The Chairman

by Kai Bird

  McCloy was only one of the most influential members of an elite group, but, partly due to the breadth and longevity of his career, he was without doubt the most important member of this Establishment. Alone among his peers, he managed to straddle for nearly five decades the interlocking directorships of corporate America, the federal government, and the country’s leading public-policy and philanthropic foundations. For much of his career, he was in a position to grease the machinery that powered postwar American society. When something went wrong, when a crisis occurred, he was invariably a man whom presidents called to their side, whether it was in World War II, postwar Germany, the Cuban missile crisis, or the aftermath of a presidential assassination.

  He was a modest, almost unpretentious man. John Kenneth Galbraith had dubbed him the “Chairman of the Establishment,” but that was a description McCloy abhorred. He preferred to call himself a mere “legman,” and liked to point out that his origins were humble. He was, in fact, the son of a woman who made her living working as a hairdresser in the homes of well-to-do Philadelphia families. A strong-willed woman, Anna McCloy molded her son to become a different kind of servant to America’s ruling elite.

  Well into his eighties, McCloy could still be called, by Harper’s magazine, “the most influential private citizen in America.” But simple longevity does not explain how one man could wield such influence. Character had something to do with it. His congeniality, personal modesty, and commonsensical demeanor evoked trust. Unlike some of his peers—such as Averell Harriman or Lewis Douglas—McCloy had no political ambitions. His politics were less a matter of ideology than simple pragmatism. He had no constituency—except for his ties to Rockefeller family interests on Wall Street—and even in this case, for most of his career, he managed to make it seem that he was always able to rise above these private interests in order to discern the public interest. He was the quintessential chairman of the American Century.

  BOOK I

  The Making of a Wall Street Lawyer

  CHAPTER 1

  A Philadelphia Youth: 1895–1912

  “John, always run with the swift. You might someday come in second.”

  COACH JOHN PLANT THE PEDDIE SCHOOL

  All his life, John Jay McCloy knew he had been born on the wrong side of Philadelphia’s “Chinese Wall,” a massive, blockwide stone viaduct which once physically and symbolically segregated the upper classes in the city center from the poor of North Philadelphia. Built by the country’s largest corporation at the time, the Pennsylvania Railroad, the Wall provided westward-bound trains an elevated route out of the city, toward the new “Main Line” suburbs. McCloy always remembered it as a social divide, a barrier his mother was determined he would cross.

  At the turn of the century, Philadelphia maintained a strong sense of class. “Proper Philadelphia gentlemen” were rapidly setting the standard for a national aristocracy of talent and wealth based largely on the East Coast. The common interests of these merchants, investment bankers, and corporation lawyers lay in free trade, internationalism, and the expansion of American power abroad. Culturally, “Philadelphia gentlemen” were generally groomed in a few select New England boarding schools, and then attended Harvard, Yale, the University of Pennsylvania, or Princeton. They socialized at exclusive men’s clubs, vacationed at summer resorts in Maine, Cape Cod, or the Adirondacks, and had pedigrees that could usually be inspected in the Social Register. All the attributes of this establishment—the private-school education, the men’s clubs, even the Social Register—were Philadelphia inventions.

  The country’s oldest private club, the Fish House, was founded in 1736, a few years before the earliest of London’s famous clubs. The Philadelphia Club followed in 1834, and the Old Philadelphia Rabbit Club started up in 1861. The Union League and the Rittenhouse Club soon followed. These exclusive clubs—the Fish House limited its membership to thirty men—imposed aristocratic and courtly standards on the city’s social life. Every day the city’s leading bankers, brokers, doctors, businessmen, and lawyers—men with names like Biddle, Cadwalader, and Bingham—came to the Philadelphia Club’s stately brick home at 13th and Walnut to eat, drink, and discuss the city’s affairs. It was, in the words of one social historian, “probably the most compact and inviolable little group of aristocrats in America.”1

  Everyone knew everyone else. These men had usually grown up together, gone to the same prep school together, and married into families known to one another. Many of them were of Quaker merchant ancestry, though most now attended “high” Episcopalian church services. Such names as Wharton, Wister, Morris, Rush, and Ingersoll had played prominent roles during the American Revolution. A hundred years later, these families still constituted the inner circle of what it meant to be a “Proper Philadelphian.” Their personal code of conduct was derived from Quaker middle-class money values, a blend of virtuous materialism and aristocratic aloofness. The Protestant work ethic ordained that piety, frugality, and hard work would be rewarded by material success. At the same time, it was considered unseemly to make a public spectacle of one’s wealth or power.

