Why George Bush Came to Texas, OR Enron - A Short History

Many years ago I became acquainted with Catherine Austin Fitts, while both of us were members of what was then called a listserv, which was managed by Kris Millegan. The three of us and many others were trying to learn how the American economy incorporated proceeds of narcotics sales into our financial system. Sometime after Catherine had visited me in Texas, the Texas corporation Enron collapsed in November 2000, the same month George W. Bush was first elected and less than a year before the September 11, 2001 destruction of the World Trade Center. (See James P. Galasyn's Bush/Enron Chronology).

The work below grew out of those debacles.

ENRON

From Hoover’s Handbook of American Business, 1993: 

Enron traces its history through two well-established natural gas companies — InterNorth and Houston Natural Gas (HNG).

InterNorth started out in 1930 as Northern Natural Gas, an Omaha, Nebraska, gas pipeline company.  By 1950 Northern has doubled its capacity and in 1960 started processing and transporting natural gas liquids.  The company changed its name to InterNorth in 1980.  In 1983 it spent $768 million to buy Belco Petroleum, adding 821 billion cubic feet of natural gas and 67 million barrels of oil to its reserves.  At the same time the company (with four partners) was building the Northern Border Pipeline to link Canadian producing fields with U.S. markets.

HNG, formed in 1925 as a South Texas natural gas distributor, served more than 55,000 customers by the early 1940s.  It started developing producing oil and gas properties in 1953 and bought Houston Pipe Line Company in 1956.  Other major acquisitions included Valley Gas Production, a South Texas natural gas company (1963), and Houston’s Bammel Gas Storage Field (1965).

In the 1970s the company started developing offshore fields in the Gulf of Mexico, and in 1976 it sold its original gas distribution properties to Entex.  In 1984 HNG, faced with a hostile takeover attempt by Coastal Corporation, brought in former Exxon executive Kenneth Lay as CEO.  Lay refocused Enron on natural gas, selling $632 million of unrelated assets.  He added Transwestern Pipeline (California) and Florida Gas Transmission, and by 1985 Enron operated the only transcontinental gas pipeline.

In 1985 InterNorth bought HNG for $2.4 billion, creating the U.S.’s largest natural gas pipeline system (38,000 miles).  Soon after, Kenneth Lay became chairman/CEO of newly named Enron (1986), and the company moved its headquarters from Omaha to Houston.

Laden with $3.3 billion of debt (most related to the HNG acquisition), Enron sold 50% of Citrus Corporation (operated Florida Gas Transmission, 1986), 50% of Enron Cogeneration (1988), and 16% of Enron Oil & Gas (1989).  In the meantime the company paid $31 million for Tesoro[1] Petroleum’s gathering and transportation businesses in 1988.

In 1990 the company bought CSX Energy’s Louisiana production facilities, which helped to increase Enron’s production of natural gas liquids by nearly 33%.  In late 1991 Enron closed a deal with Tenneco to buy that company’s natural gas liquids/petrochemical operations for $632 million.

Enron’s 1992 contract with Sithe Energies Group to supply $4 billion worth of natural gas over 20 years to a planned upstate New York cogeneration plant fits its vision of natural gas as a leading fuel for the future.

History of Enron, Originally Founded as 
Houston Natural Gas Company

In 1893 John Henry Kirby started construction of the Gulf, Beaumont and Kansas City railroad line, which he sold to the Atchison, Topeka and Santa Fe in 1900. He decided to invest the money he made on building the railroad into East Texas timber land, but after the big Spindletop oil discovery near Beaumont in East Texas in 1901, he took another turn into oil exploration. With dollar signs in their eyes, however, his creditors thought it more advantageous for themselves to take the corporate assets held as security than to give Kirby the necessary time to develop those assets into oil-producing property.

On July 6, 1901 the Houston Daily Post contained a huge front page headline and photo of Kirby announcing the chartering of Houston Oil Company of Texas with a capitalization of $30 million and of the Kirby Lumber Co. with $10 million in capital. The stock was issued, but Kirby still had to obtain buyers for the stock. That means he had to find stock brokers who had connections to huge pools of capital to invest. For his financing, Kirby had gone to Patrick Calhoun, a New York corporate attorney "with desirable connections in eastern banking circles." Calhoun was the grandson of John C. Calhoun, vice-president under John Quincy Adams.

Patrick Calhoun, a native of South Carolina, owned stock in the Southern Oil Co., which had 100 producing oil wells in the Corsicana Field in East Texas. The investors Calhoun brought into Kirby's companies included Brown Brothers of New York; Simon Borg & Co., originally founded in Tennessee; and Maryland Trust Co. of Baltimore, the latter being proposed as trustee to handle the company's securities and act as its subscription agent. Maryland Trust Co. was headed at that time by ex-Confederate officer, Colonel J. Wilcox Brown.

The Brown Brothers firm was founded in the United States by descendants of Alexander Brown, who also were involved in the English brokerage firm of Brown & Shipley, of Baltimore, Maryland, and, after 1825, in New York. Brown Brothers would operate out of New York City until its eventual merger in 1931 with W.A. Harriman & Co., the latter an investment bank set up five years earlier for E. H. Harriman's young sons by Prescott Bush's father-in-law, George Herbert "Bert" Walker of St. Louis, Missouri, who is the subject of a series of articles at this blog.

Foreclosure and Receivership

The financing scheme for the Kirby companies was an intricate system of cross-collateralization which Kirby alleged was designed to allow the creditors to steal the assets of his companies. Receivers were appointed on February 1, 1904, the same day interest was due on timber certificates that had originally been issued for $11 million, but devalued down to $7 million. Of that, $6 million work of the certificates had been sold by Brown Brothers, while being guaranteed by Houston Oil Co.[2] The semi-annual payment was made by Brown Brothers & Co. in the amount of $700,000, including $210,000 interest, but only the interest was tendered to Maryland Trust, which was rejected.

The receivers appointed for Houston Oil were F.A. Reichardt, cashier of Planter's and Mechanic's National Bank of Houston (of which John H. Kirby was president) and Thomas H. Franklin, a San Antonio attorney, who was president of the Houston Oil Company. N.W. McLeod, a "prominent St. Louis lumber man," and B.F. Bonner, Kirby Lumber Company's vice president, who lived in Houston, were appointed as receivers for Kirby Lumber.[3]

A receiver not mentioned in the New York Times article at that time was Col. J.S. Rice, who, according to his obituary in the Houston Chronicle on March 12, 1931, had been in the sawmill business in Tyler since 1881, after starting as a clerk at the Houston & Texas Central Railroad in 1879 — a railroad extending west and north from Houston to the cotton fields of central Texas. Jo Rice served as receiver of Kirby Lumber from 1904 to 1909 and was elected vice president after it was reorganized. He was also president for a time of Great Southern Life Insurance, vice president of Houston Land Corp., and a director of Missouri Pacific Railroad Co. A nephew of William Marsh Rice, through marriage he was also related to both W.S. Farish and Stephen P. Farish--two brothers who had married Libbie Randon Rice and Lottie Rice, respectively, Jo Rice's sister and cousin.

The New York Times quoted Mr. Kirby as saying that both companies were profitable, and "the only and sole cause of the present trouble lies in the fact that the securities issued the Houston Oil Company have not been marketable." The Times went on to say that

... interests identified with the Atchison and with the St. Louis and San Francisco [Frisco] Railroads have a large interest in the Kirby Lumber Company. Representatives of several banking houses more or less closely associated with the two companies which have just been placed in receivers' hands said yesterday that the assets of the companies were of undoubted value, and that the proceedings were really the outcome of internal discord.[4]

From the Galveston Daily News, February 4, 1904:

Houston, Tex., Feb. 3 --There was nothing new here today in connection with the affairs of the Kirby Lumber Company or the Houston Oil Company, both of which were given receivers by Judge McCormick of New Orleans. Affairs about the Planters and Mechanics National Bank moved along today as they do every day. There was no unusual deposit nor unusual withdrawal of money. In other words, they had their normal appearance all day. In connection with the affairs of the appointment of the receivers the following facts and figures show the status:

The Kirby Lumber Company was incorporated under Texas laws in July, 1901, capitalized at $10,000,000. Its object was to take over fifteen sawmills previously purchased by the Houston Oil Company of Texas. Financial aid was obtained from Eastern associates also interested in the Houston Oil Company of Texas, capitalized at $30,000.000. Stock of the Kirby Lumber Company is divided into $5,000,000 of common, and preferred shares of the same amount. The Kirby Lumber Company contracted with the Houston Oil Company for six and one-half billion feet of yellow pine timber of 12 inches diameter and upward, for the aggregate sum of $30,000,000, to be paid in semi-annual installments in sixteen years....The company owns 180,000 acres of land at Kountze easily worth $5,000,000. Other lands held by the company amount to 127,220 acres, readily marketable for at least $3,000,000.
The temporary receivers of the Kirby Lumber Company and the Houston Oil Company have ordered a continuance of operations in the usual manner, and announcement is made that plans are being considered to terminate the receiverships when the cases are called before Judge Burns of the Southern District of Texas on February 17.

