Howard Hughes

by Clifford Irving

  You see, the Convair people, from the very beginning, had made a mistake in the negotiations with me. When I go in to negotiate with a man, or a company, I assume from the beginning that everybody’s out for his own interests, and from the beginning you’ve got to lean on the other guy. If he’s worth his salt he’s going to try and lean on you, and you have to get in the first push. So I started leaning on Convair from the beginning, and I leaned, and I leaned, and they fell right over without a whimper. They weren’t donkeys, they were lapdogs.

  I had a great deal of faith in the plane we were going to develop, the 880. I didn’t want my competition using it – Pan Am and American and United. So Convair and I reached an understanding that they wouldn’t sell the 880 to anybody except TWA and airlines such as Delta who flew other routes and weren’t in competition with TWA. Now that, you must admit – to agree to a restrictive condition like that – was pretty dumb of them.

  There was a time limit, of course. But by the time the time limit was up, United and American had committed themselves to planes from Boeing and Douglas, and Convair wound up holding the bag – the empty bag. They blamed me, but all I did was negotiate powerfully. If they had negotiated powerfully against me, we would have come to some more reasonable arrangement.

  I knew Jack Zevely was under a lot of pressure, especially during these design sessions with me. He wasn’t used to staying up all night. Moreover, I had an advantage in that I absolutely controlled my company. For all practical purposes I owned TWA, whereas Zevely and all these guys I dealt with were representing a bunch of stockholders and had to watch their step.

  But I tried to do everything I could for the man. Once, after we’d been talking half the night, I said, ‘What you need is a little pick-me-up, Jack, and I’m going to take you to the movies.’ I arranged a private midnight showing of a new film at RKO – Jet Pilot. I got Janet Leigh to come down, and Janet sat next to him during the show and cuddled up to him. He fell sound asleep.

  Jack Zevely made a very unkind remark afterwards. He said the 880 was not named after the eighty-eight seats it was supposed to have, but for the ‘880 ridiculous goddamnned conferences’ he’d had with Howard Hughes.

  I hadn’t picked up these 880s yet, because the changes hadn’t been made that I had insisted on. I decided I didn’t want the planes. They hadn’t styled them exactly the way I wanted them, but I said to myself, ‘Jesus, I’ve got to give these guys a break.’ And they’d come up with a new plane by then, the Convair 990, so I said, ‘All right, give me a dozen of those.’

  And you got those?

  No. I had to cancel that order too. By then I’d bought Boeing 707s. And I didn’t have any more spare cash. You see, to start this financing program after the war, we needed $500 million. That’s big money. I called Noah Dietrich one day and said, ‘Noah, where the hell am I going to get this $500 million?’

  ‘What $500 million?’ he asked.

  ‘Pay attention to your job,’ I said. ‘Get out the files and look and see what the goddamn TWA’s committed itself to.’

  He called me back two days later and said, ‘Howard, where are we going to get the $500 million to buy these airplanes?’ That was Noah.

  Toolco had a hundred million in cash, profits from the expansion program that we had gone into recently. But that left us four hundred million short. Noah wanted a bond issue, because he wasn’t sure that Toolco’s profits would continue in the same way. The bond issue was meant to be a sort of insurance against the possibility of profits dropping off down at Houston. But he wanted not only a bond issue guaranteed by Hughes Tool, but a bond issue with a conversion clause – meaning that the bondholders could convert at a given point into common stock or preferred stock, whichever the hell it was. This meant in effect that they could take part of Toolco away from me, and I wasn’t having any of that. I said, ‘No dice.’

  We worked out some sort of compromise, because we had to come up with the money. I got Fred Brandi of Dillon Read in New York to start the ball rolling – you need a syndicate, you understand, to float an issue of that size. Fred went ahead, and then the details filtered back to me and I realized I could lose my ownership of Toolco this way. That’s what everybody wanted in the long run – they wanted to take Toolco away from me.

  I called Fred and said, ‘Forget it. Kill it.’

