Table Of Content

-- Working Papers -- CHRONOLOGY Dillon Read & the Aristocracy of Stock Profits DISCLAIMER: The following chronology was prepared as a background research tool for the drafting of “Dillon Read & the Aristocracy of Stock Profits.” The purpose was to provide background research only. This chronology is not inclusive of all relevant dates during the period. It includes source materials believed to be reliable as well as useful. It also includes additional materials which may or many not be reliable as well as materials which are not useful for the story at hand. The reader should treat this information as preliminary and subject to change. The reader is advised not to rely on any information herein -- to independently confirm any information before using or relying on it. Special thanks to the following sources: The Life and Times of Dillon Read, Robert Sobel, The Penguin Group, May 1991 Barbarians at the Gate - The Fall of RJR Nabisco, by Byran Burrough and John Helyar, Harper & Row 1990 Barry & ‘the boys”: The CIA, the Mob and America’s Secret History by Daniel Hopsicker, , Mad Cow Press Friends in High Places: The Bechtel Story – The Most Secret Corporation and How It Engineered the World by Laton McCartney, Ballentine Books, 1988 The Iron Triangle, by Dan Briody, 2003, John Wiley & Sons, Inc. Jail Breaks – Economic Development Subsidies Given to Private Prison by Good Jobs First, available at www.soros.org -- Good Jobs first is an initiative of the Institute on Taxation and Economic Policy. The report is authored by Philip Mattera and Mafruza Khan with Greg LeRoy and Kate Davis and is dated October 2001 Rockefeller Foundation – website chronology Solari website – various articles and litigation section, including litigation timelines now at www.dunwalke.com/gideon UBS Website – Chronology Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 1 - 1882 Clarence Dillon is born Clarence Lapowski in Texas. Dillon’s father was Samuel Lapowski, a Polish Jewish immigrant who arrived in America in 1968 and moved to San Antonio, Texas where he opened a dry goods store. There were other members of Samuel’s family that settled in America – a brother became a doctor and settled in New York City. Around 19880, Samuel Lapowski met Bertha Steenbach, a Lutheran, the daughter of Swedish immigrants, whose family owned and operated several silver mines and owned land in Colorado and Texas. Bertha and Samuel also had two daughters, Jeanie and Evelyn. All of their children were raised as Protestants. Lapowski’s business thrived, and he branched out into different areas, including banking, a natural expansion of the dry goods business. He would advance fund to ranchers and farmers to tide them over until they sold their cattle or crops, and he used part of the earnings from this activity to speculate in land in nearby Abilene, Texas, on which oil was discovered. To escape the brutally hot San Antonio summers, the Lapowskis would vacation in New Hampshire or Maine. (The Life and Times of Dillon Read) 1882 The Office of Naval Intelligence (ONI) is founded to seek and report on technological advancements that would ensure that the US Navy is a world-class navy. ONI develops a close association with the new founded Naval War College in Newport Rhode Island. Lt. B.M. Mason is the first Director of Naval Intelligence. 1889 Joseph Willits is born into a Quaker family in Ward, Pennsylvania, Chester County. His father is a successful farmer (dairy, mushrooms, flowers) who organizes the Pennsylvania Dairy Association and becomes Secretary of Agriculture in Pennsylvania 1889 JP Morgan holds a meeting at his 5th Avenue mansion in NY. The purpose is to reach a consensus whereby the owners of America’s railroads merge their competing interests. This was no mere group of transportation executives agreeing to fix prices. The railroads also controlled the nation’s coalfields and oil supplies and were tightly bound to the nation’s largest banks. The creation of the Federal Reserve in 1914 completed this process of consolidation. In effect, Congress ceded control of the US currency system and the federal credit to the banks, thereby officially recognizing the cartel. This placed a relatively small number of men in a position to set prices across the economy with a degree of control heretofore unknown in US History (The Negative Return on Investment Economy) 1897 As a result of a serious drought in Texas this was a very bad year for business. Nevertheless, the Lapowski’s sent Clarence to Worcester Academy and funded weekend trips for Clarence to New York to visit his uncle. Lapowski had earlier taken Clarence with him on buying trips to New York. Clarence did not do well in school. He filed the Latin portion of the Harvard entrance examination and because of this entered the scientific school, where Latin was not required. At the end of the first year, he retook the examination, failing once