Dillon, C(larence) Douglas
Dillon, C(larence) Douglas
(b. 21 August 1909 in Geneva, Switzerland; d. 10 January 2003 in New York City), versatile New York City financier and philanthropist who was secretary of the treasury during the Kennedy and Johnson administrations.
Dillon was the only son of Clarence Douglas Dillon, a self-made financier, and Anne (Douglass) Dillon, a home-maker and art collector. He also had a younger sister. Of Polish-Jewish extraction, the elder Dillon changed his surname from Lapowski to Dillon, adopting his paternal grandmother’s name and his American wife’s Presbyterian faith. Dillon’s father was a cosmopolitan art connoisseur and a founder of the prominent New York City investment firm Dillon, Read. Born while his parents were visiting Switzerland, Dillon was raised in affluent New York City suburbs. Precociously intelligent and a fluent reader by his fourth birthday, Dillon attended the elite Groton School in Massachusetts, graduating in 1927. He then went on to Harvard University, managing the football team, becoming class treasurer, and graduating magna cum laude in 1931 with an AB in American history and literature.
On 10 March 1931 the athletic, strong-jawed, but self-effacing Dillon married Phyllis Chess Ellsworth, with whom he had two children. Dillon settled in the New Jersey suburbs and paid $185,000 for a seat on the New York Stock Exchange, spending five years in stock-broking and investment banking. He became president of the family-owned U.S. and Foreign Securities Corporation in 1937 and a Dillon, Read director and vice president the following year.
In 1940, as World War II began in Europe, Dillon joined the U.S. Naval Reserve. Called to active duty in 1941, he rose to lieutenant commander by 1945, winning the Legion of Merit and Air Medal for active service at Guam, at Saipan, and in the Philippines. Returning as board chairman of Dillon, Read in 1946, Dillon supervised its extensive domestic and foreign investments, doubling them by 1952. Possessing a forte for detached analysis, he was known for carefully scrutinizing fine details of business proposals. Having been active in state Republican politics since 1934, Dillon assisted the future secretary of state John Foster Dulles in New York governor Thomas E. Dewey’s unsuccessful presidential campaign in 1948. In December 1951 Dillon launched New Jersey’s campaign to make Dwight D. Eisenhower the Republican presidential nominee, contributing heavily to his subsequent campaign.
Appointed ambassador to France in 1953, Dillon was initially criticized for his inadequate French and diplomatic inexperience, but he developed into an adept envoy, skillfully winning French acquiescence to German membership in the North Atlantic Treaty Organization in 1954 and deftly defusing crises over Indochina in 1954 and Suez in 1956. His urbane charm and knowledge of food, wine, and fine art proved diplomatic assets. Joining the State Department in Washington, D.C., as deputy undersecretary for economic affairs in January 1957, assisting Secretary Dulles, eighteen months later Dillon became undersecretary for economic affairs. On Dulles’s resignation Dillon served from April 1959 to January 1961 as undersecretary, the department’s second position. Dillon, a dedicated internationalist, concentrated on promoting trade and economic development, coordinating mutual security assistance programs, and enhancing the scope and effectiveness of foreign aid. His efforts contributed to the founding in 1959 of the Inter-American Development Bank and to establishing in 1960 the Act of Bogotá economic development program, a precursor of the subsequent Alliance for Progress, and the European-backed Organization for Economic Cooperation and Development.
Although Dillon had openly supported the Republican candidate Richard Nixon for president, in December 1960 the Democratic president-elect, John F. Kennedy, seeking to reassure the financial community he would not adopt “easy money” policies, named Dillon secretary of the treasury, where he remained until March 1965. Initially Dillon’s greatest preoccupation was to reverse the growing U.S. balance of payments deficit of the late 1950s and thereby strengthen the dollar and prevent gold outflows. These priorities caused Dillon to oppose fiscal stimulus tax cuts and expansionary public spending initiatives championed by the presidential Council of Economic Advisers chairman, Walter Heller. By late 1962, however, Dillon had become converted to a three-year tax cut of $10 billion, albeit one cautiously spread over three years. Eventually passed under President Lyndon B. Johnson in 1964, the measure cut $11.5 billion from personal and corporate income taxes. Seeking to rationalize the tax system and enhance revenue, from 1961 onward Dillon also introduced tax reforms that, though much modified by Congress, eliminated various loopholes and provided investment tax credits designed to encourage the modernization of American industry against foreign competition and induce Americans to invest domestically rather than overseas. Dillon also drafted much of the antitariff Trade Expansion Act (1962).
