—with pain,” Estes Kefauver, chairman of the Senate antitrust and monopoly subcommittee, told American consumers in 1959.

  But just four days after the Kennedy-engineered steel pact was signed, U.S. Steel chairman Roger Blough scheduled a meeting at the White House and stunned the president by informing him that he was going to announce a 3.5 percent price increase, effective at midnight—a move that would trigger price jumps at other steel companies and send inflationary ripples throughout the economy.

  Kennedy was furious at Blough’s double cross, which he correctly saw as a direct challenge to his ability to manage the economy. “My father always told me that all businessmen were sons of bitches,” said JFK at the height of the steel industry crisis, “but I never believed it until now”—a remark that he was happy to have leaked to Newsweek.

  While the president saw Blough as a backstabber, Luce’s Fortune magazine regarded the steel mogul as a capitalist hero, declaring him a “business statesman” who was fighting not just for his own company but on behalf of the entire corporate sector by defying the president’s authority. Blough’s company occupied a central position in the country’s corporate pantheon, which was reflected in the U.S. Steel board of directors. Blough himself was well connected within the power elite—including to Dulles, with whom he served in organizations like the Council on Foreign Relations and the Lafayette Fellowship Foundation (part of the Ford Foundation).

  Kennedy understood that if Blough and the other colluding steel executives prevailed, his leadership would be severely undermined, not only at home but abroad. He had staked his reputation with organized labor and American consumers on the deal—and now he was faced with “the most painfully embarrassing predicament of his career,” in the view of his White House advisers. A steel industry victory would make it clear to the entire world who ran America.

  Determined to protect his presidency, over the next three days JFK unleashed the full powers of the federal government in an all-out effort to crush the steel industry rebellion. Attorney General Bobby Kennedy announced a grand jury probe of steel price-fixing, which he followed by issuing subpoenas for the personal and corporate records of steel executives and by sending FBI agents to raid their offices. “We were going to go for broke: their expense accounts and where they’d been and what they were doing,” JFK’s brother and political enforcer later recalled. “I picked up all their records and I told the FBI to interview them all—march into thei
r offices the next day. We weren’t going to go slowly. . . . All of [the steel executives] were hit with meetings the next morning by agents.” Meanwhile, Robert McNamara’s Defense Department announced that it was reviewing its steel purchasing practices, making it clear that it would favor companies that did not follow U.S. Steel’s price hike.

  Kennedy’s strong-arm tactics produced quick results. On April 12, Inland Steel—a smaller but still significant company—caved under the pressure, announcing that it would not raise prices. Bethlehem Steel soon followed, and by the next day U.S. Steel itself waved the white flag.

  In victory, JFK adopted a genial and magnanimous posture. Over dinner at the White House on May 3, Schlesinger asked Kennedy what he had said to Blough when the U.S. Steel chairman surrendered. “I told him that his men could keep their horses for the summer plowing,” smiled JFK.

  But the resentment from the steel showdown never faded away. Corporate executives continued to snipe at the president, spreading the word that his administration had destroyed “business confidence” by bringing the steel industry to heel. Senator Barry Goldwater, the voice of the rising Republican right, escalated the rhetoric, calling Kennedy’s bare-knuckled tactics against the steel barons “a display of naked political power never seen before in this nation. . . . We have passed within the shadow of police-state methods.”

  Chatting with Schlesinger in the Oval Office on June 4, Kennedy said, “I understand better every day why Roosevelt, who started out such a mild fellow, ended up so ferociously anti-business.” JFK vowed that he was not going to appease his big business critics by taking what O’Donnell described as “an ass-kissing posture.” To counter the corporate assault on his presidency, said Kennedy, “[w]e have to put out the picture of a small group of men turning against the government and the economy because the government would not surrender to them. That is the real issue.”

  Schlesinger discovered that some of the corporate sniping against the president came from within his own administration. While dining at Joe Alsop’s in late July, the watering hole where Schlesinger kept in touch with the CIA crowd, the White House adviser was disgusted to hear McCone fulminate against Kennedy’s economic policy, which the former industrialist regarded as too pro-labor. “I have rarely seen a man more completely out of sympathy” with the administration’s economic direction, Schlesinger observed in his journal. The CIA director’s “formula for economic stimulus,” wrote Schlesinger, “is to kick labor in the teeth.”

  As he continued to wrestle with the disgruntled corporate community into the fall, Kennedy longed to make the battle over the economy the centerpiece of his presidency, telling Schlesinger that he “only wished there were no Cold War so he could debate the future of America with the businessmen.” This is a remarkable and all but overlooked statement, indicating—once again—Kennedy’s visionary thinking.

  A year after the April 1962 steel blowup, Kennedy tried to make light of the controversy as he addressed a Democratic fund-raising dinner at the Waldorf Astoria hotel. Told that the steel industry was presenting former president Eisenhower with its annual public service award in another banquet hall at the same hotel, JFK grinned mischievously. “I was their man of the year last year,” he told the Democratic crowd. “They wanted to come down to the White House to give me their award, but the Secret Service wouldn’t let them do it.”

  Beset by the rising tensions in his government, Kennedy would bring up the awkward subject of assassination from time to time. In public, as on this occasion, he used it as a comedic device. But in private, with old friends like Red Fay, he mused about it in a more somber vein.

