by Kai Bird
On returning to New York in late 1928, McCloy found himself in the midst of a stock-market frenzy. The country was reveling in what seemed to be unending prosperity. Herbert Hoover had been nominated by the Republicans for the presidency and was running against the Democrats’ Alfred E. Smith, the first Roman Catholic to run for president. A poll showed Hoover the overwhelming choice of Wall Street lawyers. Paul Cravath raised money for the Hoover campaign, as did Robert Swaine, George Wickersham, William Lloyd Kitchel, Trubee Davison, and many other of McCloy’s colleagues.54 There was little doubt of the outcome; the Republican-managed economy seemed to be booming, and Hoover easily outspent his opponent. The “Chief,” as he was affectionately known from his years as a mining engineer, won in a landslide.
Hoover’s popularity on Wall Street did not necessarily translate into universal optimism about the direction of the economy. Paul M. Warburg was one of the few pessimists. Throughout the 1920s, he had been a Cassandra; he was known on the “Street” as “the sad Mr. Warburg,” to distinguish him from his brother Felix, “the happy Mr. Warburg.”55 In March 1929, he urged the Federal Reserve to intervene, arguing that if “unrestrained speculation” was not halted it was sure to “bring about a general depression involving the entire country.” One businessman retorted that Warburg was “sandbagging American prosperity.”56
To some extent, the notion of a “New Era” of American prosperity was just a myth. Prosperity was skin-deep in many parts of the country; throughout the decade, 30 percent of the nation’s coal miners were unemployed. Wages in general remained low, and in 1928 workers in many industries took wage cuts. That year, in Baltimore, a survey conducted by city policemen found the real unemployment rate to be 42.5 percent. And there was no social-welfare net to speak of.57
Wall Street, however, was blind to these disparities. “Leaders among America’s bankers and industrialists,” Swaine observed, “thought they had found the secret of perpetual prosperity.”58
For not a few, the secret lay in insider trading. “We conducted business very differently prior to the establishment of the SEC,” recalled Benny Buttenwieser.59 In 1928, he quietly used his inside knowledge of an impending sale of railroad stock to make a quick $5,042.21 personal profit.60 Blair & Co., a Cravath client managed by Jean Monnet, maintained a preferred list of fifty-eight prominent individuals who were cut in on favorable stock offerings. So too did Goldman, Sachs, another investment-banking house, on whose board sat John Foster Dulles. Such practices were common, even among the best of Cravath’s clients.
By 1929, after four and a half years at Cravath, McCloy had labored conscientiously for the firm’s most important clients: Kuhn, Loeb & Co., E. R. Squibb & Sons, Shell Union, Blair & Co., and a host of railroads and banks. He was regarded by even the difficult Swaine as someone the partners could rely on to perform meticulous work. Socially speaking, he traveled the same circuit of parties and cultural events as did the most senior Cravath partners and clients. Like Otto Kahn and Paul Cravath, who succeeded each other as chairmen of the Metropolitan Opera, he was frequently seen at the opera, dressed in full white tie and tails.61
As a noticeably eligible bachelor, McCloy was a constant dinner guest at the homes of Chester McClain, Don Swatland, and Maurice “Tex” Moore, where after a formal sit-down dinner the usual dozen guests would adjourn for cigars and a couple of rounds of bridge.62 Everyone regarded him as a member of the Cravath family.
So it was hardly a surprise that on July 1, 1929, McCloy was offered a Cravath partnership. Years later, when many Cravath associates waited at least ten years for the partnership plum, Wall Street lawyers often remarked that for McCloy to have won a Cravath partnership after less than five years was an extraordinary feat. But for a brief time in the 1920s, things were different. This generation of lawyers, like McCloy, were often veterans, whose careers or legal education had been interrupted. McCloy had also had nearly four years with another firm before coming to Cravath. By 1929, he was already thirty-four years old.
A Cravath partnership was a singular achievement and carried with it considerable financial rewards. McCloy’s partnership earned him at least $15,000 his first year, at a time when fewer than 6 percent of Americans earned more than $3,000 a year.63 With the promotion came his own private room in the firm’s new offices on the twenty-seventh and twenty-eighth floors of a thirty-seven-story building at 15 Broad Street, just south of the Morgan building. Paul Cravath personally supervised the decor. Each partner’s room was outfitted exactly alike: simple mahogany desks, brown leather chairs, a matching divan, cream-colored walls, and a plain beige carpet. The only exception to this comfortable but blandly uniform setting was Cravath’s own office: he had dark-green leather chairs and oyster-white walls. McCloy could have earned more money working for one of his investment-banking clients, or in his own private practice,64 and it may have been rather dreary and dull, but this was where he wanted to be.
