Joseph P. Kennedy, Sr.

This article is about the politician, Joseph Kennedy, Sr.; For the baseball player, see Joe Kennedy.

Building tremendous wealth

Wall Street

In the early 1920s Kennedy moved to New York to make his mark on Wall Street, buidling one of the largest fortunes in the United States through investments on Wall Street during the 1920's and early 1930's.

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David Kennedy, author of "Freedom From Fear," describes the Wall Street of the Kennedy era:

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"(It) was a strikingly information-starved environment. Many firms whose securities were publicly traded published no regular reports or issued reports whose data were so arbitrarily selected and capriciously audited as to be worse than useless. It was this circumstance that had conferred such awesome power on a handful of investment bankers like J.P. Morgan, because they commanded a virtual monopoly of the information necessary for making sound financial decisions. Especially in the secondary markets, where reliable information was all but impossible for the average investor to come by, opportunities abounded for insider manipulation and wildcat speculation."

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The Crash

Kennedy formed alliances with several other Irish-Catholic money men, including Charles Mitchell, Mike Meehan and Bernard Smith. For example, he helped establish the Libby-Owens-Ford stock pool, an arrangement in which Kennedy and colleagues created an artificial scarcity of Libby-Owens-Ford stock to drive up the value of their own holdings in the stock. Using inside information, and the public's lack of knowledge, a pool operator would bribe journalists to present that information in the most advantageous manner. The stocks would then change in price up or down depending on the position favoured by the pool. This conduct is now illegal as both insider trading and market-manipulation. Some attribute these market manipulations as being in part responsible for the Stock Market Crash of 1929 which some say triggered the worldwide Great Depression.

Related Topics:
1929 - Great Depression

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In any event, Kennedy got out of the market in 1928, long before the Crash locking in multi-million dollar profits. Indeed when the 1929 crash did come, he made money due to his short positions.

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Liquor Importing, Movie Production, Property

During Prohibition, Kennedy's company Somerset Importers became the exclusive American agent for Gordon's Dry Gin and Dewar's Scotch which was only allowed to be imported during Prohibition for medicinal purposes. Anticipating the end of Prohibition (not difficult to do as it slowly passed through the required number of states) he assembled a very large inventory of stock that he sold for a profit of millions of dollars when Prohibition was repealed in 1933. He invested this money in residential and commercial real estate, the Merchandise Mart in Chicago and Hialeah Race Track.

Related Topics:
Prohibition - 1933 - Hialeah Race Track

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Kennedy made a huge amount from reorganizing and refinancing several Hollywood studios. Some speculated he enjoyed the industry because of the attractive women involved in it. Film production in the U.S. was a lot more decentralized than it is today, with many different movie studios producing film product. One small studio was FBO, the Film Booking Office of America, which specialized in Westerns produced cheaply. Its owner was in financial trouble and asked Kennedy to help find a new owner. Kennedy liked the business so much he formed his own group of investors to buy it for $1.5 million.

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He then moved to Hollywood in March 1926 to focus on running the studio. Movie studios were then permitted to own exhibition companies and often found it necessary to get their films on the big screen. With that in mind, he acquired the Keith-Albee-Orpheum (KAO) Theaters Corporation which had more than seven hundred theaters across the United States in a hostile buyout. He later acquired another troubled production studio Pathe Exchange.

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In October 1928, he formally merged his film companies FBO and KAO to form Radio-Keith-Orpheum and made a large amount of money in the process.

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Kennedy knew how to play hardball. Keen to buy Pantages Theater chain which had sixty-three stong performer theaters, Joe made an offer of $8 million. It was declined. Joe then stopped distributing his movies to Pantages. Still Alexander Pantages declined to sell. When Pantages was charged and tried with rape though, his reputation took a battering and he accepted Joe's revised offer of $3.5 million. Some allege that Joe's associates were involved in encouraging Eunice Pringle to make false allegations against Pantages.

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It is estimated that Kennedy made over $5 million from his investments in Hollywood.

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