Court records showed that it bought
property
from The LBJ Company and resold it the same day to Lyndon B.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
There are, too, moderate-sized business and professional entrepreneurs, most of them unable to distinguish between their business and governmental duties; they use government as a tool of their businesses, a practice openly defended by the late Senator Robert Kerr of Oklahoma, an oil man who was often referred to as "The King of the Senate.
" There are, finally, those without means or firm business connections.
Most of these, excepting only the conspicuously educated, are "on the make," looking upon the government much as brokers look upon the Stock Exchange: an opportunity to feather their nests and thus gain witless public esteem, status.
A difference, however, is that brokers do not function under oath.
And it is because congressmen have taken an ostentatious oath that one is entitled, without listening to any sophomoric mush about "human failings" as the orchestra plays "Hearts and Flowers," to subject them to sharp scrutiny and judgment. What one might be inclined to overlook in a broker, or even a banker, one cannot sensibly treat as "just one of those things" in a legislator or other official if one values reasonable civil security.
In the passing of loaded legislation, many instances of which were cited by the staid Herald Tribune, the lawmakers manifestly act either for their own account or, as brokers, for the account of others. As the record shows, they function in both roles.
Apart from direct gifts of money, which perhaps are what give most Establishment congressmen their financial starts, the prime way outsiders, mainly corporations, mobilize their zeal is by means of retainers through their law firms. Of 435 representatives and 100 senators, the Herald Tribune noted, 305 are lawyers. The firms of nearly all are under lucrative multicorporate retainer.
While one cannot show in every case that a lawyer-congressman is supporting a client of his firm on the floor or in committees, it can be shown in many cases. In some instances one would be hard put to show a one-one connection between a client and a legislative beneficiary. The client-attorney relationships of the congressmen, however, show that both client and attorney are running out of the same corporate stables, flying the same battle flags. The congressmen, if not full-fledged corporate men, are so close
to it in their thinking that they are indistinguishable from the officials of the United States Chamber of Commerce. Nobody has to tell the congressmen how to think, for example, on the subject of taxes if they think about them at all; they think that way spontaneously.
The law-retainer racket, often combined with threatened extortion, is very old and is touched upon by Charles Francis Adams II, one-time president of the Union Pacific Railroad, in his Autobiography (1916). In Washington on business for the railroad Adams at once encountered "a prominent member of the U. S. Senate" who was still alive, retired, when Adams wrote: ". . . he has a great reputation for ability, and a certain reputation, somewhat fly-blown, it is true, for rugged honesty. I can only say that I found him an ill-mannered bully, and by all odds the most covertly and dangerously corrupt man I ever had opportunity and occasion carefully to observe in public life. His grudge against the Union Pacific was that it had not retained him--he was not, as counsel, in its pay. While he took excellent care of those competing concerns which had been wiser in this respect, he never lost an opportunity of posing as the fearless antagonist of corporations when the Union Pacific came to the front. For that man, on good and sufficient grounds, I entertained a deep dislike. He was distinctly dishonest--a senatorial bribe-taker. "
This sort of thing is virtually standard legislative practice in the United States and was the thought in the mind of the The Nation (June 26, 1967) when it charged that the nature of the case made against Senator Thomas Dodd before he was censured by the Senate had been largely a cover-up. John Stennis, chairman of the Ethics Committee, The Nation charged, had steered the Senate away from considering the more serious charges against Dodd: "that he had (1) threatened to investigate the movie industry but, after taking a political contribution from the Motion Picture Association, dropped the probe; (2) threatened to investigate the television industry, but dropped the matter after taking money from a major member of the industry; (3) taken money from insurance companies while supposedly investigating them; (4) taken money from the firearms industry, and thereafter cooled in his ardor to control interstate shipments of guns; (5) used an airplane belonging to McKesson & Robbins, the drug makers, while sitting on an antitrust subcommittee investigating the drug industry; (6) taken a gift from Westinghouse's lobbyist while sitting on a judiciary subcommittee probing price fixing in the electrical industry; (7) sought favors and jobs for a number of groups and individuals who had contributed to his seemingly bottomless need for money. "
Dodd, in fact, was a fairly typical legislator, fitting right into the history of the American congressional system.
Apart from the incentives of surreptitious gifts, campaign contributions and law retainers, congressmen ferret out independent legislative and bureaucratic incentives strictly for their own account. Not only brokers, they are entrepreneurs and promoters as well. They are especially concentrated in the building-and-loan, television, insurance, local banking and credit fields, all subject to regulation and franchising by governmental agencies. Some are also personally interested in a variety of other government-regulated business activities, including the juggling of oil lands. They are, not to put too fine a point on it, estate builders. Estate building represents their philosophic horizon.
First a word about law firms.
Aware that some question of propriety might arise, some congressmen are related to two-name law firms. There is, first, their original firm. There is, also, a newer firm listing all partners' names except their own but occupying the same office, employing
the same personnel, using the same telephone number and the two sets of names on the same door. The Herald Tribune photographed some of these novelties.
It is presumably through the newer firm that business about which there might be some question is siphoned. The congressman does not participate on the books in such business. But, also presumably, his partners in the old firm are grateful. Presumably he is given a compensatory share in the old firm, doing business with nongovernment- connected clients, and is excluded from direct participation in the juicy second firm. Thus appearances are preserved.
But, even so, the single-name law firm prevails. Most congressmen don't care about appearances.
As the Herald Tribune noted, Senator Everett Dirksen, a big Establishmentarian and like his close friend Lyndon B. Johnson an ardent public partisan of prayer and God, is a member of the obscure Peoria, Illinois, law firm of Davis, Morgan and Witherell. This little firm numbers among its clients the formidable International Harvester Company, Pabst Brewing Company, the National Lock Company and the Panhandle Eastern Pipeline Company, a sprawling giant.
"During a 1959 Senate debate on pending legislation to bar pressures on Federal regulatory agencies, Sen. Dirksen said he would continue contacting them for constituents until such time the law provided he could be 'put in jail for doing it. '" 46
"In addition to his public chores, he is a . . . director of the First Federal Savings and Loan Association of Chicago. . . .
"Sen. Dirksen's business ties meshed neatly with his politics, earlier this year, with the appointment of Carl E. Bagge, a Chicago railroad attorney, as an industry-oriented member of the Federal Power Commission. It was on the Senator's recommendation that President Johnson appointed Mr. Bagge. " 47
The Herald Tribune then recalled that the Dirksen law firm represented Panhandle Eastern Pipe Line, which "falls within the jurisdiction of the FPC. " Dirksen, therefore, is seen to play a variety of roles. Everybody--legislator, president, law firm, corporations, commissions and lobbyists--is rolled together in the same capacious bed.
Dirksen, although nominally a Republican, bobbed up in several parts of the Herald Tribune inquest. In 1962 he received, according to this rockribbed Republican newspaper, concentrated campaign contributions from members of the pharmaceutical industry: officials of the Warner-Lambert Pharmaceutical Company, the Olin Mathieson Chemical Corporation (Squibb) and G. D. Searle and Company, drug manufacturers.
"During this period," said the Herald Tribune, "Sen. Dirksen was leading the opposition against Sen. Estes Kefauver's campaign to regulate the cost and safety of consumer drugs.
"In his book, The Real Voice, on the late Sen. Kefauver's drug fight, author Richard Harris says that Sen. Dirksen became known as the defender of the medical and pharmaceutical interests. " 48
Representative Claude Pepper, Democrat of Florida, former senator, a practicing lawyer with three Florida offices, and an officer and director of the Washington Federal Savings and Loan Association of Miami Beach, in 1963 introduced two bills authorizing savings and loan associations to buy tax-exempt securities. He was at the time a member of the House Banking and Currency Committee which passed on the bills. Sitting on the board of Pepper's Savings and Loan Association was Arthur Courshon, one of the chief savings and loan lobbyists in Washington. One bill was enacted into sacred law in 1964.
Pepper lost his Senate seat in 1950 after fourteen years' incumbency in an election that achieved some fame owing to the novelty of the charges against him by George Smathers. The latter bawled to the swampwater electorate that Pepper had a sister who was a "thespian" and before his own marriage had "practiced celibacy. " One wonders what would happen in the outlands if some candidate were ever accused of being a carnivore, heterosexual and biped who had caused his wife to undergo parturition. Very probably he would be lynched before a dictionary could be ordered from Sears, Roebuck. Many congressmen, in sober fact, are paranymphs.
