Harry McPherson Text of Interview: April 1, 2003

ORAL HISTORY OF
APRIL 1,2003
HARRY C. MCPHERSON, JR. – ELEVENTH INTERVIEW
It is April 1,2003.
Mr. Vanderstar: As I mentioned to Harry McPherson before we turned on the
tape, we’ve pretty well gone through the public service aspect of his life after the early days,
especially in view of the book and the transcripts of the interviews in the LBJ Library. So I want
to get on to his transition to private practice in 1969.
Nixon was sworn in in January of ‘69 and you left about then, right?
Mr. McPherson: I did. I left on that day at noon.
I’m not sure if I’ve mentioned getting called by Johnson on the morning of
inauguration. On the night before January 20, 1969, there was a party at the White House of
senior and intermediate staff, lovely party, a kind of a melancholy air to it. We were leaving,
and we were leaving on a pretty down note because of Vietnam. I gave a talk on behalf of the
staff to the president and told him what it had meant to us to be able to work with him.
The next morning at about seven I was awakened by a phone call from the
president. I was planning to sleep in for another couple of hours and then do something useful. I
didn’t intend to go to the White House on that last day. After the stroke of noon I wouldn’t be
welcome there in any event. Anyway, Johnson said, “That was a nice party last night, I
thought.” I said, “I did, too.” He said, “You were one of the fellows who worked on the
Kennedy Center for a long time with Roger Stevens,” and I said, “I was.” He said, “YOU want to
be on the board?” And I said, “Sure.” I can hear “scratch, scratch, scratch, scratch” as he put his
name to an appointment to the Kennedy Center board where I became vice chairman and years
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later, general counsel. He said, “You also started that Woodrow Wilson Center over at the
Smithsonian, you and Doug Cater were working on it. Do you want to be on that board? I’m
going to make Hubert [Hubert Humphrey] the chairman of it. Do you want to be on it?” And I
said, “Sure.” “Scratch, scratch, scratch, scratch.” (laughter)
I had a feeling that if I’d played my cards right, I might have gotten even more
out of that morning. I assumed a lot of it had to do with the talk I had made the night before,
which was not in any way contrived; it was very genuinely meant. In any case, that was my
transition to the non-governmental world for the first time since January 1956. This was January
1969.
Mr. Vanderstar: So, 13 years.
Mr. McPherson: 13 years.
Mr. Vanderstar: Plus, of course, you had been in the military, so you spent a lot
of your years at that age in government serviceMr. McPherson: That’s true.
Mr. Vanderstar: –of one form or another. When did you start thinking about
getting a job somewhere or opening a law firm or whatever you were thinking about?
Mr. McPherson: I started wondering about that in the fall of ‘68, well before the
election. I didn’t intend to stay in government, no matter who won. I was extremely fond of
Hubert Humphrey, but there was nothing I really wanted to do in government at that point that I
was likely to be appointed to. New presidents don’t come in normally and appoint some
modestly well-known fellow from his predecessor’s staff to a cabinet job. So, I didn’t expect to
be offered one of those; I didn’t know even whether I would want to take it if I were. And I
didn’t want to stay and work at the White House. I had done enough of that. After four years, I
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had had plenty of it.
So in the fall I started to think about what I would do. A number of people
approached me about doing things in the private sector. Almost all of them were things that I
had neither experience nor knowledge nor talent for, but they were intriguing. William Benton,
the advertising genius-he and Chester Bowles had started Benton & Bowles. Benton owned
The Encyclopedia Britannica, and he asked me if I would like to be the president of it. I said, “I
didn’t really think so.” I’d worked with Benton when I was in that State Department job. He
was the U.S. ambassador to UNESCO, and the two of us had spent a week or ten days in Paris
one time, at a big meeting of UNESCO. He entertained me very lavishly at places like Maxim’s.
Anyway, he made that offer. When I said I didn’t think I wanted to move to Chicago, he said,
“Well, where do you want to live?” And I said, “Well, I like Washington, frankly.” And he
snorted and said, “The only two cities in this country fit for a man are Chicago and Houston.”
Mr. Vanderstar: Oh, boy. (laughter)
Mr. McPherson: Those were the two places where fang and claw competition
would bring the best to the top.
Arthur Krim, a very wealthy, very pleasant man, a very good man I believe, who
was quite close to Johnson, asked me if I would be interested in being vice president of United
Artists Corporation, in charge of corporate development. I didn’t even know what that meant. It
obviously meant buying properties, working out deals. I went up to New York and I met with
Arnold Picker, later to be number one on the Nixon enemy list for having given a lot of money to
Ed Muskie, and Arthur Krim and Bob Benjamin. The three of them had taken over United
Artists. I didn’t know whether I would enjoy doing that at all. I called Jack Valenti, who was at
MPAA, and asked him for counsel. His counsel was, “Well, they’re three very good guys and
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you’d probably like them. The one thing you’ve got to insist on, car and driver.” (laughter). I
said, “That’s fine, if I decide that I’d like to do that, then I’ll ask for a car and driver, but I don’t
know if I’d know where to tell the driver to take me if I had the job.”
Two or three law firms, and in what was rather unusual in those days, asked me
whether I would have any interest in joining them. Here was a fellow who had never been in a
law firm for a day as a practicing lawyer, who had been in government ever since he got out of
law school.
Mr. Vanderstar: Had you even taken the bar?
Mr. McPherson: Oh, sure. I took the bar before I left Texas. I was a member of
the Texas Bar and one could easily waive into the District Bar. I thought it rather bold of them
to be willing to risk this. One of them was your old firm, and that really intrigued met. I thought
that would be quite wonderful. We never got beyond conversation with a couple of guys who
came to see me to see if I would consider it. And I certainly did.
Clark Clifford invited me over to the Pentagon and asked if I would be interested
in going with him. I was deeply flattered by that because I had been working with him, side by
side, for a year on Vietnam and for several years before that periodically, when he would show
up at the White House. Abe Fortas asked me if I had an interest in joining him; after he was
forced to leave the Court he asked me if I would practice with him in his Georgetown office.
