Saturday, 16 January 2021 18:45

James Saxon and John Kennedy vs. Wall Street

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Jim DiEugenio examines President John F. Kennedy's economic policy and his relationship to the American Power Elite by reviewing Donald Gibson’s ground-breaking 1994 book, Battling Wall Street, and the role by played by James J. Saxon, his Comptroller of the Currency, in attempting to implement that policy.

In this author’s opinion, the best book ever written about President John Kennedy’s economic policies is Donald Gibson’s Battling Wall Street. It was first published in hardcover in 1994. It was re-released in 2014 in a trade paperback edition. Before addressing my main subject, I would like to review a bit of that important book. The main reasons being:

  1. It is relatively rare, and
  2. No other book I know of equals its thoroughness of subject matter.

As Walter Heller, the Chairman of the Council of Economic Advisors, stated, Kennedy was very interested in the details of economic policy and he was a good student of worldly philosophy. One of his major goals as president was to attain higher rates of growth and productivity. (Gibson pp. 6, 20) As early as 1961, Kennedy said that he supported “long range planning for national economic growth.” (ibid p. 21) This included a multipronged program of tax policy, trying to balance the budget, investment in technology and education, and the use of fiscal policy for capital improvements.

In the decades since, the Republican Party has tried to use Kennedy’s tax cut proposal—achieved after his death by Lyndon Johnson—as intellectual support for the whole Arthur Laffer/supply-side economics concept. There are many, many problems with this faulty comparison. First, any economist should know that Kennedy was a Keynesian, not an apostle of what we call today, the Austrian School, best represented by the late Milton Friedman. (Heller had nothing but disdain for Friedman, considering him something of a clown.) As Heller later said, Kennedy chose the tax cut option as a stimulant, because he knew it would be an easier sell to congress and it would cure the mild recession faster than a capital investment program. (Gibson, p. 21) Once the recession danger had subsided, he would then begin a capital investment program.

Further, as Timothy Noah pointed out in 2012, when congressman Paul Ryan was selling this false comparison, there was a distinct difference between the Kennedy/Heller tax cut and the Mitt Romney/Ryan proposal. The latter was an across the board cut. The Kennedy proposal was weighted toward the middle and especially the lower classes. (The New Republic, 10/11/2012) As Noah wrote, this, in itself, demonstrates that it was a demand, not supply, oriented cut. As Noah also pointed out, Ronald Reagans’ 1981 tax cut was also supply-side oriented, since the higher ratio of tax cuts went to the upper class. Budget director David Stockman later admitted that the upper-class cuts were the point of the act. But it was hard to sell ‘trickle-down economics.’ So, they dressed it up with a new term: ‘supply-side’. (Ibid) And let us not forget: at the time JFK entered office, the top marginal rate was 91 percent. Kennedy was proposing to cut it to around 71%. When President Reagan was done with it, that top rate was eventually reduced to 28 per cent. In other words, Reagan cut it by more than 60 per cent. There can be little doubt that this colossal cut for the already wealthy contributed to the very serious problems of income inequality and the bankruptcy of the treasury.

As Gibson points out, that marginal cut was only part of Kennedy’s tax reform program. He also wanted to encourage investment in plant and technology, so he provided an investment tax credit for corporations to do so. (Gibson, p. 21) Kennedy added a caveat to this: it was only good on materials located in the USA and had an operative life of six years or more. In other words, it was aimed at improving domestic production in the long term. One of the specific aims of this incentive was to make American goods more competitive in world markets by increasing productivity. (ibid, p. 22) In other words, it was a nationalist program.

Related to this, Kennedy wanted to end the policy of tax deferral for companies investing abroad, especially in low tax countries and places like Switzerland. His tax reform program would move to eliminate these kinds of tax breaks. (The only exception to this was to preserve certain tax breaks if a company invested in a developing country emerging from colonialism, e.g. Indonesia.) As Gibson comments, Kennedy’s overall program was not anti-business. It was really pro-production and nationally oriented.


Kennedy’s tax proposal was also aimed at securing for the treasury billions of dollars “in income from interest and dividends going unreported and untaxed each year.” (Gibson, p. 23) His proposal was to use an annual withholding tax, as with middle class income. For dividends, he proposed a higher rate of tax on families with incomes over $180,000 per year—almost two million today. He also proposed tax code alterations to prevent the wealthy from concealing income garnered through advantages like investing in holding companies.

