The second article in this three-part series described the Cleveland-based industrial complex of which Hanna Mining Company is the nucleus (the complex includes National Steel Corporation, Consolidation Coal Company and Chrysler corporation) and the four family dynasties (Hannas, Humphreys, Loves and Weirs) who control it. This final installment will show how members of the Hanna interest group have attained political influence commensurate with their economic and social status. Both M.A. Hanna (1837-1903) and George M. Humphrey (1890- ) -- the two men most responsible for the construction of the Hanna industrial empire - have played prominent roles in midwestern and national Republican politics.
M.A. Hanna - McKinley
M.A. Hanna, son of a prominent Cleveland grocer, became a partner of Rhodes and Company,a coal and iron shipping firm, in 1864 through his marriage with Daniel P. Rhodes' daughter. Hanna became the dominant partner through a shrewd policy of mergers which gained the company control of the mines producing the coal and iron its ships carried.He built up Rhodes & Co. until, under the name of M.A. Hanna Company, it became one of the two or three largest firms in coal and iron trade in the Ohio lake district.
Hanna's initiation to politics resulted from his presidency of a Cleveland streetcar railway, also inherited from his father-in-law. In order to get franchises for street routes, the company contributed to the election expenses of particular councilmen.
He soon emerged as one of the key fund-raisers (as well as contributors) for the Ohio Republican Party machine. In 1894, he withdrew from active participation in the affairs of the M.A. Hanna Co. (leaving its direction to his brother Leonard) in order to manage the campaign to secure the nomination of fellow-Ohioan William McKinley as the Republican presidential candidate of 1896. Hanna successfully engineered and personally financed, at the cost of $100,000, McKinley's nomination. After the nomination, he assumed the chairmanship of the Republican National Committee. As McKinley's campaign manager,he systematized a method of collecting contributions whereby each corporation and bank was assessed for a specific amount in accordance with its earnings. After McKinley's election, Ohio's governor named Hanna to the U.S. Senate seat vacated by former Senator Sherman who was appointed Secretary of State.
Hanna's rise to leadership in the Republican Party occurred at a critical juncture in the organizations history. At the beginning of his chairmanship, the party still represented the diverse interests of midwestern (Chicago, Cleveland, Cincinnati) and eastern (New York, Boston, Philadelphia) bankers and industrialists who made major contributions to its coffers. For though Wall Street financiers already constituted the most influential interest group in the party, they lacked control over the state party machines (except New York's) which managed delegates' votes. In 1896, Wall Street financiers contributed by far the bulk of the funds-$3,000,000 out of the $3,500,000-needed to run McKinley's campaign for the presidency after they failed to impose their choice, Levi Po Morton, on the convention.
During McKinley's first term (1896-1900), however, there occurred an unprecedented reorganization of major sectors of American industry in which small geographically dispersed businesses were amalgamated into large combines directed by Wall Street financiers. These financiers, because they had wrested control of state industries out of the hands of local proprietors, began to have sway over state party machines. The locus of national party control thus began to shift into the hands of Wall Street.
Consequently, M.A. Hanna, the major fund-raiser for the Republican Party, became increasingly dependent upon prominent Wall Street financiers and industrialists (such as William and John D. Rockefeller - Hinnats boyhood schoolmates -- and James Hill and J.P. Morgan) for financing Republican campaigns. For example, in 1900 one company alone, Rockefeller's Standard Oil Company of New Jersey, contributed one-tenth ($250,000) of McKinley's entire campaign expenditures.
As McKinley's congressional representative, Senator Hanna was in constant contact on policy issues with these financiers and became a major spokesman for their interests in Congress. In close collaboration with them he wrote the trust plank of the Republican platform of 1900, which held that trusts were necessary for the development of foreign trade. (1)
George Humphrey - Taft and Goldwater
George Humphrey's aggressive policy of mergers in the 1920's and 30's rejuvenated the company M.A. Hanna had left to his brother and transformed it into the nucleus of an industrial empire see NACIA Newsletter, July-August 1968). The wealth generated by this large complex of companies enabled Humphrey to become a prominent voice in midwestern Republican politics though, unlike M.A. Hanna, he was not a professional politician. His role, also unlike Hanna's, has been that of a leading financier of the two major political movements since World War I which have challenged east coast hegemony over the Republican Party -- the Robert A. Taft and Barry Goldwater movements.
