The Very, Very Rich and How They Got That Way (15 page)

“You qualify for a commission as an administrative or supply officer,” Secretary Knox declared, “but sea duty is out of the question.” He paused and studied me closely. “I understand you own the Spartan Aircraft Corporation,” he said after a moment. I agreed that I did.

“The armed forces must have every aircraft factory in large-scale production as soon as possible,” he told me. “The most important service you can render the war effort is to drop all your other business interests and take over direct personal management of Spartan.”

I arrived in Tulsa as the working president of Spartan in February 1942. There was a tremendous amount to be done and very little time in which to do it. Manufacturing facilities – including factory space – had to be expanded, machinery and tools obtained, engineers and technicians recruited and workers hired and trained by the thousands. Despite bottlenecks, shortages and setbacks, peak production was attained in less than 18 months.

I remained in active and direct charge of Spartan’s operations throughout the war. Before it ended, the Spartan flying school was training as many as 1700 fledgling aviators at a time. By V-J Day, the Spartan factory – employing more than 5500 workers at the peak – had turned out a vast array of airplane parts and components on subcontracts from major aircraft firms. Among these were 5800 sets of elevators, ailerons and rudders for B-24 bombers; 2500 engine-mount sets for P-47 fighters; Curtiss dive-bomber cowlings by the hundreds; Douglas dive-bomber control surfaces by the thousands; wings for Grumman Wildcat fighters; tail booms for Lockheed P-38 pursuits. Spartan also produced N-1 primary trainers on prime contract.

Spartan’s production record brought high commendations from the armed forces – tributes to the efficiency and loyalty of the men and women who’d worked for the firm and who did their part in helping to win the war.

I stayed on at Spartan until 1948 to nurse the firm through the pangs of reconversion to peacetime production of house trailers. Then once more I went back to my first and greatest business love – oil.

My oil companies were prospering and were larger and more active than ever before, but it was time for additional expansion. Vast demands had been made on America’s oil reserves by the war, and post-war petroleum consumption was rising sharply throughout the world. Oil prospectors were fanning out – to Canada, Central and South America, Africa and the Middle East – searching for new oil sources. Instinct, hunch, luck – call it what you will – told me the Middle East was the most promising locale, the best bet, for oil exploration. I had almost obtained an oil concession in the Middle East in the 1930s but had allowed my chance to go by. Now I decided to seek a concession to prospect and drill there and make up for the opportunity I had lost. In February 1949 my company obtained a 60-year concession on a half interest in the so-called Neutral Zone, an arid, virtually uninhabited and barely explored desert region lying between Saudi Arabia and Kuwait on the Persian Gulf.

The concession was granted by His Majesty, Ibn Saud, king of Saudi Arabia. In immediate consideration for the right to explore and drill for oil in the Neutral Zone, I paid the Saudi Arabian government $12,500,000. It was a gargantuan risk, and many people in the petroleum industry once again openly predicted I would bankrupt my firms and myself.

Four years and $40 million were needed before we brought in our first producing well in the Neutral Zone. But by 1954 I could relax and enjoy a private last laugh at the expense of those who had prophesied my ruin. The Neutral Zone had proved to be one of the world’s most valuable oil properties. Well after well had come in, and petroleum geologists conservatively estimate proven reserves in places in the region covered by my concession to exceed 13 billion barrels!

With this tremendous reserve and with producing wells in the Middle East and elsewhere bringing up millions of barrels of crude oil annually, it has been necessary to expand even further in other directions. My companies have had to build and buy additional refineries to handle the enormous crude-oil production. Pipelines, storage facilities, housing projects for workers and innumerable other installations and facilities have been built or are abuilding.

A $200-million Tidewater Oil Company refinery was completed at Wilmington, Delaware, in 1957. Another Tidewater refinery near San Francisco has been modernized at a cost of $60 million. There is a new 40,000-barrel-a-day refinery in Gaeta, Italy, and another with a 20,000-barrel-a-day capacity in Denmark.

In 1954 and 1955 construction began on the first vessels in a fleet of supertankers. Several of these have been completed and are even now in operation. This tanker construction program is proceeding apace. Tonnage afloat and now under construction exceeds one million deadweight tons. Among the ships are truly giant supertankers displacing upwards of 70,000 tons.

