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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Who Was That White House Call Girl?

A must-read for those who want to understand Watergate

Now that Phil Stanford's book, White House Call Girl, is available for purchase, we repeat our tickler to give you a taste of the questions the author was looking to answer all those years ago--when John and Mo Dean were suing people right and left for attempting to disclose the real story. There were questions in Stanford's 1986 article, which appears below. Many books by insiders and interviews from outsiders later, we learn many of the answers to those questions in Stanford's book, White House Call Girl. 

Mr. and Mrs. Dean

What we don't get to the bottom of, unfortunately (in my opinion), is the role of the "Texans" in the whole sordid affair. If you want to learn more about who the Texans really were, you have to study Quixotic Joust and do some research of your own. We call this our real history; it's what you don't read in textbooks. Real historians are usually called conspiracy theorists.

Watergate Revisited

© 1986 by Phil Stanford

Columbia Journalism Review, March/April, 1986

When Jim Hougan's new Watergate book, Secret Agenda, was published last winter, it caused a brief but intense flurry of interest. Writing for the New York Times Book Review, Pulitzer Prize-winner J. Anthony Lukas faulted Hougan in several instances for jumping to what he considered unwarranted conclusions, particularly when it came to Hougan's theory that the real reason behind the Watergate burglary was a secret sex scandal. However, he also found that Hougan had presented some "valuable evidence."

"If even half of this is true," wrote Lucas - whose word carries particular weight in this instance because his own book on Watergate, Nightmare, is considered the definitive work on the subject - Secret Agenda will add an important new dimension to our understanding of Watergate.

"But," Lukas added, "it may be months before reporters can sort through this material, check Mr. Hougan's sources, and decide which of these revelations is solid gold, which dross."

Reviewing the book for the Washington Post Book World, Anthony Marro, himself an old Watergate hand and now managing editor of Newsday, criticized Hougan for mixing "diligent information gathering with questionable, even reckless, assumptions about motive and purpose." Nevertheless, he wrote, "Hougan has attacked the official record of Watergate with . . . considerable skill, pointing up scores of questions, flaws, contradictions, and holes."

"It likely will take some time for Hougan's reporting to be absorbed, cross-checked, challenged, and tested," Marro added, "and whether this proves to be an important book or simply a controversial one will depend on how well it survives the scrutiny that it is sure to receive."

Another review, by Robert Sherrill, appeared in the St. Petersburg (Fla.) Times. Sherrill, who has a reputation for being a hard-nosed investigative writer, found that Hougan "builds a compelling case even though some crucial parts, as he readily concedes, are based on circumstantial evidence."

"If nothing else," Sherrill concluded, Secret Agenda has raised enough questions to remind the press that no matter how conscientiously it tries to unravel scandalous riddles of government, it should wait a few years before boasting that the solution is complete" - and, like Lukas and Marro, he left no doubt that he expected the press to get to work.

That, of course, was more than a year ago - and to date, apparently, no one from any of the major news organizations has made an effort to test any of Hougan's findings. This seems odd, if only because the Watergate affair is one of the most important political and journalistic events of our time, and because, if Hougan is right, our knowledge of it is seriously flawed.

What Hougan presents in Secret Agenda is not so much a totally new version of Watergate as it is, to use Marro's words, "a significant new dimension and perspective." There is nothing in his account to suggest that Richard M. Nixon was not guilty of impeachable offenses. Nor does Hougan dispute that the break-in was planned in the White House, or that when the burglars were caught, the president and his men conspired to cover up their involvement.

What he does say is that all the while this was going on, the CIA, quite without the knowledge of the White House, was pursuing an agenda of it own. Hougan says that at least two of those involved in the break-in were actually spying on the White House for the CIA and conducting their own illegal domestic operations; that one of these domestic operations involved spying on the clients of a call-girl ring operating out of an apartment complex near the Watergate; and that when the White House-planned bugging of the Democratic National Committee's headquarters threatened to expose this operation - as it might have, since some of the clients for the call girls were being referred from the DNC - it was sabotaged in order to protect the CIA's role.

"Watergate," Hougan writes, "was not so much a partisan political scandal as it was . . . a sex scandal, the unpredictable outcome of a CIA operation that, in the simplest of terms, tripped on its own shoelaces."

