Begin Reading
Table of Contents
Photos
Newsletters
Copyright Page
In accordance with the U.S. Copyright Act of 1976, the scanning, uploading, and electronic sharing of any part of this book without the permission of the publisher constitute unlawful piracy and theft of the author’s intellectual property. If you would like to use material from the book (other than for review purposes), prior written permission must be obtained by contacting the publisher at [email protected]. Thank you for your support of the author’s rights.
For Stacey, my partner
on this and all other journeys
and
For Mom and Dad,
who made the path possible
Prologue
Morris eased the pickup truck to the side of the road. The wide, busy thoroughfares of 1950s Wichita, Kansas, were just five miles southwest, but here on the largely undeveloped outskirts of the city, near the Koch family’s 160-acre property, the landscape consisted of little more than an expanse of flat, sun-bleached fields, etched here and there by dusty rural byways. The retired Marine, rangy and middle-aged, climbed out of the truck holding two sets of scuffed leather boxing gloves.
“Okay, boys,” he barked, “get outside and duke it out.”
David and Bill, the teenaged Koch twins, were at each other’s throats once again. Impossible to tell who or what had started it. But it seldom took much. The roots of the strife typically traced to some kind of competition—a game of hoops, a round of water polo in the family pool, a footrace. They were pathologically competitive, and David, a gifted athlete, often won. Everything seemed to come easier for him. Bill was just nineteen minutes younger than his fraternal twin, but this solidified his role as the baby of the family. With a hair-trigger temper, he threw the tantrums to match.
David was more even-keeled than Bill, but he knew how to push his brother’s buttons. Once they got into it, neither backed down. Arguments between the twins, who shared a small room, their beds within pinching range of each other, transcended routine sibling rivalry.
Morris always kept their boxing gloves close at hand to keep the brothers from seriously injuring each other when their tiffs escalated into full-scale brawls, as they often did. The brothers’ industrialist father had officially hired the ex-soldier to look after the grounds and livestock on the family’s compound. But his responsibilities also included chauffeuring the twins and their friends to movies and school events, and refereeing the fights that broke out unpredictably on these outings.
Holding their boxing gloves, Morris summoned the feuding twins from the truck. They knew the drill. He laced up one brother, then the other. The boys, both lean and tall, squared off, and when Morris stepped clear, they traded a barrage of punches.
A few minutes later, once they’d worked it out of their systems, Morris reclaimed the gloves and the brothers piled breathlessly into the cab of the truck. He slipped back behind the wheel, started the engine, and pulled onto the road.
Another day, another battle.
Pugilism was an enduring theme in the lives of the Koch family. The patriarch, Fred Koch—a college boxer known for his fierce determination in the ring—spent the better part of his professional life warring against the dark forces of communism and the collective might of the nation’s major oil companies, which tried to run him out of the refining business. As adults, Fred’s four sons paired off in a brutal legal campaign against one another over the business empire he bequeathed to them, a battle with plotlines that would seem far-fetched in a daytime soap opera. “It would make ‘Dallas’ and ‘Dynasty’ look like a playpen,” Bill once said.
The roles the brothers would play in the saga were established from boyhood. Fred and Mary Koch’s oldest son, Frederick, a lover of theater and literature, left Wichita for boarding school in the Northeast and barely looked back. He was uninterested in the family business and a disappointment to his tough, bootstrapping father. An intensely private man who assiduously avoided the public eye, Frederick became a prolific arts patron and collector, with a passion for restoring historic properties stretching from France’s Côte d’Azur to New York’s Upper East Side.
Their father saw glimpses of himself in his rebellious second son, Charles, whom Fred Koch molded from an early age into his successor. After eight years in Boston studying chemical and nuclear engineering at MIT and working for a consulting firm, Charles returned to Wichita to learn the intricacies of his family’s oil refining, engineering, and ranching businesses.
David and Bill followed Charles (and their father before him) to MIT and eventually they, too, joined the family business. But that’s where their paths diverged. David became Charles’s loyal wingman, while Bill, still nursing childhood resentments, grew at first into a gadfly and then, in his brothers’ eyes, a hostile presence within the company. The public would know Bill best for his flamboyant escapades: as a collector of fine wines who embarked on a litigious crusade against counterfeit vino, as a playboy with a history of messy romantic entanglements, and as a yachtsman who won the America’s Cup in 1992—an experience he likened, unforgettably, to the sensation of “10,000 orgasms.”
Charles and David, meanwhile, built their father’s Midwestern empire—with about $250 million in yearly sales and 650 employees in the late 1960s—into a corporate behemoth Fred Koch would scarcely recognize, a company with $115 billion in annual revenues, more than 100,000 employees, and a presence in 60 countries. Under Charles’s leadership, Koch Industries grew into the second largest private corporation in the United States (only the Minneapolis-based agribusiness giant Cargill is bigger). Koch made its money the old-fashioned way—oil, chemicals, cattle, timber—and in its dizzying rise, Charles and David amassed fortunes estimated at $40 billion apiece, tying them for sixth place among the wealthiest men on the planet. (Bill ranks 329th on Forbes’s list of the world’s billionaires.)