My firms have recently built spanking new office buildings in Los Angeles, California; Tulsa, Oklahoma and New York City – at a cost approaching $40 million. Regardless of what they produce, plants and businesses owned by Getty interests are oriented to steady expansion. Management is constantly seeking ways and means to increase output, and large-scale projects are under way to develop new products and to find new applications and uses for old ones. By no means the least of the activities in which my companies are engaged are oil and mineral explorations, which are being conducted energetically on four continents.

This, then, is the story of how I chose my road to success and how I travelled it from my wildcatting days in the Oklahoma oil fields, of how I’ve built my business and made my fortune. To it I would like to add a brief, highly personal – and mildly rueful – footnote.

For years I had managed – at least on the whole – to avoid personal publicity. Or, rather, since I did nothing either to seek or evade it, I suppose it would be more accurate to say that personal publicity avoided me. This state of peaceful near anonymity ended suddenly and forever in October 1957, when
Fortune
magazine published an article listing the wealthiest people in the United States. My name headed the list, and the article labeled me a billionaire and “The richest Man in America.” Subsequently other publications gave me the even more grandiloquent title of “The Richest Man in the World.”

Since then I’ve been besieged by requests to reveal exactly how much money I have. I’m seldom believed when I reply in all honesty that I don’t know, that there is no way I
can
know. Most of my wealth is invested in the businesses I own or control. I make no claims about the extent of my wealth, and I really don’t care how rich I am.

Today my companies are thriving, and they’re carrying out ambitious programs for further expansion. My primary concern and main interest lie in making certain that my companies continue to grow so that they can provide more employment and produce more goods and services for the benefit of all.

My associates and I are convinced that the overall economic trend is up and that despite the alarms and fears plaguing our era, the world is on the threshold of a prosperity greater than any in its history. We want to contribute our part to bringing this prosperity about – and to share in it, along with all peoples in all countries throughout the world.

2 Originally appeared in
Playboy
magazine under the title “How I Made My First Billion”. Copyright © 1961, 1965, 1966 by Playboy.
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The men in this gallery have used many and varied techniques to hoist themselves to the top of the financial heap. Salesmanship, borrowed money, technical innovation, plain old-fashioned audacity – we’ve watched and will watch these and other techniques and approaches being applied. We can analyze the techniques in a general way, for each is tangible enough so that you can grab it, turn it around and upside down, study it from this angle and that. Each seems capable of being taught, at least to a minor extent, by one man to another.

Now let’s look at another component of success whose qualities are quite different: luck.

Luck can’t be taught by or transferred from one man to another. It can’t easily be analyzed. It isn’t tangible; there are no convenient handles by which to grab it and examine it. Yet, bafflingly, it seems to be a necessary part of almost every man’s climb to the top.

Luck, the totally unpredictable workings of a blind and uncaring fate. Its presence is more clearly felt in some men’s lives, of course, than in others. J. Paul Getty credits luck for much of his success. Joe Hirshhorn, the stock-market player, had to have it in large measure. Many of his most successful plays, while founded partly on wisdom, still depended on the outcome of future events that could not be foreseen with any real clarity. He sold all his stockholdings just before the market crash in 1929, and he later admitted luck had a great deal to do with it. Hundreds of other men, less smart or less lucky, failed to sell out – and nobody knows their names today.

Luck isn’t so clearly evident in the lives of other rich men, but if you look hard enough, you can always see it lurking somewhere in the background. Clement Stone, for example, appears to have battled his way from poverty to riches solely with his own brain and backbone. Yet there were many key points of his life when ill fortune could have squashed him flat as it has squashed other men. On his first day as a frightened young salesman he managed to peddle two insurance policies. Suppose, by chance, he had not met the two kindly gentlemen who bought those policies. Suppose his sales total that day had been – as it could easily have been, but for a quirk of fate – zero. It is conceivable that he might then have become discouraged and quit the insurance-selling business forever.

At any time of his life, too, he could have been stopped by sickness or automobile accident or any of a hundred other calamities. None of these things happened. And so Clem Stone kept going onward and upward.

It is instructive and somewhat scary to think that there might have been another teenage salesman who began peddling insurance on the same day as young Clem Stone, in the same city, perhaps even the same office building. This other young fellow might have had latent sales talents equal to Stone’s. Blundering in and out of offices just as Stone was doing, he had the bad luck not to meet two kindly gentlemen who happened to have a need for health-and-accident insurance. And so this other young man quit the business in disgust and went – who knows where? Downhill, perhaps. Stone, meanwhile, falling into two sales by sheer blind luck, gained enough encouragement to go on sharpening his then-unknown talents as a salesman and ended with $400 million in his bank account.