There was something magnetic about being part of the Cravath team. “Tex” Moore’s wife, Elizabeth Luce Moore (Henry Luce’s sister), attributed this “great attraction” to the variety of the work. “It is never boring. There’s always a new challenge. . . . Each company has its own problems, and got into them in different ways. So to extract them, and put them together again, is just very interesting, [and] always different.”65 Another part of it was the simple prestige, and the security of being associated with a firm that, in good times or bad, would always have a host of wealthy clients.
Within four months of McCloy’s partnership, the fever of intoxicating speculation finally broke and the market crashed on Tuesday, October 29, 1929. A week later, Cravath wrote his English friend Lord Beaverbrook, the British Canadian newspaper magnate, “We are having a shake-up in the stock market unequaled in the memory of living man. . . . Many fortunes have been lost and many very rich men are now only moderately rich.”66
McCloy’s personal finances were untouched by the October crash. All of his Cravath earnings had gone to supporting himself, his mother, and his two spinster aunts, Lena and Sadie, who still lived in Philadelphia. He had no stocks to lose in the market. And by autumn he had less wordly concerns on his mind. At the age of thirty-four, he was finally in love. In August 1929, just after winning his Cravath partnership, he had taken his vacation in Arizona, where he wanted to see the Grand Canyon. On the train back to New York, he entered a carriage and caught a glimpse of the back of Congressman Lewis Douglas’s head. “I didn’t know if I wanted to sit with him: he could be quite a bore. Then I saw an attractive woman sitting next to him, and I thought I would go up to talk with him.”67
The “attractive woman” was Peggy Zinsser Douglas, Lew’s wife. Peggy enjoyed McCloy’s company on the train and made a point of telling him about her unmarried older sister, Ellen Zinsser. When they arrived in New York, Ellen was standing on the platform to greet them. McCloy took an instant liking to this tall, elegant brunette. She had a high forehead, long, dark eyebrows, high cheekbones, an almost classic Roman nose, and a full, engaging smile. She was the kind of woman who put people at ease upon their first meeting. Her family used a German word—Fingerspitzengefühl—to describe her talent in dealing with awkward social situations. Outgoing and uncomplicated, she possessed not only grace and charm, but considerable wit and intelligence.
Her family background and upbringing were quite different from McCloy’s. Her father, Frederick G. Zinsser, owned a chemical company founded by her great-grandfather, who had come to New York from Germany in 1848. He had been mayor of Hastings, and his brother August, a banker and real-estate executive, was listed in the New York Social Register. His other brother, Hans Zinsser, a noted Harvard biologist, later wrote the bestseller Rats, Lice and History.