again. Even so, he was permitted to transfer to the college. Sometime in this period, Samuel Lapowski decided to alter his surname to Dillon, which had been his mother’s maiden name. His children also took this name. (The Life and Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 2 - Times of Dillon Read) 1905 Clarence graduates from Harvard. At Harvard, Clarence was not an outstanding student. While transparently intelligent, he demonstrated scant interest in his studies, although significantly he showed skills at and a liking for mathematics. Those who knew him then say Dillon spent considerable time and won substantial sums at cards. One of Dillon’s closest friends at Harvard was Armin A. Schlesinger whose father, Ferdinand, had come to America from Germany and settled in Milwaukee, where he became a manufacturer of mill machinery. From there Schlesinger expanded into iron mining and was president of several companies in that industry. During a visit to Cambridge the elder Schlesinger urged Dillon to relocate to Milwaukee, offering to help him find employment there, perhaps a new business in partnership with his son. Dillon accepted, and during the next three years the two men were associated at one of the Schlesinger companies, Newport Mining Co. and its subsidiary, the Milwaukee Coke and Coal Co. Through Schlesinger’s new wife, Dillon was introduced to Anne McEldin Douglass. Her parents were George and Susan Dun Douglass. Her uncle had founded the credit-reporting firm, RG Dun at which her father worked. Clarence and Ann were married on February 4, 1908. In 1907, Dillon has a bad accident. For the rest of his life he would occasionally suffer from an inner ear malady caused by the accident, which subjected him to occasional bouts of vertigo and may have contributed to his volatile temperament. After the railroad settled the case for $8,000, the Dillon’s go to Geneva and Paris for an extended convalescence. (The Life and Times of Dillon Read) . 1909 C. Douglas Dillon is born in Geneva Switzerland on August 21 1910 The Dillon’s returned to Milwaukee where Clarence purchases a half interest in his brother in law’s company, the Milwaukee Machine Tool Company. The partners sell it in 1913 when it runs into trouble fulfilling orders at the price quoted. 1912 Joseph Willits earns a bachelor and masters degrees from Swarthmore College and joins the University of Pennsylvania faculty as an instructor in Geography and Industrial Economics at the Wharton School of Finance and Economics. He marries Ruth Sharp Brown, his classmate at Swarthmore and graduate at the Friends Central School. On their honeymoon, they buy Hayes Farm in Jackson, New Hampshire in the White Mountains where they and their family summer. He earns his PHD in Economics in 1916 from Penn. Drafted into WWI, he served as an employment supervisor at the US Naval Aircraft Factory in Philadelphia. 1913 Federal Reserve System created; Clarence Dillon joins William A. Read as bond salesmen in the Chicago office 1914 The first drugs outlawed in US 1915 William T. Fitts Jr. is born in Jackson Tennessee. 1916 Clarence Dillon becomes a partner in William A. Read, becoming head after Read’s Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 3 - death; James V. Forrestal joins. 1919 Returning to Wharton at the end of WWI, Dr. Willits is named Chairman of the Department of Geography and Industry to which he applies his expertise to a new field of labor management. As director of the Department of Industrial Economics he sets up Wharton’s Industrial Research Department. January 16, 1920 Prohibition begins, legislated by the Volstead Act and the Eighteenth Amendment ratification in 1919. 1920’s R.J.Reynolds creates a Class A stock—known locally as anticipation stock--- designed to put all voting power in the hands of the workers. It paid an extraordinary rich dividend – 10% of all profits in excess of $2.2 MM. Workers clamored for the new issue, and many used their salaries to buy all the Class A they could. The annual dividend payment became a kind of local holiday, a time local car dealers and luxury purveyors eagerly awaited. The story was told of a Winston Salem tyke who received a horde of presents on Christmas morning, only to begin weeping uncontrollably. He said he’d had his heart set on Class A stock. From the early 1920’s until the IRS disallowed the Class A in the 1950’s, Reynolds employees controlled the majority of the company stock. 1921 William Read & Co.’s name is changed to Dillon Read & Co. According to a story of the period, Clarence Dillon rose at a partners meeting and said “Gentlemen, I have brought in 85 per cent of the business here and henceforth the name of the firm shall be Dillon, Read & Company. Those who do not like the arrangement can withdraw.” 1921 Council on Foreign Relations is formed. 