The 1967 annual report stated that 'at present' - i.e. in the spring of 1968 - 'IOS Overseas Funds Management Ltd under President James Roosevelt, is exploring the possibility of product introduction in developing countries.' By 'product', IOS meant a fund or an equity-linked insurance company. The countries where IOS eventually succeeded in setting up national products were Canada, the Sterling Area, France, Italy, West Germany, Sweden, Holland, Australia, and - on a tiny scale -Argentina and Cyprus.
The countries where the national funds gambit or its insurance variant were seriously attempted without success included Iran, the Philippines, Spain, Protugal, Venezuela, Mexico, Israel, the Lebanon, Scandinavia (as a whole), Norway, (where IOS actually had a charter which has never been used), Japan, South Africa… and Yugoslavia.
The national funds drive, of course, was backed up by a tremendous public relations campaign, the thrust of which was to suggest that IOS was something altogether purer and more cosmically important than a mere business. Its ultimate goals, the campaign set out to convince the world, were not merely profits, but peace and economic development.
Here again, while the initiative for the most audacious projects tended to come from Bernie Cornfeld himself, Roosevelt's role should not be underestimated. It hardly mattered that in the end he proved to have little real power in the company. What mattered was that he cast over all that IOS did, the magical aura of his parents' name, which is identified everywhere with the most disinterested achievements of American liberalism.
No other mutual fund group, possibly, would have had the audacity to sponsor an international peace conference, and then turn it into a commercial jamboree No other mutual fund group, certainly, could have produced someone to preside over such an occasion with the aplomb which James Roosevelt brought to the solemn farce of Pacem in Terris II.
In 1962, Robert M. Hutchins, the head of the Center for the Study of Democratic Institutions in California, had arranged what he called a 'convocation' in New York, at which eminent private individuals from various countries were invited to meet and discuss the problems of war and peace. That was Pacem in Terris I. Such meetings are not rare, and most people think' they are desirable, even if they do not lead to the millennium overnight.
Inevitably, however, they cost a good deal of money. On the previous occasion, Hutchins had been able to raise what he needed from various American corporations.
Then someone introduced him to Cornfeld, who became not just the angel of peace on earth but its impresario.
Four hundred people, many of them of the greatest eminence, were invited to Geneva from seventy countries. They assembled on May 28, 1967 in the Intercontinental Hotel, setting for the famous sales conferences.
Much earnest oratory was heard from them over the next three days, though James Roosevelt's assertion that their 'deliberations mark an important breakthrough for the cause of all humanity' sounds in retrospect a trifle exaggerated.
Three principal themes had been chosen for discussion: the war in Vietnam, the threat of war in the Middle East, and the deadlock over the two Germanies. It was unfortunate that the meeting coincided with a resumption of American bombing in Vietnam and with the outbreak of the Six Days War in the Middle East.
Bernie Cornfeld can certainly not be blamed for the fact that most of what was said on the chosen topics was therefore ghoulishly inappropriate. What was characteristic was the way he did his best to get his sponsor's plug in whenever he got a chance.
In retrospect, the list of participants must make embarrassing reading for some of the great men who attended, and for some of the innocent unknowns: for Senator Fulbright and John Kenneth Galbraith; the editor of
Le Monde
and the Swiss Cardinal; ambassadors, ministers, archbishops and four Nobel peace laureates jostled shoulders there - with 'Robert J. Haft of the United States' and a mob of other Bernie cronies, some of whom may well have thought Pacem in Terris was a stock traded over the counter.
The most exquisitely vulgar exploitation involved the octagenarian muscian and pacifist, Pablo Casals. It had been arranged for his peace oratorio,
El Pessebre,
to be performed in connection with the conference in Geneva with the composer conducting. As it happened, Casals was prevented by illness from conducting. His brother took his place. But he did send a touching message of goodwill.
'Dear friends,' the old man wrote, 'my only weapon for justice and against war have been my cello and my conductor's baton; and though I cannot be with you, my music will speak for me of love and peace.'
The music was recorded, and Cornfeld arranged for the tapes to be transcribed on to discs and handed out in glossy packages to the participants. This was duly done, and the albums were marked: 'IOS presents
El Pessebre
by Pablo Casals.'