Not a few statesmen like Senator Smathers, Democrat of Florida, although no longer active as lawyers, nevertheless "promote legislation favorable to their law firm's clients. Over the years Sen. Smathers has supported bills beneficial to Standard Oil of New Jersey, International Telephone and Telegraph Corp. , Pan American World Airways, the Florida East Coast Railway and several insurance companies, all clients of the Miami law firm which bears his name. " 49 He is a real corporate fan.
Senator Sam J. Ervin, Jr. , Democrat of North Carolina, a member of the judiciary Committee which had held hearings on four of nine sitting Supreme Court justices, argued as a paid attorney against the government before the court for the Milliken textile interests. 50
Two businessmen-Senators--Wallace F. Bennett, R. , Utah, and Edward V. Long, D. , Mo. --have successfully blocked the "truth-in-lending" bill which Sen. Paul Douglas, D. , Ill. , and a host of other Senators have been sponsoring since 1960 [said the Herald Tribune ]. Sen. Bennett, former president of the National Association of Manufacturers, is head of an automobile distributorship and director of an insurance company. Sen. Long, a director of a St. Louis bank, has been a vocal supporter for savings and loan institutions since he served in the Missouri legislature. [More recently he has been shown tied up with James Hoffa's Teamsters' Union. ]
U. S. Controller of Currency James Saxon once commented that about two-thirds of all Congressmen are involved in savings and loan associations. An aid later reported Mr. Saxon's estimate was somewhat exaggerated but that a substantial number of Congressmen were indeed connected with savings and loan groups.
He said that of the 1,200 or so inquiries which the Controller's office receives annually regarding bank charters and branch applications, at least half come from Congressmen. Most of the inquiries, the aid said, were simple requests for information without any suggestion of pressure.
But as pointed out by George B. Gallaway, author and government expert, "A telephone call from a Senator or Congressman can paralyze the will of a government executive and alter the course of national policy.
In other cases, Sen. Jennings Randolph, D. , W. Va. , an insurance company director, has taken an active role in debate on proposed medical insurance legislation. His deciding vote killed medicare in the Senate in 1962.
Rep. Multer, chairman of the subcommittee on bank supervision, is privately associated with banking operations. 51
Senator B. Everett Jordan, Democrat of North Carolina, is chairman of the strategic Rules Committee and frequently has argued on the Senate floor against allowing increases in competing foreign textile imports as recommended by the Tariff Commission. Increasing such imports is part of a supposed national policy of knitting together a raveled world.
The senator is himself a domestic textile man, an officer and director of the Sellers Manufacturing Company of North Carolina.
It was before his committee that the case of Bobby Baker, hired secretary to the Senate Majority, was brought for investigation. Baker was accused of improperly using his position in personal out-of-bounds windfall moneymaking schemes. And it was Senator Jordan who abruptly closed the inquiry as the trail grew hot with the historic remark: "We're not investigating senators. "
"Would Bobby Baker have been able to engage in shadowy business deals if his Senate bosses had been above reproach? " the Herald Tribune asked rhetorically. 52 Baker, in the view of sophisticates, merely paralleled the operations of his masters, from whom as a very young man he had learned everything he knew about anti-public skulduggery.
Alluding to the Bobby Baker case, the Herald Tribune said it "raised doubts about the moral fiber of the government right up to the steps of the White House. " 53 It was, indeed, precisely as attention was directed toward the Senate group of which Lyndon B. Johnson had been a rabidly prayerful member that Senator Jordan abruptly closed off the tepid Baker investigation.
The television industry embraces many congressmen. It has been estimated that 75 per cent of congressmen have interests in television-radio broadcasting franchises. The Herald Tribune found that nine senators and fourteen representatives had direct or family-related interests in broadcasting stations. "While he was in the Senate, the family of Lyndon B. Johnson held the only television broadcasting license in Austin, Tex. "
The Case of Lyndon Johnson: A Paradigm
According to the Wall Street Journal, Mr. Johnson's large-scale property-dealing
activities began when be was a representative back in the 1930's. 54
"Unofficial estimates," said the Herald Tribune, "pegged the President's fortune, accrued mostly through his radio-TV holdings, from nine to 14 million. Last August in a public statement he listed his net assets at $3,484,098. A month later, Mr. Humphrey, who sometimes refers to himself as an 'unemployed druggist,' reported his net worth as totaling $171,396. " 55
Earlier Barry Goldwater, Republican presidential candidate, disclosed that he and his wife were worth $1. 7 million mostly in stocks, all of it inherited money.
Johnson, by contrast, was a poor boy who made good-in politics. Back in the 1920's he worked on Texas road gangs as a laborer and was variously employed in catch-as- catch-can jobs until he went to Congress in 1934 after a brief stint as state director of the depression-born National Youth Administration. Those were lean days but, as the Democratic song promised, happy days were returning and soon everything would again be as it was before the dismal crash of 1929. Once on the government payroll Johnson, like many of his colleagues, was never pried loose.
The Johnson fortune, and the miracle of its growth despite the monkish immersion of its architect in steamy affairs of state, came in for a great deal of sudden press attention. What figures are available on it were unprecedentedly disclosed during the presidential campaign of 1964. This revelation resulted from many rumors of the vast magnitude of the Johnson holdings and particularly from a cold-eyed 7,000-word analysis in the Wall Street Journal of August 11, 1964. The editors of this elite feuilleton had assigned a three-man assault team of ace reporters to invade Texas and find out what caused all the aroma. Their report heightened the worst fears abroad in the land, leading to the later
somewhat perfumed self-disclosure reported in the New York Times on August 20, 1964.
The Journal led off its findings with the following rollicking heading:
LYNDON'S PALS
HIS HOMETOWN COTERIE WHEELS AND DEALS IN
LAND AND BROADCASTING THEY BUY INTO AUSTIN BANKS, TRADE PROPERTY WITH LBJ
AND PLAY SOME POLITICS TOO DIRECT LINE TO THE WHITE HOUSE
What engages our attention here is not what might interest a political partisan: the fact that this was about the holder of the highest competitive office in the land. It would be a grave mistake to look upon Mr. Johnson's financial affairs as rarely exceptional. They are, rather, a baroque pattern of a Congressional Establishment man's affairs. I remarked earlier that none of these men operate alone. One man could not juggle all this stuff. Behind practically each Establishment figure is organization: a standard political organization of the Republican or Democratic variety and a personal political-financial organization of long-time cronies.
This area of our politics has not been studied, as far as I am aware, by our political scientists. What shows on the surface in Washington is only the tips of the various icebergs. These personal political-financial networks show what politics are about to most of their successful professional practitioners: chiefly a way of self-enrichment. The pubpols are trying to become junior finpols.
So, taking what the Journal found out as a paradigm of approximately what would be found in practically every Establishment case, there was disclosed the following:
The Johnson affairs revolved around the hitherto obscure Austin law firm of Clark, Thomas, Harris, Denius and Winters, "patronized by giant national corporations. " A separate lawyer, A. W. Moursund of Johnson City, was found to be Mr. Johnson's personal attorney, realty partner and a key figure in his affairs. He was "linked by private telephone circuit to the LBJ Ranch and the White House. " All the lawyers interviewed talked themselves down, jocosely. "I'm just a country lawyer," said Moursund. "I'm just a poor boy, born and raised in East Texas, trying to make an honest buck," said Don Thomas of the law firm. Said Mr. Ed Clark: "Spell my name right--I need the business. "
Mr. Johnson, the Johnson family, these lawyers and other cronies, the Journal found, held parallel or interlocking interests in television-radio properties, vast tracts of land made valuable by federal electrification and Johnson-sponsored dam projects over the years and shares in clusters of Texas banks that gave the group enormous credit resources. Said the Journal: "According to experts of the American Bar Association it is unusual for law firms to invest substantially in bank stocks, but perfectly legitimate. "
There was, first, the Texas Broadcasting Company, a name substituted for The LBJ Company when Mr. Johnson unexpectedly became president of the United States. This outfit owned the various radio and exclusive television stations of the Johnsons. A "competing" radio station, working out of the same address, had been long before set up by Johnson associates and employees: John Connally, now governor of Texas, Walter Jenkins, Merrill Connally, Willard Deason, Melvin Winters (the Johnson City contractor who is a trustee of the Johnson foundation), Robert L. Phinney (an old Johnson college roommate who became Austin's postmaster and more recently director
of the Internal Revenue Service for the region), and various other Johnson employees or associates.