1924 Dillon Read issues first post war closed end investment trust 1925 Dillon rescues the faltering Goodyear Tire & Rubber Company, engineering a buyout - - marking a long history of Dillon Read in the buyout business. 1926 Dillon Read organizes the largest public offering ever -- $55 million for National Cash Register Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 4 - 1928 By 1928, Kaiser and Bechtel have already built major pipelines for Standard Oil and Continental Gas—in 1928, Kaiser accepts a $20MM contract to build roads in Cuba 1928 Dillon engineers the sale of Dodge to Chrysler 1929 After Mussolini comes to power, the Lateran treaty or Concordant is enacted between the Italian government and the Catholic Church. The government formally recognized the sovereignty of the Vatican state, official declared Roman Catholicism the state religion, nominally called for the papacy to remain neutral in international affairs, and made financial compensation for claims arising from the confiscation of papal lands. In addition, the church was granted control of various properties outside of Vatican City and these holdings were declared tax-exempt. During the way, all Vatican investments in Italy were likewise given tax exemption. (Through the Looking Glass) 1930-31 Dr. Willits served on President Herbert Hoover’s Emergency Committee for Employment. Years before the New Deal, he called for a system of unemployment insurances, control over the expansion of credit and greater controls over business and industry. 1930’s Willits family goes on sabbatical to Europe where his daughter Barbara Kinsey Willits attends a Swiss boarding school for girls. April 11, 1930 Nicholas F. Brady is born in New York City 1931 C. Douglas Dillon graduates from Harvard – his father buys him a seat on the NYSE 1931 Kaiser & Bechtel become part of a consortium to build the Boulder Dam – Bechtel and their various partners build many New Deal sponsored projects. the Moffat Tunnel in Colorado, Grays Harbor in Washington and the Grand Coulee, Parker and Bonneville Dams. ....the Bay Bridge linking Oakland and San Francisco. 1932 Rockefeller Foundation grants are used to establish full-time departments of psychiatry in teaching hospitals and medical schools, including Chicago, Duke, Harvard, McGill, St. Louis, Tulane, Yale and Washington. (RF website chronology) Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 5 - 1933 Dr. Joseph Willits is named Dean of the Wharton School and President of the Bureau of Economic Research, where he serves as executive director from 1936 to 1939 July 3, 1933 Standard Oil of California wins exclusive 50-year right to search for oil across 395,000 square miles of Saudi Arabia. 1933-53 Rockefeller Foundation expends $1.5MM in identifying and assisting 300 scientists and scholars from Nazi Germany to settle in friendly locations, many relocate to US universities. (RF website chronology) 1933 Prohibition ends when the Eighteenth Amendment is repealed with ratification of the 21st Amendment. Prohibition had a notable effect on the brewing industry in the US. When Prohibition ended, only half the number of breweries reopened as had existed before. Many small breweries were out of business for good, because mainly the largest breweries had survived. 1934 The Federal Bureau of Prisons is created by Federal statute in 1934. It operates as a wholly owned, self-sustaining Government corporation now marketed under the trade name UNICOR. UNICOR markets federal prison labor to federal agencies. 1934 The Exchange Stabilization Fund is created as a non-accountable, non-transparent fund that can tap the federal credit. It is managed by the NY Fed on behalf of the Secretary of the Treasury. 1934 The Federal Housing Administration is created. 1935 Public Utilities Holding Company Act becomes law. 1936 Douglas Dillon becomes a Vice President and Director of Dillon Read May 1937 Steve Bechtel and John McCone (later head of the CIA) start the Bechtel- McCone Corporation in Los Angeles. Their first contract is a refinery for So Cal. By 1939, Bechtel- McCone had mushroomed into an organization with more than 10,000 employees and Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 6 - building refineries, chemical plants and pipelines from Montana to Venezuela. 1939 Joseph Willits becomes Dean of Social Sciences of the Rockefeller Foundation 1940 William T. Fitts Jr. graduates from the University of Pennsylvania Medical School where he was first in his class. He was then drafted into the Marine Corp as a Lieutenant during WWII. Rising to the rank of Captain, he served as a surgical ward officer with the 20th General Hospital of the US Army, a Penn-affiliated hospital in the China-Burma- India Theatre 1940 The Boston Symphony receives a Rockefeller Foundation grant of $60,000 to establish the Berkshire Music Center at Tanglewood. 1941 Douglas Dillon helps set up the OSS with Donovan During the War he sees active service in the US Navy and spends the last few months in the Pacific where his ship survives several attacks by Japanese suicide bombers. 