by The Big Rich: The Rise;Fall of the Greatest Texas Oil Fortunes
Though opposites in every way, John and Clint Jr. operated seamlessly. They owned their assets in a partnership, Murchison Brothers, which Big Clint had set up for them in 1942. Though they plied separate spheres, and though their partnership was never put into writing, every investment was shared equally. After seven years of apprenticeship, Big Clint’s first 1956 stroke precipitated an organizational break between father and sons. The elder Murchison moved his interests into a new building on Mockingbird Road in north Dallas, leaving his sons to swim on their own. There were a few early missteps—John’s investment in a uranium mine was a total loss—but for the most part the two brothers proved able and active investors.
Unlike the parsimonious Hunts across town, but very much like their father, John and Clint Jr. enjoyed the finer things. John drove a Porsche to work and piloted his own Beechcraft Twin Bonanza; when he tired of slogging back and forth to Love Field, he built an airstrip two miles from his North Dallas home, then discovered so many friends asking to use it that he turned it into a private airport. As Big Clint’s health deteriorated, he began complaining about getting around the Big House. John’s growing family was bursting out of its three-bedroom house, so father and son switched homes—not that John’s wife, Lupe, was all that excited about a bar with tarpon scales on the wall. She launched an extensive remodeling, peeling off the scales, removing the screened-in porch out front, and turning the mansion into a vast showcase for entertaining. In time John and Lupe’s parties would become legendary in Dallas, occasions other families discussed for years afterward. One of the most famous was John’s fortieth birthday party, for which Lupe brought in a 120-piece orchestra from Houston, an all-black gospel choir, and a Dixieland band from New Orleans. At midnight fireworks burst overhead and the choir and the musicians launched into a fullthroated rendition of “When the Saints Go Marching In,” as hundreds of men in tuxedos and women in long gowns and diamonds, champagne flutes held aloft, danced late into the night.
In terms of Texas-style hedonism, though, John had nothing on his brother. Early on, Clint Jr. had declined his father’s invitation to build a home on a hundred-acre parcel Big Clint purchased across the road from the Big House. It wounded his father, but as with everything else, Clint Jr. wanted his own land, his own mansion. In 1954, after two years of searching, he purchased twenty-five acres of land three miles from his father’s estate. He wanted to design every detail of the home and the landscaping, and Jane, having just delivered the couple’s fourth child, relented, though she made clear she was eager to move out of their cramped three-bedroom Tudor in Highland Park.
Clint Jr., promising to move quickly, began work on the blueprints. The home he envisioned was to be even larger than his father’s, a 43,500-square-foot structure in the shape of a horseshoe. Hewn from hundreds of tons of stone borne to Dallas on railcars from Big Clint’s Acuna ranch, the house alone covered an entire acre. The main swimming pool, complete with an underwater viewing room, was so big it “could float the Queen Mary,” as one wag put it; a second, smaller pool was dug alongside the master suite, just for Clint and Jane. Then the problems began. Clint insisted on overseeing the tiniest details, from the width of molding in the bathrooms to the size and shape of each of hundreds of live oaks he was having planted. The electronics alone held up work for years. Decades before it became practical, Clint Jr. wanted a fully automated home packed with the latest gadgetry. Appliances would slide in and out of walls, curtains slid at the push of a button, even the bar was outfitted with an automated dispenser. “I don’t care for tending bar,” he explained. Stereos, lights, lamps, a security system—Clint Jr. insisted on doing it all himself. According to Jane Wolfe, he spent years perfecting a single big-screen television, long before such items reached stores.
