The Strong Man: John Mitchell and the Secrets of Watergate (31 page)

MITCHELL:
I’m talking about the whole picture of this ITT—what can develop out of this Senate investigation [by the Antitrust and Monopoly Subcommittee] and so forth, if you don’t need it. You don’t need it for these bastards up there to burden us with it. I don’t know who’s been giving you the information, but it’s a bad political mistake. I’m not talking about the merits of it, either.

NIXON:
John, the problem we’ve got is this: that we’ve got is that—I don’t give a damn about the merits either. But we have a situation—and Connally has spoken to me about it—but where the business community, for, for—believes that we’re a hell of a lot rougher on them in the antitrust than our predecessors were.

MITCHELL:
All right. Now let me—

NIXON:
And they don’t think you are, they think McLaren is.

MITCHELL:
Well, there, there are reasons for it.

NIXON:
Because he leads you to believe this.

MITCHELL:
And it wasn’t McLaren, you know, that started all this. It was your Council of Economic Advisers and [Federal Reserve Chairman] Arthur Burns, and it was done in order to help cool this economy and the stock market, and I could go on a lot of other things. And the things that they’re accusing McLaren of are just—made out of whole cloth. It’s just not true. There are antitrust cases here, but what I want to talk about is the political aspects of it…. You just can’t stop this thing while up at the Supreme Court because you will have Griswold quit, you will have a Senate investigation…. There are other ways of working this out.

NIXON:
Okay. You—

MITCHELL:
But I’m—I want to ta—I want to—

NIXON:
Well, go ahead, you could—yeah, I understand that. If that’s the problem politically, go ahead.

Here was one of Mitchell’s finest hours as a public servant. Within minutes, he had talked Nixon down from the ledge on the
Grinnell
appeal, taken a shot at Ehrlichman (“I don’t know who’s been giving you the information, but it’s a bad political mistake”), and defended his own man (“the things that they’re accusing McLaren of are just made out of whole cloth”). At Justice the next day, Mitchell called his deputy aside. “By the way,” the attorney general bemusedly told Kleindienst, “your friend at the White House says that you can handle your fucking antitrust cases any way you want.”
²⁴

Ten days later,
on the first of May, John and Martha Mitchell attended the 1971 Kentucky Derby as personal guests of Republican governor Louie Nunn. After the race, the Mitchells and scores of other guests repaired to the governor’s Beaux Arts mansion in Frankfort for a lavish buffet dinner. Also on hand was an ITT lobbyist, a regular at Governor Nunn’s Derby bashes, named Dita Davis Beard.

An irrepressible character in her mid-fifties, twice divorced with five children, the gray-haired Beard had been a hard-drinking, chain-smoking, foul-mouthed fixture on the Washington political scene since 1961, when she joined ITT’s new capital offices. It was Beard who “put ITT on the political map,” plying congressmen with corporate catnip: rides to and from their districts on ITT planes, free limousines and booze, ghostwritten floor speeches. With her nerve and verve, Beard transcended the era’s limitations on women. And she had one other thing going for her: a mutual admiration society with Geneen, whom she, uniquely among the corporation’s top executives, freely called “Hal.” The ITT president adored his lady lobbyist, admiring her pluck, fattening her expense account, and invited her to deal directly with him—an arrangement resented by her boss, Bill Merriam.
²⁵

From their mutual friend, Governor Nunn, Beard knew in advance that Mitchell would be attending the Kentucky Derby dinner. She and Mitchell had never met. When she first approached him, Mitchell listened politely as Beard complained about DOJ’s pursuit of ITT; he patiently explained that he had disqualified himself from the litigation and therefore “could not and would not” discuss it with her. Mitchell later estimated the exchange took all of “two minutes at the most, possibly three.” But Dita Beard wasn’t done. Minutes later, as the Mitchells and Governor Nunn filed through the buffet line, “Mrs. Beard again approached me,” Mitchell later testified, “with the same harangue….”

I repeated my desire not to discuss the subject matter and advised her that I did not appreciate her pressing the subject. We went…to the dinner table and sat down, and while we were eating our dinner it is my recollection Mrs. Beard approached us again…. I lost my sweet disposition…. I said in no uncertain terms that I didn’t appreciate her pressing me on the subject and said, in effect, “Shove off.”

Governor Nunn, present for the entirety of Mitchell’s exchanges with Beard, later confirmed his version. That night, Beard collapsed to the floor, apparently in a drunken stupor, and was removed from the mansion after being revived by Nunn’s aides.
²⁶

Mitchell would hear more
from Dita Beard—but for now, he still had to contend with John Ehrlichman. The White House aide was still seething over Mitchell’s success in convincing the president to reverse his blunt orders on the
Grinnell
appeal. Ehrlichman wrote Mitchell on May 5, a time when both men were consumed by the May Day riots, demanding a three-way meeting with McLaren, at which they might discuss “the present status of the ITT cases, in order that we can achieve the agreed-upon ends discussed by the president with you.”
²⁷

Mitchell simply ignored Ehrlichman’s provocations, a luxury the attorney general could afford because of his own unique standing with the president. Settlement negotiations between Justice and the conglomerate were hurtling forward, anyway: Felix Rohatyn, the Lazard Frères investment banker and ITT director, had been briefing Kleindienst and McLaren on the adverse consequences that divestiture of the Hartford Fire Company would impose on ITT—and on the country. Kleindienst later remembered he was “quite taken by” Rohatyn, not least because the banker conceded at once, as a legal matter, that “McLaren was right and ITT was wrong.”