The industrial complex. which Humphrey controls is representative of other such complexes,located primarily in the midwest, west and southwest which, particularly since World War II, have grown independent of Wall Street control. These locally controlled industrial complexes have formed the basis of great centers of finance rivaling Wall Street. An indicator of this shift in the balance of financial power is the decrease in the percentage of national banking resources which Wall Street commanded from 25% at the end of World War II to 12% in 1964. (2)
This rivalry between finance centers did not become plainly manifest in internal Republican politics (with the possible exception of the 1912 split between the Taft and Roosevelt factions of the party) until the convention of 1940 at the advent of World War II. This convention marked the first stage in a long series of battles between the political representatives of the financial and industrial enterprises outside the Wall Street nexus of control whose markets and investments were still primarily domestic, and the political representatives of the more advanced Wall Street-controlled financial and industrial enterprises whose markets and investments were rapidly becoming international. The former, often labeled "isolationists" and "conservatives" emphasized domestic economic stability and thus opposed U.S. intervention in World War II unless directly threatened. The latter, on the other hand, often labeled "internationalists" and "liberals" emphasized international economic stability and thus advocated U.S. entry into the war to protect Europe where they had many business interests. (3)
The economic leverage which Wall Street was able to exert over state party machines to gain delegate votes enabled the nomination of its favorites, Wendell Wilkie (1940), Thomas Dewey (1944, 1948) and Dwight Eisenhower (1952, 1956), despite the numerical majority of conservative delegates. The standard-bearer for the conservatives in these initial skirmishes was Robert Taft, who lost the 1948 and 1952 nominations by slim margins.
Eisenhower acknowledged the strength of the conservatives by appointing a number of key Taft supporters to his cabinet, among them, George M. Humphrey, whom he named Secretary of the Treasury. As one of the cabinet strongmen, Humphrey constantly articulated the conservative ideology in emphasizing the achievement of domestic stability through low taxes, tight credit control and a balanced budget. His primary adversary in cabinet debates, the other cabinet strongman, John Foster Dulles (formerly a partner in the Rockefeller-linked Wall Street law firm of Sullivan and Cromwell and a past president of the Rockefeller Foundation), articulated the liberal ideology of the financiers and industrialists with extensive overseas interests, emphasizing the achievement of international economic stability through foreign aid and defense expenditures. After five years of failure in his attempt to balance the budget, Humphrey resigned his post in late 1957.
George Humphrey played two major roles in the movement to secure the presidential nomination for Goldwater. In the beginning of 1964, when Goldwater announced his candidacy, Humphrey assumed the position of midwest chairman of the Goldwater for President finance committee. In this capacity, he also helped organize a business committee of 450 for Goldwater. Aside from being a major fund-raiser, he was also a heavy contributor - as were other members of the four family dynasties which control the Hanna complex (see PDF version for charts).
CAMPAIGN CONTRIBUTIONS OF THE FOUR FAMILY DYNASTIES (See .pdf version for chart.)
Secondly, capitalizing on the close friendship he developed with former president Eisenhower, (4) Humphrey functioned as one of the main liaisons between the Goldwater campaign managers and the former chief executive. Twice Humphrey played the main role in neutralizing Eisenhower's stance in the part, preventing him from endorsing candidates put forward by the party's liberal wing.
The first instance of this occurred shortly before the crucial California primary which Goldwater carried over Rockefeller by a close margin. Humphrey telephoned Ike from Cleveland asking him to disavow widely-held interpretations of an article he had been persuaded to sign by New York Herald Tribune president Walter Thayer. The front page banner headline article (May 25, 1964) which gave a detailed description of the type of man Ike believed the Republicans should nominate, appeared to endorse Nelson Rockefeller over Barry Gold-water. To get the maximum political mileage out of the article, Thayer waived the copyright and released the story to the liberal press and wire services where it stimulated a flood of other interpretive articles and editorials labeling Ikets act as anti-Goldwater. Shortly after Humphreyts call, Eisenhower held a press conference at which he told the assembled reporters, "You have tried to read Goldwater out of the party, I didn't." (5)
The second incident occurred in early June when Humphrey called Eisenhower during the Republican Governors Conference to persuade him to dampen rumors generated by the press that he had agreed to endorse Pennsylvania governor Scranton. Ike promptly called Scranton to tell him that their June 6th visit at Gettysburg was not to be construed by him as an endorsement. When Eisenhower arrived in Cleveland to attend the Governors Conference,"Humphrey met him and never left his side." (6)
Political Payoffs for M.A. Hanna Company
The connections Humphrey made through his role as a major contributor to and fund-raiser for the Republican Party had invaluable payoffs for the industrial empire he controlled. For instance, the success of Hanna Mining Co. in acquiring control of Brazilian iron ore deposits was due in large part to the roles played by several prominent Republicans with high-level U.S. government contacts. While Humphrey was still serving as Eisenhower's Secretary of the Treasury, he dispatched his cabinet cohorts son, John W.F. Dulles, who had had mining experience in Mexico, to organize Hanna's operations in Brazil.
