Part 4 of Land and Loot

History of Northwestern Mutual Life and its Creators

Who exactly has been involved in the Northwestern Mutual Life Insurance Co.?   

There is more than one version of its history.  According to Hoover’s Handbook of American Business, 1993, John Johnston (at age 75), along with 36 leading Wisconsin citizens, founded Mutual Life Insurance Co. in 1857, and it became Northwestern Mutual Life Insurance Co. in 1865. 

According to Anton Chaitkin, the company was founded in 1858 by Henry L. Palmer, who was its president from 1874 to 1908.  During those years Palmer was also the Grand Commander of the Scottish Rite, Northern Jurisdiction.[1]  Chaitkin says that “[Alexander] Mitchell had been sent to Wisconsin from Britain by a Scottish investment trust which owned the Northwestern Mutual Fire Insurance Company, of which Mitchell became the president.  By the 1870s Mitchell had used his insurance company, allied to Palmer’s, as a 'bank' to consolidate Wisconsin’s railroads and control all of the state’s grain silos.”  Mitchell owned all the railroads in Wisconsin at that time.[2]

How did this “bank” work?  Historically, there had been a national bank created during George Washington’s administration, under the supervision of Alexander Hamilton.  It had been re-established in Philadelphia in 1816, after Hamilton’s death at the hand of Aaron Burr, and placed under management of Nicolas Biddle.  The bank had a monopoly on issuance of bank notes in order to balance the nation’s need for credit against its need for a stable currency.  This bank was abolished by Andrew Jackson, who placed U.S. government deposits into a number of “pet banks,” allowing speculation into risky ventures such as western real estate and railroads to proceed unabated—and leading to the Panic of 1837.

During the post-Jacksonian era, when there was no national monetary currency, a group of incorporators could establish a bank in the Wisconsin Territory by obtaining a charter from the territory, approval from Congress, and raising a small amount of capital in the form of gold, silver and notes of other banks.  Then the bank could issue its own bank notes based on those assets and lend it out at interest.  If the bank achieved a measure of confidence in repaying the notes on presentment, the notes would circulate in the economy just as money.  If more notes were returned for payment than the bank had on deposit, the bank could call the notes due.  During economic instability, a prudent bank would be more cautious in issuing credit and thus limit the monetary supply.

In 1837 three Wisconsin charters were approved by Congress, the stock in two of which charters was controlled by the following: 

1. Henry T. Stringham of Detroit; 
2. Morgan Martin; 
3. John A. Welles (cashier of the Farmers and Mechanics Bank of Detroit, one of that city’s two pet banks); 
4. James D. Doty; and 
5. three other Michigan bankers.   

Stringham traveled to New York and Philadelphia in November 1837 attempting to sell the charters of the Bank of Wisconsin and the Bank of Mineral Point—both of which were suffering from the Panic of 1837—to Nicolas Biddle, who was not interested. 

Alice E. Smith reported the banks’ outcome in Volume I of The History of Wisconsin:  From Exploration to Statehood:

Some months later still another opportunity to escape the burden of debt and reach safety appeared; George Smith of Chicago expressed interest in the two Wisconsin charters.  The Scot Smith was agent for a group of his countrymen who had set up the Illinois Investment Company in the American city.  Welles, with whom Smith conferred in Detroit, was wildly enthusiastic over the prospect.  Smith and his associates Patrick Strachan and William D. Scott were, he declared, “shrewd, safe, and money making men—close managers.”  They would connect the banks with an insurance company in Chicago, establish agencies in New York and St. Louis, take perhaps three-fourths of the stock of the two Wisconsin banks, and manage the business—and, he concluded, “no doubt realize for us all of the golden day dreams in which we have indulged.”

Two years were taken up by an investigation of the legislature into the operations of another of Stringham’s banks in Green Bay.  Fraud was found to exist, and by late 1839, the depression brought on the failure of other banks.  The Bank of Mineral Point, however, somehow continued to operate—which can only be surmised to be due to the fact that it was located in a mining community with a commodity that enabled its borrowers to repay their loans and to the fact that the U.S. Attorney General ruled that the U.S. Treasury had no authority to inspect banks of the territory.

Amidst this turmoil, the legislature issued a charter to the Wisconsin Marine and Fire Insurance Company for 20 years in May 1839, with power to insure ships and buildings, receive deposits, make loans, purchase and receive stock, mortgages and real estate.  Almost all the stock was purchased by George Smith, and the first board of directors included Hans Crocker and William Brown, of Milwaukee, and Patrick Strachan, William D. Scott and George Smith of Chicago.  According to Alice Smith, since Smith arrived in 1834 from Scotland he had been using Scottish capital to make speculative land purchases of village lots in Chicago, Milwaukee and port settlements along the lake front, and on farm loans on both sides of the Illinois-Wisconsin border.