Now, this is clearly a mind-boggling scenario, and there is a natural tendency for some to simply laugh it off. However, -considering the published statements of journalists such as Lukas, Marro and Sherrill, as well as Hougan's own reputation as a serious writer and investigator - he is a former Washington editor of Harper's magazine and the author of Spooks, a welldocumented study of the use of intelligence agents by corporations and other private entities - Hougan's findings cannot be so easily dismissed.

What's needed is a careful look at his facts: either they are correct or they aren't. And the logical place for such an investigation to begin is with Hougan's account of the break-in, since that is the keystone of his entire argument. My own inquiries indicate that Hougan is right on several crucial points.

According to the generally accepted account of the break-in, the reason the Watergate burglars entered the headquarters of the Democratic National Committee on June 17, 1972, was to replace a defective bug on the telephone of the secretary of DNC chairman Larry O'Brien. As this version goes, in the course of a break-in two weeks earlier, James McCord had installed two bugs - one on the phone belonging to O'Brien's secretary, the other on the phone of another official, R. Spencer Oliver.

The Oliver bug worked, and for two weeks, we are told, a fellow named Alfred C. Baldwin III, sitting in a room in the Howard Johnson motor lodge across the street from the Watergate complex, monitored conversations from it.

Baldwin passed on summaries of those conversations - which he and others described as sexual in nature - to McCord, who passed them along to G. Gordon Liddy, who passed them on to Jeb Magruder. When the bug on O'Brien's phone failed to function, the Plumbers went back in to replace it, and that is when they were arrested. In any case, that is the standard version.

According to Hougan, however, the DNC was never bugged in the first place; when FBI technicians arrived on the scene later in the morning of the arrest they couldn't find a single bug in the DNC. And where does Hougan get this startling information? Hougan says it comes from FBI documents obtained through a freedom of information suit.

According to the documents he cites, neither FBI nor telephone company technicians were able to find the bugs that had supposedly been planted by the Watergate burglars - despite three top-to-bottom searches, which included the dismantling of every phone on the premises, and some urgent pleas from the prosecutor, assistant U.S. attorney Earl J. Silbert, who understood that the failure to find a bug could have serious consequences for his case. Furthermore, when an antiquated bug was actually discovered on a secretary's phone some three months later, the FBI tested it and concluded that it would have been incapable of transmitting outside the Watergate. They pronounced it a phony, probably a plant, and assigned it an entirely different case number.

Now, quite obviously, this raises some questions that demand answers. For example: Are the documents that Hougan cites genuine? Yes. They are on file at the FBI reading room in Washington, D.C., and I have examined them. Well, isn't it possible that these reports are merely interim reports, and that the FBI later reversed itself? Apparently not. I spoke with retired FBI special agent Wilbur G. Stevens, who was supervisor of the FBI laboratory during Watergate. He confirmed (a) that the FBI was never able to find a bug in the DNC and (b) that when one was later discovered after a call from a secretary at the DNC, the FBI considered it a fake.

"There's nothing that I know of that would change (these findings)," he said.

Then why haven't we heard of these FBI documents before? As Hougan points out in his book, the Justice Department under Nixon refused to release any of these reports to the Senate Watergate Committee. This is confirmed by Terry Lenzner, former assistant chief counsel for the committee. "We were concentrating on the cover-up," Lenzner told me. "It would have been useful to our investigation to have the documents in order to check them against any conflicts that might have risen." Nor were the documents given to the defendants in the Watergate trial, as noted in a pre-release story on Secret Agenda by the New York Times.

Hougan, who obtained a total of 16,000 documents through the Freedom of Information Act in 1980, was presumably the first person outside the Justice Department to examine them. But wasn't the prosecutor required by law to hand over material that might be exculpatory to the Watergate defendants? Anthony Lukas raises this question in his review for the New York Times, pointing out that, under the Brady rule, the prosecution is required to give all such evidence to the defense. In this case, the application of the rule seems especially obvious, because the government had charged the Watergate burglars with planting a bug that its own investigators said was a fake. When I asked the Watergate prosecutor, Earl Silbert, about this, he said he recalled the documents but had no clear recollection of whether they had been available to the defense. He went on to say that the Brady rule is only a "legalism," and that the prosecutor is required to turn over such material only if asked to do so by the defense.

"And, frankly, I just can't say that they asked," Silbert said. "If the memos weren't turned over to the defense, that was the reason."

"But how could they request them if they didn't know they existed?" I asked.

