Part 9:Dupont Dynasty;Behind the Nylon Curtain....The Crisis Years

Very fascinating read here,with the way this family had their hands in so many pies.Sort of like reading a time capsule as you recall some of the comings and goings of your reality on the planet,if you are old enough to recall the events.The take on Penn Central is very interesting as once again a railroad takes center stage in the narrative,which also details the financial fall of one Dupont,and concludes with the Duports attitude toward their Labor in Niagara

  

DuPont Dynasty 

Behind the Nylon Curtain 

Gerard Colby

Thirteen 

THE CRISIS YEARS 

1. GUARDING THE HOMEFRONT 

On a warm starless night in the summer of 1968, a tense quiet hung over the city of Wilmington. Nearby, like a sleeping giant, rested the Delaware River, its black waters still simmering from the heat of the day. Across the river, along the New Jersey banks, the DuPont Chamber Works could be seen in the distance, flaring orange and yellow against the night. From that vast city of yellow lights spewed forth the tall, bright-blue arc that traced the Delaware Memorial Bridge rising to span the river, then reaching down to touch the shores of the state of Delaware. Over the blue arc, a long steady stream of yellow auto lights quietly flowed. But only a few got off at the Wilmington exit. 

DuPont Highway, the main artery leading into Wilmington, carried little traffic beyond an occasional army jeep passing by on patrol, enforcing the 10:00 P.M. curfew. The capital city of chemicals was silent that night, its skyline dark and somber. No lights radiated from Du Pont Company’s Nemours Building, nor from the Du Pont family’s Bank of Delaware nor their Delaware Trust Building. Even the lobby of their Hotel Du Pont was dimly lit, expecting few visitors. Only the police headquarters in City Hall a block away betrayed any sign of life. 

There were only a few policemen inside, all murmuring complaints about the heat and none bothering to look busy. They all looked very much alike in their uniforms, having the rough look of men who had reached middle age prematurely. Like chicks around a hen, they gathered around the desk sergeant, a big man with drooping jowls and small eyes reddened with fatigue. Like most of the men, he hadn’t had much rest since the curfew was imposed four months before. It wasn’t that the work was so challenging. Hardly, especially with the National Guard on hand to help. It was just the boring nightly routine of endless arrests and bookings that was tiring. 

The sergeant had just finished checking the night’s list of arrests when a thin, unimpressive-looking man walked quietly through the entrance and approached the desk. The man, a Caucasian, was slight of figure, with a dark suit that hung loosely about his slender shoulders. His short black hair was plastered down in that conservative, no nonsense style of a small businessman in his mid-forties who has already lost his youthful flair. He had a quiet manner about him as he spoke with thin, weak lips, his small eyes peering timidly behind light-rimmed glasses. 

The policemen scratched their heads and looked questioningly at each other as their visitor stated his desire to post bail for four young Black prisoners. The sergeant knew the case: the four were part of a party of seven Black men charged with illegal entry. They had claimed they were fleeing from unknown assailants and were forced to take refuge in an occupied home. Police, on the scene on a supposed tip-off, and National Guardsmen reported hearing gunshots and discovered the van the men were driving was peppered with bullet holes, but they were unable to find anyone but the seven Blacks. So the seven were arrested and charged with illegal entry. 

The sergeant looked up at the man, not sure he wanted to be bothered, and told him to sit down. The visitor sat patiently for half an hour or so and then rose and quietly approached the sergeant again about bail. 

“Bail’s pretty high, you know,” warned the sergeant. 

The man seemed undisturbed. “I’ll put up my yacht as collateral,” he answered. 

The sergeant was startled for a moment. Then he broke into a large infectious smile that caught on the other policemen’s faces. 

“Your yacht, eh?” he said. “Sit down please.” 

The visitor again complied. After a while he nervously began casting glances at his watch. Finally, after the sergeant had left, he got up and approached the other policemen. 

“I’m sorry,” he said quietly, “I really can’t stay here all night, so I’ll just have to let my lawyer handle this.” He took out a card from his wallet. “When you know how much the bail is set for, please contact me.” 

The policemen’s eyes widened as they read the card: 

IRÉNÉE DU PONT, JR. 

The four prisoners were released within half an hour. 

This incident, hitherto unpublished, may well shock some readers, for direct involvement by Delaware’s richest family in the personal trials of Black Delawareans has indeed been rare. That the four young Blacks involved were all leading political activists, in fact, makes Irénée’s actions unprecedented in the family’s 200-year history. Yet these were unprecedented days for the DuPonts, days of mounting defeat abroad in the most unpopular war in the country’s history, days of social disintegration, upheaval, and mounting rebellion at home, even in Delaware. 

Irénée Jr.’s providing bail for these four Black activists, an event so completely without precedent in the affairs of the Du Ponts, was the inevitable culmination of the family’s attempt to control social discontent in Wilmington, the capital city of their empire. The discontent had been sharpening in response to underlying economic and social trends that were transforming cities everywhere in the country. But now some members of the family were aware of what was taking place in Wilmington and were actively trying to head off a social explosion. 

Indeed, since World War I, when agricultural mechanization and northern urban industrialization spurred the first rural migrations to Delaware’s only real city, Wilmington, the Du Ponts had been involved in trying to cool the smoldering coals of social fusion, openly fearing the revolt against established order that might someday be kindled. In the Twenties Pierre du Pont initiated the state’s extensive school building program, financed by first himself, then a graduated income tax (which he initiated as Tax Commissioner), while Alfred I. DuPont led a drive to pass state social security legislation for the elderly. Both projects, although accomplishing their goals, did little to uplift the lives of Wilmington’s growing Black population. 

With the Depression, Wilmington was hit with its second great influx of rural migrants, as well as hordes of unemployed transients from other cities. Once again Pierre was on hand, worriedly serving on Delaware’s Unemployment Relief Commission. But it was not until World War II that white workers began deserting Wilmington in growing numbers, moving to that automobile-created milk-white culture called the suburb. Meanwhile the Black influx into the city continued at its usual steady rate. Again, Pierre du Pont donned his governmental garb in 1944 and watched over the state’s financial development as Tax Commissioner until 1949. 

Pierre’s leaving the Tax Commission renewed what can be termed Wilmington’s “era of neglect” by the Du Ponts. Preoccupied with their own company’s hectic expansion in the South and overseas, and smug about the economic prosperity in the suburbs, the family as a whole ignored the increasing decay of Wilmington’s central residential area, exactly at a time when influx into the city by poor southern Blacks and outflow to the suburbs by working-class whites were greater than ever. Of the five Du Ponts who were the most politically active during the Fifties, Francis V. Du Pont (the state’s leading Republican), Alexis DuPont Bayard (the state’s leading Democrat), J. H. Tyler McConnell (Democratic nominee for governor in 1956), E. I. Du Pont (Republican State Committeeman) and Reynolds Du Pont (Republican legislator), none showed any real recognition of, much less active concern for, Wilmington’s economic disintegration and the subsequent hardships befalling its Black residents. 

In fact, four Du Ponts—Nicholas R., son of Eugene Du Pont, Jr.; Pierre S. III, son of Lammot Du Pont; Lammot Du Pont Copeland, Sr.; and George T. Weymouth, an in-law— were identified before the Senate Finance Committee in 1954 as sharing in a $549,375 “windfall” profit off construction of the Clifton Park Manor housing project in Wilmington. Later, investigators raised the “swindle” figure to $898,000 on a paid-in capital investment of $7,325. It seems the Clifton Park project was given a guarantee on an FHA-approved mortgage of $5,980,000, but the actual cost of construction allegedly came to only $5,082,000.

By 1960, Blacks, according to official statistics, made up 26 percent of Wilmington’s population, 1 a conservative estimate. This population, made up mostly of unskilled laborers and unemployed poor, was concentrated in an overcrowded area where over 37 percent of the housing was substandard and still rapidly deteriorating. 2 In the Black area monthly rents had risen 95 percent since 1950, from a median $37.30 to $72.60, while white areas of the city endured a rent increase of “only” 36 percent, from $52.40 to $71.10. 3 This Duchy of Du Pont—until the 1950’s a segregated state de jure, and until the late 1960’s openly practicing segregation (it is still a segregated state de facto, but covertly through income lines)—offered Wilmington Blacks a median income of only $3,813 a year in 1960; white median income, on the other hand, boosted by Du Pont’s army of highly paid chemists, was $6,190. 4 

Of all the Du Ponts, only Henry B. Du Pont, scion of North American Aviation, and J. H. Tyler McConnell, Hercules director and son-in-law of William Du Pont, Jr., seemed to have some sense of the impending economic disaster—and social danger—in Wilmington’s decay. This does not mean that urban decay was not noticed by other Du Ponts; in 1960 that would have been an impossible task for any resident of the Wilmington area. However, Henry and McConnell were clearly the first Du Pont's to try to initiate a change in the family’s policy of neglect—but it was a change clearly based on the business ethic and built on the need for a proper social climate for both the family and Du Pont’s international headquarters. 

On October 4, 1960, Du Pont Company led twelve of Delaware’s other leading employers in sponsoring a slide show, “Which Way Wilmington?” Out of the meeting came the Greater Wilmington Development Council, brainchild of Joseph Chinn, Jr., chairman of Wilmington Trust, Edwin P. Neilan, president of the Bank of Delaware, and two other DuPont executives. Henry and McConnell, meanwhile, advised and consented as GWDC’s chairman and president respectively. 

GWDC’s motives were obvious to everyone right from the start. “The Development Council’s power base is among the community’s top business leaders and professional people,” editorialized the Du Pont-owned Wilmington Evening Journal, “who have drawn together out of enlightened self-interest as much as anything. Predictably, this approach will be hardheaded and economic.” 5 And narrow-minded. While developing working papers that showed the high proportion of jobless among Blacks, the GWDC could only conclude that “unemployed labor is an economic waste, and an economic waste is a drain on the economy” 6 through the loss of purchasing power. The human misery involved in joblessness went unobserved. GWDC’s employment program, token at best, met dismal failure. 

In programs directly affecting corporate interests, however, GWDC was more successful. Henry, after all, was one of the more farsighted members of Delaware’s State Goals Commission and State Planning Commission, personally shaping the lives of half a million Delawareans. In November 1961 GWDC announced a fifty-year redevelopment plan for the city, including a Midtown Wilmington Plan, a Pilot Plan, and an elaborate design envisioning Wilmington as a major metropolitan center connecting New Jersey, Pennsylvania, and Maryland. Then, as now, it was a vision dear to the hearts of many leading Du Ponts. One Du Pont, in fact, William Winder Laird, Jr., son of Mary Belin du Pont, became so excited about Wilmington’s redevelopment prospects that he began making speeches to the Chamber of Commerce on “Urban Renewal Through Private Initiative—Dream or Reality?” Laird was also determined to make it his own profitable reality by buying up over $1 million worth of center-city properties. 7 Involved in Laird’s real estate speculation was another Du Pont in-law, George T. Weymouth, also a member of GWDC, and Eleuthère I. Du Pont, son of Francis V. du Pont and grandson of Senator T. Coleman DuPont. 

Another speculator was former Lieutenant Governor John W. Rollins, owner (with his brother) of Rollins, Inc., a company in which Eleuthère I. Du Pont’s Sigma Capital Shares held a 5,000-share investment. In late 1966 Rollins even submitted a proposal to turn the west city center commercial area into a $100 million complex, offering to work closely with the GWDC. 

In 1965 Henry B. and William Du Pont ushered Block Blight, Inc., under GWDC’s wing. Founded in 1956 for the purpose of buying, rehabilitating, and reselling slum housing, Block Blight could claim only 166 finished homes by 1965. Strapped to the ideology that possession of private property is the first step toward urban renewal, Block Blight tried unsuccessfully to bring middle-class families, that all-important tax base for Wilmington’s powerful, back into the city. Among its directors were state Senator Reynolds du Pont and banker C. Douglas Buck, Jr., another grandson of Senator T. Coleman DuPont. 

GWDC’s interest in Block Blight, however, reflected a growing concern about the restlessness of Wilmington’s poor, who were already living in overcrowded, dilapidated housing. Rents had increased in the Black community, and inflation in general had reached intolerable levels, so that even President Johnson was urging surtaxes to cool the economy. Yet Wilmington’s poor saw corporate and banking interests in the state thriving, imbued with elaborate plans for the state’s future, including the future of the Black community. 

Also, there was the Vietnam War, with draft boards dipping into the cream of Black and poor white youth and offering no ear for legal challenges to a draft for an undeclared war. In fact, for thousands of Wilmington’s Black youth, awakened to political consciousness by the civil rights movement, the Vietnamese represented no “enemy,” despite the ominous exhortations of drum-beating white cold warriors. Moreover, the Vietnam War had produced few jobs for Black Delawareans. Even in the peak year of 1969 the war brought only $55 million in defense business into the state. 8 

For the poor, Wilmington was a city of coordinated frustration. Discrimination in housing was rampant. Blacks who tried to move out of the center city into the better homes of the suburbs were often subjected to harassment. In previously all-white Collins Park, a Black home was bombed twice, the first time being damaged, then destroyed. Blacks justifiably felt their rights were seldom protected by state, county, or city police. As for the courts, many Blacks felt they had found little justice but plenty of Du Pont “presence,” carrying the judicial traditions of James M. Tunnel of Wilmington Trust Company, former judge of the Superior Court and U.S. senatorial candidate in 1966, and G. Burton Pearson (who married Lammot Du Pont’s daughter in 1968), former judge on the State Supreme Court and past president of the Delaware Bar Association. 

Liberal lawyers were few and far between in Delaware, and again the Du Pont domination of the legal system was all too obvious: William S. Potter, a Du Pont in-law, was, like Pearson, past president of the Delaware Bar Association; Edmund N. Carpenter, nephew of Margaretta L. du Pont, was also a top member of the Delaware Bar, as well as a former deputy attorney general, a member of the Delaware Law Enforcement and Planning Agency, and former chairman of a state commission to reform jury service. As for juries, Irénée du Pont, Jr., was foreman of the Grand Jury, and W. Laird Stabler, a Du Pont relative, prosecuted as deputy attorney general from 1961 to 1964, was Master of the Family Court from 1964 to 1965, and served as a Republican state representative until his election as attorney general in 1968. 

Both parties in the state offered no avenue for reform. The Republican Party was totally dominated by the Du Ponts, the outstanding leaders having been Francis V. Du Pont, Reynolds DuPont, state Senate majority leader, Eleuthère I. Du Pont, treasurer of the Republican State Finance Committee from 1953 to 1964, and A. Felix du Pont, Jr. The Democratic Party, with William S. Potter and Alexis I. DuPont Bayard dominating the state chairmanship since 1956, offered little in the way of relief for Blacks; the weight of Dixie Delawareans, led by former U.S. Senator J. Allen Frear, Jr., V. B. Derrickson, and Charles Terry, was also felt. As governor, Terry had even worsened the plight of Black civil rights in Delaware. 

Wilmington saw its first civil disturbance in the summer of 1967. Although it was a minor outbreak of anger in the frustrated Black community, minor especially when compared to the scores of cities burning from Black rebellions at that time, the flooding of the area with shotgun-toting state and city police revealed Terry’s “overkill” policy. On Terry’s urging, the legislature on August 4 passed the Emergency Riot Act, giving the governor sweeping powers. 

Although there is no doubt that the Emergency Riot Act was approved by GWDC members, Terry’s crudity and openly racist posture ran head on against GWDC’s more sophisticated recommendations and policies. The southern Delaware’s feeble response to the future prescriptions of northern Delaware industrialists and financiers gathered in the GWDC, stirred a grumble of dissatisfaction in the mansions along the Brandywine. The futile efforts to move Terry on the GWDC path—efforts on the part of Du Pont in-laws like G. Burton Pearson, Jr., chairman of Terry’s State Goals Commission, C. Douglas Buck, Jr., member of the State Human Relations Commission, and Richard P. Sanger, member of Mayor Babiarz’s Advisory Committee on Urban Renewal—convinced many Du Ponts, especially Henry B., that the occupant of the governor’s mansion had to be changed. Henry began looking for a Republican candidate, and he didn’t have to look far. In fact, he didn’t even have to look beyond his own company.

Many are called, but few are chosen in Delaware. Russell B. Peterson was one of the chosen. A $70,000 Du Pont executive, Peterson was among Henry’s intimate circle who had risen with the GWDC into the upper ranks of the Republican machine. Having harbored designs on high political office for years, Peterson had worked hard developing his liberal reputation, even at a threat to his business career. In 1959 his modest plan for the upgrading of only four Blacks in Du Pont Company was rejected by Du Pont’s management as too radical. This temporary setback, however, turned out to be a boost for Peterson the following year when the Du Ponts, responding to President Eisenhower’s personal appeal for their support of racial integration in industry (since many of their plants were in the South), adopted the “Peterson plan.” 

Peterson’s first step toward the governor’s mansion came in 1966, when Henry appointed him head of the GWDC’s Neighborhood Improvement Program. This $750,000 “experiment” aimed at developing a dialogue between Wilmington’s power elite and the Black community. Local residents were hired as street workers to contact their neighbors, identify problems, and recommend solutions. “Those of us who are involved in operating this program,” Peterson explained to his fellow GWDC members early in 1967, “and those residents who are to be assisted by it are virtually in two separate worlds.… We’re going to place heavy emphasis on the job problem this year in an attempt to involve local business and industry.” To Peterson, the GWDC would “become the dominant force in the solution of social problems.” 

Although Peterson’s “job program,” the GWDC-sponsored Job Opportunities Center, failed to produce more than twenty-six jobs in an area (East Side, West Side, and Northeast Wilmington) where unemployment officially topped 17 percent, his smooth style of operating impressed many younger Du Ponts, including Irénée du Pont, Jr., and Pierre S. du Pont IV. The appearance of reform, rather than results, was what the family endorsed. 

Of the two, Irénée undoubtedly carried more weight in family circles. He had moved up since taking his father’s chair on the board of directors in 1959 at the age of 39. He succeeded 80-year-old Donaldson Brown on Du Pont’s finance committee in 1965, and rose to the executive committee as a vice-president in 1967. By then, as one of the richest Du Ponts, Irénée was also a director of Wilmington Trust and Christiana Securities, and a trustee of the Longwood Foundation, the $60 million philanthropy set up by the late Pierre S. Du Pont II. 

To a great extent, Irénée was Henry B.’s protégé in business and community affairs. In business, although certainly wealthy enough to stand on his own, Irénée usually followed Henry’s approach in Du Pont Company, Christiana Securities, and Wilmington Trust. In community affairs, Irénée followed his cousin’s lead in the Longwood Foundation and GWDC. This in no way implied that Irénée did not have a mind of his own. He did, and a rather sharp one at that. It merely meant Irénée essentially agreed with Henry’s general outlook on life. 

As old Henry’s health steadily deteriorated, Irénée took over more and more of his cousin’s tasks and eventually his posts. He also took up Henry’s enthusiasm for Russell Peterson, who by 1967 was a member of the Republican state finance committee. 

Peterson’s unannounced candidacy was not without its trials, however, and interestingly enough, some of his most potent opposition came from Lammot du Pont Copeland, Sr., president of Du Pont. 

In both domestic and foreign policy, conservative Copeland did not share Peterson’s liberal posture. In fact, Copeland had found Charles Terry likable enough for him to accompany the governor to the National Governors’ Conference that year in order to urge high textile tariffs to fight the Kennedy Round’s proposed reduction. 

Lammot made his first open move against Peterson’s bid on October 20, 1967, when he announced, as Du Pont president, that “An employee of the Du Pont Company who becomes governor or lieutenant governor should resign.” 9 The statement was made on the pretext of preserving Du Pont from political charges of openly dominating the state, and it was pointed out to Lammot that New Castle County Executive William T. Conner was on “leave of absence” as a Du Pont attorney while governing about two-thirds of Delaware’s population. Conner, as well as many company officials in the state legislature, had not been asked to resign. Copeland could only respond to the charges of unfairly pressuring Peterson by weakly assuring, “We encourage employees to take an active role in public affairs” 10—in Peterson’s case, at the price of his job. 

