Zeckendorf

by William Zeckendorf

  I won for years, but finally I must have been betting too often or too much, because the bookies recognized and caught up with me. When I would try to make a bet, the bookies were blind and ignored my signals. This was their way of saying, "You're on to our racket, but now we are on to you, too, and won't let you win." So, for a few nights they really hooked me; I probably gave them back one thousand of the five thousand dollars I had taken over the years, but it was all in the spirit of good crooked gambling and took nothing from my vacation pleasure. Marion and I could still enjoy ourselves at the Floridita, which was world-famous for its daiquiris—I am one of the few people who have their recipe; and the delights of their black-bean soup and Morro crab on a balmy night are still with me.

  The only property we ever owned in Havana was the Hotel Nacional, which was put up in the twenties by the Fuller Construction Company and in my view is possibly the finest hotel in Latin America. It was owned by the Plaza Hotel Operating Company, which owned the Plaza and the Savoy Plaza in New York, as well as the Copley Plaza in Boston. The Nacional and a number of other hotels were acquired by a shrewd trader named Arnold Kirkeby during the thirties. We acquired the Nacional, the Gotham in New York, and the Beverly-Wilshire in Los Angeles and a couple of other hotels from Kirkeby in the 1950's; a few years after its acquisition, I sold the Nacional to Juan Tripp and Pan Am's Intercontinental Hotels for a couple of million dollars' profit.

  During our visits to Cuba, we had come to meet a number of moneyed and influential visitors and residents, such as Southenes Behn of ITT and Julio Lobo, the Cuban and international sugar king. Lobo, who had made a career of cornering and riding the sugar market, owned or controlled sugar lands, mills, deep-water docks, the Hershey candy-bar business in Cuba, and much more that I never knew about. He was the biggest fish in the Cuban pond and quite friendly, of course, with General Batista, who ran the country. To copper his bets, Lobo was probably supplying a bit of backstairs help to Castro as well.

  The largest sugar-mill operator, after Lobo, was the Aspura family, who owned the Toledo mills. The Aspura lands, once on the outskirts of Havana, had been partly engulfed by Havana as the city grew, and now accounted for something near one-third of the city. The ownership was plagued by what are called colonos, squatters who settle on land and after a period of time get title by adverse possession. This meant that real title would be hard to clear, though not impossible. More important, there were great tracts of city-side cane land, free of squatters, only awaiting proper development. I had met Aspura at one or two social functions and brought up the question of buying his lands. A little to my surprise, he offered to sell for 7.5 million dollars, and we agreed to buy.

  I called up Lobo and said, "Julio, we are buying Aspura's land."

  Lobo, who went to Lawrenceville and Princeton and speaks perfect English, said, "Oh, that's a great deal, I've been trying to get hold of it for years. How did you do it?"

  "Well, just one of those things."

  I knew that Lobo was glad to be rid of a competitor. He was also aware of the real-estate aspects of the Aspura land, and liked to be in on anything big in Cuba. I knew what reply I'd get when I said, "It occurs to me that we might be well advised to have a Cuban like yourself in a powerful position as a partner. How would you feel about taking a half-interest with us?"

  With great warmth he said, "Yes, of course I'll take it."

  That, then, was the combination. I called on Rafael Oriomuno, who was South American lawyer for the Rockefellers. Instead of taking a few weeks, it took months to draw up the necessary papers. Everything was very slow, very technical. Aspura obviously was in no hurry to make the sale, but Oriomuno assured me that things were moving ahead.

  Many months had gone by, when one day Lobo called me. He was in New York and wanted to have lunch.

  At lunch he said, "I think we should do this thing by one-third shares."

  "What do you mean?"

  "This is such an important property, and you'll have a great deal of trouble with the colonos: you'll need government help. The Big Boy ought to be a partner."

  "You mean Batista?"

  "That's right."

  "Well . . ."

  I was wondering if this was a typical muscle job where the local chief was going to take one-third without paying, but Lobo said, "He'll pay his full share."

  "I'd like to meet him," I said.

  "He wants to meet you."