  My father always said, ‘Watch out for partners.’ And what could be worse than being partners with several thousand greedy stockholders? They never care about the company, they just care about the price of the stock.

  It was then that Noah Dietrich committed the most irresponsible act of his business life. I was buried up to my neck in the problem of trying to find $400 million, and he went off on a vacation to shoot a goddamn elephant in Africa. He said he was going on safari, but I have a feeling he just wanted to hide out down there. He said I had been so indecisive in the buying of the new jets that he couldn’t stand it, and I wasn’t taking his advice now, and he was going.

  Don’t you think it’s true that you had been indecisive?

  Because I kept changing my mind? That’s not indecision. That was just an intelligent reaction to changing circumstances. The Convair people promised me they could do certain things and then when it turned out they couldn’t do them, I backed away. Then they came up with a new set of promises, and dropped the ball there too. I knew what I wanted and they couldn’t deliver.

  Noah, however, called it indecision, and told me I was being irrational in the matter of raising the money for TWA, and he elected to flee. I did everything I could to stop him, not out of selfish reasons, except insofar as the company was in trouble and I needed Noah. I offered him six months’ vacation if he’d just wait until the troubles were over, but he wanted his three weeks in Tanganyika. I telephoned him at Kennedy Airport in New York – had him paged. I pleaded with him. I got down on my knees – I didn’t literally get down on my knees, because I was on the telephone – but verbally I got down on my knees. I said, ‘Noah, please don’t go. I need you.’

  ‘Goodbye, Howard,’ he said, ‘I’ll see you in three weeks.’

  By the time the great white hunter got back I’d come up with an interim solution. For one thing, I stalled, and while I did that, TWA began to do better, so that it turned out we didn’t need that much cash at all. I squeezed what I could out of Toolco and Equitable Life and the Bank of America and Irving Trust – maybe $30 million. I got it by means of short-term 90-day notes guaranteed by Toolco.

  An incident happened there that seemed minor at the time, but if I’d had my thinking cap on I would have realized that it was a portent of the future. These 90-day notes were renewable, and the second or third time I wanted to renew them – this was a $12 million loan from Equitable Life – they balked.

  How much did TWA owe by that time?

  It wasn’t so much a question of how much TWA owed, it was a question of our long-term commitments for jets. That, at the time, amounted to around $300 million. I wanted the loan to be renewed and the guys up at Equitable got a little stuffy and said, ‘Give us the details on your long-term financing.’ In other words, they wanted to know specifically how I planned to find the rest of the three hundred million. I said, more or less, ‘It’s none of your business. Do you want to lend me the twelve million or don’t you?’

  ‘Well, sure,’ they said, ‘we know you’re good for it, or at least Toolco’s good for it, but we’d like to have some guarantee for the future, and for our stockholders.’

  This was just doubletalk. Then they got around to the point.

  You remember that back in 1948 I loaned TWA $10 million which I eventually converted into stock, and that’s how I first got control of the airline. Equitable Life had been mixed up in that, in the sense that they had also loaned TWA $40 million. They were my principal creditor, and one of the conditions they put on my conversion rights was that if TWA defaulted on its payments to Equitable, then my stock would be put into a voting trust controlled by th
em.

  They brought this up again in 1958 when I wanted to renew the ninety-day notes. ‘Sure, Howard,’ they said, ‘we’ll give you the money, but if you don’t complete the long-term financing within a set period of time, let’s think about that voting trust possibility.’

  This was said by a man named Oates, who ran Equitable. I got the drift, and I said, ‘Thank you very much, Mr. Oates. I’ve decided I don’t need your $12 million anymore. You’ll have it back within a week.’

  I dug into the till at Toolco and came up with the twelve million, plus interest, and paid them back. They said at the time I was gun-shy, and they were right. They didn’t exactly stick a gun in my ribs, but I could see it bulging in the holster under their collective armpit, so I paid them back.