Both at the time and in a lavish book he had produced, with himself naturally given precedence among the princes of peace, Cornfeld gave great play to the fact that the money for Pacem in Terris had come from the IOS Foundation. What he did not say is where the Foundation got it. It came from New York brokerage houses, who were instructed to direct brokerage for this purpose, just as they had given it to Sam and Martica Clapp.
James Roosevelt was not just Bernie Cornfeld's customer's man, trouble-shooter and ambassador-at-large. He was also useful as a recruiting sergeant.
It was Cornfeld's own idea, of course, to adorn the IOS boards with some reassuring names. Roosevelt himself was not quite the first acquisition. Wilson Wyatt, the jovial Kentucky lawyer and politico, joined even before him.
But a lieutenant-governor of Kentucky, even one who has managed a presidential campaign, carries relatively little weight in Europe. A governor of California is more imposing. Roosevelt was able to persuade his old friend ex-Governor Edmund G. 'Pat' Brown, to join the Fund of Funds board. And Cornfeld had recruited a useful man in Germany: Erich Mende, head of the small Free Democratic Party.
But Cornfeld was after bigger Hons. That summer of 1967 he made his first approach to the ex-Chancellor, Ludwig Erhard, reputed father of the West German economic miracle, and perhaps the most highly regarded economist-in-politics in Europe.
For eighteen months, Cornfeld paid court to Erhard. He needed the most imposing figurehead he could get to offset IOS’s public relations problems in Germany. He needed Erhard badly enough to fly to Germany himself, in mid-December 1968, to try to persuade the ex-Chancellor to join him.
A month later Erhard was still talking to Cornfeld's emissary, Mende's man, Dr Preussker. But in the end, Erhard said no.
In mid-1968 IOS went shopping for some august names in
Britain and came back with the Earl of Lonsdale; a Conservative mp called Sir Harmer Nicholls; and Anthony Montague-Browne, who had once been one of the late Sir Winston Churchill's secretaries. All three became directors of ill
About the same time, James Roosevelt also recruited an expatriate Englishman called Sir Eric Wyndham White, whom he knew socially. For some twenty years Sir Eric had played a leading role in administering the General Agreement on Trade and Tariffs, of which he became secretary-general, with his office in Geneva. Wyndham White joined IOS because he had been attracted by Roosevelt's talk about the potential of the national fund idea for providing development capital to underdeveloped countries. It is doubtful whether Bernie Cornfeld took as much notice of him when he arrived as he would have done if he had been able to read the future.
Early in 1969 IOS’s first royal recruit was brought in -Count Carl Johan Bernadotte, of the Swedish royal family. That was IOS’s last great success out lion-hunting. But it was not the last hunt by any means. Bernie Cornfeld had almost certainly approached Adlai Stevenson and invited him to join the IOS board shortly before Stevenson's death in London in 1965. He definitely did approach both ex-Vice President Hubert Humphrey (to whose 1968 presidential campaign he had been a moderately heavy contributor) and ex-Supreme Court Justices Arthur Goldberg, and Abe Fortas. An approach to the present President of France, Georges Pompidou, when he was out of favour with General de Gaulle in early 1969, was also enthusiastically discussed by Roosevelt.
Pacem in Terris was by no means the only instance in which IOS sought to project itself as far more than a mere business enterprise. Sometimes it seemed almost to lay claim to the status of an independent power among the nations. On September 16,1968 for example, to quote its own brochure, IOS 'brought together over 300 eminent jurists, philosophers and statesmen in Geneva to discuss specific action to be taken for the establishment of international peace and human rights through law'. As the brochure, perhaps a trifle naively admitted, 'IOS contributed a major portion of the funds needed to be sure that the international observance' of World Human Rights-Law Day 'take place in Geneva'. That eminent jurist Edward M. Cowett was the host and sat on the right hand of Chief Justice Earl Warren of the United States, and the chief justices of Ireland, Italy, India, Denmark, Libya, Switzerland and Norway occupied appropriate places of subordinate dignity.