A month later, in a speech before the American Petroleum Institute, Copeland made it clear just how different his approach to social problems was from Peterson’s. “There are some people today who ignore a law if they don’t happen to approve of it,” he asserted. “I haven’t heard any loud expression of public outrage when this happens—on a picket line, for example, but such tolerance has never been extended to business.” 11 

Copeland’s ideology was certainly no different from Henry B. du Pont’s, but his methods for dealing with current community problems were. While Copeland raged against the rebellions, Henry’s GWDC gave $166,000 to the Wilmington Youth Emergency Action Council (WYEAC), an organization of local “gang” youth with the goal of changing “the relationship between the official establishment of Wilmington and the youth who believe that Wilmington does not care for them and in turn don’t give a damn for Wilmington.” Copeland was effectively pitting himself in the political arena against policies and plans then being developed by the GWDC leadership. 

Unfortunately for Copeland, his political stance came at a most inopportune time in his business career. Under his leadership, Du Pont had entered a period of very real crisis, one endangering the entire family fortune. 

Most of Du Pont’s ailments had little to do with Copeland personally, resulting more from congenital diseases of big business. Since the nineteenth century, the Du Ponts had always been guided by the rule of thumb of a 10 percent return on invested capital. “I would rather have a $3 billion business at 10 percent return than a $6 billion business at a 5 percent return or even a 6 percent return,” 12 Crawford Greenewalt had once said. This was entirely possible during the years Du Pont was still expanding horizontally and vertically as a product innovator. From World War I through the Twenties and Thirties Du Pont expanded into chemicals, rubber, artificial fibers, and automobiles (General Motors). In 1955 Crawford managed to score the company’s postwar high, a yield of 13.8 percent. But after that Du Pont’s troubles began. 

First, Du Pont was by then a growing giant of assets, and maintaining a 10 percent yield on so huge an amount of invested capital required a constant expansion of sales to match the company’s increase in assets. Meanwhile, technological developments were eroding costs—and prices at the same time. This need for increased sales was translatable into a need for increased markets. Here Du Pont met an unfamiliar problem —competition. 

In the United States two dozen other companies were now producing nylon and other artificial fibers, often at lower prices than Du Pont because their plants were newer and used more efficient cost (labor) saving technology. “We are probably better than ever,” commented chairman Crawford Greenewalt in 1967, “but there is no doubt about our competitors’ technical sophistication. We have lost some of our competitive margin.” 13 In 1961, the year Du Pont’s earnings fell to 8.1 percent, Celanese Corporation even produced a plastic superior to DuPont’s Debrin acetal resin, successfully beating back a Du Pont patent suit while also introducing an acetate rayon to compete with Du Pont’s viscose rayon.

Abroad, in Europe and Japan, labor costs were even lower, and revived indigenous industries were moving to capture their native markets and even those beyond their borders. Both Crawford Greenewalt and Lammot Du Pont Copeland tried to meet this second challenge by expanding Du Pont abroad, even buying into some Japanese firms. But stiff competition from European and Japanese companies continued to grow. 

The Kennedy Round tariff cuts only exacerbated this dilemma. Designed to open overseas markets for American farm produce, tobacco, and aluminum, the new tariffs cut down the legal walls that had previously protected the American chemical corporations. Copeland played a low-key role in the early tariff battles in Washington, sending only one or two letters to Congress while Monsanto, Westinghouse, and other smaller companies were very aggressive. This may be because Copeland recognized that Du Pont was not one industry, but many industries. While the rayon and dyes departments definitely encountered difficulties, the paints and finishes departments were not affected, and film and cellophane departments, which were not into exports, were not immediately influenced by imports. And cushioned by Vietnam War orders, the explosives department felt nothing. In fact, the 1961–1965 chemicals boom hid Du Pont’s mounting crisis. Only after Du Pont was deprived of 30 percent of its earnings through the G.M. divestiture in 1965, and only after foreign textiles began entering the American market, did Copeland finally launch an aggressive opposition to reciprocal trade in an attempt to save and expand Du Pont’s foreign and domestic textile markets. 

This was only one example of Copeland’s personal leadership failings. There were others, but all of them were coupled with the albatross of Du Pont’s own size. The problem of bigness was one of the main reasons for Du Pont’s loss of reputation as the leading innovator in the industry. As Crawford Greenewalt observed in 1967, “one of the penalties of size is that it’s now hard to develop a product that can make such a big impact.” 14 A new product would simply not bulk enough to greatly affect Du Pont’s earnings, which by then had slipped from 13.7 percent in 1955 to 7.9 percent, far below the family’s traditional 10 percent rule of thumb. 

Ironically, Copeland tried to answer the problem of bigness with even further bigness. During his first year as president he increased capital expenditures by 50 percent, from 1962’s $245 million to $370 million in 1963. In 1964 he eased off to $290 million, but by the following year capital expenditures were on the rise again to $327 million. In 1966 Copeland spent a colossal $531 million on plant and equipment, reducing Du Pont’s net cash and marketable securities from $624 million to $432 million in one year. By midsummer of 1967 Du Pont’s liquid assets had dropped to $227 million. 

The reason for Du Pont’s drop in liquid assets was Copeland’s rigid adherence to another Du Pont tradition—the financing of all expansion out of earnings on hand. This practice allowed Du Pont to be free of debt and bankers, the clan jealously preserving its control of the company’s destiny and board of directors. As Russell Pippin, Du Pont vice-president and director, explained to the New York Society of Securities Analysts, “The Du Pont Company down through the years has been noted for conservative financial management; we do not take exception to these views.” 15 

Much of Copeland’s construction expenditure went to finance overseas plant expansion, but most went to expand domestic operations. Unfortunately for Du Pont, and for Copeland in particular, it appears not enough went into modernizing existing production lines. Rather than improving what he already had by installing the most advanced, cost-saving technology, Copeland made his giant bigger. This produced disastrous results when the economy slowed up in 1966: Copeland had expanded Du Pont’s fiber plants exactly when sales were declining, creating huge surpluses. 

Through the Kennedy Tariff Round cuts, the textile industry had been sacrificed for foreign markets needed in other industries. This resulted in a flood of foreign imports which hurt Du Pont’s textile customers, on whom Du Pont depended for one-third of its sales volume. Orders for Du Pont products declined by as much as 6 percent in 1966. This decrease in sales was made worse by domestic competition. Armed with new patents and those released by Du Pont to avoid anti-trust prosecution, domestic competitors were giving Du Pont a run for its profits. These included the giant oil corporations, who were going into petrochemicals and plastics. A lack of markets caused overproduction and excess inventories in textiles; prices dropped in synthetic textiles around the country, also forcing Du Pont’s prices down even further, as much as 17 percent in nylon and 40 percent in Dacron. 

In these price wars, Copeland, following the postwar tradition of evading charges of being a trust that underpriced competitors (and a longer tradition of maximizing profits), didn’t lead any reduction in prices. And glued to this tradition, Du Pont lost the initiative—and some markets with it. Furthermore, the price erosion reduced Du Pont’s dollar income from sales, and the sales volume was unable to increase fast enough to keep pace with the cost of the chemical giant’s output, even though Du Pont was now functioning at only 70 percent of capacity (this left 30 percent of the company’s machinery idle while depreciating). Capital costs thus rose, aggravated by the inflation which the Vietnam War was heating to a boil. Here again, Copeland’s traditionalism crippled his reign. Instead of shifting research funds to existing production processes in order to find ways of lowering costs and raising productivity, he maintained the traditional heavy investment in basic research for long-term development. This approach lacked the flexibility to shift quickly into new markets or even to retain old ones. With dollar sales down and production costs up, Du Pont’s profits fell 4.4 percent, depressing earnings. Accordingly, the attractiveness of DuPont stock to investors also fell: the market value of DuPont common declined by more than 100 points, or $4.6 billion. In one year, Delaware’s richest family saw 40 percent of the value of their DuPont stock disappear. 

Copeland’s ominous tidings in April 1967 that market problems “can well be with us for at least another year” proved an understatement in subsequent years. But 1967 was bad enough for the besieged president. Profits fell 24 percent in the first quarter. By June Du Pont’s stock had fallen 50 percent from its 1964 high of $293.75; now a share was worth only $153.23. Moreover, the plunge of the big stock pulled down the market’s entire bellwether index, leaving Du Pont still the highest priced blue chip stock on the Dow-Jones industrial average. 

To add to Copeland’s woes, Corfam, Du Pont’s new artificial leather for shoes, had not panned out after an investment of over $60 million. “Get set to be swept off your feet,” Du Pont ads announced in newspapers across the country in 1964, “Du Pont invites you to ‘step into tomorrow.’” Potential buyers were swept off their feet, all right, but by the prices. Corfam shoes were just as expensive as leather, selling for $40. At that price a customer could buy instead top-grain leather. To make matters worse, one of Corfam’s supposed attributes, shape retention, backfired: customers complained Corfam shoes never felt “broken in.” And while Copeland was unable to reduce its manufacturing costs, Goodrich introduced a cheaper “Aztran” competitor that was already finding a market among brand-name shoe makers. 

Corfam’s monumental failure—a financial loss of $80 million to $100 million—was only a reflection of the general failure of Copeland’s campaign to develop a direct consumer market. Throughout its long history, Du Pont had sold over 95 percent of its products to other businesses. The consumer was generally left untouched, and the Du Pont identity of its products was lost along the retailing way. Copeland, believing that here lay an untapped resource for needed liquid capital, strove to change Du Pont’s traditional policy, explaining that the company was “making a more concentrated effort to get to the customer.” 16 “Everybody who is anybody at Du Pont,” noted Business Week in November 1963, “is said to be on notice to submit any consumer product ideas for consideration.” 17 Copeland established a Consumer Products Division in his first year in office, placing it under the auspices of the Fabrics and Finishes Department, and moved lawn and garden products and “Zerex” antifreeze there from the Industrial Biochemicals Department. He also moved the new division into electronics, cellulose springs, and Duco mending cement, and poured immense amounts into plants to make old and new chemicals for chain and department store products.

This move into the slippery consumer market was Copeland’s only break with family business tradition, and ironically, it proved to be his greatest failure. While the direction was economically sound in principle, considering that competitors like Monsanto were using similar diversified marketing techniques to achieve flexibility in gathering liquid earnings and greater profit margins, it was unwise in the light of the concrete economic situation at that time, a time of beginning economic contraction. As the 1967 Annual Report, commenting on a 3 percent drop in sales and a 20 percent decline in earnings per common share, summed up, “the year 1967 was disappointing for Du Pont.” 

Yet Copeland stubbornly plowed on, refusing to abandon projects like Corfam, pouring more and more money into new products for markets that were not there, frantically spending $60 million in advertising in 1967 to try to create the markets that would not appear, announcing another $20 million construction project for the new Brandywine Building in downtown Wilmington to house some 2,000 Du Pont employees and commercial tenants by 1971, expanding out of reserves and earnings, helping to reduce stock value, and refusing to borrow. 

Copeland even had still newer products ready for production—Zeset (which shrink proofs woolen fabrics), nylon shutters and plastic vanity tops, curtains that change color and density when the sun hits; fiber that screens out salt and other impurities from water; ski jackets—when his political opposition to the GWDC’s candidate, Russell Peterson, broke the final straw and ushered in the confrontation of December 1967. 

Copeland’s opposition to Peterson’s ambitions inevitably brought him into opposition with the concern of other members of the family for banking the fires of social discontent in Wilmington. The point of this concern was to maintain a climate for, as Business Week so aptly put it, “the smooth functioning at the top of Du Pont [which] contributes to its efficiency.” 18 

The rebellion of the oppressed Black community in July 1967 made GWDC members believe the implementation of their policies was even more urgent. In November, the same month Copeland was denouncing lawbreakers, Henry B. du Pont as president of the Longwood Foundation granted $500,000 to the GWDC Housing Corporation for renovation of the Asbury Heights area of Wilmington. But the unnoticed details of GWDC’s plans revealed Henry’s true intent for the poor Black community. Of some eighty dwelling units, the GWDC contracted for thirty, being permitted by Section 221- d-3 of the federal housing code to rent the renovated homes for $90 to $140 per month and also receive federal assistance. Relocation, not betterment, was GWDC’s plan for Wilmington’s poor Blacks. It was part of a conscious effort to force the poor out of the city and lure the stable (and taxpaying) middle-class to return. This was the corporate reason behind the GWDC’s support for “open housing.” “As the GWDC has pointed out,” editorialized the News-Journal in late 1966, “there is the economic and social health of the community. Industries in New Castle County are already having difficulty hiring qualified Negroes because of lack of housing opportunities.” The economic and social health of Du Pont and their top management necessitated replacing the racist crudity of Charles Terry with the subtlety of a reliable Du Pont executive, Russell Peterson. 

In view of his poor performance at the Du Pont helm, Copeland put himself in a most unfavorable situation by obstructing the GWDC candidate. There were few family members who subscribed to his methods politically or businesswise. Among the family elders who installed Cope-land into office, Crawford Greenewalt, George P. Edmonds, and W. W. Laird, Jr., all supported the GWDC’s policies and may well have been disillusioned with Copeland’s reign. Walter Carpenter, Jr., and Henry F. du Pont, both over 80, were inactive in the company’s affairs, and W. Sam Carpenter III, and GWDC members Emile F. du Pont and H. Rodney Sharp, Jr., offered little enthusiasm for Copeland’s policies. Irénée du Pont, Jr., although maintaining his personal friendship with Copeland, was quietly at odds with him concerning political and economic style. Copeland was clearly isolated in the family hierarchy. 

Copeland’s public statement attacking Peterson’s job was in October 1967. His attack on the rebellious “who ignore a law” came in November. A month later, in the last week of December, Copeland attended the Du Pont board meeting which all but ended his active career. 

Whatever negotiations or possible demands may have been made preceding or during the meeting went unrecorded in the official minutes and it may be true that no record was even needed. But one thing is clear: when the family leaders emerged from the large board room, Lammot du Pont Copeland, Sr., was no longer president of Du Pont. To the shock of most business leaders across the country, the Du Ponts released an announcement that Copeland had resigned the presidency and was assuming the semi retirement spot of the chairmanship from Greenewalt, who also stayed on as a director. And replacing Copeland was an experienced and able vice-president who had risen to active leadership within Henry B.’s GWDC that year: Charles Brelsford McCoy. 

Bald, lean, 58-year-old “Brel” McCoy was billed as “the first real outsider” president of Du Pont. Walter Carpenter’s brother, R. R. M. Carpenter, it was pointed out, had married into the family and so Walter could not be considered a real outsider. McCoy’s brother, on the other hand, only became a Du Pont production manager. His sister only married the company’s secretary, Henry Bush, and his father, John W. McCoy, was only a former Du Pont director, vice-president, and member of the executive committee. Du Pont never mentioned, however, that McCoy’s brother-in-law, Henry Bush, was actually a Du Pont. Bush’s mother was Joanna (du Pont) Bradford, daughter of Eleuthera du Pont and sister-in-law to both Henry B. du Pont and Alfred I. Du Pont. But even that does not tell all. McCoy’s own son had married a Du Pont. McCoy’s daughter-in-law was the former Carol V. Kitchell. Her maternal grandmother was Margaretta du Pont, sister of Irénée, Pierre, and Lammot du Pont and wife of Ruly Carpenter. Carol’s mother, Irene du Pont Carpenter, had married William J. Kitchell before going on to plow through two more marriages with Richard P. Morgan and J. Avery Draper III. Carol was the offspring of her mother’s first marriage. Her father, William J. Kitchell, was a leading director of the family’s Blue Ridge Mutual Fund, of which E. I. du Pont, Emile F. du Pont, and Donald F. Carpenter were also directors. Clearly, Charles McCoy was no outsider to the Du Ponts. 

McCoy’s first three months in office coincided with the first rise in the company’s sales and earnings since the second quarter of 1966, and some of the family saw this as a hopeful sign for the future. During these first three months of 1968 progress also seemed to be underway on their political front as well. Peterson continued his unofficial campaign, quietly resigning from positions which could become a magnet for charges of Du Pont domination. He withdrew from the Republican State Finance Committee, Reynolds DuPont taking his place, and also resigned from the GWDC leadership, Irénée du Pont, Jr., replacing him there. 

Irénée also began playing a more active part in Wilmington affairs. In February 1968 he hosted a dinner for Jackie Robinson held by the Delaware chapter of the National Conference of Christians and Jews. “It may come as a surprise to you, as it did to me,” Irénée told the gathering, “to read in the classified ads that traditional organizations of racial hate are still advertising for members.” 19 Some of the Ku Klux Klan ads Irénée was referring to, however, had appeared in his family’s own News-Journal papers. 

Three years later, when Irénée was himself a director of the News-Journal, Klan ads were still being smeared across its pages. Yet Irénée pursued his goal of restoring Wilmington’s calm climate and, as one family historian put it, “disciplined populace,” with unmitigated gall. “A major target for our work with these official groups,” he explained as Robinson and others looked on, “is to further develop two-way communication between community factions and the police.” 20 Tensions between the Black community and the front-line hired guardians of the Du Pont “order,” the police, were smoldering. 

Irénée realized that the fire hose of diplomacy was needed if the community-oriented climate of Wilmington that contributed to the effectiveness of Du Pont management was to be maintained and GWDC plans for the city furthered. 

Two months later, in April, the GWDC formally announced the creation of Downtown Wilmington, Inc., to centralize business leadership for the final drive to implement GWDC’s plans for the downtown area. Wilmington’s corporate leaders realized these plans offered immense benefits for the business community and only marginal benefits for the Black ghetto. In fact, some of the Black residents had already been forced out and their homes razed to make way for corporate planning. With the control of redevelopment not in the hands of the people of the inner city, but in the hands of those such as Du Pont director George P. Edmonds (husband of Reynolds Du Pont’s sister Natalie), Henry B. du Pont, Irénée Du Pont, Jr., and Joseph W. Chinn, Jr. (chairman of Wilmington Trust and Henry B. Du Pont’s appointee to the GWDC’s New Firm Recruitment Committee), it was only a matter of time and circumstance before Wilmington’s Black community exploded in anger. And significantly enough, the announcement of Downtown Wilmington occurred squarely in the face of that explosion. 

On April 4, 1968, while supporting the wage demands of Black sanitation workers in Memphis, Tennessee, Dr. Martin Luther King was assassinated. Many Blacks saw this as the result of King’s increasing shift of emphasis from religion to economic demands of Black workers and his recent statements against the Vietnam War; most Blacks simply saw it as a manifestation of white racism in America, and in cities throughout the country Black communities expressed their bitterness and grief by taking to the streets. 

One of the mildest outbreaks was in Wilmington, Delaware. While whole blocks of Black ghettos in other cities burned, in Wilmington property damage was estimated at less than $250,000. Contrary to other areas where insurrections flared at the time, Wilmington endured no deaths and no major injuries. In fact, not the rebellion, but the reaction of government officials was probably the most extreme happening in Delaware that month. 

On the morning of April 9 Governor Terry responded to Mayor John Babiarz’s call for 500 National Guardsmen to quell a small disorder involving fewer than 100 Blacks. But for Terry, even 500 troops were too small in number. For the first time in the state’s history, the governor ordered the mobilizing of the entire Delaware Army and Air National Guard, and 3,500 armed, mostly white, troops soon entered downtown Wilmington. They were to stay nine long months, the longest armed occupation of any American city in peacetime history.

By Easter Sunday, April 14, when Mayor Babiarz lifted the citywide curfew and declared the situation under control, over 370 persons had been arrested. Most had been picked up for curfew violations, but some arrests fell under the 1967 Emergency Riot Act that made the mere urging of property destruction liable for the same full penalty as the actual act. Terry, however, citing “intelligence reports” predicting violence the next day, refused to withdraw the troops. The next day passed quietly. But on April 29 there was violence—by the National Guard. On that day Douglas Henry, Jr., a Black man accused by police of burglary, was shot and killed in the custody of police by a Guardsman. Quickly, the state legislature passed and Terry signed a bill making the Guard exempt from any civil or criminal action resulting from any such atrocities “performed in the line of duty” while under the governor’s mobilization orders. 