"I can see your point," Silbert said, "but some Brady requests are overbroad." What do the defense lawyers say about that? I sent copies of the FBI reports to one of them, Ellis S. Rubin. A prominent Miami trial lawyer, Rubin was retained to represent the four Cuban members of the burglary team - Eugenio Martinez, Frank Sturgis, Bernard -Barker and Virgilio Gonzalez - after they had pleaded guilty and been sentenced to prison.

When I called Rubin a few days later he expressed astonishment, stating categorically that his clients had never been given the information. "This is a definite violation of Brady vs. Maryland," he said, "and it could be cause for a new trial." He said he would take the matter up with his clients.

"You may have a bigger scoop than you imagined," Rubin added.

If, as my own abbreviated investigation shows, Hougan's facts on the break-in check out, this is obviously an important story in itself, as Rubin's comments would suggest. But, beyond this, even if Rubin and his clients decide not to seek a new trial, Hougan's version of the burglary is important because of the questions it raises about the rest of the Watergate affair. For example:
Since Alfred Baldwin was obviously listening to something in his room at the Howard Johnson, just what was he listening to? Hougan's answer - and this is where the sex-scandal theory begins to emerge - is that Baldwin was listening to transmissions from a bug that was planted elsewhere. Hougan concludes that the bug was situated in a prostitute's quarters in the Columbia Plaza, which is located near the Watergate complex. As Hougan himself points out, the evidence for this is circumstantial.

Another question posed by the new break-in evidence, however, is a bit easier to deal with:

If much of what we know about the break-in and bugging is false, then where did we get our original version of those events? Hougan's answer, supported in this instance by the records of the Watergate Commission, is - James McCord. If the standard version of the break-in is false, McCord was apparently lying.

But why?

According to Hougan, both McCord and E. Howard Hunt "were secretly working for the CIA while using the White House as a cover for domestic intelligence operations." Once again, this assertion is so contrary to what Hougan calls the "received version" of Watergate that we are tempted to dismiss it out of hand. However, Hougan's conclusions in this regard would seem to be based on the same kind of verifiable information as his break-in scenario, so that if anyone is interested it should be possible to check it out.

According to the generally accepted version of Watergate, Hunt is the somewhat buffoonish member of the White House Plumbers, a former CIA agent in disrepute, whose ineptitude contributed mightily to the bungling of the "third-rate burglary" at the DNC. As we have come to believe, Hunt left the agency in the spring of 1970 to take a job with a Washington public relations firm called the Robert R. Mullen Co. He continued in Mullen's employment after he got his job as a White House consultant, working as a publicity writer.

Marshaling information from several sources, Hougan argues that Hunt never really retired from the CIA. He presents evidence that two previous "retirements" by Hunt were acknowledged fakes; that shortly before Hunt ostensibly left the agency in 1970 his top-secret security clearance was actually extended in anticipation of his continued "utilization" by the CIA; that the Mullen company was no ordinary public relations firm but a CIA front with active CIA agents working out its office; and that during the Watergate period the president of the Mullen company, Robert Bennett, reported to his case agent at the CIA on his efforts to divert attention from any agency involvement in Watergate.

So, if Hunt was still working for the CIA, what was he doing at the White House? Hougan says he was there as an undercover agent, spying on the White House for the agency. In support of this, he introduces an internal CIA memorandum, written by an agency employee who worked at the White House CIA liaison office. According to the memo - which had been previously published as an addendum to House hearings, but in a vague, summary version, with the names of the author and its two addressees deleted - Hunt regularly used the office to send sealed envelopes back to CIA headquarters. On one occasion, according to this memo, a member of the liaison staff opened one of the envelopes and found it to contain "gossip" material.

Hougan found out the name of the author of the memo, Rob Roy Ratliff, and gave him a call. According to Ratliff, the gossip alluded to was about White House officials and other members of the administration. Hougan found another source, who described the gossip as "almost entirely of a sexual nature." He also discovered that the recipients of Hunt's missives, whose names had been deleted for reasons of "national security," were CIA director Richard Helms and the CIA's medical services division - the staff of which, as Hougan points out, uses such material to construct psychological profiles.

