#4 The Remarkable Life and Turbulent Times of Joseph P. Kennedy

Summary Notes


Drawing from the book "The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy," the discussion delves into Kennedy's formative years between 20 and 40, highlighting his early entrepreneurial ventures and his ultimate goal to amass wealth for his children's future in public service. Despite facing discrimination as an Irish Catholic, Kennedy's relentless ambition and financial acumen led him from a Harvard graduate to a bank president, and eventually to Hollywood, where he leveraged his banking background to revolutionize the film industry. His strategic moves in banking, real estate, and the movie business, including pioneering work in film production and distribution, enabled him to achieve his goal before the age of 40. Joseph P. Kennedy's story is not just one of wealth accumulation but also of adapting to and overcoming societal barriers, showcasing his multifaceted abilities and unwavering determination.

Summary Notes

Source Material and Focus of Discussion

  • The discussion is based on the book "The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy."
  • The book is a New York Times bestseller and a Pulitzer Prize finalist.
  • The speaker intends to cover Joseph P. Kennedy's life from age 20 to 40.
  • Focus is on the period where Kennedy was starting out and achieved his life goal.
  • The aim is to provide motivation by illustrating how Kennedy started in similar circumstances to listeners and achieved his life's work.

"So the source material for most of what I will talk to you about today comes from the book the Patriarch the remarkable life and turbulent times of Joseph P. Kennedy. This book was a New York Times bestseller and a finalist for the Pulitzer Prize, and it is a monster."

The quote indicates the credibility and depth of the source material for the discussion, emphasizing the book's recognition and extensive content on Joseph P. Kennedy's life.

Joseph P. Kennedy's Early Ambitions and Character Traits

  • Joseph P. Kennedy was a man with multiple talents, charm, energy, and ambition.
  • His life featured dramatic successes and failures, as well as a tragic ending.
  • Despite being an Irish Catholic from East Boston, he did not let his heritage limit him.
  • Kennedy fought against societal barriers and was known for his outspoken nature.
  • His primary goal was to amass wealth so his children could devote their lives to public service, which he achieved before turning 40.

"His primary goal, and this is a really important part, his primary goal as a younger man was to make so much money his children would not have to make any, and then they could devote their lives to public service."

The quote underscores Kennedy's primary motivation in his early years, which was to secure financial stability for his family so they could engage in public service.

Kennedy's First Business Venture

  • Kennedy's first business was a sightseeing bus tour while at Harvard.
  • He bought a bus on an installment plan, refurbished it, and conducted historical tours.
  • This early venture showcased his entrepreneurial spirit and willingness to work while studying.

"Passengers didn't take the ride just for fresh air or for the thrill of motor driving. They were interested in history, and I let them have it."

This quote from Kennedy reflects his understanding of customer interests and his approach to providing value through educational sightseeing tours.

Transition from Education to Career

  • After graduating from Harvard, Kennedy faced uncertainty about his career path.
  • He decided to enter banking and finance, aiming high despite limited opportunities for Irish Catholics in Boston's financial sector.
  • Kennedy's Harvard education and networking helped him, but he faced ethnic and religious barriers.
  • He took a civil service exam to become an assistant state bank examiner as a strategic move to enter the banking industry.

"Banking ranked as high as any commercial profession, he would explain to a reporter in 1928."

Kennedy's quote reflects his view of banking as a prestigious and foundational career choice, highlighting its strategic importance in business.

Early Career Challenges and Strategies

  • Kennedy faced exclusion from Boston's banking institutions due to his background.
  • He took a low-paying job as an assistant state bank examiner to gain industry insight.
  • Kennedy invested in real estate on the side, partnering with a friend in old Colony Realty.
  • Despite his side businesses, his primary focus remained on breaking into banking.

"With no entry level position at hand, he decided to take a different route into the Boston banking establishment."

This quote illustrates Kennedy's adaptability and strategic thinking in circumventing barriers to enter the banking industry through an alternative path.

Kennedy's Growth in the Banking Sector

  • Kennedy became the president of Columbia Trust Company at age 25.
  • He revitalized the struggling bank, significantly increasing its assets within six months.
  • His work ethic and business acumen were evident in this early success.

"Joseph P. Kennedy elected president of Columbia Trust Company at age 25."