As Gibson notes, many of these proposals—and others—did not make it through congress or to the ultimate revenue bill passed in 1964. It’s not possible to predict if Kennedy would have brought them back if he had lived. But even in their raw proposal state, they would indicate where Kennedy was headed. And that would be on a notably liberal—today the word is progressive—pathway. Kennedy felt that wealth should be acquired and used through productive investments that benefited society as whole. He was not in favor of profits accrued through financial speculation and inheritance. As Gibson notes, Kennedy’s overall program was trying to guarantee that the

…search for profit would not end up destroying rather than creating economic prosperity for the country. In this he was very clear, consistent and coherent. (p. 24)

Kennedy did not like running deficits, but if they were necessary, he would utilize them in aid of economic expansion and low unemployment, in other words, for Keynesian aims. (Gibson, p. 27) Part of that aim was to prepare a stand by program to prevent future economic downturns. A future downturn was to be alleviated through a combination of tax cuts, capital improvements—including direct grants in aid to cities and states—and expanded unemployment insurance. In this regard, and as we should all be cognizant of today after CV 19, JFK seems to be granting options to himself from the domain and prerogatives of the Federal Reserve. (Gibson, p. 29)

The program as a whole was to be greater than the sum of its parts. In other words, Kennedy meant to have it perform in a synergistic fashion. As Gibson wrote, “each specific policy would reinforce and intensify the other initiatives.” (ibid, p. 30) Kennedy wanted to shift capital from non-productive to productive investments. He was specifically interested in expanding low cost energy production. (Gibson, p. 24)

The above program, combined with Kennedy’s policies overseas (which this site had reviewed at length), made the president rather unpopular with the corporate aristocracy. The early sixties were the maturation of the multinational corporation. But beyond that, Kennedy had made himself a target for big business by his stand in the U.S. Steel case in 1962. As the late John Blair wrote about that conflict, it was “the most dramatic confrontation in history between a president and a corporate management.” (Blair, Economic Concentration, p. 635)

Kennedy had taken much time to negotiate a freeze on both wages and prices in the steel industry, in order to head off an inflationary spiral in the economy. After he thought this had been accomplished, on April 10, 1962, Roger Blough of U. S. Steel requested a personal meeting with the president. This was about ten days after the agreement had been signed. Blough flew into Washington and handed the president a press release saying that his company would announce a 3.5% price increase in six hours. (Gibson, p. 10)

Kennedy was outraged that Blough would turn on him at the last minute. He perceived that what the steel companies were trying to do was to humiliate him and cripple leadership of his economic program in public. Most readers of this site know how this turned out. Attorney General Robert Kennedy had FBI agents serve subpoenas on the chief executives of the steel consortium in the wee hours of the morning for suspicion of collusion and price fixing. JFK went on national television to condemn their actions. In no uncertain terms he said that the:

…simultaneous and identical actions of United States Steel and other leading steel corporations increasing steel prices by some $6 a ton constitutes a wholly unjustifiable and irresponsible defiance of the public interest. (Click here for details)

Beyond that, he then went even further in his priority of the pubic good over corporate greed. He stated that the American people would find it hard to accept,

…a situation in which a tiny handful of steel executives, whose pursuit of private power and profit exceeds their sense of public responsibility, can show such utter contempt for the interests of 185,000,000 Americans.

Within hours, one by one, the steel companies capitulated. (Gibson, p. 11) I don’t have to ask the reader the last time he recalls a president speaking up like this for the interests of the common man over the Wall Street oligarchy. In fact, Fortune magazine theorized that Blough may have been acting as an emissary for the corporate class to discourage the Kennedy example of cooperation between government and business. (Fortune, May, 1963) That article said that this hidden motive could explain the bizarre timing and inherent disdain of Blough’s audience with JFK. The article also stated that it was almost as if the intent was to provoke the maximum friction between the new president and the business world. Author Grant McConnell agreed that Blough’s awkward move was meant as a direct challenge to Kennedy. (Steel and the Presidency, 1962, pp. 6–7) McConnell then developed this idea further:

Acceptance would have had the result of forcing the administration to abandon any hope of dealing actively with economic issues, which was of course, one of the chief desires of many business leaders.


There are indications that Blough was representing more than himself in his conflict with Kennedy. One such indication was the continual attacks on Kennedy and his administration in what many have called the Lucepress, that is Henry Luce’s Time-Life-Fortune magazine empire. In fact, one of the earliest and most lasting assaults on Kennedy was published in Fortune magazine. Fortune was a business-oriented monthly publication at that time, e.g. publishing the annual Fortune 500 and Fortune’s Investors Guide. It was designed for the Wall Street, high-end investor class to inform them about business directions and places where capital could be increased through speculation.