Many Du Pont's were concerned that future incidents like the Henry killing could trigger further protests by the Black community as well as worsen Wilmington’s already tarnished reputation for tranquility. Some quietly supported Mayor Babiarz’s formal ending of the city emergency on May 1 and his withdrawal of city police from joint patrols with Terry’s Guardsmen. The governor’s continued insistence on retaining the Guard and backing up its patrols with state police began the Du Pont family’s complete disaffection with his reign. Many DuPont's who had previously held reservations about supporting Peterson now joined the long line to his campaign treasury led by Irénée du Pont, Jr. 

Irénée replaced the ailing Henry B. du Pont as chairman of the GWDC that month. “We’re beginning to see solutions not only to the physical problems but the human problems of the urban environment,” he asserted. The GWDC, he contended, is “hacking its way through the jungle of urban problems.” 21 The machete Irénée used to cut up the Black community was “moderate-income” housing. With Irénée’s ascension to Henry’s chair, the GWDC made housing a top priority. The result was a “pilot” plan for middle income housing in northeastern Wilmington which Black residents living in the area could not afford. For the rest of the Black community, the GWDC set up the Neighborhood Improvement Association to sponsor “sweep-up” campaigns and beautification projects to try to gild the ghetto’s dilapidated housing under the ominous shadow of the bulldozer. Meanwhile, Downtown Wilmington, Inc., began formulating final plans for an elaborate shopping mall. 

Still, Terry’s troop occupation hindered the attractiveness of Wilmington as a business opportunity. No Du Ponts were heard protesting the arrest of antiwar demonstrators on April 27 for violating an “emergency” city ordinance prohibiting assembly by ten or more persons, or Terry’s crushing of a Black student protest at the Delaware State University on May 16 with state police and National Guardsmen armed with automatic weapons, gas, and dogs, or the warrantless arrest on June 6 of twentyseven Blacks by police and the stripping and macing of young Black girls in jail. But the family’s alarm that their state was becoming a national scandal was undoubtedly mounting. 

“He has kept them too long,” 22 said state Senate majority leader Reynolds DuPont of the Guard in June. Reynolds explained he had no quarrel with Terry’s original calling out of the Guard; it was only that the Guard had now gone overboard. By the following February, when Terry had been safely disposed of, Reynolds would be more candidly calling the governor’s troop occupation a “keystone comedy approach.” 23 

Terry, meanwhile, continued his ravings about imminent revolution. Independence Day, he assured the state’s whites, would see a terrible Black rebellion. None occurred. In August came the shooting incident which caused four leaders of the Wilmington Youth Emergency Action Council to take refuge in a nearby home, resulting in their arrest. Privately, Irénée du Pont, Jr., bailed out the WYEAC leaders, who were nevertheless convicted later, by a city judge, of unlawful entry. The judge claimed there was no evidence of a shooting, while the News-Journal reported ten bullet holes in the WYEAC van, eleven empty cartridges on the lawn of the house where the WYEAC leaders had sought refuge, a crowd of 120 people at the scene, and sounds of gunfire heard by National Guardsmen and police who arrived at the scene. 

This frame-up was only the beginning of a long campaign by Terry against the GWDC-financed Black youth organization. In September the arrest of six Black youths at the Cherry Island firing range was associated with WYEAC by the governor, who announced that he would block any further money from the Office of Economic Opportunity designated for the organization. The GWDC repeated its support of WYEAC, only to learn that U.S. Senator McClellan was coming to the aid of Democratic Party brethren with an official investigation of WYEAC by the Senate Internal Security Committee. On October 1, OEO stated it would not renew its grants to WYEAC, and from October 8 to 11 McClellan’s committee held hearings in Wilmington, relying solely on reports of their own investigators and on witnesses sympathetic to Terry and hostile to WYEAC. No present or former members of WYEAC were even called to testify. Publicly Irénée opposed McClellan’s investigation. But privately, he authorized GWDC cooperation in police investigation of WYEAC. Finally, Irénée rescinded GWDC’s own funding of WYEAC, effectively dissolving the youth organization. 

Terry had been counting on McClellan’s hearings to generate an atmosphere of hysteria conducive to his reelection. But the governor had forgotten who actually ruled the state. When DuPonts in the Democratic Party began eroding his own party’s following, he became even more extreme, publicly accepting the support of Wallacites. It was in this atmosphere that the White Vigilantes of North America held organizational meetings in Delaware urging the use of arms. Wilmington policeman Ralph Prior headed the revived Ku Klux Klan, and a state legislature committee recommended sterilization of welfare mothers who gave birth to two illegitimate children. Eugene D. Bookhammer, Peterson’s running mate, was reported to have made a similar proposal. 

Bookhammer’s suggestion was par for the Republican course—a steady drift to the right. As election day drew nearer, Peterson became more and more conservative in his “Three-S” (Shrink crime rate, Salvage dollars, Save the people) campaign, urging more police, an end to “political interference” with police, and better pay for police. Although his electoral package had definite reforms in it, the keynote of his campaign, like most other state and national campaigns that year, was “law and order.” 

Peterson’s shift to the right cut into Terry’s lead, as did Du Pont money. In the last few days before the election Terry suffered three successive blows: on November 1, sixty clergymen released a statement attacking the Guard occupation; on November 3, white liberals and radicals successfully sponsored a demonstration, in violation of the city’s “assembly” law, “against fears in the white community and the Guard occupation”; on November 4, Terry suffered a heart attack.

The next day Russell Peterson was narrowly elected governor. 

Peterson had a plentiful supply of members of the Du Pont circle on his winning slate. On a federal level he had the newly elected Republican Congressman William V. Roth. Roth’s sojourn to the pinnacles of power was lighted along the way by his marriage to Jane K. Richards, daughter of Robert H. Richards, Jr., a director of Du Pont Company and Wilmington Trust. Jane’s grandfather, Robert H. Richards, Sr., was the “guiding genius” secretary of Pierre du Pont’s Christiana Securities, the family holding company, as well as former deputy attorney general of Delaware. 

On a state level Peterson would also have many a helping DuPont hand. Reynolds DuPont was elected president pro tern of the state Senate, where two other senators of the seventeen-member body, Dean Steele and Everette Hale, were DuPont Company employees, and two more senators, Margaret R. Manning and Louise Conner, were the wives of present or former DuPont executives. In the state House of Representatives Pierre S. Du Pont IV, who had run unopposed in 1968, joined seven other DuPont employees and Clarice U. Heckert, the wife of a Du Pont employee. There also, reigning as House majority leader, was W. Laird Stabler, Jr., a Du Pont relation whose father had also been high in the company hierarchy. On the powerful Joint Legislative Finance Committee, which passes on all budget requests from state agencies, sat Representative Herbert Lesher (chairman), Senator Steele (chairman of the Senate Finance Committee), Senator Everette Hale, and Representatives John Billingsley and Marie Pagano, all Du Pont employees. 

Peterson filled his own “chemical cabinet” with Du Pont's. For the post of executive assistant he chose Christopher Perry, former News-Journal employee and member of the State Republican Committee; his father, Glen Perry, had been the architect of Du Pont’s propaganda in the General Motors anti-trust case and retired only later that year as Du Pont’s public relations director. For the post of press secretary, Peterson picked Jerry Sapienza of the News-Journal. To head the State Highway Commission, Peterson named Charles L. Eller, a veteran of twenty-seven years with Du Pont who in 1968 supervised the company’s $300 million construction program. Eller replaced Frank Mackie, a recent DuPont retiree. “We can’t have two DuPonters on the commission,” 24 Peterson told reporters, whereupon he appointed the wife of Alex De Dominics, a Du Pont employee, as the commission’s first female member. The Du Pont situation was not much different in the State Treasury. There, Daniel J. Ross, a Du Pont retiree, watched over the state’s fiscal books, recording the disbursements signed by Peterson and his lieutenants. 

But the whole reason for Peterson’s campaign had been Wilmington. There in the surrounding suburbs, C. Douglas Buck, Jr., son of Alice du Pont and grandson of Senator T. Coleman DuPont, presided over the New Castle County Council. William Conner, a Du Pont executive, administrated as County Executive. And in Wilmington itself, a new mayor had been elected—Harry G. Haskell, Jr. 

Harry Haskell, Jr., owed his political life to the Du Ponts. His father, Harold Haskell, Sr., and uncle, J. Amory Haskell, had both been Du Pont vice-presidents and directors. Although his father had organized Du Pont’s Explosives Department and was eventually made general manager of all of Du Pont’s high explosives interests, Harry, Jr., felt no compulsion to fit into the available niches in the company hierarchy. Instead, Harry invested in non-Du Pont holdings: Garrett Miller & Co., Brown & Scott Packing Company, Fable Brands Corporation, and Shur-Whip Company. Harry served on the boards of all these companies and was also a director of Gurt Hill Farm, nationally famous for its Guernsey cows. In 1955 he became a member of the Delaware State Chamber of Commerce. 

But Haskell’s real love was Republican politics. A delegate to the 1952 Republican Convention, which nominated Eisenhower, Harry was appointed in 1954 as secretary of the departmental council in the U.S. Department of Health, Education, and Welfare, where he was first associated with Nelson Rockefeller, then HEW undersecretary. As secretary of the departmental council, Harry was responsible for the development of secretarial and international relations of HEW. He stayed there for one and a half years until appointed by Eisenhower in August 1955 to the special presidential committee headed by Rockefeller “to help in winning the minds of men throughout the world for the cause of freedom and democracy.” 25 Translated, that meant Radio Free Europe, which Harry believed was “America’s mightiest weapon in this ideological battle.” 26 

In 1956, backed by “Veterans for Haskell,” Harry ran for Congress as a cold warrior opposed to ending hydrogen bomb tests or the peacetime draft. As for his domestic policies, Harry summed it all up in one sentence: “Labor can only progress as our economy progresses.” 27 Supported by most DuPonts and the News-Journal, Harry was a shoo-in. 

After completing his two-year term in 1958, Harry turned toward deeper involvement in business, reportedly owning over thirteen companies in Europe and becoming a director of ARAD, a subsidiary of a far-flung development corporation in Israel, RASSCO. A firm believer in corporate-controlled education as a panacea for social ills, Haskell took on trusteeships of Fisk University, Hobart College, and William Smith College; as a Congressman he had been one of the sponsors of the Defense Education Act of 1958, the law designed to meet American capitalism’s need for highly skilled labor as part of “national defense.” He was also treasurer of Unidel Foundation, the exclusive financial conduit founded by his father that controls most of the DuPont family’s grant money to the University of Delaware. 

By 1966 Haskell was a director and chairman of the finance committee of Abercrombie & Fitch, one of the country’s largest sporting goods retailers. Owning all of Ray Evans Properties, Haskell also held a considerable interest in Peoples Bank and Trust Company (of Wilmington). That year he also joined the board of Wilmington’s TV station, WHYY, which had been started with a $150,000 grant from Henry B. du Pont’s Longwood Foundation. But it was through another Du Pont, W. W. Laird, Jr., that Harry found the road back to active politics. Joining in Laird’s Rockland Corporation to speculate in Wilmington real estate, Haskell found political complement to his deals in Block Blight, Inc., and Irénée du Pont’s Downtown Wilmington, Inc., boards of which he became a sterling member. 

Through this business association, solidified by Haskell’s directorship on Wilmington Trust and his family’s long DuPont history, GWDC circles in the Republican Party were encouraged to support the former Congressman as the mayoral nominee on Peterson’s “law and order” slate. 

With Haskell’s election, the GWDC planned for better days, but during the remaining six months of Babiarz’s lame duck administration the GWDC continued to function as practically a parallel city government, led by Irénée du Pont, Jr. 

Irénée’s role during this period in many ways paved the way for Haskell’s administration. An example of this occurred only two weeks after Haskell’s election. On November 18, police were attempting to question a group of Black youths about a gas station robbery when one of the youths panicked, ran, and was shot in the neck. When parents and white sympathizers heard about the shooting and came to the police station, the police refused to provide information and they were subjected to harassment from Guardsmen. 

This incendiary provocation was even worsened when the Guard and city and state police entered the Black community en masse and surrounded the home of a local Black leader, William Hallman, on the pretext of searching for the robbery suspect. Six White Coalition members went to the scene to confront the police on their lack of a search warrant. The police balked long enough to give Irénée time to work behind the scenes, pressuring city officials to obtain a warrant and withdraw the Guard from around Hallman’s home. According to Hallman, Irénée worked until 3:00 A.M. in the morning on a crisis “that could have touched off a tinderbox.” 28 Eventually, Irénée’s efforts, combined with the determination of the Black community and its white allies, was enough to convince the city to obtain the warrant and pull back the Guard. 

Two days later Irénée asserted to grateful white GWDC members that their organization had had “very limited, very superficial and very stereotyped” contacts with Blacks. The GWDC must break through “the roadblock of racial attitudes,” he stated. “The white community must understand the reality of being Black, of having another skin color.” 29 Harlan W. Roberts, staff associate for the Methodist Action Program, attested to just one aspect of that Black experience in Wilmington. “It is more dangerous for a Black man in the Wilmington police lockup than it is in the jungles of Vietnam.” 

Terry left office amid mounting criticism and demonstrations against the Guard occupation. Irénée and Peterson were not happy about the demonstrations, however, as they included more radical groups, such as the University of Delaware chapter of Students for a Democratic Society (SDS) and the New York-based Youth Against War and Fascism, both of which could be expected to open broader questions of class control. To discourage just such a planned demonstration, Peterson on January 2, 1969, threatened to extend the period of Guard occupation if SDS or other groups protested in Wilmington. 

Pressure by the business leaders was also brought to bear, and some members of the White Coalition were threatened with the loss of their jobs if they participated. Haskell and Peterson pressured Black organizations to hold back support, a tactic particularly successful with the local NAACP. The Committee of 39, whose president was a Du Pont executive, came out in opposition to the demonstration, and the Wilmington Council of Churches, which had privately favored the protest and mounted its own clerical criticisms, had its GWDC financing cut off by Irénée. Even Irénée’s former allies, WYEAC, came under attack as one of its organizers, Ned Butler, was fired from the Catholic Inner City because of his role in planning the demonstration and he was replaced by an Atlas Chemical efficiency expert. 

Despite this concerted campaign, the demonstration went off as planned, while Peterson, now inaugurated, stepped up his own plans and hurriedly announced the withdrawal of the Guard. The longest armed occupation of any American city in peacetime was at last over. Hundreds of people had been arbitrarily arrested by the Guard and police, and four people killed. But more important to the Du Ponts, over a thousand newspapers across the country had recorded the sordid event. Most of those reports were sketchy and referred to “Black rioting” that had long before been crushed by the military. And since the larger issues of democracy versus corporate control had seldom been raised, the experiment in military repression had in fact succeeded. Only Terry’s blunt style and prolonged fascination with armed power had marred the military experiment which most DuPonts had initially endorsed. And now a new governor, Russell Peterson, could restore the city’s tarnished image and pursue the GWDC programs that would attract other firms and taxable middle-income families.
 

With Haskell’s ascension to office, the GWDC ceased being a parallel city government. Instead, it moved into City Hall itself, shedding its executive director in the process as Haskell’s administration took over its housing program. To run the show, and the city, Haskell hired a top GWDC staff member, Allan Rusten, as his administrative assistant. Rusten, the News-Journal reported, “has been responsible for administration of all of GWDC social action programs.” 30 Formerly, Rusten was in charge of GWDC public relations, a post he also held with the Republican State Committee and for Goldwater’s National Republican Platform Committee in 1964. Now, in City Hall, he had direct supervision over all activities of ten of the thirteen city departments. For the next four years, while Harry Haskell traveled around the country wearing his mayoral ribbon, it was Rusten, and through him Irénée du Pont, Jr., who held the keys to the city. 

With obstacles in local government removed, Irénée hoped to pursue his GWDC program in 1969, successfully crippling the GWDC Black rival, the Urban Coalition, through Du Pont control of 30 to 40 percent of its treasury. Two years later the Urban Coalition would still be smarting under Irénée’s charge that the Black organization’s proposed $161,000 budget was “unrealistic.” “Either the Urban Coalition is here to do business,” answered Roosevelt Franklin, president of the NAACP, “or let’s close up shop and quit game playing; $161,000 is no money for this business community.” Franklin, however, was mistaken. If anyone was playing games, it was not Irénée. His business motives and plans for Black removal to make way for the GWDC’s new civic center were by then frank and obvious. Only the political and economic climate of Wilmington had stalled their implementation for two years. 

Much of Wilmington’s unfavorable business climate had been the legacy of the Guard occupation; but some aspects were generated by the Du Ponts’ political enemies. One such Democratic gladiator was Dr. C. Harold Brown, director of the University of Delaware’s Division of Urban Affairs. In May, Brown released a three-year investigatory study into GWDC’s $750,000 program establishing three neighborhood centers in Wilmington. “The centers are tragic failures,” the study reported, citing evidence that 84 to 96 percent of area residents never received any help, two-thirds to three-fourths of the residents had never attended their meetings, two-thirds had never been in contact with the centers, and 10 to 20 percent had never even heard of them. Irénée’s angry response came swiftly. “I don’t understand why he made public his results before showing them to us,” the GWDC chairman said. “I think it was unwise. There are a great number of dedicated people working at these centers. When they read this, it cuts the feet out from under them.” 31 

For a while that year it looked like Irénée’s family would also share that fate. Worsening economic conditions around the country threw a pall over Wilmington’s economy and GWDC’s plans. By the end of 1969 American capitalism had entered its greatest crisis since 1929, a crisis which threatened to pull the stock market, and with it the Du Ponts, down to ruin. 

2. 

THE FALL OF THE HOUSE OF DUPONT 

In Wall Street’s competitive world of stocks and bonds, few brokers had a stronger reputation than Edmond du Pont. From his prestigious 1 Wall Street offices on the nineteenth floor of the Irving Trust Building in New York or from his Wilmington office, Edmond, as senior partner of F. I. du Pont & Company, made decisions on which whole fortunes depended, sometimes so quickly that associates were left breathless. 

But Edmond’s neat, conservative appearance and cool manner betrayed no signs of a rash man. Rather, crew-cut Edmond looked the model of efficiency, his trim 155-pound frame smoothly dressed in the traditional pinstripe suit which accentuated his bushy browed, darkish good looks. “We’re not interested in our rank,” he once exclaimed. “We’re interested in doing business in an efficient manner.” 32 

That was in 1963, when Edmond’s own past record seemed to bear him out. Edmond had joined his father, Francis I. du Pont, in 1932, a year after the founding of the firm and the same year he married Averell Adelaide Ross, the daughter of the founder of the prestigious accounting firm of Lybrand, Ross Bros., and Montgomery. A year later, in the grip of the Depression, his father made him a partner of the firm. 

Those were drab days for the market, when the Dow-Jones industrial average limped below 42. With stubborn determination, Francis and his son held on, their fortunes not really made until the bonanza of World War II. As John Kenneth Galbraith once remarked, “The Great Depression of the Thirties never came to an end. It merely disappeared in the great mobilization of the Forties,” 33 and with the mobilization also disappeared the brokerage house’s troubles. Francis, however, did not see the full bloom of his dreams. He died at the age of 69 in 1942, when the market was just beginning to boom again. Edmond assumed the helm. 

Edmond’s reign was synonymous with expansion. Merely four years after his father’s death, Francis I. DuPont & Company took over the entire nineteenth floor of 1 Wall Street. By 1953 the firm had 62 branches and 575 salesmen, and it merged with J. E. Bennett the following year to form the second largest brokerage house in the country. 

By 1963 F. I. Du Pont & Company had 110 offices and 1,300 registered representatives. That year Edmond continued his diet of smaller companies by absorbing A. C. Allyn Company of Chicago and some assets of A. M. Kidder of New York. When Kidder went under, he took over its offices on the eighteenth floor of 1 Wall Street. 

In the bull market of the Sixties there seemed no end to F. I. du Pont’s growth. Like his favorite character, Tom Jones, Edmond found himself with strange bedfellows, including formerly estranged relatives. With two other family brokerage firms, Laird Inc. and Laird, Bissell, & Meeds, Edmond underwrote 7,602,285 shares of Royal Dutch Petroleum stock in 1958. In 1963 he participated with Laird and Company and Laird, Bissell, & Meeds in a group of investors led by Morgan Stanley & Co., underwriting $200 million worth of 4¼ percent 30-year debentures offered by Socony-Mobil Oil Co. (Rockefeller family interests). These same firms also joined Edmond in 1962 in underwriting the privately owned Mid-Center Parking Center in Wilmington, and in 1964 Edmond, Laird Inc., and a Dallas firm made a joint bid to purchase the Pure Oil Company for more than $700 million. 