The Journal was piqued by two contrasting strands it found in Johnson affairs: the pattern of monopoly as in the television broadcasting station and concentrated bank holdings, and the pattern of apparent competition within the group itself.
The broadcasting enterprises are housed in a modern office building at Tenth and Brazos Street in Austin owned by the Brazos-Tenth Street Corporation, a holding company held in the name of Don Thomas of the law firm. Mr. Thomas denied point- blank that he was just a "front man" for LBJ. Yet he is also the secretary and a director of the broadcasting company, and a trustee of The LBJ Company Profit-Sharing and Incentive Plan and of the Johnson City Foundation, an LBJ creation.
The Brazos-Tenth Street Corporation, the Journal found, figures in baffling big land deals with Mr. Johnson.
Court records showed that it bought property from The LBJ Company and resold it the same day to Lyndon B. Johnson in person. It engaged in a series of such land deals with the then vice president, as local records showed, and in some cases acted as the buyerseller in deals between Mr. and Mrs. Johnson. The Journal explained them as possible tax maneuvers through a "conduit agency. "
Other deals were recounted in which parcels of land were sold over the years in a circle extending through Johnson companies and employees and then winding up again in the hands of the original owner, Donald Thomas of the law firm.
Money for the various deals, said the Journal, was supplied by banks in which the "members of the Johnson inner circle have an interest and a voice. "
Mr. Moursund himself was found to be a big dealer in land tracts, held fifty-fifty with The LBJ Company. According to Mr. Thomas, the president owned about 5,000 acres of land, most of it ranch land but 27 acres of it bought back in the 1930's for about $300 an acre and now worth about $20,000 an acre, a rise from $8,100 to $540,000. In addition to being a partner of LBJ in big land deals Mr. Moursund was a trustee of the broadcasting company stock and of the Johnson City Foundation, the philanthropic distributions in one year of which were found to total $8,000 out of $11,000 income and an increase of $89,000 in asset value.
Both Mr. Moursund and the law firm were found to be extensively interested in regional banks, and the Journal reporters found the belief strong in the muted region that Mr. Johnson was an eminence grise in the background. Mr. Moursund, his mother, his law partner, Mr. Thomas of Austin and the Brazos-Tenth Street Corporation acquired control of the Moore State Bank of Llano, Texas, soon after Messrs. Moursund and Johnson had paid it a visit.
"Lyndon's associates own or manage stock in all eight of Austin's banks," said the Journal. "Here in Johnson City, at about the time Lyndon Johnson was being inaugurated as Vice President, Brazos-Tenth acquired four-fifths of the stock of the town's only bank, Citizens State (resources: about $3 million). On the board sit Mr. Thomas, Mr. Moursund and another key member of the inner circle, Jesse Kellam, president of the Johnson broadcasting company. " Kellam is a college chum of Johnson's, succeeded him in 1934 as Youth Administration director, helped him with his first congressional campaign, now owns stock in four Austin banks and is a director of one of the biggest, the Capital National.
But the big man at Capital National was Ed Clark of the law firm, a former Texas secretary of state, lobbyist and political and legal troubleshooter for Mr. Johnson. Clark and his partners are big stockholders in Capital National.
Mr. Moursund is a director of the American National, another big Austin bank of which the Johnson Profit-Sharing Plan and the Johnson City Foundation are also stockholders. "The Johnson foundation also has holdings in three other Austin banks; its total of bank stock comes to roughly $137,000. "
In Austin National, the biggest bank in the region, Brazos-Tenth has a stockholding foothold.
John Connally served as the first president of the ostensibly competing radio outfit, KVET. Connally had been secretary to Representative Johnson prior to 1948 and was manager of the presidential bid of LBJ in 1960. As governor of Texas he is now conceded to have complete Establishment control of the state, having routed the liberals. Connally originally subscribed to half of the new radio station's stock for $25,000, which he borrowed from Ed Clark's Capital National Bank. Mr. Clark was also a founder of the radio company that entered the field against the Johnsons' KTBC, headed by Mrs. Johnson.
The Federal Communications Commission, the Journal noted, apparently did not notice KVET had the same address as KTBC and numbered among its founders KTBC personnel. It is illegal for the owner of one station to hold even minority interest in a competing station in the same town. Walter Jenkins, later an administrative aid to President Johnson, was an early stockholder in the Connally station.
Difficulties in Washington connected with the new station were quickly cleared. Its bid for a wavelength held by a San Antonio station, seventy miles away, was quickly resolved by the FCC; KVET got the desired wavelength. "Then the Civil Aeronautics Administration complained erection of the 210-foot broadcasting tower would 'present an undue hazard for the safe operation of aircraft. ' But two weeks later it changed its mind.
"KVET, like Lady Bird's KTBC, had no trouble getting network affiliation, signing up with Mutual. To this day these two remain the only network outlets in Austin, though the city now has seven radio stations. "
Connally in 1955 became attorney for Sid Richardson, the multimillionaire Fort Worth oilman, thus cementing the relations of the group with the inner-circle depletion- allowance crowd, of which Mr. Johnson in the Senate was always an ardent supporter. At this time Mr. Connally turned over his control in KVET to Willard Deason, old Johnson school chum.
"Those who drop in to visit station president Deason nowadays can hear his cheerful view of competing with the Johnsons and his cozy recollections of how it all came about. They can see two pictures adorning his office. One is a brown-tone photo taken in 1932, of schoolmate Lyndon. The other is a large autographed portrait of the President of the United States. "
It was hard on the heels of this instructive report that Mr. Johnson took an unprecedented step for a president of the United States by disclosing figures on his financial position. The principal, assets shown consisted of the Texas Broadcasting Corporation and real estate. The total valuation placed on them was $3,484,098. Ownership titles were split among the family so that the president apparently held $378,081 of assets, his wife $2,126,298 and the two minor daughters close to $500,000 each. No mention was made of the Johnson City Foundation.
As the Times pointed out, original ground-floor costs were used in arriving at valuations and the auditors themselves noted that the method used was "not intended to indicate the values that might be realized if the investments were sold. "
Unfeeling and obviously partisan Republicans called the valuations "incredibly low" and charged that the method used was "like the city of New York listing the value of Manhattan Island at $24," the original price supposed to have been paid to the Indians.
Financial analysts in general contended that merely the holdings shown were worth up to $15 million or more.
There were internal discrepancies in the report as published. Texas ranch properties listed among total balance-sheet assets were set at $502,478, a figure carried forward from an erroneous computation that on the basis of the itemization given should have added up to $1,445,822. Either the total given is wrong or the items composing it are erroneously stated, as anyone may ascertain by consulting the Times.
In the preceding decade the family had received admitted cash income exceeding $1. 8 million, irrespective of the pro forma quadrupling in value of assets. The original cost of the broadcasting enterprise was $24,850 in the period 1944-47. Undistributed profits of $2,445,830 after the deduction of purely potential capital gain taxes were solely used to bring its valuation to $2,470,680. Capital gain tax will never be paid unless the broadcasting enterprise is sold.
The broadcasting company, it was shown, is wholly owned by Mrs. Johnson and her two daughters. It owned or had an interest in broadcasting facilities in Austin, Waco, Bryan and Victoria in Texas, and in Ardmore, Oklahoma.
Both in type of personal holdings and those distributed among kin there was nothing to differentiate the statement from that of any Wall Street tycoon except the numerical details. The president and his wife held respectively $159,270 and $239,270 of tax- exempt state and local government bonds. Each held ranch properties valued at $227,114 and minor amounts of "other assets. "
Properties owned by Mr. and Mrs. Johnson were placed in trust in November, 1963, immediately after he assumed the presidency. They will be so held until he no longer holds federal office. Yet, he held high federal office before the creation of this trusteeship, which has the sole effect of placing the properties under the management of nominees. It does not represent a divorce.