Robert Manning edited the Atlantic Monthly, and he persuaded the woman who
provided a subsidy for the Atlantic Monthly to offer me the job of president and publisher. I
didn’t know what such a person did. I flew up to Boston and three of us, Bob Manning and I and
a nice woman who underwrote the magazine’s losses, went to the Ritz and had a wonderful meal
and drank an enormous amount. I talked a blue streak about things that ought to be in the
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magazine-not a word about how to produce the advertising that would sustain the magazine or
the things that a president and publisher does. We got back to Manning’s house, and as he was
bibulously untying his shoes he said, “You don’t want to be president of the Atlantic Monthly.
You want to be the editor. You can’t be editor, I’m the editor!” (laughter)
Berl Bernhard and I had been good friends for close to 20 years, beginning when
Berl was the Staff Director of the US. Commission on Civil Rights and one of the ten
outstanding young men in America in that role. We had just taken to each other and remained
close throughout the time. I’d persuaded him to leave his law firm to come over to the White
House to be the director of the White House conference called “To Fulfill These Rights” in
1966, a tumultuous time. I was just thinking yesterday, sitting in a church on 10” Street in Pat
Moynihan’s funeral, of a time when a reporter asked Berl in a press conference whether we were
going to continue focusing the civil rights conference on the Negro family report of Moynihan’s,
which by that time had become enormously controversial. Berl said, “Who is Daniel Patrick
Moynihan?” with a big grin on his face, and that question was cited at least 50 times during
Moynihan’s life by him and another 50 by Liz Moynihan. Both of them regarded it as evidence
of such faithlessness on Berl’s part that they could never forgive him. (laughter)
Berl came over and said, “I wish you’d come with our firm, Jim Vemer and Gene
Liipfert and me.” They did mostly transportation law, aviation and motor carrier work. They
had come out of an old Washington firm called Tiemey & Tiemey. John Tiemey was Gene
Liipfert’s father-in-law and was a tremendous surface transportation lawyer, railroads and
trucking. He represented the Florida East Coast Railroad in a huge battle down there involving
the Duponts. Huge litigation, savage controversy. Berl was his sidekick in that. At some point
in 1959 or ‘60, I think Jim Vemer and Berl had had enough of Tiemey & Tiemey and decided to
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form their own firm. Liipfert, who was, I really believe, the preeminent trucking lawyer, ICC
lawyer in the country, which may not be saying a hell of a lot nowMr. Vanderstar: Then it was saying a lot.
Mr. McPherson: It was, yes. Liipfert had a master’s in history from Vanderbilt
and a Harvard law degree and was a pilot and navigator in World War 11. He was a brilliant
man. He was a real mastodon in a field of heifers at the ICC. Big head, superb lawyer, very
tough mentor of young lawyers. Many people here still have the scars on them from Gene
Liipfert. Vemer had been staff director and general counsel of the Civil Aeronautics Board. The
chairman of the CAB in those days was a man named Don Nyrop-a very bright, able man who
left the CAB and became chairman of Northwest Airlines for 25 years. When he left he
immediately hired Jim Vemer as his Washington counsel. By the time I joined the firm, Vemer
had been representing Northwest for ten years and for another four or five years continued to do
so-something I’ll come to later. In any case, Berl did not really fit neatly into this
transportation world. Although he learned to be a good aviation lawyer at the CAB and to be
competent in motor carrier law, he had a hunger for other things and was hoping to spread the
firm’s range of practice.
It was a tiny firm, only 11 lawyers when I joined it. I joined it because I didn’t
know what else to do really. I didn’t know how comfortable I would be in any of these other
jobs, even with a great firm like yours. I didn’t know what to do in a private law firm, and
something told me that if you don’t know what to do and your best friend says, “Come with me,”
that you’re probably wise to do it. So I joined it, and they put my name on the end of it, and I
started trying to figure out what to do.
For the first six months I was a basket case. I didn’t know how to keep time, I
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didn’t know how to deal with clients. I was taken to lunch one day by Verner and Liipfert and
Berl, and in the nicest way they asked me if I was doing anything because I wasn’t writing
anything down-not keeping a record that they could bill clients with. (laughter) If someone
asked me for help in the State Department, and the issue was one involving an international air
right that was in the office of the assistant secretary for economic affairs, where aviation matters
were handled, I’d call over there and talk to somebody that I’d known for a long time, I’d get an
answer and report back and never think to write down any time. (laughter) So, it took me a
while to began to learn how to be a modestly productive lawyer.
Mr. Vanderstar: Let me go back to your exploring other options and the options
exploring you. Nowadays, I would think that there would be a long list of things that might
tempt you or might be put in front of you. Let’s start with Valenti-a trade association of some
sort. Anything in your mind about that or anybody come and approach you to head up the
National Kumquat Growers Association
Mr. McPherson: Yes, they did and I think the forest products people did.
I hate to sound like a ninny, but I really didn’t have any appreciation for what was
legitimate to do in searching for and putting together a career. I think part of the problem may
have been that I had been taken care of by events over the years. I happened to land a job when I
came up here with the man who was the majority leader of the Senate, and the most powerful
and effective member of the Congress. Working for him was very exciting. When he went off
to be vice president, I continued with the majority leader of the Senate, a very good fellow, and
in the course of those years came to know Cyrus Vance at the Pentagon, so I got a chance to do
something else by just knowing someone who called me. And another friend at the State
Department asked if I would like to go there. Johnson had by this time become president
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because of the assassination of Kennedy, and he asked me to join him in the White House.
So events, fate, had produced a lot of options for me, and I think I just assumed
that they would continue to do. So I didn’t follow what Meyer Feldman, Mike Feldman, a
predecessor of mine with Kennedy and Johnson, did, which was to work the net of businesses
and law firms with whom he had had commerce as assistant counsel and counsel to the
president-in the textile world, in the trade world, in aviation, in all manner of businesses. Mike
Feldman made a lot of connections and, as it turned out, went with David Ginsberg and Howard
Leventhal, later a D.C. Circuit judge.
Mike reached out to these businesses that he had already told, “I’m going to start
a firm and I want your business.” Many of them responded at once. A partner of mine, John
Zentay, was in that firm, beginning as an associate. Mike had managed to acquire clients in the
imported fuel oil business, the East Coast marketers of fuel oil, and John Zentay made a career
out of representing that industry. He still represents them 32 years later.