On February 12, 1904 the New York Times contained a short item on page 14 stating that a committee of five had been chosen by the holders of the 6% timber certificates issued by Maryland Trust--George W. Young, Dumont Clarke (president of the American Exchange National Bank in New York and a director of U.S. Mortgage & Trust Co.), James Brown (chairman of Brown Brothers), Gerald L. Hoyt (who served as a director of the Wisconsin Central Railroad alongside Brown Brothers partner, John Crosby Brown), and F.S. Smithers. A week later, Kirby was again quoted in the Times, as follows:

"A distinguished Wall Street operator undertook to finance the Houston Oil Company; had and exercised undisputed authority in the conduct of its affairs. He also directed the financial affairs of the Kirby Lumber Company until about a year ago, and during this period of his control caused the latter company to invest heavily in the preferred shares of his oil company....The Board of Directors of the Houston Oil Company, over the protest of the Wall Street promoter, who is still a member of the board, voted to accept the money and to request the Maryland Trust Company not to proceed, but the money was declined and the demand for receivership persisted in."

By the end of March of that year a lawsuit had been filed by members of a stock syndicate managed by two officers of the Baltimore Trust and Guaranty Company alleging misrepresentations made about the condition of the lumber company in the prospectus. The petition further alleged that one month prior to the appointment of receivers, Kirby formed a holding company with Benjamin F. Yoakum, president of the St. Louis and San Francisco Road, to which they transferred the majority of the Kirby Lumber Company stock, and that they formed the Houston, Beaumont and Northern Railroad Company, to which Kirby Lumber's traction lines and other railroad properties were transferred. In addition, the HB&N RR Co. was capitalized at $500,000 with a bond issue of $1 million. Yoakum loaned the company $600,000 and in return received all the bonds, half the stock and $18,000 in commissions. The newly formed company used half the loan proceeds plus an additional $18,000 to repay a prior loan to Yoakum and his commission for this loan.[5]

Surprisingly, we learn that in 1904 Yoakum was a director and on the executive committee of the board of Seaboard Air Line railroad with people very close to the Alex. Brown bank, including Sol Davies Warfield, uncle of Wallis Simpson and others written about in another blog this author writes.

In 1906 Walter Monteith, brother of Edgar Monteith, Sr. (who many years later became attorney for Gibraltar Savings and Brown & Root), was appointed to act as receiver on behalf of the investors.[6] A settlement was reached in 1908. Houston Oil owned several shallow oil wells in Nacogdoches County, all of the stock of Southwestern Oil Co. and properties of Southern Oil Co., as well as stock in Higgins Fuel and Oil Co., but for revenue it primarily relied on the stumpage agreement with Kirby Lumber. Because of more efficient equipment and the demand for timber for the railroad industry, the lumber company was better able in the next few years to meet its contract requirements, and virtually the same investors organized Houston Natural Gas Co. (HNG) in 1926.

Houston Pipe Line Co. was a wholly owned subsidiary of Houston Oil Company of Texas, and its stockholders formed HNG as a separate corporation a year before the pipe line company completed constructing distribution gas lines. Their hope was to compete with Houston Gas and Fuel (HG&F), of which Captain James A. Baker was president. HG&F had signed a contract to buy only from Houston Gulf Gas, and HNG therefore turned to the outlying areas and other cities in Harris County for customers. Shortly before the stock market crash in 1929, Houston Gulf Gas bought out HG&F and then merged with United Gas Corporation, a holding company, 42% of which was bought by Pennzoil (Zapata’s successor) in 1965, then divested by the SEC in 1970, creating a separate investor-owned corporation, United Gas, Inc.--later Entex. The two gas companies merged in 1976 and were later merged into Enron.

[NOTE: The money can be followed directly from the Baker network into Enron.]

John H. Kirby had incorporated Houston Natural Gas in 1925 with eleven subscribers to the initial issue of capital stock issued on January 18, 1926:

• E.H. Buckner, president - 70 shares
• Louis Seymour Zimmerman, Baltimore (president of Maryland Trust Co.) - 70 shares 
• George Mackubin, Baltimore - 70 shares
• David Hannah, Houston - 40 shares
• Judge H.O. Head, Sherman, Texas - 40 shares
• McDonald Meachum, Houston - 40 shares
• C.B. McKinney, Houston - 40 shares
• H.M. Richter, Houston - 40 shares
• George A. Hill, Jr., Houston (father of Raymond M. Hill—discussed in Pete Brewton’s book, The Mafia, the CIA and George Bush) - 35 shares
• T.M. Kennerly, Houston - 35 shares
• A.S. Henley, Houston - 20 shares

The following May, 1926, 1,500 additional shares were issued, with 140 each bought by the largest three investors, with Hannah and McKinney each buying 80 more. New shareholders of note were Samuel C. Davis (80), Thomas S. Maffit (80), John Foster Shepley (80), Samuel W. Fordyce (80), and N.A. McMillan (70), all of St. Louis, Missouri--part of the syndicate for which Prescott Bush's father-in-law, George Herbert "Bert" Walker, was already handling investments through his investment bank, G.H. Walker & Co.[7]

After the 1926 sale of stock, the following geographical breakdown existed:

• Houston -- 1,100
• Baltimore -- 430
• St. Louis -- 390

Filings with the Securities and Exchange Commission in 1976, just prior to the merger with Entex, show that directors of Houston Natural Gas included the following:

1. John H. Duncan (also a member of the audit committee)--chairman of the board of Gulf Consolidated Services, Inc. in Houston and chairman of the executive committee of Gulf + Western Industries, Inc. in New York--since 1968, who owned 40,000 shares of HNG.
2. C. Thomas Clagett, Jr. (also a member of the audit committee), whose occupation was investments in Washington, D.C.--who owned 252,226 shares individually plus over 700,000 additional shares as trustee for family members.
3. J.A. Edwards, a board member since 1968, who was president of Liquid Carbonic Corp., an HNG subsidiary (42,596 shares).
4. W.S. Farish III, who was shown to be president of Fluorex Corp., an "international mineral and exploration company" in Houston (4,000 shares), grandson of Libbie Rice Farish.
5. Robert R. Herring, chairman and CEO of HNG, director since 1964 (60,000 shares), husband of Charlie Wilson's girlfriend, Joanne Herring.
6. M.D. Matthews, vice-chairman of board (32,482 shares).
7. Neil D. Naiden, partner of Morgan, Lewis & Bockius, a Washington, D.C. law firm.
8. Charles Rathgeb, chairman and CEO of Comstock International, Ltd. in Toronto, Ontario, Canada.

Interestingly enough, Robert Herring (at the time of his death married to a Houston "socialite," the former Joanne Johnson King) was also president of Rice University in 1980, shortly before his death, and John Duncan's brother, Charles Duncan, Jr., retired in 1996 as chairman of the Rice board, which had previously been headed by George Rufus Brown, brother of Herman Brown, co-founder of Brown & Root (later Halliburton).

The newspaper misspelled the name of Pakistan's President--Zia ul Haq.

