History Thread: Nixon Cash

From the beginning of his political career, Richard Nixon dodged accusations of financial impropriety. In 1950, hostile reporters claimed that notorious mobster Mickey Cohen donated to his Senate race against Helen Gahagan Douglas. His infamous Checkers Speech of 1952, while running for Vice President, was inspired by revelation that Nixon maintained a semi-legal “slush fund” of off-the-books donations. In his 1960 campaign against John F. Kennedy and his gubernatorial bid two years later, Nixon was badgered about a supposed loan from Howard Hughes, given to his brother Donald for a failed restaurant business.

Nixon learned the wrong lesson from these experiences. Obsessed with Kennedy’s massive spending and supposed ties to organized crime, Nixon afterwards vowed to “never be outspent again.” He therefore enlisted lawyers, tycoons, foreign officials and campaign financiers to create a dark money apparatus that dwarfed the comparatively petty crimes of Watergate. Nixon turned his White House into a crime family all his own, providing yet another precedent for successors to follow.

Herbert Kalmbach

Initially, the consigliere for this enterprise was Herbert Kalmbach. Usually identified as “Nixon’s personal attorney,” Kalmbach was more interested in building social clout in California than practicing law. Nixon told John Dean that Kalmbach “isn’t a lawyer in the sense that most people have a lawyer”; his connection to the President consisted of managing his San Clemente property and controlling access to the White House. “You can get to Herb,” one donor lamented, “but you can’t talk to him for less than ten thousand dollars.” Kalmbach openly peddled his influence to gain campaign contributions for Nixon, lining his own pockets in the process.

Kalmbach served as a go-between for Nixon’s corporate associates. Miami businessman Bebe Rebozo, Nixon’s closest friend, often allowed the President use of his estate to relax and escape the press. Rebozo wrangled donations from fellow businessmen, Miami’s Cuban-American population and various other sources, not all of them above board. Rebozo was instrumental in convincing the reclusive Howard Hughes to donate $100,000 to the campaign. Don Kendall of Pepsi-Co was another reliable source of corporate donations, allowing Kalmbach access to donors in exchange for help with overseas contracts.

Kalmbach’s efforts didn’t stop at America’s shores, either. In 1968 he enlisted Tom Pappas, a wealthy Greek-American businessman, for assistance in exchange for favorable treatment of Greece’s brutal miltiary junta. Pappas managed to deliver a staggering $549,000 into Nixon’s coffers. Senate investigators later determined that most of this money came directly from the junta’s intelligence service. Once Nixon took office, he gratefully supplied arms to the Greek government, legitimizing the pariah dictatorship and likely extending its existence through 1974. Somehow, this managed not to be the most egregious example of Nixon’s unconventional campaign diplomacy.

Nixon and Bebe Rebozo

Nor did Kalmbach deign at getting his hands dirty. In 1970, former Alabama Governor George Wallace challenged the incumbent, Albert Brewer, as a stepping stone for his next president campaign. Wallace attacked Nixon’s “southern strategy” as “all talk,” threatening to upset the President’s plans to recruit conservative Democrats to his “New Majority.” He used Postmaster General Winton Blount, a fellow Alabamian, to keep tabs on the race and advised the IRS to scan Wallace’s brother Gerald’s income taxes. He also detailed Kalmbach to play a hands-on role in stopping Wallace’s campaign.

Thus on April 1, 1970 Kalmbach met Robert Ingram, a representative of Brewer’s campaign, at a hotel in New York. A charade from a bad spy novel ensued: Kalmbach identified himself as “Mr. Jensen from Detroit” and asked his contact if he had brought a briefcase. “I figured that you would give me one,” Brewer’s man said, panicking. “I’m not about to give you my briefcase,” Kalmbach snapped. Moving to a corner of the lobby, he then began stuffing a manila envelope with $100 bills. Once “Mr. Jensen” completed his work, an astonished Ingram counted the loot; there were 1000 c-notes, $1 million in total, for his candidate’s use.