But I didn’t do that, and I didn’t know how to do it. If I had had the slightest
business imagination I think I would have really reached out and tried to see if there was any
spark that might have started a blaze. As it was, I just sat in my office and received visits from
people who made offers to do things I hadn’t given the slightest thought to.
Mr. Vanderstar: You said in the beginning of that story you were unsure about
what was the legitimate thing to do. What did you mean when you used the word “legitimate”?
Were you thinking in ethical terms?
Mr. McPherson: Yes.
Mr. Vanderstar: What did you mean by that?
Mr. McPherson: Well, I meant that, while I think that it is entirely appropriate
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for someone in the last few months in a job such as counsel to the president to make some
inquiries and talk to people about what he might do when he leaves, he needs to be very careful
not to speak to people who may have matters that will come before him. I was extremely
fortunate in my second year as counsel to Johnson. I was being pressed to get everything done
that I needed to get done, and I told him I would really like to have a deputy, an assistant. He
talked about it one day with his old friend Senator Mike Monroney of Oklahoma. Monroney
said, “Well, as it happens, the brightest lawyer in Oklahoma has come up here to work for me on
the Joint Committee on Reorganization of Congress.” Monroney had been appointed to chair
that committee. W. DeVier Pierson came up to work with Monroney, and he told Johnson, “He
is awful good.”
Well, he is awful good. He came as my deputy. He was so tremendously bright
and able as a lawyer, still is, that I felt enormously comfortable in turning over to him a number
of things that normally I would handle. The more I got involved in working on Vietnam issues
and in what amounted to race riots in the cities in ‘67 and ‘68, DeVier began doing more and
more of the business side of the general counsel’s office.
This was important particularly in 1968 when I had decided to go with this firm,
Vemer, Liipfert & Bernhard. The CAB had before it a gigantic case called the Transpacific
case. In it they were prepared to authorize a number of U.S. carriers to serve Japan, Thailand,
Australia and Hawaii, and a number of foreign carriers that come here. They denied a lot of
requests for service as well. This huge package came over to the White House for final action. I
knew without reading it thoroughly that Northwest was very much involved in this decision, and
I was about to go to work for Vemer, Liipfert & Bernhard, which represented Northwest. I had
nothing to do with drafting memoranda for the president about the case. I gave it to DeVier and
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said, “Don’t talk to me about it.” He never did.
But it was hard not to just get a sense around the building, because I had been
handling the aviation cases for a long time, people would just start talking to me about the
Transpacijk case, assuming that I was involved in it. I would stop them, but words would come
out. My partners-to-be were eager to know what was in it and what was going to be
recommended. I had to tell them that there just wasn’t any way for me to let them know. So,
that’s a particularly sharp case of the legitimacy question that I was mentioning.
Mr. Vanderstar: Okay. By the way, did you know Paul Wamke? You
mentioned Clifford.
Mr. McPherson: I did indeed, very well.
Mr. Vanderstar: Paul went with him instead of coming back to Covington.
Mr. McPherson: He did. Clark’s idea was that it would be great to come back
into private practice with two guys that he had worked with on Vietnam. Paul had been the
assistant secretary for international security affairs and really had been functioning as a kind of
general counsel or court of inquiry within the Pentagon, and I was Clifford’s “partner in the
White House,” as he said.
Mr. Vanderstar: Yes. But that didn’t tempt you, the Clifford Wamke firm?
Mr. McPherson: It was very appealing. But I think I knew that, as much as I
liked Clark-and indeed I admired him enormously as a truly gifted lawyer and counselor-I
was pretty sure that the Clifford firm, no matter whatever the other names were, would be an
essentially theocratic institution and that the the0 would be Clark Clifford. He had another
Monroney man, a really bright lawyer named Tom Finney, who, had he lived, would have given
Clark Clifford the counsel that would have caused him to stay out of the First American BCCI
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problem, organization scandal that he fell into in the 1970s. I knew it would be very much his
firm, and I’d been living in a theocracy for a long time with LBJ.
I sort of knew that with Fortas as well.
Finally Ed Williams. One time in ‘77 or ‘78, when Califano had left him and gone
to HEW, it was suggested to Williams that he persuade me to join him and be what was called
his “State Department.” He was the “War Department” and I would be the “State Department.”
That was the same thing; even more of a case in which there was a dominant lawyer who really
ran the entire show. It’s never been that way in this firm, and I like it.
Mr. Vanderstar: Nowadays, many people in your position or comparable
positions in the executive branch would go into some kind of investment banking business or
something related to investment or would go into some kind of non-governmental organization,
the Red Cross or whateverMr. McPherson: Right.
Mr. Vanderstar: -as the president, or might go in with some kind of major
foundation. Rusk came out of the Ford Foundation, and I can’t think of an example of
somebody who went into a Ford Foundation from government, but there might be somebody.
Mr. McPherson: Mac Bundy.
Mr. Vanderstar: Bundy, of course.
Mr. McPherson: From Harvard to the NSC to the Ford Foundation.
Mr. Vanderstar: Right, okay, I knew there was an example and I couldn’t think
of it. Now, did anyone in the investment banking, NGO or foundation field approach you, or did
you give any thoughts to pursuing anything along those lines?
Mr. McPherson: No, I didn’t, and you’re quite right that today that is something
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that would be second nature to someone in a job such as what I had. You would have met a lot
of people in investment banking and in business, and you could be very valuable to them. But at
the time it didn’t appeal to me.
Mr. Vanderstar: Okay, and the nonprofit foundations also didn’t come your
way?
Mr. McPherson: Something tells me that I was approached by someone in that
world, the 501(c)(3) world, and I can’t remember what it was.
I felt, among other things, John, that if ever I was going to be a lawyer in the
practice of law, it was time to do it. I had no experience in the private practice of law and didn’t
know how to do it. How to try a case. After several months, I was given a case at CAB. When
you want to, I’ll tell about that.
Mr. Vanderstar: Okay. Well, let’s talk about your transition to the firm. You’ve
already told one good story about your first six months of not recording the time you spent or
recording the activities you engaged in, but what did you think you were getting into when you
came to the firm? I mean, you had a high regard for the people here, but it was not a theocracy,
and what did you think you’d be doing from nine to five, Monday through Friday or whatever
kind of work schedule you envisioned?