Strachan and Scott, whose names appeared among the five original directors, had been transferred from Chicago to New York City, where for the next twenty years they operated as brokers, commission merchants, and bankers.  Other of Smith’s countrymen took up location in Buffalo and rising cities of the present Midwest—St. Louis, Galena, Cincinnati, Detroit.  At these centers they established commission houses dealing in produce to be shipped to market, besides turning their hands to miscellaneous enterprises in response to local needs.  Although they probably operated independently, they were loosely affiliated with Smith and, together with his agents Strachan and Scott in New York, formed a huge network of co-operating agencies.  Smith himself remained in Chicago, and directed his expanding commercial empire from his office in the heart of the city.  Some acceptable medium of exchange was needed, and to supply this want, the Wisconsin Marine and Fire Insurance Company was created....

During the summer of 1839 shares in the Wisconsin Marine and Fire Insurance Company were advertised in Aberdeen, Scotland, at $25 a share, and by the end of the year 2,425 shares had been sold, virtually all of them Scottish owned.

Very little about these or other operations of the uncommunicative George Smith was known in Chicago. The insurance firm that had been quietly established in Milwaukee during the summer of 1839 was placed under the management of Alexander Mitchell, who was made secretary of the company at the annual salary of $1,100.  The 22-year-old farmer’s son, who had had two years’ apprenticeship under the law firm of Adam and Anderson in Aberdeenshire, assumed the varied responsibilities of a financial concern on the Wisconsin frontier.  He ran a substantial real estate business, sold insurance on vessels and on land property, negotiated loans, advanced money on produce being shipped to market, and furnished exchange service with the East and the British Isles.  On all these services the company exacted charges, which in time netted it substantial amounts.  But it was around one further service, accepting money on deposit and lending certificates of deposit, that the business revolved, and which actually became the basis of the Milwaukee and all the allied George Smith operations.

To evidence deposits received, the company issued certificates of deposit, but records reflect that the amount of CD’s issued more than doubled every year until 1846.  The reason for this increase in a city with a limited population seems to be that the notes were backed by funds raised by “subscription in Scotland.  Not only Mitchell, but also Smith and his affiliates in the West and in Buffalo and New York paid out and accepted the notes, thereby increasing their circulation and familiarizing the new West with what became known as ‘George Smith’s Money.’”[3]

The use was so widespread that the Wisconsin legislature began an investigation in 1843, which resulted in revoking the charter early in 1846, primarily because of the fact that the stockholders were foreigners “not amenable to the laws of the United States,” who could recall their officers and renege on the notes.  Nevertheless, the company continued its business unimpeded, having been advised that the only way to stop their operations was through a quo warranto proceeding.  Smith allegedly bought up most of the Scottish investors’ subscriptions and became one of Chicago’s wealthiest men.  Mitchell, joined by David Ferguson, another Scot from Aberdeen, continued to run the company in Milwaukee.  Between 1846 and 1852 the CD issues jumped from $95,000 to over $1 million.[4]

It is possible that Houston, Texas acquired its own affiliate when Strachan Shipping Company, established by a Captain Frank Garden Strachan and Captain George P. Walker in October 1886 in Savannah, Georgia,[5] set up a branch in Houston.  Houston's Strachan was a Scot from Banffshire who was involved in the London-China trade and had traveled from Scotland to New York in 1886 to discuss business opportunities in the South with Spence and Company.  Captain Walker was in the Chatham Artillery.  Strachan Shipping does not own ships, but acts as shipping agent and provides stevedores for persons wanting to ship cargoes (exactly as Smith’s agents from the same area of Scotland had done).

Another emigrant from Banff, Scotland at about the same time was a man named George Stephen, who became a director of the Bank of Montreal in 1871 and its president in 1876.  Stephen was a cousin of Donald A. Smith, resident governor of Hudson’s Bay Company, who, with railroad tycoon James J. Hill, obtained financing from George Stephen in order to buy out the Dutch bondholders of the bankrupt St. Paul & Pacific Railroad in 1878 that would later become the Canadian Pacific.  This information is contained in a biography of James J. Hill, published in 1955,[6] in which the author states:

Just where Stephen got the money is still something of a mystery.  It was even charged that he “borrowed” it from the Bank of Montreal, but this was never proved, and it is well to say only that he produced the major portion of the purchase price, the sale was made, and the properties and land-grant agreement of the St. Paul & Pacific Railroad were presently taken over by the newly incorporated St. Paul, Minneapolis & Manitoba Railroad Company.  The incorporators were George Stephen, Donald A. Smith (later Lord Strathcona--founder of British Petroleum), Norman W. Kittson, James J. Hill, and John S. Barnes, the last representing the New York firm of J.S. Kennedy & Company, which represented, after a fashion, the Dutch bondholders.[7]  Hill was to manage the railroad.

Another account is found in a history of Canada, which says that in 1876 Stephen went to Chicago with fellow banker R.B. Angus to attend legal proceedings involving the failure of a steel company in which the Bank of Montreal was an investor.  During a break in the litigation, the bankers went to St. Paul to see James J. Hill, and somehow all parties who were to participate in forming the International & Great Northern Railroad Co. made contact:

In brief, [Jesse P.] Farley [of Dubuque, Iowa], the official receiver in bankruptcy, and Kennedy, the New York agent of the Dutch bondholders, were taken into the picture.  Farley, in fact, later brought suit against Smith and his associates for a share of the loot, which he claimed had been promised him for his help in persuading the Dutch to sell out; but the suit was thrown out of court because of Farley’s fiduciary position.  Meanwhile, Stephen made a trip to Holland to meet the Dutch bondholders.  The final result was that the Dutch sold out an equity of some $28,000,000 in principal and interest for $6,000,000 while agreeing to wait for their money until the tangle was resolved.