The other would-be salesman, aged about 70 today, may be living in pinched and gloomy retirement from some penny-ante job. He may still be working for a few bucks a day to keep body and soul together. He may be on the Bowery. He may be dead.

But instead of just imagining this luckless man, is there any way in which we can track him down in the flesh, actually talk to him, find out exactly what his life has been like?
True
magazine once asked me to do exactly that. The assignment was to find two men who had been born and bred in the same year, in the same section of the same town, with the same advantages and disadvantages – one of whom had gone uphill and the other of whom had gone down. The story was to be a study of that elusive phenomenon, luck.

It was a fascinating assignment but a tough one. I had to approach it backward. I started by going down to New York’s Bowery district, that depressing and grimy home of the homeless, the destitute, the washed-up. I went into the Majestic Bar, where you could buy wine for 15 cents a glass. I handed out a few bucks and briefly took down the life stories of all the ragged, bleary-eyed men who were lined up along the elbow-worn, drink-spotted bar. Then I went to a library and combed through
Who’s Who
and other volumes until I found a successful man who had been born and brought up in the same town and circumstances as one of my Majestic bums. I then interviewed both men at length, and I interviewed other people who seemed to have something to say about luck and here is the story.

They lived through the same sociological changes, the same historical events, the same world cataclysms. They grew up as boys in the Roaring Twenties. The Great Depression smacked them down as teenagers. They were sucked into the vortex of the Second World War as young men in their 20s. They were spewed out again into the fantastic peacetime boom of the late 1940s and the 1950s. And today they are middle-aged men in the early autumn of life, looking back on spring and summer, on failure and on success.

Today Charles Alexander Wilson is known to his friends as Banana Nose. He is a Bowery bum. Issur Danielovitch is known as Kirk Douglas. He is a Hollywood star and a millionaire.

Fortune has treated them unequally. Why? Are their characters different? Of course. Has one tried harder than the other? Certainly. Heraclitus remarked some 25 centuries ago that character is destiny, and philosophers and novelists and moviemakers since then have made the point over and over again. To a large extent a man makes his own fate. But is that all there is to it? How about luck, pure, blind, random, uncontrollable chance? Did luck play any part in the diverse lives of Kirk Douglas and Banana Nose Wilson?

It did – a very big part. There were events in both men’s lives that were seemingly beyond their control, events that took shape beyond their purview and then came crashing into their lives. These events helped one man reach a pinnacle of success – and knocked the other man flat.

Luck. It blunders in and out of our lives, unbidden, unexpected, sometimes welcome and sometimes not. It is the supreme insult to human reason: You can’t ignore it; yet you can’t plan for it. No matter how carefully you design your career, you cannot know how the design will be changed by the workings of random events. You can only know that the events will occur. You can only wait for them and hope that they’re in your favor.

“Nobody has ever figured out a way to duck luck,” says Sherlock Feldman of Las Vegas. Feldman lives in a world of raw luck, a world in which people deliberately expose themselves to the distilled essence of it. He is casino manager of the Dunes, one of Nevada’s biggest gambling clubs. On duty from 2:00 A.M. to 10:00 A.M., he daily watches people who would rather play with raw luck than sleep. “The very fact that you exist at all is a matter of luck. If you want to scare yourself or amuse yourself – depending on your viewpoint – find out how your father chanced to meet your mother. Maybe they met at a party. Maybe your father was only at the party because he happened to run into a buddy on a street corner that day and the buddy invited him to drop in that night. That’s how close you came to not existing.”

Feldman, a beefy man with thick-rimmed glasses and a look of sad good humor, does a lot of thinking about luck. “It’s a strange commodity,” he says. “You can get superstitious as hell about it if you let yourself. People come in here with rabbits’ feet and astrology charts and all kinds of crazy ideas about how they’re going to control their luck. I laugh. I say, ‘There’s no such thing as luck. It isn’t a mystical something; it’s just random events.’ But then somebody comes in and does something that’s statistically impossible and I have to say, ‘Well, yes, he had luck.’ ”

Like the innocent tourist who dropped in one night recently – “a guy, I don’t even know his name, a little guy from nowhere.” The little guy had about $100 with him and was prepared to lose it all. He thought he would like to try shooting craps. He had never played the game before and had to be taught how. Normally a crapshooter thinks himself lucky if he holds the dice and continues winning for five or ten minutes, and a quarter hour is considered a superb run of luck. The little guy from nowhere held the dice for a fantastic two hours and forty minutes. When the incredible game ended, he had won about $30,000.