By 1959, five years after planning had begun, the home was still long from finished. Yet even before Clint Jr. had his own mansion, he needed his own private island. Having grown up on Matagorda, he knew what he wanted, and after another two years of searching he settled on a tiny, undeveloped Spanish cay, a two-mile patch of white sand surrounded by turquoise water northeast of Abacos Island in the Bahamas. It was Matagorda Act Two, sans rattlesnakes. Clint oversaw construction of a five-thousand-foot runway, a radio tower, generators, and roads, then a luxurious main house and six guesthouses. Big Clint, who felt his son spent far too much time on such things, was unimpressed. “Well,” he grumped, “I guess the next thing the little s.o.b. will want is a string of racehorses and a mistress.” When the comment was relayed to Clint Jr., he quickly telephoned his father. “Hey Dad,” he asked, “do you know where I can get a string of racehorses?”6
Not that the pursuit of luxury kept John and Clint Jr. from the pursuit of profits. By 1957 the Murchison Brothers offices at 1201 Main thrummed with all the energy of Big Clint’s heyday. In the late 1950s the brothers expanded aggressively into real estate development, following a crowd of savvy young Dallas developers like Trammell Crow who were busy throwing up subdivisions all across the Sun Belt. (“You know who built Atlanta?” went the joke. “Dallas.”) The Murchison subdivisions, dotting the suburbs of San Diego, Los Angeles, New Orleans, Texas, and Florida, were built by Murchison-owned companies using Murchison-owned building materials trucked in on Murchison-built roads. “We like to make our money coming and going,” Clint Jr. quipped. Within two years the brothers had consolidated control over almost all of the family’s investments—Big Clint’s and their own—giving them stakes in more than one hundred separate companies, from insurance, oil, and construction to publishing, real estate, bus lines, banks, and BB guns. Their assets topped five hundred million dollars.
For the most part, no one knew it. Big Clint’s failing health remained a family secret, and the press continued to portray their empire as solely their father’s. When they were mentioned at all, John and Clint Jr. were dismissed as “Clint’s boys.” That image was to change dramatically, however, after September 1960, when John and Clint Jr. were shoved into combat on the national stage. Their opponent was a dour sixty-nine-year-old East Coast industrialist named Allan P. Kirby, and the fight was a convoluted sequel to Big Clint’s cameo in the struggle for control of the New York Central Railroad six years earlier. The railroad’s chairman, Big Clint’s friend Bob Young, had rewarded him with a large stake in another company, the three-billion-dollar Investors Diversified Services of Minneapolis, known as IDS. It had been a sweetheart deal, the shares acquired at below-market prices, and afterward it became the focus of a series of irksome shareholder lawsuits filed against the Murchisons, Young, and his partner, Kirby.
Big Clint didn’t get along with Allan Kirby—not many people did—but as long as Bob Young was around, it didn’t really matter. Unfortunately, the mercurial Young had been plagued with depression for years. In January 1958, while staying at his winter mansion in Palm Beach, he slid a shotgun into his mouth and pulled the trigger; the next morning the Murchisons awoke to find themselves the uneasy partners of Allan Kirby. In the wake of Young’s death, Kirby moved to rid himself of the shareholder lawsuits. The cost was steep, ten million dollars, but the hardest part was satisfying the plaintiffs’ demands to retrieve Big Clint’s IDS stock. The shares had risen in value, but somehow Kirby prevailed upon the senior Murchison to turn them over in exchange for an equal number of nonvoting shares. It was the only way to end the lawsuits.
The new arrangement, finalized in December 1959, made the Murchisons minority shareholders in an IDS now controlled by Allan Kirby; in effect, Kirby became a feudal lord while the Murchisons found themselves serfs nervously protecting a fifty-million-dollar investment in his fields. Things went bad from the start. Within weeks, and without so much as a phone call, Kirby abruptly threw out IDS executives the Murchisons had installed. It was a slap in the Texans’ face, but with little but seats on the IDS board, they were at Kirby’s mercy. At that point, the brothers had to decide whether to fight or sell their shares. Reluctantly, they girded for war. Gr
asping for leverage, the Murchisons swung a deal with Bob Young’s widow to buy the stock she held in Kirby’s holding company, the Alleghany Corporation; the package of common and preferred stock, if fully converted, would give the Murchison brothers about 20 percent of Alleghany’s voting shares, roughly the same as Kirby’s. It was a daring challenge. The serfs had now barged into the manor and thrown up tents in the living room.
Because Big Clint’s strokes remained a secret, the press initially believed it was the elder Murchison who had orchestrated the move. “At 64,” an ill-informed New York Times reporter wrote in a major profile of Big Clint in February 1960, “he has yet to slow down and consolidate his empire.” In fact, this was John and Clint Jr.’s fight from the outset. The brothers first sent word to Kirby demanding a say in how IDS was run. The imperious Kirby, however, refused to listen. The Murchisons brought in John Connally, now an attorney for hire, to mediate some sort of solution, but Connally got nowhere.