The partners (Stephen, Smith, Kittson, Angus, and Kennedy) signed a joint note for the amount to the Canadian Bank, of which Smith and Stephen were directors, and included an extra $780,000 for contingencies.  Money still had to be found to build enough road to secure the valuable land grants.  The four Canadians put up $300,000, Hill and Kittson flinging into the pot everything they owned...[8]

It was also in 1876 that Donald A. Smith made a trip to London, where his superiors in the Hudson’s Bay Co. made him chief commissioner for the company in Canada, “a position that gave him power to act in most if not all matters without the approval of the distant Board of Governors in London.”  With that power he began to encourage the immigration of Scots to Canada, as well as America, to land which his investors would acquire through land grants in exchange for building railroads.  In 1879 the partners in the new company divided up $15 million of stock in the St. Paul, Minneapolis and Manitoba Railroad, while selling $16 million in bonds to pay for the track. 

By 1880 the old St. Paul & Pacific company, now defunct, was reincorporated into the Canadian Pacific with George Stephen as president, Duncan McIntyre as vice-president and Richard Angus as general manager.  James J. Hill, William Kennedy and Norman Kittson (who later "owned" what became the Burlington and Missouri Pacific railroads) also had a share.  Though not an officer, Donald Smith owned 5,000 shares.  Other shareholders included the banking firms of Morton, Rose & Co., and Morton, Bliss & Co.; Kohn, Reinach & Co. of Frankfort (which included the SGI of France).[9] 

These investment bankers were all fronts for the Rothschilds and Warburgs who, in 1913, consolidated all their power in the United States by passage of the Internal Revenue Act and Federal Reserve Act.  They put the seal on the consolidation in 1932 with the acquisition of the Washington Post by Lazard Freres/Rothschild lackey, Eugene Meyer.

But back in the 1880s, when the Canadian railroad ran into difficulties in construction, James J. Hill and Kennedy withdrew from the company. The syndicate headed by George Stephen, who controlled the Bank of Montreal, kept receiving more and more stock at no cost, and issuing more bonds sold to the public, secured by the land grants, to pay the costs. In 1882 $30 million in stock was turned over to a New York firm, but no more stock could be sold the next year because of a recession, and the New York creditors pressed for payment.  Somehow a bill was passed for the Canadian government to make a loan to the railroad to pay off the creditors. 

By the next year, however, they again needed money.  They raised a small loan in Edinburgh.  Coincidentally, when that money was almost gone, there was an Indian uprising which was quelled because the government was able to send troops to aid the settlers because the railroad was in place.  As a result, in 1885 the $35 million of unissued stock for which there were no buyers was canceled, replaced by 50-year first mortgage 4% bonds, and the government forgave the previous mortgage, taking new bonds in place of the old.  Stephen took the remaining bonds to England and sold all of them to Baring Brothers’ Lord Revelstoke.[10]

When the railroad was completed in 1885, Baring Brothers bought the bonds held by the Canadian government for $20 million, and the railroad company paid the balance of the loan to the government by returning 6 million acres of land.  George Stephen continued to be a large investor in the railroads, but also in related industries such as steel and tank cars.  The first through train took 137 hours to cross the continent.  In 1894, after Great Britain “woke up to realize the value of a quick route to the Orient,” William Cornelius Van Horne, who later became president of the Canadian Pacific, was appointed Honorary Knight Commander of the Order of St. Michael and St. George.[11]  In 1897, at the age of 76, Donald Smith became Canada’s new high commissioner in London and was raised to the peerage to become Lord Strathcona.   Charles Stephen became Lord Mount Stephen. Two years later the Boer War began, at the height of the British Empire, and Lord Strathcona raised funds to send a special regiment of hand-picked Canadians to South Africa.

It was Lord Strathcona and the British Crown who sponsored Samuel Bronfman’s “rise to wealth in the bootlegging rackets” in the 1920s.[12]  Lord Strathcona was also the founder and first chairman of the Anglo-Persian Oil Co. formed in 1909 to operate the concession given to William Knox D'Arcy by the Shah of Persia in 1901 on which oil had been discovered by Burmah Oil Co., which owned  97% owned of the stock with 3% owned by Strathcona individually. Another of the founding directors was Sir Charles Greenway, who became managing director in 1910 and the second chairman in 1914, after Strathcona.  In 1914 51% of the stock was sold to the British Government which injected 2 million pounds into the company for the war effort.  Greenway retired in March 1927, and in 1935 the company became Anglo-Iranian Oil.  It became involved in petrochemicals and entered an agreement with the Distillers Company in 1947 (forming a joint company which later became British Hydrocarbon Chemicals).  In 1951 Iran expropriated the foreign oil company, precipitating three years of negotiations, resulting in the resumption of the Iranian oil development by a consortium of oil companies.  Anglo-Iranian then became British Petroleum and had a 40% share in the consortium.  The company was "privatised" in 1987 by Margaret Thatcher.[13]

In October 1879 the International & Great Northern Railroad gave a mortgage covering the assets of its railroad in Texas to John S. Kennedy and Samuel Sloan, as Trustees, in New York to secure the holders bonds issued for expansion of Hill’s railroad into Texas [8/765 Mortgage Records in Harris County].  Thomas M. Pearsall was president and Jacob Wetmore was assistant secretary who signed the mortgage in New York.