  For this reason, few “Philadelphia gentlemen” sought political office. These highly educated and righteous men possessed a sense of public service, but they preferred to fulfill their civic and charitable obligations outside the public limelight, within discreet voluntary associations. Similarly, they chose to exercise their power indirectly, from behind the scenes and through their contacts with other men of means. More than in any other city in America, Philadelphia’s club men represented a cohesive and stable establishment. It was an establishment to which the McCloys had never belonged.

  The McCloys came to Philadelphia as poor Scotch-Irish immigrants sometime in the mid-1700s. As devout Presbyterians, they stood outside the city’s Quaker establishment, but they were a rung above the Irish Catholic, German, and Italian immigrants of the mid-nineteenth century. On the eve of the Civil War, McCloy’s grandfather William McCloy married Amelia Conrad. In 1862, Amelia, twenty-seven, gave birth to a son, whom they named John Jay McCloy. This was McCloy’s father, a quiet, handsome young man who dropped out of high school to earn his livelihood.

  When he was barely twenty years old, in December 1882, John Jay McCloy landed a job as a clerk with the prestigious Penn Mutual Life Insurance Company. This was an achievement for a youth with little education and no experience. Established in 1847, Penn Mutual in the 1880s was a highly respectable institution in Philadelphia society. Its officers were members of all the right clubs and listed in the Social Register. McCloy started as an actuarial clerk earning $600 a year. It was tedious, meticulous work, but it suited him. “Persistency,” said a Penn Mutual officer, “may be set down as one of the qualities of a life insurance agent.”2

  McCloy fit the mold, and his steadiness did not go unrewarded. Each year his salary rose about $100, until by the early 1890s he was paid $1,400 per annum—a more than handsome wage. In 1891, he married Anna Snader, twenty-seven, a pretty, independent-minded woman of poor Pennsylvania Dutch stock. In the summer of 1892, she gave birth to William Snader McCloy.

  Earlier that year, McCloy’s status at Penn Mutual had dramatically improved. In February, the supervisor of applications, policies, and death claims died, and McCloy, who had risen to chief clerk, was selected to take his position. This placed him among the top fifteen employees in the company’s Philadelphia headquarters. His salary rose from $1,550 in 1891 to $2,000 in 1892. That year they made a 50-percent down payment on a $7,600, plain two-story row house at 2136 North 19th Street, a mile north of the Chinese Wall. It was a two-mile walk to Penn Mutual’s new offices on Chestnut Street, or John McCloy could take the trolley that ran past his front door.

  In this solid middle-class house on Sunday, March 31, 1895, Anna McCloy gave birth to a second son. She had wanted to name him John Jay, after his father. But at the christening, Anna’s father insisted that the boy carry his mother’s maiden name. Because neither Anna nor her sel
f-effacing husband was willing to argue the point, the child was baptized John Snader McCloy. But in just a few years, young “Jack” would suddenly announce that he had changed his middle name, dropping the “Snader” for “Jay.”

  The high-school dropout had done well by his family. By the time his second son was born, the supervisor of applications and death claims was earning more than $3,000 a year. He was not part of good Philadelphia society, but he had a window onto it. One of his best friends at Penn Mutual was the company’s medical doctor, J. Allison Scott. “He was from the Philadelphia elite,” young Jack McCloy would remember, “from the right part of town, across the Chinese Wall.”3

  With Dr. “Al” Scott’s encouragement, McCloy, Sr., began to study Latin. He took to carrying Latin exercise books on the trolley to work and, with Scott’s encouragement, began to write little pieces of Latin verse in spidery green ink. When another Penn Mutual colleague commented that “one had to know Greek to be an educated person,” he told Anna that he only wished he had time to study Greek as well, and wanted to be sure that his sons learned both classical languages.4