They preferred to operate quietly—to run, as David once put it, “the biggest company you’ve never heard of.” But Koch Industries’ products touch everyone’s lives—from the gas in our tanks to the steak on our forks and the fertilizer that helps our crops grow, and from the drywall, windowpanes, and carpets in our homes and offices to the Brawny paper towels and Dixie cups we keep in the pantry. The company ranks among the world’s largest commodities traders, operates three ranches that sprawl over 425,000 acres, and processes some 750,000 barrels of crude oil daily. A day doesn’t pass when we don’t encounter a Koch product, though we often probably don’t know it. Koch Industries is omnipresent, but the Kochs managed to remain so under the radar that many Americans confuse the pronunciation of their surname with that of a former New York City mayor, Ed Koch, rather than pronouncing it like the soft drink, Coke.
David has lived the quintessential billionaire’s life. He traded provincial Wichita for New York City, where his name is etched into the façades of some of Manhattan’s most important cultural landmarks, including the Lincoln Center theater that’s home to the New York City Ballet. When not in his oceanfront mansion in Southampton, his Palm Beach villa, or Aspen ski lodge, David and his family reside in a storied Park Avenue high-rise, former home to John D. Rockefeller Jr., among other heirs to vast industrial fortunes.
Charles, by contrast, remained in his hometown, a city with an unassuming, head-down, and entrepreneurial character that matched his own. He lives in a modern, boxy mansion of stone and glass on the sa
me compound where he grew up—just the multibillionaire next door in his east Wichita neighborhood, where strip malls and chain restaurants have overtaken the once wide-open terrain.
Schooled by his conservative father in the evils of government, Charles gravitated to libertarianism, a philosophy that advocates the maximum of personal and corporate freedom and the most minimal government, if only to tend to the defense of these liberties. He grew to believe zealously in the power of markets to guide human behavior, and to loathe the government regulations and subsidies that distorted markets—and behavior itself—by trying to impose false order. Blending the ideas of the libertarian movement’s intellectual forefathers, Charles devised a unique management philosophy that placed a relentless emphasis on the bottom line, where even the lowliest pipefitter was meant to envision himself as an entrepreneur. This system, which Charles called Market-Based Management, helped him to build a conglomerate that generates massive profits, but which has often found itself in regulators’ crosshairs after blood was spilled or waterways were contaminated.
Charles has done more than just construct one of the world’s largest industrial empires. With David, he has spent decades trying to remake the American political landscape and mainstream their libertarian views. Together, the brothers pumped hundreds of millions of dollars into this endeavor. Unlike other major political donors, they offered more than just money; a strategic vision. They funded academics, think tanks, and political organizers to coalesce public support around their causes. The Tea Party movement that rose up after the election of President Barack Obama germinated, in part, from the intellectual seeds the Kochs had planted over the years. Though the brothers downplayed any connection to this cadre of irate citizen activists, they helped to provide the key financing and organizational support that allowed the Tea Party to blossom into a formidable political force within the Republican Party—one that paralyzed Congress and eventually ignited a GOP civil war.
Politicians, as Charles sees it, are merely vessels for the ideas you fill them with—or as one of his political advisors once put it, stage actors working off a script produced by the nation’s intellectual class. So while creating and financing the intellectual infrastructure to promote their ideology, he and David have backed a constellation of conservative candidates to do battle in the political arena—politicians such as Wisconsin’s Scott Walker, who upon assuming the governor’s office in 2011, staged a fractious showdown with the public employee unions of his state; or South Carolina’s Jim DeMint, one of the ringleaders of a Republican revolt against raising the nation’s debt ceiling that brought the nation to the brink of default.
Charles and David brought their political resources to bear as never before during the 2012 election, which Charles called “the mother of all wars.” Yet they emerged from the crucible of the campaign having gained little more than a reputation as cartoonish robber barons, all-powerful political puppeteers who with one hand choreographed the moves of Republican politicians and with the other commanded the Tea Party army. As with all caricatures, this one bore only a faint resemblance to reality.
For all the unwanted attention the Kochs received during the 2012 campaign—including the “other Koch brothers,” as the media sometimes dubbed Frederick and Bill—America came through that political battle knowing little about who they really are. Like other great dynasties, the Kochs have a mythology of their own that polishes the rough edges of history into a more pristine version of the truth. And the family’s legacy (corporate, philanthropic, political, cultural) is far more expansive than most people realize—and will be felt long into the future. In their lifetimes, the four Koch brothers have become some of the most influential, powerful, celebrated, and despised members of their generation. Understanding what shaped them, what drove them, what set them upon one another, requires traveling back to a time before the battles began.