HNG located its offices in 1927 in the Petroleum Building built by Irishman J.S. Cullinan, where it remained until 1967, when it became the core tenant of Kenneth Schnitzer's office building at 1200 Travis. The primary attorney for the company was shareholder George A. Hill--of Kennerly, Williams, Lee, Hill & Sears--the father of Raymond Hill of Mainland Savings fame, to whom Pete Brewton devoted an entire chapter of his book. The foremost Houstonian shareholder was David Hannah who had arrived in Houston from Scotland in 1908 and was head of the Houston Cotton Exchange for a time. David Hannah Jr. would later be named a trustee of the Hermann Hospital Estate and serve alongside Walter Mischer, Jr. He would also attract investment from Toddie Lee Wynne, Jr. into a company called Space Services, Inc., which would launch the first private satellite into space from Matagorda Island, Texas.

In 1956 Houston Oil Co. was sold to Atlantic Refining Co. for a quarter-billion dollars ($250 million). In 1966 Atlantic acquired Richfield Oil Corp., a company which had been placed in bankruptcy in 1928 when it had over $10 million in judgment claims resulting from canceled oil leases at the Elk Hills Naval Reserve, subject of the Teapot Dome scandal, to Pan American Petroleum, received by Richfield from Edward L. Doheny in 1928. The case was settled in 1933 for $5 million after broker Henry L. Doherty & Co. (60 Wall Street) made an exchange offer for 4 shares of Richfield for one share of Cities Service Co. stock. To protect its interest in the stock, Cities later purchased a large block of Richfield and Pan American bonds.

It appears that these various oil companies owed interest on bonds to holders comprised of numerous foreign, mostly British, investors. According to a book written in 1972 by Charles S. Jones,[8] the former chairman of Richfield, as his very first act, once the decision was made to merge with Atlantic, was:

... to go to London to visit my friend Sir Maurice R. Bridgeman, chairman of British Petroleum. While his company was very much interested in entering the United States market, British Petroleum needed government approval to use dollars, and Sir Maurice thought the market value of British Petroleum shares too low for an advantageous exchange of stock. The matter was left in abeyance until either party desired to explore it further.

Jones next offered to merge with K.S. "Boots" Adams--father of former Houston Oilers owner "Bud" Adams--who was chairman of Phillips Petroleum. Later, he set up talks with Standolind at Bunny Harriman's ranch in southeastern Idaho, "Railroad Ranch."[9] After news of this meeting was leaked by unknown sources, Richfield's stock increased, leading to an offer from Robert O. Anderson, chairman of Atlantic of Philadelphia, whom Jones met in August 1965, again at the Harrimans' ranch, leading one to believe that Brown Brothers had a big interest in a buyout of Richfield. After that meeting several other companies expressed an interest, but, according to Jones, "a curious event occurred."

One of our Washington lawyers called to tell me that a Mr. Cladouhos, an Antitrust Division lawyer assigned to the case, had suggested that Richfield settle the suit by merging with Atlantic Refining Company. The division had earlier suggested a merger, but this was the first time it had named a partner. The suggestion seemed most unusual, but I concluded that Bob Anderson's lawyers had probably been exploring the Justice Department's attitude toward a merger with Richfield and had thus given Cladouhos this particular inspiration.

As far back as 1959, when W. Alton Jones was still living, we had made a study of the possibility of merging Richfield, Sinclair, and Cities Service to form a national company strong enough to compete with the international majors. There was always the imponderable of the Justice Department's attitude, but we decided that we would never know the reaction until we tried....Cities Service already owned about 30 percent of Richfield.

When the merger was finally worked out, "Francis Kernan and others of the Boston-based investment bank, White, Weld & Company, represented Richfield."[10] The White, Weld investment bank, which in 1974 merged with G.H. Walker and Co., owned by then by G.H.W. Bush’s Uncle Herbie, his own financial patron. The White Weld-Walker amalgam also merged its London and Swiss operations with Crédit Suisse, the premier drug-money-laundering institution of the day, and the domicile for the Bush-North "Enterprise" offshore bank accounts.

The Zimmerman who was named as a HNG shareholder was president of Maryland Trust from 1910 until 1930, when the company merged with Drovers and Mechanics National Bank and the Continental Trust Company, but continued to operate under the name of Maryland Trust, with Zimmerman as senior vice president until his retirement in 1948. Shareholder Mackubin was a senior partner in the brokerage firm of Mackubin, Goodrich & Co. and became a director of Houston Oil Co. in 1925.

Continental Trust was operated by Solomon Warfield, the uncle of Wallis Simpson —Duchess of Windsor. Solomon Warfield acquired a number of shares of Alleghany preferred stock, "issued in a storm of controversy by the banker J.P. Morgan, who was a chief investor for King George VI and Queen Elizabeth at the time they were Duke and Duchess of York," for his niece, which she inherited upon his death in 1927. This stock had always been her "first investment favorite," according to her biographer Charles Higham.[11] When the Duke and Duchess became friends with Alleghany’s Robert Young, allegedly after being introduced by mutual friend Robert Foskett after the Windsors moved to the Bahamas, Young and his wife Anita became one of their few close friends. Both Foskett and Young were directors of Alleghany and lived in Palm Beach, Florida. When Warfield died, he left her only "the interest from $15,000 worth of shares in his railroad companies and in the related Alleghany Company and in the Texas Company [later Texaco]. She had expected a slice of his $5 million, and she furiously began a lawsuit against the trustees of the estate, in the form of a caveat."[12]

In 1937 Allan Kirby gained virtual control of Alleghany. Not long thereafter Texan, Clint Murchison, would be introduced to the Duke and Duchess of Windsor by mutual friend Allan Kirby, and another Houstonian, George R. Brown, would become an Alleghany director. In such cases, it seems very likely that the person holding title to the stock and acting as a director is a mere nominee for someone who does not wish to have his or her name disclosed.

This leads one to wonder whether George and Herman Brown really owned Brown & Root, or whether they were primarily nominees for someone else, or whether they were simply very dependent upon the other capital invested in their corporations--all of them handled by the investment bank of Dillon Read, specifically by August Belmont IV, thought to be working on behalf of his patron, Rothschild Bank, which handled American investments for royal British capital. George and Herman were nobody before 1942, but almost overnight George Brown became Lyndon Johnson's chief financier and a director of major multi-national corporations, and for many years served as chairman of Rice University. After the death of Herman Brown, Brown & Root would be sold to and become a subsidiary of the Halliburton Company, the company to which Vice-President Dick Cheney is so closely tied. The sale proceeds set up the Brown Foundation, managed by, among others, Edgar Monteith and Fayez Sarofim, the investor/husband of Herman Brown's adopted daughter, Louisa Stude.

Sarofim was born in Egypt, but obtained a bachelor’s degree in food technology from the University of California and an MBA from Harvard Business School. In 1958 he established Fayez Sarofim & Co. in Houston, though his first job in Texas was in the Abilene branch of Anderson Clayton cotton merchants, where he became close to Edward Randall III and his circle of friends. Herman Brown's adopted daughter Louisa Stude was in the same circle. After their marriage, Herman Brown's new son-in-law began managing the corporate retirement fund for Brown & Root and the endowment of William Marsh Rice University, then valued at $63 million. Herman himself died in 1962, and Sarofim thus stepped up in managing a big part of the Brown & Root wealth.

Names of Halliburton directors may give an idea about the corporation's other major shareholders. In 1976, for example, they included Alex E. Barron, president of Canadian General Investments, Robert J. Bradley, a director since 1952, owner of only 700 shares, whose occupation was "personal investments." F.A. Calvert, Jr., a director since 1965, was also an investor. Ford M. Graham was an oil and gas consultant, and the 10th Lord Polwarth (Henry Alexander Hepburne-Scott) was and outside director from the Bank of Scotland from 1974 to 1987. At the time this report was made, Joseph A. Thomas, a partner in Lehman Brothers, was retiring from the board. Thomas, a Texan, had been "lent" to Schenley Distillers as administrative assistant shortly after Lehmans brought out the original issue of Halliburton stock in 1933, just after repeal of the 18th Amendment. [13]

Entex was the successor corporation to Houston Gas & Fuel formed by Captain James A. Baker of Baker, Botts probably for his major client, the Rice family or Rice Institute itself. Baker was president and had signed a contract to buy only from Houston Gulf Gas, preventing any competition in its market from upstart company, Houston Natural Gas, which was forced to market its product outside the city of Houston. Eventually, HG&F merged into Houston Natural Gas in 1976, and later became Enron.