Yet, in September of 1961, reporter Charles Murphy was allowed to publish an article called “Cuba: The Record Set Straight.” It was not at all a business article. Without exaggeration, it was an all out attack on Kennedy’s foreign policy. And it was not actually written by Murphy; he was the ghostwriter. It was actually designed by Howard Hunt, under the supervision of Allen Dulles. Hunt himself spent two days working on the formal composition with Murphy. (James DiEugenio, Destiny Betrayed, Second Edition, p. 54) That Luce would allow his flagship business magazine to be used in such a way tells the reader how highly he valued Dulles and, inversely, what he thought of Kennedy.

The article is written in pure Hunt/Dulles, heightened Cold War style. Although its title refers to Cuba, it attacks Kennedy for seeking a neutralist solution in Laos and for not backing Ngo Dinh Diem strongly enough in Vietnam. It then leaps to the conclusion that because of those weak policies, Kennedy had to resort to the Bay of Pigs invasion of Cuba. It was this article which began the whole myth of the cancelled D-Day air strikes. The idea that, on the morning of the actual landing of the Cuban exiles, there was a scheduled air strike from Guatemala intended to knock out the last remnants of Castro’s air force and thereby allowing the invading force to land freely and proceed up the beach uncontested.

At the time this article was being composed, President Kennedy had already decided to terminate Dulles as CIA Director. His brother Robert had served on the Taylor Commission, the White House inquiry into the Bay of Pigs debacle. RFK had the opportunity to examine Dulles and he had concluded that Dulles had lied to his brother about the operation’s chances of success and certain crucial elements of its staging. (DiEugenio, pp. 42–43) It was Robert who then motivated his brother to terminate Dulles for this subterfuge.

As we know today, and as President Kennedy knew back then, there were no such D-Day air strikes scheduled from Guatemala or anywhere else except Cuba. Both the CIA and Kennedy understood that the president wanted further sorties to be flown from a secured air strip on the island. (DiEugenio, p. 45) As Bobby Kennedy later concluded, Dulles knew the operation would fail on its own. He was gambling that Kennedy would send in the Navy to save the expedition, rather than sustain a humiliating defeat. Dulles was wrong. Kennedy found out about his scheme and decided to relieve him. Through his friend Luce, Allen Dulles now had Hunt and Murphy covering for him. He would blame the failure of the Bay of Pigs on Kennedy.

In 1963, Fortune opened up on Kennedy’s general economic policies. They scored his Keynesian approach to the economy. The editors said the real wise men of economics were monetarists like Milton Friedman and Friedrich Hayek. They also criticized JFK for running budget deficits to create growth. As Gibson observes, “Fortune was among the leaders in rejecting virtually every major aspect of Kennedy’s domestic economic program.” (ibid, p. 59)

But that was not all. Charles Murphy wrote another article in Fortune in March of 1963. It was entitled, “Billions in Search of a Good Reason.” This one went after Kennedy’s foreign aid program. Murphy criticized Kennedy’s efforts to try to promote industrialization and growth in the Third World. He concluded that this process had gotten out of hand.

Murphy also criticized Kennedy’s attempts to deal with these nations directly in bypassing international organizations, e.g. the World Bank. Murphy also scored his failure to stipulate that aid must be linked to agreements to purchase goods from America. This seems to be partly a reaction to Kennedy’s Alliance for Progress, which offered direct aid from the Treasury to Latin American nations. As Walter LaFeber notes in his book Inevitable Revolutions, that program was stripped down under Lyndon Johnson. When Nixon became president, he assigned Nelson Rockefeller to write a report on the program. Once Rockefeller’s report was submitted, the president eliminated the alliance. (Click here for details)

Murphy concluded his article by saying that a large and important part of the banking community was against Kennedy’s foreign aid program. He specifically named the chairman of the board of Chase Manhattan and the president of First National Bank of Chicago. To even have Murphy writing these articles was clearly a conflict of interest on a personal level. Because once Kennedy had read the 1961 article on the Bay of Pigs, he was so angry that he stripped Murphy of his Air Force reserve status. In a letter to Edward Lansdale, Murphy said this did not bother him that much. Why? For his true loyalty was not to President Kennedy but to Allen Dulles. (DiEugenio, p. 46)

As anyone who knows what Kennedy was trying to do in places like Congo and Indonesia, it would be fitting that the banking community would be opposed to his reformist policies. As John Perkins outlines in his book, Confessions of an Economic Hit Man, the aim of the international banking community was and is to keep emerging nations in debt so that they can control investment, thereby substituting imperialism for colonialism. Kennedy actually mentioned his opposition to this policy in his Inaugural Address: “…we pledge our word that one form of colonial control shall not have passed away merely to be replaced by a far more iron tyranny.” To this writer, that statement—and Kennedy’s policies in places like Indonesia and with the Alliance for Progress—seems to be in opposition to the emerging globalist agenda of the American banking community. As the European colonial era was ending, Wall Street saw an opening for American imperialism to take its place.