Hougan also succeeds in shedding new light on McCord, the chief Watergate burglar. Contrary to the popular conception of him as a plodding ex-agency gumshoe, Hougan writes, McCord was for years a high-ranking (GS-15) official in the CIA's Office of Security, which was responsible at various times for the agency's mind-control programs, plots to assassinate foreign leaders, and a variety of illegal domestic operations, such as the mail-opening project, the infiltration of the antiwar movement, and Operation Chaos. It is worth keeping in mind that at the time of Watergate none of these programs had been exposed.

As Hougan shows, McCord's supposed retirement from the CIA, which occurred in 1970, just three months after Hunt's, was also quite dubious. McCord's ostensible reason for retiring was to make more money than he earned on his GS-15 salary. However, before he signed on with the Republican National Committee and the Committee to Re-elect the President, McCord's only apparent sources of income were his pension, a part-time teaching job at a community college in Maryland, and a private security firm, McCord Associates, which had no clients until he was hired by the RNC.

Hougan cites several examples of McCord's activities during his tenure as a Republican security adviser that are difficult to explain, including the purchase in Chicago of several telephone bugs that would broadcast only via classified CIA communications satellites. There was also a suspicious incident that occurred at McCord's home just five days after the Watergate burglary; all of McCord's records were thrown into the fireplace and burned. Present for the event were McCord's wife (McCord was still in jail) and one Lee R. Pennington, Jr., a deep-cover contract agent who worked for McCord's old outfit, the Office of Security, and received his pay in the form of "sterile" checks. [According to Lukas,  he worked on a $250-a-month retainer under Howard Osborn (Chief of Security for the CIA), involved in Operation Chaos.]

A CIA memo, not made public until two years after the fire, indicates that Pennington went to McCord's home for the purpose of "destroying any indication of connections between the Agency and Mr. McCord." As Hougan points out, since it had already been reported in the press that McCord was a former employee of the CIA - McCord had testified to that effect at his arraignment - the only possible connection that might have concerned the agency would have been one subsequent to his retirement.

And what was McCord up to? Hougan says that, with the assistance of a down-and-out private investigator named Louis J. Russell, he was involved in bugging some prostitutes at the Columbia Plaza Apartments near Watergate, possibly to collect information that the CIA could use for political blackmail. At this point - as Hougan turns toward his sex-scandal theory - the facts are somewhat sketchier.

However, even with the sex scandal there are plenty of intriguing leads that would seem to warrant further inquiry. To start with, there is the call-girl ring itself, which operated out of the Columbia Plaza, catering to an assortment of Washington types, including a U.S. senator and a clutch of foreign intelligence agents. Hougan knows this because he got the "trick books." When the call-girl ring was exposed in the weeks before the Watergate break-in, it created a minor scandal. But until Hougan came along no one ever saw any reason to connect it to the Watergate affair. Hougan finds several possible links, including evidence of high-level White House interest in the case. [One person interested was the man in charge of hiring White House personnel and clearing them, Peter Flanigan, whose sister was married to the head of the investment firm which employed Larry O'Brien at about the time he went to work for Howard Hughes, at the same time he became head of DNC to run the 1972 election for the Democrats.]

More to the point, Hougan establishes through interviews with Phillip Mackin Bailley, the lawyer who pled guilty to running the call-girl operation, that clients for the prostitutes at the Columbia Plaza were being referred on a regular basis by a woman who worked in the DNC offices.

Next, Hougan produces another of the FBI documents he obtained through the FOIA - which reveals that when the burglars were arrested at the DNC, one of them, Eugenio Martinez, was caught by the police trying to get rid of a key he had in his coat pocket. And the key? As the FBI quickly determined, it belonged to the desk of Ida "Maxie" Wells. Wells was the secretary of R. Spencer Oliver, who, it will be remembered, was the DNC official whose phone was supposedly bugged.

What does the key mean? Hougan takes it as additional evidence for his thesis that Watergate was not so much a political scandal as it was a sex scandal. Maybe he's right, and maybe not; and maybe he's partly right, which strikes me as more likely.

At this point there's not enough information to come to any conclusion. However, the documents are on file at the FBI reading room for anyone interested in pursuing the matter. The key itself - along with copies of the FBI documents and other Watergate records - is to be found at the National Archives.