Mr. McPherson: I assumed that there would be aspects of the representation that
people here had that would yield to treatment by Congress or by executive agencies. Much of
the firm’s practice-95 percent of it-was in these regulatory agencies, the CAB, the ICC, to a
small degree the FAA. All of them contained policy issues that normally got decided within the
regulatory agency itself but that sometimes cried out for a change the direction of government
policy. So that if one could go see the chairman of the Commerce Committee or the chairman of
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the Aviation Subcommittee and say, “Look, we’ve been following this course for some time as a
nation, and it’s not producing a good result for American carriers or for the traveling public or
whatever. You really ought to consider making a change in the statute.” I thought maybe that
would be something that I could contribute to, and I did to some degree. I knew many members
of the Congress and had worked with them there and dealt with them from the White House. I
knew a lot of bureaucrats in a number of agencies, so I could be usehl in that sense. My name
was known well enough so that I could get my calls answered by most such bureaucrats. I had
been one of them, and for the most part they would respond without hostility.
Mr. Vanderstar: Did you anticipate or did your new partners anticipate that
business might come to the firm because you were here?
Mr. McPherson: Oh, I’m sure they did. (laughter)
Mr. Vanderstar: That’s a ticklish subject.
Mr. McPherson: It is and I’ll talk about my first few cases.
I can’t tell you how many people in the last six months of my life in the White
House suggested that as soon as I landed in some law firm, if that was what I chose to do, they
certainly intended to be there with business. They all had business before the White House, so
this was a nice way of saying, “I will want to help you then, and I’m sure you want to help me
now.” And almost none of it materialized. In fact, while some people think that the acquisition
of law business is a science, I think it is essentially the work of tooth fairies. Business comes
from the oddest places. You just don’t expect it at all, and suddenly you are asked to take on a
representation that absorbs you for months.
First I have to tell about my one case before the CAB. As I mentioned earlier,
Jim Verner represented Northwest Airlines. The CAB decided to authorize some service
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between Islip airport in Long Island and a number of cities-Chicago, Cleveland, Pittsburgh-as
a way of taking heat off LaGuardia. Northwest was one of those who applied to serve IslipMidwest cities. With the help of Jim Vemer, who was an old hand at CAB brief writing, I
worked on the brief and prepared myself for my oral argument before the CAB. It occurred one
steaming afternoon when the air conditioning was not working very well in the old CAB over on
Connecticut Avenue. Some windows had been opened to let in a little air.
I got up and started talking about the merits of Northwest as the carrier to be
chosen for these services. I looked at these board members, and I saw at least two of them who I
knew had been appointed by Johnson. They were looking at me, apparently trying to remember
where they had heard the name. Or so it appeared. One member was about half asleep, but he
would suddenly sit up straight, staring at me with an expression of semi-recognition. And here I
was going on and on about the particular merits of Northwest.
I had an experience that I think the Germans refer to as the “doppelganger.” My
spirit left my body and looked back at me and asked that person talking about Northwest
Airlines, “What on earth are you doing before the CAB on a humid afternoon talking about
service from Islip” when the year before I had been trying to help figure out the shape of the
table in Paris so that the NLF, the North Vietnamese, and the South Vietnamese and the
Americans could sit down, and had been on the phone with Vance and Rusk-and here I was
talking about service from Islip.
It was a clarifymg experience. It clarified that I was now in private practice and
that I was no longer dealing with such immense issues.
The first time I got a really interesting client on my own occurred thus: Richard
Nixon, for reasons that he probably could not have told you a year after the event, imposed price
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and wage controls on the economy. It was a lawyer’s field day. Bill Coleman called me. He
was in a Philadelphia firm. He was a marvelous lawyer, still is, an African American who had
been first in his class at Harvard Law School, clerked for Frankfurter, and had served as a clerk
for Thurgood Marshall when he was preparing to argue Brown v. Board of Education. Bill was
Johnson’s choice to go on the Third Circuit in 1967, and perhaps beyond, Johnson, interestingly,
knew a lot of African-American judges and was interested in advancing them. Bill Hastie, and
Coleman and Thurgood himself. I tried in two meetings with Coleman to persuade him to go on
the Third Circuit, but he resisted. He wanted to be a powerful private lawyer, as he became.
One of the things he did in Philadelphia was to represent the Philadelphia
Inquirer. The publisher of the Inquirer, Fred Chait, was a very bright lawyer who was on the
executive committee of Knight Newspapers in Miami. Coleman had agreed to go on the Price
Commission-he accepted Nixon’s appointment there-and so he couldn’t represent Knight
Newspapers or the Philadelphia Inquirer and wondered if I would. Indeed I would, and I began
going up once or twice a week to Philadelphia working on advertising rates, on pay scales for
printers and members of the various guilds.
Fred Chait and I hit it off. He was the kind of lawyer who was not only good in
business but was fascinated by regulation. He would sit up at night reading Price Commission
and paperwork regulations, and he would call me every day and say, “You know, I was just
thinking about, I’m sure you’ve been thinking, too, about 326(a)(4).” (laughter) I started going
down to Miami to meet with the Knight Newspaper people, a charming man named Alvah
Chapman who was one of the really capable newspaper executives; the Knights themselves were
involved, Jack Knight. In Washington I would go to the Price Commission or the Pay Board and
meet with their bureaucrats with the latest version of an ad rate increase or a pay scale change
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that Fred Chait and I cooked up.
It worked well. This was not playing basketball at the Final Four level, because
no one really knew what these regulations meant. The task was to cook up ways of living with
them. Nevertheless, we got done what needed doing. I became the fair-haired boy of the Knight
Newspaper people. One day Fred called me and said, “Can you do antitrust? Do you have
anybody that does antitrust?” We had by this time 15 lawyers in the firm, and most of them
were doing aviation and motor carrier. They were very able. Some of them were even brilliant
lawyers, but they weren’t antitrust lawyers. He said, “What about communications? Any FCC
capability?” “No.”
But I suddenly had a thought.
In 1972, during the period of this Price Commission and Pay Board business, a
Yale classmate of Berl Bemhard’s, David Tillinghast-ne of the preeminent international tax
lawyers in the country who been the head of the Treasury Department’s international tax
work-approached Berl and said that his firm, Hughes, Hubbard & Reed in New York, had for a
long time thought they wanted a Washington office but had never had the courage to start one.