If all the original shareholders retained their shares in the initial companies, Enron would be controlled by the families of the Rices, Farishes and the stockholders of the Maryland Trust Co., which put John Henry Kirby in receivership in the early days of the 20th century. But of course people do sell their stock or die and pass it along to heirs and devisees. Nevertheless, it would be fascinating to see who the major stockholders in Enron were in 2001 when it cratered, and took so much with it, only a matter of days following the destruction of the World Trade Center Buildings in New York on September 11.

Originally published at this blog on May 3, 2011 as 

"Pakistan's old friend, Joanne Herring of Houston."

---

ENDNOTES: 

[1] Tesoro Petroleum Corporation, has an equally fascinating history as Enron, as seen from this excerpt from 1965: "There's some local confusion over the proposed stock interchange of Coronet Petroleum Corp. of Houston and the Texstar Corp. of San Antonio. Coronet is the former Gulf Coast Leaseholders, Inc. Texstar is the holding company organized a decade or so ago by the late Tom Slick of San Antonio, and purchased last year by Amon Carter Jr., of Fort Worth, and others. William T. Rhame of San Antonio is president of Texstar. Burford King, Fort Worth who became president of Gulf Coast Leaseholds before its name was changed to Coronet last year, was one, of those listed as the purchasers of the old Slick firm. Then, reportedly, the [Amon] Carter group sold its Texstar stock to Gulf Coast and this group became the controlling interest of the Texstar Corp. All this was last summer. In the fall, Bob West of San Antonio, who had been head of the Texstar Petroleum Corp., subsidiary of the corporation of the same name, set up his own company and purchased the petroleum subsidiary from the parent corporation. West's new company is Tesoro Petroleum Corp. Now, Coronet Petroleum stockholders will meet April 15 in Houston to vote on an agreement whereby Texstar Corp. would assume control of Coronet Petroleum stock. The ratio would be one share of Texstar stock for each 5.8 shares of Coronet stock. As of Jan. 1 Tex Star Oil & Gas Corp. of Dallas changed its name to Texas Oil & Gas to avoid confusion in the public's mind over it and the Texstar Corp. of San Antonio. Louis Becherl Jr., of Dallas heads this firm which has no connection with Texstar Corp." [Source: San Antonio, TX EXPRESS/NEWS - April 4, 1965] 

[2] New York Times, February 2, 1904, p. 11. 
[3] New York Times, February 3, 1904, p. 11. 
[4] New York Times, February 3, 1904, p. 11. 
[5] New York Times, March 30, 1904, p. 12. 
[6] It should be noted that both George and Herman Brown and the Monteiths previously hailed from Bell County, where several surveys of land were patented to a Monteith.  It might be interesting to learn whether the Browns may have been related to the family of brokers. 
[7] Samuel Davis, born in 1871, was a son of John Tilden Davis, and his brother was none other than Dwight Filley Davis for whom the Davis Cup was named. When he obtained a passport in 1918, Samuel Craft Davis called himself president of the John T. Davis Estate and stated he was traveling to France and England to work on behalf of the YMCA's War Work Council. More will be said about his family and about John Foster Shepley in future posts at this blog. 
[8] Charles S. Jones, From the Rio Grande to the Arctic:  The Story of the Richfield Oil Corporation (Norman, Okla: Univ. of Okla. Press, 1972), p. 308. 
[9] Remarkably it was in Sun Valley, the Harrimans' ski resort, where Warren Buffet and Disney's chairman bumped into each other accidentally and decided to merge. 
[10] Keep in mind that at that time, the Hannah family appeared to be major shareholders of Houston Natural Gas.  David Hannah was also chairman of a private company competing with NASA, with a land development company with a Scottish name, and with an amusement company started near the Dallas-Fort Worth International Airport in 1955 by Robert Bernerd Anderson, trustee of the Waggoner estate, lawyers Toddie Lee and Angus Wynne, who wanted Bill Zeckendorf to help develop as an industrial and distribution center.  Zeckendorf brought in the Rockefeller Brothers' investment company.  Angus Wynne was the father of Bedford Wynne, who was not only an employee of the Murchison family, but a minor partner with Clint W. Murchison, Jr. in the Dallas Cowboys football team.

  If this director was actually oilman, Robert O. Anderson (as distinguished from Eisenhower Treasury Secretary Robert B. Anderson), it is interesting to explore this link between him, David Hannah and the Wynnes, since he would also add into the mix a connection with John Dick and Walter Mischer. 

Mischer's connection to Robert O. Anderson involves a 250,000-acre ranch near Big Bend National Park that Mischer owned with Anderson. According to Pete Brewton, John Dick "had Anderson over to his house for dinner, while Anderson invited Dick to his annual Christmas dinner for the 'world's most powerful men' at the Claridge Hotel in London. The only woman in attendance . . . was then-British Prime Minister Margaret Thatcher." Brewton, p. 274. Both Mischer and John Dick also both borrowed money from Hill Financial Savings of Pennsylvania, one of the companies involved in the St. Joe Paper transaction. Anderson's father was Hugo A. Anderson, a leading oil and gas banker at First National Bank of Chicago. When Robert O. retired from AtlanticRichfield, he went into an oil and gas partnership with Tiny Rowland, considered by some to be a front for the British monarchy. In 1975 HNG directors included John H. Duncan and W.S. Farish III. In 1976 the company merged with Entex and later with Enron.

     [11] Charles Higham, The Duchess of Windsor:  The Secret Life (New York:  Charter Books, 1989), p. 387. 
     [12] Higham, p. 67. 
     [13] Wechsburg, p. 248.

Knights and Their Secret Orders

Conditional Allegiance to Power?

In another blog article, I borrowed a quote from famed economic historian Robert L. Heilbroner who was quoted by James Presley in his book, A Saga of Wealth as follows:

Vassal swearing allegiance to lord

“Throughout most of history,” wrote Robert L. Heilbroner, “wealth and power have gone hand in hand.” The alliance, an obvious one, has grown with but occasional public outcries. Working together, possessors of wealth and power may achieve a stability of their own. Over most of history, wealth has been a vassal to power, for as Heilbroner explained, “it was easier for the ruler to become a rich man than the rich man a ruler.” [Presley, page 303]

Elliott Roosevelt was ushered into the radio business initially by Fort Worth men associated in business with  the father of his second wife, Ruth Googins. They enticed him to move to  Texas -- undoubtedly promising him the moon in the hope of attracting his father's power for their own interests. Newly elected Franklin Roosevelt had a power to which these businessmen gravitated, but that expanding federal power could also make them shudder. Americans, since the days of the Federalist blockade against England, have fought tooth and nail against the Constitutional principle of majority rule, which effectively damns the business interests of the defeated minority. They swear their fealty and allegiance to the man in power only when he gives them what they want. Full stop.

In 1930 Texas had quite a number of men, like Elliott's radio investors Sid Richardson and Charles Roeser, who had recently become rich in the oil fields of Corsicana and East Texas. Over the preceding decades these wealthy men had witnessed what they viewed as the usurpation of state law by the federal government. The federal government had obtained the power to tax their incomes in 1913 and to prohibit the sale of liquor within the state in 1920. Both laws could now be enforced through the expanding powers of the Bureau of Investigation, linked to the Treasury Department's Bureau of Prohibition, as opposed to Texas' own police force, the Texas Rangers.

With this feeling of a need to reach out and grab control of federal authority--much as Colonel Edward M. House of Texas had done when he went in search of a candidate for the Presidency in 1912--the newly wealthy oilmen in Texas thought that, by buying Elliott a place within Fort Worth society, they would thus gain the power of the executive office for themselves. Like the du Pont family of Delaware who would attempt to buy Franklin Roosevelt, Jr. in 1937, the Texans soon discovered things did not quite go as planned under the new President.