For the first two years of Nixon’s term, Kalmbach energetically served as White House point man for such enterprises. He was a respectable fundraiser, managing a then-massive $3.9 million for the 1970 midterm elections. But his efforts largely came to naught: Wallace won back the Governorship, and Democrats overwhelmingly won the midterms, in an apparent repudiation of Nixon’s agenda. Fortunately, as the 1972 campaign approached, Nixon had other advisers more than able to fill the breach.

Nixon and John Connally

John Connally was one of the few colorful figures in Nixon’s self-described cabinet of “gray men.” The former Governor of Texas was a flamboyant protege of Lyndon Johnson who possessed an eye for political boldness and an amoral deal. As Nixon’s Treasury Secretary, Connally persuaded Nixon to take America’s economy off the gold standard, in Nixon’s “big play” to goose the economy before the 1972 election. Nixon, who according to one aide “wanted to be like Connally,” came to view the Texan as a possible successor: he seriously considered dumping Spiro Agnew to make Connally his running mate.

As a representative of a farm state, Connally learned that the Associated Milk Producers Inc. were preparing to donate money to politicians who would counteract the Administration’s price policies. The AMPI donated to candidates of both parties, in a nonpartisan effort at influence peddling. This did not endear them to the President’s staff; Chuck Colson advised Nixon to “put the screws on [them] on imports” unless the AMP unequivocally supported Nixon. But Connally advocated a proactive engagement with the “adamant, militant” dairymen. “If you do something for them this year,” Connally advised the President, “they think you’ve done it because they got a good case and because you’re their friend. If you wait till next year… you get no credit for it.”

On March 23, 1971 Nixon hosted one of the most extraordinary Oval Office meetings ever. Nixon, Connally, Agriculture Secretary Cliff Hardin and domestic adviser John Ehrlichman were among those assembled to greet AMPI representatives Phil Campbell and John Whittaker. Nixon treated the dairy men to a harangue about how “the cities are all corrupt” and that “a country that loses its rural heartland…loses its character.” After Hardin defended his support for price controls as good for the industry, Nixon riposted with bizarre musings about how “milk is a sedative” and that the political upsides of a quid pro quo outweighed any economic concerns.

Cliff Hardin (right), with Nixon, John Anderson and a feathered friend

Thus a deal was quickly struck: the milk moguls would donate $2,000,000 to Nixon in exchange for increased Federal subsidies, allowing the AMPI to sell its milk at an 85 percent parity rate. Hardin was forced to swallow his reservations and signed off on the deal (he soon left the Administration, replaced by the more pliable Earl Butz). The President celebrated their successful price fixing deal by gifting Campbell and Whittaker White House cufflinks. “We better get ourselves some milk before the price goes up,” Ehrlichman chortled. His joke, the milkmen’s appreciative laughter and the sordid scheming were all caught on Nixon’s White House tapes.

Connally’s scheme was immensely successful, at least in the short term (not so much when, years later, Campbell and Whittaker were indicted for financial fraud). The President received his $2 million; the milk industry reaped an estimated $100 million in profits from Nixon’s intercession. But the heavy fundraising lifting went to Maurice Stans, Watergate’s greatest forgotten villain. Compared to the bumbling Plumbers and the clownish Donald Segretti, Stans’ operations worked brilliantly. They provided a blueprint for every amoral campaign financier of the past half century, raising extraordinary amounts of cash without concern for ethics or propriety.

Maurice Stans

Stans, born in Minnesota to Belgian immigrants, started as an accountant for a sausage-making company where, he admitted later, “ethics…were not very high”; a boss taught him the company’s unofficial motto of, “what are friends for if you can’t screw them once in awhile?” Stans afterwards became an executive at Alexander Grant & Co. and found his way into the Republican Party. He served as Dwight Eisenhower’s Budget Director in the ‘50s, building a network of acquaintances in government and Big Business that served him well. Among them was Vice President Nixon; never a close friend, he nonetheless recognized Stans’ skill and kept him on retainer as a fundraiser during his presidential campaigns. Stans’ ability to bring wealthy donors (from J. Paul Getty to W. Clement Stone) into the Nixon camp ensured a Republican victory in 1968.

