The Kennedy family’s wealth and political power are legendary. Three US senators, two
US ambassadors, and of course, President John F. Kennedy. But where did they get their money?
Here's how the Kennedy family really got so rich.
The source of those riches began with one man — Joseph Kennedy Sr. Kennedy’s life
and early business dealings have been the subject of several on screen adaptations,
including a story arc on HBO’s Boardwalk Empire. Born in Boston in 1888, he faced discrimination
from his working-class background and Irish-Catholic identity. But he quickly made his name known.
Graduating from Harvard in 1912, he entered a banking career and started donating to the
Democratic Party, forming important political connections along the way.
He married Rose Fitzgerald in 1914 – a wise political move, because her father John was
none other than the mayor of Boston. But John resented the upstart Joseph marrying into
a family better connected than the Kennedys were, so he sent Rose off to a European convent
school for a year, apparently hoping distance would end the marriage.
Not to be. Their marriage set off a lifetime of establishing important social connections
for Joseph, though Rose would be left to play a compliant political wife, raising nine children
and turning a blind eye to her husband's affairs.
By the 1920s, Joseph Kennedy Sr., was an investor who wasn't all that concerned about the ethics
of how he got his money. His part in the 1929 stock-market crash is in that gray area between
legitimate and illegitimate.
As History reports, Kennedy was already known as a savvy investor by 1929. In that year,
he saw his fellow investors taking part in what appeared to be a booming market, though
on looking closer he thought they were pretty overvalued, He sold off some stocks and began
shorting others, betting they would, very soon, be worth a lot less. He was right, and
he made money when the stock market imploded in 1929, where others were bankrupted.
Kennedy wasn't above insider trading either, according to Pittsburgh Quarterly, though
it wasn't strictly illegal at the time. Still, he knew the window was closing, telling an
associate,
"We better get in before they pass a law against it."
According to Pittsburgh Quarterly, Joseph Kennedy Sr.'s first foray into the movie business
came about in the 1920s, when Kennedy had purchased 31 movie theaters as part of a business
group in the 1920s but couldn’t get an in to buy a studio. Thanks to a connection he
made with the Prince of Wales in Paris, however, he got a letter of introduction and eventually
some heavyweight British banking money to become a studio boss.
In Hollywood, he would later open his studio, FBO, with another to create Radio-Keith-Orpheum,
eventually known as the big-name Hollywood studio RKO Pictures. By enacting more business
deals and shuffling around shares, he came out of the whole venture with more than $15
million of today's money in profit, all in the span of only a few years. Some of that
trading was based on insider information, but that wouldn't become illegal until the
Securities and Exchange Commission, or SEC, decided it was — under the direction of
Joseph as its first chairman.
Rumors of Joseph Kennedy being a bootlegger were apparently just rumors, only springing
up in the wake of President John F. Kennedy's assassination. Some wondered if mobsters may
have been involved with the family since Prohibition.
“Chicago boss Sam Giancana told a friend that, ‘Joe Kennedy was one of the biggest
crooks that ever lived.”
Though those types of allegations probably aren't true, Joseph did get in on the legitimate
alcohol business before Prohibition finally collapsed, creating a new business called
Somerset Importers and securing contracts on a trip to Britain to import a variety of
liquors to the United States.
"I made the same deal, you know."
"Excuse me?"
"Across the pond. To import Dewars when the country returns to its senses."
That happened thanks in part to his connections with Franklin Roosevelt, due to some key political
donations, and the business went into operation mere months before Prohibition went bust in
1933.
On a momentous trip to Britain in 1933 to secure that business, Time reports that future
Prime Minister Winston Churchill connected with Joseph. He got the liquor-importing deal
done thanks in part to his donation-funded connections to the Roosevelts, helping him
become the first head of the SEC in 1934.
Though some people expected Joseph to act like a crook after President Franklin D. Roosevelt
named him SEC chairman, he surprised them and kept everything on the straight and narrow,
deftly navigating a complicated political landscape full of both friends and enemies.
Those were skills highly useful in the realm of diplomacy too, and FDR would eventually
name Joseph US Ambassador to the United Kingdom from 1938 to 1940. Years later, Caroline Kennedy,
his granddaughter, would serve as US Ambassador to Japan from 2013 to 2017.
Though Joseph Kennedy, Sr., engaged in some political work himself, it seems pretty clear
that his real political ambitions were reserved for his sons. And it all started with Harvard.
Thanks in large part to their dad's efforts and the fact that he had already graduated
from the university in 1912, the Kennedy children were pretty much guaranteed admission to Harvard
themselves, says The Crimson. Joseph, Jr. got his degree in 1938, followed by his younger
brothers John, Robert, and Ted in succession.
Meanwhile, Joe Sr., had been making significant donations to political groups to help pave
the way for his kids to get involved in politics eventually. According to Pittsburgh Quarterly,
he backed FDR with a pretty significant $25,000 donation back when Roosevelt was still just
the governor of New York. That was followed up by even bigger donations and fundraising
for FDR's Democratic Party over the years, presumably making it all the easier for a
Kennedy to get a warm reception by party members.
The Kennedy son who had been Joe’s focus for a political career was Joseph Kennedy,
Jr. But he died in a top-secret mission for the US military in August of 1944, when an
explosive aboard his plane detonated unexpectedly and killed both him and his co-pilot.
