Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty

by Daniel Schulman

This book simply could not have been written without the participation of the scores of people I interviewed along the way. To anyone who returned my call; replied to my e-mail; agreed to meet for coffee or a drink; contributed insights and anecdotes; or pointed me in the right direction—you have my deepest appreciation. Thanks to each of you for being so generous with your time.

  I also could not have done this without the support of my friends and family, who provided encouragement and inspiration throughout the process. My parents, Bernard and Linda Schulman, have been behind me at every step during my career, never more so than during the writing of this book. I owe them more than they know. My gratitude as well to the Schulman, Cooke, Silverman, and Zell families, as well as to my wonderful in-laws, Ray and Marilyn Pieczarka, and my sister- and brother-in-law, Kate and Greg Skouteris. Thanks, most of all, to my wife, Stacey, who was a beacon of confidence when I was overcome by doubt, who buoyed me with love and levity when I needed it most, and who gave me the strength to put one foot in front of the other and climb.

  About the Author

  Daniel Schulman is a senior editor in the Washington bureau of Mother Jones, and a founding member of the magazine’s investigative journalism team. His work has appeared in the Boston Globe Magazine, Columbia Journalism Review, Psychology Today, Village Voice, and many other publications. He splits his time between Cambridge, Massachusetts and Washington, D.C.

  Notes

  This book is the product of more than two years of research and reporting. It is based on hundreds of interviews with a wide range of sources: friends, relatives, classmates, and acquaintances; business associates and employees; political allies and adversaries; members of the philanthropic community; and many, many others who were gracious enough to share their perspectives on the Koch family and/or their companies. Unless specified in the source notes below, all quotations come from interviews conducted by me, or, in a handful of cases, by my research assistants Andy Kroll and Ryan Brown. Whenever possible, I strove to quote sources on the record, but in some cases interview subjects requested, and I granted, anonymity so they could speak candidly.

  My research also benefited from a huge range of primary source documents, including thousands of pages of correspondence and other material, unearthed at more than a dozen archives. They include those located at the Chicago History Museum, Columbia University, Harvard University, the Hoover Institution, the Library of Congress, the Massachusetts Institute of Technology, Rice University, the Russian State Archive of Economics, the University of Michigan, the University of Oregon, the University of Southern California, Wichita State University, the Wisconsin Historical Society, and elsewhere. I relied as well on many thousands of pages of legal documents—transcripts, depositions, exhibits, motions, and more—produced through numerous lawsuits involving the Koch brothers, their father, and/or the family’s various business entities. Any errors of omission or commission are mine and mine alone.

  Prologue

  1. “Okay, boys”: Interview with Jay Chapple.

  2. nineteen minutes younger: “Brother Versus Brother,” The New York Times, April 28, 1998.

  3. shared a small room: Interview with John Damgard.

  4. a college boxer: “Knights of Padded MIT in First Meet Tomorrow,” The Tech, March 5, 1920.

  5. “It would make ‘Dallas’ and ‘Dynasty’ look like a playpen”: “Build Your Own Playpen,” New England Business, September 1988.

  6. “10,000 orgasms”: “Billionaire Bill Koch Wins $12 Million More From Wine Maven Who Sold Him Bogus Bordeaux,” New York Post, April 13, 2013.

  7. Bill ranks 329th: “The World’s Billionaires,” Forbes, March 4, 2013.

  8. “the biggest company you’ve never heard of”: “The Price of Immortality,” Portfolio, October 15, 2008.

  9. former home to John D. Rockefeller Jr.: Michael Gross, 740 Park (Broadway Books, 2005), p. 48.

  10. stage actors working off a script: Brian Doherty, Radicals for Capitalism (Public Affairs, 2007), p. 410.

  Chapter 1. Sons of Wichita

  1. some of the earliest colonial settlers: Mary Judith Robinson, Patriots and Loyalists: An American Family from Colonial Times (2009).

  2. enjoyed visiting Fred’s father: “Quanah Parker, Chief of the Comanches,” Kerrville Mountain Sun, November 18, 1926.

  3. the Koch family’s home phone number: “Fred Koch at Rice University,” published by Rice University’s Office of Public Affairs, November 2008.

  4. briefly captained the MIT team: “Matmen Campaign Proves Successful,” The Tech, March 15, 1921.

  5. “The way up the ladder”: “College Grad Seeks Job… And More,” Discovery, July 2012.

  6. from plane manufacturing to gold mining: “C.F. De Ganahl, 69, Plane Maker, Dies: Manufacturer Also Had Been Gold Miner,” The New York Times, May 15, 1939.