Once Canada’s railroads spanned from east to west, Hill concentrated on moving south into America, through Minnesota along Lake Superior, and he organized the Northern Steamship Company to carry products across the Great Lakes.  As a friend of John Murray Forbes of Boston, who headed the Chicago, Burlington & Quincy, Hill worked out a deal that allowed his lines to carry freight and passengers to Chicago.  Fifteen years later (1901) Hill bought the entire Burlington system.[14] 

In 1889 he organized the Great Northern Railway Company, which took over operation of the St. Paul, Minneapolis & Manitoba, and several years later put his roads under control of a holding company, Northern Securities Corporation.  Hill was chairman, and ten of the 15 board members were connected to Hill and J.P. Morgan.  This company was opposed by Theodore Roosevelt who called it a new trust and ordered prosecution under the Sherman Act. 

 

As a result, in 1904 the holding company was dissolved, and “Harriman forces received a paper profit of some $58 million.”[15]  Harriman died in 1909 and Hill in 1916, following decades of hostile rivalry.  Why did this rivalry exist?  Both J.P. Morgan and Harriman have acted as investor/ nominees for certain members of the British royal family.  Do they represent different factions which are themselves at odds with each other?  If not, why the pretense that they are competing?

NOTES:

[1] Anton Chaitkin, Treason in America:  From Aaron Burr to Averell Harriman (New York:  New Benjamin Franklin House, 1984), pp. 330-31.

[2] The story of this monopoly is an interesting one which begins after the reorganization of the Milwaukee & St. Paul railroad in 1861.  The bondholder/creditors formed an association through which they owned the common stock of the corporation.  In two years the value had increased from 12 cents to 90. [State Historical Society of Wisconsin Publications, pp. 291-96.].  Its chief rival, Milwaukee & Prairie du Chien (French for Prairie Dog), was the subject of great stock speculation in 1866 when the brokerage firm owned by Henry Stimson (a Skull and Bones member and Yale graduate who, as Secretary of War, recruited many other members of Skull and Bones to serve in the Administration of Franklin Roosevelt) quietly bought up all of Prairie Dog's common stock at low prices and loaned some to unsuspecting neighbors.  Then he called in the loans, but since he had cornered the market, the borrowers could not find any stock to buy, causing the price to quadruple in 10 days.  Stimson, however, had overlooked a clause in the charter which prohibited owners of common stock from voting for directors, so he had no control.  He remedied this by sneaking through a bill in the Wisconsin Assembly at the end of the session.  Then in April 1866 he sold his holdings to Milwaukee & St. Paul in exchange for almost 30,000 shares of preferred stock and 25% more of common.  Mitchell also obtained control over the McGregor & Western and the West Wisconsin.  When he returned to Scotland in 1868, he bought controlling interest in the Racine & Mississippi from the City Bank of Glasgow--thus giving him control of every through route from the shore of Lake Michigan to the Mississippi River.  By that time, the only other significant routes in the state were owned by the Chicago & Northwestern, which had similarly absorbed all its rivals.  All competition ceased for two years when the two railroads elected interlocking directorates, and by 1870 the consolidation was complete when Alexander Mitchell became president of both railroads.

[3] State Historical Society of Wisconsin Publications, p. 296.

[4] State Historical Society of Wisconsin Publications, p. 306.

[5] Houston:  A Profile of Its Business, Industry and Port.

[6] Stewart H. Holbrook, James J. Hill:  A Great Life in Brief (New York:  Alfred A. Knopf, 1955), pp. 49-50.

[7] J.S. Kennedy & Co. was correspondent of the Scottish American Investment Trust, which had been organized by Robert Fleming of Dundee in the 1870s.  The founder of Barings was originally from Bremen, German, and had immigrated to England in 1717.  The partners of the first Baring firm in New York—Baring, Magoun & Co.—included Alexander Baring who formerly worked for Kennedy, Tod & Co., which held the mortgage on the Atchison, Topeka and Santa Fe Railroadin Houston.

[8] W. G. Hardy, p. 275.

[9] Hardy,  p. 316.

[10] Hardy, pp. 364-65.

[11] Holbrook, p. 81.

[12] Anton Chaitkin, EIR, April 26, 1996, p. 43

[13] This information was obtained from http://www.bp.com

[14] Holbrook, p. 109.

[15] Holbrook, p. 144.