  What I didn’t realize then was that when the real tussle came they wouldn’t just whip out a .38 caliber automatic, they’d come at me with bazookas and Sherman tanks, and if I ducked behind a wall to hide there’d be ten guys in gray suits and sincere ties waiting for me with switchblade knives. And I also didn’t realize that these bankers and insurance company presidents were a gang. I made the mistake of assuming they operated semi-independently.

  I bypassed Equitable and went to Ben Sessel at Irving Trust and borrowed $26 million from them. That was another major mistake, but I didn’t realize it at the time.

  Meanwhile I got another estimate of what Toolco was worth. I got it from Merrill Lynch and a couple of those other brokerage houses I was always using to find out where I stood. ‘Fifty million,’ they said. The way they came up with their figure was based on a formula – a price-earnings ratio. In this case they’d figured the company was worth about fourteen times net earnings. Now, this meant that if you can raise the earnings, then the value of the company is that much higher. For every million dollars more that the company could earn each year, it would be worth fourteen million more in its stock price.

  So in the middle of May 1957, I decided I wanted Noah to go down to Houston again and work with Toolco, because I was sure we could get more money out of Toolco, boost its earnings and therefore boost its potential sales price. I asked Noah to stop by my bungalow in the Beverly Hills Hotel so that we could discuss it.

  I had started to grow long hair and a beard around that time. I hadn’t seen Noah for a month or two and when he came in the door he said, ‘Howard, you look like a gorilla.’

  ‘Noah,’ I replied, ‘if your knowledge of finance matched your knowledge of zoology, you’d be a poor man. A gorilla may have long hair, but as far as I know no member of the species has ever been able to grow a gray beard.’

  ‘All right,’ he said, ‘you look like a Neanderthal.’

  ‘The way I look,’ I told him, ‘is none of your goddamn business.’

  This still had me annoyed when we got down to business, and then Noah said he didn’t want to go to Houston. He said he was comfortable in California and he saw no reason for it.

  ‘Hell, there’s a damn good reason for it,’ I said. ‘We need more earnings because we need a higher valuation.’

  He told me he needed to discuss it with his wife, that she was tired of his running off on errands so often. The next day he called me and said, ‘I’ll go, but on one condition.’

  ‘What’s that?’

  He wanted more money. Half a million a year plus expenses wasn’t enough for him. He had been nagging me for years for a piece of the company, stock options, and some way that his income could be capital gains. He was greedy, that’s common enough. Each time he would nag me I would eventually throw some bone his way to make him happy.

  He sprang this to me on the telephone. I said, ‘You get the hell over here.’ I was furious. He was trying to hold a club over my head.

  I was still at the Beverly Hills Hotel. But by the time he got there I decided I didn’t want to see him.

  When he called me from the house phone in the lobby I told him to get to a public phone, which infuriated him. He insisted on coming out to the bungalow.

  ‘Noah,’ I said, ‘there’s absolutely no need for you to come out. I don’t want to hear any more remarks about my gorilla-like or Neanderthal-like appearance, and we can talk more easily on the telephone. Just get to a more private public telephone. Any hotel employee can listen in on a house phone.’

  I moved him around to a couple more telephones until finally he was at one that I considered safe. By then he was nearly out of his mind with fury.

  ‘What kind of raise do you want?’ I asked.

  What he wanted was profit-sharing and a capital gains agreement – a slice of the apple pie.

  ‘Noah, we’ve discussed this before and I said no. I’ve made you a rich man. Now you’re pushing me.’

  And then he said something which instantly severed both our personal relationship and our business relationship. He made a speech to me about how I had been promising him this arrangement for years. That was not true. He wound up by saying that he had finally come to the conclusion that I had no integrity and he didn’t trust me. He wanted to send his lawyer to talk to my lawyer, and he wanted a decision within forty-eight hours.

  ‘Noah, you’re insulting me, and you’re trying to hold a gun to my head. Nobody does that. You’re fired. If you’re in this hotel five minutes from now, I’ll have the management throw you out onto Sunset Boulevard. If that happens, be careful. There’s a lot of traffic.’ And I hung up.