Douglas Dillon was ambassador to France as part of the Eisenhower administration. He was quite familiar with the Rockefeller family, since he attended the elite private school of Pine Lodge in New Jersey with three of the Rockefeller brothers: Nelson, Laurence, and John. After the war, he became chairman of his father’s firm, Dillon, Read, and Company, a large investment bank on Wall Street. He was a lifelong Republican, who aided Dwight Eisenhower in his campaign to secure the GOP nomination in 1952. He was also a large contributor to Ike’s general election. As many authors have pointed out, John Kennedy did not really appoint his own cabinet. His brother-in-law Sargent Shriver and, to a lesser extent, Ted Sorenson and Phil Graham of the Washington Post organized a search list, which they then brought to Kennedy. (Arthur Schlesinger, A Thousand Days, p.132) According to Arthur Schlesinger, it was Paul Nitze who first suggested Dillon as Treasury Secretary. Then Graham and Joe Alsop pushed him on Kennedy. What made this even more odd is that Dillon had contributed to Nixon’s campaign in 1960. (ibid, p. 135) When Schlesinger pointed this out, Kennedy replied he really did not care about that issue. What he wanted to know was if Dillon was able and would he go along with his program?

Dillon was able, but if Kennedy had demanded a bit more research, he would have found out that Dillon was a questionable enlistee in his program. For instance, from before he was elected, it was clear that Kennedy was going to support the democratically elected Patrice Lumumba in an independent Congo. Dillon had backed the Allen Dulles view that Lumumba was in the arms of Moscow—which he was not. He also feared Lumumba’s powers of oration to rally the army about him. (David Talbot, The Devil’s Chessboard, p. 379–80) Another African leader that Kennedy favored was Kwame Nkrumah of Ghana. Dillon thought that Nkrumah was a Castroite and, therefore, Kennedy should not aid Nkrumah’s pet project, the Volta Dam. (Philip Muehlenbeck, Betting on the Africans, pp. 84–85)

As Donald Gibson notes, one of the things that many of his critics were disturbed about was Kennedy’s willingness to loan what they called “easy money” for credit purposes. Which, of course, is what the Alliance for Progress was about: low interest or no interest loans for infrastructure and capital improvement. By 1962, Dillon seemed to have gone over to the side of Kennedy’s critics on this and other issues. For example, he was pressing for less government spending, except for defense expenditures. The Wall Street Journal, another consistent critic of Kennedy, wrote in 1963 that the activists in the administration, like Heller, had gained the upper hand over the conservatives like Dillon. (Wall Street Journal, 10/3/63, article by Philip Geyelin) The article said that Kennedy did not want to rely on monetary policy to cure a balance of payments problem. And, in fact, the president had come to think that such problems were too important to be left to bankers. He also did not agree with another of their notions, namely letting interest rates rise. (Hobart Rowen, The Free Enterprisers: Kennedy, Johnson and the Business Establishment, p. 179)

By 1963, there was a split within the administration over general economic policy. There was on one side the activist Kennedy group which included JFK, Heller, and Franklin Roosevelt Jr. of the Commerce Department. On the other side was Dillon, the Federal Reserve, and their outside backer David Rockefeller of Chase Manhattan. (Gibson, p. 74)


One way that it appears that Kennedy tried to get around this logjam was through James Saxon. Saxon was Kennedy’s Comptroller of the Currency. That position charters, regulates, and supervises all national banks and, back then, thrift institutions. It also had control over branches and offices of foreign banks in America. I first recall reading about Saxon in the late Jim Marrs’ book, Crossfire. As Marrs described it, Saxon had been:

…at odds with the powerful Federal Reserve Board for some time, encouraging broader investment and lending powers for banks that were not part of the Federal Reserve System. Saxon also had decided that non-Reserve banks could underwrite state and local general obligation bonds, again weakening the dominant Federal Reserve banks. (p. 275)

From here, Marrs went on to the controversy surrounding Executive Order 11110, where Kennedy authorized printing silver certificate currency out of the Treasury. I believe Marrs was wrong about that issue, as many others have been. (Click here and scroll down to EO 11110) But he was correct about James Saxon’s struggle.