With Joseph, Jr.'s, death, reports Pittsburgh Quarterly, the next eldest son, John, became
the focus of Joseph, Sr.'s, political ambitions. It was a focus that apparently helped a young
John F. Kennedy make extra friends, PBS says. John's friends knew that, though he was loaded,
he never carried money. So whenever they spent time together, the friends could pay the tab
and then be promptly reimbursed by Joseph Sr.
With this helpful backing, JFK capitalized on political connections opened by his dad,
entering national politics with his 1946 election to the House of Representatives. In 1953,
JFK married Jacqueline Bouvier, from an old-money family. The New Yorker reports that the match
opened the Kennedy clan up to additional circles of power. By then, the Kennedys’ wealth
and political connections reinforced each other, arguably helping JFK secure a senator’s
seat and, in 1960, the White House. This opened the way for more important political connections,
not to mention some serious donations for election campaigns. Even JFK's popular books
may have been boosted by not only his family's name but by sales financed through the Kennedy
millions. Along the way, the connections and large campaign donations kept pouring in,
expanding the Kennedy web of wealth and power.
That sort of easily accessible wealth later made it all the easier for JFK to donate his
$100,000 presidential salary to charity, certainly helping the optics of his time in the White
House.
With investments and business deals in a wide variety of different ventures, from liquor
imports to Hollywood film studios, Joe Sr. launched a winning strategy of diversification
that paid off with monetary and political returns. And, like so many investors before
and after him, the father of the Kennedy clan put a decent amount of his money into real
estate too. As the book The Patriarch tells it, by the first couple of decades of the
20th century, Kennedy was already deep into the Boston real estate market, which, of course,
earned his family a large income.
Real estate continues to be a significant part of the modern Kennedy fortune. As PBS
reports, the land and homes owned currently by the Kennedys are high end. There are famous
family compounds in upscale locations like Cape Cod and Palm Beach, as well as more commercial
properties like Miami's Hialeah Race Track that pay into Kennedy coffers. According to
Forbes, the Kennedy family also has a stake in Vornado Realty, which gives them millions
through an investment deal with the company via incorporated entities and trusts. As of
2014, it was estimated that the family had earned $170 million from this deal alone since
1998.
With a pretty hefty amount of money rolling in, the Kennedys have strong reasons to get
laser-focused on what happens when their money crosses paths with the IRS. And, like other
ultra-wealthy people who can afford to hire exclusive tax advisors, they've learned how
to take advantage of some seriously lucrative tax exemptions.
Specifically, much of the Kennedy fortune has avoided run-ins with the capital gains
tax. The capital gains tax, as explained by Investopedia, is essentially a tax levied
against investments. When a person or corporation sells an investment, any growth between when
the investment was taken on and when it's sold is subject to that tax.
So with a lot of investments that could grow quite a bit over time, the capital gains tax
can make you feel pretty anxious. Except, as Forbes reports, the Kennedy family appears
to have deferred and maybe even completely avoided the capital gains tax for many of
their investments, due to significant loopholes in the rule.
At this point, the Kennedy family is now one of the most recognizable names in America,
with a fortune to match. It's also grown beyond the enterprising Joseph Kennedy, Sr., with
far more family members who might have access to those funds without the oversight of the
family patriarch who originally brought it all together. So, how is a fortune supposed
to sustain itself in the face of, say, a wayward family member who is an absolute dud when
it comes to money management?
No one's throwing out any names of actual Kennedys here, but, in case anyone ever tries
spending the fortune recklessly, the Kennedy money is probably safe. That's because, according
to Forbes, a large amount of the family fortune is tucked away in a series of trusts, some
of which are managed in Kennedy, Sr.'s name. Joseph P. Kennedy Enterprises ties many of
these disparate funds together, and those funds can contain anywhere from hundreds of
thousands to millions of dollars.
Yet, while a Kennedy or two might be on the board of the organization, much of the actual
work of handling investments falls to outside advisors and money managers. For the Kennedys
who collect the money at the end of the day, that's probably just fine by them.
If you're trying to dig into the nitty-gritty of the modern-day Kennedy riches, you might
run into quite a few walls over the course of your quest. According to Forbes, much of
the Kennedy family's holdings are now in private securities, meaning that public information
about them is pretty tough to come by. Family member Christopher Kennedy said that,
"We are a very public family with a very private investment philosophy."
There are some glimpses into the exact state of the fortune, though. As Newsweek reports,
Kennedys serving in Congress have had to list their income, just like other senators and
representatives. However, also like their fellow politicians, they have been allowed
to do so in very broad, difficult-to-track brackets that allow them to hide at least
part of their full wealth. Ted Kennedy, the youngest of JFK's siblings, earned a $165,200
yearly salary as a senator, though, thanks to the income from the Kennedys’ vast network
of investments, he likely could have forgone that income entirely and hardly noticed. Just
look at the numbers: on Joseph Kennedy, Sr.'s, death in 1969, he left about $400 million
(or $2.67 billion in 2018 money) to his family, setting them up for a good, long while.
"Mister Kennedy."
Check out one of our newest videos right here! Plus, even more Grunge videos about your favorite
political families are coming soon. Subscribe to our YouTube channel and hit the bell so you don't miss a single one.