FDR was happy to accept his minions' pledge of fealty but, as the rich Texans soon learned, he rarely protected their interests if it was inconsistent with his concept of the overall good for America. Two of these wealthy "vassals," as we have seen, Sid Richardson and Charles Roeser, saw their investment in Elliott's radio network tank. At the same time, their primary interest--oil--was also in dire straits. Where was the protection they expected?

Hot Oil in East Texas

FDR was elected in 1932 by a plethora of groups disenchanted with Republican Herbert Hoover's nonaction in overcoming the effects of the stock market crash in 1929 and the depression that seemed to be unending. The Democrats' pledge to repeal the Volstead Act brought several otherwise divergent groups of voters into the Party, including Franklin Jr.'s in-laws, the du Ponts of the famous chemical conglomerate.

Over-drilling in East Texas

A wealthy group of Texas Democrats consisted of oil men made wealthy in the East Texas Oil Fields, who saw their profits being drained by fly-by-night opportunists tapping wells into the massive pools of oil underneath their own oil wells. They believed they had the right to regulate production through the Texas Railroad Commission, originated in the days when Colonel Edward M. House was building his own railroad and electing governors in Texas to appoint men to the Commission judicially recognized as the agency in charge of regulating oil and gas.

The Texas Oil and Gas Conservation Act of 1919 prohibited production of crude oil “in such manner and under such conditions as to constitute waste” and the Texas Railroad Commission was charged with doing “all things necessary for the conservation of oil” and with establishment of “such rules and regulations as will be necessary to conserve the oil and gas resources in the state.”

Believing the 1919 Act gave Texas complete power to regulate oil well production within Texas, the commissioners attempted to quell the flow from cheap "teakettle" refineries set up by independent oilmen who came to the Texas boom field from all parts of the nation, threatening to drain the pools underneath the wells of the "big oil" interests like Humble Oil. In the summer of 1931, more than a year before FDR's election, a federal appeals court had struck down the power of the Railroad Commission to do more than to "conserve" oil, disallowing a quota system, and thus upholding the rule of capture announced many years earlier in Pennsylvania.

Big Oil vs. Independents

Sterling Mansion portico

The governor of Texas at this time, Ross Sterling, was one of the founders of Humble Oil (now Exxon), who had resigned from the Humble board in 1925 when his sale of stock to Standard Oil of New Jersey made him a wealthy man and gave Jersey Standard half of Humble's stock. Sterling had seen his fortune diminish with the 1929 stock crash, which came on the heels of his sinking a hefty $1.4 million of his new-found wealth into the construction of a 21,000-square- foot mansion in La Porte, Texas.

Governor Sterling

As the Depression deepened without help in sight from President Herbert Hoover, Sterling took action on the state level, calling a special session of the Texas Legislature in August 1931 to address the oil crisis. Federal courts were being requested to grant injunctions in favor of small independent oil men who had contracted to sell more oil than the Railroad Commission permitted them to drill under new proration orders, issued in the hope of stopping the price of oil from plummeting further.

Since June, "the price of oil throughout the Mid-Continent Field had fallen from one dollar and seven cents for high gravity oil, similar to that produced in East Texas, to an average of twenty-two cents a barrel." [Master's thesis of Lucile Silvey Beard, citing L. G. Bignell, “East Texas Must Not Pass 160,000 Barrels of Oil,” Oil and Gas Journal, August 20, 1931, p. 23.]

While appealing one such injunction to the U.S. Supreme Court, Sterling then declared a state of war in East Texas and put the Texas National Guard's Brig. Gen. Jacob F. Wolters in charge of enforcing the new Texas law. Wolters, a graduate of the Fort Worth college that later became Texas Christian University (TCU), was not only a partner in a Houston law firm which acted as general counsel for the Texas Company (later Texaco), but, since 1918, as a general in the Texas National Guard had been the "troubleshooter for many Texas governors. They called on him to establish martial law in areas where even the Texas Rangers could not reassert civil law and order." [1]

In December 1932, a month after FDR was elected but not yet inaugurated, the U.S. Supreme Court upheld the federal district court's contempt order against Governor Sterling "on the ground that a governor can declare martial law only in case of actual insurrection or menacing threats of insurrection."

In Sterling v. Constantin, 287 U.S. 378 (1932), Chief Justice Charles Evans Hughes, who wrote the stinging opinion, addressed the governor's "attempt to regulate by executive order the lawful use of complainants' properties in the production of oil" by interjecting himself in the place of civil judicial process, delegating the authority to the

Humble Oil

Not only did Governor Sterling lose this case, so did former-governor Dan Moody, who had preceded Sterling as governor. Moody, given the credit for ending the reign of the Ku Klux Klan prominent once again during Prohibition, by fighting against the localized corruption of Pa and Ma Ferguson, had made it possible for the federal government to increase its power in areas formerly left to state control.

According to Nicholas G. Malavis in Bless the Pure and Humble: Texas Lawyers and Oil Regulation, 1919-1936, Moody--who had returned to private practice when succeeded by Sterling (elected apparently in an effort to protect Standard Oil's stock value)--was hired as attorney for a plethora of independent East Texas oil operators (filling 13 Pullman train cars) when Dan represented their interest before proration hearings at the Railroad Commission in March 1931. The orders came and went but, without any inherent enforcement mechanism, Governor Sterling was impotent without the national guard.

Rise of the "Federal Authority"

What is important for these purposes, however, is how this battle in the oil fields affected what was later to occur in Texas politics during the 1960's. Having been slapped down for using state action to regulate what they thought should have been within the state's power, certain influential Texans sought to buy their way into federal power. And if that wouldn't work, ... well, it would work. Texans knew how to handle such matters. They had being doing it since 1836.

Pre-1931 photo of Gov. Moody showing Oveta Culp as parliamentarian; she was later wife of Gov. Hobby

Remember San Jacinto!

These events occurred a relatively short time before Texas started to plan for the Centennial to commemorate its 100 years of independence from Mexico, declared on March 2, 1836, but not officially won until winning the battle at San Jacinto on April 21 that year. Ironically, Texans were only able to build a suitable monument to their glory days of independence by tapping into funds obtained from the federal government. And it just so happened they had powerful men in place who did the tapping for them--Vice President John Nance Garner and RFC chairman Jesse H. Jones.  The total monies for the memorial was set out in a special article in the San Antonio Light May 9, 1937:

The government, appropriated $3,000,000 for Centennial markers and buildings and other government agencies contributed enormous amounts of money toward various Centennial projects. The expenditure for San Jacinto is approximately this:

Vice President Garner's Centennial commission..................$ 385,000
WPA for landscaping...............................................................325,000
WPA Funds for terracing........................................................ 500,000
Extra fund approved by president........................................... 200,000

Total federal funds.............................................................. $1,320,000
State appropriation .............................................................$   250,000

Houstonians and Texas officials were embarrassed when Jesse Jones who, as chairman of RFC was instrumental in obtaining the WPA and PWA grants and originally inspired the San Jacinto monument, came to Houston to level the cornerstone which was to have borne his name. Additional embarrassment is in store for those who accompany President Roosevelt on his scheduled visit to San Jacinto at the end of his gulf fishing trip.

The reason the original fund set up in Texas was not used was that the constitutional amendment authorizing a centennial celebration and instructing the legislature to make adequate financial provision for resulted in competition among Dallas, Houston, and San Antonio to host the central exposition. Although it possessed the least historical background, the commission chose Dallas because it offered the largest cash commitment ($7,791,000), the existing State Fair of Texas facility with provisions for expansion, and unified urban leadership headed by bankers Robert L. Thornton, Fred F. Florence, and Nathan Adams. The Texas legislature and the United States Congress each appropriated $3,000,000 for the special 1936 centennial; however, it was determined these funds could not be used in this monument.