Nixon appointed Stans his Secretary of Commerce, a post that Stans didn’t want (he preferred Treasury) and which afforded him little influence on Nixon’s economic policy. Nixon made clear that Stans had a bigger job to do: namely, raising money for his reelection. This task was complicated when, in January 1972, Congress passed a law requiring that campaigns report all contributions over $100. Noting that the law didn’t go into effect until April 7, 1972, Stans, Kalmbach and their partners in crime found creative ways to exploit all available loopholes.

Even by modern standards, when corporate lobbying and “dark money” are commonplace, Stans’ methods remain remarkably brazen. Richard “Racehorse” Haynes, a prominent Dallas attorney and Republican fundraiser, explained Stans’ MO to Carl Bernstein: “Maury came through here like a goddamned train. He’d say to…the big money men who’d never gone for a Republican before, “You know we got this crazy man [William] Ruckelshaus [then director of the EPA] back East who’d just as soon close your factory as let the smokestack belch…People…need to cut through the red tape when you’ve got a guy like that on the loose. Now, don’t misunderstand me; we’re not making any promises, all we can do is make ourselves accessible.”

Hugh Sloan

Belying his appearance as a mild-mannered bureaucrat, Stans operated more like a mobster, shaking down businessmen for campaign contributions. He convinced oil company Amerada Hess to donate $200,000 in exchange for dropping an investigation of their drilling practices. At another juncture, $460,000 from other petrochemical companies, including Gulf and Pennzoil, was raised, laundered through Mexico and delivered to CREEP treasurer Hugh Sloan in a suitcase by a Pennzoil executive. Under such persuasion did George Steinbrenner, the Cleveland shipping magnate and New York Yankees owner, illegally donate $100,000 to Nixon’s coffers. Stans encouraged others to bid for Ambassadorships; Ruth Farkas, a department store executive, became Ambassador to Luxembourg after such a conference, where Stans twisted her arm to donate $300,000 to Nixon.

Ray Kroc, the McDonald’s CEO, also fell into Stans’ clutches. Known as a brilliant, if ruthless businessman after turning a local burger restaurant into a worldwide franchise, Kroc generally restricted his comments on politics to coarse cynicism. “You show me a man with courage and conviction,” he told a reporter, “and I’ll show you a loser.” But Kroc was deeply conservative, opposed to Lyndon Johnson’s Great Society, labor unions and the rise of ’60s counterculture, enough that in ’68 he donated $1,000 to Nixon’s campaign. Something about Nixon (perhaps their shared rags-to-riches background, their California roots, or simply that Nixon was as ruthless and conservative as Kroc himself) appealed to Kroc, who soon installed a plaque with a Nixon quote in McDonald’s corporate headquarters.

Kroc’s admiration didn’t stop the Nixon Administration, or at least its bureaucrats, from investigating him. His decision to raise the cost of cheeseburgers in November 1971 ran afoul of Nixon’s Price Commission, ruling that it violated the President’s sweeping wage and price control orders issued that year. As Kroc’s lawyers appealed this ruling, Congress began debating a law that was nicknamed “the McDonald’s Bill,” standardizing a subminimum wage for employees under 18 – then, as now, a major portion of McDonald’s workforce. Kroc complained loudly about “the dilution of freedom” by those opposing the bill, and Nixon’s finance chair spied an opportunity.

Ray Kroc

Early in 1972, Secretary Stans invited Kroc and other tycoons to a lunch in Washington. After a harangue about the Democratic Party’s embrace of radicalism and its threat to corporate America, Stans challenged the assembled bigwigs to “put your money where your mouth is.” Kroc was so moved by Stans’ peroration that afterwards, he approached him and told the Commerce Secretary that “you hit me right here.” The two men retired for a private conversation, after which Kroc pledged $255,000 to Nixon’s campaign. Kroc admitted that “my motive was not so much pro-Nixon as it was anti-George McGovern,” but for Stans the difference was academic.

Soon afterwards, Kroc was invited to a black-tie lunch at the White House, where he briefly bantered with the President about the size of his profits. Nixon then voiced his support for the “McDonald’s bill;” in September, McDonald’s was further declared exempt from the Administration’s price control ordinances. Jack Anderson reported Kroc’s donation and the flailing McGovern campaign seized on it: Congressman Benjamin Rosenthal of New York branded the burger money “the selling of the US government.” Kroc dismissed Rosenthal and other accusers as “braying jackasses”; although Congress considered citing the loan in Nixon’s articles of impeachment, ultimately Kroc received little more than brief embarrassment for his trouble.

