It is always wise when dealing away from home to have influential local partners. Through Anderson I had met Toddie Lee Wynne and his nephew Angus Wynne. The Wynnes, who were in oil and Dallas real estate, were eager to help develop the Waggoner land. They brought in a number of top Dallas and Fort Worth businessmen as fellow investors. For my part, I brought in Rockefeller Bros., their family investment company. In due course, the Great Southwest Corp. we organized developed the corridor between and helped join these two great cities. Land value, as we anticipated, boomed. Stock in the venture that once sold for one dollar later sold for ninety and promised to climb much higher, though Webb & Knapp, in order to generate cash for yet other developments, profitably sold out its share long before this climb.
Typically, as we had in the past, we sold out sooner than we might have liked to because of the lure and pull of other projects. Meanwhile, as regards the speed and ease of getting this project moving, the principal explanation lies in the fact we had the right number and right kinds of partners at our side.
▪ 13 ▪People and Places
A CITIZEN of a small town can, through circumstances or design, come to know almost everyone in the community. On the upper levels of our own business-oriented society it is the same. The threads of mutual acquaintanceship spread everywhere. In some cases they work and weave together as tightly as a piece of waterproof cloth. At other times they scatter out like the strings of an unfinished net, but each strand is somewhere connected to others.
What I did in the course of my work was continuously pick out and weave together a great variety of these strands. Whenever possible I made use of existing connections between people. At other times I created new ones. And deals that did not go through, every bit as much as deals accomplished, can usefully illustrate how, at the top, what one might call the "village system" of contacts operates.
For example, sometime after the American Broadcasting Company bought our West Side Riding Academy for its television studios at a handsome price, ABC's chairman, Ed Noble, called, inviting me to lunch at "21." There, after a pleasant meal and a bit of verbal sparring, he said, "Bill, I invited you to lunch because you are the first man to make any money on television—by selling us that studio. You must be doing something right, so I'd like you to join the board of directors and help us out." Noble also offered me some potentially lucrative options on ABC stock, but as it turned out, his invitation was less of an honor to me than an admission of desperation on the part of the company. I joined the board and for the next ninety days found myself working almost exclusively for ABC, which was in terrible shape. A multimillion-dollar bank loan was being called, with no cash in hand to pay it, and ABC's facilities situation around the country was chaotic. Through Charlie Stewart at Bankers Trust I was able to help ABC refloat its loan. Then, by arranging sales and leasebacks of ABC's California properties with my friends at Mutual Life, I solved the company's most pressing cash problems. Within six months, thanks in large part to these manuevers, ABC had a fairly presentable balance sheet, and I was Noble's favorite board member.
Not long after this, however, Noble called a special meeting to announce a proposed merger with Paramount Pictures Corp. This was the theater chain which was half of the old Paramount movie empire that had been broken up by an antitrust decree. The theater company was cash-rich. And, as Noble put it, "I'm like a fellow who owns a giant circus except all I've got is a great big tent and no players, no actors. . . ."
He thought Paramount would help him there, but I said, "These fellows are just a bunch of theater owners who are in trouble themselves—because of television. They're not producers. All you'll wind up with is an even bigger tent than before—and still no players." But Noble wanted to get his hands on Paramount's cash, and the discussion went back and forth.
Finally I said, "Well, if you must have a merger, right this minute I can think of a much better match. Merge with International Telephone & Telegraph Company. They have money, they could be to you what RCA is to NBC." Noble's curiosity was piqued, but he doubted that ITT would be interested. "Give me an hour," I said. He agreed.
During a Cuba vacation with Fred Ecker of Met Life, I had met Sothenes Behn, the international financier and chairman of ITT. Now I called Behn. At my request for an immediate meeting, the ITT chairman invited me to see him and General Harrison, the company president. I drove downtown, walked into the dark-paneled executive offices, and Behn said, "What is it, Bill?"
