Whitewater - 1 April 1994

The dreaded moment has arrived: I'm going to talk about Whitewater. And if Mark Twain's pronouncement is true, that a journalist's job is to attract people to take an interest in something that doesn't interest them, then I can only say "journalism is about to have it's final test".

I have as I said last time, deliberately resisted talking about what has become Topic A in this country because I believed, I still believe it's a small tale artificially inflated by newspaper and television reporters who are hungry for a first-rate Washington scandal and by Republicans, congressmen, especially who are getting impatient for a sin or a political blunder to pin on the president and his party in time for this year's congressional elections when, remember, the entire House of Representatives is up for re-election. Nothing lurid or shocking has happened lately to make us think otherwise, though I better confess that one secret reason for not talking about it is that it is about as dramatic and as easy to explain as the oscillations of the bond market.

Incidentally, here is the very latest word on that subject from a bond expert. The bond market is extremely oversold and suggests there are numbers of leverage positions that had to be unwound at any price. Hence, the non-stop liquidations. Ah so, but by now there is a special prosecutor voted by Congress and committees both of the Senate and the House are getting ready to go over the same ground. There may not be anything there, but by Jiminy, as President Bush, would say, "if there is a smoking gun, one of us is going to take credit for finding it", not a non-partisan objective investigator, no political capital in him.

There is of course a new story every day – dense, complicated in the way that accountancy or American income tax forms are complicated, nothing yet to stir the blood except the item that came out the other day, which every devotee of bingo or the lottery or the horses can understand. Mrs Clinton – remember this all happened 16 years ago – Mrs Clinton invested $1,000 in the commodities market in commodities futures and after 10 months of trading she had picked up a profit of nearly $100,000 dollars, some smart cookie was the comment of one of those street persons snagged by a man with a microphone. And I'm afraid that a million or so Americans who took in the television news of it this week will immediately start poking around or having some flashy character poke around for them in the commodities market. Though, Mrs Clinton's luck was a freak, the odds against its happening to you a trader calculated our about 10,000 to 1.

May I, for the pure in heart, remind that commodities are such precious, well commodities as cattle, sugar, soya bean, wheat, timber, copper, hogs bellies and that they were in colonial America where there was a scarcity of coins at one time the most popular form of money. In New England, wool, cattle and corn was so used, tobacco in Maryland and Virginia, lumber and tobacco in New York State, beaver skins in Pennsylvania, rice, corn, indigo in the Carolinas. Some of the colonial legislatures declared that certain plentiful commodities were legal tender in payment of debts.

When, in the middle of the 19th century or just before the railroad, the Deere plough and other farming marvels opened up the whole prairie there came into Chicago, which was soon to become the railroad hub of the continent vast invasions of hogs, millions of bushels of wheat, armies of cattle and soon barrelled pork and beef for shipping as far away as London. This cornucopia of God's plenty, aka commodities, led to the formation in every big city from the mid continent to the Atlantic Coast of Boards of Trade, Chambers of Commerce and in 1848, to the first and still pre-eminent commodities exchange in Chicago. Trading in commodities futures is perilously simple, you bet that say the price of cattle will go up on a certain day put up $1,000 and if your right you can pickup a handsome profit, if your wrong you have to pay back two, three, four times your original bet.

What in God's name an old banker friend of mine cried the other day, "what was she doing playing around in the commodities market?" As he put it, the commodities market is for two kinds of people, people who spent all their adult life watching the ups and downs of lumber, cattle, wheat and so on and the other kind of investor, sick people he said. It's very often the last stop of a compulsive gambler. Anyway, expert or hot shot gambler, the historical fact is that in the commodities marketplace, three out of four investors loose money.

Well now, is it possible to say in outline, what Whitewater is all about? I'll try. The first mention of the business in a newspaper was in the New York Times just two years ago, it simply questioned Governor Clinton's investment in a land deal or real estate venture, a parcel of land on an island in Arkansas, which was meant to be developed as a resort, it's known as Whitewater. What the paper questioned was the soundness and propriety of the investment because Governor Clinton's partner a Mr McDougal was the owner of one of the thrifts – that's building societies – which later failed. Well, this news item did not take fire.