All these ventures, as well as time itself, helped breach the rifts created in the family by Alfred I. DuPont’s famous feud with Pierre S. du Pont. Edmond’s father had sided with Alfred against Pierre’s allies but soon after reached a truce and a $30 million investment by the family. Now, through Laird, Bissell, & Meeds, Edmond was rubbing shoulders with Garrett Van S. Copeland, older son of Du Pont President Lammot du Pont Copeland, Henry Silliman, son-in-law of old Irénée du Pont, Edward Newbold Smith, son-in-law of Henry B. du Pont, and Alfred Bissell, who married the niece of Eugene du Pont, Jr. Through Laird Inc., Edmond was also in touch with George Weymouth, another in-law, Silliman, Smith, and Alfred DuPont Dent, grandson of Alfred I. DuPont. 

Assisting along the way also was Edmond’s brother Emile, whose sharp mind had propelled him to a vice-presidency and directorship in Du Pont Company. Emile was brought into the family’s Blue Ridge Mutual Fund by Eleuthère du Pont, as was Edmond. There, Edmond also joined Donald F. Carpenter and James Q. Du Pont in stock speculation, while Emile in 1967 joined Eleuthère and Reynolds DuPont in another fund, Sigma Capital Shares Corporation. Eleuthère also made Edmond treasurer of his Delaware Chemical Engineering Corporation. These growing ties were also reflected in the Continental American Life Insurance Company, where Eleuthère, as treasurer, put Edmond’s knowledge of mutual funds to profitable use. Edmond even served as a director of Continental American for a period with George P. Edmonds, son-in-law of Lammot Du Pont, and Francis V. Du Pont, son of T. Coleman Du Pont. With this economic rise came the social laurels of a directorship in old Henry F. du Pont’s Winterthur Corporation and, in 1965, trusteeship of the University of Delaware. 

That year Edmond reportedly joined other Du Ponts in buying out the president of Waddell & Reed, Cameron K. Reed, securing control of over 24 percent (145,440 shares) of the investment firm’s voting stock and l2½ percent of Class A nonvoting stock quoted at $43.25 a share. In keeping with Edmond’s own interest in mutual funds, Waddell & Reed was an investment adviser to mutual funds and owned 80 percent of United Investors Life Insurance Company, of which Edmond was a director. Moreover, Waddell & Reed also managed the huge $2.1 billion United Funds, Inc., and United International Fund; Edmond also served as director of these companies. To complement this tidy affair, Wilmington Trust was made direct custodian over United Funds’ $400 million science fund. 

All seemed to be going well for Edmond in the Sixties. He had also involved himself in two other stock investment companies: the $398 million Delaware Fund and the $100 million Decatur Income Fund, where he joined Lammot du Pont Copeland’s other son, Lammot du Pont Copeland, Jr. His own younger son, Edmond Rex du Pont, Jr., was now securely niched in F. I. du Pont & Company, while his elder son, Anthony, had graduated from Yale and taken an engineering job with Douglas Aircraft Company. 

Most of these days Edmond spent at F. I. Du Pont’s ground floor office at the Du Pont Building in Wilmington, where he lived in a modest ten-room house. Once a week, until her death in 1967 at the age of 92, Edmond’s mother would stop by the office to chat about her many investments. Edmond’s brother, A. Rhett Du Pont, was also making quite a name for himself. Despite a reputation as a drinker (he was, for example, fined $200 for drunken driving and a hit-and-run accident in 1959), A. Rhett knew how to make money. He had even won recognition from David Rockefeller’s Downtown Lower Manhattan Association in 1961 and was a member of the board of governors of the American Stock Exchange. 

In 1967 F. I. Du Pont & Company was generating close to $100 million in income from its own operations, and had become a major stockholder in such corporate giants as A.T. & T. Other Du Ponts, led by Lammot du Pont Copeland and Emile F. du Pont, by then had invested heavily in F. I. Du Pont & Company, and Garrett Van S. Copeland, Lamont’s son, and Peter R. Du Pont, Emile’s son, had even become partners. 

Then came the deluge of 1968–1969. The market was swept by a flood of calls as investors feared the drought of domestic capital caused by anti-inflationary taxes and the decline in earnings. Edmond had sensed this danger in 1967 when, commenting on Johnson’s wartime surtax on corporate and personal income, he warned that “it would seem prudent to await action on any tax increase in order to be sure that business adjustments that have been under way for more than a year have run their course.” 34 

But time was late for American capitalism, and Johnson knew it. The huge return of capital from export sales that Lammot du Pont Copeland in 1963 had expected would outweigh the loss of capital spent abroad for overseas plant construction had been hindered by the use of that capital in still further huge investments abroad. Moreover, this overseas economic empire required a military shield, especially in Europe, the Mediterranean, the Pacific, and in later years particularly, in Southeast Asia. This meant dollars flowing abroad not only for U.S. corporate investments, but also for U.S. military presence. 

During the first two decades after World War II, European and Japanese financiers and their governments welcomed the dollar as a valuable source of needed capital for reconstruction and as a currency basis for international trade. For those two decades the U.S. dollar had reigned as the undisputed lord of world capital, the foundation of the postwar international monetary system in the “Free (Enterprise) World.”

With European and Japanese reconstruction completed in the Sixties and their economies revived, however, the accumulated dollar overflow lost much of its glow and became increasingly exchanged for U.S. gold (gold being the accepted arbiter among currencies). This deficit in the U.S. balance of payments grew into a deeper and deeper problem for the U.S. government. Its gold stocks were becoming depleted at the same time that the federal treasury, financing a huge arms buildup, continued to turn out annual deficits, further undercutting the real value of the dollar. The crisis was only aggravated more by the Vietnam War. The U.S. corporate war machine consumed even more foreign goods and raw materials, spent even more dollars abroad, and chalked up ever higher deficits in the domestic and international balance sheets. 

Key to all this was the mounting crisis of U.S. productivity. The dollar’s value had been undermined also by the domestic effects of overseas investment: the flow of U.S. capital abroad dried up the financial sources for most domestic capital investment, leaving the domestic field neglected. It was this that was one of Du Pont’s chief problems when McCoy assumed office late in 1967. And Du Pont was not unique: with the exception of computers and reproduction machines industries, this stagnation of domestic investment had put a brake on technological innovation in many key areas of production (auto, appliances, etc.). To make matters worse, the federal government’s open commitment not to permit another 1929 collapse only encouraged investors further to avoid capital investment in industry and steer their capital into more speculative, riskier, but more quickly profitable waters, often with unsound business practices. 

By 1967 the U.S. economy was suffering a crucial decline in its productivity differential with European and Japanese companies. Some of these companies were jointly owned by American corporations which saw fit to reinvest much of their profits in foreign plants and develop foreign consumer markets. In a few cases, foreign management, backed by a majority of foreign directors and their governments, reinvested in their own countries despite American grumblings; in those cases, concern over short-run profits for their investments outweighed the broader economic interests of the American corporate class as a whole. 

As a result, U.S.-made goods were steadily being underpriced and driven out of the world market. Eventually, in 1971, the U.S. would add to its balance of payments deficits the first trade deficit in a century. By the following year this trade deficit would increase threefold. 

The Vietnam War, however, played not only an economic role in undermining the dollar, but also a crucial political role. The Vietnamese’s smashing Tet offensive in 1968 seriously eroded what foreign confidence still existed in a U.S. victory and the dollar’s market prospects in Asia and the rest of the underdeveloped world. If the Vietnamese could prevent American corporations from establishing plants to use cheap labor and the raw materials of Southeast Asia, perhaps other underdeveloped nations could do likewise. The continuing rush on U.S. gold mounted, soon triggering a “gold crisis.” Then, as the United States sought to protect its gold reserves by restricting and eventually ceasing gold payments, challenges were raised in the world’s money markets to the exchange value of the dollar itself, thus spurring the selling of dollars and the pressure for devaluation. That devaluation, only the official adjustment to the decline in the dollar’s buying power, played an important role in the subsequent worsening of inflation in the United States, popping many a balloon among the American people. 

In a desperate attempt to cut into the mounting war deficit and slow down inflation, President Johnson had imposed the surtax. Even Edmond DuPont had to admit in 1967 that “In view of the federal deficit for the past fiscal year and the much larger deficit looming this year, it would appear essential to enlarge federal revenues through a tax increase that would have the effect of stemming any new inflationary tide.” 35 But Edmond felt business was slowing on its own, and encouraged Johnson to wait until it started up again. Johnson, openly fearful of Black rebellions sweeping the country over inflation, unemployment, and the draft, and equally alarmed about the speculation frenzy boosting stock prices above their earnings justification, warned of a future overheating of the economy and wanted to nip the problem in its credit bud by raising prime interest rates. 

In this, Johnson succeeded, only to frustrate dreams of immediate profits and drive the marketeers into a selling frenzy. Millions of these shares that were bought on margin, often by mutual funds employing leverage, were suddenly dumped on the market; and as mutual funds—the modern counterpart of the speculative investment trusts of the golden Twenties—had been Edmond’s specialty, he also inherited their debacle. 

Throughout 1968 F. I. Du Pont & Company was swamped with a flood of selling and speculative buying, most often on margin. Edmond’s back office became one of the messiest in the brokerage business. Orders being processed by hand were backed up in long lines, snarled in paperwork. The result was a 100 percent increase in Edmond’s costs: increased personnel, massive overtime, and, following the national inflation, a general rising trend in all expenses. Although F. I. Du Pont raked in a record $119.6 million in total income from operations in 1968, its net income available to the partners (before taxes) fell to $8.9 million, down 26 percent from the $12 million net income a year before. After federal taxes, du Pont scored only a $4.7 million profit, far below 1967’s $5.9 million. 

With its liquid capital reserves falling, Du Pont did not present a pretty picture to other houses on the Exchange who were aware that some of Du Pont’s problems were the result of its own doing. Despite Edmond’s claim of a heavy reliance on research, by 1968 this was simply not the case. Edmond’s persistence in paying low wages for research personnel had caused a high turnover in Du Pont’s research staff, weakening its capabilities. This lack of an adequate research department hurt the marketing ability of Du Pont’s salesmen and diminished the company’s attractiveness to new institutional clients. Consequently, Du Pont salesmen were willing to accept innumerable small orders, which only contributed further to the backlogging problem. 

Thousands of orders for selling and buying were delayed in Du Pont’s backwaters. Yet, these and even more orders were accepted by Du Pont. This was in violation of the antifraud provisions of the securities laws, which prohibit sales by a dealer when he has reason to believe he will be unable to deliver the securities promptly. Hundreds of complaints were sent to Du Pont by investors, but for the most part Edmond and his long-time managing partner, Charles Moran, Jr., ignored them. For this, both were fined $25,000 each by the Exchange and the firm was hit with an additional $50,000 fine. If Edmond was to avoid this unhappy occurrence in the future and meet the Exchange’s audit of his capital reserves backing his business, he realized, he would have to raise additional capital and modernize the firm’s research, accounting, and even its organizational structure. 

Edmond tried to deal with this problem by taking the first step toward incorporating the partnership, a maneuver other brokerage houses were also employing to modernize their organization, exploit corporate tax loopholes, and have a stronger legal basis for acquiring needed loans, floating bonds, and selling stock to raise capital. Edmond’s plan called for a board of seventeen directing partners with himself as chairman; it probably would have been implemented had time permitted. But the crush of ensuing events robbed Edmond of his opportunity—and his company. 

The deluge came in mid-May 1969, when the market broke badly, suffering a 10 percent decline in stock prices across the board. In the heat of mass selling, calls went out for more capital behind margined stock, but frantic stock owners found credit scarce in an apprehensive money market. Overloaded commercial banks were unable to accommodate the flood of demands for loans, and banks in general feared a contraction of available resources for commercial paper. In an attempt to buoy their stock values, corporations flooded the money market with I.O.U.’s, ballooning the market to $24.4 billion by June. With the unavailability of an expanding overseas market diminishing the dollar’s value in contrast to foreign currencies, and the resultant inflation further tightening credit, brokerage houses had to accept $6.9 billion in notes the following year, $709 million in one month. 

Saddled with many speculative mutual funds and small investors as customers, F. I. Du Pont was particularly hard-hit by the selling, and operational costs triggered a $7.7 million deficit in 1969. At that point the New York Stock Exchange, suspecting that Edmond and Moran had accepted too much business on margin without adequate liquid capital as insurance, in June 1969 asked for an audit of F. I. Du Pont’s capital reserves to see if it met the board of governors’ rule of 20 to 1, the required ratio of total indebtedness to net capital. 

The Exchange also asked F. I. Du Pont to reduce its loans. Such demands proved Moran’s management so incompetent that in September he was forced out of the firm. 

To attract additional capital, in 1970 Edmond merged F. I. Du Pont with Glore Forgan Staats, Inc., one of the country’s leading underwriters. With twenty offices, it was one of the largest consolidations in Wall Street history, and Edmond hoped Glore Forgan’s trade would answer questions about DuPont’s capital reserves. But to lay the question to rest once and for all, at the very same time Du Pont absorbed Hirsch & Co. Although this was designed as another “partner” acquisition to improve Du Pont’s capital picture, it also charged Du Pont with 50,000 to 60,000 new accounts, a huge intake of business which Du Pont was not yet prepared to handle. 

To cope with this mounting problem of back office snares and gather additional capital at the same time, Edmond shopped around for a computer company willing to provide capital in exchange for a huge computer operations contract. Just a week before Edmond’s group finally found their solution in Texas, they approached one computer company for a contract on back office business with one condition: a $4 million to $5 million capital injection into F. I. Du Pont. The company refused. The following week Edmond found what he thought was an easy mark in the lean, crew-cut Texan, H. Ross Perot. Perot owed a lot to the brokerage houses of Wall Street. When the market crisis first developed, Perot’s computer firm, Electronic Data Systems Corporation, looked so handy that investors gave it a price-earnings ratio of 500 to 1; brokers were convinced that the new computer service had tremendous growth potential. Perot’s stock, which went public in 1968 at $16.50 a share, skyrocketed to a high of $161 by 1970, suddenly transforming Ross Perot into a billionaire—on paper. 

Perot’s first big contract was handling Medicare claims in Texas for Blue Shield, and he soon landed other Medicare contracts in nine other locales. According to a General Accounting Office report released in 1973 by Congressman L. H. Fountain, chairman of the House Intergovernmental Relations Subcommittee, Perot’s firm made a 100 percent profit on Medicare contracts, a 200 percent profit from the Texas contract alone. 

In July 1970 Perot made his first real break into Wall Street through the F. I. Du Pont contract, purchasing the firm’s computer operation with 100,000 shares of Electronic Data Systems stock worth $3.8 million. Edmond granted Perot both back- and front office paperwork, and the Texan took little time in making himself felt. First, Perot moved his own personnel on the scene. Then he suggested “bank balances” to replace the old cumbersome stock certificates. But other, less beneficial things arrived with Perot—rumors. 

Almost immediately, F. I. Du Pont was hit with rumors about a lack of capital. “Almost by definition,” recalled Wallace C. Latour, Edmond’s new managing director, “the rumors circulating about us had to be false. No one knew what kind of shape we were in, including ourselves. We knew that we weren’t comfortable in capital, but we thought we had enough.” 36 But rumors are considered a way of life on the Stock Exchange, and despite Du Pont’s claims, this time they were reflecting the truth of the situation. “We have had some customers ask for their securities,” Latour admitted, and the American Stock Exchange even had to severely censure two floor members and fine them $1,000 each for spreading false rumors. Edmond had his accountants audit the books and dutifully pronounce the firm financially “sound,” but the New York Stock Exchange, suspecting Edmond’s figures were unreliable, remained uncertain. Felix Rohatyn, partner of Lazard Freres & Company and chairman of the Exchange’s surveillance committee, insisted Edmond provide more funds. 

As most of their own funds were tied into the precarious mutual funds sector, Edmond’s partners elected to sell the 100,000 EDS shares they had received from Perot. Originally they had wanted those shares as an investment in what they considered “a great growth situation,” but now they were resigned to the sale to raise the necessary capital to cool the Exchange’s heated concern. For its part, in November the Securities Exchange Commission asked Perot to remove his previous two-year restriction on the sale of that stock. It was then, Perot later claimed, that he first found out about F. I. Du Pont’s capital problems. 

Perot already had a deep stake in F. I. Du Pont & Company. If F. I. Du Pont could not meet the Exchange’s legal requirement and was forced to close, Perot’s Electronic Data Systems would lose $8 million in Du Pont business annually, or up to 20 percent of its revenue. Its stock, and Perot’s billion dollar personal worth, would then be worth substantially less. F. I. DuPont’s collapse would also hurt his plans to capture the computer business of other brokerage houses, which would be jeopardized by the fall of the market’s second largest firm. 

But the Texan industrialist was also aware that if he needed the Du Ponts, they, and all of Wall Street, needed him even more. Merrill Lynch, which had avoided a heavy commitment in the margined mutual funds, was about to rescue another failing giant, Goodbody & Company, but only if no other firm collapsed before the deal was completed in December. If both F. I. du Pont and Goodbody failed, over half a million investors might lose their securities and cash, since the Exchange had already exhausted its reserves indemnifying customers of other firms. At the time, there was no Securities Investor Protection Corporation to use taxpayers’ money to insure private speculators, and if two such leading firms failed, public confidence in Wall Street would shatter, and possibly Congress would be prompted to shy away from passing the SIPC bill the Street so desperately needed. 

Perot grasped the crisis probably better and more candidly than any federal official would have dared. “I realized,” he explained, “that you’d have to nationalize the airlines and other capital-intensive industries quick if they couldn’t get money out of the Street. You’d have to nationalize the utilities—quick. You couldn’t sell public school bonds.” 37 And getting the money for such public necessities as schools, Perot realized, would eventually mean nationalizing the private banks (including his own Republic National Bank of Dallas), which controlled the country’s money. To a capitalist like Perot, the interest of private capitalism was synonymous with the national interest. “I feel strongly that everyone ought to make every contribution he can to the country.” 38 

Despite his patriotic stance, however, Perot put his own profit first. When the partners first tried to sell their 100,000 EDS shares, Perot, Edmond later charged, delayed their registration. Then, when Edmond approached the billionaire Texan to invest $5 million in the firm, Perot still hedged, playing his cards. The White House, by this time alerted to the immense economic danger, then intervened. Perot was well known in conservative Republican circles since his unsuccessful propaganda stunt of attempting to jet tons of Christmas gifts to American prisoners of war in North Vietnam. He had been a large contributor to Richard Nixon’s 1968 campaign, and he knew the President personally, so the calls he now received from Attorney General Mitchell, Treasury Secretary John Connally, and Presidential Assistant Peter Flanigan urging his investment in F. I. Du Pont, while pleasing, were not surprising. It may have fired Perot’s patriotic embers, but his stance in the negotiations remained imperturbable cool.

Meanwhile, the pressure built on Edmond. In September the Big Board conducted its annual surprise audit of F. I. du Pont. The following month the Exchange’s accounting firm released figures showing a $17.7 million deficit for F. I. du Pont in 1970. Most of these operating losses were the result of write-offs and the recommended 1 to 16.45 reserves required because of the back-office mess Perot’s computer had yet to clear up. In desperation, Edmond asked Perot to raise his loan to $10 million to create a better than 10 to 1 ratio for the firm. 

Edmond Du Pont found that Ross Perot drove a hard bargain. When the final deal was reached on December 15, Edmond had been forced to agree to a number of concessions in exchange for Perot’s $10 million investment. He promised to incorporate the firm, whereupon Perot would have the right to convert $1.5 million of his investment into 51 percent of the firm’s stock. This would give control of F. I. Du Pont to someone outside the Du Pont family for the first time in its forty-year history. F. I. Du Pont would also have to issue $8.5 million worth of debentures to Perot, and arrange for a loan collateralized by a Chicago partner, John W. Allyn, owner of the Chicago White Sox baseball team. Edmond agreed to all this for the loan, and promised Perot high preference in the event of forced liquidation. Finally, Edmond was not only to obtain the signature of all general partners and lenders on a statement promising to keep their funds in the firm, but also to raise an additional $15 million. “I don’t want to be in the position of putting my money into the top of a funnel,” Perot asserted, “and having others pulling it out the other end.” 39 If Edmond failed, Perot’s 51 percent investment would automatically become 91 percent. 