Under Kennedy, Dillon served on the executive committee that decided policies during the October 1962 Cuban Missile Crisis. He also sat on the National Security Council and in August 1961 headed his country’s delegation to the Punta del Este conference that created the Latin American Alliance for Progress program. Dillon’s tax reduction program inaugurated several years of rapid economic growth, thereby, some argued, enabling Johnson in 1964 and 1965 to launch the costly military intervention in Vietnam. Socially compatible with Kennedy, Dillon found Johnson less congenial and returned to banking in March 1965, becoming president of the U.S. and Foreign Securities Corporation in 1967 and serving as Dillon, Read executive chairman from 1971 to 1981. In March 1968, during the ongoing Vietnam War and after the January Tet Offensive, when Communist guerrillas launched a nationwide assault against South Vietnamese and American forces, Dillon, as one of the president’s Senior Advisory Group on Vietnam, was among the “wise men” who urged Johnson to seek withdrawal from Vietnam. Heading the Advisory Committee on International Monetary Affairs for the U.S. Treasury, Dillon simultaneously urged tax increases to bolster the dollar and the international monetary system.
A trustee of the Metropolitan Museum of Art in New York City since 1932, Dillon enthusiastically chaired its board from 1970 to 1978 and was president for five further years, personally donating $20 million, raising another $100 million, building up its holdings of Chinese art, and donating his own eighteenth- and nineteenth-century French paintings. At various junctures he chaired the Rockefeller Foundation, the Brookings Institution, and the Harvard Board of Overseers, and was vice chairman and a director of the Council on Foreign Relations, which he joined in 1946. After his first wife’s death, Dillon married Susan Sage on 1 January 1983. He received numerous honors, including the Presidential Medal of Freedom (1989). Dillon died of a severe infection at Presbyterian Hospital in New York City.
A committed internationalist of cosmopolitan antecedents, the cultivated, low-key, and prudent Dillon epitomized those moderate East Coast liberal Republicans who devised their country’s activist cold war strategy while firmly embracing relatively cautious and conservative economic principles.
Dillon’s personal papers are deposited in the John F. Kennedy Presidential Library in Boston. Official records generated during his service in the State and Treasury Departments are located in the U.S. National Archives II in College Park, Maryland; the Dwight D. Eisenhower Presidential Library in Abilene, Kansas; the Kennedy Presidential Library; and the Lyndon B. Johnson Presidential Library in Austin, Texas. Summaries of Dillon’s governmental service are given in Nelson Lichtenstein, ed., Political Profiles: The Johnson Years (1976); Eleanora W. Schoenebaum, ed., Political Profiles: The Eisenhower Years (1977); Bernard S. Katz and C. Daniel Vencill, Biographical Dictionary of the United States Secretaries of the Treasury, 1789–1995 (1996); and Joseph M. Siracusa, ed., Presidential Profiles: The Kennedy Years (2004). Dillon also figures prominently in Deane F. Heller, The Kennedy Cabinet: America’s Men of Destiny (1961); Robert Sobel, The Life and Times of Dillon Read (1991), a study of the investment bank; and Robert C. Perez and Edward F. Willett, Clarence Dillon: A Wall Street Enigma (1995), a biography of Dillon’s father. Obituaries are in the Washington Post (12 Jan. 2003), the New York Times (12 Jan. 2003), the Times (17 Jan. 2003), and the Guardian (24 Jan. 2003). Dillon recorded oral histories for the Columbia University Oral History Program and the Kennedy and Johnson Presidential Libraries.