More troublesome for Stans was Robert Vesco, the buccaneering financier who made his bones with a variety of illegal investment schemes. Vesco, sporting a pencil mustache and pomaded hair stolen from The Godfather‘s button men, was friends with Nixon’s ne’er-do-well brother Don, and had met the President himself at least twice. In January 1972, Vesco traded on his connections: through Nixon attorney John Sears, he arranged for a meeting with Attorney General John Mitchell. Vesco presented Mitchell was a lengthy file detailing “harassment” by the Securities and Exchange Commission of his Bahamian investments, bluntly demanding that the Attorney General “get the SEC off my back.”

Robert Vesco

Mitchell, about to resign to run Nixon’s reelection campaign, was nonplussed. He contacted William Casey of the SEC, who sent a memorandum assuring Mitchell that Vesco “did not hesitate to engage in fraudulent and deceptive practices,” and were further investigating Vesco for lying under oath to SEC investigators. Showing the same moral fiber as when he told Gordon Liddy to come up with a cheaper version of his berserk GEMSTONE plan, Mitchell referred him to Stans, by now resigned from Commerce to run CREEP’s finance committee.

In March 1972, Vesco met with Stans personally, telling him that he’d donate to Nixon’s campaign in exchange for dropping the SEC investigation. Stans responded that he’d be happy to help Vesco…if Vesco presented him with $250,000, in cash, by April 7th. After much haggling, Stans had to settle for $200,000. On April 6th, a private detective hired by Vesco delivered the cash – “$100 bills bound in brown paper wrappers” – to an intermediary, who presented it to Stans the same day. John Sears, astonished by the “cloak-and-dagger atmosphere” surrounding the donation, insisted that Stans view this as “nothing but a political contribution.” His tardy virtue neither phased Stans, nor prevented Sears from being indicted the following year.

But Nixon’s relationship with International Telephone and Telegraph (ITT) proved the biggest headache – and showed the White House at its most thuggish. One of the world’s largest corporations, ITT was characterized by journalist Anthony Sampson as “a leviathan secretly circling the world.” From cozy relationships with Nazi Germany to serving as a conduit for CIA operations in Chile, it became a synecdoche for the baleful influence of unchecked capitalism. In 1971, Justice Department official Richard McLaren began zealously investigating ITT for violating anti-trust laws through its illegal acquisitions of American companies. Too zealously for President Nixon, who vowed to his staff that there “there [aren’t] going to be any more anti-trust actions” and personally interceded.

Richard Kleindienst

On April 19, 1971, Deputy Attorney General Richard Kleindienst received a phone call from the President. With few preliminaries, Nixon barked “the IT & T thing — stay the hell out of it. Is that clear? That’s an order.” He told Kleindienst that McLaren was a “son of a bitch” who was jeopardizing Nixon’s reelection chances and that he should be fired if he continued his investigation. Kleindienst recalled that “I almost fell out of my chair” and gently pushed back, assuming it was one of Nixon’s passing rages that could be safely ignored. After consultation with John Mitchell, Kleindienst decided to disregard Nixon’s orders and instruct McLaren to proceed with his lawsuit.

Nonetheless, Nixon persisted; McLaren’s case petered out in July, when the Justice Department and ITT reached an undisclosed settlement. But if Kleindienst wasn’t privy to Nixon’s reasoning for his flagrantly illegal order, it was apparent to Mitchell and Stans, who soon afterwards attended (along with John Ehrlichman and his aide, Bud Krogh) a marathon negotiating session with ITT lobbyist Dita Beard. The corporation offered Nixon a staggering $400,000 donation, ostensibly to assist with the Republican National Convention, then scheduled for San Diego (later moved to Miami for security reasons). No one doubted the loan’s real purpose.