  A date was set up. I arrived in Havana and drove to the palace, through the gates, past the submachine-gun-carrying guards, under the muzzles of the machine guns on the roof, and walked into the President's office. Batista was stocky, ruddy of face, and obviously had a good bit of Indian blood. He was most jovial, and didn't talk about our deal as such. What he wanted to talk about was large-scale housing for the people of Havana and what we could tell him about urban redevelopment. He spoke benignly about upgrading the status of his people. Finally he said, "You have a fine prospect here in Havana."

  I agreed, saying, " . . . in respect to that, I assume we deal through our friend Julio."

  He said, "That is right," and that was all. He had given his official blessing to the deal, and not too long after, I heard that the long-delayed papers were in order.

  I had not seen Aspura since we first shook hands on our deal a year previously, but he did not want to sign the contract in Cuba; he wanted to sign in the United States. He and his family came up over a weekend. That Monday he and his lawyer–son-in-law had a very convivial lunch at our office. At that time I had an abstract painting on a stand at the back of the room which seemed to catch Aspura's eye. He asked a few questions about it. I could tell he liked it, and knowing a little about Latin customs, I had it wrapped up and sent to his hotel that afternoon. That evening we took his entire family, including his two beautiful daughters and wife, to dinner at Le Pavilion. Naturally, no business was discussed during this time, but neither was the painting. The contract papers were to be signed on Wednesday. Tuesday, we heard nothing from Señor Aspura. Wednesday, he could not show up for the closing. On Thursday I got my painting back with a flowery note saying he could not permit himself to be obligated for such a handsome gift, and by now I was getting the message. I said, "Boys, this fellow is going to welch; otherwise he would never have broken the date on Wednesday or sent back that picture."

  Getting Oriomuno on the phone, I asked, "Rafael, what do I do in a case like this?"

  Rafael came right back, "This case would be under Latin law. You can sue. Under our code, a contract is a contract when all points are agreed to. Signed or not signed, there is a contract if there are no open points."

  There were no open points. The contract had been completely agreed to and only needed signing. But, Oriomuno cautioned, "You can sue, but you would never be able to serve him in Havana; you'll have to catch him here before he leaves. Be sure to get a photo of his being served, or he will deny it ever happened."

  I called in Jim Millard, an aggressive young Irish lawyer on our staff, and said, "Draw up an affidavit of service. We are suing Aspura for ten million dollars. Get a photographer, get over to the hotel, and give him the summons before he skips town."

  Millard and his photographer hopped over to the Plaza, asked for Aspura at the desk, and were told, "He left for the airport ten minutes ago."

  My men raced in a cab to the airport, and there, at the terminal, smiling for a squad of newspaper photographers, the Aspuras being something in the way of Latin socialites, were my friend, his admiring family, and various hangers-on. Millard, photographer in tow, walked up and asked, "Are you Mr. Aspura?"

  "Yes, I am Mr. Aspura." Seeing the photographer, Aspura kept a pleasant face, because he enjoyed being in the society columns.

  "I have this for you, Mr. Aspura," said Millard, handing over the summons.

  "Oh, thank you very much, we already have our tickets."

  "It is not that kind of ticket, sir."

  Aspura took the papers. Flash! w
ent the camera. A few moments later: Crash! went Aspura. When he read the summons, he fell in a faint. They revived him, got him aboard, and flew from New York to Havana at two thousand feet of altitude. We had the goods on him, and a badly shaken Aspura knew it.

  Our lawsuit was then filed in Cuba. It had not yet gotten to trial the next time I was down there on a weekend. Julio Lobo invited me to lunch, during which he asked what I was going to do about the lawsuit.

  I told him I'd never been involved in this sort of lawsuit, that I liked to limit my appearances in court to speeding tickets. I told him I'd like to drop it if Batista agreed.

  "I think that might be the best thing."

  I am not sure what prompted Lobo's anxiety for peace, but I had no appetite for a forced deal and said I would drop the suit immediately.

  Julio was obviously pleased and immediately announced that he would give a dinner party, invite Aspura, and we would all be friends again.

  Aspura showed up at the party to give me an embrace and pronounce me a great caballero. It was his daughters, he said, who had talked him out of selling the property; they wanted their sons to have it. For his part, he would rather sell to me. Within a year of this dinner, Castro had taken over Cuba. The first major property he took over was Aspura's Toledo mills. Castro would have been even happier to take it away from Mr. Zeckendorf, and if I'd shown up and could have been proved to be a partner with Batista, I might have lost more than property.

