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When Joe Kennedy moved from accumulation to preservation of capital, the safest bet seemed to be Manhattan real estate. To his delight, his shrewd broker, John J. Reynolds, the real estate counselor of the archdiocese of New York, made him vastly richer at minimum risk. Gradually, over the past seven or eight years, Ken Industries and the Park Agency, Inc., have disposed of the family's holdings in Manhattan. The golden touch that Kennedy enjoyed in his dealings is illustrated by the largest single transaction in this slow, quiet process of liquidation. In 1943 Kennedy bought the property at 59th Street and Lexington Avenue, on which Alexander's department store now stands, for $1,900,000, with only $100,000 in cash. In the fall of 1963, the property was sold for $6,000,000 in cash.
The largest building block in the Kennedy fortune is Chicago's huge Merchandise Mart, the world's biggest commercial structure. Joe Kennedy acquired it in 1945 for just under $13 million, and turned what seemed a gigantic white elephant into a stupendous profit maker. It is now valued at $75 million.
Kennedy began investing in oil in the late 1940s, principally to gain the tax break supplied by the oil depletion allowance. Kennedy's original partner, Tulsa Petroleum Engineer Raymond F. Kravis, remains a co-investor and an adviser on operations. He describes the Kennedy investment as "a big small company," amounting to some $10 million and producing an annual gross income of about $ 1,000,000.
Precautions for the Children
As early as 1926, Joe Kennedy set up a trust fund for Rose and the children then born. Another was created in 1936, and still another in 1949. The latter trust fund is the vehicle through which Kennedy settled portions of his wealth on his 28 grandchildren. The three trust funds and the Joseph P. Kennedy Jr. Foundation are the chief instruments of capital conservation. At the end of 1968, the foundation had assets of $22.1 million, and it disbursed $1.6 million, almost entirely for research in mental retardation.
When John F. Kennedy became President, it was disclosed that his personal holdings under the family trust funds were $10 million. The $500,000 gross gave him, after taxes, slightly over $100,000 a year to spend. Like the Boston Yankees from whom he learned so much, Joe Kennedy, in creating the trusts for his children, took precautions, stipulating that control over the principal should pass at stated age intervals. Before his death, the President, on his 45th birthday, had received one-half of the principal held in trust for him, with the remaining half under the discretionary control of the trustees. The wills of the brothers made similar provisions for their heirs.
Yet the heirs may sometimes be hard pressed. At his death, Bob Kennedy left campaign debts and expenses of more than $3,000,000, which his estate could not pay. Edward M. Kennedy has raised money to repay these debts, and other members of the family have made contributions. A close friend of Ethel's, recalling the "extravagance of the ebullient life" that she, Bob and the children enjoyed, hints that income and outgo run a neck-and-neck race in her household as in the ordinary American's.