For six months things simmered until, that September, Kirby ousted the Murchisons from IDS’s board. John and Clint Jr. immediately declared war, announcing that they intended to seek a vote of Alleghany shareholders to remove Kirby as chief executive officer of his own holding company. It was to be not only the largest, most expensive proxy fight in Wall Street history to date—Alleghany controlled five billion dollars in assets, including IDS and the New York Central—but precisely the Texas Oil versus Eastern Establishment battle many had been expecting since the Big Four burst onto the national scene. It had taken a decade to arrive, and a new generation to fight it, and in the balance hung not just the fate of one investment but a judgment as to whether John and Clint Jr. would be viewed as legitimate players in the corporate world or merely pretenders to their father’s throne.
That this was to be a battle between Old America and New was obvious to all. Allan Kirby was a quintessential symbol of old money, the son of the founder of Woolworth’s, a prickly, withdrawn man who during a four-decade career had leveraged his vast inheritance into the largest single-ownership stakes in Woolworth, Alleghany, the New York Central, and the giant New York bank, Manufacturer’s Trust Company. His family, then as now, lived in the horse country around Morristown, New Jersey, in a twenty-seven-room mansion hung with Rembrandts and Gainsboroughs. Kirby was strong and mean and very capable. He was worth three hundred million dollars.
Kirby was the perfect foil for a Texan, and the press ate it up. Life enthused about a battle shaping up between “two great American economic baronies—the rough-hewn Texas beef, oil and money combine and the elegant Eastern financial syndicate.” The accompanying photos said it all, Kirby’s Rolls-Royce adorned with APK 1 license plate, Kirby glowering on a New York ferry, the Murchisons symbolized by a Brangus bull bearing the family’s 7L brand. One Life photo, of John Murchison standing with his family beside a bronze sculpture in the foyer of the Big House, suggested that for all the hoopla about a clash between East and West, the cultural chasm between the two sides—and the two Americas—was no longer as vast as it once had been. John, though a native Texan, was a Yale man. His state was growing up.
It was John, the brother more attuned to banking and finance, who took the lead against Kirby. A proxy fight is a bit like a political campaign. Alleghany shareholders were the voters, and all would need to be romanced if the Murchisons were to have any hope of winning. The odds were against them; Kirby had long, strong ties on Wall Street, and already controlled more than 20 percent of the shareholder votes. John readied for a siege. In the fall of 1960 he rented offices at Forty-eighth and Madison Avenue and shifted much of the Murchison Brothers corporate staff from Dallas to New York. He augmented his forces with dozens of New York lawyers, two separate proxy-solicitation firms, and, as his aide-de-camp, the noted investment banker Gustave “Gus” Levy of Goldman Sachs. Anticipating a long, nasty fight, John and his wife, Lupe, moved to Manhattan, settling into a seventeen-thousand-dollar-a-month suite at the Carlyle Hotel, leaving their four children behind with a governess in Texas. Clint Jr. flew in once or twice a week to help out.
John fired the war’s first shot, slamming Kirby with a lawsuit charging him with fraud and conspiracy in connection with Big Clint’s turnover of IDS stock. Kirby yawned; that he considered the Murchisons unlettered yokels went without saying. One of his men sniffed to a reporter that the Murchison empire was a “vehicle put together of glue, string, turpentine and wind.” With a quarter of Alleghany’s stock in his pocket, Kirby could easily have warded off the Murchisons by buying a majority of its shares. But he didn’t. From all appearances, he never thought he had to. In time Kirby got around to his own lawsuit, charging Big Clint with insider dealings at IDS. That winter John and Clint Jr. countered with a public relations offensive, sitting for long interviews with eastern reporters who appeared surprised they weren’t wearing Stetsons and string ties. The brothers played up their status as southwestern underdogs, telling the New York Times man with a straight face how surprised they were to find “rustlers and brand-changers” in the corridors of Wall Street.
For all their Sturm und Drang, many Wall Street fights, like courtroom trials, are designed to force both parties toward settlements. In early March 1961, with the Alleghany shareholder vote just two months away, Kirby consented to peace talks in his Park Avenue offices. John demanded two seats on the Alleghany board of directors, and Kirby appeared to agree. The next morning’s headlines declared the war over before it had really started, but the settlement fell apart later that day when Kirby refused John’s demands to replace IDS’s CEO with a man more to his liking. At that point both sides filed papers with the Securities and Exchange Commission to begin active solicitation of proxy votes for the shareholder meeting.