  7. engineering challenges: “Special Napthas with Pipe Still,” F. C. Koch, Oil and Gas Journal, March 10, 1927.

  8. “as brilliant a pair of brain lobes”: Charles Francis de Ganahl, The Life and Letters of Charles Francis de Ganahl Vol. II (R. R. Smith, 1949), p. 379.

  9. former Army sergeant: The National Cyclopædia of American Biography, Vol. 56 (J. T. White & Company, 1975), pp. 209-210.

  10. Fred bought a one-third stake: “Restructure, Inc.”

  11. lived in his office: Ibid.

  12. Mary’s parents approved: From an unpublished portion of an interview conducted with Mary Koch in 1986 by Leslie Wayne, then of The New York Times. At the time, she also interviewed Charles, Bill, and a handful of Koch Industries executives. Copies of the interview notes are in the possession of the author. (Hereafter, “Leslie Wayne interview notes.”)

  13. a month (and six dates): Ibid.

  14. “a typical old country boy”: “Family Feud at a Corporate Colossus,” Fortune, July 26, 1982.

  15. “Fred was a strong man”: “A Visit with Mary Koch,” East Wichita News, October 1988.

  16. The inspiration for the elaborate trip: The Life and Letters of Charles F. de Ganahl.

  17. “But this is my trousseau!”: “A Visit with Mary Koch.”

  18. After crisscrossing South America: Details of their honeymoon come from films of their trip viewed by the author.

  19. Fred felled a pair of leopards: “Koch Family Matriarch Dies at 83,” The Wichita Eagle, December 23, 1990.

  20. Mary helped to exercise: From a compilation of family films narrated by Mary Koch and viewed by the author.

  21. the child’s namesake telegrammed: “Namesake and Mentor,” Discovery, January 2010.

  22. “The most glorious feeling”: “A Letter’s Legacy,” The Wichita Eagle, March 15, 1998.

  23. “He wanted to make sure”: Koch v. Koch Industries (D. Kans., 1985), testimony of Charles Koch.

  24. “country-club bums”: “A Letter’s Legacy,” The Wichita Eagle, March 15, 1998.

  25. “If we wanted to go to the movies”: Ibid.

  26. “He was like John Wayne”: “David Koch Intends to Cure Cancer in His Lifetime and Remake American Politics,” Palm Beach Post, February 18, 2012.

  27. “The old man didn’t put up with”: “Captain America,” Sports Illustrated, April 20, 1992.

  28. “It used to be so hot there”: “A Letter’s Legacy,” The Wichita Eagle, March 15, 1998.

  29. “My father was quite a student of history”: Koch v. Koch Industries, testimony of Charles Koch.

  30. a cancerous tumor: Details about Fred’s palate condition come from Leslie Wayne’s 1986 interview with Mary Koch and from: John Lincoln, Rich Grass and Sweet Water: Ranch Life with the Koch Matador Cattle Company (Texas A&M University Press, 1989), pp. 5–6.

  31. advertise their cattle brands: “Early Day Newspapers in Quanah,” Quanah Tribune-Chief, August 26, 1938.

  32. 10,000 acres: Lincoln, Rich Grass and Sweet Water, p. 6.

  33. Monet’s Field of Oats and Poppies: George T. M. Shackelford and Elliot Bostwick Davis, Things I Love:
The Many Collections of William I. Koch (MFA Publications, 2005), p. 24.

  34. He sold a refinery: Lincoln, Rich Grass and Sweet Water, p. 6.

  35. “fat cattle and nutritious grass”: Lincoln, Rich Grass and Sweet Water, p. 61.

  36. driving there by a different route: “A Letter’s Legacy,” The Wichita Eagle, March 15, 1998.

  37. “It sure is clean here”: “Koch and His Empire Grew Together,” The Wichita Eagle, June 26, 1994.

  38. “Freddie didn’t want to learn”: From a compilation of family film footage narrated by Mary Koch and viewed by the author.

  39. “another world”: Leslie Wayne interview notes.

  40. Frederick had a nervous breakdown: “The Curse on the Koch Brothers,” Fortune, February 17, 1997.

  41. “Father wanted to make all his boys”: “Survival of the Richest,” Fame, November 1989.

  42. “Freddie sort of segregated himself”: “Brothers at Odds,” The New York Times Magazine, December 7, 1986.

  43. “Freddie wanted no part”: “Survival of the Richest.”

  44. “He and Mrs. Koch have three sons”: “Responsible Leadership Through the John Birch Society,” a pamphlet published by the public relations department of the John Birch Society.

  45. tearfully pleading: “Survival of the Richest.”

  46. “bad boy who turned good”: “Brothers at Odds.”

  47. “I’m still alive”: Leslie Wayne interview notes.