  I called my people at Romaine Street and had the locks changed on his door and on his desk.

  But you had such a long relationship with him – he’d worked with you for over thirty years. Didn’t it pain you to lose a man who was in many ways closer to you than most people?

  He was never really close to me. At least I wasn’t close to him. And by then, not at all. There are other men who I’ve met more briefly, men with whom I’ve lost contact, or who have died, whose passing from my life I’ve mourned far more deeply than Noah Dietrich. He viewed me the way a stockholder views a stock he owns. He didn’t care about me, he cared about wringing as much profit as he could out of me. He pushed me too far.

  And you didn’t miss him after that, as a business adviser?

  I missed him all the time. I got into a lot of trouble because he wasn’t there to keep me in check with his narrow and conservative bookkeeper’s mind. I realize that all too well. But you have to draw the line somewhere. I drew it, and I took the consequences.

  Who were you close to at that time?

  Mostly Jean, my wife.

  I’m glad you brought up her name. You’ve steadfastly avoided the subject of your second marriage to Jean Peters. Don’t you think it’s time you talked about it?

  No, but I also think you’ll make my life more miserable than it is now if I keep on successfully dodging the marriage to Jean, so I’m willing to deal with it – up to a point.

  Do you remember Groucho Marx’s famous remark when he was invited to join the Beverly Hills Country Club? He said, ‘I wouldn’t join any club that would have me as a member.’ That’s my feeling about marriage to me. I can’t truly fathom how a woman in her right mind would want to do it. I’m not good husband material. I’m too fixed in my ways. I’m generous, and when I get involved with a woman I take a great interest in her, but there’s too much else on my mind for me to satisfy a woman’s needs. And I do have my quirks.

  Having said that, let me also say that Jean is one of the most delightful and loyal human beings on the planet. And she’s intelligent. Which makes me wonder why she married me. But she did, and that’s a fact. Why I married her is of course easier to understand. I was lonely, and tired of messing around with all those Hollywood beauties who were pursuing their careers nonstop and, no matter how fond of me they professed to be, basically out for what they could get. Jean wasn’t like that. She was a caring person. And I cared for her. I really loved her, respected her, and wanted the best for her. She reminded me a great deal of my first wife, Ella. Make of that what you will.


  I thought, if I marry Jean, that will bring stability and common sense to my life. I won’t worry so much about things like TWA and Hughes Aircraft – I’ll go for walks in the country and watch a movie and sit down to dinner at dinnertime like a normal man with his normal wife. I’ll have someone to care for me when I’m old and crippled, as I knew was inevitable after all the plane crashes I’d had and the damage I’d done to my body. If you damage the body, you also damage the mind. Mind and body are one. I thought Jean might stop me from losing my mind.

  I proposed to her after many years of seeing her off and on, and she accepted. She loved me. She’d been married once before, to a businessman named Stuart Cramer III, but that didn’t work out, and the funny thing is that after he and Jean were divorced Cramer married my old girlfriend Terry Moore. Maybe there’s only a limited pool of women for every man and vice versa. These things are mysteries.

  Jean and I were married in Tonopah, Nevada by a local justice of the peace, using other names to avoid publicity. That’s legal in Nevada. We flew down there in January 1957 in one of my Connies and the whole thing didn’t take more than three hours.

  Where did you go on a honeymoon?

  Right back to the Beverly Hills Hotel. I was too involved in the TWA horror to have a proper honeymoon. We didn’t even live together at first, mostly because my living habits were so outrageous that Jean wouldn’t stand for them. I intended to change them, and I told her so, but not just yet. We lived in separate bungalows at the Beverly Hills Hotel and we could see each other whenever we liked, but at least she didn’t have to listen to me doing business on the telephone at three o’clock in the morning and raiding the fridge at five o’clock for a bowl of French vanilla ice cream, which was my favorite.