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Seven-night-a-week Partygoers

Yet another Watergate revision posted here for what it's worth--basically only basic information about John Dean's life. "Shepard asserts that once Dean, the president’s counsel, decided to aid the investigation, he became the villain, breaching attorney-client privilege and releasing government secrets.... Shepard is thorough in his research and passionate in his viewpoints but has no compunction about imagining events and motivations when they are not documented and is reluctant to provide facts and let readers come to their own conclusions. Still, Shepard brings back vivid memories of an acrimonious time and raises some interesting questions," says reviewer Vanessa Bush.

Troublesome Facts About John Dean

November 11, 2009 by Geoff Shepard |

You will read his books and search the Internet in vain if you are looking for any detail in John Dean’s rise to power.  One might believe that his story was one of a natural progression from Wooster College to Georgetown Law School to the House Judiciary Committee, the Department of Justice and then to the Nixon White House—but this would overlook the astonishing number of fits and restarts in his early career:

• Dean grew up in Marion, Ohio and first attended Eber Baker High School—switching to Staunton Military Academy in Virginia early in his Sophomore year. It is not clear what happened at Baker High, but in that era you got sent away to military school only if you came from a military family or there was trouble on the home front.

• He graduated from Staunton in 1957, but did not go into the military.  Instead, he enrolled at Colgate University in New York, intending to major in English.  Things did not go well for him at Colgate and he again switched schools in the middle of his Sophomore Year—returning to Ohio to attend tiny Wooster College, where his activities centered on the Pre-Law Club.
• In his Senior Year, Dean married Karla Hennings, daughter of Senator Thomas Hennings of Missouri.  He graduated in the lower third of his class in 1961 (144/204), but did not go to law school.  Instead, he enrolled in American University in Washington, DC, doing graduate work in political science.

  

  Dean's father-in-law, Sen. Hennings

• In 1962, he dropped out of American University to enroll in Georgetown Law School, from which he graduated in 1965.
• His first (and only) experience in private practice was with the small communications law firm of Welsh & Morgan, who specialized in obtaining very lucrative FCC broadcast licenses.  Dean was fired in six months ‘for unethical conduct’:  Apparently, while working on a license application for a firm client, he also prepared an application on behalf of his mother-in-law in St. Louis.  It is not clear from the record whether the Dean application was in direct competition with the one he was working on for the firm or just one that would have reduced the scarce number of such licenses.  What is clear is that Dean quickly ascertained the lucrative nature of what he was working on for the firm and sought to take advantage of that knowledge for his own family.
• Dean quickly became Minority Counsel to the House Judiciary Committee, courtesy of Rep. Bill McCullough of Ohio—and Wooster College alum.  For reasons that remain unclear, Dean ‘was terminated effective August 13, 1967’ and remained unemployed for the next six months.
• In February of 1968, Dean became Associate Director of the Commission to Reform the Federal Criminal Laws, named the Brown Commission after its chairman, Edmund G (Pat) Brown ( who had defeated Richard Nixon in 1962 to become California’s Governor).  Dean described his duties as administrative in nature, but also dealing with conflict of laws and death penalty statutes.  While on the Commission staff, Dean obtained a letter from his previous law firm that qualified his termination, saying it  ‘resulted from a basic disagreement over law firm policies regarding the nature and scope of an associate’s activities’—but the letter notably did not rescind the prior characterization of being terminated for unethical conduct.

It is from this highly questionable base of experience and expertise that Dean became Associate Deputy Attorney General shortly after Nixon was inaugurated in January of 1969.  It was there that he supervised the work of the Legislative and Legal Section of the Department of Justice.  Six months into his new job, Dean separated from his wife, leaving her with their two year old son.

Dean moved to the White House in July of 1970, replacing John D. Ehrlichman as Nixon’s Counsel.  How could someone who started and then dropped out of his first high school, college and graduate school, and who was terminated from his first two jobs end up on the White House staff? It is as story of a classic bureaucratic move gone bad:  Ehrlichman had roomed at UCLA with Bob Haldeman before joining to Stanford Law School and practicing law in Seattle. He had been a senior member of Nixon’s 1968 campaign staff that was run by Haldeman. With Haldeman as Nixon’s Chief of Staff and Ehrlichman as his lawyer, they soon became known as the Berlin Wall. After eighteen months, Ehrlichman become Assistant to the President for Domestic Affairs, taking all his top staff to the newly formed Domestic Council.

The hiring of John Dean to replace Ehrlichman—essentially replacing a power figure with a demonstrably less senior successor—was done to assure the Counsel’s office did not again become a power base. Dean has said ‘the title was the best part of the job’, since all he really was ‘just a messenger boy between Haldeman and Attorney General John Mitchell. He told his sentencing officer that ‘His principle [sic] duty was of evaluating and handling security clearances and clemency petitions in addition to administrative duties.’ Amazingly, in retrospect the FBI full field investigation that would have preceded any appointment to the White House staff was waived in Dean’s case —since he would have been the one to review it.