CHAPTER ONE
Sons of Wichita
Strong-jawed and broad-shouldered, with reddish hair and a pair of wire-rim glasses that gave him an air of industriousness, Fred Chase Koch cut a dashing figure galloping up and down the polo field at the Kansas City Country Club. It was a September day in 1932, and debutantes crowded the sidelines to watch the match between the local old-money boys and the visiting squad from Wichita—a town newly flush with oil wealth, where Fred was a partner in a fledgling engineering company that catered to the refining industry. One of those society belles was Mary Clementine Robinson, the twenty-four-year-old daughter of a prominent Kansas City surgeon and granddaughter of a founding faculty member at Kansas University. She was tall, graceful, and erudite, with delicate features and a wavy bob of chestnut hair. A graduate of Wellesley with a degree in French, she was a talented artist and had worked as a designer for the Kansas City apparel maker Nelly Don.
Fred had remained a bachelor into his early thirties. There had been little time for settling down. He traveled regularly to far-flung locales to oversee the construction of refinery equipment and scare up new business opportunities for his firm, the Winkler-Koch Engineering Company. Recently, his work had even taken him to the Soviet Union, where Fred’s firm helped to overhaul the country’s archaic oil refineries, a lucrative contract that had made him and his partner millionaires.
That Fred was riding on the same polo field as the elite of Kansas City and in the company of women like Mary Robinson, whose ancestors included some of the earliest colonial settlers, spoke to his rapid rise from hardscrabble origins.
The second son of a Dutch immigrant turned frontier newspaperman, Fred was born on September 23, 1900, in Quanah, Texas, a poor but plucky town just east of the panhandle. To a boy, unaware of the hardships of frontier life, this whistle-stop town on the Fort Worth and Denver City Railway seemed like paradise. It had streams to fish, plentiful game to hunt, and fields to roam. At the turn of the century, Indians still periodically came to town, including Quanah’s stoic namesake, Comanche Chief Quanah Parker, who enjoyed visiting Fred’s father, Harry, to gawk at his modern printing press.
Though a magical place for a boy, Quanah’s allure diminished year by year as Fred grew into an ambitious young man. He came of age in a time of rapid technological change, and he suspected his future lay beyond his hometown, an enclave surrounded by prairie that stretched to the horizon, interrupted by occasional stands of spindly mesquite.
When Fred was born, there were fewer than eight thousand cars in the United States. They were expensive and impractical, the playthings of the rich. Yet by Fred’s sophomore year at Quanah High School, there were 2 million. Thanks, in part, to Henry Ford’s decision to forgo steam or electricity for gas-powered internal combustion engines in his signature automobiles, there was now a growing national thirst for gasoline, once considered a useless by-product of converting crude oil to kerosene.
Texas ranchers had once shaken their heads bitterly as they drilled down through the bone-dry soil in search of water, only for viscous oil to ooze to the surface. Now wildcatters raced to sink wells and tap the next big gusher. Among those lured in by the oil boom was Fred’s uncle, Louis B. “L. B.” Simmons, who had established a refinery in the oil town of Duncan, Oklahoma. The future, to Fred’s way of thinking, no longer belonged to those who could make crops grow in the soil, but to the engineers and entrepreneurs who could extract wealth from what lay beneath the surface.
A gifted student with a particular aptitude for science and math, Fred left home in the fall of 1917 for the newly established Rice University in Houston. The bustling oil-rich city was a significant change of pace from Quanah, where the Koch family’s home phone number had been all of a single digit—3. Fred thrived at Rice. His teachers considered him a standout student and his peers elected him president of his sophomore class. But like his father, Harry, whose wanderlust had led him from the Dutch harbor city of Workum to a dusty frontier town in Texas, Fred soon grew restless to experience the world.
He spent the summer after his sophomore year work
ing aboard the SS Coweta, a Merchant Marine vessel, as it steamed to England. When he returned, he did not go back to Rice. Instead, he moved east to Boston, matriculating to the elite Massachusetts Institute of Technology. Along with his studies, he also took up boxing and briefly captained the MIT team.
Fred’s engineering skills were in demand, and even before graduating, he accepted a position with Texas Company (later Texaco), where he worked as a research engineer at the company’s Port Arthur refinery on the Gulf Coast. But he saw little future there: “The way up the ladder in that large organization looked very steep and difficult.” So he quit, joined another oil company, then resigned from that one, too. As he struggled to drum up work as a consultant, Fred heard from an MIT friend, Carl de Ganahl, whose father was building a refinery in England and who would become a mentor to the callow engineer.
Charles Francis de Ganahl’s résumé read like an adventure novel. He was an explorer and entrepreneur who as a young man had established a sugar plantation deep in the Mexican interior after opening the country’s upper Panuco River to boat navigation. Over his trail-blazing career he dabbled in everything from shipbuilding to oil, and from plane manufacturing to gold mining, with business interests that spanned three continents.
In the early 1920s, with the domestic supply of oil increasingly controlled by the major U.S. oil companies, Ganahl established a petroleum refinery and storage facility in England. The Soviet Union supplied the refinery with the bulk of its oil, transporting it by tanker from the Georgian city of Batoum on the Black Sea.
Located on the Isle of Grain, where the Thames and Medway Rivers flow into the North Sea, Ganahl’s Medway Oil and Storage Company was ideally situated to provide deepwater access to oceangoing tankers. But the terrain, largely reclaimed marshland, posed an array of engineering challenges.
Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty Page 1