Edmond failed. 

It may seem a mystery that Edmond du Pont was unable to gather the necessary funds from such wealthy brethren as his. After all, $15 million does not seem much for the richest family on earth to raise, and the Du Ponts then held more personal wealth than any single family. 

The key to the DuPont riddle had much to do with the general state of the economy at the time, a looming crisis which inspired smaller, but crucial dramas within the story of Edmond’s fall. 

First was the drama unfolding within Du Pont Company itself. Since the 1965 G. M. divestiture, Du Pont’s stock had declined well over 100 points. Like most combines, Du Pont had the problem of providing big enough earnings after the giant stage had been reached. “It’s a case of having to run faster just to stand still,” 40 commented Standard and Poor’s Outlook. Sales were still rising, well over $3.5 billion, but earnings per share were not matching the 1965 high of $8.63. Du Pont’s competition had grown in recent years from diversified and expansion-minded oil companies and foreign concerns, while its factories were plagued by overcapacity, which was true of the entire chemical industry for that matter. 

Although Du Pont had friends (and relatives) in the investment world (Poor still recommended Du Pont stock, pointing to its low price-earnings ratio), institutional investors saw problems and began to reduce their holdings in chemicals. Investment companies and mutual funds reduced their chemical and drug stock portions of their portfolios from the 8.4 percent of March 1964, to 4.2 percent in 1969. Such selling drove Du Pont stock down to 160 in January 1969, a far cry from its 261 high only four years before. The deluge of May only made matters worse for the Du Ponts as they saw their stock tumble to 131 by June, joining 417 other new lows on the New York Stock Exchange. 

The continued fall in earnings put tremendous pressure on the Du Ponts. The family’s holdings in the company were now worth one-half of their 1965 value, a tremendous blow to the family coffers. And to make matters worse, in the midst of this economic storm, one young member of the family now found he couldn’t keep his head above troubled financial waters. Among the many paper empires starving for credit in those precarious days was that of Lammot du Pont Copeland, Jr. Using the credit of his famous name, Copeland had built a house of cards over recent years, and now it came tumbling down with a reverberation heard round the world. 

Motsey’s Paper Empire 

Since his graduation from Harvard in 1954, young Lammot Copeland, Jr.—or “Motsey,” as he is called in family circles—had had a passion for right-wing politics, associating himself with the ultra-conservative Young Americans for Freedom. Buoyed by many personal trust funds (of which four alone were valued at a cool $11 million) and by his father’s ascension to the Du Pont presidency, Motsey became a bigwig in conservative political circles, being national treasurer of YAF from 1962 to 1966. Following Goldwater’s defeat in 1964, Motsey also became a director and treasurer of the American Conservative Victory Fund, and president of the American Conservative Union. 

Although some of these facts were mentioned earlier, they are worth repeating as they are what took Motsey on the road to financial disaster. To acquire a forum for his right wing ideas, Motsey began purchasing newspapers in southern California, an area dominated by aerospace and defense industries and renowned for its political conservatism. He began these purchases in 1963, the year his father became president of Du Pont. 

Within a few years, Motsey bought the Currier News Corporation, Graphic Productions Corporation, the San Fernando Valley Times, the Standard Register, and Great Western Publishing Company, extending his newspaper holdings into northern California as well. His Citizen-News Company, which operated a chain of newspapers in the Los Angeles area, including the Citizen-News of Hollywood, was his biggest stake, the revenues of the two dailies and twenty-seven weeklies running close to $9 million a year when he took them over. 

Motsey’s problems, like those of his father and most of his Du Pont relatives, began around 1967. That was the year when growing public concern over an unwinnable Vietnam War began causing a shift to the left in the political temper of the country’s population, a shift that took on momentum over the next three years as the prospects of victory became dimmer and the occasions of social upheaval greater and more frequent. This political shift cut into the attractiveness of Motsey’s right-wing politics, and the readership of his papers suffered accordingly. By mid-1970 their annual revenues had fallen to about $5 million.

But in 1967 Motsey saw only roses, and through his West Coast dealings he was introduced to the man who was to play a key role in his downfall, Thomas A. Shaheen. A heavyset, outgoing promoter, Shaheen was then based in Chicago as “financial adviser” to the Pension Fund of the Journeyman Barbers, Hairdressers, Cosmetologists and Proprietors International Union of America—the Barber’s Union. He had left California in 1965 following an unsuccessful attempt to develop supermarkets, and had been declared bankrupt by a Chicago court the following year. But he left behind a hustler’s legend in California, and one money broker there became the medium for Shaheen’s meeting Motsey. 

If the Du Ponts gave their version of what followed, Motsey would be described as the next victim of Shaheen’s operation. But Motsey’s own deals through Winthrop Lawrence Corporation, the “hard-money” loan and investment firm he established with Shaheen in 1967, suggested otherwise. There were victims, all right, but none by the name of Lammot du Pont Copeland, Jr. 

The first victim was the Barber’s Union, many of whose members are elderly and have only future pensions standing between them and old age pauperism. Under Shaheen’s advice, union officials lent $12 million in pension funds to various ventures of which $4.5 million later became delinquent, including a $1.3 million loan to Copeland’s own northern California newspaper operations. Some of these loans from the Barber’s Union were also used to finance Copeland and Shaheen’s other deals. 

The next victim was the Dean Van Lines, a West Coast trucking company. Dean’s search for capital, in the credit squeeze of 1966, eventually led it to Winthrop Lawrence. According to sources quoted in the Wall Street Journal, Motsey and Shaheen agreed to arrange a quick $1.6 million bank loan for Dean. But Dean’s treasury didn’t see that loan for almost a year. To keep things afloat, Shaheen arranged for the Barber’s Union to advance interim loans of about $700,000. Finally the $1.6 million loan came through, allegedly minus some $600,000 in “fees.” Motsey arranged for additional loans which finally forced Dean’s owners to sign over control to Winthrop-Lawrence. In September 1969 Dean, its profits now drained away, filed a Chapter 11 bankruptcy petition, whereupon Motsey and Shaheen sold off eight of Dean’s affiliates for $500,000 at a profit of nearly 300 percent. 

Another hapless case was that of Edmund C. Giusti, a California real estate speculator whose plan for a country club also led him to Winthrop-Lawrence—and trouble. According to a deposition filed by Giusti in California superior court, Shaheen agreed to arrange a $1.1 million loan, but at a very high cost: a $97,000 fee to Shaheen, a $35,000 fee to Motsey, $106,000 in fees and commissions, and 100 acres of Giusti’s 1,500-acre plot, worth $400,000. After it was all over, Giusti still needed money, and another $1.2 million loan was allegedly “approved” by Shaheen. This loan never materialized, but $500,000 in pension funds from the Barber’s Union did—to Winthrop Lawrence, which then channeled the money to Giusti. Again, the cost was steep: $20,597 in “fees” to Shaheen, and 200 more acres of land valued at $740,000. Shaheen, meanwhile, received a large fee also from Winthrop-Lawrence for arranging the loan. 

Motsey was riding high these days, making loans with New York banks to finance new acquisitions. He got Winthrop-Lawrence involved in an abortive attempt at franchising Mexican foods under the name of “Taco Boy,” and steered the firm into setting up the Pleasure Petroleum Corporation and financing college dormitories in Kentucky, Louisiana, Georgia, and Mississippi. On his own, he invested in Calumet Publishing Company, a Chicago-based newspaper chain, and speculated in Texas, Arizona, Maryland, and California real estate. One Los Angeles tract, worth $2.2 million, proved a disaster, its steep hill discouraging development construction. With another tract, a $1.8 million Sacramento shopping center, Motsey was more fortunate. Observing that its occupancy rate never rose above the break-even stage, Motsey simply sold the shopping center to Super Stores, Inc., a Mobile, Alabama, store chain haplessly controlled by his own Winthrop-Lawrence. 

But Motsey’s biggest venture was in Transogram Company, a New York toy manufacturer founded in 1915 and listed prominently on the American Stock Exchange. “Transogram had everything we needed,” Shaheen recalled, “a listing, a history and a problem.” 41 Transogram’s problem was an operating deficit which had grown since the death of its chief executive, Charles Raizen, in 1967. By January 1969, when Motsey and Shaheen opened and successfully closed negotiations for acquisition, Transogram’s owners had suspended payments to creditors and the workers’ pension plan. 

Motsey had expected this acquisition to proceed quickly, but it was not until mid October that it was finally approved by Transogram’s stock owners. Meanwhile, Motsey had overextended himself, accumulating a tidal wave of debts that were now close to catching up with him. 

To ease the burden, Motsey and Shaheen surrendered a 25 percent interest in Winthrop-Lawrence to MacDonald Lynch, a Texas financier, in exchange for his $1 million certificate of deposit. This certificate Motsey placed in the vaults of the Royal National Bank of New York in exchange for a line of credit from the bank which was quickly exhausted. 

Motsey and Shaheen next turned to Transogram. At a board meeting attended by Copeland, Transogram’s directors loaned Shaheen $250,000 in spite of their own financial problems. The money was supposed to be used to acquire the Yellow Cab Company of Philadelphia and Connie Mack Stadium; in exchange, Shaheen promised Transogram a 20 percent interest in each. Neither company, however, was ever acquired. 

In December Motsey moved to take over Transogram, planning to buy 250,000 shares (25 percent of the company’s stock) then held by the Raizen estate. Motsey put $500,000 down and signed notes for $4 million, again using the advantage of his name to buy credibility. At the last minute, however, an unknown party who had agreed to pick up $1 million worth of the Transogram notes suddenly backed off, jeopardizing Motsey’s whole scheme. 

To save the day, Motsey made an appeal to Dad. 

Lammot du Pont Copeland, Sr., had already been involved in his son’s deals. Already he held a $3.6 million note from Winthrop-Lawrence convertible into 35 percent of the firm’s stock. Only the previous April he had put up $3.35 million worth of his own blue chip stock to partly collateralize a $3.7 million loan for his son from Wilmington Trust, the family bank, and only in October he had loaned two more $500,000 advances to his son. Now Motsey was back for more, and his father, growing concerned, once again dipped into his pocket. This time the Du Pont chairman arranged a $3 million loan from Chemical Bank and Trust Company of New York, of which he was a director. Copeland, Sr., again backed the loan with his own stocks. 

It was a high price to pay, but Copeland’s son was finally chairman of a large industrial corporation, Transogram. And there were immediate spoils. Winthrop Lawrence paid 80,000 Transogram shares worth $6 apiece to Shaheen’s personal holding company, the Columbia Financial Corporation, “for services rendered … in the negotiations.” Motsey also was able to trade off the lavishly equipped, air-conditioned dormitories of Southwestern Louisiana University to Transogram. Subsequently, the toy company took a $183,000 operating loss off these dormitories the following year. 

Transogram continued to suffer an operating loss, and only by juggling accounts was it able to show a mere $189,000 profit for 1969. Yet Motsey’s ambitions knew no bounds, directing Transogram to acquire two profitable companies, Quaker Masonry Company of Hollandale, Florida, and Southern Precision Industries, Inc., of Harrison, Arkansas. To pay the former owners, Motsey gave them Transogram stock, promising to buy it back in the future. 

The use of Transogram stock now became Motsey’s chief bargaining tool for more capital. By January 1970 his other debts were also catching up. His favorite project, the Citizen-News, was losing $60,000 every month. To head this company Motsey had hired Richard Horton, a former San Quentin Prison inmate. Horton had been jailed in the mid-Sixties for his role as a member of a confidence ring which drove the bank of Brighton, Colorado, to bankruptcy within twenty-one months through forgery and phony accounting. Now, as Motsey’s lieutenant, he strove to keep the Citizen-News afloat by cutting costs, firing half the staff, and shifting the paper’s politics to a more liberal stance in keeping with the new political trends. But his efforts failed; they were no doubt hampered by Motsey’s $13,000-a-month “consulting fee” (which Copeland claimed to have collected for only one month) and by his siphoning off of Citizen-News revenue to finance other newspapers in northern California.

To stave off the debts being called on his marginal empire, Motsey began approaching smaller banks outside New York which the name of Du Pont could entice into loans. To paint a sound picture, Motsey’s unaudited personal financial statement on April 30 showed liabilities of only $9 million and boasted assets of $29.5 million. Buried in the report, however, was a tiny footnote that “Mr. Copeland has personally guaranteed obligations of companies he owns. There is, in each instance, security considered ample for the obligation so guaranteed.” 42 Within three and a half months it would be revealed that that little footnote had $50 million in liabilities lurking behind it. 

In these latest of late hours Motsey increasingly used Transogram’s stock to shore up his paper empire. For collateral he pledged 20,000 Transogram shares at the Missouri State Bank and Trust Company in St. Louis; 10,000 Transogram shares at Peoples Bank in Aurora, Colorado; 17,000 shares at the Houston Bank and Trust Company; 10,000 shares at the Madison National Bank in Washington, D.C.; 40,000 shares at Louisiana National Bank in Baton Rouge; and $300,000 worth of Transogram notes at the Huntington National Bank in Columbus, Ohio. 

Some banks didn’t even ask for security. One Midwest bank, for example, gave Winthrop-Lawrence a $450,000 loan with almost no questions asked. All told, fortythree banks were induced into becoming Motsey’s creditors. 

Still that was not enough. Motsey’s last hope, to buy his own bank, was yet unrealized. Over a year earlier Transogram had attempted to acquire the Mountain Savings and Loan Association of Denver, but federal savings and loan authorities stepped in, refusing to grant approval. 

The first crack in the veneer covering Motsey’s empire appeared in mid-June 1970 in the person of Motsey’s father. Copeland, Sr., was plagued by his own financial problems as Du Pont’s stock continued to flounder in the market’s storm. Apparently by this time he saw Motsey’s empire as unsalvageable and, probably urging his son to abandon a sinking ship, cut the financial lifeline. To smooth the blow for his son and at the same time protect his own high position in Chemical Bank, Copeland quietly arranged a final $5.5 million loan for Winthrop-Lawrence through that most secretive of world capitalism’s institutions, a Swiss bank. 

Motsey used the advance from the Union Bank of Switzerland to pay off Chemical’s $3 million loan (freeing his father’s collateral) and his father’s own $1 million loan. This left Motsey with $1.5 million, and after returning a compensating balance of $500,000 to the Swiss bank and paying a discount of $165,000, his final holding came to only $800,000. Meanwhile, Copeland, Sr., was still in the hole to the tune of $3.5 million worth of blue chip stock left with the Swiss bank as collateral. Copeland probably expected soon to kiss that goodbye, but he undoubtedly considered his reputation with Chemical Bank more important. Significantly, Motsey had also made one of his few repayments of debts to First National City Bank, another bank in which Du Pont Company had large deposits and of which Du Pont president Charles McCoy was a director. Motsey’s repayment of that $150,000 loan may well have been consistent with his father’s effort to protect his own and Du Pont’s reputation. 

Having covered his son’s tracks in New York, Copeland, Sr., then turned to cleaning house in Wilmington, immediately disclosing his son’s precarious position to the family bank, Wilmington Trust. At the instructions of Copeland’s attorney, William S. Potter (himself a director of Wilmington Trust and a Du Pont in-law), a $3.4 million judgment was secretly taken by Wilmington Trust against Motsey’s $3.7 million debt on the loan granted him the previous year. In return, Wilmington Trust held off liquidating Motsey’s and his father’s collateral, possibly to give Motsey time to better arrange his affairs before filing for bankruptcy. 

Events closed in on Motsey the rest of that summer. In July one of Motsey’s smaller bank creditors, angered over his failure to repay a $250,000 six-month note when due on March 25, threatened to blow the whole lid off the Copeland empire by throwing Motsey into involuntary bankruptcy. “The thing I resented most,” recalled an officer of the Worthen Bank and Trust Co. of Little Rock, Arkansas, “was all those guys telling us that we didn’t dare to go up against the DuPonts. So we went up to Wilmington armed with the necessary papers. The next day we got our money.” 43 

No sooner had Motsey bought off the Arkansas bank than more trouble broke out in California. In Hollywood a finance company seized the Citizen-News Building with security guards in lieu of $450,000 owed by Motsey. Motsey’s Citizen-News lieutenant, Richard Horton, after a scuffle with the guards, repossessed the building with the aid of local police, only to see the finance company then take the case to the Internal Revenue Service for the Citizen-News’s failure to pay employee withholding taxes. Two weeks later the Citizen-News, thrown into bankruptcy proceedings, ceased publication. 

With the death of his newspaper, Motsey was in a real sense signaling the coming of his departure from the world of high finance. That month he told an associate “that sooner or later he was going to have to file for bankruptcy. I passed the word around, but nobody believed me. From beginning to end in this thing, nobody could believe a Du Pont could go bankrupt.” 44 

Whatever plans Motsey might have had for filing bankruptcy papers, he kept them secret from his Winthrop-Lawrence associates, never mentioning them or Wilmington Trust’s recent judgment against him, to Shaheen. He even spent a good deal of time in August and September in London, where Shaheen was sheltering his family—and himself—from a Chicago Federal Grand Jury investigation into delinquent Barber Union loans made while he was the union’s pension fund adviser. Shaheen was using his presence there in typical fashion, setting up a closed-end offshore fund and obtaining the distribution rights from London Screenplays Ltd. to five movies, including “The Virgin and the Gypsy.” Never emotionally strong enough to say no to Shaheen, Motsey signed notes for the films and was to be chairman of the mutual fund; then another bomb was laid on Wilmington. 

A few years back, Joseph Keenan, president of the International Brotherhood of Electrical Workers, approved a $2.7 million loan to some of Motsey’s California newspapers. The inappropriateness of union officials providing pension funds for right wing anti-labor newspapers would have been enough to raise rank-and-file ire, but the IBEW leadership even allowed Motsey to persuade them later to surrender a $700,000 trust deed on some of his newspaper properties that the millionaire scion had put up as part collateral. Motsey simply paid them $44,000 and then used the deed to obtain another $400,000 loan from the Maccabees Mutual Life Insurance Company of Southfield, Michigan. 

Motsey failed to pay back the union’s loan when it came due in the spring of 1970. Apparently, paying back millions to financial brethren at Chemical Bank and First National City Bank meant more to Motsey than paying back a loan from a union’s pension fund for its elderly workers. In July the union began pressing Motsey to repay his debt. Finally, on September 11 and 18, the union’s Wilmington attorney notified Motsey and Wilmington Trust that it intended to take possession of the collateral still due them: 18,187 shares of Christiana Securities common worth about $2 million. There was only one catch: Motsey’s stock was safely locked away in the vaults of Wilmington Trust. 

On September 28 Wilmington Trust’s counsel, Richards, Layton, & Finger, informed the union that its request was “not timely.” An additional twenty-five days were required for normal bank procedures to be fulfilled. Exactly twenty-two days later Motsey filed papers for voluntary bankruptcy under Section 10. 

Motsey’s move came as a complete shock. “I couldn’t believe it,” said Shaheen. “We were all ready to go with this mutual fund and boom—Lammot flies back to Wilmington and files for bankruptcy.” 45 One of the accountants closest to Motsey expressed similar surprise. “I was with Lammot the day before he filed bankruptcy and he never mentioned a word of it. The first I knew about it was in the papers.” 46 

With Motsey went the keystone to the entire Copeland empire. Having received only $200,000 out of $4 million in notes pledged by its chairman, Transogram stock plummeted from its 1970 high of $15.25 down to $3.62, cutting the stock value held by all those small banks nearly 80 percent. One Midwestern bank president was forced to resign, and the former owners of Transogram’s new acquisitions, Quaker Masonry and Southern Precision Industries, were left holding devalued stock with little hope of ever seeing Motsey’s promise to buy their shares come true. London Screenplays, holding Motsey’s notes, had their credit line cut off by Morgan Grenfell & Co., the big British banking concern. Over 100 banks across the country saw their loans, and their credibility, jeopardized. 

