Thy Will Be Done

by Gerard Colby

  As Soviet ships and submarines steamed toward the U.S. naval blockade, religious services were held throughout the world. In Buenos Aires, Billy Graham preached about “The End of the World.”

  Running though John Kennedy’s deliberations about the planet’s life and death was his concern about New York’s Republican leaders, Governor Nelson Rockefeller and Senator Kenneth Keating. Rockefeller had launched a salvo of criticism against the administration during a speaking tour that spring.

  More ominous, Keating, whose own chances for reelection in 1964 would be greatly influenced by Rockefeller’s presidential race that same year, had been challenging Kennedy since August on the Senate floor with reports about the presence of Soviet missiles in Cuba.

  In July, the head of the Veterans of Foreign Wars had made a similar claim, citing the CIA’s U-2 flights as the source.6 The White House had begun to suspect that Keating’s source was someone high in the CIA who had been asked to undermine the president.7 (In fact, Keating was getting his information from the conservative network of Cuban refugees that was tied to King.) On October 10, Senator Keating upped the ante. Leaving his sources mysterious, Keating charged that he had confirmed reports that Soviet offensive missiles were in Cuba. Kennedy’s advisers were alarmed. Keating was publicly disclosing astounding facts that they themselves were not aware of until October 14, when the CIA’s Richard Helms informed McGeorge Bundy of the U-2 findings.

  A week later, on October 22, Adolf Berle was waiting to go on public television with the Rockefeller Foundation’s Kenneth Thompson when President Kennedy made his dramatic announcement of a U.S. blockade of Cuba. “I was supporting [Kennedy] for all in sight,” Berle recorded in his diary, “… and this time there will be no charges that somebody weakened at the crucial moment.”

  To Berle, the U.S. military blockade was simply a matter of self-defense and therefore legal under Article 51 of the U.N. Charter. Kennedy’s mentioning that Latin American cities could also be targeted by the missiles in Cuba was “technically beautiful,” judged Berle, giving members of the Organization of American States the ammunition they needed to back the blockade.

  However, legal gymnastics could not prevent war or hold the U.S. military in line. “The President is in a grave situation, and he does not know how to get out of it. We are under very severe stress,” Robert Kennedy informed the Soviets at the height of the crisis, according to Nikita Khrushchev. “In fact, we are under pressure from our military to use force against Cuba.… If the situation continues much longer, the President is not sure that the military will not overthrow him and seize power. The American Army could get out of control.”8 Even after the Soviets capitulated, Robert Kennedy later reported that at least one high-ranking military official (probably Air Force General Curtis LeMay) advised President Kennedy to proceed with air strikes on Cuba anyway.9

  Later, after Khrushchev agreed to dismantle the missile bases in return for Kennedy’s calling off a planned U.S. invasion of Cuba, Berle could not resist giving his friend Nelson Rockefeller some credit for Kennedy’s success. “I never was fonder in my life of Article 51, nor gladder that it was there (Nelson Rockefeller’s personal achievement) and that exactly similar language is in the Treaty of Rio: ‘The inherent right of individual or collective self defense.’”10

  Nelson’s contribution to Kennedy’s success, if bitterly ironic, was also unrecognized outside Nelson’s circle. Nelson won reelection in November, but by a smaller margin than in 1958. Berle suffered, too. “Having split my ticket and supported Rockefeller, I am in political isolation again.… The White House would like to destroy Rockefeller as a possible rival.”11

  The sixty-seven-year-old Berle’s long career was all but over. Four days after the election, beneath a storm-tossed gray sky, he saw Kennedy and Rockefeller again at Eleanor Roosevelt’s funeral. Walking with mourners from the little church at Hyde Park, New York, down to Eleanor’s grave beside her husband’s in the rose garden of the old Roosevelt mansion, Berle remembered that he had first seen that house in May 1932, when he joined Franklin D. Roosevelt’s brain trust as one of its more conservative members. Eleanor’s funeral “was distinctly the end of an era,” he wrote, observing that the original New Dealers were “now old and white haired … and perhaps I with them, visibly going over the horizon line which divides politics and history.…”12

  The Berles shared their pew with Roosevelt’s second vice president, Henry Wallace, as if the deep differences over the social direction of the nation were now also relegated to the grave. For in the postwar generation led by Rockefeller and Kennedy, the new gospel was not redistribution of the nation’s wealth, but unending growth. Arguments about the need for income distribution to bolster consumer demand were sent into exile. What now ruled was the “trickle-down” theory of an economy fueled by tax cuts and increasing amounts of credit commanded by governments willing to go ever deeper into debt, control over cheap oil, and widening markets in the Third World.