Knowing he is the beneficiary under this trusteeship, is the president's mind so free of property influence that he is likely to come out for, say, strict government regulation of television advertising or the end of tax-free oil? Is he likely to agree with Kennedy appointee Newton Minow that television is a "wasteland"?
Said the New York Times editorially on September 25, 1964, about this arrangement:
The property has been placed in trust while the President is in office, and Mr. Johnson will unquestionably take special pains to avoid any charge of improper influence over the F. C. C. But a conflict of interest remains as long as the nation's chief officeholder possesses a stake, direct or indirect, in a property he is charged with regulating.
This property was acquired when Mr. Johnson was in Congress. He was doing what many other Congressmen . . . have done. There is, unfortunately, no law against Congressmen owning television and radio facilities or having a financial interest in other franchises or businesses that are either regulated by Federal agencies or dependent on Government contracts. But the very fact that Mr. Johnson set up a trust when he assumed the Presidency indicates that ownership of Government-regulated business suggests a conflict--for members of Congress as well as for the occupant of the White House.
The Times suggested "divestiture" of the property as a way out, without suggesting the nature of such legerdemain. If it were sold the president would realize a handsome
profit. If it were given away for charity it would defeat the intended purpose from the beginning.
The insight given by the Johnson financial statement, as far as it went, into the affairs of a big Establishmentarian and career politician who thirty years before was as poor as the proverbial church mouse enabled reflective observers to see where rhetoric leaves off and substance begins in the thinking of the Establishment. The energy devoted to putting together from scratch and sheltering these properties should be some guide to personal motivation. What was disclosed bore none of the earmarks of a part-time hobby.
What is even more strange is that even as president Mr. Johnson has continued large- scale land and cattle purchases through agents, paralleling value-bringing state highway and bridge-building projects, according to the New York Times in an extensive report of December 26, 1966 (23:2-3). This report of total holdings more recently of 14,000 acres in five separate ranches led Washington wits to say that Mr. Johnson has been the biggest real estate operator as president of the United States since President Jefferson's "Louisiana Purchase. "
Despite his single-handed involvement of the United States in a big Asiatic land war, long held by the Chiefs of Staff as something to be avoided at all costs, Mr. Johnson is nevertheless hailed by many as the architect of "The Great Society," an apparition that is due to materialize no doubt at about the same time as grass-roots communism appears in Russia and the Soviet state "withers away. " just how much stock one should take in the Great Society fantasy was suggested at the annual get-together of the American Political Science Association in 1965, as reported by the New York Times:
Although a high proportion of them unquestionably voted for Mr. Johnson last fall, the comments of the political scientists indicated a shocking skepticism about Washington's earnest belief that this President has introduced--through his Great Society programs, his style of vigorous personal leadership and his invocation of the virtues of one "great big party"--a dramatic new element in American politics.
Nelson Polsby of Wesleyan University captured the prevailing view when he remarked:
"There's nothing new about all this. All you really have is a swollen Congressional majority, that Barry Goldwater handed the Democrats, passing programs that have been kicking around since New Deal and Fair Deal days. "
A colleague from Wesleyan, Clement E. Vose, compounded the heresy, saying that the Johnson record "is not one of innovation, but of ratification of ideas that have been germinating since the time of Henry Wallace. " 56
So much for "The Great Society. "
Other Political Horatio Algers
Before closing the books on the Horatio Algers in politics, some further nuggets from the valuable Herald Tribune series, Put together by ace reporter Dom Bonafede, should be exhibited:
"Civic participation" by applicants is one of the yardsticks used by the Federal Communications Commission in granting TV licenses, and being a congressman is interpreted as "civic participation" given weight in licensing--a doctrine that Democratic Senator William J. Proxmire of Wisconsin called "an amazing proposition. " 57
Representative William E. Miller, Republican candidate for vice president in 1964, was on the payroll of the Lockport Felt Company while in Congress, where he had
"openly promoted legislation favorable to the company on the floor. " He was made a vice president of the company two weeks after leaving Congress. 58
Senators Spessard Holland and George Smathers of Florida and B. Everett Jordan and Samuel J. Ervin, Jr. , of North Carolina were co-sponsors of a bill in which the Florida Power and Light Company was "the prime mover" to exempt from federal regulation private utilities not directly linked with outof-state transmission networks. 59
Until he recently sold the bulk of his holdings, Sen. Warren G. Magnuson, D. , Wash. , the Commerce Committee chairman, was part owner of a Seattle broadcasting station. One of the committee's functions is to oversee operations of the FCC.
Sen. John L. McClellan, D. , Ark. , the famed rackets-buster, is chairman of the subcommittee investigating the Federal banking system, even though he is a bank director in private life. Another subcommittee member, Sen. Sam J. Ervin, D. , N. C. , also holds a bank directorship.
Rep. William C. Cramer, R. , Fla. , spoke against the Administration's war [sic! ] on poverty almost from the program's inception. But his protests appear to have been muted ever since a laundry service he heads in St. Petersburg was awarded a contract with Women's job Corps. 60
Although the Corrupt Practices Act of 1925 requires congressmen to report campaign contributions and expenditures, limiting what can be spent to $5,000 for representatives and $25,000 for senators, large numbers of members of both Houses report "none" on the required forms after each election. 61
Yet carloads of money are nevertheless spent, or at least collected, in congressional campaigns. Only $18. 5 million was formally reported as collected for the 1962 "off year" campaigns, but an expertly estimated $100 million was collected. 62
Political money is really tossed about in a large way.
"Newly elected Rep. Richard L. Ottinger, D. , N. Y. , a multi-millionaire in private life, spent almost $200,000 through 34 committees to win his seat. Yet, his campaign report lists expenditures of $4,500 and no contributions. " 63
Although there are criminal penalties prescribed for negligent failure to file a report or to file a false report, there has never been a prosecution under the Act of 1925.
"Ingenious methods of raising campaign funds are developed. . . . Card games are held in which a portion of the pot from each hand is set aside for a campaign committee. For many years, Rep. Michael J. Kirwan, of Ohio, House Democratic Campaign Committee Chairman, staged a St. Patrick's Day party for the purpose of soliciting campaign funds. " 64
Cocktail parties are a standard fixture where lobbyists are panhandled for handouts to support democracy. One lobbyist told the Herald Tribune that it usually cost him $100 for a single drink "and a "cold shrimp on a toothpick," which was perhaps cheap.
A generally favored swindle is to run $100- to $1,000-a-plate testimonial dinners, production cost about $10 apiece, and to send twenty-five to a hundred tickets to various corporate people, who generally grab them like manna and distribute them to the office help. If the corporate boys fail to remit they suspect an undeserved demerit may be entered against their names in some little black book.
While a direct gift of money in excess of $3,000, except (as the courts have percipiently ruled) expensive presents to a lady friend, are subject to tax, a gift in recognition of "public service' is not so taxable. Although such gifts are not lavished on low-paid scientists, artists, military officers and profound cogitators, who may be
supposed to have rendered some public service, they are rife in the case of officials, especially congressmen. It is not necessary to pass them money in some back alley. What is done is to stage a glittering public affair, with hundreds of well-heeled customers present, and to present the modest recipient with a large certified check as the cameras flash the scene for posterity. What results are photographs reminiscent of Renaissance paintings titled "Adoration of the Infanta. " Diners leave with the vague semi-alcoholic feeling that they have participated in a religious ceremony, have at least paid homage to a glorious Republic once sadly betrayed by wicked, wicked, wicked Benedict Arnold.
Lest any strait-laced, dyspeptic methodologist charge that I am drawing my data from only two sources which, although highly orthodox, could be wrong or wrong-headed, let the future historian know that among many other sources on congressional skulduggery there are the nationally syndicated Washington columns of Drew Pearson, a practitioner of the journalistic craft for more than forty years.
Not only do we encounter many members of the cast we already are familiar with in the Pearson columns but a host of new names ooze into view week after week.
"Any pressure group that is rich and powerful enough can find a champion in Everett Dirksen," said Pearson. "It is his conviction that the special interests are entitled to a voice in the Senate. His office has been headquarters for almost every major group--the drug industry, gas and oil combine, food packagers, etc. --that has had a legislative problem.