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Time Magazine

Jun. 25, 1973

In 1969 Richard Kleindienst, who was then Deputy Attorney General, hired Dean as the Justice Department's liaison with Congress. As such, he was in charge of lobbying efforts for the ill-fated nominations of Clement Haynsworth and G. Harrold Carswell to the Supreme Court. His loyalty to the Administration so impressed senior White House staffers that he was hired to succeed John Ehrlichman as presidential counsel in 1970. In that job, Dean appeared to be a man of rigid principle, even when he was secretly helping to cover up Watergate. Once a junior staffer asked whether he could accept a $200 honorarium for a speech. "No, sir," Dean declared. What if he turned the money over to his church? "No," Dean repeated. "Nobody on the White House staff is going to accept money for anything."

Undoubtedly, Dean's career was furthered by his good looks and his command of the social graces. Detractors also suggest he was helped along by his first marriage—to Karla Hennings, the daughter of the late Senator Thomas C. Hennings of Missouri. She bore his son John IV, now 5, but the marriage ended in divorce three years ago.

Last fall [1972] Dean married Maureen, a former insurance saleswoman from Los Angeles.

From the outset, John and Mo Dean maintained a low social profile in their $70,000 brick town house on Quay Street in Alexandria's affluent Old Town section, just 200 yards from the Potomac. Now, of course, the profile is lower still. Occasionally, they eat out with the Goldwaters, who live across the street. One recent Saturday, another neighbor, Ervin Committee Member Lowell Weicker, dropped in for beer and pretzels. Before the worst of Watergate, the Deans played tennis and golf, swam and sailed their 18-ft. boat. Nattily dressed in broad-lapel suits and wide ties, Dean used to drive to work a purple Porsche 911 as highly polished as his shoes. Now he and Mo stay home.

Although hidden from public view by drawn shades, he still looks tanned. The tan is inexplicable; he told a recent visitor: "I haven't been in the sun for days. I would call it a bourbon pallor; except I haven't had a drink for days either." For the most part, in these last weeks leading up to his climactic appearance before the Ervin committee, he has worked in his basement, putting his letters and other documents in order, preparing for his ordeal.

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JULY 13, 1964

By GORDON BROWN

Associated Press Writer

SAN FRANCISCO (AP) —North Carolina delegates to the Republican National Convention were told Sunday the successful Goldwater drive for delegate votes began in the Tar Heel state. Dick Kleindienst, GOP candidate for governor in Sen. Barry Goldwater's home state of Arizona, thanked North Carolinians for their early support of Goldwater in a brief visit to a caucus of the 28 delegates. He said that if there was a place that could be said to be a beginning of Goldwater's successful campaign, it was last Feb. 15 when the Fifth North Carolina District pledged  delegates to Goldwater.

Kleindienst, a Goldwater manager, predicted the senator's nomination on the first ballot and called Him "a truly national candidate." At its caucus, the North Carolina group also heard from close relatives of the two major candidates — Barry Goldwater Jr., representing his father, and Mrs. Marian Isaacs, representing her brother, Gov. William Scranton of Pennsylvania.

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JUNE 4, 1971

 NEW YORK (UPI) - The American Civil Liberties Union, (ACLU), in response to criticism by Deputy Atty. General Richard G. Kleindienst, reiterated its claims yesterday that most of the mass arrests during Washington's May Day antiwar demonstrations were illegal. In addition, the ACLU office in New York said the persons arrested were detained illegally, the physical facilities in which they were held were "chosen to maximize pain and suffering" and arrest forms "were deliberately falsified in a retroactive attempt to justify the arrests."

Kleindienst, the No. 2 man in the Justice Department, said Thursday the arrests were legal constitutional and essential to control a "vicious and wanton mob attack on Washington."

"In apparent frustration over its inability to win other wars, the administration has inflated the May Day disruptions into a threat to the national survival which it could crush through a display of overwhelming force," the ACLU said.

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March 9, 1972

 WASHINGTON (AP) — Columnist Jack Anderson told Senate investigators today that "Richard G. Kleindienst is unfit to be attorney general because he is not a " man who understands the law and respects the truth."

Despite his disclaimers, acting Atty. Gen. Kleindienst played a major role in settlement of three antitrust suits against the International Telephone & Telegraph Corp. Anderson testified to the Judiciary Committee as a result of columns written by Anderson last week the committee is taking new testimony relating to Kieindienst's nomination to be attorney general. In the same newspaper is this:

WASHINGTON — Rep. Barry Goldwater Jr., R-Calif., is engaged to marry 25-year-old Susan Lee Gherman, a business major at the University of California at Los Angeles. The 33-year-old congressman, whose office announced the engagement Wednesday, is the son of Sen. Barry Goldwater. R-Ariz. Miss Gherman is the daughter of Dr. and Mrs. Mort [Emmanuel Motimer] Gherman of Newport Beach, Calif. No wedding date has been set.