  Yet the Rockefellers and Berle were unhappy. The Cuban missile crisis, once publicly supported and past, seemed a bitter victory to Berle. Castro, though humiliated by the Soviets’ unilateral decision to withdraw the missiles, won survival for his revolution. Kennedy, by calling off an invasion by armed forces and avoiding the risk of nuclear war, had removed the only real possibility of reversing Cuba’s nationalization of American corporate properties within Berle’s lifetime.

  Behind the doors of the boardrooms of many of the nation’s largest corporations, Kennedy’s greatest victory quickly developed into his greatest defeat.

  THE PYRRHIC VICTORY

  For some business interests, leaving Castro in Cuba was the final straw. Kennedy already had earned their wrath when he took to national television in April 1962 to announce his opposition to U.S. Steel’s price hikes. Fearing inflation, the administration had also leaned on the steelworkers’ unions not to strike, but instead to defer a wage increase for the first time in a generation. But business resisted the guidelines; maximizing profits was its raison d’être. “My father always told me that all businessmen were sons-of-bitches,” Kennedy said privately after being told by U.S. Steel chairman Roger Blough of the coming price increase, “but I never believed it till now.”13

  The president’s statement was leaked to the press, infuriating corporate America. Confronted with Bethlehem Steel and four other companies joining the price increase, Kennedy used a televised press conference to say that with all the sacrifices and changes the nation was enduring, “the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives, whose pursuit of private power and profit exceeds their sense of public responsibility, can show such utter contempt for the interest of one hundred and eighty five million Americans.”14

  Kennedy mustered the vast federal resources at his disposal. The administration shifted defense contracts from the Morgan-controlled steel giant, threatened legislation, used a grand jury investigation of possible antitrust violations of price-fixing collusion, and even sent FBI agents to question a newsman about a report that U.S. Steel had pressured Bethlehem into collusion.

  Within days, Inland Steel and Bethlehem Steel abandoned the fight. U.S. Steel then surrendered with a price rollback. Kennedy had proved just who was president of the United States. But he paid a price: corporate enmity.

  Now, with Cuba, the domestic dispute over who should hold the ultimate legal power—corporations or the elected government—became an issue of foreign policy. On the face of it, Kennedy’s foreign policy looked like a businessman’s formula for success. The president persuaded foreign governments to buy more military equipment from the United States arms industry to reduce the deficit in the balance of payments. At home, he encouraged domestic savings with tax cuts benefiting corporations. He reduced the deficit in the balance of payments abroad by tying 80 percent of foreign aid to purchases in the United States. He encouraged restraint of tourist spending abroad. He reduced
tariffs (except for those on textiles and chemicals) to promote sales of U.S. goods.

  To those who followed U.S. trade, the Trade Expansion Act of 1962 served only those large corporations that could afford a “free trade” policy. The pressing need was not for increased trade, at least not yet. The balance of trade was already favorable, amounting to nearly $5 billion a year. The problem was the balance-of-payments deficit. And that deficit was caused not by unfavorable trade, but by government spending in Europe and Asia on military installations and servicemen’s salaries and by corporate investments in foreign factories, mines, and agribusinesses.15 Foreign earnings, “parked” in Swiss and Caribbean banks serving as tax havens, were never repatriated.

  If Kennedy’s restraining of spending abroad contradicted his encouraging American corporations to invest in the Third World as a bulwark against communism, U.S. corporations resolved the contradiction. In the wake of the Cuban Missile Crisis in turbulent Latin America, Teodoro Moscoso and other administrators of the Alliance for Progress read with dismay a New York Times report in November that American corporate investment in Latin America was “drying up.” Business leaders demanded that the U.S. Treasury guarantee their private investments from losses from nationalization. Otherwise, they would not invest.