This scheme exploded into the headlines on February 29, 1972 when Brit Hume, a legman for the ubiquitous Jack Anderson, published a memo from Beard outlining ITT’s dealings with Nixon. Beard, described as “a blunt woman who…thrives in the competitive, driving world of Washington politics,” wrote candidly that “the President has told Mitchell to see that things are worked out fairly.” The memo proved an immediate bombshell, with Administration critics seizing upon its plaintitive closing line, “Please destroy this, huh?” After Hume confirmed the story with Beard, Anderson’s column left no doubt that “the fix was a payoff” for shutting down the antitrust suit.

Chuck Colson

By now, Mitchell had left the Justice Department and Kleindienst was preparing to succeed him, having passed through his confirmation hearings without incident. In an act of extraordinary hubris, Kleindienst insisted upon renewing the hearings in March to clear his name. Kleindienst brazenly lied to the Senate Judiciary Committee that “I was not interfered with by anyone at the White House,” a performance which later earned him a suspended prison sentence. Despite Kleindienst’s denials, the furor stirred by Beard’s memo refused to die away. The Senate ominously suggested that they’d consider calling Beard to Washington to testify, moving the White House and ITT into a panic.

At the behest of ITT Vice President Ned Gerrity, Beard went on a “vacation” to keep her away from Washintgton. While traveling, Beard suffered chest pains and was hospitalized in Denver with a heart condition. This news reached White House aide Chuck Colson, who summoned Howard Hunt to handle the situation. Colson instructed Hunt to “urge [Beard] to tell the truth…and to reassure her if she told the truth, her many friends back in Washington would not hold against her…that she contrived this memorandum.” Outfitting himself with dark glasses and a red wig provided by the CIA, Hunt traveled to Denver.

On March 16th, a disguised Hunt arrived at Beard’s hospital, calling himself “Edward Hamilton.” Beard’s son David was nonplussed by the Plumber’s appearance, his “red wig on cockeyed, like he put it on a darkened car.” Her daughter Lane, who’d been tending to her mother, asked the man who he represented. “High Washington levels who are interested in your mother’s welfare,” Hunt responded, forcing his way into Beard’s room. For four hours, Beard endured an intensive bedside grilling from her visitor, who left her little doubt about the consequences of standing by her story. Hunt often botched his operations, but he proved competent enough at badgering a sick, middle-aged woman.

Hunt visits Dita Beard, envisioned by Julian Allen

The next day, Beard publicly denounced Anderson’s article as a “forgery” and a “cruel fraud” with no basis in fact. (ITT afterwards eased Beard out of her lobbying position, promoting her to a sales role.) Kleindienst’s hearings went forward, as ITT collaborated with the White House in shredding documents relating to the Justice Department investigation. John Ehrlichman confronted SEC chairman Bill Casey about his ongoing probes, demanding to know “whether this is necessary.” Casey obliged by refusing to turn documents over to the Senate who, without Beard’s testimony, failed to effectively challenge Kleindienst. Kleindienst was officially confirmed as Attorney General on June 8th, nine days before Nixon’s next scandal exploded.

Ultimately, Nixon’s fundraisers raised $60.2 million, much of it off the books, for the 1972 race: “the largest amount of money ever spent on a political campaign,” Stans boasted after the President’s landslide reelection. But after the Watergate break-in, investigators easily traced money given to the burglars back to the Committee to Reelect the President; Carl Bernstein’s discovery of a check from Kenneth H. Dahlberg, a contributor from Minnesota, in the bank account of Bernard Barker played a key role in unraveling the scandal (along with the defection of Hugh Sloan, who balked at Stans’ criminal behavior and offered damning testimony to federal prosecutors). While Stans disassociated himself from the cover-up, Herbert Kalmbach degraded himself delivering hush money to the burglars.

As the Watergate scandal unfolded, investigators became overwhelmed by the sheer volume of money circulating at CREEP – and its rather profligate use. The Washington Post‘s investigation of Donald Segretti, the “ratfucking” lawyer who sabotaged Democratic primaries, uncovered that Segretti’s pranksters were paid from a $45,000 fund maintained by Kalmbach. John Dean admitted to investigators that he “borrowed” $4,850 from CREEP to fund his honeymoon, soon before turning against the White House. Herbert Porter, a young aide to John Mitchell, revealed that he handled CREEP’s “petty cash” safe from which campaign officials could borrow money with no questions asked. Under questioning by the Ervin Committee, Porter pleaded lamely that “I have often thought we had too much money.”