In November of 1963, Saxon granted an interview to US News and World Report. The interview was given before the assassination, but not published until after Kennedy’s death, in the issue of 11/25. In the introduction to the interview, the editors wrote that:

A little-known federal banking agency suddenly has burst into the news, stirring controversy. James J. Saxon, Comptroller of the Currency, who has shaken up many banking regulations, now finds himself at odds with the Federal Reserve Board and some of this country’s leading bankers. The Comptroller approved scores of new national banks, and branches, spurred key mergers, revised outmoded rules. Result: Keener competition for deposits and loan customers.

In this interview, Saxon explained why he was taking these rather exceptional measures. He attacked the banking establishment for not doing all they could to fulfill their customers’ needs; whether they be individuals or businesses. He specifically criticized low interest rates on saving accounts and the shortage of installment loans. He also complained about the reluctance of banks to make loans to farmers. He added that some of this was due to over-regulation, but he was also clear that banks “ought to be out working with all sorts of businesses, with industry, with farmers finding ways to be helpful. Many haven’t been doing it.” Saxon noted that he was attempting to relax rules in certain areas in order to encourage more widespread granting of credit. He said that he was very well received among commercial entities interested in borrowing.

Saxon went on to say that his reform agenda had run into opposition within the banking industry itself, mainly from bankers of the older generation. He also specifically said he had problems with the Federal Reserve Board. He mentioned the Chairman of the Board, William McChesney Martin, as being in disagreement with him. The interviewer stated that when Saxon went to congress, Martin opposed all of his reform suggestions.

Saxon thought the Fed had too much power over what banks could offer as interest rates on accounts and also too much control over loans on large construction projects. In regards to that, he specifically stated that the Fed should not determine how money can be used. In the interview, he said that Rockefeller’s Chase Manhattan had too much sway with the Fed. Saxon wanted more competition in banking and he wanted more new banks in more communities, since he felt banks had much to offer to the life of a community, no matter how small. I encourage everyone to read this remarkable interview.

At the end, he clearly implies he had John Kennedy’s backing and no one had resisted his policies from above. In reading the interview, one wonders if Saxon was the man Kennedy sent forward to duel with Chase Manhattan, since Dillon would not. It turns out that Kennedy and Saxon had a common problem, namely Dillon.

After Kennedy’s death, on May 18, 1964, Saxon sent Dillon a memo.  It was really more of a complaint. Saxon’s office had sent three bills to Dillon to pass on for approval to congress. They all coincide with the tenor of the Saxon interview. The first was to expand the comptroller’s office powers over foreign banking and financing corporations. The second was to clarify requirements of reports on conditions of national banks. The third was “to remove the power of the Board of Governors of the Federal Reserve System to examine National Banks.” Saxon was quite upset that Dillon had stalled on all three, to the point that he felt his office was being discriminated against. He complained that his views were being ignored, especially when the Federal Reserve took a contrary opinion, which they likely did in regards to the third bill he mentioned to Dillon. One has to wonder if, with Kennedy dead, Dillon felt free to marginalize Saxon.

At the end of Part 6 of his “Creating the Oswald Legend” series, Vasilios Vazakas points to the upper levels of the American Power Elite as to where the final approval over JFK’s assassination came from. As Gibson points out, and as I have tried to indicate here, the economic powers in America had been pushing for a globalist agenda even during Kennedy’s presidency. They wanted European colonialism to be replaced by American imperialism, which would allow American business entities to be shipped abroad. They also wanted old-fashioned tight-money monetarist rules in banking. Kennedy opposed both.

As David Talbot notes in The Devil’s Chessboard, Doug Dillon supervised the Secret Service back in 1963. Even Howard Willens of the Warren Commission was surprised as to how Dillon managed to escape a real grilling, including refusing to turn over certain Secret Service records. (Talbot, p. 584) Willens later found out that Dillon had enlisted Warren Commissioner John McCloy in his cause and McCloy had gone to President Johnson to give Dillon more backup. McCloy was employed at the time by the Wall Street law firm of Milbank, Tweed, Hadley, and McCloy. McCloy’s office was located in New York, at Rockefeller Center.

Last modified on Monday, 18 January 2021 20:44
James DiEugenio

One of the most respected researchers and writers on the political assassinations of the 1960s, Jim DiEugenio is the author of two books, Destiny Betrayed (1992/2012) and The JFK Assassination: The Evidence Today (2018), co-author of The Assassinations, and co-edited Probe Magazine (1993-2000).   See "About Us" for a fuller bio.

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