1941 The War Powers Act authorizes the US Treasury’s Exchange Stabilization Fund (ESF) to serve as a holding pool for captured Nazi loot, thus creating a significant slush fund for later covert operations, including the rigging of the Italian elections in 1947-48 at the request of the Vatican. (Christopher Simpson’s Blowback.) 1942 Bechtel-McCone receives a contract through entity Cal Ship from Maritime Commission to build ships for the Navy. Within little more than a year Cal ship was employing 42,000 workers and building as many as three dozen Liberty ships. By October 1944 Cal ship was producing 20 ships a month. At the direction of the War Department, Bechtel was building pipelines and refineries in Mexico, Venezuela and Bahrain, off the coast of Saudi Arabian. During the War, Bechtel worked on an Alaska pipeline involving black budget funding and involving a large work corp of blacks from the South provided by the Army Corp of Engineers. Secret funding issues turned into a scandal. (FIHP page 63-65) Bechtel-McCone for the Army’s Willow Run Aircraft Modification Plant in Alabama come up with a cost plus contract that turns into a scandal involving Bechtel’s padding of contracts (p. 66-68). Incredible story in the history of the destructive power of cost plus contracting. 1942 The Institute for Religious Works, or Instituto per le Opere de Religioni, IOR ws reconstituted from another agency, Administration for Religious Works, which had been established in 1887. Pius XII places it under the control of financial wizard named Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 7 - Bernardino Nogara who begins investing Vatican monies in banks, real estate holding companies and corporations. IOR begins to establish ties with the leading financial institutions of the world including Morgan Guaranty, Credit Suisse, Chase Manhattan and Continental Illinois. The Vatican buys a 15% interest in the giant real estate holding and construction company known as Immobiliare that gives IOR a piece of the action in everything from the Watergate Hotel in Washington to reports in Mexico to apartment complexes in Montreal. Working through Chase Manhattan, the Vatican also begins purchasing stock in General Motors, Gulf Oil, Bethlehem Steel, TWA, IBM and other major companies. Nogara retired in 1954 and during his lifetime had pyramided the money give to the Vatican by Mussolini(said to be $85MM) to nearly $1 billion. Larry Gurwin wrote “ IOR helped many Italians to protect their wealth from confiscation by the Germans, taking advantage of Vatican City’s status as a sovereign state.” (Through the Looking Glass). Early ‘40’s – Bechtel builds several “heavy water” storage plants at Hanford Washington as part of the Manhattan Project – the program that developed the atomic bomb. Later, after the bomb had proved its destructive potential at Hiroshima, Bechtel had been one of several contractors and utilities that had built the Doomsday Town in the middle of the Nevada Dessert. For Bechtel, the Doomsday study was one of a series of early projects the company carried out for the AEC in conjunction with a number of its energy-minded customers like PG&E. It was work that in the coming years would do much to define the emerging nuclear industry. Not coincidently, it would also establish the Bechtel Corporation as the world’s largest purveyor of nuclear power. 1940 William T. Fitts Jr. graduates from the University of Pennsylvania Medical School where he is first in his class. He is then drafted into the Marine Corp as a Lieutenant during WWII. Rising to the rank of Captain, he served as a surgical ward officer with the 20th General Hospital of the US Army, a Penn-affiliated hospital in the China-Burma- India Theatre 1941 Douglas Dillon helps set up the OSS with Donovan who on July 11, 1941 is appointed by President Roosevelt as “Coordinator of Information.” Donovan was a prominent Wall Street attorney who won the Congressional Medal of Honor as an Army colonel during World War I. During the War Dillon sees active service in the US Navy and spends the last few months in the Pacific where his ship survives several attacks by Japanese suicide bombers. WWII The Office of Naval Intelligence creates a partnership with the Italian mafia to ensure that they have the critical intelligence and support for the European invasion. 1944 John Simpson joins Bechtel after a successful career at J. Henry Schroeder where he worked closely with John Foster & Allen Dulles at Sullivan & Cromwell. During WWII while Allen Dulles was organizing OSS networks from Switzerland, Simpson took time off from the bank to become chief financial advisor for the US Army in Europe. ...Reference on P. 77 in FIHP related to James B. Black, chairman of Pacific Gas & Electric arranging for Steve Bechtel to become a member of the board of JP Morgan and Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 8 - a member of the Business Council, a Washington based organization composed of the leading businessmen in the country. 