  For more than two years, under Castro, Lobo continued to hold sway and was allowed to keep his lands. When I asked about this among knowledgeable exiles, I was told that the government needed Julio's professional abilities in the world sugar market, but in due time they would undoubtedly swallow him up for dessert. This indeed happened, and Lobo barely escaped with his life to safe haven in the United States.

  Once here, he again went into sugar speculating and manipulating and came within a grain of cornering the market and making a fantastic killing, but he overplayed his hand. The market got away, and he was cleaned out. In old Cuba, where the cards were marked for him, he could corner the market and squeeze the short buyers dryer than a cane husk. Away from his own base, he almost did it—but not quite.

  Yet a third vast land deal, one that created the basis for a great subempire in the Webb & Knapp realm, came to us sometime near the holidays at the end of 1955 and early 1956. My broker called offering us a major block of shares in Godchaux Sugars, Inc. This company, with thirty-five thousand acres of petroliferous land along the Mississippi between New Orleans and Baton Rouge, owned and operated sugarcane lands and a sugar mill and refinery. Its annual sales were in the fifty-million-dollar range, but the return was only one percent, and the owners wanted out. It was not the sugar but the real estate that interested us. We agreed to buy. Other offers of stock came in, and we eventually wound up with a chance for eighty-five-percent control of the company for 8.5 million dollars. For this kind of financing we needed help. I called Bob Young, at the New York Central, outlined the deal, plus its possibilities, and asked if he would put up the money.

  He said, "I don't think we have the money, but I'll give you a takeout by Alleghany—can you use that on a loan?"

  A takeout is an agreement to buy a note on maturity; Alleghany, in other words, was lending us their credit. I called my crusty friend Jim Muir at the Royal Bank in Montreal and asked, "Will you take Alleghany's takeout and lend the money now on stock?"

  "How much?" he asked.

  I told him.

  "What else goes with it?"

  "I'll get you some compensating balances of at least as much money." These compensating balances would be unrelated, a sort of interest bonus to the Royal Bank.

  "How long will you want it for?"

  "A year."

  "What rate will you pay?"

  "Six percent."

  "It's a deal." He hung up.

  The next day the New York agent for the Royal Bank called to say I could come and get the money.

  I got Bob Young to execute the papers, and Webb & Knapp had a Southern plantation on its hands. Even before the deal was fully consummated, however, I went downtown to see Horace Havermeyer of the National Sugar Company. He bought the sugar refinery from us for 14.5 million dollars. Some 8.5 million dollars of this money went to pay off existing mortgages and debts of the company, leaving us with six million in cash. Over the next two years we sold the sugar mill, plus seven thousand acres of land, to South Coast Corp. for 3.2 million dollars. After liquidating $700,000 of inventory and cash receivables, and paying off the remainder of existing debts, we were left with another 1.5 million dollars in cash. Godchaux Sugars now owned roughly twenty-eight thousand acres of land free and clear and had a few million dollars of cash in hand: it was a very sweet deal. We changed the name of the company from Godchaux Sugars to Gulf States Land & Industries and began putting the new property to work.

  First, we sold six hundred acres of land to Du Pont for a new polyethylene plant at $1,250 per acre. This money helped finance some of our acquisitions of the Waggoner estate between Dallas and Fort Worth. Then we began development of a strategically located new town just north of New Orleans. We also acquired fifteen thousand more acres of land just to the south of New Orleans from Louisiana Citrus Corp., and we had Gulf States take over some very promising interests in the Strategic Materials Corp. from Webb & Knapp.

  John Udd, a brilliant Canadian engineer, builder, and hotel operator, a man of many parts, had concocted a process for removing the thirty-three-percent iron ore left over in mining slag. The Koppers Company of Pittsburgh was involved in some of this work, which was somewhat comparable to removing the dry vermouth from a martini, but at the laboratory and early pilot-plant stage the process seemed most promising. Webb & Knapp had become interested in the venture, bought into it, and had gone so far as to acquire the ghost town of Clarkdale, Arizona, and a nearby forty-million-ton slag pile as a preliminary inventory. We turned this operation over to Gulf States, which had cash to carry it forward. Later there was a merger with Chemetals Corp., which would supply the chemical and mineral knowhow to bring the process to fruition. We kept putting money into the development work for many years. There were other residuals—gold, silver, and traces of copper—which made it attractive, but in the final analysis we could not make the process economically feasible. We had to let the business go.