Winthrop-Lawrence was forced into bankruptcy as well. In turn, Massey Junior College in Atlanta, Georgia, and a trade school at Pascagoula, Mississippi, both had to turn students out of their rooms and put their dormitories up for sale. Meanwhile, Motsey’s California newspapers had gone into receivership.

Overnight, 38-year-old Motsey became a national figure, although not the way he had originally intended. Over a dozen suits were launched against him by famous associates charging fraud, and Motsey, in turn, sued his Winthrop-Lawrence associates, secure in the knowledge that Delaware law protects “spendthrift” trusts from litigation. Apparently, Motsey was a big spender. His trusts amounted to over $13 million. Despite his $50 million in debts, Motsey to this day enjoys a $311,000 yearly income from these trusts, which allows him to live in a style proper for any self-respecting Du Pont, bankrupt or not. 

On November 24 Lammot du Pont Copeland, Jr., made his first public appearance in Wilmington’s federal court. Accompanied by his New York lawyer, David Griff, Motsey appeared somewhat nervous as he entered the packed courtroom to face his creditors, of which there were over 100. But as he spoke in answer to questions put by the federal bankruptcy referee, Murray C. Schwartz, it became only too clear that the tall, reserved heir was well-informed on the details of his financial empire. Copeland, moreover, found himself even smiling shyly at photographers. 

The Barber’s Union found nothing to smile about, however. They were awarded the 9,000 shares of Christiana Securities Motsey had put up as $900,000 collateral. This still left the union’s pension fund short $400,000 by Copeland, and about $4 million more owed through loans arranged by Shaheen. 

The Electrical Workers Union was also not happy. The IBEC had received only $1.8 million worth of Christiana Security collateral, leaving its pension fund short by $700,000. 

But perhaps the unhappiest of all was Lammot du Pont Copeland, Sr. Copeland’s $3.5 million collateral with the Union Bank of Switzerland was liquidated on the stock market. With Wilmington Trust, he got a somewhat better deal. Although it quickly liquidated Motsey’s $410,000 collateral, it spared Copeland, Sr.’s $3.35 million block of blue chip stocks. Instead, it sold the stock to a syndicate headed by former business associates of William Potter, Copeland’s attorney. 

But even more important was the damage done to Copeland’s name among Du Pont Company stockholders and the family. Motsey had committed a grave sin against the family’s financial mores—he had lost Christiana stock in his personal speculations instead of preserving its traditional use as a family trust. About $2.7 million worth of Christiana had subsequently fallen into the hands of outsiders—labor unions, at that. The following April, before hundreds of stockholders gathered in Hotel Du Pont for Du Pont’s annual meeting, Copeland would be called upon by one irate stockholder to resign his chairmanship because of his son’s dealings. He would refuse then, only to resign the following year, as one company official put it, because of “personal troubles relating to his son.” 

Motsey’s was one of the greatest personal bankruptcies in American history, and for the economy and Edmond du Pont, it came at precisely the wrong time. First, it put a damper on the family’s willingness to bail out private ventures by any one member or group in the clan. Second, it undermined Lammot du Pont Copeland, Sr.’s ability to help with Edmond’s problems in F. I. Du Pont even if he wanted to. With Du Pont stock still in trouble, and millions in blue chip stocks that were posted as collateral for Motsey now disappearing or in jeopardy, Copeland had to fend for himself. It was not surprising, then, that when Edmond desperately called for more capital for F. I. Du Pont in December 1970, only one month after Motsey’s bankruptcy hearings, Copeland turned him down. 

In fact Copeland and the rest of the family were considering pulling out of F. I. Du Pont altogether. No doubt Edmond’s own misfortunes and the company’s losses were the main reasons for this decision. But the final impetus may well have been growing rumors of an impending suit soon to be filed against him for allegedly practicing some of the same “milking” techniques ascribed to Motsey. The following June these rumors were indeed confirmed when a complaint was filed in Philadelphia’s District Court claiming F. I. du Pont’s involvement in a conspiracy which allegedly had brought about the bankruptcy of the largest railroad in the country—the Penn Central. 

The Great Train Robbery 

The Du Ponts had been involved with the Pennsylvania Railroad ever since Pierre S. du Pont II joined the railroad’s board in 1930. Becoming a member of its finance committee two years later, Pierre advised the railroad on the refinancing of its capital structure throughout the grim days of the Depression and right up until 1953, less than a year before his death. 

At that time Lammot du Pont Copeland donned Pierre’s mantle and also assumed a leading position on the board of the Philadelphia, Baltimore, and Washington Railroad, a Pennsylvania Railroad subsidiary which had as board members two other Wilmington Trust directors, W. Stradley and H. Morris. Fusing these Du Pont ties to the Pennsylvania Railroad was the family’s long-standing close relation to Morgan interests, which held 7.2 percent of Pennsylvania’s stock and were probably its biggest shareholders. 

It was this Du Pont association with Morgan interests that led to crucial negotiating activities concerning Pennsylvania Railroad soon after Pierre’s death. The focus of these negotiations was the Toledo, Peoria, and Western Railroad, a valuable “bridge carrier” line that linked the Santa Fe Railroad in the west with the Pennsylvania Railroad in the east. Morgan interests, represented by J. P. Morgan & Company and Guaranty Trust Company, owned large controlling blocks of stock in both the Santa Fe and the Pennsylvania and therefore had a vested interest in the status quo of profits. 

This interest was threatened in 1954 when Ben Heineman acquired control of the Minneapolis and St. Louis Railway. Heineman sought to link the T.P. & W. and another line, the Monon Railroad, with his own line to form an “outerbelt” line connecting east and west by bypassing the traditional Chicago and St. Louis gateways. Such a bypass, by avoiding those cities’ traffic congestion and the accompanying loss in shipping time and cost to shippers, would pose a serious competitive threat to the old Santa Fe Pennsylvania lines which used the gateway cities. Heineman’s bid for the T.P. & W. in the spring of 1954, then, presented a challenge to the Pennsylvania’s and the Santa Fe’s profitable operations. Both railroads responded to this challenge by offering their own bid to the T.P. & W.’s owners. 

Unfortunately for Heineman, the T.P. & W. was controlled by the Du Ponts through the trust department of their Wilmington Trust Company, which owned 82 percent of T.P. & W.’s stock. Although Wilmington Trust had run the T.P. & W. profitably since 1947, it suddenly took an interest in selling the line when both the Santa Fe and the Pennsylvania management expressed concern that the T.P. & W. should not fall into “unfriendly hands.” 47 From then on, although Heineman made repeated offers to bid competitively (and even made one bid 33 percent higher), Wilmington Trust officials, particularly President George P. Edmonds, son-in-law of Lammot du Pont, Vice-President Joseph Chinn, and Vice-President J. Sellers Bancroft—who served as a director of the T.P. & W. and co-trustee of the estate of the late president of the railroad, George P. McNear— consistently steered the T.P. & W. into the hands of their friends and actually, through the Pennsylvania, themselves. 

On April 15, 1955, Wilmington Trust agreed to sell to the Santa Fe and Pennsylvania each a 26 percent holding. On April 29, however, the other co-trustee of the McNear estate heard of Heineman’s offer and requested that the bid be reopened, but to no avail. This violation of trust gave the estate’s beneficiaries the angry fuel to demand an acceptance of Heineman’s offer, and on May 26 Wilmington Trust reopened the bid. Subsequently, Santa Fe had to better Heineman’s offer and quickly bought all of the trust’s T.P. & W. stock and resold half of it to Pennsylvania Railroad. As a sidelight, Lammot du Pont Copeland, representing Du Pont interests on the Pennsylvania board, also later became a director of Wilmington Trust. 

The T.P. & W. deal illustrated not only the cooperation between “friendly hands,” but also served as a further move by the Du Ponts into the Pennsylvania Railroad. A year later, in 1956, Copeland and the two Wilmington Trust representatives on the Philadelphia, Baltimore, and Washington Railroad board approved the absorption of the Pittsburgh, Cincinnati, Chicago, and St. Louis Railroad by the Pennsylvania subsidiary. A few years later, when the Pennsylvania merged with the New York Central to form the largest railroad network in the country, the Du Ponts did not sit on the Penn Central board, probably to keep the railroad from being implicated in their court-ordered divestiture of control of General Motors, the Penn Central’s biggest customer and another link in the Du Pont-Morgan community of interests. But they did keep their stock interest in the new $4.4 billion combine.

Size, however, brings its problems in the areas of both generating high enough earnings and operating efficiently. This is especially true of railroads, as they have borne the brunt of automotive trucking competition with particularly disastrous results. The T.P. & W. deal exemplifies what problems ensue for railroads when short-run profits are placed above efficiency. The T.P. & W. acquisition by Pennsylvania Railroad and Santa Fe did not result in cost-saving efficiency, but greater cost-generating congestion in St. Louis and Chicago. Heineman’s bypass plan, which would have cut costs in the long run by avoiding traffic snarls, was scrapped in the interest of the status quo of the Pennsylvania’s immediate profits. 

The Du Ponts, in taking steps to destroy Heineman’s plan and hand the T.P. & W. over to the Pennsylvania, as well as in their leadership role in the Pennsylvania Railroad itself, directly contributed to the inefficiency of the country’s rail system and to the Penn Central’s inability to compete with the trucking industry, an inability which, along with other problems, was a key factor in the Penn Central bankruptcy. Translated into the effects on most of the country’s population, the Du Ponts’ complicity in the T.P. & W. affair resulted in higher prices for goods shipped and cutbacks on less profitable passenger service (to cut costs to compensate for lost freight business). It represents just one example of profiteering which is costly to the people of this country; as long as mass transit is privately owned, the people may be deprived of any chance of a viable (and much needed) transportation system between cities. 

Above and beyond these functional dilemmas of capitalism and its profit motive, Penn Central also became afflicted with increasing management negligence. What was neglected was Penn Central’s needs; what was not neglected was Penn Central’s financial reserves. 

According to a June 1971 suit filed in Philadelphia’s Federal District Court by Penn Central, F. I. Du Pont & Company and top Penn Central management had been involved over the years in a lucrative conspiracy to exploit the railroad’s resources for their own private investments and profits, a violation of the Federal Securities Law. 

F. I. Du Pont was the principal investment adviser to Penn Central and approved the railroad’s major investments in other firms. For these investments, the railroad’s Supplemental Pension Plan, with a book value of $278 million and a real value of $331 million, and the $11.5 million Contingent Compensation Fund were used. The Supplemental Pension Plan represented the present and future income of 21,000 active and 15,000 retired railroad workers. The Contingent Compensation Fund was designed as deferred compensation for company officers. Two other source funds, the Pennsylvania Company and the Employee Benefit Funds of the Buckeye Pipeline Company, were also employed. 

All of these funds were under the control of Penn Central directors David C. Beven, Richard King Mellon’s hand-picked vice-president in charge of finance, and General Charles J. Hodge, erstwhile partner in F. I. Du Pont and former business partner of Maurice Stans, Nixon’s Commerce Secretary. All were used to invest in the Penphil Company, of which Hodge was a promoter and Beven was founder, secretary, and treasurer. Another Penn Central director, General O. F. Lassiter, owned 20 percent of one of Penphil’s subsidiaries, Florphil Company, a firm involved in Florida investments.

 F. I. Du Pont’s overt involvement in Penphil was through one of its vice-presidents, Hobart C. Ramsey, in 1963. Ramsey and Alphonso Manero, who became a Du Pont partner in 1968, were among Penphil’s thirteen original shareholders. Later, another du Pont partner, Mrs. Marie L. Hodge, also became associated with Penphil as a stockholder. But the big DuPont force in Penphil’s growth was the chairman of Edmond Du Pont’s executive committee, Charles Hodge. 

During the Sixties, Beven, Hodge, and F. I. Du Pont & Company allegedly used Penn Central’s pension fund “to build Penphil into a large worldwide conglomerate.” 48 The record does indeed show that Penphil was becoming a conglomerate, buying 30,488 shares of Kaneb Pipeline Company, 10,000 shares of Tropical Gas Company, 5,000 shares of National Homes Corporation, 30,000 shares of Continental Mortgage Investors, 10,000 shares of the Great Southwest Corporation, 21,280 shares of the First Bank and Trust Company of Boca Raton, 51,000 shares of Holiday International Tours, and 4,668 shares of the University National Bank of Boca Raton. 

All these firms, with the exception of Holiday International Tours and the Florida banks, were controlled by Beven and Hodge; Holiday International was established by Penphil to hook up and use Penn Central funds invested in another company, Executive Jet Aviation, Inc., to establish a worldwide competitor to Pan Am.

This last scheme, the brainchild of General Lassiter, involved—according to testimony in December 1970 before the House Banking and Currency Committee— everything from corporate pimping of women employees to holdings in International Air Bahama, before Pan Am tipped off the Civil Aeronautics Board about its new competitors. Apparently, the Federal Aviation Act prohibits railroads from running air carriers. In January 1969 the CAB laid the second largest fine in its history on Penn Central, $70,000, and ordered the railroad to turn over control of EJA to a Detroit bank, causing a loss to Penn Central of $22 million. 

The EJA disaster was only one of many Penn Central losses from investments recommended by Beven and Hodge. On December 1, 1969, Penn Central bought 90 percent of Great Southwest Corporation, costing it $92 million. By June 1971 the stock was worth only $40 million. Meanwhile, Penphil had already dropped 10,000 GSC shares in 1965 at a net profit of 130 percent, its owners obviously intending to shift to Penn Central for resources. This same ruse was used for Tropical Gas, in which $2.2 million of Penn Central funds were invested, and was repeated again in September 1968 before Tropical Gas was merged in 1969 with the U.S. Freight Company, Beven and Hodge selling out. By then, Penphil’s worth had increased 200 percent since 1967, while Penn Central funds were also steered into Arvida Corporation (58 percent), a resort in Boca Raton, Florida, where Penphil picked up 26,000 shares of Bancshares of Florida in exchange for its bank holdings. 

This incredible wild scenario was only brought to an end when Penn Central, caught in Nixon’s credit squeeze, had its lawyers finally file for reorganization under bankruptcy laws in June 1970. This left $82 million worth of Penn Central I.O.U.’s practically worthless, contributing to an already capital-short market’s woes. Additionally, in December, the very month Edmond du Pont was hurriedly calling on relatives in Wilmington to invest in his brokerage firm, the House Banking and Currency Committee released its “Executive Jet Aviation” report, exposing the shady behavior of one of Edmond’s top executives and partners, Charles Hodge, in financially advising the now bankrupt Penn Central. Such alleged swindles revealed that more than back-office snarls was wrong with F. I. du Pont & Company and must only have further discouraged the family’s willingness to help resolve Edmond’s need for capital. 

Less than a year later Penn Central’s lawyers would sue F. I. Du Pont & Company, charging the brokerage house with having been a “co-conspirator” with Beven, profiteering off commissions and fees for investments in Penphil and other related companies, exploiting the resources of Penn Central to benefit Penphil, trading on Penn Central’s credit lines for Penphil, hurting the railroad’s credit, and causing a loss of the use of funds for its own railroad needs. 

These were charges that could destroy the reputation of any brokerage house as an investment adviser, and what was worse, Penn Central’s bankruptcy seemed to confirm them. Chemical Bank had given preferential loans to Penphil based on the Penn Central and F. I. du Pont luminaries involved, and other large New York banks had given loans to Penn Central, some of which ended up in Penphil or its subsidiaries. The railroad’s pension fund was now depleted, and in January 1972 Philadelphia District Attorney Arlen Spector would obtain indictments against Hodge, Beven, and Lassiter, charging them with causing monetary damages of $66 million which, it was claimed, triggered off the bankruptcy. 

More than anyone else, Lammot Du Pont Copeland, Sr., probably knew the falsity of that latter charge. As this former Pennsylvania Railroad director well knew, $66 million did not account for Penn Central’s losses of up to $400 million a year. Much of the answer lay instead within Penn Central’s own mounting inefficiency and the failure of most large railroads to generate enough profits to keep investors from straying into more lucrative diversification. 

But the damage done to F. I. Du Pont’s reputation by the Penn Central fiasco was irreparable, and the reputation and fortune of the family as a whole, especially among banks on which the family in its own investment trend had increasingly relied, had to be protected—even at the cost of one of its favorite sons. Copeland, for one, had his own directorship (and Du Pont’s reputation) with Chemical Bank to preserve. This, compounded with his son’s bankruptcy and his own losses, were no doubt the key factors behind his refusal to Edmond’s plea for capital assistance. These were also the main reasons why Edmond’s plea fell on deaf ears throughout the Du Pont mansions along the Brandywine. 

Having failed to obtain the signed promises of all general partners and lenders to keep their funds, and failing to raise the $15 million he pledged, Edmond was removed from the chair he had occupied for almost thirty years, and his father for ten before him. On December 29, 1970, at a meeting of the general partners, he “resigned” and was replaced by another partner favored by the Perot group, John W. Allyn. Managing director Wallace Latour, always loyal to Edmond and his own job, opposed yielding to the Perot forces. He, too, was replaced. Perot’s holding in the brokerage firm now automatically rose from 51 percent to 91 percent. As one of his associates put it, “It was a great deal.” 49 

Other DuPonts, led by Lammot du Pont Copeland and Edmond’s older brother Emile, didn’t think so, and they continued their plans to withdraw their $30 million from the firm, giving their six-month required notices. This threat and an additional audit revealing that the firm needed another $30 million to $40 million for a 1 to 10 capital debt ratio, infuriated the Texan. 

“They knew I wanted to do this thing in the national interest,” Perot claimed. “They would have been wiped out if I hadn’t come in, but when I did they looked on me as someone pouring money into a funnel so they could take it out at the bottom.” Perot made no bones about his nouveau riche resentment for “those people who have never worked.” “When something happens to their trust fund, they’re traumatized.” 50 

Perot’s mentioning of the family’s concern for its trust funds probably was an accurate description of what was most on Du Pont minds at the time. It also revealed how important the trust funds’ ability to flexibly buy, sell, and diversify in general had become to the family, keynoting the clan’s increasing move from industrial to financial preoccupations. 

For their part, the Du Ponts claimed that Perot had “stolen” the firm. Although Edmond was incommunicado and reported ill, his elder son, Anthony, had taken up the Du Pont banner. Thirty-seven-year-old Tony had a $1 million investment of his own in his father’s firm and also headed a small aerospace defense plant in Torrance, California. Helping him through the negotiations was one of Edmond’s former general partners, 57-year-old Morris Goldstein. Together, they represented twenty investors, mostly Du Ponts, who had made an investment of $25 million to $30 million. 

On February 10 Tony and Goldstein arrived in Dallas for a meeting with Perot. As the meeting progressed, Tony insisted that the partners’ December agreement giving Perot control didn’t have the approval of the investors they represented. Perot’s claim on the firm, he explained quietly, would result in a deluge of lawsuits. Having played his ace, Tony then made his offer, suggesting that Perot buy the family out or search for a third party to buy him out. 

The bluff didn’t work. Perot simply turned the tables and agreed. “I want out,” he said, and then made it clear that he also wanted hard conditions: his $10 million returned, a 25 percent ownership for $750,000, all the firm’s data processing and bookkeeping contracts, and a guarantee by the family that they would raise another $30 million to give the firm a solid 1 to 10 ratio. 

Tony was astounded. “We explained that if the investor group had that kind of money, we wouldn’t be having conversations with him in the first place.” 51 The meeting ended with nothing resolved. 

At this point the New York Stock Exchange and the Securities Exchange Commission intervened, frightened of the economic consequences if the second largest brokerage house in the country were forced to close its doors for lack of capital. Felix Rohatyn, chairman of the Exchange’s surveillance committee, became a mediator for the Perot group, while the Exchange’s vice-chairman, Ralph De Nunzio, became the mediator for the Du Ponts. The Exchange’s chairman, Bernard Lasker, acted as the go-between. 

The pressure built on the Du Ponts. On March 8 and 10 the board of governors of the Securities Investor Protection Corporation, only recently created by Congress, stated they wanted some plan worked out by March 11 to be presented before a joint meeting of the SIPC and the SEC. March 11 passed, as did March 15, the deadline for Perot’s $10 million loan if no agreement had been reached. Perot agreed to extend the deadline three more days, after which F. I. du Pont would have to close its doors. That threat finally brought direct intervention from the White House. 