"To no one's particular surprise, Dirksen's law firm in faraway Peoria, Ill. , has collected retainers from many a giant corporation whose interests the Senator has served in Washington. " 65
A few other nuggets from the Pearson columns--the nuggets alone would fill a book-- are as follows:
Representative William H. Harsha, Jr. , Republican of Ohio, has been a strong opponent of the Federal Mass Transportation Act, designed to develop rail and commuter services for clogged cities. His law firm represents the Greyhound Bus Lines. The congressman favors limiting imports of residual fuel oil.
And it is because congressmen have taken an ostentatious oath that one is entitled, without listening to any sophomoric mush about "human failings" as the orchestra plays "Hearts and Flowers," to subject them to sharp scrutiny and judgment. What one might be inclined to overlook in a broker, or even a banker, one cannot sensibly treat as "just one of those things" in a legislator or other official if one values reasonable civil security.
In the passing of loaded legislation, many instances of which were cited by the staid Herald Tribune, the lawmakers manifestly act either for their own account or, as brokers, for the account of others. As the record shows, they function in both roles.
Apart from direct gifts of money, which perhaps are what give most Establishment congressmen their financial starts, the prime way outsiders, mainly corporations, mobilize their zeal is by means of retainers through their law firms. Of 435 representatives and 100 senators, the Herald Tribune noted, 305 are lawyers. The firms of nearly all are under lucrative multicorporate retainer.
While one cannot show in every case that a lawyer-congressman is supporting a client of his firm on the floor or in committees, it can be shown in many cases. In some instances one would be hard put to show a one-one connection between a client and a legislative beneficiary. The client-attorney relationships of the congressmen, however, show that both client and attorney are running out of the same corporate stables, flying the same battle flags. The congressmen, if not full-fledged corporate men, are so close
to it in their thinking that they are indistinguishable from the officials of the United States Chamber of Commerce. Nobody has to tell the congressmen how to think, for example, on the subject of taxes if they think about them at all; they think that way spontaneously.
The law-retainer racket, often combined with threatened extortion, is very old and is touched upon by Charles Francis Adams II, one-time president of the Union Pacific Railroad, in his Autobiography (1916). In Washington on business for the railroad Adams at once encountered "a prominent member of the U. S. Senate" who was still alive, retired, when Adams wrote: ". . . he has a great reputation for ability, and a certain reputation, somewhat fly-blown, it is true, for rugged honesty. I can only say that I found him an ill-mannered bully, and by all odds the most covertly and dangerously corrupt man I ever had opportunity and occasion carefully to observe in public life. His grudge against the Union Pacific was that it had not retained him--he was not, as counsel, in its pay. While he took excellent care of those competing concerns which had been wiser in this respect, he never lost an opportunity of posing as the fearless antagonist of corporations when the Union Pacific came to the front. For that man, on good and sufficient grounds, I entertained a deep dislike. He was distinctly dishonest--a senatorial bribe-taker. "
This sort of thing is virtually standard legislative practice in the United States and was the thought in the mind of the The Nation (June 26, 1967) when it charged that the nature of the case made against Senator Thomas Dodd before he was censured by the Senate had been largely a cover-up. John Stennis, chairman of the Ethics Committee, The Nation charged, had steered the Senate away from considering the more serious charges against Dodd: "that he had (1) threatened to investigate the movie industry but, after taking a political contribution from the Motion Picture Association, dropped the probe; (2) threatened to investigate the television industry, but dropped the matter after taking money from a major member of the industry; (3) taken money from insurance companies while supposedly investigating them; (4) taken money from the firearms industry, and thereafter cooled in his ardor to control interstate shipments of guns; (5) used an airplane belonging to McKesson & Robbins, the drug makers, while sitting on an antitrust subcommittee investigating the drug industry; (6) taken a gift from Westinghouse's lobbyist while sitting on a judiciary subcommittee probing price fixing in the electrical industry; (7) sought favors and jobs for a number of groups and individuals who had contributed to his seemingly bottomless need for money. "
Dodd, in fact, was a fairly typical legislator, fitting right into the history of the American congressional system.
Apart from the incentives of surreptitious gifts, campaign contributions and law retainers, congressmen ferret out independent legislative and bureaucratic incentives strictly for their own account. Not only brokers, they are entrepreneurs and promoters as well. They are especially concentrated in the building-and-loan, television, insurance, local banking and credit fields, all subject to regulation and franchising by governmental agencies. Some are also personally interested in a variety of other government-regulated business activities, including the juggling of oil lands. They are, not to put too fine a point on it, estate builders. Estate building represents their philosophic horizon.
First a word about law firms.
Aware that some question of propriety might arise, some congressmen are related to two-name law firms. There is, first, their original firm. There is, also, a newer firm listing all partners' names except their own but occupying the same office, employing
the same personnel, using the same telephone number and the two sets of names on the same door. The Herald Tribune photographed some of these novelties.
It is presumably through the newer firm that business about which there might be some question is siphoned. The congressman does not participate on the books in such business. But, also presumably, his partners in the old firm are grateful. Presumably he is given a compensatory share in the old firm, doing business with nongovernment- connected clients, and is excluded from direct participation in the juicy second firm. Thus appearances are preserved.
But, even so, the single-name law firm prevails. Most congressmen don't care about appearances.
As the Herald Tribune noted, Senator Everett Dirksen, a big Establishmentarian and like his close friend Lyndon B. Johnson an ardent public partisan of prayer and God, is a member of the obscure Peoria, Illinois, law firm of Davis, Morgan and Witherell. This little firm numbers among its clients the formidable International Harvester Company, Pabst Brewing Company, the National Lock Company and the Panhandle Eastern Pipeline Company, a sprawling giant.
"During a 1959 Senate debate on pending legislation to bar pressures on Federal regulatory agencies, Sen. Dirksen said he would continue contacting them for constituents until such time the law provided he could be 'put in jail for doing it. '" 46
"In addition to his public chores, he is a . . . director of the First Federal Savings and Loan Association of Chicago. . . .
"Sen. Dirksen's business ties meshed neatly with his politics, earlier this year, with the appointment of Carl E. Bagge, a Chicago railroad attorney, as an industry-oriented member of the Federal Power Commission. It was on the Senator's recommendation that President Johnson appointed Mr. Bagge. " 47
The Herald Tribune then recalled that the Dirksen law firm represented Panhandle Eastern Pipe Line, which "falls within the jurisdiction of the FPC. " Dirksen, therefore, is seen to play a variety of roles. Everybody--legislator, president, law firm, corporations, commissions and lobbyists--is rolled together in the same capacious bed.
Dirksen, although nominally a Republican, bobbed up in several parts of the Herald Tribune inquest. In 1962 he received, according to this rockribbed Republican newspaper, concentrated campaign contributions from members of the pharmaceutical industry: officials of the Warner-Lambert Pharmaceutical Company, the Olin Mathieson Chemical Corporation (Squibb) and G. D. Searle and Company, drug manufacturers.
"During this period," said the Herald Tribune, "Sen. Dirksen was leading the opposition against Sen. Estes Kefauver's campaign to regulate the cost and safety of consumer drugs.
"In his book, The Real Voice, on the late Sen. Kefauver's drug fight, author Richard Harris says that Sen. Dirksen became known as the defender of the medical and pharmaceutical interests. " 48
Representative Claude Pepper, Democrat of Florida, former senator, a practicing lawyer with three Florida offices, and an officer and director of the Washington Federal Savings and Loan Association of Miami Beach, in 1963 introduced two bills authorizing savings and loan associations to buy tax-exempt securities. He was at the time a member of the House Banking and Currency Committee which passed on the bills. Sitting on the board of Pepper's Savings and Loan Association was Arthur Courshon, one of the chief savings and loan lobbyists in Washington. One bill was enacted into sacred law in 1964.
Pepper lost his Senate seat in 1950 after fourteen years' incumbency in an election that achieved some fame owing to the novelty of the charges against him by George Smathers. The latter bawled to the swampwater electorate that Pepper had a sister who was a "thespian" and before his own marriage had "practiced celibacy. " One wonders what would happen in the outlands if some candidate were ever accused of being a carnivore, heterosexual and biped who had caused his wife to undergo parturition. Very probably he would be lynched before a dictionary could be ordered from Sears, Roebuck. Many congressmen, in sober fact, are paranymphs.