1945 Dr. William T. Fitts, Jr. returns to Penn to become an assistant instructor in surgery at the School of Medicine, a Rockefeller Fellow and a full professor in 1956. His wife, Barbara Kinsey Willits Fitts, has a master’s degree in economics from the University of Pennsylvania and has been working at the Philadelphia Federal Reserve Bank. End of WWII, C. Douglas Dillon becomes chairman of Dillon Read. As a member of the Republican Party, he is a major contributor to the campaign of Dwight Eisenhower. October 1, 1945 President Harry Truman’s Executive Order 9621 abolishes the OSS and transfers its functions to the State and War Departments. January 22, 1946 President Truman signs a Presidential Directive establishing the Central Intelligence Group to operate under the direction of the National Intelligence Authority. Truman names the first Director, Rear Admiral Sidney W. Souers. September 18, 1947 The National Security Act of 1947 establishes the National Security Council and the CIA to replace the National Intelligence Authority and the Central Intelligence Group. 1946 For tax reasons Bechtel-McCone is liquidated. A new Bechtel Corporation soon snaps up contracts to build 200 miles portion of the Texas-California gas line, a $7MM oil refinery for So Cal in Salt Lake City and several factories for Owens-Corning Fiberglass... Page 78 refers to Bechtel commissioning a study from the Stanford Research Institute of Paul Alto (SRI) and that Bechtel had been one of SRI’s principal founders and had bankrolled its operations heavily. P. 97 describes McCone has being a director. A meeting Bechtel arranged at the Links Club where the plans are developed for the Transmountain Pipeline Company of Canada. The project was finished in 1954. 1946 Dr. Albert Kinsey receives his first support for studies of sexuality from Rockefeller Foundation and publishes his first book in 1948 (RF website chronology). Rockefeller Foundation’s divisions of social sciences, health and natural sciences combine to fund the first effort to comprehensively survey socioeconomic conditions in developing countries. The work is carried out on the island of Crete. Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 9 - 1947 McCone becomes member of the President’s Air Policy Commission. Impressed with McCone’s work on the Commission, James Forrestal asked McCone to raw up the budget for the newly formed Department of the Air Forces...Page 98. McCone joins Simpson at a dinner with Allen Dulles at his town house in NY to celebrate Dewey’s expected victory. 1947 FHIP -- Bechtel approves the assignment by the Navy of several nonuniformed officers to the Bechtel-built Saudi Arabian refinery at Ras Tanura. The officer’s...mission was gathering intelligence. This was the early years of significant relationship between Bechtel and the CIA and US intelligence worldwide. In the 1950’s a former Aramco executive stated that the only effective intelligence gathering in Saudi Arabia was a large private company. That the time, the only such company in Saudi Arabia was International Bechtel Incorporated. FIHP has a chapter on Bechtel’s’ relationship with the CIA – “The Company and the Company” At the invitation of Allen Dulles, Steve Bechtel served as the agency’s liaison with the Business Council. He and many of the Council members were debriefed after trips abroad. Describes senior Bechtel folks who worked for both Bechtel and the CIA – Snodgrass Page 121. 1947 Dillon Read privatizes the Texas Eastern pipelines, lead by August Belmont, returned from service in the Navy where he had risen to Lieutenant Commander. The deal clinches Dillon’s reputation as a leader in the oil industry – with many clients in utilities, gas and oil. Peter Flanigan, son of Manufacturer’s Hanover Trust Chairman Horace Flanigan and of Anheuser-Busch heiress, arrives at Dillon Read after Princeton and service in the Navy during WWII. 1947-48 The Dulles Brothers working from Sullivan & Cromwell and using slush funds from the ESF captured from the Nazis orchestrate the rigging of the Italian elections at the request of the Vatican. (Christopher Simpson’s Blowback) 1948 Standard Oil of California, which had brought in Texas Oil (Texaco) brings in Standard Oil of NJ and Mobil into its Saudi Arabia deal to create the Arabian American Oil Company ---Aramco. P.83—After WWII, Ickes orders Aramco to develop its Saudi fields post haste. Shortly, thereafter Aramco calls Steve Bechtel.....P.95 FIHP –during the late 1940’s and ‘50’s Bechtel’s operations were rapidly expanding beyond Saudi Arabia....Bechtel crews moved into Yemen, Kuwait, Lebanon, Iraq and Iran, with the K May 22 1949, James Forrestal, former Secretary of the Navy, former Secretary of Chronology ~ Dillon Read & the Aristocracy of Stock Profits - 10 -