Without stopping to list several other evidentiary steps here, we can now go straight to Hougan's conclusion: that James McCord had been monitoring the prostitutes at the Columbia Plaza, possibly to obtain blackmail information for the CIA; that when the call-girl ring was busted, the White House saw a chance to collect some dirty stories of its own and launched the Plumbers on its own fact-finding mission; and that, in order to preserve the secrecy of this project, which amounted to nothing less than an illegal domestic operation by the CIA, McCord sabotaged the burglary, causing all hands to be arrested.

As should be clear, even from this brief summary, Hougan's sex-scandal scenario has some holes in it - the biggest being the lack of any positive proof that the CIA was involved in the call-girl operation, or that Baldwin was in fact listening in on the Columbia Plaza. However, it should be equally obvious that the real worth of Secret Agenda does not depend on this one rather sensational theory.

Especially for journalists, the importance of Hougan's book lies in the questions it raises about all the old theories that we have accepted as fact. In Secret Agenda, Hougan makes a convincing argument that at least some of what we think we know about Watergate is wrong.

It is high time that the press started facing up to the possibility.

Reprinted by Proquest with the permission of the Columbia Journalism Review; used here for non-commercial purposes only. 

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.

~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~~~

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.

~~~~~~~~~~~

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.

~~~~~~~~~~~~~~~

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.

~~~~~~~~~

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

~~~~~~~~~~~~~~

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.

Off the Boards

Former Mrs. George Owen

 Maureen "Mo" Kane Biner Owen (then future-wife of John Dean) was married to George Washington Owen, Jr. for a few months in 1967, but she had known him off and on since 1965. The were, allegedly, introduced by "Heidi Rikan," possibly the alias of her friend Cathy Dieter. Two years before Mo's marriage to Watergate counsel John Dean, Time Magazine wrote about another friend of George Owen--Gilbert Lee Beckley, then presumed dead:

Gilbert Lee Beckley is—or was—a valuable man to the Cosa Nostra. He helped the mob flourish in the green field of betting on college and professional athletics. Handling as much as $250,000 worth of bets daily, Beckley, 58, mastered all the tricks of his arcane trade:

• wangling information from locker rooms,

• computing odds in his head,

• occasionally bribing athletes.

Gilbert Lee Beckley

Once Beckley was discovered behind a scheme to fix college basketball games by bribing the referees. On another occasion, word flashed along his betting network that bookies need not worry about the outcome of a football game, because "the coach is betting."

Nothing if not systematic, Beckley kept his fellow bookies' identities secret. He assigned each a number, then recorded their figures in library books. Beckley, No. 11, kept his own accounts next to page 11 of the New Dictionary of Thoughts.

Two Sides. Beckley's value was not limited to the Cosa Nostra; he also worked the legitimate side of the street. He had a deal with National Football League investigators to tip them about point spreads, possible fixes and tampering with games (TIME, Aug. 22). More recently, he may have been tempted to cooperate with Government agents. Such a double life can be dangerous —even fatal. Last month, old No. 11 vanished. His lawyers have not heard from him, and he is "off the boards," or out of the play, in the betting world. Two weeks ago he forfeited a $10,000 bond by failing to appear for his trial on forgery charges in Atlanta. Some associates believe that Beckley may have fled to Belgium or Israel to escape jail. Others fear a more ominous answer. Beckley's mob associates were mindful that the N.F.L. investigators include former Government prosecutors. The mob has been worried that Beckley might try to wiggle out of his trouble by passing information to the Government. In that event, Gil Beckley would be distinctly more valuable to his friends dead than alive.

Colodny Interview of George Owen, Jr.

George Owen, Jr.

Whether it was actual fact or invention (perhaps we shall never really know), George Owen told Len Colodny, co-author of Silent Coup: The Removal of a President, in an interview in 1988 or thereabouts, that he first met Maureen Kane in 1965, and that he was introduced to her by another girl named Heidi whom he had met in Antigua. At the time he was on the island with his "running mate," Bedford Wynne, one of the co-founders of the Dallas Cowboys, and they were thinking of buying a hotel-casino owned by "Gil Beckley -- who was a world renowned gambler." This interview was transcribed and parts of it submitted as evidentiary proof in a lawsuit that would later be filed by John and Maureen Dean against the book's publisher and authors for defamation and libel, a case eventually settled.

The Portland Free Press publisher, Ace Hayes, acquired a copy of the public documents filed in the lawsuit and shared them with others. They have since been passed around digitally and have become fair use. In Colodny's book, he had made statements about Maureen "Mo" Kane (who married George Owen in 1967 and had their marriage annulled the same year) -- conclusionary statements arrived at based on dozens of interviews with people who had known Mo both before and after she married President Nixon's White House Counsel John Dean in September of 1972.