  Despite his friendship with Dr. Scott, John McCloy hoped his two sons would study the law. The lawyers at Penn Mutual possessed a certain status and prestige independent of their rank in the corporation. One of the lawyers representing the company at this time was a thirty-three-year-old attorney named George Wharton Pepper. McCloy was introduced to Pepper by Dr. Scott, who had married Pepper’s younger sister, Frances. Through their friendship with the Scotts, the McCloys became known to the Peppers as decent, hardworking people. Because they lived north of the Chinese Wall, John and Anna McCloy never became a regular part of the Peppers’ social calendar. But Anna would always regard George Pepper as someone whom she could approach for advice. Over the years, the lawyer was to become young Jack’s first mentor and role model.

  The aristocratic cadence of the Pepper name was matched by the man’s debonair good looks, his “Old Philadelphia” breeding, and his University of Pennsylvania education. He played the British sport cricket, not American baseball. He was president of the elite Rittenhouse Club, a major fund-raiser for the Episcopalian Church, and a partner in the prestigious law firm of Biddle & Ward. He was a paragon of the “Philadelphia lawyer,” a term dating back to Andrew Hamilton’s defense of John Peter Zenger in Colonial America’s earliest case involving the freedom of the press. Such lawyers were known for their advocacy of private interests; few Philadelphia lawyers ever made a reputation for their careers on the bench. They were advocates, not judges.

  George Pepper’s paying clients were usually corporations, such as the Union Traction Company, a monopoly that controlled Philadelphia’s trolley system. As a young attorney, he frequently defended the company against damage suits arising from accidents suffered by passengers. As with Penn Mutual and other corporate clients, his job was to keep the company out of court. “Lawyers,” Pepper wrote in his memoirs, “as a class have always been unpopular.”5 Sensitive to the fact that this was particularly true of corporate lawyers, Pepper early in his career cultivated a patrician sense of “trusteeship” in questions involving the public interest.

  “The so-called ‘corporation lawyer,’” he wrote, “when he deserves to be scolded, is one whose offense does not consist in representing a corporation or in being disloyal to his client but in allowing fidelity to that client to dim or black out entirely his sense of public duty.”6 Only lawyers, he believed, possessed the disinterestedness necessary to discern the greater public good. Such attitudes were typical of paternalistic Philadelphian society.

  Pepper’s sense of civic duty did not include running for elective office. Gentlemen lawyers did not, he believed, “itch for public office”; his attitude mellowed somewhat in later years, when he reluctantly accepted an appointment to a U.S. Senate seat. (He proved to be a poor politician and was quickly defeated at the polls.) He believed that lawyers like himself and Elihu Root, New York’s foremost corporate lawyer, best exercised their influence on the commonwealth from afar. Such lawyers were a class apart, and John McCloy, Sr., the self-conscious high-school dropout, dreamed of nothing better for his two young sons than that they should enter the ranks of such men.

  Young Jack McCloy was four and half years old in December 1899, when epidemics of diphtheria, typhoid, and cholera swept through Philadelphia. The young were especially vulnerable. Two-year-old Edward T. McCloy, a cousin, died first, and then his brother, William, age seven, came down with diphtheria: a fever and a severe sore throat gradually swelled until the boy could hardly breathe. He died in December 1899. Jack always remembered William as a bright, athletic boy whom he had been told to emulate.

  Only thirteen months later, John McCloy, Sr., had a heart attack. Lying on his deathbed, he said to Anna, “Make sure John learns Greek.”7 McCloy left a widow and son with no income. Penn Mutual had refused to insure his life because their doctors had detected a heart murmur, stemming from a mild heart attack he had suffered during the Great Blizzard of 1888.

  Three weeks after his death, at the end of a board meeting at Penn Mutual, trustee Noah Plympton eulogized McCloy. No one mentioned that the company had refused life insurance to their own supervisor of applications and death claims. But the trustees did vote to pay his widow the balance of his salary for the year 1901.8 McCloy had worked eighteen years at Penn Mutual; he was a top officer in the company when he died, and his widow had little more than $3,000 to make her own way in life and support her six-year-old son.