He wondered whether Berl and I would have any interest in becoming partners in Hughes,
Hubbard & Reed while remaining partners in Verner Liipfert Bemhard & McPherson. We went
up two or three times and met these exceptionally able pleasant lawyers. Their senior man, the
chairman of their executive committee, was a great practitioner named Orville Shell. He was on
the board of Merck and was their principal outside counsel. He was a most elegant man. Warm
spirited, broad gauged, and chairman of Wall Street Lawyers for George McGovem, despite
being a corporate lawyer. He was also chairman of the board of the New York City Ballet, big
figure in philanthropic work all over New York, and I think the father of Orville Shell, the writer
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about China.
We worked out a deal. Berl and I became full partners of Hughes Hubbard &
Reed and went up to New York every couple of weeks. The deal was that each firm would try to
steer business to the other, and each would get the benefit from what it steered while the other
did the work. As a economic matter, it never produced a lot. Lloyd Cutler once took me to
lunch and said, “Would you tell me how this works?” He said, “Cravath and I have been talking
for years about some way to relate.” This was before the practice began of huge firms like Piper
Rudnick swallowing up small firms like Verner Liipfert. This was an association, a relationship,
with the bond being a couple of partners, two individuals who were partners in both firms.
Something hit me after Fred Chait tried to hire Verner Liipfert for antitrust and
FCC work, and I called Orville Shell and said, “Something’s afoot. Knight Newspaper has got
some kind of acquisition in mind. They want an antitrust guy and they want some
telecommunications expertise. I want to steer them to you. You all have really got to be at your
best because these are very bright people, it’s a superb newspaper chain, and they will be looking
for good work. They think they’ve gotten that out of me. Essentially what I’ve done is follow
whatever Fred Chait thought was a good idea.” I called Chait back and asked if they would be
willing to interview Hughes Hubbard. Well, a team of Knight people went to New York and met
with Orville Shell and four or five other lawyers, including a fellow named Jack Fontaine. To
tell the story in three sentences instead of 30, they got hired, they were not only counsel for
Knight as it acquired Ridder and became Knight-Ridder Newspapers, but Jack Fontaine moved
to Miami as general counsel of the company and later became its president. He spent his next 20
years running that newspaper empire. All fi-om that initial connection.
Here I was, I had done this, and I was looking for my next call from Bill Coleman
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or somebody, now that I’ve learned what you do when you get hired.
Mr. Vanderstar: What you do is you sit in your office and answer the phone.
Mr. McPherson: And answer the phone.
Mr. Vanderstar: By the way, when was this Knight-Ridder deal?
Mr. McPherson: ‘72.
Mr. Vanderstar: Okay. So, you had been here for three years.
Mr. McPherson: Yes. I had been doing whatever came along that had a
particular legislative or executive branch aspect to it, and we were getting into a number of
things where I could be helpful. I got a call one day from Senator Bennett Johnston of
Louisiana, whom I had known for a long time. He asked me whether I would be interested in
representing some oil and gas wildcatters and developers who were trying to save the percentage
depletion allowance for people in the oil business. I said, “Of course I would.”
In came four or five of the most attractive clients I ever had in my life. These
were virtually all Republicans. They were smart as could be, they were individual entrepreneurs,
they were very wealthy. They operated in Kansas, Oklahoma, Texas, Louisiana, and they
considered themselves under-represented by the IPAA, the Independent Petroleum Association
of America. Essentially, the oil industry was composed of the Seven Sisters, the big giants, and
then a whole bunch of medium-sized firms that dominated the IPAA-like Sun and Marathon
and Conoco and those sorts-and lastly these small operators-small, certainly not by income in
terms that you or I would recognize, some of them had maybe a thousand stripper wells, wells
that produced under ten barrels a day, or who drilled maybe a dozen wells a year, had maybe ten
rigs of their own and leased the rest, flew about in Beechcrafts, whose investors included,
speaking of Beechcrafi, people like Mrs. Beech in Wichita-people who had money and wanted
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to make more through investing in oil and gas drilling and development operations.
These wildcatter-developers wanted to save the depletion allowance. I said I
would be delighted to help them. And there were pricing issues as well. Nixon had imposed on
the oil world a set of price controls. There was one control for so-called “old” oil, oil that had
been produced years ago and was still pumping, and a higher price for oil from newly drilled
wells. That is, if you went out and drilled a wildcat well you got $1 1.25 a barrel, but if you were
producing old oil, you’d get $5.25.
Mr. Vanderstar: Now, were price controls generally still intact at this point?
Mr. McPherson: Not on the economy as a whole. I believe that, in the interim
between my adventure with Knight and this imposition of oil controls, general price controls had
been lifted.
These developers had decided to seek the help of Bob Nathan, an old lion of a
Democratic economist who had his own economic consulting business. They asked him to do a
study of the economic cost of oil. Essentially they wanted him to look at the whole spectrum of
oil drilling in America, take into account all the dry holes, and factor that in to what it cost to
produce a barrel of oil. So that, leaving aside opportunity cost, if you just looked at what you
spent as you went out and drilled wells and added to it what you spent in exploiting a successfd
well, tying up to the pipeline and all that, and if you considered also what you spent drilling dry
holes, that would give you an economic cost per barrel. The government ought to allow that
higher price for new oil, which was enough to make this a worthwhile endeavor. Furthermore, a
number of these guys, as I mentioned, had a lot of stripper wells, and they thought those wells
ought to be encouraged to stay in production, even though they only produced less than ten
barrels a day, by being allowed to charge whatever the market would bear just to keep them
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going. If they were treated like old oil at $5.25, it wasn’t worth it to produce eight barrels at
$5.25 when you had to have somebody go out and check pumps and fix them. It was worth less
at $5.25 than it cost to keep the stripper well going.
Mr. Vanderstar: So, could you stop here and tell this easterner what a stripper
well is?