Another key Republican associate of Humphrey is Herbert Hoover, Jr., son of the former U.S. president, who joined Hanna's board in 1960. Hoover brought to the company invaluable experience in international mining and government intelligence which could not but have helped the company in its dispute with the Brazilian government over its rights to the Minas Gerais ore deposit (see NACLA newsletter, May-June 1968). Hoover, a renowned international oil, mining, and electronics engineer, served the Brazilian and Iranian governments, among others, as an engineering consultant between 1942 and 1952. In late 1953, at the request of John Foster Dulles, he undertook a special assignment to mediate the Iranian oil dispute. The agreement which Hoover negotiated bestowed upon a consortium of U.S. and European oil companies control of Iranian oil properties which Premier Mossadegh had nationalized prior to his overthrow by the CIA in August, 1953. (7) In September, 1954, upon successful completion of this assignment, Hoover assumed the number two position in the State Department. As Under Secretary of State, he further developed his high-level intelligence contacts through the chairmanship of the Operations Coordinating Board, the executive committee of the National Security Council, highest foreign policy planning board of the government. (8)
Still another prominent Republican, John J. McCloy (partner in the Rockefeller-associated law firm of Milbank, Tweed, Hadley and McCloy, and former Board Chairman of the Chase Manhattan Bank) played a key role in securing Hanna's access to the Minas Gerais concession. After the overthrow of the Goulart government in 1964, McCloy, retained as Hanna's counsel, escorted U.S. ambassador to Brazil, Lincoln Gordon, to the office of President Castelo Branco, Goulart's successor, to ask for a restoration of the concession as one condition for receiving U.S. financial aid. 9 McCloy, the first president of the World Bank (1949) is also in a position to help Hanna acquire World Bank loans to develop its Brazilian operations. In January 1968, the World Bank granted a $22 million loan to finance the integrated aluminum mining, refining and smelting facilities of Companhia Mineira de Alumino, controlled by Hanna Mining Co. and ALCOA. Hanna has applied to the World Bank for another loan to provide part of the financing for the development of the iron ore deposits by its subsidiary Mineracoes Brasileiras Reunidas and for the development of a federal railway network to connect the deposits with a proposed ore harbor (see NACLA Newsletter, May-June, 1968). (10)
Another way Humphrey utilized his political connections to benefit the industrial empire he controls is exemplified by a contract M.A. Hanna Co. signed to provide nickel to the General Services Administration (GSA) at the beginning of the Eisenhower administration. At the outbreak of the Korean War, when the United States suffered a severe nickel shortage, Hanna officials informed the Office of Defense Mobilization that they had discovered a large deposit of nickel-bearing ore in Oregon. The company spokesmen proposed that the government help finance the development of the mines and the erection of a smelting plant as well as buy the nickel. GSA administrators, however, criticized the terms of the proposal as yielding M.A. Hanna too excessive a profit and were on the point of rejecting it when Eisenhower announced Humphrey's cabinet appointment. Under pressure from above, the GSA officials reversed their decision and approved the contract on January 16, 1953, a week before Humphrey assumed his post.
A congressional investigation conducted by Senator Symington at the suggestion of the Kennedy administration later revealed the extortionate profits M.A. Hanna made as a result of the contract. The congressmen found Hanna's profits on sales over a six year period were 57.4%. (11)
1. Most of the documentation for the above analysis is from: Marcus Alonzo Hanna; His Life and Work, Herbert Crly, Archon Books, 1965 (originally published by Macmillan in 1912).
2. The Making of the President 1964, Theodore H. White, Atheneum, 1965, p. 69.
3. It is instructive to examine the contrasting ideologies of the spokesman of the Hanna fortune - G.M. Humphrey, who backed Taft - and of the spokesmen of the Rockefeller fortune - John J. McCloy and Richard Aldrich (former Board Chairmen of Chase Manhattan Bank) who backed Dewey and Eisenhower, in light of the development of their respective enterprises. For the companies on which M.A. Hanna and John D. Rockefeller based their fortunes had similar origins; both exploited raw materials with great profit potential and both were founded in Cleveland within a decade of each other by boyhood schoolmates. Yet their rates of growth were quite dissimilar. Rockefeller carried out a policy of mergers and amalgamation in the 1870's whereas Humphrey undertook such a policy for the Hanna enterprise only in the 1920's and 30's. The early formation of the Standard Oil Trust enabled overseas expansion as early as the 1890's to secure foreign sources and markets for oil. The Hanna enterprises began to expand abroad to secure ore sources and markets only within the last decade.
4. Eisenhower was a frequent guest at quail-shoots on Humphrey's Georgia plantation. The two also often golfed together at the exclusive Laurel Valley Golf Club in Pennsylvania which Humphrey's business associate George Love organized in 1959 with Ben Fairless of U.S. Steel.
5. Suite )50, The Story of the Draft Goldwater Movement, F. Clinton White, Arlington House, 1967, pp. 342-3.
6. What Happened to Goldwater: The Inside Story of the 1964 Republican Campaign, Stephen Shadegg, Holt, Rinehart and Winston, 1965, p. 127.
7. For the story of the CIA in Iran, see The Invisible Government, D. Wise and T.B. Ross, Random House, 1964.
8. "Number Two Job in the State Department," The New York Times Magazine, E.B. Lockett, October 31, 1954.
9. The New York Times, November 7, 1964.
10. George Humphrey also had close ties to the World ank as a result of serving as a member of its Board of Governors while Secretary of the Treasury.
11. For a more detailed account of this scandal, see "Humphrey of Hanna," Despoilers of Democracy, Clark Mollenhoff, Doubleday, 1965, pp. 74-91.