The quote marks a significant milestone in Kennedy's career, achieving a leadership position in banking at a young age.

Overcoming Economic Challenges

  • The financial panic of 1914 affected Columbia Trust, but Kennedy managed to navigate through it.
  • World War I and its economic impact presented challenges that Kennedy had to address.
  • Despite initial setbacks, Columbia Trust and Kennedy's personal wealth grew as the economy recovered.

"Though Columbia Trust was very much a local bank, not even Joe Kennedy could protect it from the financial panic that set in motion by the declaration of war."

This quote highlights the external economic challenges that Kennedy faced and his resilience in steering Columbia Trust through turbulent times.

Early Stock Market Experience and the Lusitania Incident

  • Tom Campbell recounted Joe's initial success in the stock market, with every stock he purchased increasing in value.
  • The sinking of the Lusitania on May 7, 1915, caused a market downturn that erased Joe's profits and challenged his expectations of easy money.
  • The market recovered as the U.S. economy boomed due to the Allies' demand for American goods, and Joe re-entered the market with more caution.

"Then came May 7, 1915. The German sinking of the Lusitania and the deaths of more than 100 American civilians in the war scare that followed. The spectacular four-month stock market rise was halted, then reversed, wiping out all of his profits and, according to Tom Campbell, knocking his dreams of easy money into a cocked hat again."

This quote highlights the impact of the Lusitania incident on the stock market and Joe's investments, showing the volatility of the market and the external factors that can influence it.

Financial Strategies and Loans

  • Joseph P. Kennedy was strategic in borrowing money, securing loans with various assets, and never borrowing more than he could repay.
  • He exhibited a remarkable ability to manage finances and profit from market opportunities.
  • His early experiences in the market shaped his understanding of the American economy's strength and growth potential.

"On November 2, 1915, short of capital to invest, he borrowed $55,000 from National bank. It was a short term, six month loan backed by some stock certificates, life insurance policies, and real estate."

This quote explains one of Joe's financial strategies: leveraging assets to secure capital for investment, demonstrating his confidence and calculated risk-taking in the financial market.

World War I and Work at Four River

  • During World War I, Joe avoided military service by working at Four River, contributing to the war effort through ship and supply production.
  • His work ethic and competence led to an increased workload and multiple responsibilities, including managing housing and feeding thousands of shipyard workers.
  • Joe established the Four River Lunch company, capitalizing on the opportunity for personal profit while serving the workforce.

"So during this time in World War I, he was of age for military service. He was already supporting his wife and two children... He was recruited by a local company in Boston... called Four River."

The quote provides context for Joe's decision to work at Four River, emphasizing his family responsibilities and the opportunity to contribute to the war effort through industrial work.

Handling the Influenza Epidemic

  • Joe was tasked with managing the influenza epidemic at Four River, converting dormitories into infirmaries and attempting to contain the spread.
  • The stress of the epidemic and workload contributed to Joe developing an ulcer, the first sign of stress-induced health issues that would affect him throughout his life.

"Kennedy was given the task of converting shipyard dormitories into infirmaries in the hope that isolating the sick might help stop the spread of further contagion."

This quote shows Joe's involvement in public health efforts during the 1918 influenza epidemic, highlighting his adaptability and commitment to addressing emergency situations.

Post-War Career Decisions and Resignation from Four River

  • After the war, Joe did not return to his previous role at Columbia Trust, seeking new opportunities instead.
  • He resigned from Four River as the shipbuilding boom ended, ready to pursue other ventures.

"After 20 months in the same place, Joseph P. Kennedy tendered his resignation."

This quote marks the end of Joe's tenure at Four River, indicating his readiness to move on from the post-war decline in shipbuilding and seek new challenges.

Transition to Hayden Stone and Real Estate Ventures

  • Joe accepted a managerial position at Hayden Stone, continuing his stock trading and real estate investments.
  • He formed Fenway Building Trust with Eddie Moore, expanding his real estate portfolio.
  • Joe's relationship with Eddie Moore was pivotal, leading to a long-term collaboration in various cities and industries.

"Kennedy accepted a position as manager of the brokerage department at Hayden Stone."

This quote signifies Joe's transition to a new role in the financial sector, where he would leverage his investment acumen and connections to further his career.