Anybody else who ever came in to talk to me about IT-and-T, they’d say, “You’re wrong, Goddamn it!”…[Rohatyn] came up for the first time with the approach of what kind of effect this would have on ITT, and
ergo
the economy…. I said to him, “This is the first time anybody has ever mentioned that, and I would like to have you go down and meet with Mr. McLaren.” And thereafter, Mr. McLaren conducted those meetings. You know, he kept me informed on what the progress of them was, until that final day when they came up with that settlement.
²⁸

Critics later made much of Rohatyn’s mysteriously persuasive effect on McLaren. Why was the antitrust chief suddenly willing to countenance ITT’s retention of Hartford, a company the conglomerate had gone ahead and acquired despite repeated warnings by DOJ? As McLaren himself told Kleindienst in June 1971: “ITT’s management consummated the Hartford acquisition knowing it violated our antitrust policy; knowing we intended to sue; and in effect representing to the court that [it] need not issue a preliminary injunction [barring the merger in advance] because ITT would hold Hartford separate and thus minimize any divestiture problem if violation were found.”

Yet in the same memorandum McLaren conceded Rohatyn’s arguments that forcing divestiture of Hartford now would “cripple ITT financially and seriously injure its 250,000 stockholders,” leading to the loss of “well over $1 billion” in stock value and a likely “ripple effect” across Wall Street and the economy. McLaren “reluctantly” concluded that the government must “weigh the need for divestiture in this case—including its deterrent effect, as well as the elimination of anti-competitive effects…against the damage which divestiture would occasion.” The government, moreover, had already lost two of its three ITT cases—
Grinnell
and
Canteen
—at trial.
²⁹

McLaren always maintained that he alone had decided to settle the ITT cases, and that the final deal—while allowing the conglomerate to keep Hartford Fire—represented a triumph for the government. Senator Philip Hart, the Michigan Democrat whose subcommittee probes of antitrust policy Mitchell had pointedly warned Nixon to avoid, later claimed the final settlement was “not substantially different” from terms the antitrust chief had rejected back in November 1970. Yet this was demonstrably false: Where ITT’s 1970 settlement proposal had offered to divest the company of Canteen, the industrial piping division of Grinnell, the domestic operations of Levitt and Sons (a huge home construction company ITT owned), and other assets, the final consent decree—signed on July 31, 1971, and approved by the federal district court on September 24, thus spelling the end of the ITT cases—forced the conglomerate to sell off Canteen, Grinnell’s fire protection division, Levitt’s domestic
and
foreign operations, 46 percent of Hajoca Corporation (a plumbing company that provided synergy with other ITT assets), and all foreign and domestic operations of the Avis Rent A Car Company.

In addition, ITT agreed to a ten-year injunction forbidding the conglomerate from acquiring any insurance companies, as well as any company worth more than $100 million, or any company that posted $25 million in revenues while cornering 15 percent of a given market. Neither these ten-year restrictions nor the divestiture of Avis or Hajoca was contemplated in the 1970 proposal. All told, the final consent decree imposed divestiture of some $937 million in 1971 sales, 56 percent more than what ITT proposed in 1970; and divestiture of some $792 million in forsworn assets, 58 percent more than what ITT proposed in 1970. Indeed, ITT’s stock dropped 14 percent in the first two days after the settlement was announced. “We didn’t halt prosecution—they caved in,” McLaren declared. Solicitor General Griswold, a figure of unquestioned integrity, said later: “We got 100 percent of what we asked for.”
³⁰

Mitchell welcomed the end; the ITT cases had generated endless irritation inside the administration. But he also reveled, quietly, in his demonstrated power to ward off White House intrusions on his turf. He hailed the Antitrust Division for negotiating “the largest divestiture of any corporation in the history of U.S. business,” and likened ITT’s acquiescence to “the defendant pleading guilty.” The end of the three-year
todeskampf
between the Department of Justice and ITT was, to Mitchell, “a confirmation of the antitrust policy of the administration…not a denial of it or an abrogation of it.”
³¹

Now the attorney general
looked ahead—to the coming election year and the massive, and unwelcome, task awaiting him: managing Nixon’s reelection campaign. A million things demanded Mitchell’s attention, from staffing the skeletal Committee for the Re-Election of the President (CRP) to staging the GOP convention. After some difficulty, San Diego, Nixon’s “lucky city,” had mustered the funding to bid on, and win, the privilege of hosting the convention.

Key to that had been a sub-rosa pledge of at least $100,000 from San Diego’s Sheraton Hotel, a subsidiary of ITT. Did Mitchell know about that? Who could recall, amid the welter of people and paper that crossed the attorney general’s desk every day? And what difference did it make? Beyond such tedium lay the nirvana Mitchell craved: return to New York and the private practice of law. Surely the intricacies and propriety of the ITT settlement, and whatever relation they bore to the convention’s financing—then questioned only by a handful of shrill partisans—would fade from the newspapers, and Mitchell could get on with his life.