Susan's father, a lawyer and psychiatrist, lived in Newport Beach, California, but had been born in Winnepeg, Canada and educated as a physician there before his emigration in about 1936. From 1954-56 while living in Chicago, he was a Colonel in the Civil Air Patrol (see page 3). Susan Gherman had been engaged in 1967 to Harry Roger Drackett III of Cincinnati, Ohio, whose grandfather invented Windex. She attended Santa Monica City College after graduating from Katherine Gibbs School in New York. Shortly after the Newport Beach wedding on March 30, 1972 to Barry Goldwater, Jr. where 1,500 guests attended the Balboa Bay Club reception, the following appeared in the Desert Sun:

Father-In-Law Of Goldwater Faces Charges

SAN BERNARDINO (UPl)—The father-in-law of Rep. Barry Goldwater Jr., R-Calif. was charged Thursday with 10 counts of grand theft and 59 of false and misleading advertising in connection with real estate sales. The charges were brought against Dr. E. Mortimer Gherman, of Laguna [sic] Beach, Calif., father of the former Susan Lee Gherman, who married the young congressman less than two months ago. Goldwater is the son of Sen. Barry Goldwater, R-Ariz., the 1964 Republican presidential nominee. Charges against Gherman and two others, James Moreland and John A. Patterson, were filed by Deputy District Attorney Charles Wolfe, who said the accusations were related to sale of 128 cabin sites for $1.1 million at Big Bear Lake, a popular weekend resort for Los Angeles area residents. He said the state Department of Real Estate began an investigation because lot buyers complained that advertisements led them to believe utilities were available at the sites, and they weren’t.

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Most readers may not realize that when John Dean met his future wife, Maureen Kane Biner Owen (or perhaps it was Maureen Kane Owen Biner?), she had a good friend named Susan Gherman who married John's former roommate from Staunton Military Academy days, none other than the son of U.S. Senator Barry Goldwater. After Susan and Barry Jr. divorced, Susan married an older man named Marvin L. Warner, to whom she was married at the time the following story appeared in 1979, although the marriage would endure for less than one year:

Susan Goldwater more than meets one's eye

by MARIAN CHRISTY

June 10, 1979

Daily Herald Chicago, Illinois

WASHINGTON - When people talk about Susan Goldwater, which is often, it is in terms of her stunning looks. But there's much, much, more to the senator's former daughter-in-law than meets the eye. Statuesque Susan, who has a pilot's license and races cars, is transforming herself from a much-photographed, much-touted seven-night-a-week partygoer into a television performer.

She has her eyes set on the national scene and is carefully negotiating, through a New York agent, freelance television work via a network or syndication. Goldwater, 33, wants and is getting the best of both worlds.

On May 26 she married the American ambassador to Switzerland, 60-year-old millionaire Marvin Warner of Cincinnati and Miami.

Goldwater says Warner has given his blessings to her career ambitions. "We're giving each other room," she says. The remark Is revealing.

SUSAN GOLDWATER is the mother of Barry III, who's 4, and her no-fault divorce from Rep. Barry Goldwater Jr., R-Calif., became final May 16.

She comes from an affluent California family background. Her father, Mort Gherman, is a lawyer and psychiatrist. The family home is in Newport Beach, and Susan is used to the best of everything.
Lately she has been working for it.

Now she co-hosts "PM Magazine" on WDVM-TV, Washington, with a $40,000 plus-expenses salary. When she signed her three-year contract, she insisted on an option to quit, on short notice, if a network offered her a job. But she will leave the station, a CBS-TV affiliate, now that she has married Warner. She expects to be back on syndicated or network television in the fall. The root of her ambition goes deep: "I plan to make a go of this thing." she says. "By that I mean right to the top."

Goldwater sounds calculating, but television is a tough, cut-throat business where pretty faces and famous names are common.

IN A WAY, her third marriage will make her career pursuit easier, Warner has a private plane and plenty of household help. Susan Goldwater is just breaking into a highly competitive business where she sees her rivals as Phyllis George and Jane Pauley. Her new lifestyle will help.

What makes Susan Goldwater tick is her sheer gutsiness. Some call it nerve. Others call it aggressiveness. Her charm tempers her steel, and the combination is fascinating. You get the real clue to Goldwater's personality when she talks about driving the pace car, at 130 mph, at the Daytona 500. She talks about flirting with danger, maybe death.

"The cars are just inches away. One wrong move and..." The smile she smiles is sweet and out of context with her description of Russian roulette on wheels.

After the Goldwater marriage of five years had failed, Susan, with no television experience, showed up in Columbus, Ohio, hosting a nightly cable television show.

SUSAN GOLDWATER, astute social butterfly, slowly became Susan Goldwater, creditable television interviewer. "I know," she says, "that I've made a complete switch. I went from the party life to nothing — nothing but work."

That's not exactly true. Susan is very attractive and there was a string of serious admirers. Warner, though stationed in Switzerland, courted her with daily trans-oceanic telephone calls and once-a-month rendezvous in Washington, Switzerland and Palm Beach.

The difference in age — 27 years — doesn't bother her. She says they have an agreement not to "botch up" the relationship with silly lovers' quarrels. "Time is of the essence for us," she says seriously.