Mr. McPherson: It’s a well that produces less than ten barrels. It’s what’s left in
Texas today. When you go out there and see that they have the old horse going up and down,
it’s producing six or eight, ten barrels a day. There are people who make a living at it, guys who
have a filling station or auto repair shop and who own two or three of these wells. They go out
and check them every now and then and they have them tied up to a tank; somebody from some
larger distributor comes by and fills up his tank truck from the tank and pays the owner so much
to keep him going. In those days, there were tens of thousands of stripper wells, and they were
important because there were a lot of wells producing eight or ten barrels a day. If you could
free them up to obtain 15 dollars or 16 dollars a barrel, then they were economical to operate.
So, anyway, these were my clients.
Mr. Vanderstar: Now, they went to Bob Nathan to do the economic study.
Mr. McPherson: Yes.
Mr. Vanderstar: And was that after they came to you or before?
Mr. McPherson: Simultaneously. I knew Nathan. He and I liked each other and
we worked well together. When I would come up before some member of Congress I would
beat the drum, to set the stage and then present the great Bob Nathan, “whom of course you
know of and who is a life-long Democrat, worked for Roosevelt and was a great friend of
Hubert Humphrey” and all that.
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Mr. Vanderstar: Wasn’t Bob Nathan very active in the NAACP?
Mr. McPherson: In the NAACP, yes.
Mr. Vanderstar: He was a prominent figure.
Mr. McPherson: So from the point of view of these Republican oil men from
Kansas and Texas and Louisiana, it wasn’t a bad deal to have a pretty well-known Washington
moderate Democrat McPherson and a very well-known moderate liberal economist Bob Nathan
standing up for them.
I got a call one day from a friend, A1 Hunt of the Wall Street Journal. He said, “I
just noticed in looking at the lobbying registration that you have registered for “Americans for
Energy Independence.” I said, “Yes, absolutely.” He said, “Well, that’s interesting. Lyndon
Johnson’s lawyer signing up with a bunch of guys from the oil patch. Most of them are
Republican, I think.” I said, “Yes, they are.” And he said, “What are you doing for them?” I
said, “If these guys don’t survive, if they can’t retain the percentage depletion allowance”-and,
incidentally, the big companies, for tax accounting reasons that I never understood really didn’t
give a hoot about the percentage depletion allowance. They did their accounting in a different
way so that that depletion allowance, which I had always associated with the oil industry, was
really meaningful only to individual operators and small companies, not to the giants, not to the
Exxons and the Mobils and the Shells. I said, “You know, if these guys don’t keep that
percentage depletion, if they can’t get a good price for their wildcat oil and their stripper oil,
they’ll go out of business and we’ll be left with the Seven Sisters. You’ll just have the giants,
you won’t have these guys, and we’ll be at the mercy of these huge companies.”
Well, Hunt wrote a perfect article, quoting me at great length. But I had
completely forgotten that the biggest client that Hughes Hubbard & Reed had was Atlantic
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Richfield. At the time, Atlantic Richfield and the other giants who were involved in a tense
investigation of concentration in the oil industry mounted by the FTC. A guy named White, a
lawyer from a Houston firm who knew the oil industry, had come up to be special counsel to the
FTC. He was giving the majors fits. Jerry Shapiro, who was Atlantic Richfield’s main lawyer at
Hughes Hubbard & Reed, got a call from the deputy general counsel of Atlantic Richfield, who
said that they were astounded by this article. The deputy general counsel was engaged in an
intra-corporate war with the general counsel, who had approved my representation of this group
of independent operators. I had asked Hughes Hubbard Reed if they had any problem with this a
month before, when I first started.
Mr. Vanderstar: Without knowing that they represented Atlantic Richfield?
Mr. McPherson: No, I knew that. And, in fact, just to show you how it’s
possible to lose touch in the heat of the battle, I asked my clients if it was okay with them
because of Atlantic Richfield. I didn’t see any conflict. Atlantic Richfield didn’t oppose the
percentage depletion allowance, and they didn’t oppose these higher prices for oil. I thought we
were all on the same sid-the two groups had different priorities. In talking to A1 Hunt, I just
lost it, I just really let go. The deputy general counsel was in control in Los Angeles at
headquarters because the general counsel was out of the country on some business deal, and the
deputy was really going to stick it to him. He would be able to point to this decision to okay this
the month before. “You let McPherson do this, and now he’s attacking big oil.”
During the morning there must have been three calls from the Hughes Hubbard
executive committee. They had a phone with a speaker up in New York. They had about five
guys, and I was alone down here. Jerry Shapiro said, “The problem is, you see, they think that a
guy like White at the FTC, reading something by you,” he said, “is going to ask you to testify
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before the FTC. And this womes them quite a lot, and when people find out that we also
represent Atlantic Richfield, what are we going to say?” My secretary walked in and gave me a
note, “A Mr. White is on the phone.” I said, “Excuse me just a minute.” White said, “Mr.
McPherson, I read the article by A1 Hunt this morning. This is extremely interesting, and I
completely agree that the small oil man has got to have that percentage depletion allowance and
really should have higher prices for wildcat oil.” I said, “There is a vote on percentage depletion
allowance this afternoon in the Senate at two’clock. Would you be willing to say on behalf of
the Federal Trade Commission and its inquiry into the oil business that it is important to retain
the percentage depletion allowance so that smaller operators can remain in business?” He said,
“Yes, I would.” I said, “Would you say that in a letter to Senator Bentsen?” and he said, “Yes.”
I said, “Okay, I’ll call you back in just a minute.” So I got back on the phone with New York.
They said, “Well, let us talk to the Atlantic Richfield lawyer some more. Maybe we can calm
him down. Just don’t get into any conversations with White at the FTC.”
Well, I called Ron Natalie, a very bright lawyer in this firm, still here, who had
the best sense of what ethics were required of a lawyer. “What do I do here?” He said, “You
don’t have an option. You’re representing these oil and gas operators and you’ve been handed
something that can be of enormous benefit to them and you’ve got to use it.” Then Mr. White
called back. He said, “I’m told by my chairman that I can’t speak for the commission because
they would have to meet after they have a formal session, where they could take a position as a
commission, and there just isn’t time for that.” I said, “What about you? Could you do it as
special counsel?” He said, “I would.” I said, “Could I draft something-it will only be two
paragraphs long-could I draft it and send it to you?” He said, “Absolutely.”