Not a few statesmen like Senator Smathers, Democrat of Florida, although no longer active as lawyers, nevertheless "promote legislation favorable to their law firm's clients. Over the years Sen. Smathers has supported bills beneficial to Standard Oil of New Jersey, International Telephone and Telegraph Corp. , Pan American World Airways, the Florida East Coast Railway and several insurance companies, all clients of the Miami law firm which bears his name. " 49 He is a real corporate fan.
Senator Sam J. Ervin, Jr. , Democrat of North Carolina, a member of the judiciary Committee which had held hearings on four of nine sitting Supreme Court justices, argued as a paid attorney against the government before the court for the Milliken textile interests. 50
Two businessmen-Senators--Wallace F. Bennett, R. , Utah, and Edward V. Long, D. , Mo. --have successfully blocked the "truth-in-lending" bill which Sen. Paul Douglas, D. , Ill. , and a host of other Senators have been sponsoring since 1960 [said the Herald Tribune ]. Sen. Bennett, former president of the National Association of Manufacturers, is head of an automobile distributorship and director of an insurance company. Sen. Long, a director of a St. Louis bank, has been a vocal supporter for savings and loan institutions since he served in the Missouri legislature. [More recently he has been shown tied up with James Hoffa's Teamsters' Union. ]
U. S. Controller of Currency James Saxon once commented that about two-thirds of all Congressmen are involved in savings and loan associations. An aid later reported Mr. Saxon's estimate was somewhat exaggerated but that a substantial number of Congressmen were indeed connected with savings and loan groups.
He said that of the 1,200 or so inquiries which the Controller's office receives annually regarding bank charters and branch applications, at least half come from Congressmen. Most of the inquiries, the aid said, were simple requests for information without any suggestion of pressure.
But as pointed out by George B. Gallaway, author and government expert, "A telephone call from a Senator or Congressman can paralyze the will of a government executive and alter the course of national policy.
In other cases, Sen. Jennings Randolph, D. , W. Va. , an insurance company director, has taken an active role in debate on proposed medical insurance legislation. His deciding vote killed medicare in the Senate in 1962.
Rep. Multer, chairman of the subcommittee on bank supervision, is privately associated with banking operations. 51
Senator B. Everett Jordan, Democrat of North Carolina, is chairman of the strategic Rules Committee and frequently has argued on the Senate floor against allowing increases in competing foreign textile imports as recommended by the Tariff Commission. Increasing such imports is part of a supposed national policy of knitting together a raveled world.
The senator is himself a domestic textile man, an officer and director of the Sellers Manufacturing Company of North Carolina.
It was before his committee that the case of Bobby Baker, hired secretary to the Senate Majority, was brought for investigation. Baker was accused of improperly using his position in personal out-of-bounds windfall moneymaking schemes. And it was Senator Jordan who abruptly closed the inquiry as the trail grew hot with the historic remark: "We're not investigating senators. "
"Would Bobby Baker have been able to engage in shadowy business deals if his Senate bosses had been above reproach? " the Herald Tribune asked rhetorically. 52 Baker, in the view of sophisticates, merely paralleled the operations of his masters, from whom as a very young man he had learned everything he knew about anti-public skulduggery.
Alluding to the Bobby Baker case, the Herald Tribune said it "raised doubts about the moral fiber of the government right up to the steps of the White House. " 53 It was, indeed, precisely as attention was directed toward the Senate group of which Lyndon B. Johnson had been a rabidly prayerful member that Senator Jordan abruptly closed off the tepid Baker investigation.
The television industry embraces many congressmen. It has been estimated that 75 per cent of congressmen have interests in television-radio broadcasting franchises. The Herald Tribune found that nine senators and fourteen representatives had direct or family-related interests in broadcasting stations. "While he was in the Senate, the family of Lyndon B. Johnson held the only television broadcasting license in Austin, Tex. "
The Case of Lyndon Johnson: A Paradigm
According to the Wall Street Journal, Mr. Johnson's large-scale property-dealing
activities began when be was a representative back in the 1930's. 54
"Unofficial estimates," said the Herald Tribune, "pegged the President's fortune, accrued mostly through his radio-TV holdings, from nine to 14 million. Last August in a public statement he listed his net assets at $3,484,098. A month later, Mr. Humphrey, who sometimes refers to himself as an 'unemployed druggist,' reported his net worth as totaling $171,396. " 55
Earlier Barry Goldwater, Republican presidential candidate, disclosed that he and his wife were worth $1. 7 million mostly in stocks, all of it inherited money.
Johnson, by contrast, was a poor boy who made good-in politics. Back in the 1920's he worked on Texas road gangs as a laborer and was variously employed in catch-as- catch-can jobs until he went to Congress in 1934 after a brief stint as state director of the depression-born National Youth Administration. Those were lean days but, as the Democratic song promised, happy days were returning and soon everything would again be as it was before the dismal crash of 1929. Once on the government payroll Johnson, like many of his colleagues, was never pried loose.
The Johnson fortune, and the miracle of its growth despite the monkish immersion of its architect in steamy affairs of state, came in for a great deal of sudden press attention. What figures are available on it were unprecedentedly disclosed during the presidential campaign of 1964. This revelation resulted from many rumors of the vast magnitude of the Johnson holdings and particularly from a cold-eyed 7,000-word analysis in the Wall Street Journal of August 11, 1964. The editors of this elite feuilleton had assigned a three-man assault team of ace reporters to invade Texas and find out what caused all the aroma. Their report heightened the worst fears abroad in the land, leading to the later
somewhat perfumed self-disclosure reported in the New York Times on August 20, 1964.
The Journal led off its findings with the following rollicking heading:
LYNDON'S PALS
HIS HOMETOWN COTERIE WHEELS AND DEALS IN
LAND AND BROADCASTING THEY BUY INTO AUSTIN BANKS, TRADE PROPERTY WITH LBJ
AND PLAY SOME POLITICS TOO DIRECT LINE TO THE WHITE HOUSE
What engages our attention here is not what might interest a political partisan: the fact that this was about the holder of the highest competitive office in the land. It would be a grave mistake to look upon Mr. Johnson's financial affairs as rarely exceptional. They are, rather, a baroque pattern of a Congressional Establishment man's affairs. I remarked earlier that none of these men operate alone. One man could not juggle all this stuff. Behind practically each Establishment figure is organization: a standard political organization of the Republican or Democratic variety and a personal political-financial organization of long-time cronies.
This area of our politics has not been studied, as far as I am aware, by our political scientists. What shows on the surface in Washington is only the tips of the various icebergs. These personal political-financial networks show what politics are about to most of their successful professional practitioners: chiefly a way of self-enrichment. The pubpols are trying to become junior finpols.
So, taking what the Journal found out as a paradigm of approximately what would be found in practically every Establishment case, there was disclosed the following:
The Johnson affairs revolved around the hitherto obscure Austin law firm of Clark, Thomas, Harris, Denius and Winters, "patronized by giant national corporations. " A separate lawyer, A. W. Moursund of Johnson City, was found to be Mr. Johnson's personal attorney, realty partner and a key figure in his affairs. He was "linked by private telephone circuit to the LBJ Ranch and the White House. " All the lawyers interviewed talked themselves down, jocosely. "I'm just a country lawyer," said Moursund. "I'm just a poor boy, born and raised in East Texas, trying to make an honest buck," said Don Thomas of the law firm. Said Mr. Ed Clark: "Spell my name right--I need the business. "
Mr. Johnson, the Johnson family, these lawyers and other cronies, the Journal found, held parallel or interlocking interests in television-radio properties, vast tracts of land made valuable by federal electrification and Johnson-sponsored dam projects over the years and shares in clusters of Texas banks that gave the group enormous credit resources. Said the Journal: "According to experts of the American Bar Association it is unusual for law firms to invest substantially in bank stocks, but perfectly legitimate. "
There was, first, the Texas Broadcasting Company, a name substituted for The LBJ Company when Mr. Johnson unexpectedly became president of the United States. This outfit owned the various radio and exclusive television stations of the Johnsons. A "competing" radio station, working out of the same address, had been long before set up by Johnson associates and employees: John Connally, now governor of Texas, Walter Jenkins, Merrill Connally, Willard Deason, Melvin Winters (the Johnson City contractor who is a trustee of the Johnson foundation), Robert L. Phinney (an old Johnson college roommate who became Austin's postmaster and more recently director
of the Internal Revenue Service for the region), and various other Johnson employees or associates.