I replied, "Here's the deal . . . ," and outlined ABC's situation. ITT, with most of its holdings then spread overseas, was very much interested in balancing these properties with U.S. investments, and that very afternoon I arranged an offer of a share-for-share exchange of stock between the two companies.
Noble, however, only used the ITT offer to further his bargaining with Paramount and then closed that deal. When this occurred, I felt obliged to turn in my resignation as a director. The stock options once promised me, and which I had more than earned, were never again mentioned by Noble. I could, I suppose, have made things a bit embarrassing for him on this score, but I didn't. At that time I had enjoyed my maneuverings for ABC. I was sorry that what would have been the best long-term deal for ABC was spurned, but, where it counted, it was known how and by whom ABC's short-term fortunes had been brightened. My repute as honest broker and corporate negotiator continued to grow sufficiently, so that a few years later I found myself in another and quite different sort of nondeal involving Howard Hughes.
Howard Hughes, an industrial genius and paradoxical man, has been phenomenally successful. He has also produced some disastrously costly movies. He was known as a famous Hollywood Don Juan who collected and discarded beautiful women the way boys collect and discard model airplanes. For the past twenty years he has also managed to live as a traveling recluse, a sort of peripatetic Trappist. He deals with his various company managers only intermittently, sometimes through handwritten notes, at other times through obscure intermediaries, midnight phone calls, or summonses to secret, out-of-the-way meeting places.
The last time I saw Howard, he had already surrounded himself with the phalanx of competent, honest, and thoroughly humorless young Mormons who served as the gate-keepers, errand boys, and contact men. Through them he wards off and deals with much of the rest of the world.
The first time I met Hughes, in the early 1950's, was in Florida, where we had talked about his buying the 63,000-acre Indian Trail Ranch that Webb & Knapp controlled. At one point, I also offered to swap our 12,000-acre Mountain Park property in Los Angeles for his RKO Theatre stock. Nothing came of these brief encounters, all of which had taken place in motels, beachside shacks, and the like. These meetings, I presume, helped set things up for the following episode.
It started in October, 1954, with a telephone call from Spyros Skouras, suggesting we have lunch. I had met Spyros, a stocky, gravel-voiced Greek, when he was chief of Twentieth Century-Fox during my earlier California reconnaissances. Spyros, who had long been a friend and, as much as anyone could be, a confidant of Howard Hughes, hoarsely announced at our lunch: "I've been talking with Howard Hughes, and he is ready to make a change. He wants to retire from business and devote his time and money to medical research. . . ." Spyros continued for a time building on this theme and the vast extent of Hughes' holdings. Finally he said, "You are a man who is always dealing with money people. Can you find a group big enough to handle this thing?"
I immediately replied, "It sounds like a Rockefeller proposition . . . they have the money. They would also be interested from the standpoint of their own foundation work, Laurance Rockefeller especially. They are backing lots of research in cancer. Do you want me to try it?"
He said yes, so I called Laurance Rockefeller for an appointment. We met, and I told him the story. He asked, "Do you think Hughes really means it?" I said I thought Hughes meant it because Spyros thought he meant it, and it was the kind of thing an eccentric like Hughes might do. The only way to know for
sure, however, was to go to California and find out. Rockefeller agreed to come along, and through Spyros I arranged for a meeting, while quietly lining up some other backers who might have a special interest in some part of Hughes' holdings.
Rockefeller, my son, and I flew out to Los Angeles. There we met Spyros. The four of us lunched in the terrace dining room of the Beverly Hills Hotel, where, I suppose, we were all scrutinized by Hughes or his agents. In any event, we found ourselves programmed into a script that only the members of various undergrounds, portions of the CIA, the NKVD, and perhaps the Minutemen would normally take seriously. At precisely 1:30 Spyros was to get up and take a taxicab to a predetermined place, where he would be met and then taken to the rendezvous. At 1:50 Rockefeller and I were to go to a certain intersection, where a man wearing a red shirt with an open collar would contact us and drive us to the rendezvous. The meeting was to be attended by Spyros, Rockefeller, and me. There was no provision for my son's being there, but I thought I'd bring him along for the experience.