Since truth is an absolute defense to the claim of libel, Colodny submitted the interview transcripts to the court in order to show that the conclusions he made about Mo were true. We don't know whether they were true or not, and, unfortunately, George Owen is no longer alive to verify the facts. Part of his interview by Len Colodny is contained below:

OWEN: And he [Gil Beckley] was a friend of Bedford's and mine and we were going, you know, try to buy the hotel. And I walked out of my room and it was raining. And they had a little tent to walk under to the casino and there to the dining room. And I saw this girl walking a dog, a little white poodle, and this was the prettiest damn girl you ever saw in your life.

COLODNY: I'll say one thing, everybody that's ever seen this woman uses those exact words.

OWEN:"Built like a brick shit house." I said, "God damn," I said "man," and I just sat down in the mud.

COLODNY: [Laughing]
OWEN: I said, "I've never seen a son of a bitch as pretty as you and if you jump on my back I'll take you around the world barefooted." And she said, [Laughing] and I said "come on, I'll buy you dinner." She said, "Well, I want to tell you something, that is the most profound statement that I've ever seen a man do to get a date with me."

COLODNY: [Laughing]

OWEN: Yes, sir, I'll accept and so we went to dinner, drank some wine, had a good time and everything and she was going to stay there a couple of before she meets Mo, there, she's up in Washington and then she meets this guy from Texas and then she goes back to Washington and she seems to be tied pretty much to this guy.

OWEN: Oh yeah.

COLODNY: And, and now, now Mo meets you in '67 and then they go to Tahoe together. Now, what was the point of them going to Tahoe together?

OWEN: Maureen, ah, went with a guy who was a dealer up there. And she fell in love with this guy, and you know, they lost a lot of weight and a whole bunch of...

COLODNY: Yeah, she, this is the story she tells: "I chose Tahoe with, with my new and good friend who I'd met through George, Heidi Rikan, I skied, swam, gambled, played tennis, and hiked. I lost weight going from one fifteen to ninety eight pounds, to [from?] a size six to a three, George saw me once during this period and handed me two hundred dollars and said, 'My god, you're starving, go fatten yourself up.' "

OWEN: [Laughing] That's about right, that's about the size of it.

COLODNY: "And after several months with Heidi I finally decided I had to strike, straighten out my marital situation so I sought and got an annulment from my marriage to George Owen." Is that accurate? Is, as best...

OWEN: Oh, it could have been, I didn't know. I had a divorce, I didn't need a, anything like this.

OWEN: Well if you know, if you analyze the whole situation. I wasn't with Maureen very long. Well, I met her in late '65 and in '66 we, she left and out, in, and out, in, and then in '67 we got married. I went and got a Mexican divorce before we got married.

COLODNY: All right so in other words, Diane Wisdom was gone by the time?

OWEN: Oh yeah. Diane had been gone a long time. She traveled with Frank Sinatra's...

COLODNY: Right so, so she's gone and, and you had a Mexican Divorce and now you're...

OWEN: A Mexican Divorce and ah, this friend of mine, this, this guy we talked about, ah, you know, signed one of, as one of the witnesses or something like that. But any way I had the divorce and then we got married and then, then everything else happened.

The Miramar Hotel Casino in Antigua

So, George told Len Colodny he met Heidi Rikan in Antigua at a hotel/casino in which Gilbert Lee Beckley was an owner/manager before George met Heidi's friend Mo in 1965. The newspapers in 1959 were full of reports that Beckley lived in Surfside, Florida and was being questioned by a grand jury about the fixing of a boxing match, but nothing came of it until John Kennedy was elected and made his brother Robert the Attorney General. Six months after the inauguration, we read:

WASHINGTON (AP)—The Justice Department today announced indictments against 13 men for using illegal long-distance telephone hookups to conceal a nationwide horse race betting system. Atty. Gen. Robert F. Kennedy said a 20-count indictment, returned by a federal grand jury in New Orleans, grew out of illegal calls to or from these 10 cities: New Orleans and Baton Rouge, La., New York, City, Chicago, Los Angeles, Las Vegas, Atlantic City, Miami, Biloxi, Miss., and Newport, Ky.