I called Senator Bentsen, the sponsor of our amendment, and I said, “Let me tell
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you what’s happened.” He said, “I’ve got to have it. I must have it as soon as you can get it to
me.” I wrote it. White redrafted it. A kid from Bentsen’s office was in White’s office waiting
for it. Bentsen took it the floor. It had quite an effect. Bentsen had a lot of friends in the
business. And most of them were in this general category of wildcatters and developers. He was
defending them, and in a way he was defending the consumer from abuse by the majors. This
was right down his alley.
We won. By about four o’clock there was a vote in the Senate. We just shouted.
By 4:30, more calls had gone back and forth between Hughes Hubbard and Atlantic Richfield in
Los Angeles, and it was made pretty clear to Hughes Hubbard that they could either have
Atlantic Richfield or McPherson. In the next room was a fellow named Phillip Lacovara, who
had argued the Nixon tapes case and had just joined Hughes Hubbard & Reed. He was
conscious of part of what was going on. I never invited him into this. He must have been
dumbfounded. It was such an intense time. I said to the group in New York, “I’m really sorry.
I’ve enjoyed being your partner and this was an error of mine. I had forgotten the relationship
that you had with Atlantic Richfield and how this might be read. I really think it’s an
overreaction by Atlantic Richfield, but I know what you do with a client who overreacts when
that client is your biggest client. I can understand why you’ve come out where you have.”
A few minutes later they called Berl and said, “We’ve asked Harry to step aside
but we hope you will stay.” He said, “Thank you, but I don’t want to do that.” I walked into the
john, and by this time my shirt was sopping. I must have looked like a ghost. But I wasn’t at all
unhappy. I wasn’t grief stricken. I was delighted that we had won. I was exhilarated by the day,
to be honest with you. The wild infighting that the day produced with extraordinary. A guy
came into the booth next to mine, an associate named, Howell Begle, who had been with Hughes
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Hubbard Reed and they had assigned him to Washington. He said, “Can I go with you and
Berl?” And I said, “Yes.” Begle remained with us until last month. He finally went back with
Hughes Hubbard Reed because of a newspaper client issue, but his whole life was lived here in
the city as a result of that day. He chose to stay with us. It was quite a day.
Mr. Vanderstar: Your resume, which I am looking at, has an entry here among
significant accomplishments, and I quote, “Represented oil and gas wildcatters and developers in
Kansas, Oklahoma, Texas and Louisiana in tax legislative battles.” Is that the story you justMr. McPherson: That’s the story. (laughter)
There was another lawyer involved, Bob Sisk. Sisk is a great trial lawyer. He
was the counsel for Hallmark Cards in their big antitrust case. He was the ASCAP-BMI lawyer.
A robust, manly fellow. Sisk was on the executive committee of Hughes Hubbard. He was in
the Tombs that day trying a case in downtown New York. He got back about 5 o’clock in the
afternoon and his secretary, a very pleasant woman, told him what happened. He went storming
into Shapiro’s office and started yelling about letting this client push us around.
I had once taken Sisk into see a wonderful man, Senator Phil Hart, who was
chairman of the Senate Antitrust Subcommittee. Sisk represented the Pepsi Bottlers Association.
The bottlers, Pepsi, Coke and many others, have territorial jurisdiction rules for their sales, and
this is always presented antitrust issues. Phil Hart and I were very good friends. I worked for
him on the Calendar Committee in the late ‘50s. He was one of the truly fine human beings who
ever served in Congress. A great person. If you want to bring tears in someone’s eyes about
Phil Hart, ask Bob Dole about him. Dole, Inouye and Hart were in a veterans hospital together
as patients, and Hart, who had also been wounded, took the bed pans out, brought the food in.
He was that kind of man.
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I took Sisk in to see him, and we laid out the case of the bottlers. We had worked
hard to do it well. Hart listened, and he had his Chief of Staff there. At the end of it he said,
“You’ve got a good case. I’m going to support you.” Well, Sisk went back to New York and
said, “We have got a partner down there who did this with Phil Hart for the Bottlers
Association.” As far as Sisk was concerned, I was good value. Now I had been kicked out of
the firm, and he was furious.
What do you do? This is the reason for telling the story, it’s almost like a New
Yorker story. (laughter) Sisk was in a psychotherapy group, which was common in those days,
when you were having trouble in your marriage, kids were giving you a fit, that sort of thing.
The psychotherapist believed in the curative value of contact, physical contact, including the
contact of men’s heads laid on the ample chests of women in the group. (laughter) Sisk called
and asked if he could join some group, and he went there so he could put his head on the large
breasts of this woman. And then, when that didn’t help, he went to his apartment and got a
bottle of Johnny Walker Black and drank about half of it through the night, watching dumb TV,
anything. Had a splitting headache the next day.
He came down about a month later. He took me to dinner and said, “This is
really, the one thing that’s ever happened in this firm that made me sick.” Orville Shell had
retired. I think Shell had the size and the suavity to have finessed this with Atlantic Richfield
even though it was not his client. I think he could have handled it and would have as the
chairman of the firm. Jerry Shapiro was very intense, capable lawyer. This was his big client,
the firm’s big client, and he was just nervous as could be that this could cost him the client. In
any event, that’s my story of New York and Washington practice.
Mr. Vanderstar: Let me back up and ask you a question. You left the White
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House in January of 1969. Now it seems to me that one’s name and experience and contacts like
yours have a shelf life, and there comes a time when other people have come out of government
(laughter) with good credentials and your star sort of starts to fade. Yet you’re telling me that
three years later, Bill Coleman, and even more significant, four and five years later a United
States senator is calling you because you had known people when you were in government. You
see what I’m puzzled about?
Mr. McPherson: One of the big helps for people like me was that the Democrats
controlled the Congress right straight through. Between 1933 and some time in the %Os, the
Democrats controlled the House of Representatives in every year except two right after World
War I1 when Joe Martin was Speaker, and they controlled the Senate almost the entire time as
well. So, if you were a lawyer in a large corporate law firm and your business client had a big
problem on the Hill, the chairman of that company might be a Republican in great standing with
Richard Nixon and his gang, but your problem was with John Dingell or Fritz Hollings or some
one of the old lions on the Democratic side. So if you were such a corporate lawyer and you
looked around, you might find somebody like McPherson who could help you in trylng to reduce
the penalty that the company would pay. That helped a lot.