At 1:50 Rockefeller, my son, and I got up and walked over to the nearby corner. A man with a red shirt, open at the collar, came up, looked us over, and said, "Follow me." We did, for about a block, where he climbed into a 1932 Chevrolet jalopy, something the Okies might have used on the trek west twenty years ago. The car was dusty blue in color, some of the windows were cracked, the fenders looked as if they had been battered in and hammered out more than once, and the rugs in the back had been worn through. It was quite a sight to see the immaculate Rockefeller get into this wreck. It wasn't a very large car, and maybe my squeezing into place amused him as well. At any rate we got rolling, and after a time found ourselves in a seedy section of town. We stopped in front of a four-story building, a onetime private home that looked as if it had been converted into a flophouse, except that the building was now being patrolled. Four or five young, neatly dressed, rather good-looking men, all with crew-cuts, continually walked around the place. These were Hughes' Mormon entourage, and as we pulled up one of them came over and said, "Mr. Hughes has called the meeting off."
I said, "Why?"
"Sir, just you and Mr. Rockefeller were supposed to come to this meeting. You have a third party here, and Mr. Hughes feels that is a breach of the understanding."
"The third party is my son."
"It doesn't make any difference who he is."
I turned and said, "All right, Bill, you go back to the hotel, and we'll carry on."
The young guard said, "Wait a minute, I have to find out if Mr. Hughes will still go through with the meeting." We sat out in the hot sun till our native guide came back to say that Hughes would see us. We then climbed up to the top floor of the building and down to the end of a long hallway, where our escort rapped on the door with a distinct pattern of knocks. The door opened, and there stood Howard Hughes, looking exactly as he has often been shown in newspapers and magazines: six-foot-three, slender, youthful-looking, he had a three-day growth of beard, wore a V-neck shirt, soiled sport trousers, and dirty tennis shoes. The only thing neat about him was his hair, which was combed straight back, covering a balding head. He was around fifty-two years old at the time. As we stepped into this hideaway office, I introduced Rockefeller and joshed Howard a bit about his not buying the Webb & Knapp Mountain Park property, which was fast rising in value. We all seated ourselves. Hughes, who wore a hearing aid, pointed the speaker at whoever was talking. After a bit, and in the most casual way, he asked, "What do you fellows want?" Since it was Hughes who had approached us through Spyros, and since polite indirection had done nothing for me in previous meetings, I decided to be blunt, saying, "Howard, you know damn well what we want. We didn't come three thousand miles to admire your old trousers and sport shirt, or because we like this part of town; we came here to buy. I was told by Spyros that you were ready to sell."
"Oh," he said, "I told Spyros I'd listen to something."
I said, "If that is the way things are going to go, we've wasted our time. Either you are talking in good faith or not. Spyros says that you want to sell out and devote the rest of your life to science and the interests of humanity. Is that true? If it isn't, we may as well leave."
"I said something like that to Spyros."
I turned to Spyros and said, "Before we go any further, suppose you tell Howard what you told me."
Spyros, hoarse voice, Greek accent, and all, has tremendous charm and is very persuasive. He soon got the meeting on a much better footing, and it began to go along more easily. Rockefeller, who up to this time had said very little, now spoke up, saying that he had come there only because I asked him to. If a deal required capital financing, he would be interested in helping, but he did not come out there just to make money. He was interested in getting new money for cancer research. Hughes replied that he was interested in backing a great research foundation and that he had already established one foundation which was doing great things in medical research and would do more. Then, turning his hearing aid toward me, he said, "What do you have in mind for buying me out at . . . as long as you are here?"
I said, "Let's analyze what we are talking about, and I'll make you an offer. We are talking about Hughes Tool Company and Hughes Aircraft. We are talking about RKO, your real estate in Tucson, plus the brewery in Texas, and we are talking about TWA. That's your portfolio, isn't it?"
He said, "Generally speaking, that's it."
I said, "I'm recommending that we pay three hundred and fifty million dollars for all that."