The indictment charged that the defendants, described unofficially as including some of the biggest names in horse race lay-off gambling operations, paid telephone company employes to fix switchboards so that wagering calls went through free and unauthorized. The indictment charges them with conspiring to defraud the government of taxes and to cheat the American Telephone & Telegraph Co. of toll charges. The Internal Revenue Service investigated the case. Bench warrants have been issued by U.S. District Judge Herbert W. Christenberry for the arrest of the 13. Bond was fixed at $25,000 each.

The defendants are: Benjamin Lassoff, 53, and his brother Robert Lassoff, 41, and Myron Deckelbaum, 57, all of Cincinnati, Ohio. Gilbert Lee Beckley, 49. Surfside, Fla., and Alfred Mones, 57, Miami Beach. Sam Di Piazza, 35, and Louis E. Bagneris, 60, Arabi. La.; Eugene A. Nolan, 31, Baton Rouge; Charles A. Perez, 44, Harold Brouphy, 52, and Anthony Glorioso, 45, all of New Orleans. Alfred Reyn, 52, New York City and Peter Joseph Martino, 37, Biloxi Miss.

Part of the records released by the FBI relating to the Kennedy Assassinations includes the following document at Mary Ferrell website.

Miramar Hotel Casino in Antigua, British West Indies

Charlie "The Blade" Tourine

Gil Beckley in Antigua at Tourine's Casino

We are told that this group of mobsters was part of the Vito Genevese Family, about whom Drew Pearson in an October column in 1950 had this to say: 

Vito Genovese of New York and New Jersey — Genovese was Lucky Luciano's gunman. He gained notoriety helping Luciano terrorize tributes from New York's brothels, fled from New York to New Jersey and now is an important cog in the New Jersey Mafia. His criminal history dates back to April 15, 1917, when he was arrested in New York city for possessing a revolver and got 60 days Since then his power has grown. He has been arrested for carrying a concealed weapon, felonious assault, homicide, disorderly conduct, burglary, petty larceny, and first-degree murder. Miraculously, however, he was acquitted on the murder charge.

If we return to the beginning of this essay, the interview between Colodny and George Owen, we must understand that Colodny started his research on Watergate to follow up on some of the information revealed in a book by Jim Hougan, published in 1984, called Secret Agenda: Watergate, Deep Throat, and the CIA. Hougan himself has continued his own research, which has been published in an essay online, in which he muses about the friend George Owens first met in Antigua, whom he called Heidi:

But what about "Cathy Dieter"? Who was she? According to Gordon Liddy, Dieter's real name was Heidi Rikan. Liddy testified that he learned this from a seemingly authoritative source: Walter "Buster" Riggin, [see Watergate Exposed for more information] a sometime pimp and associate of Joe Nesline, himself an organized crime figure in the Washington area.

Formerly a stripper at a seedy Washington nightclub called the Blue Mirror, the late Erica "Heidi" Rikan was a friend of Nesline's and, more to the point, of John Dean and his then-fiancee, later wife, Maureen. Indeed, Rikan's photograph appears in the memoir that "Mo" wrote about Watergate. [23]

While admitting their friendship with Rikan, the Deans deny that she ran a call-girl ring, or that she used "Cathy Dieter" as an alias. Beyond Buster Riggin's assertion to Liddy, evidence on the issue is slim or ambiguous. One writer who attempted to verify the identification is Anthony Summers. As the Irish investigative reporter wrote in his massive biography of President Nixon:

Excellent book by Phil Stanford

Before her death in 1990, Rikan said in a conversation with her maid that she had once been a call girl. Explaining that a call girl was 'a lady that meets men, and men pay them'---the maid had grown up in the country and knew nothing of big-city sins---she added, tantalizingly:

'I was a call girl at the White House." [24]

This would appear to confirm assertions that Rikan was a prostitute. But Summers undercuts the confirmation by reporting in that same book---strangely, and in a footnote---that he "found no evidence" of Rikan working as a call-girl. [25]

Notes:

23. Maureen Dean (with Hays Gorey) Mo: A Woman's View of Watergate, Simon & Schuster (1975).
24. Anthony Summers, The Arrogance of Power (Viking, 2000), p. 422.
25. Summers, p. 530.

But then, Anthony Summers couldn't see evidence of an inside job in Venice, Florida, after spending weeks with Daniel Hopsicker.



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