K STREET Chapter Six

 

I believe it was the great Sam Rayburn - Speaker of the House for so long they got to calling him “Mr. Democrat” - who explained, “Every administration should have at least two Tommy Corcorcorans.” Sadly, Franklin Delano Roosevelt had them both. The first Tommy Corcorcoan pushed through the original Social Security legislation and became FDR's special liaison on Capital Hill, while the second Tommy made millions abusing the contacts established by the first. As Sam Rayburn put it once, “A jackass can kick a barn down, but it takes a carpenter to build one.” And again, Tommy was both of those, too.

"I know the corners of this town in the dark”

Thomas G. Corcoran. 1945.

They called him “The Cork” because he was irrepressible - he just kept popping up. He first rose to the surface after the 1934 midterm elections, when, improbably, the party in power added nine more seats in the House and nine more in the Senate. Roosevelt was now ready for Social Security, a program he designed to defeat what he knew would be future attempts to destroy it. It would be funded by payroll deductions because that way, said Roosevelt, “no damn politician can ever scrap my social security program.” And the man he chose to ruthlessly push that program into life was the “boyish, but intellectually quick ”, Tommy Corcorcan.

“If, as our Constitution tells us, our Federal Government was established . . . ‘to promote the general welfare,’ it is our plain duty to provide for that security upon which welfare depends.”

Franklin Roosevelt. June 8, 1934

In January of 1935 the Social Security Act was introduced into both the Senate and the House of Representatives simultaneously. According to Tom Elliot, who had helped Tommy in drafting the law, the strongest opposition came in the Senate. “Tom took four senators, I took four senators, and Charlie West from the White House took four senators. The outcome was, I think, the measure of our skill as lobbyists. Charlie West got nobody...I got two and lost two. Corcoran got all of his four.”. After that victory, FDR brought Tommy into the inner circle and made him his private secretary – “speech writer, strategist, talent scout and back channel lobbyist.”

“Apart from my father, Tom (Corcoran) was the single most influential individual in the country."

Elliott Roosevelt 1939

It was Tommy who guided the next big fight, after the Supreme Court had killed several of the New Deal's most progressive programs. Roosevelt began to push for an amendment to the Constitution adding a new justice to the court every time one of the original nine justices reached 70 years of age. Tommy wrote fiery speeches that Roosevelt delivered with fire. The battle failed, but the court got the message and abruptly reversed itself on several subsequent decisions. Said a Washington sage, “A switch in time saved nine.”

But it was also Tommy who suggested the Anglophobe Joe Kennedy (above) as ambassador to England, and who pushed for American neutrality during the Spanish Civil War, which helped make Franco dictator in Spain for fifty years. By the fall of 1940 Roosevelt saw the problem. As Harry Hopkins, who would replace The Cork, explained, “ "Tom, you're too Catholic to trust the Russians and too Irish to trust the English." But Roosevelt fired Tommy in typical FDR fashion. He asked him to leave government so he could secretly aid China in their war with the Japanese. Then FDR never told him how to help the Chinese. That removed Tommy as an irritant for FDR,  but The Cork was far from sunk. Call it a lesson in unintended consequences.

“I want to make a million dollars in one year, that's all.”

Tommy Corcoran 1940

Under Roosevelt's protection, Tommy's created Claire Chennault's Flying Tigers -  U.S. Army pilots in American P-40 fighters, bearing Chinese markings, which were shooting down Japanese aircraft a full year before Pearl Harbor.