It was thus up to Houstonian Jesse Jones to ensure that those "Sons of the Republic of Texas" who fought at San Jacinto were properly memorialized. An editorial in the Kerrville Daily Times humorously recounted events surrounding San Jacinto Day celebrations of 1937:

It has been suggested that an enemy of Jesse Jones is responsible for the protest of the patriotic organization. This may or may not be true, but the whole fuss looks like a tempest in a teapot to us. Far too many squabbles have developed during the Texas Centennial period over the location bill u provision which would have of Centennial memorials, etc. Such foolishness should stop....Jesse Jones foremost citizen of Houston, and a National leader, was largely responsible for the Federal appropriation for the monument. We see no good reason why his name and the names of the President and Vice President might not have been cut into an inconspicuous cornerstone. The whole fuss is being humorously referred to as the "Second Battle of San Jacinto." A similar uproar about the Alamo which occurred several years ago, was designated as the "Second Battle of the Alamo," and just now a third battle seems to be possible over the location of the Alamo Museum.

Jesse H. Jones and Sam Houston's only surviving son, Andrew Jackson Houston - 1936

In a show of gratitude that the long-dreamt-of monument was finally a reality, the Sons of the Republic of Texas (Gen. Jacob F. Wolters had been a president of the fraternity before 1934) made Jesse an honorary member. He could not be a regular member, because of its bylaws:

The society of Sons of the Republic of Texas is composed of white male persons of good moral character who are more than 16 years old and who are descended from an ancestor who was a loyal resident citizen of Texas prior to its annexation to the United States of America in February of 1846.

Base of San Jacinto Monument

Then they took him into their small secret order, the Knights of San Jacinto, created by Texian President Sam Houston in 1843, and revived by the Sons of the Republic of Texas at the culmination of Centennial celebrations on San Jacinto Day 1939. San Jacinto Museum of History Association headed by George A. Hill, Jr., the man "primarily responsible for creating the San Jacinto Museum."

The secret order's major role in later history will be explored in other posts at this blog.

 __________________

Endnotes:

[1] Wolters, a partner in an eminent Houston firm--Lane, Wolters and Storey--with Judge James L. Storey and Jonathan Lane. When Storey died in 1925, his obituary stated he had recently withdrawn from the firm -- making it Wolters, Blanchard, Woodul and Wolters -- which then included former lieutenant governor Walter F. Woodul, with offices on the  eighth floor of Jesse Jones' Houston Chronicle Building.

Saudi Owners of American Bank Stock

Barnes family stock in Bank of the Commonwealth, Detroit, Michigan:

United Press International, April 3, 1972

DETROIT (UPI) - James T. Barnes & Co., a Detroit-based mortgage investment firm, announced today it had options to purchase controlling interest in the financially-troubled Bank of the Commonwealth from the Chase Manhattan Bank of New York. James T. Barnes Jr., president of the mortgage firm, said the Barnes family had agreed to purchase 1,780,435 shares of the common stock of Commonwealth from Chase Manhattan. The New York bank acquired the stock more than a year ago in public auction after it had foreclosed on two notes totaling $20 million owed the bank by the prior controlling group interest, Donald H. Parsons [former chairman of the Bank of the Commonwealth of Detroit and owner of a Pittsburgh hockey team, the Penguins, and the Ford and Dime Buildings in Detroit] and his associates. [Parsons and his group, mostly University of Michigan alumni in their mid-thirties, took over Bank of the Commonwealth in a proxy fight in 1964.] The Barnes family also said it had arranged to purchase the 65,000 shares of preferred stock held by Chase Manhattan, as well as an additional 100,000 shares of preferred stock held by two California real estate men, Donald Kaufman and Eli Broad.

The combined total gives the Barnes family 53 per cent of the preferred stock and 39 per cent of the common stock, effective control of Commonwealth, Detroit's fourth largest bank. However, ultimate control remains with the Federal Deposit Insurance Corp. (FDIC) which was given broad powers in agreeing to loan Commonwealth $60 million to strengthen the bank's capital. The FDIC loans, the largest of its type ever extended, was approved by the stockholders last month.

The purchase price was not disclosed, but Commonwealth stock, traded over-the-counter, closed at 7% on the last trading day, Thursday. The acquisition of the Commonwealth stock by the Barnes family, which last fall bought 85 per cent of the Peoples Bank of Port Huron, another ill-fated Parson's venture, was praised by Robert P. Briggs, commission of the Michigan Financial Institutions Bureau. He called it "good news to all who have worked to bring about the reorganization of the bank."

John E. Thompson, president of Commonwealth, praised Chase Manhattan for its role in strengthening the bank but said it was "in the best interest of everyone" that a local family now has control. Barnes told a news conference that John A. Hopper, a Chase Manhattan vice president sent in as chairman of the Commonwealth, would remain as chairman "for as long a period as possible consistent with his intention at a later date" to return to New York.

United Press International, April 3, 1972

DETROIT (UPI) - James T. Barnes & Co., a Detroit-based mortgage investment firm, announced today it had options to purchase controlling interest in the financially-troubled Bank of the Commonwealth from the Chase Manhattan Bank of New York. James T. Barnes Jr., president of the mortgage firm, said the Barnes family had agreed to purchase 1,780,435 shares of the common stock of Commonwealth from Chase Manhattan. The New York bank acquired the stock more than a year ago in public auction after it had foreclosed on two notes totaling $20 million owed the bank by the prior controlling group interest, Donald H. Parsons [former chairman of the Bank of the Commonwealth of Detroit and owner of a Pittsburgh hockey team, the Penguins, and the Ford and Dime Buildings in Detroit] and his associates. [Parsons and his group, mostly University of Michigan alumni in their mid-thirties, took over Bank of the Commonwealth in a proxy fight in 1964.] The Barnes family also said it had arranged to purchase the 65,000 shares of preferred stock held by Chase Manhattan, as well as an additional 100,000 shares of preferred stock held by two California real estate men, Donald Kaufman and Eli Broad.

The combined total gives the Barnes family 53 per cent of the preferred stock and 39 per cent of the common stock, effective control of Commonwealth, Detroit's fourth largest bank. However, ultimate control remains with the Federal Deposit Insurance Corp. (FDIC) which was given broad powers in agreeing to loan Commonwealth $60 million to strengthen the bank's capital. The FDIC loans, the largest of its type ever extended, was approved by the stockholders last month.

The purchase price was not disclosed, but Commonwealth stock, traded over-the-counter, closed at 7% on the last trading day, Thursday. The acquisition of the Commonwealth stock by the Barnes family, which last fall bought 85 per cent of the Peoples Bank of Port Huron, another ill-fated Parson's venture, was praised by Robert P. Briggs, commission of the Michigan Financial Institutions Bureau. He called it "good news to all who have worked to bring about the reorganization of the bank."

John E. Thompson, president of Commonwealth, praised Chase Manhattan for its role in strengthening the bank but said it was "in the best interest of everyone" that a local family now has control. Barnes told a news conference that John A. Hopper, a Chase Manhattan vice president sent in as chairman of the Commonwealth, would remain as chairman "for as long a period as possible consistent with his intention at a later date" to return to New York.

WISCONSIN STATE JOURNAL, 
SATURDAY, FEBRUARY 1, 1975

DETROIT (AP) - A Saudi Arabian financier has reached agreement with the Bank of the Commonwealth, Michigan's sixth largest bank, to buy 40 per cent of its stock. The agreement, announced Friday, must be endorsed by the Federal Deposit Insurance Corp., which holds a $35-million note on the bank.

Ghaith Pharaon said he agreed to purchase most of the Commonwealth stock now held by the James T. Barnes family. Arab sources said Pharaon, 34, has close ties, to the Saudi Arabian ruling family. He attended the Harvard Business School and is a director of the Jezirah Bank of Jedda.

One segment of the Barnes family stock in Michigan's Commonwealth Bank had previously been owned by Chase Manhattan Bank, a member of the New York Federal Reserve, whose interest had been derived through foreclosure of loans made to Donald H. Parsons.

The other segment was purchased by the Barnes family from Detroit real estate men, Kaufman and Broad, creators of the first publicly traded (NYSE) home-building corporation. Thus, we can surmise the Federal Reserve was well aware in 1975 that a Saudi citizen was approved to controlling shares of the Commonwealth Bank in Detroit.