Ellen, her sister, Peggy, and her brother, John, grew up in a spacious Victorian manor, called Locust Wood, overlooking the Hudson River at Hastings-on-Hudson. Ellen’s German nanny had taught her German, and as a child she had traveled in Europe and liv
ed for several months in Paris. At Smith College, she majored in French.68
In the 1920s, Ellen and Peggy Zinsser were well known and popular in the New York social scene. “Everyone knew the Zinsser sisters,” said Benjamin Buttenwieser.69 Their friends noticed more than the usual bit of sibling rivalry. Freddie Warburg, one of McCloy’s closest friends, nicknamed Ellen and Peggy the “Sun sisters,” a reference to the scheming and intrigue that went on among the sisters of that famous Chinese nationalist family.70
Peggy had clearly made an exceptional match in 1921 by marrying the sole heir of the Phelps-Dodge copper fortune, Lew Douglas, who by 1926 was Arizona’s congressman. Douglas had actually first dated Ellen, but the elder Zinsser sister evidently enjoyed her independence. She was working part-time at Lord & Taylor, a fancy, upscale clothing store in Manhattan, when she first met McCloy. By that time, she was already thirty-one years old, unusual for an unmarried society woman in those years. Balding, stocky, and not much of a dresser, McCloy was not the man most people thought Ellen Zinsser would end up marrying. His prospects as a Cravath partner were promising, but he had no property, and he certainly did not move in Ellen’s café-society circles. And, as Ellen was to learn later, he had a possessive mother who still from time to time camped out in his apartment. Archibald MacLeish, who liked McCloy, nevertheless thought he “was not much of a catch for Ellen Zinsser compared with Lew Douglas.”71
Ellen was dating a number of other men, but McCloy had been smitten and set about in his determined fashion to court her. He soon learned that she “was hell-bent on doctors. . . . I had a rival. He was a successful doctor named Davison who had recently bought a rather spectacular black and white wire-wheeled Cadillac roadster. It was quite impressive. . . . Ellen was enamored of that damn roadster. I was competing with Davison, and this doctor could buy and sell me. . . . I bought, out of some very spare funds, a secondhand Cadillac of the same model, only it was red and had bright wire-wheels. I drove it up to Hastings . . . and parked it along side the doctor’s, who was calling on [Ellen]. I was quite broke, but I remained in the competition.”72
McCloy’s courtship campaign was waged in the midst of Zinsser family outings, picnics, and softball games. Luckily, the Zinssers had a tennis court, which allowed him to display his prowess in games with Ellen. “Things followed nature’s course,” remembered McCloy.73 They were married on April 25,1930, a day of record freezing temperatures and snow squalls, in a small Episcopal ceremony held at 8:00 P.M. in the Zinsser home at Hastings-on-Hudson. The room was lit by candlelight. Ellen wore a gown of white lace and held a bouquet of white orchids. Harry Brunie was best man, while Peggy Douglas and Ellen’s sister-in-law, Mrs. John S. Zinsser, were bridesmaids. Among the guests were Lew Douglas, of course, and F. Trubee Davison, who had become an assistant secretary of war in the Hoover administration.74
The honeymoon had been dictated by Cravath, since McCloy had been assigned to replace Tex Moore in the firm’s small Paris office. So, five days after their marriage, the couple boarded a ship for France, taking with them the red “courtship roadster” that Ellen so liked. In Paris, they had some difficulty finding an apartment within their means. Someone eventually referred them to a member of the Tiffany family who had a luxuriously decorated and fully furnished apartment for rent at 175 Rue de L’Université, near Les Invalides, on the Left Bank. McCloy was sure the almost palatial apartment would be too expensive, but Ellen charmed the owner. “Someone spilled something,” McCloy recalled, “and Ellen took such good care of it that Madame Tiffany said, ‘You can rent it for whatever you want to pay.’ “75
She enjoyed driving about Paris in the splashy red Cadillac roadster. In an attempt to give McCloy a smattering of French, she hired a tutor who turned out to be a former mistress of Toulouse-Lautrec, the hunchbacked painter notorious for his liaisons.76 From her frequent letters home that spring, her brother concluded, “She certainly seems contented and happy.”77 McCloy was now considered to be very much part of the Zinsser household. Ellen’s brother reported to Douglas in May, “I got a letter this morning from our crazy brother-in-law in Paris. He greatly resents the appellation of ‘baldy,’ which fits him so well, and threatens in typical legal fashion to use dire financial reprisals with his New York connections, if I do not desist. Otherwise, he seems to be quite well, and tells me confidentially that his wife is not half bad.”78
McCloy had his office at 3 Rue Taitbout, not far from their apartment. By that time, a number of major Wall Street firms had established themselves in Paris: White & Case, Root, Clark, Howland & Ballantine, Cadwalader, Wickersham & Taft, and Sullivan & Cromwell. Unlike these firms, the Cravath office did not solicit much business from the local American business community and instead worked almost exclusively on bond and security matters initiated at the New York office. Much of this meant simply a continuation of McCloy’s work on the sale of European bonds in the American security markets. The clients were the usual crowd of investment bankers, including J. P. Morgan & Co., Kuhn, Loeb & Co., and Seligman, Blair, and Hallgarten.