But at the same time, now technically a private citizen, Tommy was also paid $25,000 to introduce Henry Kaiser (above) to the chief of the Production and Management Office. Shortly thereafter Kaiser, who had never built a ship before in his life, was granted $645 million in naval construction contracts. Tommy also introduced Kaiser to the head of the Reconstruction Finance Corporation, which loaned Kaiser the money to build a magnesium production plant in San Jose, California. Tommy sent Kaiser a bill for $135,000 and 1/3 of the shares in the plant. Kaiser never paid him. But by now Tommy had a long list of clients, who did pay him

In late 1945 a D.C. ,“financier” named Serge Rubinstein came under investigation for draft evasion. Rubinstein called The Cork. And on January 27, 1946, Tommy called Abe Fortes, an old buddy from his New Deal days. Tommy explained to Abe, “He is a rich man who's scared...I think you can get $100,000 down this morning.” Fortes called Tommy back the next day and revealed that Rubinstein had handed over a check for just $5,000. “That's all yours”, said Tommy. Technically, this was Tommy's first year in private practice, and he earned from this and other such cases, $250,000.

"When you're charging fees . . . charge them high. The world takes you at your own valuation. You decide whether you're Tiffany or Woolworth--not the market.”

Tommy Corcoran.

Immediately after the war, Tommy cut a deal to distribute relief supplies in China by air. The United Nations paid $2 million to buy the war surplus aircraft and a company, Commercial Air Transport (CAT),  was set up by Tommy and run by Claire Chennault. It promised to deliver medicine and food. But as Chennault explained in a July 18, 1946 phone call to Tommy, “This thing would be a great money-maker if we didn't carry a pound of UNRRA cargo.” So they didn't.  But they still kept the airplanes. In 1950 the CIA purchased those same planes for a million dollars, one third of which went into Tommy's pocket.

“Once you get into this business you’ve got to be a draft horse and you’ve got to wear blinders,”

Tommy Corcorcoan

It was the CIA connection that convinced managers of the massive United Fruit Company to hire Tommy as a lobbyists, even giving him shares in the company.  E. Howard Hunt, of Watergate fame, admitted in his biography to cutting his “special ops” teeth on offensives against land reform minded peasants in Guatemala. These special ops were inspired by Tommy to protect United Fruit's stranglehold over the local governments, originating the phrase, "Banana Republic".

“(Tommy Cororcoan) ...inhabits that lawyer ruled limbo between government and business, where deals are made and big fish are caught in a seamless net of arguments, favors and threats. In this strange element, you can't keep a live cork down.”

Life Magazine. April 11, 1960

We know so much about Tommy's immediate post war business because in May of 1945 the new President Harry Truman asked FBI director J. Edgar Hoover to tap The Cork's office phones. Over the next three years this produced 5,000 pages of transcripts. Those transcripts, kept in the Truman Library, were released in 1983, two years after Tommy's death, at 80 years of age from a pulmonary blood clot. And by then,   lobbying in Washington had become bigger than any individual.

 “Every time I wag my ass on the Hill, someone reads cosmic importance into it.”

Tommy Corcorcoan 

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K STREET Chapter Five

I believe that houses are like the people who occupy them. If they remain standing long enough  they can become all things. First the little house on K street was a home,  and then it was a bordello and a bar, and then it sat empty for a few years. I mean, who would want to live in such an infamous den of inequity? That question was answered during the roaring twenties, when 1625 K street became the home of various fraternities associated with George Washington University - the campus is one block south across Pennsylvania Avenue, between 24^th and 19^th Streets. But the frat parties came to abrupt end with the onset of the Great Depression.

One in four Americans lost their jobs. Those who still had a job saw their wages fall by almost half, at the same time that the price of food went up. 

Those who lost their home or apartment threw up shacks and shanties on vacant land and called them "Hoovervilles".  Empty pockets turned inside out were called "Hoover Flags". There were literally millions of Americans in agony.  Industrialist Henry Ford proclaimed that the Great Depression had been caused by “an era of laziness”, and President Hoover, from his government subsidized home three and ½ blocks south of the Little Green House, seemed to agree. But to the vast army of unemployed, that did not seem to be so much an answer as a justification as to why Ford's family was not going hungry like theirs. The District of Columbia in 1930 had a population of 607,000 people, and almost half of them had no regular income.