  48. “Father put the fear of God in him”: “The Curse on the Koch Brothers,” Fortune, February 17, 1997.

  49. “It was a miracle”: “Charles Koch Remains Focused on Business,” The Wichita Eagle, March 29, 1998.

  50. In his baby book: “Wild Bill Koch,” Vanity Fair, June 1994.

  51. desperate gambits for attention: Ibid.

  52. “He’d lash out”: “Pulling the Wraps off Koch Industries,” The New York Times, November 20, 1994.

  53. “We had to get Charles away”: “Brothers at Odds.”

  54. “to grow up amongst ourselves”: “A Letter’s Legacy,” The Wichita Eagle, March 15, 1998.

  55. “When you’re one of four kids”: “Wild Bill Koch,” Vanity Fair, June 1994.

  56. mischievous bully: “Blood Feud,” Wall Street Journal, August 9, 1989.

  57. “For a long time”: “Wild Bill Koch.”

  58. bashed his twin over the head with a polo mallet: Ibid.

  59. David still bears a scar: Ibid.

  60. “from an unsophisticated country boy”: 2003 Deerfield Medal acceptance speech by David Koch.

  61. had become unhinged: Leslie Wayne interview notes.

  62. “You’ve got to talk to a psychiatrist to analyze it”: “Survival of the Richest.”

  Chapter 2. Stalin’s Oil Man

  1. 2,500 cracking-related patents: David McKnight Jr., A Study of Patents on Petroleum Cracking (University of Texas, 1938), p. 9.

  2. sixteen contracts: Winkler-Koch v. Universal Oil Products (S.D.N.Y., 1945), opinion, July 16, 1951.

  3. “conducting a very aggressive, active campaign”: Universal Oil Products Co. v. Winkler-Koch Engineering and Globe Oil and Refining Co. (D. Del., 1931), trial testimony of G. W. Miller.

  4. they gathered their clients: Universal Oil Products v. Winkler-Koch Engineering Co. and Root Refining Co. (D. Del., 1929), affidavit of Walter J. Blenko.

  5. Koch and Winkler had incorporated a new company: Charter of the Winkler-Koch Patent Company, February 20, 1929.

  6. The plan initially called: Details about the Winkler-Koch Patent Company and its legal defense fund come from documents and testimony in Universal Oil Products v. Winkler-Koch Engineering Co. and Root Refining Co.

  7. Winkler had been Universal’s chief engineer: The National Cyclopædia of American Biography, Vol. 56, p. 209.

  8. worked shoulder to shoulder with Carbon Dubbs: Charles Remsberg and Hal Higdon, Ideas for Rent: The UOP Story, 1994 (UOP), p. 138.

  9. declined to testify: Universal Oil Products v. Winkler-Koch Engineering Co., et al. (D. Del., 1931), opinion, April 27, 1934.

  10. “post graduates of Universal.”: Ibid.

  11. “exclusively a patent holding company”: Universal Oil Products v. Winkler-Koch Engineering Co. and Root Refining Co., trial transcript.

  12. “The differences that do exist are modifications”: Universal Oil Products v. Winkler-Koch Engineering Co., et al., opinion, April 27, 1934.

  13. to proceed vigorously: “Validity of Petroleum Cracking Patents Sustained,” Chemical Bulletin, June 1934.

  14. “We assume you will be interested”: Hearings Before a Subcommittee of the Committee on Military Affairs, United States Senate, 78th Congress, “Monopoly and Cartel Practices: Universal Oil Products,” November 3, 1943.

  15. a federal grand jury indicted: “Ex-Judge Davis Accused by Jury of Selling Favors,” The New York Times, March 29, 1941.

  16. $1.5 million from his foes: Charles Koch, The Science of Success (Wiley, 2007), p. 7.

  17. severed ties: Ibid., p. 10.

  18. “It was a living hell to him”: Koch v. Koch Industries, trial testimony of David Koch.

  19. Fred’s advice to his sons: Charles Koch, The Science of Success (Wiley, 2007), p. 7.

  20. led the world in petroleum production: Vagit Alekperov, Oil of Russia (East View Press, 2011), p. 80.

  21. “a plan for a great world revolution”: Hearings Before the Committee on Ways and Means, 71st Congress, “Prohibition of Importation of Goods Produced By Convict, Forced, or Indentured Labor,” p. 153.

  22. “its merit”: “American Cracking for Soviet Refining,” Oil of Russia, No. 4, 2012.

  23. When Fred arrived in Moscow: “Two Shores of Professor Sakhanov,” Oil of Russia, No. 1, 2012.

  24. “we will make you rotten to the core.”: Fred C. Koch, A Business Man Looks at Communism (1960), p. 8.