In the autumn of 1992, a federal agency looking into all those bankrupt thrifts became a little suspicious of the Arkansas because of overdrafts it had allowed the land company Whitewater and its hopeful resort owners Clinton and McDougal. After Mr Clinton's election to the presidency, Mr McDougal bought out the Clintons' interest in the company, fair enough, understandably avoiding a conflict of interest.

The Clintons' lawyer who presumably negotiated the sale, the settlement, was a man named Foster; he was a partner in the law firm to which Mrs Clinton also belonged. After the election she too resigned from that firm, right and proper.

Last July, Mr Foster committed suicide in the Virginia park and I sometimes wonder if the Whitewater deal would ever have blown up if Mr Foster was still alive. But President Clinton's personal lawyer removed Whitewater documents from Mr Foster's office, which didn't become known till last autumn. At that time too, the federal agency investigating the thrifts asked the Justice Department to look again into the Arkansas thrift.

Well by January, these three events, the federal agencies suspicion of the Arkansas thrift owned by the Governor Clinton's Whitewater partner, the suicide of Mr Foster, the secret removal of his papers by the Clinton lawyer. These forced the president to have the attorney general appoint a special prosecutor to look into the whole business, he's at it now but as I say at least two committees of Congress are going to go padding in his footsteps.

Since January, what has come unravelled is the tight little society of the president's aides and advisors; three of them have resigned for various alleged or suspected improprieties. There's nothing new or shocking to add to this tale, but what is new is the growing recognition that the indiscretions, the sins of any of the president's men have all been done by Arkansas buddies the president brought up with him to Washington.

Now presidential government by crony is natural anywhere and since John Kennedy has been not unusual. All the intimate daily work of his presidency was done by the half-dozen or so transplanted Boston friends who were known as the Irish mafia. Lyndon Johnson no too wiley and practiced a politician and too long in Washington to trust only to his own folk, but Jimmy Carter brought a handful of Georgians to Washington and they got him into trouble. President Bush, he too, had had long experience of Washington and executive government and if he had picked a crony for a big job for a cabinet job even, he was also one who'd been in Washington a long time. With Mr Clinton we have reverted to the Kennedy/Carter principle.

It's only since a grand jury has been sitting on the Whitewater case at the incidence of the special prosecutor that we've learned a whole roster of new names and mostly they're old Little Rock buddies. The investigation of Whitewater has developed far enough to give us a true picture of a young governor and his wife who went about their private business without much thought of how it might reflect on or influence their public duty. The defence of the cronies such as comes out in press and television appearances is that they were all behaving in a regular Little Rock fashion, that down there in Arkansas, government and business are run not exactly in double harness but by a community of people who know each other and like each other and deal and wheel without for a moment thinking they might be guilty of what Washington might call a conflict of interest.

The New York Times, which has been so far austerely objective in this matter, on Thursday defined that Clinton's behaviour as reckless and politically unattractive and their supporters as making us familiar with what you might call the Arkansas defence, which the Times describes as a way of arguing that while the Clintons' dealings were not pretty, you cannot apply the standards of the outside world to Arkansas where 1,000 or so insiders run things in a loose way that may look unethical or even illegal to outsiders.

It may well be and we all hope that the the Clintons and their hometown buddies did nothing illegal, nothing wrong, but that from this they will surely learn that if in Arkansas the governors wife need never invite suspicion when she becomes Caesar's wife she'd better be above it.

THIS TRANSCRIPT WAS TYPED FROM A RECORDING OF THE ORIGINAL BBC BROADCAST (© BBC) AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING, THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY.

Letter from America audio recordings of broadcasts ©BBC. Letter from America scripts © Cooke Americas, RLLP. All rights reserved.