Still the town should have barely noticed when on December 5^th ,  1930 some 3,000 communists came from all over the eastern half of the United States to stage a “hunger march” in Washington.

The march was badly organized. The timing was stupid. Two marchers died from exposure to the harsh winter weather, fifteen others came down with pneumonia, twenty with the flu. Still the government managed to overreact. There were more cops than marchers. Great sums had been spent to isolate the communists, far more than was spent in relief efforts. If the American Communists had been better organized, they might have posed a real threat to the capitalist system, because President Hoover decided the best capitalism could do was to encourage those with money to invest it. They did, but not in America.

In response to Hoover's pleadings, some investments were made. In 1931 the frat house at 1625 K street was remodeled into office space. But by then there was not much call for new office space, even in Washington D.C. The economy did not need old spaces given new names. It needed new purposes. The little Green house, now a little green office building, sat empty, waiting for something to happen.

In 1932 fifteen thousand well organized WWI veterans marched on Washington, petitioning their government for early payment of their long promised war bonuses. The money was supposed to be paid in 1945, but the men were hungry now -  their children were hungry now

The powers that be called out their District of Columbia police force (above). Shots were fired. Two veterans were killed. A few cops were beat up. The Federal government decided that the problem was not that the working stiffs had been pushed to far, it was that not enough force had been applied to keeping them under control.

That “enough force” had a name – General Douglas MacArthur (above, left). Ordered to clear the “Bonus Army” from around Jenkin's Hill, the imperious MacArthur sent in tanks and troops with fixed bayonets and tear gas. Crowds of government workers shouting “Shame, shame” at the soldiers did not shame MacArthur.

Once the area around capital had been cleared the General led his little army across the river to attack the shanty town  where the desperate veterans had left their families (above). This had not been ordered. MacArthur did this on his own. The two infants who died in this assault were MacArthur's trophies, as were the hundreds of mostly women, who were beaten and bloodied in this lesson for the lazy. 

Major Dwight David Eisenhower (above, right), who was the liaison with the district cops, described the burning of the shantytown as “pitiable.” MacArthur (above, left), who had pity only for injustices suffered by himself, was quietly retired and given a  job in the far off Philippines where it was to be hoped, he would never be heard from again.

In 'upper crust' Washington, “Old” Washington, the removal of General MacArthur was a defeat equal to surrender at Appomattox Court House. He had been one of them. Still, with the incoming new administration there was reason for the wealthy denizens of Washington to hope. 

Wrote the Saturday Evening Post, “No occupants of the White House since Theodore Roosevelt had been so significantly favored as to birth and material circumstances (as FDR). Even the so called "Cave Dwellers" dropped their masks of indifference and cheered openly. At last the Nation was to have a President and First Lady who have enjoyed exceptional privileges due to family position and wealth”.

The upper crust of Washington had acquired the nomen of The Cave Dwellers, because they were rarely seen outside their Kalorama neighborhood, to the North of K street. And the subsequent invasion of Washington by the army of Roosevelt's New Deal technocrats now destroyed “the incomparably delightful relationship between the official and social life” of Washington.

The small southern town inside Washington was suffering a revolution - as usual, hardest felt in the mundane things of life. In 1937 some 40,000 people jammed Washington's Union Station (above) twice a day, coming and going.  Suddenly, Washington (and the government) was going to work.

Federal clerks toiling away in un-air-conditioned offices now numbered a daily invasion of  200,000, since most could only afford to live outside the district. And then came the final insult.  

In 1937 plans were announced to cut down 50 of the imported Japanese Cherry trees to make room for the planned Jefferson Memorial.

Outraged, a group of female Cave Dwellers chained themselves to the trees – their final line in the sand had been drawn at trees, not people. But it was a pitiable last stand.  A brainy New Dealer came down in person and served the ladies coffee in china cups. He listened to their passion for tradition. He served them more coffee and promised to replant any trees damaged. 