The bond work required McCloy to travel frequently to Germany, Holland, and his old haunts in Italy, particularly Milan. But he and Ellen spent most of their time in Paris, and he managed, as usual, to find time to play hard as well as work hard. They had a tennis game nearly every week with Francis Plimpton and his wife, Pauline. Plimpton also played touch football with McCloy on the Bois du Boulogne. “It attracted a great deal of attention from the French,” Plimpton said, “who never could figure what the hell was going on. McCloy was a very vigorous touch football player.”79
The acquaintanceship with the Plimptons turned into a lifelong friendship. Plimpton was five years younger than McCloy, but they had much in common. He too had graduated from Amherst and gone on to Harvard Law School, where he was a protégé of Frankfurter’s.80 McCloy also socialized with Allen W. Dulles, thirty-seven, who was then serving as Sullivan & Cromwell’s representative in Paris. Like McCloy, the future director of the Central Intelligence Agency traveled frequently to Germany on business. McCloy also saw a great deal of Lowell Weicker, the son of the owner of Squibb & Sons. Weicker and his wife, Mary, had been in Paris since 1927, when he bought a failing perfume company. By 1933, when they returned to New York, the company was well in the black. Mary Weicker grew to be close to Ellen in Paris. “She always knew what was going on [in society],” Weicker recalled of those times.81
In the autumn of 1930, Peggy Zinsser paid an extended visit. She found Ellen “very much in love with her husband.”82 Ellen was unhappy about only one thing in Paris. She wanted children, and she was not getting pregnant. She told several friends, including both Pauline Plimpton and Mary Weicker, that she had consulted a number of doctors in Paris in an attempt to find out what was wrong. The doctors could not help the couple.
For McCloy there were other distractions. In early September 1930, he received a cable from Cravath instructing him to attend a case scheduled for argument at The Hague. Cravath’s client, Bethlehem Steel, claimed that it had been German secret agents who had triggered a massive explosion in New York harbor in 1916, destroying millions of dollars’ worth of Bethlehem munitions. Like many Americans, McCloy had read the sensationalized newspaper accounts of espionage and sabotage associated with the “Black Tom” suit. That summer, the case had been reported in front-page headlines blaring “U.S. Suit Bares ‘Atrocities’ of German Spies” and “Mites of Evidence Linked Patiently as U.S. Drafts Black Tom Claim on Reich.” Earlier that year, The New Yorker had published a cartoon of a man on bended knee, telling his young lady friend, “Diane, darling, you’re the first real experience in my life since the Black Tom disaster.”83 As McCloy hastily reviewed the facts of the case in preparation for the arguments at The Hague, he realized how different this case was going to be from his usual corporate work. He thought the briefs read like scenarios from one of E. Phillips Oppenheim’s popular spy and detective thrillers.84
CHAPTER 5
> Black Tom: McCloy’s Wilderness of Mirrors
“The whole sordid Black Tom-Kingsland episode has served one good purpose, however. It has shown the need in this country of an efficient counter-espionage system in time of peace as well as war.”
WASHINGTON EVENING STAR EDITORIAL, 1939
In the summer of 1916, three-quarters of all the American ammunition shipped to the European war was loaded from New York harbor, and much of it passed through the Black Tom terminus, a maze of railroad tracks and warehouses that sat upon a spit of land, an island really, hard by the Statue of Liberty. At 2:08 A.M. on July 30, 1916, a thousand tons of dynamite, nitrocellulose, gasoline, and shrapnel shells caught fire and exploded, tearing the island apart. A million dollars’ worth of window glass alone was shattered in downtown Manhattan. The blast was felt across Long Island and northern New Jersey, and as far away as McCloy’s native Philadelphia. Exploding artillery shells inflicted $100,000 damage on the Statue of Liberty. Five hundred frightened immigrants on neighboring Ellis Island had to be evacuated. Fire alarms were set off all over New York, and panic-stricken crowds roamed the streets, some people thinking this was the beginning of a foreign invasion—or Armageddon. Surprisingly, only four people died.
That summer, McCloy was in Plattsburg, New York, training to become a soldier, but most Americans were still opposed to foreign entanglements. America’s role as an arsenal for the British, French, and Russian Allies was not popular, particularly among recent immigrants from Ireland, the Austro-Hungarian Empire and the czar’s Russia. Also, many of the country’s intellectuals opposed the arms shipments. Two days after the Black Tom disaster, Lincoln Steffens, the dean of muckraking journalism, wrote his sister, “Wasn’t that a bully blow-up of ammunition in New York? Think of the lives it saves—in Europe.”1