The Journal was piqued by two contrasting strands it found in Johnson affairs: the pattern of monopoly as in the television broadcasting station and concentrated bank holdings, and the pattern of apparent competition within the group itself.
The broadcasting enterprises are housed in a modern office building at Tenth and Brazos Street in Austin owned by the Brazos-Tenth Street Corporation, a holding company held in the name of Don Thomas of the law firm. Mr. Thomas denied point- blank that he was just a "front man" for LBJ. Yet he is also the secretary and a director of the broadcasting company, and a trustee of The LBJ Company Profit-Sharing and Incentive Plan and of the Johnson City Foundation, an LBJ creation.
The Brazos-Tenth Street Corporation, the Journal found, figures in baffling big land deals with Mr. Johnson.
Court records showed that it bought property from The LBJ Company and resold it the same day to Lyndon B. Johnson in person. It engaged in a series of such land deals with the then vice president, as local records showed, and in some cases acted as the buyerseller in deals between Mr. and Mrs. Johnson. The Journal explained them as possible tax maneuvers through a "conduit agency. "
Other deals were recounted in which parcels of land were sold over the years in a circle extending through Johnson companies and employees and then winding up again in the hands of the original owner, Donald Thomas of the law firm.
Money for the various deals, said the Journal, was supplied by banks in which the "members of the Johnson inner circle have an interest and a voice. "
Mr. Moursund himself was found to be a big dealer in land tracts, held fifty-fifty with The LBJ Company. According to Mr. Thomas, the president owned about 5,000 acres of land, most of it ranch land but 27 acres of it bought back in the 1930's for about $300 an acre and now worth about $20,000 an acre, a rise from $8,100 to $540,000. In addition to being a partner of LBJ in big land deals Mr. Moursund was a trustee of the broadcasting company stock and of the Johnson City Foundation, the philanthropic distributions in one year of which were found to total $8,000 out of $11,000 income and an increase of $89,000 in asset value.
Both Mr. Moursund and the law firm were found to be extensively interested in regional banks, and the Journal reporters found the belief strong in the muted region that Mr. Johnson was an eminence grise in the background. Mr. Moursund, his mother, his law partner, Mr. Thomas of Austin and the Brazos-Tenth Street Corporation acquired control of the Moore State Bank of Llano, Texas, soon after Messrs. Moursund and Johnson had paid it a visit.
"Lyndon's associates own or manage stock in all eight of Austin's banks," said the Journal. "Here in Johnson City, at about the time Lyndon Johnson was being inaugurated as Vice President, Brazos-Tenth acquired four-fifths of the stock of the town's only bank, Citizens State (resources: about $3 million). On the board sit Mr. Thomas, Mr. Moursund and another key member of the inner circle, Jesse Kellam, president of the Johnson broadcasting company. " Kellam is a college chum of Johnson's, succeeded him in 1934 as Youth Administration director, helped him with his first congressional campaign, now owns stock in four Austin banks and is a director of one of the biggest, the Capital National.
But the big man at Capital National was Ed Clark of the law firm, a former Texas secretary of state, lobbyist and political and legal troubleshooter for Mr. Johnson. Clark and his partners are big stockholders in Capital National.
Mr. Moursund is a director of the American National, another big Austin bank of which the Johnson Profit-Sharing Plan and the Johnson City Foundation are also stockholders. "The Johnson foundation also has holdings in three other Austin banks; its total of bank stock comes to roughly $137,000. "
In Austin National, the biggest bank in the region, Brazos-Tenth has a stockholding foothold.
John Connally served as the first president of the ostensibly competing radio outfit, KVET. Connally had been secretary to Representative Johnson prior to 1948 and was manager of the presidential bid of LBJ in 1960. As governor of Texas he is now conceded to have complete Establishment control of the state, having routed the liberals. Connally originally subscribed to half of the new radio station's stock for $25,000, which he borrowed from Ed Clark's Capital National Bank. Mr. Clark was also a founder of the radio company that entered the field against the Johnsons' KTBC, headed by Mrs. Johnson.
The Federal Communications Commission, the Journal noted, apparently did not notice KVET had the same address as KTBC and numbered among its founders KTBC personnel. It is illegal for the owner of one station to hold even minority interest in a competing station in the same town. Walter Jenkins, later an administrative aid to President Johnson, was an early stockholder in the Connally station.
Difficulties in Washington connected with the new station were quickly cleared. Its bid for a wavelength held by a San Antonio station, seventy miles away, was quickly resolved by the FCC; KVET got the desired wavelength. "Then the Civil Aeronautics Administration complained erection of the 210-foot broadcasting tower would 'present an undue hazard for the safe operation of aircraft. ' But two weeks later it changed its mind.
"KVET, like Lady Bird's KTBC, had no trouble getting network affiliation, signing up with Mutual. To this day these two remain the only network outlets in Austin, though the city now has seven radio stations. "
Connally in 1955 became attorney for Sid Richardson, the multimillionaire Fort Worth oilman, thus cementing the relations of the group with the inner-circle depletion- allowance crowd, of which Mr. Johnson in the Senate was always an ardent supporter. At this time Mr. Connally turned over his control in KVET to Willard Deason, old Johnson school chum.
"Those who drop in to visit station president Deason nowadays can hear his cheerful view of competing with the Johnsons and his cozy recollections of how it all came about. They can see two pictures adorning his office. One is a brown-tone photo taken in 1932, of schoolmate Lyndon. The other is a large autographed portrait of the President of the United States. "
It was hard on the heels of this instructive report that Mr. Johnson took an unprecedented step for a president of the United States by disclosing figures on his financial position. The principal, assets shown consisted of the Texas Broadcasting Corporation and real estate. The total valuation placed on them was $3,484,098. Ownership titles were split among the family so that the president apparently held $378,081 of assets, his wife $2,126,298 and the two minor daughters close to $500,000 each. No mention was made of the Johnson City Foundation.
As the Times pointed out, original ground-floor costs were used in arriving at valuations and the auditors themselves noted that the method used was "not intended to indicate the values that might be realized if the investments were sold. "
Unfeeling and obviously partisan Republicans called the valuations "incredibly low" and charged that the method used was "like the city of New York listing the value of Manhattan Island at $24," the original price supposed to have been paid to the Indians.
Financial analysts in general contended that merely the holdings shown were worth up to $15 million or more.
There were internal discrepancies in the report as published. Texas ranch properties listed among total balance-sheet assets were set at $502,478, a figure carried forward from an erroneous computation that on the basis of the itemization given should have added up to $1,445,822. Either the total given is wrong or the items composing it are erroneously stated, as anyone may ascertain by consulting the Times.
In the preceding decade the family had received admitted cash income exceeding $1. 8 million, irrespective of the pro forma quadrupling in value of assets. The original cost of the broadcasting enterprise was $24,850 in the period 1944-47. Undistributed profits of $2,445,830 after the deduction of purely potential capital gain taxes were solely used to bring its valuation to $2,470,680. Capital gain tax will never be paid unless the broadcasting enterprise is sold.
The broadcasting company, it was shown, is wholly owned by Mrs. Johnson and her two daughters. It owned or had an interest in broadcasting facilities in Austin, Waco, Bryan and Victoria in Texas, and in Ardmore, Oklahoma.
Both in type of personal holdings and those distributed among kin there was nothing to differentiate the statement from that of any Wall Street tycoon except the numerical details. The president and his wife held respectively $159,270 and $239,270 of tax- exempt state and local government bonds. Each held ranch properties valued at $227,114 and minor amounts of "other assets. "
Properties owned by Mr. and Mrs. Johnson were placed in trust in November, 1963, immediately after he assumed the presidency. They will be so held until he no longer holds federal office. Yet, he held high federal office before the creation of this trusteeship, which has the sole effect of placing the properties under the management of nominees. It does not represent a divorce.
Knowing he is the beneficiary under this trusteeship, is the president's mind so free of property influence that he is likely to come out for, say, strict government regulation of television advertising or the end of tax-free oil? Is he likely to agree with Kennedy appointee Newton Minow that television is a "wasteland"?
Said the New York Times editorially on September 25, 1964, about this arrangement:
The property has been placed in trust while the President is in office, and Mr. Johnson will unquestionably take special pains to avoid any charge of improper influence over the F. C. C. But a conflict of interest remains as long as the nation's chief officeholder possesses a stake, direct or indirect, in a property he is charged with regulating.