Strategic Business Focus and Hollywood Ambitions

  • Joe aimed to make significant wealth by assisting in business financing, expansions, and mergers, rather than through brokerage alone.
  • He identified the thriving motion picture industry as an emerging sector ripe for his financial expertise.
  • Joe's foresight and strategy eventually led to substantial earnings in Hollywood, capitalizing on the transition from silent films to "talkies."

"The big money he knew was not in brokerage per se, but in assisting businessmen in financing startups, expansions, and mergers, then managing their stock and/or their companies from the inside."

This quote captures Joe's strategic vision for wealth creation, recognizing the potential in providing financial services to growing businesses rather than focusing solely on stock trading.

Early Career and Realizations

  • Initially tried multiple jobs including producing films.
  • Realized that producing films was not profitable for him compared to distribution.
  • Organized Columbia Films to distribute Universal's films in New England.
  • Managed Columbia Films while also representing Hayden Stone.
  • Aimed to amass wealth to ensure his family could dedicate their lives to public service.

Kennedy learned quickly from his misadventures as a producer that for aspiring businessmen with large ambitions but limited capital, it made more sense to distribute and exhibit moving pictures than to make them.

This quote encapsulates Kennedy's realization that distribution, rather than production, was a more viable business strategy for him, given his limited capital and large ambitions.

Transitioning Out of Hayden Stone

  • Kennedy never intended to stay at Hayden Stone indefinitely.
  • The stock market's poor performance and Ponzi Scheme scandal in 1920 hastened his departure.
  • Continued to trade stocks, manage real estate, and handle loans while at Hayden Stone.
  • Aspired to be his own master in his own business.

Kennedy had never intended to stay at Hayden Stone forever, but the lackluster performance of the stock market through the winter and spring of 1920 reinforced his wish to move on sooner rather than later.

This quote highlights Kennedy's ambition to leave Hayden Stone and his dissatisfaction with the stock market's performance, which influenced his decision to pursue his own business ventures.

Establishing His Own Business

  • Launched his own private banking business at the age of 34.
  • First major success in 1924 by assisting Walter Howey and John Hertz against stock short sellers.
  • Invested in Hertz's new drive-yourself system, a precursor to Hertz Rent-A-Car.
  • Despite successes, was not yet a millionaire at age 36.

I knew the time had arrived for me to do at 34 what I had been determined to do at 24, be my own master in my own business.

Kennedy's quote reveals his determination to control his own destiny by starting his private banking business, fulfilling a goal he had set a decade earlier.

Strategic Wealth Building

  • Kennedy made strategic investments and set up trust funds for his family.
  • Trusts stipulated that the principal could not be withdrawn, only the interest.
  • Planned for the principal to be passed on to his children's children, understanding the power of compound interest.

And then he stipulated in those trusts that the principal, which was never to be touched, would be passed on to their children upon their death.

This quote illustrates Kennedy's foresight in creating a lasting financial legacy for his family by establishing trusts that would grow through compound interest and benefit future generations.

Acquiring FBO and Streamlining the Business

  • Bid on and eventually acquired FBO, a film company he helped found.
  • Used his business acumen to negotiate a favorable purchase price.
  • Established Cinema Credits Corporation to finance films at better rates.
  • Implemented cost-cutting measures and restructured the company for efficiency.

Sorry, but you fellows will have to go on to Florida without me. I'm going to Boston tonight. I seem to have bought a motion picture company.

Kennedy's quote captures the moment he learned his bid to acquire FBO was successful, demonstrating his spontaneous and decisive business nature.

Entrepreneurial Confidence and Impact

  • Kennedy exhibited high self-confidence and belief in his abilities.
  • Viewed himself as capable and adaptable, key traits for success.
  • His self-assurance was instrumental in his financial achievements and influence in the film industry.

I am in a new game, and I will probably be tossed around a bit, but I may have some fun and may get away with it.

Kennedy's quote shows his confidence in entering the film industry, acknowledging potential challenges but also expressing optimism and excitement for the venture.

Early Career and Self-Confidence

  • Joseph P. Kennedy's rapid financial success was rooted in his self-confidence and business acumen.
  • Despite lacking experience in Hollywood, Kennedy was confident he could successfully run a motion picture company from New York.
  • Kennedy's outsider status and diverse background were leveraged as strengths in his argument for why the motion picture industry needed someone like him.
  • His skills in numbers and business were complemented by his abilities as a master salesman.