Then he served them more coffee, and when the ladies slipped their chains to escape to the toilet, the trees were bulldozed, and the construction proceeded. (The trees were later replaced).

Like an ancient totem which had lost its magic, in early December of 1941 the Little Green House on K street was also bulldozed. The safe in the backyard was plowed over. And in its place an 11 story steel frame concrete structure would rise. And like the rest of Washington, it would be filled with lobbyists.

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K STREET Chapter FOUR

 

I do not find it surprising that less than an hour after prohibition became the national law, at midnight on January 17th 1920, six armed men stole $100,000 worth of “medicinal whiskey” out of two rail cars parked unguarded on a Chicago siding. Even at that early moment America's dream for a moral nation, drunkenly stumbled over the sobering reality that alcohol has never been a mere beverage. 

In 1920, the first year of national prohibition,  35,000 doctors would be granted permits to prescribe various potable forms of alcohol for their patients -  those suffering from strokes and stress as well as the long term pain of arthritis, cancers, congenital headaches, congestive heart problems, depression and the general aches and pains of old age. 

That same year the company which distilled “Old Grand Dad” reorganized itself as The American Medicinal Spirits Company and kept right on distilling  “Old Grand Dad Whiskey”.  In fact their business was booming. 

In the first five years of prohibition, the domestic manufacture of hard liquor in America more than doubled. And that is how America supplied its booze fix, for most of prohibition - not with bathtub gin, or rum-runners over the high seas. It was domestic product, heavily watered down and over priced, and supplied by the same distilleries that had existed before prohibition. 

As an article for “The Nation” magazine lamented in 1921, “In the U. S. are 27 warehouses in which 15,000,000 gallons of liquor are stored. The liquor is private property held for legal sale as medicine....

....a system of permit withdrawals was devised by the enforcement officials for each case (3 gallons) of liquor."   It very soon became apparent that a vast amount of fraud was being perpetrated.  It was the  bribes that bought these permits that filled the backyard bank of the Little Green House on K street. The author of that article was Roy Haynes.

Each “Withdraw Permit” had to be signed by the Prohibition Commissioner, Roy Asa Haynes (above), who was famous in anti-saloon league politics and a political appointee by President Harding.  

The going price for each permit from the Ohio Gang on K Street was $15.00. The very first permits, for the withdrawal of some 2,000 cases of alcohol, was issued to the General Drug Company of Chicago, for which J.B. Kraffmiller was paid $20,000, cash.  He kept $6,500 and passed on the rest to Howard Mannington at 1625 K Street, who divided it amongst the rest of the Ohio Gang, each member getting $2 per case.  

Even the General Drug Company got a one dollar kickback, for the use of their good name on the sales permit. What General Drug did not get was the booze. That went directly to the bootleggers who had actually bought the liquor and paid the bribes. They passed along this overhead to their customers,  who happily paid a dollar for a drink which the year before had cost them a quarter. And as Agent Means in the basement of 1625 K street sang, my God, how the money rolled in. 

The very first year of prohibition, it is estimated, bootleggers made about $100 million dollars in profits. K street was not guilty of bootlegging. As was tradition, they were merely the facilitators.

The bag man in this facilitation was Jess Smith (above), the Attorney General's “jovial, rotund, combination confidant and valet.” Agent Means described him this way; “Poor Jess, he was a typical city department-store floor walker, transplanted into alien aisles....at a complete loss. And how he loved clothes. He worshiped Daugherty with a dog-like devotion.” This seedy looking man in expensive suits was the go-between, shuffling from his boss and idol, Attorney General Harry Daugherty (and Roy Haynes) and Henry Mannington and J.B. Kraffmiller in the Little Green House on K Street.

Two or three times each week Jess would arrive at 1625 K Street to deliver instructions and payoffs, and pickup the cash that been laundered through an Ohio bank owned by AG Daugherty's brother Milo. Jess Smith kept everything straight in the meticulous notebooks he carried on him, the “who”, the “how much”, the “for what”, and the “for whom.”