“How do you explain a thing like that?” asks Feldman, frankly puzzled. Many veteran gamblers around the table that night thought something was at work, though their definitions of this something differed. Some said the little guy was “hot” – meaning, essentially, that he was temporarily in a condition in which random events were influenced to fall his way. Influenced how, by what force or agency? Some of the onlookers said they didn’t know, but others talked about something called “psychokinesis” – a presumed mental capacity by which the amateur gambler himself controlled the fall of dice. Others spoke of “precognition,” the gambler’s ability to look into the future and see how the dice would fall. Still others thought his luck resulted from mysterious forces operating around him but not within him, not under his control – forces exerted by the stars or other external agencies that, for reasons not known, were favorably disposed toward him on that particular night.

And a few thought the winning streak had no special significance at all. It was just a gathering together of random circumstances; it happened for no particular reason, without any intervention of unseen forces.

However you define luck, it patently exists. The phrase
streak of luck
is in the language because it articulates a common human experience. There are days when everything you touch turns to gold, and there are other days when everything turns to – well, let’s be polite and call it dust and ashes. Some men seem consistently luckier than others – so much so, often, that friends of the fortune-blessed individual will talk as though luck is a built-in part of his career equipment, like education. “That lucky bastard,” they‘ll say, “he can’t do anything wrong!” His shoelace never breaks when he’s hurrying to catch a plane. No waitress ever spilled coffee on his pants when he was on his way to an important appointment. When his car conks out, he’s always half a block form a service station. It never rains when he goes to a ball game, but when he wants to ski, it snows.

Among the most famous of such lucky men was Jesse Livermore, a stock-market speculator who flourished early in this century and whose bets were consistently, outrageously right. The story of Livermore’s luck would be too weird to believe if its main points were not documented in Wall Street’s archives. Livermore was a farmer’s son, born in Massachusetts, who drifted to Boston as a young man and got a clerical job in a brokerage house. He became fascinated by a type of gamble called short selling. In this hair-raisingly risky maneuver, you sell shares of a stock before you own them. You hope the price will drop before you’re required to “cover” or deliver the shares. If the price does drop, you make money by buying the shares for less than the amount you’ve already sold them for. It is a way of manipulating big blocks of stock without needing big capital to start with. You stand to make huge profits without investing any of your own money – but conversely, of course, you face equally huge losses if the stock goes up in price.

Livermore quickly discovered that he had an uncanny ability – he could never fully explain it – to sense when a stock was about to drop in price. He began by making penny-ante bets with fellow clerks at the Boston brokerage house. He would bet that a certain stock would drop next week when everybody else, including seasoned traders who were customers of the house, thought it would rise. It would drop. When people asked him how he knew, he could only shrug and say, “Just luck, I guess.”

He began selling short on the stock market itself. He became a multimillionaire. He was so consistently and uncannily successful that newspaper and magazine writers of the time, and even some hardened Wall Streeters, seriously believed he had the gift of precognition.

He denied it, but some of his parlays were hard to explain any other way. One morning in April 1906, he strolled into a broker’s office and sold short several thousand shares of Union Pacific. It was a supremely foolhardy thing to do. The stock market was booming, and Union Pacific was one of the hottest growth issues on the board. The brokerage manager was sure Livermore had made a mistake. “You mean
buy
, don’t you?” asked the manager. According to onlookers, Livermore picked up the order slip he had just filled out, stared at it with a faintly puzzled expression, then slowly shook his head. “No,” he said, “I mean what I wrote.” And with a distant smile, he left.

The next day he was back. The situation hadn’t changed. All the news about Union Pacific was still overwhelmingly bullish. The vast majority of professional trades, far from selling it short, were greedily buying it on margin. But Livermore, still with that vaguely puzzled air yet oddly serene, sold more thousands of shares short.

On the next day, April 18, San Francisco was smashed by an earthquake. Millions of dollars in Union Pacific track and other property, and uncountable millions in potential earnings, vanished beneath the rubble. The company’s stock fell like a stone. Livermore covered his short sales and came out of the deal more than $300,000 richer.

“Where did you get the hunch?” they asked him later. He could only shrug helplessly.