Bart Porter

Even as his associates became ensnared in financial difficulties, even after Vice President Spiro Agnew resigned on bribery charges, Nixon insisted that “in all of my years of public life, I have never profited – never profited from public service. I’ve earned every cent.” Then the Special Prosecutor’s office discovered that Nixon avoided paying income tax while skimming millions of dollars for improvements on his personal residences. Nixon’s ties to Bebe Rebozo, Howard Hughes and other unscrupulous moguls became grist for congressional hearings and media speculation. It turned out that even beyond Watergate, the man who proclaimed “I am not a crook” was very crooked indeed.

John Mitchell and Maurice Stans were indicted for their connections to Robert Vesco, who fled to Costa Rica soon after his meeting with Stans. After a lengthy trial, during which Stans used $400,000 in CREEP funds to defend himself, the two ex-cabinet members were acquitted in April 1974. Vesco continued his felonious career from the Caribbean, sometimes operating his old investment schemes, other times as a drug kingpin. In 1995 he renewed his association with Nixon, enlisting the late President’s nephew Don in a scheme to sell a quack AIDS medication. The Cuban government arrested Vesco after their deal became public; he died in 2007, so distrusted that many assumed he faked his own death. 

John Mitchell

Unlike the glowering, pipe-chomping Mitchell, Stans remained little-known to the public until his appearance before the Ervin Committee in June 1973. He read a prepared statement excusing his actions, while defending the motives of wealthy donors “insulted by these insinuations and falsehoods, they were vicious and unfair, completely conjectural without any fact whatsoever.” In conclusion, Stans demanded that the committee “give me back my good name.” A plea which fell on deaf ears, as Sam Ervin and his colleagues pressed Stans harshly on his unorthodox methods of fundraising. One reporter said Stans displayed “the exasperated sincerity of the substitute teacher”; Congressman Tip O’Neill, less generously, called Stans “the lousiest bastard ever to live.” 

Though acquitted in the Vesco Affair, Stans was later convicted on five counts of violating campaign finance laws and charged a $5,000 fine. He later wrote an unreadable memoir, The Terrors of Justice, where he unconvincingly proclaims his innocence and unironically compares Richard Nixon to Jesus Christ. John Mitchell served 19 months for Wategate related charges, while Herb Kalmbach (whose Senate testimony came the same day that Alexander Butterfield revealed the White House taping system) spent six months in jail. John Connally, meanwhile, was indicted for his role in the “milk money” scandal but acquitted after enlisting character witnesses Lady Bird Johnson and Barbara Jordan on his behalf.

Although some token efforts were made to block a repeat of Nixon, Kalmbach and Stans’ misdeeds, few of them stuck. In the age of Citizens United, corporate donors wield an almost unfathomable influence over political campaigns and public opinions. With the election of a president even more reckless and feckless than Nixon, their efforts have corroded democracy to the breaking point. Thus Tricky Dick contributed a far greater, and much more harmful legacy to electioneering than the “third-rate burglary” of legend.

Sources and Further Reading

Of all the general accounts of Watergate, only J. Anthony Lukas, Nightmare: The Underside of the Nixon Years (1975) extensively explores the scandal’s financial aspects. For Maurice Stans, see Bob Woodward and Carl Bernstein, All the Presidents’ Men (1974); mascohists can peruse The Terrors of Justice: The Other Side of Watergate (1978). For Ray Kroc, see Maxwell Boas and Steve Chain, Big Mac: The Unauthorized History of McDonald’s (1976) and Kroc’s memoirs, Grinding It Out: The Making of McDonald’s (1977). Robert Vesco’s adventures are extensively chronicled in Robert A. Hutchinson, Vesco (1974). For ITT, see Lukas, Richard Kleindienst, Justice: The Memoirs of Attorney General Richard Kleindienst (1985) and Anthony Sampson’s The Sovereign State of ITT (1973)