"The trouble with many concerns like my own, he explained in 1928 to a journalist, was that employees occupying positions parallel to positions in other lines were vastly overpaid." "Kennedy had never visited Hollywood, held any studio position or produced any pictures. But he did not apologize for his lack of experience."

These quotes highlight Kennedy's critical view on industry pay standards and his unapologetic confidence in his ability to succeed in the motion picture industry despite his inexperience.

Hollywood's Financial Disarray and Kennedy's Intervention

  • Hollywood lacked financial expertise, especially in areas like balance sheets, depreciation, amortization, and capitalization.
  • Kennedy identified these shortcomings as opportunities for his own financial gain and restructuring of the industry.
  • The transition from silent films to "talkies" required significant capital, coinciding with a bullish stock market that Kennedy capitalized on.

"Nobody in Hollywood, he declared, knew how to make a balance sheet that gave a banker what he needed." "Converting the studios and theaters to sound would require huge amounts of capital."

These quotes emphasize the financial mismanagement in Hollywood and the capital-intensive nature of the industry's technological transition, both of which Kennedy aimed to exploit.

Strategic Investments and Profit Maximization

  • Kennedy's company, FBO, partnered with RCA to produce sound pictures, resulting in mutual financial benefits.
  • He strategically acquired FBO stock and created the Gower Street Company to consolidate his holdings.
  • Kennedy's business acumen was recognized by Wall Street, which sought managers with his skill set to oversee large entertainment companies.

"RCA would purchase $500,000 of FBO stock, enough to pay for the installation and provide Kennedy with a sizable profit." "To manage these new companies and watch over the millions of dollars invested in them, they needed managers with the skill set Kennedy had brought with him into the picture business."

These quotes illustrate Kennedy's strategic partnership with RCA and Wall Street's recognition of his valuable business skills, leading to his role in managing large entertainment companies.

Building an Empire: Path and Kao

  • Kennedy exploited Path's financial vulnerability to secure a lucrative deal, including a large salary and stock options.
  • His negotiations with the Kao chain of theaters resulted in a favorable contract that allowed him significant control and financial rewards.
  • Kennedy's ability to multitask and manage multiple companies simultaneously was a testament to his extraordinary work ethic and business prowess.

"Though he had told the Los Angeles Times that he was working for Path without compensation, he had negotiated a healthy salary, $2,000 a week." "Kennedy was now running three large entertainment companies at the same time, two picture studios and a chain of several hundred theaters."

These quotes reveal Kennedy's negotiation skills and the scale of his business operations, managing multiple entertainment companies and securing substantial compensation for his efforts.

Profitable Exits and Financial Independence

  • Kennedy's exit strategy involved selling his holdings for substantial profits and starting anew with a secure financial foundation for his family.
  • He was a skilled stock trader, capitalizing on market fluctuations and prioritizing profit-taking over long-term investments.
  • Kennedy's wealth continued to grow through various investment strategies, and by the 1950s, his net worth was among the highest in America.

"I entered the amusement business with the viewpoint of a banker. If, after the organization of the new corporation, it is running smoothly, I look around and get a good offer for my holdings, I will make a trade." "His net worth was five times what it had been three years earlier, and that didn't take into account his real estate holdings."

These quotes demonstrate Kennedy's strategic approach to the amusement business and his remarkable ability to multiply his wealth within a few years, securing his family's financial future.

Conclusion and Legacy

  • Kennedy's legacy was one of financial mastery across various sectors, including motion pictures, stocks, real estate, and oil.
  • His investment strategies evolved over time, but his focus on wealth preservation and profit maximization remained constant.
  • Kennedy's success story is a testament to his business acumen, strategic thinking, and ability to capitalize on market opportunities.

"He had been a good baseball player and a better than average shipping company executive, broker, banker and studio executive. But when it came to making money in upmarkets and down markets, good times and bad, Joseph P. Kennedy was in a league by himself." "In 1957, Fortune magazine published its list of the richest Americans. Kennedy was 8th, with a net worth between 200 million to $400 million."

These quotes summarize Kennedy's exceptional talent for wealth generation and his status as one of the wealthiest individuals in America, showcasing a legacy of financial success.

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