  In the meantime, however, the company went into numerous other ventures. In 1958, partly to help glamorize Gulf States land, we became involved in the oil business. We wound up seeking oil off the coast of South America because a small group of suntanned and whiskey-reddened buccaneers strolled into my office one afternoon in 1958. They stood around speculatively eyeing the secretaries, the furniture, and everything else that was not nailed down while waiting to see me, then filed into my office behind their leader, Jim Wooten. Wooten, a fantastic character, was something out of Kipling. He had flown supplies into China during World War II, was for a time president of Alaska Airlines, and had since wandered around parts of the Orient and South America delivering planes, selling arms, dabbling in revolutions, and gaining and losing money and influence from one adventure to the next.

  He had great vitality, enormous charm, and a contagious sense of humor. Of a continual string of breakfast visitors who used to visit me, Wooten was the only one whom Marion would rouse herself to join because he told such fantastic and uproarious stories. Somehow or other Wooten and his friends had acquired the concession to search for oil off the coast of Dutch Surinam. They needed eighty thousand dollars in order to make the test drill necessary to keep their concession, and that is why they were in my office. Another similarly flamboyant but far shrewder man, John MacArthur of Banker's Life & Casualty Co., had sent them to me.

  After Wooten and I had talked things over a few times, I half-decided that Webb & Knapp, through Gulf States, should take the whole thing over. I would rather do that than just drill one well. I called Ham Metzger a
t Standard Oil and asked if he would recommend we take the concession. He said, "We had it and we dropped it; it was no good." I decided to go ahead anyway.

  Many a company has come in behind another one and found oil where others thought there was none. The investment would be a relatively modest one. The rewards, if we made a strike, would be fantastic. It would be great fun to take on something the greatest oil company in the world said was no good and maybe find oil. We bought out ninety-five percent of the Wooten deal. My piratical partners then scattered to blow their money and pray that we struck oil so their five percent could blossom.

  Looking at a map, I realized that if we did find oil, Surinam's neighbors in French and British Guiana would start arguing about boundaries and we'd be in the World Court for twenty years. The answer, though it was a large order, was to tie the concession in with both of these two countries as well. The French, after numerous negotiations, proved to be interested and willing. We arranged a fifty-fifty exchange; they would have rights to half the Surinam area, we would have half of the French Guianan area. British Guiana, however, was then under the control of Jagan, the Communist dentist turned rabble-rousing politico. I met Jagan at the UN. He was polite enough, but neither he nor any of his coterie had any interest in leasing potential oil lands to a New York capitalist. We had to settle for a French-Surinam deal.

  With Alcoa planning a power dam on the Surinam River as power source for a Surinam alumina plant, there was a possibility that, if we found oil or gas, we could supplement this power source and do away with need for a second power dam. With these and other possibilities and negotiations pending, I flew out to Surinam to see the country and meet some of its officials. Part of the trip involved a two-day trip down the jungle-edged Surinam River in a dugout manned by two black men. I fished for piranhas all the way down and had a wonderful time in spite of the heat.

  Meanwhile, we chartered a drilling rig in California, brought it through the Panama Canal, and put it to work fifty miles off shore in 450 feet of water. We drilled 4,500 feet down and found seven oil and gas shoals. None were commercial, but it heartened us enough to take more geologic soundings. Eventually Gulf States sold its concession rights to the Shell and British Petroleum companies for seven million dollars, keeping a percentage share of possible future oil finds. Our Surinam venture, all in all, was therefore profitable. In fact, up till the very end, Gulf States was one of the principal bastions from which we maneuvered for three desperate years to keep Webb & Knapp from falling, but more about that later. Before discussing the fall, there are some major parts and pieces to fit into the mosaic. For instance, there is the Wall Street Maneuver, which in turn helped lead to some further adventures on Sixth Avenue.