  Anna McCloy’s immediate concern was Jack’s education. For a brief time, she enrolled him as a day student at a cheap orphanage school in the city. But the boy didn’t like it, so she had him transferred to Thaddeus Stevens School, a neighborhood public school. Like most middle-class Philadelphians, she had a low regard for the free public-school system, and assumed she would someday send her son to a private school.9

  Earmarking the $3,000 payment from Penn Mutual for Jack’s education, Anna set about earning money. She hired herself out as a home nurse, but this didn’t bring in enough money, so she taught herself hairdressing. Starting out with her contacts at Penn Mutual, Anna gradually established a reputation as a fine hairdresser. Among her customers were some of Philadelphia’s best-known society ladies, including George Pepper’s wife, Charlotte, the daughter of a distinguished Yale professor. “She had a rich clientele,” McCloy remembered. Anna rose each morning by six and carried her large sack of materials to “do heads” across the Chinese Wall, where her customers lived. “She never made more than 50 cents an hour,” recalled McCloy. Other customers included Agnes Repplier, a nationally known essayist, and the families of H. H. Furness, a philanthropist and famous Shakespearean scholar; John Wannamaker, the department-store magnate, who was then known as the “Prince of Merchants”; and Samuel Disston, the manufacturer of the world-famous “Disston saw” and one of Philadelphia’s leading businessmen.10

  Anna’s pleasing personality made of these men and women of Philadelphia society not only clients, but friends of a sort. Furness gave her a set of Shakespeare for her young son. Others, like the Disston family, gave her secondhand toys from their own children’s castoffs. A pretty, vigorous, and intelligent young widow, she managed to make a small but decent family income. In the eyes of men like Pepper, Wanamaker, or Disston, Anna’s social standing was higher than that of a mere domestic servant. As a contemporary author described these “working” society women, “Some act as secretaries to wealthy women; others are house decorators; another does dressmaking; still another provides ‘afternoon tea.’ This makes no difference in their social standing. In Philadelphia a gentlewoman raises the dignity of her work to her own level: she herself never sinks.”11 And Anna was the kind of woman who coveted respectability more than money.

  Three years after her husband’s death, Anna sold their row house on North 19th Street to a speculator. She made enough money to buy another house, not far away, at 874 North 20th Street.
In this small, two-story row house, Anna and Jack were joined by Anna’s two spinster sisters, Sarah “Sadie” M. Snader, forty-two, and Lena M. Snader, thirty-two.

  This is the family McCloy remembers. “Sadie did hats and my mother did heads,” he quipped. “She worked for a milliner whose brother worked at Penn Mutual. Lena, the younger one, was the cook and housekeeper. She provided me with all the fun. . . . She took me to Fairmount Park and Willow Grove where Sousa’s band played and the roller coasters were. She saved her nickels and dimes and paid our entrance fees to the zoo and the circus.”12

  Young McCloy was taught that appearances were important. Every Saturday morning, he watched Aunt Lena scrub their front stoop. “Lena used to polish those front marble stoops until you could see your face in them,” he recalled. “Doing the front,” as the washing of the stoops was called, was very much a Philadelphia ritual. The standards were set, of course, by the servants of those living on Walnut Street, across the Chinese Wall. A magazine article of the period observed, “It is a point of honour to have the five or six white marble steps immaculately clean, and the swish of the water and the knocking of the scrubbing brush are dear to the ears of every true Philadelphian.”13 Aunt Lena upheld the McCloys’ honor on this score.

  Anna was the major breadwinner in the household, and Aunt Lena spent the most time raising Jack. There was little if any male presence. Anna tried to be a disciplinarian, invoking the name of her dead husband. She would point to the picture of him kneeling in the grass with a handkerchief carefully placed beneath his knee, and tell Jack, “There, see how neat your father was?”14

  But as he grew older, Jack became an athletically active, rowdy youngster. He and his friends played around the railroad yards, where McCloy recalled being “chased from time to time by what we called railroad dicks, always more exciting to run from than mere cops.”15 He also took to visiting the Philadelphia Baseball Park at North Broad and Huntington, about a mile down the road, or the Baker Bowl at Broad Street and Lehigh Avenue, where he watched professional baseball players like the great Napoleon Lajoie play America’s national pastime.