  David Rockefeller led the most sophisticated wing of the business critics. On May 11, he was a guest at a state dinner for France’s cultural minister, Andre Malraux. Kennedy, eager to win over business, sought David’s views on the economy in a private conversation. David had been Kennedy’s first choice for treasury secretary, and Kennedy’s suggestion that he write his views in a letter seemed innocent enough. David responded with a long letter calling for a reduction in government spending and a cut in corporate income taxes to stimulate domestic investment, bolster economic growth, and restore the United States’ competitive edge against the European Common Market.

  Kennedy’s answer to David, while confident in tone, was defensive in substance. The president insisted that the economy’s basic position was strong. He ticked off his administration’s efforts to cut business taxes, increase trade, reduce tariffs, keep the dollar strong, and hold increases in the cost of labor within the confines of productivity increases—all points that David already had acknowledged and did not need repeating except for their publicity value. But where Kennedy, perhaps inadvertently, touched a raw nerve was in the area of corporate America’s hidden wealth abroad. While reassuring the United States’ foremost international banker that he had no plans to restrict the flight of private capital, Kennedy insisted that “our tax laws should surely not encourage the export of dollars by permitting ‘tax havens’ and other undue preferences.”16

  The president had struck home. The Rockefellers had many such tax havens abroad. Small Caribbean “brass plate” banks, large Swiss commercial banks, and vaguely named private investment firms in small countries like Luxembourg overflowed with American cash, precious metals, and, most important for tax purposes, portfolios of stock holdings in foreign companies. Most large American corporations doing business overseas also “parked” their profits in foreign commercial banks under the names of wholly owned subsidiaries or limited partnerships, and often in foreign subsidiaries of megabanks like David’s Chase Manhattan. The Rockefellers’ top financial aide, J. Richardson Dilworth, was a director of two Luxembourg holding companies with investments in Latin America and oversaw the investment firms of the International Basic Economy Corporation (IBEC) in Colombia, Brazil, Peru, and other countries. In addition, IBEC’s American Overseas Finance Company held over $26 million worth of holdings in twenty-nine countries.17

  Kennedy’s 1962 tax bill directly challenged these tax benefits by removing the distinction between repatriated profits and profits reinvested abroad, making both taxable. It also brought under the scrutiny of the Internal Revenue Service revenues “parked” in overseas tax havens by subsidiary companies.

  Eager to show some support from business, Kennedy released his correspondence with David to Life magazine. Kennedy had concluded his letter by stating that “I am gratified that we agree so widely on basic problems and goals.” If this statement appeared disingenuous to those privy to the Kennedy-Rockefeller disagreements, it at least had the saving grace of ignoring means—including the value the Kennedys placed on social reform. To Life’s editor, Kennedy praised Rockefeller’s letter as the kind of serious “dialogue” he enjoyed with business leaders. But for David, this would be the last time Kennedy would use the Rockefeller name for public relations purposes—and the last time David would try publicly to persuade Kennedy to change course. From now on, if anything, the Rockefellers would attack.

  Nelson, buoyed by his 1962 reelection, attempted to leap into the breach between Kennedy and business. He was sure he could beat Kennedy in 1964, he said,18 and many believed him.

  David helped in his capacity as chairman of a key subcommittee of the Commerce Committee for the Alliance for Progress, a group of business executives of companies active in Latin America. Chase Manhattan Bank, on the anniversary of the first Punta del Este conference, had already warned that Kennedys willingness to lend funds for government-owned projects would sour corporate America on the Alliance for Progress.

  Kennedy had extended credit for development in Brazil’s impoverished Northeast in April, only months after President João Goulart nationalized ITT and issued an expropriation decree against Hanna Mining’s rich iron concession in Minas Gerais. Kennedy’s loan won him little love on Wall Street. Hanna Mining was part of an industrial troika that involved National Steel and Chrysler, and the Rockefellers had just bought a large interest in Chrysler.