In the age of Watergate, it is worth recalling that the Nixon administration, in the persons of Attorney General Mitchell, Treasury Secretary John Connally, and Presidential Assistant Peter M. Flanigan (a former vice-president of Dillon, Reed), had already violated the law by encouraging Perot’s $10 million investment. The Exchange’s own rules, adopted under the self-regulatory auspices of the Securities Exchange Act of 1934, stipulated that “the major business of an outsider buying a member firm has to be securities transactions.” 52 Perot’s business was selling computer services, not stocks. Furthermore, there is serious question as to whether the Nixon administration also violated the Banking Act of 1933, which forbade commercial bank officers from being officers of investment banking houses. At the time, Perot was a director of the Republic National Bank of Dallas. Nevertheless, the White House, and the Exchange itself, ignored the law and invited this personal friend of Richard Nixon to take control of a major investment house. 

Following Perot’s extension of his deadline, Lammot du Pont Copeland, Sr., received a call from the White House. It was Peter Flanigan. Would the Du Ponts come to Washington for a conference? 

On March 16 Copeland, Anthony Du Pont, and Goldstein arrived in the capital and were confronted by Attorney General Mitchell, Flanigan, and two SIPC board members, Donald Regan, chairman of Merrill, Lynch, and Bruce MacLaury, an undersecretary of the Treasury Department. But the Du Pont family has a long history of resisting government pressure. They still refused to keep their funds in the firm, although the meeting may well have succeeded in impressing upon the Du Ponts the seriousness of the situation. 

The next afternoon the Du Ponts again met with Perot’s negotiators in New York, Stock Exchange officials acting as mediators and also applying last-minute pressure. After several fruitless hours the meeting was adjourned. During this interval, the Exchange’s president, Robert Haack, privately addressed the Du Ponts on the danger of their losing their entire $30 million investment if F. I. du Pont was forced to close its doors and be liquidated. The Du Ponts were simply courting disaster. Having cordially laid down his bomb, Haack left the Du Ponts to ponder their fate. 

When the meeting was reconvened, a new flexibility was noted emanating from the Wilmington group. It took several hours more, proposing and counterproposing into the night, but at 1:00 A.M. an agreement was finally reached. The family would keep their money in the firm in return for a 20 percent holding and warrants, subordinated debentures, and preferred stock. This meant that if the firm earned $20 million each year in the next five years, the Du Ponts would receive $20 million on top of their $30 million holding. If all went well, their $30 million investment could return as much as $60 million within fifteen years. 

Perot, holding 80 percent, would make much more, but most of the responsibility for raising needed capital would fall on him. He would get assistance, of course. The Exchange agreed to indemnify $15 million of his investment and provide assistance for customers of Perot’s Electronic Data Systems. The Federal Reserve Board also came through, approving a $55 million loan to Perot from Chase Manhattan and nine other banks. Although Perot had put up only $78.5 million worth of EDS stock as collateral, the FRB waived the usual $157 million stock requirement for a loan of that size. In return, Perot agreed to inject $30 million more into F. I. du Pont to give it a 1 to 10 ratio. 

Everyone seemed content with the St. Patrick’s Day agreement. “If du Pont had failed,” appraised Bernard Lasker, “Merrill Lynch would not have taken over Goodbody, and if both these leading firms had gone down at once, there’s no question that the effect on the country, the industry, investors, and the economy would have been severe, if not disastrous.…” 53 “As long as there is a Wall Street we will owe a tremendous debt to Ross Perot. I for one will be, as long as I live, forever grateful.” 54 

Only one party was neither content nor grateful—Edmond DuPont. In April Edmond broke his silence and announced he was thinking of suing the firm, claiming that $3.1 million in bank loans drawn over his signature during 1970 was not for his personal behalf, but the firm’s. He remained steadfast in holding out as F. I. Du Pont’s largest investor, refusing to sign any agreement. 

Faced with Edmond’s stubbornness, the general partners simply “retired” him from the firm on April 27, thereby avoiding any need for his signature. On March 14, the firm was incorporated as Du Pont, Glore, Forgan, Inc., and the Perot take-over was completed. A. Rhett Du Pont’s and Emile du Pont’s sons, A. Rhett Du Pont, Jr., and Peter R. du Pont, remained as vice-presidents. 

Edmond was not through fighting, however. In December he sued Perot for $6 million in damages, charging that Perot had taken advantage of his computer firm’s intimate knowledge of F. I. du Pont to drive a hard bargain and force the du Pont partners into signing the agreements that surrendered control to him. Actually, Perot’s knowledge of the Du Pont family’s financial woes may have been even more intimate; Perot’s own bank, the Republic National Bank at Dallas, of which Perot was a director in 1970, was listed by Lammot du Pont Copeland, Jr., that year as one of his many creditors. Edmond also asserted Perot had deliberately delayed the registration of 100,000 EDS shares which Edmond had planned to use to bolster the capital position of the firm. 

Perot described Edmond’s charges as “pathetic.” The plausibility that Edmond’s claims amounted to more than that simplistic characterization, that they may have even been true, was undoubtedly hurt by the picture Edmond had been painting of himself. To the press, he described himself as a man who had lost $8 to $10 million—“Everything I had” 55—and was now forced to live on a monthly Social Security check of $257. That grim picture of dire poverty simply did not fit the plush reality of a Du Pont who was still a director of the Continental American Life Insurance and the Rockland Corporation, who owned sizable blocks of stock in other companies, and who continued to live in a fashionable home near close relatives all of whom were millionaires. 

Meanwhile, every day Perot called his chief lieutenant at F. I. du Pont, Morton Meyerson. “Found it yet?” he would ask, only to hear the same negative reply from New York. Over $86 million was missing in securities recorded on Edmond’s books, and many investors feared the drain on EDS stock, which, valued at $1 billion a year before, had plunged to $300 million. By June 1972 Perot had soaked over $64 million into du Pont, while the mansions along the Brandywine buzzed with chuckles tempered with a few gulps of genuine concern for the family’s own interest still in du Pont. Within two years, Perot’s salvaging job of F. I. du Pont finally took hold, but at the cost of $100 million, the milking of Walston & Co. for capital and the abandoning of the merged brokerage business, Du Pont Walston. Perot claimed he was leaving Wall Street and closed DuPont Walston, its bills paid. Along the Brandywine the gulps subsided but the chuckles continued, even as Perot’s computer firm chalked up new lucrative contracts with government agencies in Washington, D.C., Albany (where he also managed to be the top bidder), Sacramento, and, yes, even with a chemical firm founded by one E. I. Du Pont. 

3. 

PICKING UP THE PIECES 

On a cold winter night in January 1971 a well-heeled crowd of people filed into Wilmington’s deserted City Hall and mounted the long winding staircase and elevators that led to the city council chambers. Inside the paneled chambers they filed in quietly between rows, cheerfully greeting their many fellow Republicans, and politely took their seats. In front of them, beyond the railing, was the city council in full session, also sitting quietly, awaiting the arrival of Mayor Harry Haskell and the beginning of the annual “State of the City” show. 

Few of these people had noticed the two plainclothes policemen at the entrance to the council chambers, and even those probably would not have, had the policemen not tried to stop one person from entering. 

That person, Ramón Ceci, was a local longshoreman with a history of opposing the powers that be in Wilmington. Returning from a hitch in the Navy, Ceci had attended the University of Delaware and, in the heat of the antiwar upsurges of the time, became a leader of the local chapter of Students for a Democratic Society. As student government president, he made life difficult for the Du Pont-controlled administrators before finally resigning and graduating to the docks of Wilmington. Fired by a zeal for justice in his home town, Ceci had long been involved in supporting the plight of its Black community and was active in the white opposition to the National Guard occupation and “the drafting of poor and working people in an undeclared, immoral, and imperialist war against the people of Vietnam.” By 1970 Ceci was known to some of the politically active Du Ponts, and the Du Ponts, in turn, were known and opposed by him and his friends. 

Probably for this reason, Wilmington authorities were concerned about reports that Ceci would show up that night to publicly mar Harry Haskell’s moment of glory with a leaflet attacking Haskell’s 1½ percent wage tax and his real estate speculation in the city through the Rockland Corporation. During the day, police came to both Ceci’s home and his place of work to arrest him for a parking violation over a year old, but workers on the docks hid Ceci while detaining police. 

That night Ceci showed up at City Hall with other young friends from the community, determined to be allowed to attend the mayor’s public address. When the two plain clothes men stepped forward and attempted to stop him at the chambers’ doors without identifying themselves, Ceci quickly pushed their arms aside and began loudly shouting about being attacked by two unknown men who refused to identify themselves. The commotion forced the policemen to retreat into the shadows as Ceci and his friends entered the chambers, gave out leaflets to those who would take them, and sat down. 

Finally Haskell appeared, looking unworn after his two years in office, his body trim and dressed impeccably, his mouth creased in a smile, but his eyes always darting about anxiously from behind their steel-rimmed glasses. Slowly, to the applause of the Republican faithful turned out for the occasion, he walked down the center aisle, his aides flanking him on both sides. For the next half hour, Haskell delivered his State of the City address, claiming that he had halted Wilmington’s “downward rush” by firing sixty municipal workers, beefing up the police force (and doubling the number of minority policemen), installing 1,400 new powerful sodium lights that glared down on the Black community at night, establishing a “neighborhood” Model Cities Council (with little control by neighborhood people), and last but not least, imposing a city wage tax to “keep the property tax as low as possible.” 56

In a city where the Du Ponts own over $10 million worth of property and where most of the skyscrapers are Du Pont skyscrapers, such a statement by a Du Pont-supported mayor and son of a Du Pont vice-president might raise anyone’s temperature. It raised Ceci’s. As Haskell returned down the aisle to a standing Republican ovation, Ceci shouted a remark to the mayor about his real estate speculation. Embarrassed, Haskell hurriedly left the chambers, leaving Ceci to angry Republicans, a curious press, and eager police. That night Ceci was arrested—for his parking ticket, of course. 

The mayor’s attempt to bury the facts with a shrug and an arrest didn’t work this time, however, for Ceci’s public charges and his friends’ calls to the News-Journal were too blatant to ignore. The next day the News-Journal carried a large article on Ceci’s charges and his subsequent arrest. 

Such embarrassing scenes were what the Du Ponts had to face frequently in those days. Merely a month later antiwar Wilmingtonians brought before the common council a demand for an end to all drafting in the city for “the undeclared war in Vietnam.” Some weeks after that Haskell was caught permitting police to hide an electronic eavesdropping device at the site of an impending antiwar demonstration. The bugging was reported in the press around the country and drew some uncomplimentary comments. To add to Haskell’s angry embarrassment, the city council censured the mayor; one Democratic member even sent him a copy of George Orwell’s 1984. 

No sooner was this incident past when over 300 residents, mostly youths, took to the streets on March 20 to protest the Vietnam War. Following a rally in front of DuPont headquarters at Rodney Square, the demonstrators, led by the local chapter of Youth Against War and Fascism, began marching down Wilmington’s Main Street chanting, “Du Ponts get rich! GI’s die!” receiving open support from shoppers along the way. The march was stopped only by a phalanx of police moving up Main Street from the opposite direction, resulting in four arrests. But the damage to Wilmington’s “disciplined” image had already been done. 

This last scene was particularly disquieting to the Du Ponts, but 1971 had even more to offer. On September 2, inmates in Governor Peterson’s new “model” prison at Smyrna rebelled against the poor food and the behavior of the guards. Three guards were taken hostage, but were released after the press was allowed to see the prisoners, and negotiations ended the revolt. Afterwards, guards beat the prisoners severely, sparking sympathy protests in Wilmington. Angry over the rebellion and its exposure of conditions in his model prison, Governor Peterson put part of the blame for the revolt on the “meddling” prison reform activities of William H. DuPont’s wife. William became so angry about Peterson’s charges that he resigned from the Republican Party. Many other DuPonts—some of whom had been involved in setting up the new prison for mostly poor Black Delawareans—also believed the governor’s remarks were unwarranted. Some cooled their support for Peterson’s national political ambitions, an important factor in Peterson’s electoral defeat the following year. 

Peterson was not the only Republican incumbent to incur DuPont anger. Many DuPonts were becoming disillusioned with the Vietnam War policies of President Nixon as well. 

Richard Nixon became associated with the Du Ponts after World War II, when he served on the witch-hunting House Un-American Activities Committee (HUAC). (He was also an OPA co-worker with Du Pont Chairman Irving Shapiro in wartime Washington.) The Du Ponts, applauding his part in the inquisitions, fully endorsed Nixon’s vice-presidential candidacies in 1952 and 1956 and donated $125,000, the highest contribution, to his unsuccessful bid for the presidency in 1960. 

During his tenure on Wall Street, Nixon often came in contact with associates of F. I. Du Pont & Company, and although there seems some evidence that many DuPonts were less than enthusiastic about his decision to run for the 1968 Republican nomination (A. Felix du Pont, Jr., for example, openly organized in behalf of Nelson Rockefeller’s campaign), the clan fully backed his campaign once his nomination was secured. In fact, Nixon’s running mate, Maryland Governor Spiro Agnew, was well known to his Delaware neighbors. Some Du Ponts, including Samuel F. du Pont, had supported Agnew’s rise through Baltimore politics, Sam du Pont even serving on Agnew’s State Law Enforcement Commission. 

Walter Carpenter’s son, Edmund N. Carpenter II (whose wife Edna was also a former Republican national committeewoman), chaired the “Delaware Citizens for Nixon Agnew Committee.” Edmund, a past president of the New Castle County Young Republicans, and deputy attorney general and a director of the Bank of Delaware, was a member of the National Republican Finance Committee. Apparently, Edmund was quite successful in helping finance Nixon’s campaign. He raised over $14,000 from Lammot du Pont Copeland alone. Henry B. du Pont gave $3,000 to Nixon’s cause. 

Helping Edmund’s efforts was State Representative Pierre S. Du Pont IV, also a member of the National Republican Finance Committee and the Republican National Committee. 

Young “Pete” Du Pont had become a force in Republican circles over the years. From 1964 to 1965 this tall, spectacled Harvard Law graduate served well enough as assistant legal counsel for the Republican State Committee to be elected vice-chairman of the powerful Brandywine Hundred Republican Committee and he was elected to Delaware’s House of Representatives unopposed. From 1966 to 1968 Pierre was chairman of the Republican Program Development Committee, and he developed an image as an “idea man,” a reputation that some of his associates reportedly believe was undeserved. 

In January 1968 Pierre replaced his uncle, State Senator Reynolds DuPont, on the National Republican Finance Committee and was catapulted to national political prominence. 

Following Nixon’s election, Pierre latched onto the President’s coattails to be carried to his goal—national office. In April 1969 he organized the twentieth annual Booster Luncheon at the Hotel Du Pont. Along with the usual entourage of Delaware’s Republican hierarchy, Pierre’s fund-raising luncheon was attended by Maryland’s Rogers C. B. Morton, the new Republican National Committee chairman and director of Atlas Chemicals (a Du Pont spin-off), Florida’s Senator Edward Gurney, and Ohio Congressman Robert Taft, Jr. There, in the citadel of the Du Pont empire, Morton and the Du Ponts discussed Republican strategy for the 1970 election, strategy which included Pierre’s campaign for Delaware’s only Congressional seat. 

To Pierre, destiny was clearly beckoning. “As in other times in our history, our government is being challenged,” Pierre asserted on announcing his candidacy. “I believe I can help meet that challenge by moving from the House of Representatives in Dover to the House of Representatives in Washington.” To help move him along, in June Nixon appointed the Congressional candidate to the Federal Air Quality Board, emphasizing Pierre’s national political attributes. During his well-financed campaign, Pierre sought to push a liberal image and play down his family name, choosing to call himself “Pete.” In November, just a few days after easily defeating his Democratic opponent at the polls, “Pierre” suddenly reappeared, shaking hands and expressing his warmest thanks to DuPont executives as they left the company’s Wilmington headquarters. 

Pierre had political beneficiaries in Washington as well. In an act of generosity that had few precedents in American history, Congressional leaders felt Pierre’s name and connections were important enough to merit his appointment to the House Foreign Affairs Committee, even though he did not apply for it. “It’s unusual for a freshman Congressman to be assigned this important committee,” Pierre admitted with all due humility. “I’m delighted.” 57 

This first Du Pont in Congress in over forty years was also appointed to the Committee’s most important subcommittees, Foreign Economic Policy and Asian Affairs (of particular import in light of the Vietnam War, then raging). To round out his duties, Pierre was assigned to the Merchant Marine and Fisheries Committee as well, serving on the Coast Guard, Merchant Marine, and Oceanography subcommittees. The last subcommittee, oceanography, has much prominence in political circles, being concerned with “oceanographic industrial development,” including offshore oil exploitation by corporations. 

Yet, for all these weighty appointments, Delaware’s laureled Congressman had his problems. In fact, Pierre had difficulty even getting to his first meeting of the Foreign Affairs Committee, wandering through the tunnels under the Capitol, totally lost. Pierre analyzed the situation. “The first step in any Congressional Committee work,” he concluded, “is learning how to find your way to the meeting!” 58 

One meeting that Pierre did manage to get to was his first White House briefing. This success was marred afterwards, however, when Pierre, lost again, stumbled into the office of Henry Kissinger. 

Despite these bloopers, the impact of a Du Pont presence in Congress was clearly felt. Once, when Senator Edward Kennedy was testifying before the Foreign Affairs Committee on emergency foreign aid to the bankrupt Pakistani government, Pierre used the occasion to debate with the famed New Englander on whether the Republicans or Democrats were responsible for suggesting foreign aid be broken down into examinable categories. But the significance of the political leaders of two of the country’s most powerful and wealthy families squaring off was not lost on their colleagues. “I must say,” commented Representative Cornelius Gallagher, chairman of the subcommittee, “it was very interesting to hear a Kennedy and a Du Pont discuss bankruptcy.” 

Others, representing a poorer segment of the population, were not so impressed. In May 1972 Pierre’s Washington, D.C., office was attacked by some fifty angry youths. Desks were turned over and papers rifled. Soon after, Pierre’s stance in the House took a decisive swing away from his previous conservative voting pattern. After riding the Nixon landslide to reelection, he became more of an outspoken opponent of Nixon’s environmental policies, opposing the President’s plan for shore oil terminals. The “energy crisis” is really a “planning crisis” of some seventy agencies, Pierre explained. 

But like so many of his family, it was with the immensely unpopular Indochina War that Pierre showed his greatest opposition to the President’s policies. In May 1973 he publicly opposed Nixon’s bombing of Cambodia in support of the Lon Nol dictatorship, claiming that “we have no commitment to the Cambodian government.” 59 A month later Pierre described Watergate, the corporate liberal’s trump card against Nixon’s continuation of the war, as “perhaps the worst scandal in history.” 60 

With Vietnam, Pierre was only following the path already taken by other Du Ponts. 

As early as 1970 Du Pont Company had made clear its opposition to the inflation generating (and thus economically recessive) Indochina War. Even before that, Du Pont’s top economist, Ira T. Ellis, had participated in a fifteen-man committee for the U.S. Chamber of Commerce to study the economic effects of peace in Vietnam. Whatever reservations there were to coming out against the continuation of the war dissolved in May 1970, when the U.S. invasion of Cambodia was met with a wave of massive protests across the country, the shootings of students at Kent State University and Jackson State College, and even larger protests which tied up whole cities and threatened to spread to some sympathetic labor unions. 

“The Vietnam War is tearing at the whole fabric of our social and political and economic life,” declared Du Pont president Charles McCoy on June 4. “The events of recent weeks have emphasized how deeply the war is dividing our country. It has taken a terrible toll in human life and raised questions about the preservation of democratic values.… Confidence in our economy, as well as the social stability of the United States, is being seriously strained. Major domestic needs are not getting the attention they should have. The inflationary trend is continuing.” 61 

McCoy’s remarks were not made in a vacuum. Other bankers and corporate executives had expressed similar alarm. Only two days before, for example, on June 3, Thomas J. Watson, Jr., president of IBM, had told a Congressional committee that the Vietnam War presented “a major obstacle” to the economic health of the country. Now the president of Du Pont was telling the annual meeting of the Manufacturing Chemists Association, “It is hard to see how we can apply adequate resources to domestic needs and restore a feeling of national unity and confidence, until we reach a settlement of this conflict in Southeast Asia.” 