"You don't know what you're talking about."
"Maybe . . . maybe I don't know anything about it. Let's assume I don't. But you do know all about it. Will you take three hundred and fifty million dollars? You can have a check for it."
"Where is the check?"
"Well, I have a letter and a check. I have a cashier's check for nineteen and a half million, plus a letter from Sloan Cole, who is chairman of the board of the Bankers Trust Company, stating that the check is for the purpose of making a down payment for the acquisition of your holdings. The amount is nineteen and a half million not because it bears any relationship to a price that might be negotiated, but because it is the maximum the bank can lend in one single transaction, being ten percent of their capital. Here it is," I said, and reached over to hand him the letter. He put up his hands, saying, "Don't give it to me, don't ask me to touch it."
"I didn't ask you to touch it, I want you to see it."
Hughes is the most suspicious man in the world. Maybe he was afraid that taking the letter might be tantamount to acceptance, or perhaps it was his morbid fear of bacteria that kept him from touching the letter. Up until this time he had been slouching on the edge of the couch, sometimes crossing his legs, occasionally leaning forward to shift his weight, but with never a change in facial expression. Now he leaned forward to read the letter I held out to him.
Finally he said, "I won't take it."
"Why not?"
"It's not enough."
"What is enough?"
"I won't tell you."
"Do you want to sell?"
"Under certain circumstances."
"What circumstances?"
"If the price is right."
"What price?"
"The price that you might offer me. If it is enough, I'll sell."
"Now you are getting me to bid blind. . . . I'm willing to match a bid of tabled stakes, but I don't like to shoot blanks. Are we fifty million dollars apart?"
Hughes said, "No."
"Do you mean it's less?"
He said, "No, I mean more."
For a man who supposedly wanted to get down to serious business, Hughes was acting like the original coy mistress, but I kept trying. I said, "Are we one hundred million dollars off?"
"Are you offering it?"
"No, I am asking."
He said, "I told you . . . I won't tell you."
"All right, I'll find out. I am offering you four hundred and fifty million; will
you take it?"
"No. . . ."
"Howard, just exactly what do you want?"
"I won't tell you."
"Howard, take it or leave it, five hundred million."
He said, "I leave it."
"Howard," I replied, making no effort to hide my exasperation, "I think you invited us out here to give you a free appraisal. I don't think you were ever sincere."
He said, "Think what you like," then added, "I'll tell you what we'll do. I don't want to talk anymore today. We'll all go down to Las Vegas and talk down there."
Rockefeller said he couldn't go to Las Vegas, he had to get back to New York. Spyros said that he and I would go.
"Can I bring my son?" I asked.
Hughes agreed to this. And then, as if we were ten-year-old members of the latest Post Toasties secret membership club with "super" clues and passwords, four grown men who among them commanded or could influence a significant share of American wealth, sat there with never a smile, as Hughes programmed a properly secret rendezvous.
Spyros, my son, and I were to meet Hughes at midnight at a semiabandoned airport on the outskirts of Los Angeles. He would fly us to Las Vegas, but would arrange that we be driven to town in separate cars. Once in Las Vegas, we must go directly to our rooms. Under no circumstances were we to leave them during daylight, when we might be seen and start rumors.
At midnight we arrived at the deserted airport, which was entirely dark. A Constellation, a plane which Hughes had helped design, bulked in the gloom, and a guard with a flashlight told us to wait. We waited till Hughes, accompanied by another young guard, drove up in a little car. Guided by flashlights, we climbed into the darkened Constellation. Hughes checked her out, revved her up, and we took off. He did the flying. In Las Vegas we were met by several Hughes cars, driven by another group of Daddy Warbucks' monosyllabic young men, and taken to our hotel, where we had already been checked in. At this point, if Orphan Annie (accompanied by her dog, Sandy) had now shown up offering drinks, I would not even have blinked. Nothing of the sort happened, however, and we had to order our own drinks. It was late, and with Spyros' remonstrances to "humor" Howard still ringing in my ears, I went to bed.
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