While many people mistakenly believe that Joseph Kennedy made his money from the sale of alcohol during prohibition, there is no evidence to support that view. Many people, including President Richard Nixon, have tried to prove that Joseph Kenedy’s money was made illegally, but the truth is that hard work, smart thinking and good luck gave the elder Kennedy his money.
Joseph Kennedy’s father was a Boston salon owner. He imported scotch and other liquors before Prohibition started. The way that the law was written during prohibition, one could not manufacture, sell or transport alcohol. In fact, Joseph Kennedy had great aspirations for his children in the world of politics. He realized that many voters would see being Irish Catholic as a strike against them, and he did not want to add bootlegging to their problems.
In 1919, Joseph Kennedy went to work for Hayden Stone Investment House that was located near his father’s saloon. That same year, he purchased Maine and New Hampshire Theatres Company, which operated a small chain of movie houses. While there, he learned many things under the mentorship of co-owner Galen Stone. Using principles taught to him by Galen, Joseph started to invest more of his own money and to amass a small fortune. When Stone retired in 1923, Kennedy left the firm, but maintained an office there where he offered several financial services to customers he met through Galen along with those he met while he worked for shipbuilder Charles M. Schwab and as a member of the board of directors at Massachusetts Electric Company.
In 1926, Kennedy purchased Film Booking Offices. He had originally been retained while working at Hayden Stone Investment House to find a buyer for the company. He eventually put together a deal with his father-in-law, Guy Currier, and Louis Kirstein to buy the company. Joseph used his business connections to put the once unstable company back on firm financial standing and installed firm financial rules to ensure that the company started turning a profit. By 1923, Film Booking Offices had silent movie cowboy Fred Thomson under contract, and they soon added Hollywood beauty Gloria Swanson.
After moving to New York City in 1926, Kennedy started forging a relationship with RCA’s chairman of the board David Sarnoff, allowing him to gain proprietary use of the company’s Photophone. By the start of 1928, Kennedy was overseeing four movie companies with a lot of the financing coming from Sarnoff.
From the movie companies that Joseph was able to control, he formed Radio-Keith-Orpheum, which was one of the five biggest movie producers in the world at a time when going to movie theaters was a popular past time. The company paid Kennedy a salary, covered his expenses and provided him with stock.
In October 1928, Kennedy sold out his interests in Radio-Keith-Orpheum, including his stock. Therefore, when the great stock market crash occurred in 1929, Kennedy held very few stocks but had a large cash portfolio. He was one of the wealthiest men in America when others were hurting because their stock became almost worthless.