Overcapacity (or overproduction), McCoy told the chemists, was the greatest problem confronting the chemical industry. And inflation, as it spurred a reduction in the volume of consumer purchases and inevitably Du Pont’s own sales to other manufacturers, had to be stopped. One of the key ways was to cut back on deficit spending that only contributed to undermining the value of (and purchasing power of) the dollar. And one of the key spending items then causing so much social strain was the military spending for the Indochina War. 

Yet, for all his concern about inflation, one of McCoy’s own policies contributed to inflation. To finance $480 million worth of capital expenditures, Du Pont borrowed $190 million worth of European currencies for further overseas expansion. This speculation was deliberately done in anticipation of the decline in the dollar’s value and the accompanying rise in value of foreign currencies. Joined also by other American corporations, Du Pont’s foreign exchange speculation only exacerbated the deficit in the balance of payments and brought sooner the inevitable devaluation of the dollar. 

More significant to the company itself was the fact that McCoy’s taking loans from European banks represented a major shift away from Du Pont’s traditional policy of funding investments out of its own internal resources. “We have no policy for or against,” McCoy explained of any future reliance on banks. “Given the opportunity with good potential investments, we’re going to use our credit as we have in Europe.” 62 McCoy’s statement was the heralding of a dramatic new shift in company policy, and the closing of 170 years of Du Pont financial tradition. Du Pont had shed its “sound” classical economics garb and joined the rest of the country in the mortgaged age of Keynes’s deficit spending. 

Outside funding was not the only change McCoy initiated. He also scrapped the family’s traditional rule-of-thumb formula of 10 percent return on invested capital. Du Pont, he reasoned, had already passed up opportunities for new lucrative projects, including Xerography and Polaroid Land cameras, that did not fit into the old formula’s mold. The company’s earnings policy, according to Du Pont economist Charles Reeder, had to be “redefined every so often to accept reality,” 63 and the reality of 5.8 percent earning was imposing. An openness to discuss new projects must be put into effect, McCoy decreed, projects that before would never have made the executive committee’s agenda. 

To make this policy work, McCoy revamped the executive committee itself, making each of the eight $250,000 vice-presidents a liaison to a department to improve the “connection between the operating groups and the policy level, and to give us better understanding of our problems.” 64 

One of these problems inherited from the Copeland reign was Corfam, a product without a market. Already the company had lost $100 million on this plastic leather. McCoy simply resolved the matter by declaring the product a failure. As one executive summed it up to the press, “There really isn’t much to tell.” 65 

Other Copeland projects, including nylon window shutters, a photocopier, and a $250,000 color previewer, also got the axe. So did marginal operations such as cleaning agents and the family’s holy of holies, black powder. Thus the first Lammot du Pont’s original pre-Civil War plant at Moosic, Pennsylvania, joined its founder in history. 

In one way, however, McCoy followed family tradition, and that was in his labor policy—he fired 10 percent of the payroll, cutting the lifelines of 12,000 families. The only significant resistance to these layoffs and accompanying speedups on the assembly line came from an electrochemical plant at Niagara Falls, New York. The Niagara strike was the first major strike in over forty years at Du Pont. It became the longest strike in the company’s history. 

It began in October 1970, after Wilmington categorically refused to bargain, responding to only one of the union’s twenty contract proposals. Some of these proposals tried to speak directly to the decline in real earnings as compared to workers in other companies. A Du Pont mechanic in 1967, for example, made 9 cents more an hour than a G.M. mechanic. By 1970 he was making $1.52 less. To help rectify this, Niagara workers asked for a 20-cent per hour average wage increase, a 4-cent per hour increase in wage differential, one more yearly holiday from work, and a new grievance procedure to protect them from the company’s fantastic speedups and authoritarian shop practices. On September 21 Du Pont made its characteristic “final offer.” No average wage increase, only 2-cents per hour increase in wage differential and hardly any change in the grievance procedure. The 1,100 workers voted to strike. 

At first Wilmington thought the union would fold quickly. But when bundled workers continued to walk their picket line through snow and cold, DuPont headquarters set into gear a series of attacks. First the company announced it was cutting back the number of jobs available at the plant in the future. Then it stopped its Blue Cross and Blue Shield payments, a crucial blow to the workers, many of whom were middle-aged and needed the medical care. To keep their families insured, each worker now had to pay another $30 a month from his dwindling savings. Then McCoy flew in supervisors and research scientists from the Chamber Works and other research facilities in the Wilmington area to work as scabs in the Niagara plant. There, protected by local police, these strikebreakers worked in two-week shifts for extra pay and vacation benefits—often under threat of losing their own jobs if they did not comply. 

The situation exemplified well the weak position of a local in a decentralized, fragmented company-union—The Federation of Independent Unions, Du Pont System— pitted against a centralized corporate power like Du Pont with close ties to a host of other corporations and banks. Yet in the midst of this struggle, that reality and the revelation of Du Pont’s Achilles’ heel—its dependency on labor—inspired other DuPont locals around the country. In Wilmington, workers from the Newport plant staged a brief picket line in support, but no work stoppage. “The Du Ponts have run this state for a long time,” one picketer explained, “but things are going to change. Things are finally coming down.” Something had already come down. Embarrassed by the demonstration, Du Pont officials chose that day to take down the “Du Pont” sign from the plant entrance for the first time in twenty-five years “for cleaning.” 

For a while local leaders at the Newport and Edgemore plants talked about a demonstration of support for Niagara at the annual stockholders’ meeting, and Niagara talked of busing workers down to join. Students and labor militants in the area also offered support, but there was hesitation from the local leaders—fatal hesitation, as it turned out. In March the whole alliance began melting away as the Niagara workers, threatened by Wilmington with the closing of the plant, voted in a new management endorsed president and two other officials. The new president, whose own brother was in management, quickly dissolved the negotiating committee and on April 7 settled the strike himself on the company’s terms. The sweetheart contract was signed on April 12. The strike, which had lasted six months, was betrayed. 

That very same day, hundreds of Du Ponts and their allies and lieutenants gathered in the Grand Ballroom of Hotel Du Pont to hold their annual stockholders’ meeting. The Niagara workers were not mentioned once. 

Instead, the Annual Report for 1970 was distributed with a poignant last line from Charles McCoy: “Its able and dedicated employees continue to be the company’s most valuable resource.” 66 Only three years earlier Du Pont had dared to quote the words of one of McCoy’s predecessors, Walter S. Carpenter, Jr., that “it has been my observation in industry that no decision or policy is made which, in the vernacular of the marketplace, can be adjudged ‘good business’ which cannot also be reconciled with our fondest concept of man’s brotherhood.” 67 Carpenter, too, had enforced a no-strike policy during his wartime tenure. 

McCoy continued his revamping of Du Pont. Not only workers, but also managers fell under the blows of McCoy’s axe. About sixty senior executives were reassigned or “retired” early. Twenty of Du Pont’s twenty-five department heads were changed and even four members of the executive committee were replaced. The shake-up resulted in a breaking down of huge departments, pinpointing responsibility in each area. Each Wednesday the executive committee met to hear reports from department managers. Everything was now under top management’s close observation, perhaps more so than since the Du Ponts left powder for finance after World War I. Gone now, also, were Donaldson Brown’s renowned overhead trolleys. From these had hung Pierre du Pont’s financial charts rigidly focusing on how a department’s return-on-investment measured up to the minimum 10 percent yield rule. “The old system looked backward rather than forward,” noted Vice-President Edwin A. Gee. “Now, the thrust is to the future.” 68 

Gee himself represented that future as one of the company’s new stars rising with developments in nonwoven fabrics, where a 20 percent to 40 percent annual growth was forecast. Another rising star was Edward R. Kane, since 1969 in charge of overseeing textile fiber and European operations. These two fields, in a real sense, represented Du Pont’s immediate future. Textiles made up one-third of the company’s total sales, while the profits of European operations had jumped 21 percent since Kane’s taking office, to $443 million. “That,” said one associate, “in a year when Du Pont sales dropped $16 million and earnings were off 8 percent, makes Kane look awfully good.” 69 

Apparently, others agreed. In April 1971, when Lammot du Pont Copeland resigned over, among other things, his son’s bankruptcy, McCoy assumed the board chairmanship. But Irénée du Pont, Jr., did not step into the presidency, as most expected. Instead, McCoy retained the helm, the first man in fifty-two years, since Pierre Du Pont, who held both positions. And even more significant, not Irénée, but Edward Kane, was elected vice-chairman. “Since this is the normal route for DuPont presidents,” commented Business Week, “the question is whether Irénée Du Pont now still has a chance for the presidency.” 70 

Whatever Irénée’s own thoughts were on the matter, he wisely kept them to himself, observing appreciatively McCoy’s investment in new, more competitive technology in Du Pont plants. McCoy expected an 8 percent average rate of growth on earnings through 1975. “I think the five-year goal is reasonable,” he asserted. It was. 

By diversifying into pharmaceutical, medical instruments, and electronics, Du Pont’s instrument sales skyrocketed from 1967’s $200,000 to $20 million in 1972. A single clinical analyzer was expected to gross $50 million annually by 1976. Twenty-four new products, designed for quick profits, were approved in all. By diversifying capital into varying, faster growing fields each year, following the shifts of the market from 1970’s polyester to 1971’s nylon, for example, McCoy gained a new flexibility for the musclebound giant from Wilmington. Du Pont’s enormous research resources were shifted from long-term basic research to less theoretical aspects and applied to production processes already existing; development time was speeded up to regain market initiative. 

But the key to scoring the profit margins that could cushion losses each year lay in the cheap labor markets of the underdeveloped countries abroad and the consumer sales markets of the industrialized countries. McCoy expanded Du Pont’s investment abroad from $950 million when he took office to $1.5 billion in 1972. By then, 18 percent or $680 million worth of the company’s business was abroad, not counting the $300 million taken in from unconsolidated subsidiaries, mostly in Canada. 

This increase in foreign holdings and trade, as well as its foreign currency speculation, were the main reasons Du Pont’s stock suddenly jumped 5¼ points on December 21, 1971. Seventy-eight thousand shares were traded, mostly to foreign institutional investors, that is, banks and financiers, who well recognized that the dollar’s devaluation would lead to a boost in sales for a company so well hedged in world markets as Du Pont. By Christmas Du Pont’s stock had risen over 100 points in two years, from 1969’s low of 92½ to 199. The reason was given by Robert Stovall, vice-president of Reynolds Securities. “We expect a 12 percent earnings improvement in 1972.” 71 

McCoy did better—a 16 percent increase in earnings to $414 million, resulting in the first increase in dividends, to $5.45 a share, since McCoy’s first days in office. Key to this was the 18 percent increase in foreign business, to $800 million, and a 13 percent increase in total sales, now reaching an incredible $4.4 billion. 

McCoy laid down some of the reasons for success. “Du Pont is investing increasingly large sums to build new plants and to install new technology at older plants,” 72 he explained. 

But always the issue of sales brought back the question of inflation-generating war, of Indochina war. “The increasing emphasis in the economy on civilian goods benefits our markets, and the conclusion of the war in Vietnam will accelerate this trend.” 

Indeed, the de-escalation of direct involvement by American ground troops had already brought vast dividends in restoring social calm in the United States and an improvement in sales at home and abroad. This de-escalation had begun since the defeat of the U.S.-backed invasion by Saigon forces of Laos. That debacle was the final crushing blow to Nixon’s war policies, and, coupled with mounting popular and corporate pressures at home, forced his shift to the negotiating table. 

For this reason, as well as for the general alarm George McGovern caused among the more conservative larger corporations, almost all the Du Ponts supported Richard Nixon for reelection in 1972. As early as January 1971, Du Pont ties to the Nixon campaign were strengthened by the appointment of Delaware’s Thomas B. Evans, Jr., as co-chairman of the Republican National Committee. Evans, top Republican and associate of Governor Peterson, had headed a dinner for Vice-President Agnew in October 1970, which was the target of an antiwar demonstration by residents and college youths. Significantly, at the time of his appointment, Evans made it a point of assuring the press that he firmly believed President Nixon was getting American troops out of Southeast Asia. 

No doubt Evans was believed in DuPont circles, for Nixon’s scandalous campaign received sizable Du Pont donations. 

Delaware Trust director John E. Du Pont, son of William, Jr., donated a whopping $141,125. 

Reynolds DuPont, who tried to keep Republican donations out of CREEP’S hands, gave $49,000. 

Lammot du Pont Copeland, Sr., gave $22,500. 

Du Pont Vice-President Hugh R. Sharp, Jr., whose father married Irénée Du Pont’s sister Isabella, gave $9,900. 

His brother, Bayard Sharp, gave a total of $14,000: $9,000 to the Committee to Reelect the President, $2,000 to the Republican National Finance Committee, and $3,000 to the Republican Convention Gala. 

Mrs. Henry B. Du Pont, widow of Henry, who died in 1969, gave $1,000. 

W. Sam Carpenter, an in-law and Du Pont director, gave $18,000. 

Eugenia Du Pont Carpenter, daughter of Walter Carpenter III and Henry B. Du Pont’s daughter, E. Murton Du Pont, gave $1,000. 

Walter S. Carpenter, Jr., her grandfather, gave $9,000. 

Edmund N. Carpenter II, her uncle, gave $2,500. 

Irénée du Pont, Jr., gave $3,000. 

Crawford Greenewalt gave $5,000. 

Charles McCoy gave $4,650. 

George P. Edmonds gave $5,000. 

Du Pont executives gave another $47,736, including $3,000 each from Shapiro, Kane, Gee, Dawson, and Dallas, and $2,000 each from Swank and Harrington. 

This brought the total Du Pont contribution to Nixon to well over half a million dollars. 

Interestingly enough, one year later, in December 1973, a reelected President Nixon named Du Pont’s chief patents attorney as U.S. Patents Commissioner, an important position in an age of competitive challenges to Du Pont’s exclusive patents. 

Du Pont commitment to Nixon’s campaign can probably best be illustrated by a comment Elise, wife of Congressman Pierre du Pont, made during protest demonstrations at the Nixon 1973 inauguration. “Isn’t this just like a football game?” she asked one Delaware reporter. When the newsman looked puzzled, she clarified: “No, I mean it’s us against them.” 

Additionally, William F. Raskob, trustee of the estate of Pierre du Pont’s friend, the late John J. Raskob, gave $7,000. 73 

According to all known records, there was only one Democratic Du Pont donation, $13,000 from Mrs. Thomas F. Bayard. The family’s contributions to the Peterson reelection campaign were also reportedly slimmer than in 1968, a factor that probably contributed to the Republican governor’s defeat and his subsequent transfer as an aide to Harry Haskell’s and Irénée du Pont, Jr.’s old political ally, the lord of Pocantico Hills, New York Governor Nelson Rockefeller. 

New York is not the only state with growing political ties to Delaware’s ruling family. Other states, including Maryland and South Carolina, listen attentively to residing Du Ponts (such as Samuel F. du Pont and A. Rhett du Pont, Jr., respectively). Du Pont influence can also be seen in Pennsylvania, Missouri, and California, all of which will be examined later. But the state that endures the strongest Du Pont ties outside of Delaware lies a thousand miles to the south. There, in the balmy air of the land of sunshine, Du Ponts reign as the most powerful political and economic force in the state. For unknown to most Americans, Florida is second only to Delaware in Du Pont influence. In fact, Florida is the family’s hidden empire, an empire with a history of its own. 

Next
FLORIDA—THE HIDDEN EMPIRE
500s
notes
Chapter 13 
1. Charles Tilly, Wagner Jackson, and Barry Kay, Race and Residence in Wilmington, Delaware (New York: Columbia University Press, 1965), p. 11. 
2. U.S. Census of Housing, I960, Bulletin HC (1) Part 9, Tables 12 and 38. 
3. Ibid., Tables 17 and 39. 
4. Ibid., Bulletin PC (1), part 9C, Tables 76 and 78. 
5. Wilmington Evening Journal, December 9, 1960. 
6. Greater Wilmington Development Council, The Long-Term Unemployment in Wilmington, Delaware, 1961. 
7. As president of the Rockland Corporation, W. W. Laird had acquired twenty-one center-city properties by June 1967, bounded by Fifth, Sixth, Market, and Orange Streets, between the Artisans Savings Bank and the Bank of Delaware, for $1,069,111. 
8. Prime Contractors Which Received Awards of $10,000 or More—Delaware, Fiscal Year 1969, Department of Defense, Deputy Controller for Information Services. 
9. Wilmington Evening Journal, October 20, 1967. 
0. Ibid. 
11. Wilmington Evening Journal, November 15, 1967. 
12. Fortune, November 1967, p. 138. 
13. Ibid. 
14. Ibid. 
15. Transcript of meeting of the New York Society of Securities Analysts, 1960. 
16. Business Week, November 9, 1963. 
17. Ibid. 
18. Ibid., September 21, 1968. 
19. Wilmington Evening Journal, February 29, 1969. 
20. Ibid. 21. Ibid., May 2, 1968. 
22. Ibid., June 20, 1968. 23. Ibid., February 25, 1969. 
24. Delaware State News, March 4, 1969. 
25. Wilmington Evening Journal, August 27, 1955. 
26. Ibid., October 31, 1955. 
27. Ibid., October 9, 1956. 
28. Ibid., November 19, 1968. 
29. Ibid., November 20, 1968. 
30. Ibid., November 21, 1968. 
31. Ibid., May 10, 1969. 
32. New York Times, September 1, 1963, Sec. III, p. 3. 
33. John Kenneth Galbraith, American Capitalism (Boston: Houghton Mifflin Company, 1936), p. 69. 
34. New York Times, July 9, 1967, Sec. III, p. 12. 
35. Ibid. 
36. Business Week, December 5, 1970, p. 78. 
37. Fortune, July 1971, p. 90. 
38. Ibid. 
39. Business Week, March 27, 1971, pp. 74–76. 
40. New York Times, June 22, 1969, Sec. III, p. 2. 
41. Wall Street Journal, November 23, 1970, p. 1. 
42. Ibid. 
43. Ibid., November 17, 1970. 
44. Ibid., November 23, 1970. 
45. Ibid. 
46. Ibid. 
47. Pennsylvania Co., Wilmington Trust Co. vs. J. Russell Coulter, Elizabeth M. McNear, et al. (opinion of) Delaware Court of Chancery, 186 Atl. 2d 751. For a summary of the case, see also “Commercial Banks and Their Trust Activities— Emerging Influences on the American Economy,” Vol. I, U.S. Congress, House Committee on Banking and Currency, Subcommittee on Domestic Finance, 90th Congress, 2nd Session (New York: Armo Press and New York Times, published privately, 1969), pp. 775–79. 
48. Penn Central Company vs. F. I. du Pont Company, U.S. District Court, Eastern District of Pennsylvania, 71–1506, Plaintiff’s brief, November 18, 1971. 
49. Fortune, July 1971. 
50. Ibid. 
51. Ibid. 
52. Christopher Elias, Fleecing the Lambs (Greenwich, Conn.: Fawcett Publications, 1972), p. 174. 
53. Philadelphia Sunday Bulletin, March 28, 1971, p. 36. 
54. Business Week, March 27, 1971, pp. 74–76. 
55. Forbes, June 15, 1972, p. 26. 
56. State of the City Address, Harry G. Haskell, Jr., January 21, 1971. 
57. “Pete du Pont Reports,” April 1971. 
58. Ibid. 
59. Wilmington Morning News, May 11, 1973. 
60. Ibid., June 4, 1973. 
61. New York Times, June 5, 1970, p. 45. 
62. Business Week, September 12, 1970, pp. 40–41. 
63. Ibid. 
64. Ibid. 
65. Newsweek, March 29, 1971, p. 84. 
66. 1970 Annual Report, E. I. du Pont de Nemours & Co., p. 16. 
67. This Is Du Pont, No. 31, “Company and Community,” p. 33. 
68. Business Week, September 12, 1970, pp. 40–41. 
69. Ibid., April 24, 1971, p. 21. 
70. Ibid. 
71. New York Times, December 22, 1971, p. 52. 
72. 1972 Annual Report, E. I. du Pont de Nemours & Co. 
73. Courtesy of Citizens Research Foundation, Princeton, N.J., as of March 22, 1973.