  25. “Why did you save my life?”: Ibid., p. 8.

  26. “We are here just like slaves”: Ibid., p. 38.

  27. “I’ll see you in the United States”: Fred C. Koch to Howard E. Kershner, January 9, 1961, Howard E. Kershner Papers, Box 10, Special Collections and University Archives, University of Oregon Libraries.

  28. “I was naïve enough to think”: “John Birch Signer,” The Washington Post, February 22, 1964.

  Chapter 3. “The Dead Will Be the Lucky Ones”

  1. “It’s something I grew up with”: Brian Doherty, Radicals for Capitalism, (Public Affairs, 2007), p. 407.

  2. “the only sound countries in the world”: Charles Francis de Ganahl, The Life and Letters of Charles F. de Ganahl, Vol. II, pp. 893–98.

  3. “whether we are going to be free men or slaves”: Fred C. Koch to Gen. Albert C. Wedemeyer, May 2, 1966, Albert C. Wedemeyer Papers, Box 45, Folder 30, Hoover Institution Archives.

  4. returned to Moscow: “Millionaires to Tell Russia ‘It Isn’t True,’ ” Associated Press, July 23, 1956.

  5. “The meeting will be completely ‘off the record’ ”: Robert Welch to T. Coleman Andrews, October 27, 1958.

  6. “Before tomorrow is over”: A transcript of Welch’s remarks in Indianapolis were published in The Blue Book of the John Birch Society.

  7. gave him a job: Koch, A Business Man Looks at Communism (1960), p. 7.

  8. “He was always convinced that they pushed him out”: “The Paranoid Style in Liberal Politics,” The Weekly Standard, April 4, 2011.

  9. “Here, Bob, we’re in business”: G. Edward Griffin, The Life and Words of Robert Welch (American Media, 1975), p. 274.

  10. “the dead will be the lucky ones”: Fred C. Koch to Rep. Al Ullman, May 11, 1961, Group Research Inc. Records, Box 190, Rare Book and Manuscript Library, Columbia University Library.

  11. So many listeners called in: Fred C. Koch to Howard E. Kershner, January 9, 1961, Howard E. Kershner Papers, Box 10, Special Collections and University Archives, University of Oregon Libraries.

  12. “It is not the Communists w
ho are destroying America”: Koch, A Business Man Looks at Communism, p. 5.

  13. “My father hated Picasso”: “The Koch Collection: Sculptures, Paintings Chosen for Powerful Statements,” The Wichita Eagle, September 6, 1992.

  14. Demand was so great: Fred C. Koch to Elizabeth Brown, November 9, 1961, Elizabeth Churchill Brown Papers, Box 2, Folder 19, Hoover Institution Archives.

  15. “a security risk”: FBI file of Fred C. Koch.

  16. “The sad fact”: “An Address Given on the Occasion of the Graduation Exercises at the Field House of the University of Wichita,” June 5, 1960, Dr. John Rydjord Papers, Box 9, Folder 6, Special Collections and University Archives, Wichita State University Libraries.

  17. “you won’t be very controversial lying in a ditch”: “Bircher Warns America of Massive Conspiracy,” Associated Press, August 16, 1961.

  18. “If many of the opinions”: Koch, A Business Man Looks at Communism, p. 20.

  19. he and Fred had led the successful effort to curb the power of unions: J. Allen Broyles, The John Birch Society: Anatomy of a Protest (Beacon Press, 1966), p. 58; also, “Responsible Leadership Through the John Birch Society,” a pamphlet published by the John Birch Society that included biographical sketches of its members.

  20. many of the same business leaders: Gene Grove, Inside the John Birch Society (Gold Medal, 1961), p. 96.

  21. “practically medieval”: Broyles, The John Birch Society: Anatomy of a Protest, p. 56.

  22. McCarthyesque tactics: “Organizations: The Americanists,” Time, March 10, 1961.

  23. “They used my textbook on differential geometry”: “In His Prime: Dirk Jan Struik Reflects on 103 Years of Mathematical and Political Activities,” Harvard Educational Review, Vol. 69, No. 4, Winter 1999.

  24. “an MIT Alger Hiss”: Fred C. Koch to Elizabeth Churchill Brown, February 9, 1962, Elizabeth Churchill Brown Papers, Box 2, Folder 19, Hoover Institution Archives.

  25. “down on Tech”: Fred C. Koch to Robert M. Kimball, February 1, 1961, Massachusetts Institute of Technology, Office of the President, Records of Julius A. Stratton, AC 134, Box 124. Massachusetts Institute of Technology, Institute Archives and Special Collections.