It should be said to Cornfeld's and Roosevelt's credit that they did not stuff the boards of their companies with purely ornamental figures, but made an effort to acquire men with real, earned reputations. The effectiveness of the tactic, in any case, is not in doubt.
People looked at the list of eminent men who had associated themselves with IOS, and they said to themselves: 'This must be a solid business.'
It was not only potential investors who had this reaction.
In April 1969, for example, a well-known British financial columnist, Kenneth Fleet, of the
Daily Telegraph,
published a big feature on IOS. He raised several serious questions. But then he said: 'Anybody who wants to substantiate charges of this kind has, among other things, to explain the towering presence in Geneva of James Roosevelt.'
Even more important, perhaps, Roosevelt's own reputation and the big names he helped to bring in enabled IOS to recruit a wholly new kind of executive at those middle and upper-middle levels which become so important for an organization once it passes a certain size and degree of complexity.
In the end, it is quite true, the sales veterans, like Allen Cantor, George Landau, and Harvey Felberbaum kept the ultimate power in their hands, or rather such power as was not retained by Cornfeld and Cowett. But noticeably, from the beginning of 1967 on, IOS began with Roosevelt's help to acquire able executives from backgrounds other than selling. They included lawyers like the American Henry Carnegie or the Swiss Jean de Muralt; bankers like Michael Sakellaropoulo of the Bank of Canada or the German, Viktor-Emmanuel Preussker, and a particularly strong contingent of diplomats and international civil servants. Jim Wine, former us ambassador to Luxembourg and the Ivory coast; Murray Belman, who had been deputy legal adviser to the State Department; and Frank
Peel, former counsel to the International Labour Office in Geneva, were persuaded by Jim Roosevelt that economic development was what IOS was all about. (In August 1966 Roosevelt himself said that what attracted him about working for the Fund of Funds was its 'desire to develop investment in underdeveloped countries'.)
Gradually these new men, collectively, began to introduce an element of rationality, or of bureaucracy, depending on the point of view, which considerably altered the company's style in time. Many of them - such as the two State Department graduates, Hal Vaughan and Harold Kaplan, for example-were to play important roles as individuals in the coming crisis.
For professional men like these it came as a rude shock when they were first exposed to the freebooting reality of IOS sales operations. Take Colonel Gordon West's traumatic experience in Spain, for example…
West is a personal friend of Roosevelt's from Marine Corps days who stayed on to have a very distinguished career of his own in the Marines. It included secondment to the White House as an aide during the Kennedy years and a spell in the London embassy, as well as combat experience in three wars, in the South Pacific, in Korea and in Vietnam.
In the summer of 1967, as one of his first tasks with IOS, the Colonel worked out detailed plans for a national fund in Spain. That autumn, he set off for Madrid for what he had been given to think would be friendly talks with Spanish officials.
'While I was there,' he recalls with an inimitable wry gesture of all-embracing dismay, 'they just went ker-choonk.' The Spanish authorities locked the IOS offices, impounded the books, and locked up those of the salesmen who hadn't fled the country. For the colonel, who had out-fought the Japanese, the North Koreans and the Viet Cong, it was a new and humiliating experience: a rout.
It is possible to piece together the events that led up to the Spanish tragedy in unusually precise detail from court records, IOS had been selling to the American military in Spain from the early days. But the first IOS sales company there was not set up until March 3, 1967 - after the Roosevelt campaign against hot money operations was supposed to have begun.
The management of the company, which was called Investors Iberia, was entirely in the hands of a man called Emile Giubelli, a Canadian citizen born in Milan. The lawyer who advised Giubelli about setting it up warned him that 'the money laws of 1938 are ironclad'. Under Spanish law, it was strictly illegal to sell foreign mutual funds to Spaniards under any circumstances, let alone to convert pesetas into dollars in order to do so. Giubelli ignored the warning. But on July 7,1970 the Special Judge of Monetary Offences in Madrid, Don Antonio Sanchez del Corral y del Rio, fined Giubelli a total of 22 million pesetas (about $330,000) and sentenced him
in absentia
to three years in jail for what was described in the judgement as 'a monetary offence, committed and repeated, of a complicated nature'. Nineteen other IOS salesmen and clients received lesser, but still severe, fines. All had fled the country.