Was Joseph P. Kennedy a bootlegger?

Rumors have swirled for decades that Kennedy, whose nine children included President John F. Kennedy, and U.S. Senators Robert and Edward Kennedy, made his early fortune as a bootlegger during Prohibition.

But while the patriarch of the Kennedy clan certainly had his foibles, including playing fast and loose with the pre-1929 crash stock market, trading in illicit liquor wasn’t one of them, according to David Nasaw, author of The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy. As it turns out, one of the greatest American political dynasties of the 20th century was funded only in part by alcohol.

“As his biographer, I would have loved to have discovered that he was a bootlegger,” says Nasaw. “It would have given me all sorts of great stories. I tracked down every rumor I could find and none of them panned out. It became really clear that all of the stories about his bootlegging were just farcical.”

The rumors of Kennedy, the bootlegger, didn’t surface until the late 1960s and 1970s, says Nasaw, when conspiracy theorists were looking for reasons why the mafia might have played a role in the assassination of JFK. The theory was that the president’s father had made enemies in the underworld during his days as a bootlegger.

It didn’t help that various mafia characters came out of the woodwork to back up the accusations against Kennedy. Al Capone’s piano tuner said that he overheard conversations between “Scarface” and the elder Kennedy. The ex-wife of another Chicago mobster claimed her husband used to do business with Kennedy.

Nasaw doesn’t believe these stories, mostly because Richard Nixon, when he was running against JFK in 1960, hired a team of opposition researchers to investigate the Kennedy clan.

“They found all sorts of dirt on Joe Kennedy,” says Nasaw, “but not that he was a bootlegger.”

Also, by the 1960s the elder Kennedy had held high-profile government posts as the first chairman of the Securities and Exchange Commission (SEC), and then as the U.S. Ambassador to the United Kingdom. Kennedy was undoubtedly extensively vetted before he took those jobs, says Nasaw, and the FBI would have known if he was a rum runner.

“[Bootlegging] is the last thing he would do,” says Nasaw. “He had other ways to make money. He knew where the line was between legality and illegality. He wasn’t going to cross that line, because his children, who he lived for and hoped would be presidents and senators, were already tarred with the brush of being Irish Catholic and he wasn’t going to add to that by being indicted for bootlegging.”

What’s true is that Joseph Kennedy’s father, Patrick Joseph Kennedy, was originally a saloon-owner in Boston who expanded to own a whiskey importation business. The son of poor Irish immigrants and a widowed mother, Patrick Joseph Kennedy made a good living in the alcohol business and became the first Kennedy to enter politics, first as a local ward boss and then as a Massachusetts state senator.

When Prohibition became the law of the land in 1920, importers like Patrick Joseph Kennedy were allowed to keep the stores of liquor that they had already purchased. In fact, since Prohibition only banned the “manufacture, sale and transportation of intoxicating liquors,” it wasn’t illegal to drink alcohol in the 1920s.

When Nasaw tried to track down stories accusing Joseph Kennedy of bootlegging, the only account he could verify was the time he supplied free Scotch to his Harvard class reunion. But since it was his father’s Scotch, and he didn’t sell it, it wasn’t bootlegging.

The real money that Kennedy made from alcohol came later. In the fall of 1933, when it became clear that Prohibition was going to be overturned, Kennedy used his already substantial wealth and political connections to land exclusive contracts to import high-end Scotch whiskey and gin from the United Kingdom.

Those deals with top-shelf British distillers like Dewar’s and Gordon’s gin proved exceptionally lucrative. When Prohibition was lifted in December 1933, thirsty Americans bought up Scotch and gin by the case full. And when Kennedy sold his liquor franchise a decade later, he walked away with $8.2 million, more than $100 million in today’s dollars.

But even that pile of money was mere pocket change to a man who had already amassed multiple small fortunes by the time he turned 40. After gaining experience as a savvy stock trader, Kennedy became the youngest bank president in America at just 25 years old.

Then Kennedy made one of his trademark brilliant bets, buying a failing Hollywood movie studio in the 1920s and pumping out inexpensive B movies. Nasaw believes this is where Kennedy made the bulk of his millions.

“He demanded to be paid, not only in salary and expenses, but in stock options,” says Nasaw, who had full access to Kennedy’s financial records for his book. “And he drove those stock options up and down and sideways. By the time he left Hollywood in the late 1920s, he had an absolute fortune.”

That fortune was multiplied by Kennedy’s next prescient bet. While the rest of his fellow bigshot investors were pumping money into the stock market, Kennedy saw signs that stocks were wildly overvalued. He sold off most of his stock holdings before the 1929 crash, and even better, he started shorting stocks, betting that their prices would go down. When everyone else lost their shirts on Black Tuesday, Kennedy walked away richer than ever.

As for the bootlegging rumors, Nasaw allows that there might be some truth to the idea that Kennedy struck deals with some shady individuals during his years as a whiskey and gin importer.

“It’s a nasty business,” says Nasaw. “You have to chase down contracts with restaurants and liquor stores. So there were rumors that he worked with former gangsters who had gone legit. But even if he did, that’s not bootlegging, because it was legal by then.”