Now the real fighting began. In his Madison Avenue war room, John and his advisers divided the country into eighty blocks and assigned men to telephone Alleghany shareholders in each. He and Clint Jr. spent hours on the phones, patiently explaining to investors large and small how they could run Alleghany and IDS more efficiently than Kirby. Kirby, meanwhile, hired private detectives and sent them snooping through years of Big Clint’s complex business deals. They compiled thick dossiers charging Big Clint with a potpourri of financial chicanery, from sweetheart real-estate deals with Richard Nixon (true) to cheating the federal government on housing contracts (probably not) to allegations that he did business with the Mafia (doubtful). The dossiers were then forwarded to journalists including the columnist Drew Pearson, who by and large ignored them, telling Kirby’s men to come up with something concrete or shut up.z But if few of Kirby’s charges surfaced publicly, they circulated widely on Wall Street, and would pop up regularly in tales about the family for years to come.
Through it all, John worked sixty-hour weeks, and the stress and long hours began to take their toll. Never possessed of the strongest constitution—John’s wartime stresses and asthma were never far from his mind—his energy flagged. His eyes grew puffy. He began smoking. Lupe tried to divert him with weekend tours of Manhattan art galleries, which kindled in John a lifelong love for contemporary and avant-garde art. He began buying dozens of canvasses and shipping them back to Dallas. But art-collecting alone couldn’t revive him. He felt increasingly estranged from his children and finally, fearing a nervous collapse, John returned to Dallas for three full weeks to recover. In his absence, Clint Jr. did his best to keep the fight going.
By early April, with the vote a month away, the brothers could point to some encouraging signs. Several major shareholders, including two onetime Alleghany directors, had announced their support. Both sides were buying stock, and thus votes, as fast as they could—trading in Alleghany shares was the heaviest in any stock since the crash of 1929—but the betting on Wall Street was that Kirby would find a way to beat his upstart challengers. Then, just eleven days before the shareholder vote, Kirby blundered. Alleghany hadn’t declared a stock dividend in its thirty-two-year history, but Kirby now announced it would, five c
ents on every share. It was a transparent attempt to curry favor with stockholders, and a sign of Kirby’s desperation. John wasted no time capitalizing, taking out full-page advertisements in the Wall Street Journal and New York Times featuring a cartoonish Kirby tossing handfuls of “five-cent chicken feed” to Alleghany shareholders.
The shareholder meeting, held at the Lord Baltimore Hotel in Baltimore, proved anticlimactic. Kirby made polite remarks, refusing to mention the Murchisons by name. John stood in the audience and answered a question or two. Afterward, both sides told reporters they were confident of victory. It was supposed to take a full week to count the votes. It ended up taking three, but by then the word had leaked:
Texas won.
The final tally gave the Murchisons 54 percent of shareholder votes, a very tight race by Wall Street standards. For John and Clint Jr., the ensuing media acclaim matched anything lavished on the original Big Four. The coverage peaked when they followed their father onto the cover of Time. Much like NASA’s arrival in Houston two years earlier, the Time cover marked a turning point in the image of Texas and its oilmen. Where seven years earlier Big Clint had been portrayed in a rancher’s straw hat, John and Clint posed for Time in business suits; the only nod to Texas was the lasso-draped skyline behind them. According to the article:
The Murchisons’ victory on Allan Kirby’s home grounds was dramatic notice of the changing role of Texas in the U.S. economy. Easterners still like to think of Texans as illiterate oil millionaires who wear ten-gallon hats—and, when they are in Wall Street looking for money, some Texans shrewdly play the expected part… . But at home in Dallas or Houston, today’s Texas tycoon is more apt to wear a Brooks Brothers suit than Texas boots; though his poke may have started in oil (and gained by the 27½% depletion allowance), much of it now comes from electronics, real estate, insurance or shipping. And for the new Texan, Texas is no longer big enough. Ranging across the nation like eager bird dogs, Texas businessmen are supplying capital, entrepreneurial vigor and acumen in nearly every area of the U.S. economy.