"There's no time for arguments or competition or games." She repeats his age, 60, for emphasis. "This understanding gives our relationship a special quality. It makes everything positive." She quibbles about the word love.

"I LIKE it better," she says firmly, "when a man tells me I'm fun to be with or that he likes me." The tone is somewhat poignant, the eyes sad. "The word, love, is such an empty word," she says. It's an open secret in Washington that, for a long time, Susan thought she and Barry would or could reconcile. It never happened.

Is she over that? Are the old wounds healed? Her answer is simple and frank. "I can talk to Barry now without mourning the relationship I feel should have been," she says.

"There is our son," she says. "I'm always thinking of our son."

There are Susan Goldwater detractors, particularly women in the television business who complain that the Goldwater name, which is known nationally, has opened doors. She's well aware of the criticism and points out that 400 tapes were reviewed by WDVM-TV before she landed the job.

"There are people out there who say, oh yes, Goldwater, the girl with the golden name." There is a certain I'11-show-them tone in her voice. Then: "The money you get in television is nice, but to me success Is much, much more than that. It's a feeling deep inside that you somehow emerge the victor." She sighs.

(c)  1979 Boston Globe Newspaper Co.

1979  Los Angeles Times Syndicate

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Pete Brewton

The Mafia, CIA and George Bush,

pp. 280 et seq.

Consider the first bank where [Fernando] Birbragher was caught: Great American Bank in Miami. At the time (1980 and 1981) Birbragher was laundering the cartel's drug money through Great American Bank, it was owned by Marvin Warner, an Alabama native whose businesses were based out of Cincinnati. Like Charles Keating, his fellow Cincinnatian, who also got caught in the savings-and-loan debacle, Warner is full of arrogance, bluster and hubris, a man who thought his political connections and influence mongering would save him, and when it didn't, carped bitterly about government interference.

Warner got his start building houses after World War II. In the late 1950s, he bought Home State Savings in Ohio and prospered, investing in race horses and professional sports teams [including the New York Yankees]. In 1977, his support of Democrats paid off when President Jimmy Carter appointed him U.S. Ambassador to Switzerland. During his absence overseas, Warner hired Donald E. Beazley, a Miami banker and former federal bank examiner, to run Great American.

Before Beazley joined Warner he had worked for a while for Guillermo Hernandez-Cartaya, according to author James Ring Adams in The Big Fix: Inside the S&L Scandal. CIA asset Hernandez-Cartaya had gotten involved with Warner's close associates at the fraud-infested E.S.M. Securities. In fact, E.S.M. files contained a note from Hernandez-Cartaya thanking an E.S.M. principal for his offer to help in the sale or purchase of Jefferson Savings and Loan in McAllen, Texas, from Lloyd Bentsen's family.

When Warner returned from Switzerland in 1979, he took Beazley's place at Great American Bank. Beazley then jumped to the presidency of the Nugan Hand Bank in Australia. That bank, the subject of a book by Jonathan Kwitny, The Crimes of Patriots, was crawling with ex-CIA (if there is such a thing as ex-CIA) and former high-ranking military officials, and was used in drug-money laundering, weapons transactions and the cheating of American investors, among other things. (Beazley was never charged with any wrongdoing at Nugan Hand.)

When Beazley was working for Great American Bank, he was approached by an individual on behalf of Nugan Hand, who wanted to buy a Great American subsidiary bank, the Second National Bank of Homestead, Florida, Kwitny reported. The deal eventually fell through, but there were allegations that Second National Bank had been connected to the late PAUL HELLIWELL, the China OSS veteran and CIA master-operative who practiced law in Miami and was one of the powers behind Castle Bank & Trust, the offshore tax haven bank used by the CIA and the mob to launder money.

While Beazley was chief executive officer of Nugan Hand, he took part in the attempted acquisition of a London bank. 4 One of his partners in the deal was Ricardo Chavez, a Cuban exile and CIA contract agent who was a member of the Edwin Wilson, Ted Shackley and Tom Clines group. In fact, Chavez was an officer in Wilson's Houston-based A.P.I. Distributors.

Despite all these relationships to CIA operatives, Beazley has denied any connections to American intelligence. 5

Marvin Warner in cuffs

After Beazley left Nugan Hand (when it disintegrated following the alleged suicide of one of the principals), he returned to Florida banking--first as president of Gulfstream Banks, and then as president of City National Bank of Miami. City National was owned by Alberto Duque, a Colombian whose father was a wealthy coffee magnate. The attorney for the bank was Stephen Arky, Marvin Warner's son-in-law....

Arky committed suicide in July 1985 after the E.S.M. Government Securities fraud scandal broke. The collapse of E.S.M. wrecked the Home State Savings of Arky's father-in-law, Warner, and led to Warner's conviction for fraud. After Arky's suicide, he was praised by his former boss at the Securities and Exchange Commission, where Arky worked after getting out of law school. "He was one of my real success stories," Stanley Sporkin, then general counsel to the CIA, told the Miami Herald. "He was one of my finest young men."6

4. Jonathan Kwitny, The Crimes of Patriots.

5. Ibid.

6. Miami Herald, July 24, 1985.