  The climate of conflict surrounding the Kennedy presidency had a way of evoking the grim topic. Outraged by the president’s strong stand against the steel industry, Henry Luce invoked the fate of Julius Caesar in a harsh editorial in Fortune, warning JFK that he should “beware the ides of April.” But Kennedy never backed down from his ongoing duel with the steel industry. In October 1963, just weeks before his assassination, JFK’s Justice Department filed price-fixing charges against U.S. Steel and other steel companies, based on Bobby’s earlier grand jury probe of the industry. To the end of his life, Kennedy made it clear that there would be no “ass-kissing” for those corporate powers that tried to undermine his presidency.

  After Dulles was ousted by JFK in late 1961, the Old Man’s crowd had quickly closed ranks around him. The Luces immediately offered Dulles succor, inviting Clover and him to spend the New Year holiday at their winter home in Phoenix. Clare Boothe Luce often used the Arizona estate, with its cactus garden and mesmerizing view of Camelback Mountain, to recover from her own bouts of melancholy, dropping LSD with eccentric friends like Gerald Heard, a gay Anglo-Irish writer, devotee of Eastern mysticism, and psychedelic pioneer. Clover found the Luces’ desert refuge a soothing respite from the Washington vortex, but, as she wrote Mary Bancroft from Phoenix, she knew that Allen didn’t share her sentiments: “I do feel an immense relief of burden by Shark’s being out, which he himself doesn’t feel.”

  Dulles’s growing sense of resentment toward Kennedy was shared by the Luces, who had known JFK since he was a young Navy ensign. Joe Kennedy had courted Henry Luce’s support for his son during the 1960 presidential race, dropping by the magazine mogul’s Fifth Avenue apartment for a lobster dinner on the final night of the Democratic Convention, and afterward watching TV together as JFK accepted his party’s nomination. “It was a memorable moment in my life,” Luce recalled. “It’s quite a thing to sit with an old friend and watch his son accept the nomination for the president of the United States.”

  Luce was not the type to let sentiment cloud his political judgment, however, and he remained loyal to the Republican ticket. But Life magazine, his influential flagship publication, gave Nixon a tepid endorsement, leaving the door open for Kennedy. Luce admired JFK’s intellect and cultural sophistication. But he questioned whether he would be a sufficiently aggressive foe of Communism. After finishing their lobster dinner that night, in fact, Luce had warned Joe Kennedy that he would not stand for it if JFK proved too much of a compromiser in the White House. “If he shows any signs of weakness in general toward the anti-Communist cause, or to put it more positively, any weakness in defending and advancing the cause of the free world, why then we’ll certainly be against him,” Luce told the Kennedy paterfamilias.

  The Luce honeymoon with the Kennedy administration had been short-lived. After the Bay of Pigs, Luce’s coverage of the presidency turned increasingly negative. By the spring of 1963, JFK was so exasperated with the relentless drumbeat of criticism from the Time-Life headquarters in New York that he invited the Luces to lunch at the White House to see if he could somehow sweeten the power couple’s disposition. When the press lord launched into a lengthy diatribe on Cuba, demanding that Kennedy invade the island, the president suggested that Luce was a “warmonger” and the afternoon came to an unpleasant conclusion, with the Luces marching out of the White House before dessert was served. Shortly afterward, Luce convened a remarkable war council of his top editors at Time-Life, where he declared that if the Kennedy administration was not bold enough to overthrow Castro, his corporation would take on the task. Luce and his wife were already funding raids on Cuba, with the quiet support of the CIA. Now Luce would escalate his crusade against the Castro regime, in direct defiance of Kennedy.

  Like the Time-Life building in Manhattan, Dulles’s brick house on Q Street was a boiling center of anti-Kennedy opposition. The actively “retired” spymaster maintained a busy appointments calendar, meeting not only with retired CIA old boys like Frank Wisner and Charles Cabell, but with a steady stream of top-rank, active-duty agency officials such as Angleton, Helms, Cord Meyer, and Desmond Fitzgerald. More surprisingly, Dulles also conferred with midlevel officials and operational officers such as Howard Hunt, James Hunt (a key deputy of Angleton, and no relation to Howard), and Thomas Karamessines (Helms’s right-hand man). McCone, too, rout
inely checked in with his predecessor, dining with him and sending him cordial notes.

  Though Howard Hunt did not occupy the same social strata as Dulles, the two men were bonded in bitterness: they both felt they had been made scapegoats for Kennedy’s failure of nerve at the Bay of Pigs. The retired spymaster sent Hunt his photograph, and Hunt gave him a copy of his angry Cuba memoir. “I wrote this book as an antidote to the despondency that seized me in the wake of the Cuba project,” Hunt explained in an August 1962 letter, “and I hope it may give you some diversion now.” Serving Dulles, Hunt wrote in an earlier letter, was “an honor I shall always cherish.”

  Fearing that his role in the Bay of Pigs fiasco would stall his CIA career under Kennedy, Hunt sought Dulles’s help in starting a new career in the private security field. “It occurs to me that one of your many business contacts might have use for me abroad, particularly if something of my background were known,” Hunt wrote Dulles in August.

  Dulles, who told Helms, “I have always thought well of Hunt,” and that he was “disposed” to help him, agreed to get together with Hunt in September. Afterward, Hunt decided to stay in the CIA, while moonlighting as a ghostwriter for Dulles. Hunt was a prolific author and had been churning out spy novels under various noms de plume since World War II. Dulles—who produced four books in retirement, including a war memoir, an intelligence handbook, and two volumes of espionage adventures—also worked on his literary projects with a young former CIA employee named Howard Roman, whose wife, Jane, was employed in Angleton’s deeply submerged counterintelligence unit.