There were also a few things that I was doing that sort of kept my name in
circulation. I was vice chairman of the Kennedy Center and worked with Roger Stevens, the
chairman of the center, and with his great friend, Abe Fortas.
Which brings me to another client that lasted for many years. I was approached
in 1972 or 3 by Raphael Hernandez-Colon, a bright lawyer who had been elected governor of
Puerto Rico. I had had, as one of my odd responsibilities as counsel to the president, oversight
of Puerto Rico. This is an interesting development. Puerto Ricans didn’t want to be considered
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a colony or a temtory. They are a territory, the Supreme Court says so, but they don’t like to
think of themselves as a temtory. So they didn’t want to be under the jurisdiction of the
Department of the Interior, which had an Office of Territories-Guam, Samoa, Virgin Islands.
But where would you put them? No one could find a place to put them.
In 1952, when the Commonwealth Act passed and the great Luis Munoz Marin
became governor of Puerto Rico, responsibility and oversight of Puerto Rico was vested in the
White House. And where would you put it? Well, we’ll put it in the counsel’s office. I spent on
average an hour a month thinking about Puerto Rico. There were some issues of very
considerable concern to Puerto Rico that the government dealt with. If I got involved with it it
was because they got the wrong answer in HEW or some other department. I got to know
Munoz Marin a little; he was a very great man on a small island. Abe Fortas used to say, “If
Puerto Rico were France, he would have been in a league with Churchill and Roosevelt as one of
the great figures of the twentieth century.”
In any event, Governor Hernandez-Colon came to see me and said, “You used to
deal with Puerto Rico when you were in the White House, and you and I have a mutual friend in
Abe Fortas. I am the heir of the tradition of Munoz Marin, and I see it as my duty to expand the
concept of ‘commonwealth’, to change the relationship between Puerto Rico and Washington, so
that Puerto Rico becomes, for many purposes beneficial to it, an independent country with the
right to take a great many actions on its own-trade, tariff, immigration actions-while yielding
completely on foreign affairs, national security, foreign commerce to the United States. The
Puerto Ricans would be as they are now, citizens of the United States, but the tax regime under
the famous Section 936 would continue.” Covington was for many, many years the tax
headquarters of Puerto Rico in Washington.
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And he said, ‘‘I would like to retain you to work with former Justice Fortas and
Resident Commissioner Jaime Benitez, a legal scholar. I’d like the three of you to work out the
terms of a new commonwealth relationship between Puerto Rico and the United States.” Well,
for the next couple of years I spent a lot of time in Abe Fortas’s library. I did a lot of reading of
ancient, obscure international texts that Benitez produced at the University of Puerto Rico. I
drafted and redrafted and I finally persuaded Senator Henry Jackson-“Scoop” Jackson-and 1 1
other senators to sponsor our new compact. They had a hearing. It was something like the Marx
Brothers movie, “Fredonia.” Remember, “All Hail, Fredonia”? (laughter) I think there were
cops everywhere, fear of assassins jumping out. After all, Puerto Ricans had once gotten into
Blair House, shot up the House of Representatives. When you touch this status issue, you’re
really on the third rail for Puerto Ricans. It doesn’t matter a hell of a lot to mainlanders, but to
Puerto Ricans it is everything. So, we produced this document, and it was the subject of
hearings and of a couple of Washington Post op-ed articles, and then it just faded.
Several years later, the Statehood Party candidate, Carlos Romero Barcelo,
defeated Hernandez-Colon. He came to see me to ask if I would represent him and Puerto Rico.
I said, “I can’t do that. I worked with Abe Fortas and Jaime Benitez on something exactly the
opposite, so far from statehood that they are two stars almost not in the same universe.” He said,
“Will you help me with some other things?” He meant other problems he had on the Hill. I
liked him, and I said, “Okay.” I spent a couple of years doing the tin-cup routine, going around
to Congress and the departments asking for more appropriations for education health care or
different dispensations of vaccines or whatever. Carlos and I became friends.
One day we were in the office of a bright tax lawyer who worked for Bob Dole.
We were talking about this famous Section 936, some variation of it that we were seeking, It is
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the section of the Tax Code that permits American companies to operate in Puerto Rico free of
US. taxes. As Carlos and I came into this fellow’s office, he had his feet up on the desk and
kept them there; he was listening to a Handel oratorio. The governor started to speak to him, but
he put his hand up and made a gesture that meant “hold on,” and he listened to the music. It was
one of those epiphanies that you have in life that change your notion of things. For years,
working for Puerto Rico, the Commonwealth side, and now for the governor, I had gone to Pat
Moynihan, who was sympathetic to Puerto Rico and was from New York, where he represented
a lot of Puerto Ricans and was on the Finance Committee to ask him to help, and he would help.
There were some other senators-Jackson comes to mind-who also knew a lot about Puerto
Rico and would help.
But I suddenly saw that until Puerto Rico was a state and had its own senator and
Congressmen, its governor would be subject to be silenced by a staffer so the staffer might listen
to some music. Puerto Rico would never have the clout that it should have with almost four
million American citizens, all the men draft eligible, with one of the highest mortality rates in
war of any jurisdiction in America in the Korean War, and in the Vietnam War, but with no vote
in the Senate or the House. No vote. Subject to the taxes being changed, subject to all manner
of laws being changed, without anybody representing them. That afternoon I became a
statehooder. I’d never thought I’d be that. And this law firm, this office we’re sitting in, the big
conference room here became-in the late ‘80s and early O OS, when the Commonwealth
government was back in power and the statehooders were not-the headquarters on the mainland
for the statehood effort.
An extraordinary individual, Luis Ferre, the founder of the Statehood Party, a
graduate of MIT and the New England Conservatory of Music who until his 90s never let a day
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go by without spending one hour at the piano playing Bach, owned and developed the biggest
cement and construction company in Puerto Rico. He was the godfather of the statehood effort.
He was a great friend of George Herbert Walker Bush. The statehooders practically lived here.
They were here months at a time in Washington, living in these offices by day. We were the
headquarters of the statehood drive.
During that time, the years passed, and I was no longer “Oh, yeah, you’re
Lyndon Johnson’s counsel.” I was doing things like this.
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