This property was acquired when Mr. Johnson was in Congress. He was doing what many other Congressmen . . . have done. There is, unfortunately, no law against Congressmen owning television and radio facilities or having a financial interest in other franchises or businesses that are either regulated by Federal agencies or dependent on Government contracts. But the very fact that Mr. Johnson set up a trust when he assumed the Presidency indicates that ownership of Government-regulated business suggests a conflict--for members of Congress as well as for the occupant of the White House.
The Times suggested "divestiture" of the property as a way out, without suggesting the nature of such legerdemain. If it were sold the president would realize a handsome
profit. If it were given away for charity it would defeat the intended purpose from the beginning.
The insight given by the Johnson financial statement, as far as it went, into the affairs of a big Establishmentarian and career politician who thirty years before was as poor as the proverbial church mouse enabled reflective observers to see where rhetoric leaves off and substance begins in the thinking of the Establishment. The energy devoted to putting together from scratch and sheltering these properties should be some guide to personal motivation. What was disclosed bore none of the earmarks of a part-time hobby.
What is even more strange is that even as president Mr. Johnson has continued large- scale land and cattle purchases through agents, paralleling value-bringing state highway and bridge-building projects, according to the New York Times in an extensive report of December 26, 1966 (23:2-3). This report of total holdings more recently of 14,000 acres in five separate ranches led Washington wits to say that Mr. Johnson has been the biggest real estate operator as president of the United States since President Jefferson's "Louisiana Purchase. "
Despite his single-handed involvement of the United States in a big Asiatic land war, long held by the Chiefs of Staff as something to be avoided at all costs, Mr. Johnson is nevertheless hailed by many as the architect of "The Great Society," an apparition that is due to materialize no doubt at about the same time as grass-roots communism appears in Russia and the Soviet state "withers away. " just how much stock one should take in the Great Society fantasy was suggested at the annual get-together of the American Political Science Association in 1965, as reported by the New York Times:
Although a high proportion of them unquestionably voted for Mr. Johnson last fall, the comments of the political scientists indicated a shocking skepticism about Washington's earnest belief that this President has introduced--through his Great Society programs, his style of vigorous personal leadership and his invocation of the virtues of one "great big party"--a dramatic new element in American politics.
Nelson Polsby of Wesleyan University captured the prevailing view when he remarked:
"There's nothing new about all this. All you really have is a swollen Congressional majority, that Barry Goldwater handed the Democrats, passing programs that have been kicking around since New Deal and Fair Deal days. "
A colleague from Wesleyan, Clement E. Vose, compounded the heresy, saying that the Johnson record "is not one of innovation, but of ratification of ideas that have been germinating since the time of Henry Wallace. " 56
So much for "The Great Society. "
Other Political Horatio Algers
Before closing the books on the Horatio Algers in politics, some further nuggets from the valuable Herald Tribune series, Put together by ace reporter Dom Bonafede, should be exhibited:
"Civic participation" by applicants is one of the yardsticks used by the Federal Communications Commission in granting TV licenses, and being a congressman is interpreted as "civic participation" given weight in licensing--a doctrine that Democratic Senator William J. Proxmire of Wisconsin called "an amazing proposition. " 57
Representative William E. Miller, Republican candidate for vice president in 1964, was on the payroll of the Lockport Felt Company while in Congress, where he had
"openly promoted legislation favorable to the company on the floor. " He was made a vice president of the company two weeks after leaving Congress. 58
Senators Spessard Holland and George Smathers of Florida and B. Everett Jordan and Samuel J. Ervin, Jr. , of North Carolina were co-sponsors of a bill in which the Florida Power and Light Company was "the prime mover" to exempt from federal regulation private utilities not directly linked with outof-state transmission networks. 59
Until he recently sold the bulk of his holdings, Sen. Warren G. Magnuson, D. , Wash. , the Commerce Committee chairman, was part owner of a Seattle broadcasting station. One of the committee's functions is to oversee operations of the FCC.
Sen. John L. McClellan, D. , Ark. , the famed rackets-buster, is chairman of the subcommittee investigating the Federal banking system, even though he is a bank director in private life. Another subcommittee member, Sen. Sam J. Ervin, D. , N. C. , also holds a bank directorship.
Rep. William C. Cramer, R. , Fla. , spoke against the Administration's war [sic! ] on poverty almost from the program's inception. But his protests appear to have been muted ever since a laundry service he heads in St. Petersburg was awarded a contract with Women's job Corps. 60
Although the Corrupt Practices Act of 1925 requires congressmen to report campaign contributions and expenditures, limiting what can be spent to $5,000 for representatives and $25,000 for senators, large numbers of members of both Houses report "none" on the required forms after each election. 61
Yet carloads of money are nevertheless spent, or at least collected, in congressional campaigns. Only $18. 5 million was formally reported as collected for the 1962 "off year" campaigns, but an expertly estimated $100 million was collected. 62
Political money is really tossed about in a large way.
"Newly elected Rep. Richard L. Ottinger, D. , N. Y. , a multi-millionaire in private life, spent almost $200,000 through 34 committees to win his seat. Yet, his campaign report lists expenditures of $4,500 and no contributions. " 63
Although there are criminal penalties prescribed for negligent failure to file a report or to file a false report, there has never been a prosecution under the Act of 1925.
"Ingenious methods of raising campaign funds are developed. . . . Card games are held in which a portion of the pot from each hand is set aside for a campaign committee. For many years, Rep. Michael J. Kirwan, of Ohio, House Democratic Campaign Committee Chairman, staged a St. Patrick's Day party for the purpose of soliciting campaign funds. " 64
Cocktail parties are a standard fixture where lobbyists are panhandled for handouts to support democracy. One lobbyist told the Herald Tribune that it usually cost him $100 for a single drink "and a "cold shrimp on a toothpick," which was perhaps cheap.
A generally favored swindle is to run $100- to $1,000-a-plate testimonial dinners, production cost about $10 apiece, and to send twenty-five to a hundred tickets to various corporate people, who generally grab them like manna and distribute them to the office help. If the corporate boys fail to remit they suspect an undeserved demerit may be entered against their names in some little black book.
While a direct gift of money in excess of $3,000, except (as the courts have percipiently ruled) expensive presents to a lady friend, are subject to tax, a gift in recognition of "public service' is not so taxable. Although such gifts are not lavished on low-paid scientists, artists, military officers and profound cogitators, who may be
supposed to have rendered some public service, they are rife in the case of officials, especially congressmen. It is not necessary to pass them money in some back alley. What is done is to stage a glittering public affair, with hundreds of well-heeled customers present, and to present the modest recipient with a large certified check as the cameras flash the scene for posterity. What results are photographs reminiscent of Renaissance paintings titled "Adoration of the Infanta. " Diners leave with the vague semi-alcoholic feeling that they have participated in a religious ceremony, have at least paid homage to a glorious Republic once sadly betrayed by wicked, wicked, wicked Benedict Arnold.
Lest any strait-laced, dyspeptic methodologist charge that I am drawing my data from only two sources which, although highly orthodox, could be wrong or wrong-headed, let the future historian know that among many other sources on congressional skulduggery there are the nationally syndicated Washington columns of Drew Pearson, a practitioner of the journalistic craft for more than forty years.
Not only do we encounter many members of the cast we already are familiar with in the Pearson columns but a host of new names ooze into view week after week.
"Any pressure group that is rich and powerful enough can find a champion in Everett Dirksen," said Pearson. "It is his conviction that the special interests are entitled to a voice in the Senate. His office has been headquarters for almost every major group--the drug industry, gas and oil combine, food packagers, etc. --that has had a legislative problem.
"To no one's particular surprise, Dirksen's law firm in faraway Peoria, Ill. , has collected retainers from many a giant corporation whose interests the Senator has served in Washington. " 65
A few other nuggets from the Pearson columns--the nuggets alone would fill a book-- are as follows:
Representative William H. Harsha, Jr. , Republican of Ohio, has been a strong opponent of the Federal Mass Transportation Act, designed to develop rail and commuter services for clogged cities. His law firm represents the Greyhound Bus Lines. The congressman favors limiting imports of residual fuel oil.