It was the sweetest deal in the history of K Street, and you just knew some schmuck was going to screw it up. The schmuck turned out to be the keeper of the backyard bank, Federal Agent Agent Gaston Means (above). For him bountiful was never enough.

In the winter of 1922 Means got his hands on several blank liquor Withdrawal Permits. He forged Haynes' signature, and started selling them on his own. It took very little time for word to get back to Daugherty, who, in February, suspended Means from the Bureau of Investigation. But the Attorney General dare not remove Means from the Little Green House, because Means had all those file cabinets in the basement, stacked with names, dates and amounts.  

In the mid-term elections of November, 1922 the Republicans lost five seats in the House and the Democrats were beginning to percolate over Republican scandals as a 1924 campaign issue. So, in the spring of 1923 ,Daugherty was forced to admit to President Harding the trouble Means was causing. It was decided a sacrificial lamb would have to be offered up to the Democrats, and since it could not be Means, “poor Jess” was tailor made for the role, you might say. Jess had his own notebooks, but because of his devotion to the Attorney General, he could be controlled.

On the morning of Tuesday, May 29^th, 1923 Jess Smith played golf with Attorney General Daugherty, and during their game was informed that he had to leave Washington the next day, permanently.  Jess did not take it well.

Daugherty then proceeded to the White House, where he phoned another associate, Warren Martin, and ordered him to go the Wardman Hotel and stay with Smith until the poor man was out of town. At six the next morning, Martin was suddenly awakened in his room by an explosion. He found the 61 year old Jess Smith, in his pajamas and a dressing gown, lying on the bedroom floor.  Smith's head was inside a trash can, a bullet through his brain. A gun lay on the floor, inches from his fingers. There was no autopsy. His death was ruled a suicide by a friendly doctor. His meticulous notebooks and personal correspondence mysteriously disappeared.

Sixty four days later, on the second of August, President Warren G. Harding died of a heart attack in a San Francisco hotel. For a time the fact that "Silent Cal" Coolidge was now President made little difference to the business on  K Street. But inevitably, when dealing with crooks, somebody eventually got greedy again and screwed things up, again. 

This time it was Jess Smith's ex-wife, Roxy Stinson. Cheated out of what she thought was her fair share of Jess' share, Roxy spilled her guts to a Senate investigating committee, and on March 28^th, 1924, President Coolidge demanded Daugherty's resignation. Daugherty decided to play it tough. "I wouldn't have given 30 cents for the office of Attorney General, but I won't surrender it for a million dollars." Then he added, “I have no personal feeling against the President. I am yet his dependable friend and supporter." And then he resigned.

In June of 1924, Gaston Means (above, center) was sentenced to four years for perjury. Once out of prison he wrote a book, “The Strange Death of President Harding”.

It was an instant best seller, a well written inventive concoction of half truths and fantasy. Still desperate for money, in 1932 Means claimed to have been contacted by the kidnappers of the Lindbergh baby. He was arrested after stealing the supposed $100,000 ransom, and sentenced to fifteen years. He died of a heart attack in Leavenworth Prison, in 1938.

Howard Mannington died in 1932, at the age of 64, of a "lingering illness". Henry Daugherty (above) was indicted in 1926 for accepting bribes. The jury deadlocked, 7-5 in favor of conviction. His second trial ended in another hung jury, this time 11 – 1 for conviction. But the government gave up.

In 1932 Daugherty published his own book, “The Inside Story of the Harding Tragedy.” It did not sell well. In October of 1940 Henry suffered two heart attacks which left him bedridden. He died in his own bed on October 12, 1941, a very rich man. And, as far as he was concerned,  that was the point..

Now, the Little Green House on K Street was vacant again. The graft it had contained certainly did not end. It just got bigger and more professional.

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