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-After making his fortune on and off Wall Street, Joe was one of the first Eastern businessmen to grasp the potential of the movie business. By the mid-1920s, the American film industry was turning out 800 films a year and employed as many people as the auto industry. This was "a gold mine", Joe told several friends. After buying a chain of thirty-one small movie houses, Joe realized that the way to make real money was on the production side. Moreover, he was attracted to the glamour of Hollywood. Not only could he influence the way films were made, he could meet dazzling young women.
Gloria Swanson |
- While his wife Rose was in Boston, pregnant with their eighth child, Joe was in Hollywood engaged in his notorious liaison with the superstar Gloria Swanson.
- Swanson was by no means Joe's first extramarital adventure, but she was his first real affair. She was the perfect trophy to symbolize the great worldly success he had achieved. |
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- In 1926, Joe convinced a patron of his brokerage firm, named Guy Currier, to finance his plans to enter the movie business. Using insider information he received as a broker at Hayden, Stone, Joe bought the Film Booking Offices of America (FBO), sight unseen, from its British owners; and then received a commission of $75,000 from the trading company for the deal. Joe quickly changed the studio's focus to making cheap Westerns and dog pictures that could be turned out in a week for $30,000 to $50,000 each. Although they lacked artistic merit, the pictures sold, and FBO profits ballooned.
- The following year, Joe Kennedy used the profits from FBO to purchase the Radio Corporation of America (RCA) who had a new system for making motion pictures with sound. Now that Joe headed a studio, he wanted to buy a theater chain to distribute his pictures. This desire would eventually lead to the infamous "Pantages Scandal." [ see story below - How Joe framed an Innocent Man ]
- Kennedy purchased KAO (Keith-Albee-Orpheum Theaters Corp), a chain with 700 movie theaters in the US and Canada, and more than 2 million patrons daily. Edward Albee, the founder of KAO, had initially refused to sell out, but when Joe promised that he would remain in control of the chain, Albee agreed to Kennedy's offer. But once the papers were signed and Joe was chairman, Joe said bluntly, "Didn't you know, Ed? You're washed up. Through." |
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- In 1928, Joe was asked to serve as a special advisor on the board of Pathe Exchange Inc., a production company who produced a weekly newsreel. Joe soon became chairman of Pathe and began implementing his own ideas, beginning by slashing the salaries of the employees. The cost-cutting applied to others, however, and not to himself - he was drawing a salary of $100,000 from Pathe.
- Later that year, Joe merged FBO with his chain of theaters (KAO) to form the famous RKO. Joe then had RCA trade its FBO stock for stock in the new company, a deal which brought him $2 million. |
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- Joe Kennedy had become so entranced by Gloria Swanson and Hollywood that when his father PJ Kennedy died in May of 1929, Joe would not leave California to attend the funeral. Joe's cousin Joseph Kane later confronted him saying, "You son of a bitch, you didn't even go to your father's funeral. You were too busy on the West Coast chasing Gloria Swanson around."
- Joe replied, "I couldn't leave. If I left for two days, the Jews would rob me blind."
- A friend, Kane Simonian, observed, "Joe Kennedy didn't attend his father's funeral....When someone doesn't go to his father's funeral, you can believe he would do anything."
- Indeed, nothing so much illuminates Joe's character as his decision to remain in California while the rest of the family and many of Boston's most notable citizens paid their last respects to the man who had been responsible for so many of Joe's early successes. From Joe's entry into Harvard, to his job as bank examiner and designation as president of Columbia Trust, PJ had always been there to help his son. Now that his father could do nothing more to help him, Joe was too busy in Hollywood to say good-bye. |
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- In 1931, Joe Kennedy plundered Pathe Exchange. He arranged for RKO to pay Pathe insiders like himself $80 a share. The rest of the stockholders would receive just one dollar and fifty cents a share. Favoring insiders to such a degree was nothing more than robbery. Since Joe had acquired the stock for $30 a share, he more than doubled his investment in fewer than two years. Stockholders filed suit, but nothing came of it.
- Since Joe was in a position to dictate the terms of the deal, he was able to craft the transaction to enrich himself. Moreover, he took advantage of privileged information from the files of major stockholders in the movie companies who were clients of Guy Currier, his partner at RKO. While Currier was on vacation in Italy, Kennedy pillaged his files for inside information such as the size of holdings of other stockholders and their financial condition. He then used the information to further his own interests. When Currier returned, he discovered that RKO's value had plummeted, and he and his fellow investors had been betrayed. Joe Kennedy "did not behave in an honorable way," said Anne Anable, Currier's granddaughter. "Unfortunately, my grandfather didn't realize how corrupt Kennedy was," she said. |
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- Years later, Wisconsin Congressman John Schafer took to the floor of the House to denounce Joe Kennedy as the "chief racketeer in the RKO swindle." Another congressman, William Sirovich of New York, said the "inside group at RKO had committed fraud by unloading their stock, making millions." He called for an investigation of the movie industry, but by then Joe had become close to key congressional leaders as well as to President Roosevelt, and the probe was mysteriously halted.
- In Joe's papers, Doris Kearns Goodwin found letters from anguished stockholders of Pathe. Anne Lawler of Jamaica Plain in Boston said she lost her life savings. "This seems hardly Christian-like, fair or just for a man of your character," she wrote. "I wish you would think of the poor working woman who had so much faith in you as to give all their money to your Pathe." |
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- Joe Kennedy had been chairman of FBO for two years and nine months, chairman of Keith-Albee-Orpheum for five months, special adviser to First National Pictures for six weeks, special adviser to RCA for two and a half months, and adviser to Paramount Pictures for seventy-four days. In all, Joe had made an estimated $5 million in the movie business. |