  Kennedy’s acknowledgment of Brazil’s rights under national sovereignty and his granting of yet another AID loan for $398.5 million in 1963 were judged foolhardy and dangerous, despite Robert Kennedy’s wringing a handsome settlement for ITT out of Goulart. Now, with American investment in Latin America heading for a net withdrawal of $38 million, a far cry from the $300 million yearly investment Kennedy had pledged at Punta del Este, David’s Commerce Department subcommittee demanded that Kennedy abandon his government-to-government loan policy and his emphasis on social reforms and concentrate instead on loans to businesses and social policies favored by businessmen. Only this policy reversal could dampen the tidal wave of rising expectations that Latin American conservative landholders and businessmen feared. “The first requirement is that the governments—and as far as possible, the people—of Latin America know that the U.S. has changed its policy to put primary stress on improvement in the general business climate as a prerequisite for social development and reform.…

  “A second requirement concerns a change in the criteria for granting aid.… The U.S. should concentrate its economic aid program in countries that show the greatest inclination to adopt measures to improve the investment climate, and withhold aid from others until satisfactory performance has been demonstrated.”19 It was the type of all-or-nothing ultimatum that would end up keeping most of South America in line up to the present day.

  THE CIA’S LOOSE CANNON

  In the last year of the Kennedy administration, communism—and those in Washington who were alleged to be “soft” on it—emerged as the major theme of Nelson Rockefeller’s campaign to replace John F. Kennedy as president of the United States.

  Nelson returned to what he considered Kennedy’s Achilles heel, Cuba, the chief outpost of the Evil Empire overseas. Following the domino theory in reverse, he traced the mounting revolution in the hemisphere back to Cuba. Castro’s daring nationalization of American properties encouraged similar sentiments that had been simmering in Latin America since the Bolivian and Mexican expropriations of Standard Oil in the 1930s. Those expropriations had been Nelson’s schoolhouse in foreign affairs. Now Kennedy, by agreeing not to invade Cuba in order to end the Cuban missile crisis peaceably, had allowed the task to remain uncompleted.

  Cuba was only “a half done job,” wrote Berle
, because the Soviets were still in Cuba in “control of the territory.” Most important, Castro would be allowed to survive.

  The Kennedy administration had ordered the CIA to end its raids on Cuba and close down its secret training base in Louisiana. It told General Lansdale to stop the MONGOOSE assassination attempts on Castro. Invasion plans were scuttled. Nothing, certainly not pledges by Kennedy to veterans of the Bay of Pigs that their flag would be flown again over “a free Havana,” could soothe the feelings of betrayal. The hopeful exiles had answered Kennedy’s promise by chanting “War! War! War!” and war they would have, if only by proxy. Flying CIA warplanes against the followers of the deceased Patrice Lumumba in the Congo and hunting down guerrillas for the CIA throughout Latin America, they would be the CIA’s loose cannons, the unresolved “disposal problem” that Allen Dulles had used to persuade Kennedy to approve the invasion.20

  In Latin America, Kennedy was the most popular American president since Roosevelt. Even before the missile crisis, in June 1962, Mexicans had thrown confetti and given him a hero’s welcome as he laid a wreath at the monument to the fallen cadets of Chapultepec Hill. In the United States, however, hatred was growing.

  Mafia chieftains, who had been recruited by the CIA to kill Castro, now found themselves the target of investigations launched by Attorney General Robert Kennedy. “Here I am helping the government, helping the country,” said John Roselli, “and that little sonofabitch is breaking my balls. Let the little bastard do what he wants. There isn’t anything he can do to me.… I got important friends in important places in Washington that’ll cut his water off.”21

  Santos Trafficante, owner of casinos and prostitution and narcotics rings in prerevolutionary Havana, told Cuban exile leader José Alemán, “Mark my word, this man [Robert] Kennedy is in trouble and he will get what is coming to him.” New Orleans’s Carlos Marcello, having illegally returned from El Salvador after being deported by Kennedy to Guatemala, drew his bead higher. “The dog will keep biting you if you only cut off its tail,” he said of the president, comparing the attorney general to the tail; “but if you cut off the dog’s head it will die.”22