He was also happy, along with Khaled bin Mahfouz and John Connally, in 1976 to invest in the Main Bank of Houston, conveniently located in the historic Humble Oil Building on Main Street, which had become vacant after Humble Oil revealed its ownership by Exxon and moved into its new building a few blocks away. 

It was not until a year later the Saudis' investments in American banks became an appalling crime when they began to consider buying bank stock from Jimmy Carter official Bert Lance.

Associated Press - December 1977

CRS Design - John T. Jones, Jr. - and JESSE JONES

This is a fascinating account by John T. Jones, Jr. of how the Saudis got involved with the group of businessmen descended from parts of the "Suite 8F Crowd." Like his Uncle Jesse (who built and owned the Lamar Hotel where the crowd met), John Jones hailed from Houston, Texas. His father was Jesse Jones' brother, and he inherited what power he had from the foundation his uncle set up before his death--Houston Endowment--devised as a tax-free means of financing engineering work through "charitable" projects, such as museums, concert halls, and the like.

John T. Jones, Jr.'s favorite expression is "I don't know much," and he proves it in this oral interview. Was it that he didn't know, or that he just preferred not to tell us? One glaring example of what he didn't know is the omission of the name of Saudi investor Ghaith Pharaon, who entered the Houston scene at about the time CRS was intent on finding work abroad in areas where the oil money was abundant in the mid and late 1970s.

From Dec. 27, 1974 People of the Times column published in the Corpus Christi Times: 

"Earlier this month ARMAND HAMMER (above), chairman of Occidental Petroleum Co., told a Senate subcommittee on integrated oil operations that a Saudi Arabian businessman had purchased about one million shares of Occidental stock. He did not identify the businessman at that time. A company spokesman yesterday confirmed that the purchaser was GHAITH PHARAON, who represents Occidental's interests in Saudi Arabia. The confirmation followed identification of Pharaon by a Beirut financial magazine as the purchaser of shares. The company spokesman could not say precisely how many shares were bought. It has about 55 million common shares outstanding.

Another example concerns his involvement with the electrical contracting firm of Fischbach & Moore, Inc., which had not only been convicted and fined by a court in a lawsuit described below, but which had sold considerable shares of its stock to Ivan Boesky, who then conspired with Michael Milken, convicted in a later prosecution for violations of federal law. Yet John T. Jones, Jr. apparently saw himself as incidental to all this criminal activity going on all around him. What else was he in the middle of? More on that later. In the meantime, wrap your head around these blatant omissions:

Title :	JOHN T. JONES, JR.
Date  :	1991		Original File :	doc
Transcripts :	CRSS CENTER ORAL HISTORY PROJECT INTERVIEW WITH JOHN T. JONES, JR.. Kevin Noon interviewed John Jones at his home in Hempstead on December 10, 1991. It was transcribed by Barbara Anderson. KFN: This is real informal. . .what we are trying to get at is. . .if you could start with the beginning of how you got involved with CRS. JTJ: Okay. I think probably the best thing for me to do first is identify myself. I am John T. Jones, Jr. My relationship with CRS was as a corporate director. I have no training, no experience of any kind in the field of architecture or engineering. I was selected as a director, I think, because of my general business background, because I knew some of the active senior members of CRS, because I had employed CRS earlier for a major job. . .and we both spoke to each other after it was over. I wasn't very loud but I was a member of that Board from sometime in the early 70's to about the mid-eighties. The exact dates, I'm sure, are in the company records. There would be no problem about that. I resigned from the CRS Board at the same time directorship in the Fishbach Corp. of New York put me in danger of a conflict of interest with one or the other. This was at a time when both CRS and Fishbach Corp. were very interested in going into the general contracting business. Prior to that time, Fishbach had been a general electrical and plumbing contractor, national and international in scope. KFN: And your relationship with Fishbach was. . . ? JTJ: As a Director. My relationship with Fishbach was about ten years longer than with CRS. So when I had to give up one, I gave up the one with whom I had the shortest relationship. Without reference to personalities or anything like that, because at the time, I had a great many very good friends in both organizations, but sooner or later I would have been in conflict and I wanted to avoid that before it came to a head. My business background is primarily in communications. From 1950 to 1965, I was President of the Houston Chronicle Publishing Co.; President of the Houston Consolidated Television Co. from its inception in 1954 to its sale to Capital Cities Broadcasting Corp. in 1967. That is a Texas Corporation, which owns Ch.13 in Houston; and was and still am Chairman of the Board of the Rusk Corp., a radio broadcasting company, which has KTRH-AM and K101-FM in Houston, an FM stations in San Antonio, Austin, and the Permian Basin, generally in Midland. Now, CRS. . .what would you like to know? KFN: First of all. The initial project that got you involved. JTJ: The initial project that got me involved with CRS was the construction of Jesse.H. Jones Hall for the Performing Arts, which in this year, 1991, celebrated its 25th anniversary. At the time I was Chairman of Houston Endowment Inc., which financed the construction of the Hall as a gift to the City of Houston from Houston Endowment. Houston Endowment, incidentally, was the foundation formed by Jesse H. and Mary Gibbs Jones in 1938, principally funded at Jesse Jones' death in 1956. When we decided to do this, I had talked to several architectural firms but not very many. At the time, through the Jones interests, which had been commercial builders in Houston for a long time, I was in touch with a great many architectural firms. I was particularly impressed with background of CRS, Caudill Rowlett Scott. They had done a great many major school or college projects and other public type projects. I was rather naive about architecture then, but I thought if they could design a college campus, they surely ought to know how to handle people. I was also impressed with the representatives from CRS who called on me. The ones who called on me were Wallie Scott, Tom Bullock and Willie Peña. The selection process was really not scientific at all. We were just impressed with these people, and they left me brochures and that kind of stuff, which were pretty. Every good architectural firm has brochures and they are certainly not going to showcase their bad jobs. I asked them what they thought about it. KFN: So that was your impression of them, essentially, and how they performed when you interviewed them. How many other firms do you think you might have talked to? JTJ: I don't know. . .two or three. Besides that, they sure wanted the job. KFN: Oh, I'll bet. JTJ: They sure wanted the job. It was a good job for them because it was a chance for them to showcase themselves in Houston. They had only recently come into Houston. Before then, they were headquartered around College Station, doing work nationally. . .scattered around. When they moved into Houston, they really needed a real good job there. I thought because of that they might work just a little bit harder to make it a good job, a real showcase job. All the principals of the company I talked to were intrigued with the idea of this gift to the people of Houston on the same site as the old City Auditorium. The old City Auditorium, I'm sure, was a great building in its day but its day was long gone. That's basically the reason I picked them. KFN: How did things evolve after that? JTJ: Naturally, during the construction of Jones Hall, I was with them quite often. They were easy to get along with. They were the designers, supervisor of construction. I had never dealt with them before. I trusted them completely. . .but another architect was Clerk of the Works. He was there. . . KFN: To give a second opinion and keep an eye on things. JTJ: To see that it was being built as drawn and if not, that it was explained why. . .and to watch the architects and watch the contractor. He was our only direct employee; he worked for the owner. He has since then become quite a successful architect on his own. That is probably the basis and background. I got to know Tom Bullock very well and Herb Paseur. We used to have regular meetings of the Building Committee, and I was chairman. That didn't mean I knew a damn thing about building but it meant I was at all the meetings. We always had two or three people from Houston Endowment and most of the principals of CRS. . .always Bullock, Paseur. . . . KFN: Was Bill Caudill ever involved? JTJ: Bill Caudill was there from time to time. When he was there, he was very active, constantly offering suggestions, and just as frequently, offered questions. I was very impressed with the man. He had a mind that was . . .unfettered, let's say that. He liked to question and experiment, but never dangerous in his experimentation. Anyway I got to know the principals quite well. Jim Gatton was the Project Architect and I got to know him best of all. Jim, I will say, turned in a good job. No job is perfect. There are always glitches that show up now and then. But Jim did a good job on smoothing them out. If he couldn't smooth them out, he worked them out. Now what else do you want to know? KFN: I have a communication background myself, a degree, no work in the field at all. I'm interested in that topic and we're going to hit that topic pretty hard. Given all the possible definitions of communication, feel free to hit on any of those. What kind of communication structure did you see in the company when you tried to deal with them in the early years? Did you see any problems there, any advantages, examples of how they communicated with each other? JTJ: Not particularly. I was pleased. . .I won't say surprised. . .with the internal communications of the organization. I expected that because the principals I met were, to say the least, were garrulous. They were intent on everyone's knowing. . .Bullock, in particular, had this business of everybody working together. I don't know whether Tom Bullock can draw a straight line or not, but he's a hell of a mover. I got to know him and like him a great deal and my opinion hasn't changed at all. KFN: He had some great things to say before I came down here. I could tell he wanted to do this interview but he can't. JTJ: He'd have done a good job but he'd have done most of the talking. Anyway, I was pleased with the internal communication and I expected that. Certainly Bill Caudill. . .he was the Daddy Rabbit of the organization, the thing everybody coalesced around. . .was the fountainhead of a constant "stream of consciousness" memos, going at it all the time. Must have been a full time job for one person to keep him supplied with those damn little cards he used to send them out on. KFN: Yeah, he was a thinker. JTJ: Yes he was. . .thought all the time. He used to fly an old float plane. . .looked like a float plane, a cumbersome old thing. He'd fly it from College Station to Houston and come by this place, our ranch here in Hempstead, Texas; and there is old Oxbow Lake down there. He would fly over that thing and wiggle his wings and I knew next I was going to get one of those little cards with what he was thinking about when he flew over. KFN: That's wonderful! JTJ: What's next? KFN: Okay, you marked off "Mergers and Acquisitions." You were involved with some of those as they came along, possibly Sirrine and others. JTJ: Yeah, well. That was a long time after I got on the Board. I was interested in the Sirrine merger. I thought it was very much to the benefit of the company. When I first got on the Board, whatever that elusive date is. . .I can't think of it right now. . .CRS was just starting to grow out of being a pure architectural design company. They were going into Construction Management in a pretty big way, and they put in a pretty sophisticated. . .computerized, that's what sophisticated means these days, I guess. . .computerized construction management system. And they were doing very well. It was quite good and by that I mean they were getting work. KFN: So you think it was the right thing to do, switch over and start. . . . . JTJ: As you know from talking with others, at this time they were doing quite a bit of overseas work. When I joined the board, they were in the process of one big deal and going into another one, the HOK+4 consortium in the Saudi Kingdom. They were pretty well wrapped up with that. Incidentally, that went well and wound up that the companies' top echelon were more concerned with how to get the money out of Europe and back to the U.S. than they were with any glitches in their actual process in Saudi Arabia. KFN: I see, how to get the receivables back to the country. JTJ: I was kind of familiar with that because the Fishbach board. . .this other company I was with, an international electrical contractor, had just done a tremendous electrification job for the new nation of Zaire, and they were in the midst of electrifying. . .I don't know the name of the river. . .there's one great huge river that runs almost the full length of Afghanistan. . .and they were electrifying a lot of Afghanistan, hydroelectric dams, hydroelectric (?) and they had the same problem of how to get their money out. Seems all these countries want you to come in and do the work but make it difficult to get it out and the U.S. makes it difficult to get it in. KFN: So that was the big problem. . . JTJ: Not a big problem but was a problem, one that occupied some board time. Bought an awful lot of airplane tickets to Africa. . . KFN: Were you involved with the Sirrine acquisition? JTJ: No, not directly, just as a board member KFN: How did you feel about that? JTJ: I was for it. I thought a long time about it but I was for it. Architecture hadn't gone into a slump or anything like that, but architecture was a little flat. Sirrine was pure engineering company and had a real specialty. . .they were the leading paper-making engineers in the U. S. Having been closely associated with the newspaper industry for a number of years, I knew that was an industry that had not topped out. Canadian paper was becoming more and more expensive. European paper was certainly more expensive and very limited. . .all the companies were in Sweden and Finland. At that time we could not get any importation from Russia. I don't know whether there is any now or not. Russia's got the greatest potential in the world. The Canadians have got the raw material but the Canadian plants were all old, old, old. The new plants were all in the southern pine belt. Southern pine is a very rapidly renewing resource. You can grow pulp logs in 14-15 years. It takes 20-30 years to grow a tree the same size in Canada because the growing season is so short. Takes even longer than that in Finland. They've got to get their growth in 2-1/2 to 3 months. I was very much for the Sirrine and did everything I could to foster it . KFN: On the downside, what were some of the opposition comments? Do you remember any? JTJ: There was lots of questioning. There was only one real "con." Chuck was very reluctant to go into it. He had been for it for a long time. . .first he was indecisive and then was actually against it. That's the reason he left the company. He thought it was the wrong move, they were going too fast into uncharted areas. He was kind of a. . .I won't say cautious. . .but in this case, was careful to a fault. I think the good points were obvious. He didn't see it that way and wanted to keep the status quo a little longer. He was a little more apprehensive about going into uncharted waters. . . KFN: What other mergers and types of things did you look at. Do you remember? JTJ: There were lots of flirtations. One that went through was the Geren firm in Fort Worth. That was a relatively small firm, very, very strong in its market. That went through and I have no idea what came out of it. KFN: What was their specialty? JTJ: They were general architects in Fort Worth, did a little of everything. I'm sure they'd have been delighted to build you a church, office building, factory, whatever. It was a fair-size firm. . .my memory is bad. You can check with Bullock, although I know his memory isn't a damn bit better than mine, but he might add to it. I think they had close to 40 associates, but owned by an individual. . .at least that's my recollection. What else do you want to know about CRS? They had great board meetings, I'll tell you. You ate, you drank. . .anything you wanted. Extremely eclectic board, too. KFN: Yeah, I noticed there were some really interesting people on the board. JTJ: Characters, characters. KFN: Now did that help to broaden perspectives on where the company should go? Did that cause problems? JTJ: I don't think it caused any problems. This board was . . . .I don't remember any real arguments. . .lots of discussions, very open and free. It was a very good board in that respect. The character I referred to principally, I guess, was John Naisbitt, the author of Megatrends and all that stuff. He had a bunch of correspondents who clipped newspapers and sent them to him. From this wealth of clippings, etc. he would project things. I guess it turned out all right. . .I don't know whether he was an economist or just a good collator. He turned out to be a hell of an author, probably made a lot of money out of it. KFN: Do you think he sparked a lot of visionary ideas being there? JTJ: He sparked more discussions than interest. He may have headed off a few things. He pointed areas where you could concentrate (?). He was pretty firm in his projection that the future states, as far as economic growth was concerned, were California and Florida. Then the other sunbelt states with Texas in thelead as a sort of secondary role. That's my recollection. . .he kind of ruled out a lot of the rust belt states. He hasn't been completely accurate in that because some have done fairly well. KFN: Basically, then, he stirred up a lot of conversation. JTJ: Oh yeah. We had a board member who was a particular friend of mine, named Aaron Farfel. Who resigned before I got off the board. Aaron was, I guess you would call him, a general businessman and extremely successful. . .very quiet, softspoken and sharp as a tack. When he spoke, he never raised his voice but everybody stopped and listened. He didn't interject many comments, but when he thought he saw something, he would bring it up. KFN: What was that name again? JTJ: Aaron Farfel. He was. .. . KFN: Was he on the board for a long time? JTJ: He was on it for several years. He was particularly good with finances. He was also one of my board members on the old Ch. 13 board. KFN: Based on your work in the communication industry, coming into an advisory capacity for an architectural firm, did you think these folks were a little out in left field. . .were they progressive. . .aggressive. . .moderately so. . .visionary? JTJ: They were everything you said. They were kind of wide-ranging. They also. . .at least a number of them. . .had their eye on the bottom line too. . .knew what the company was there to do. It was there to be a great architectural firm but they didn't have a Medici family back of them to support them, so they knew they had to make money. They were good at that. KFN: Do you remember any of the other folks who served on the board with you? JTJ: Sure. At first, there were Bill Caudill, Wallie Scott. . . Side 2 JTJ: We always had the financial side of the company represented. The outside directors, Naisbitt, myself, Farfel. KFN: What did you say Farfel's contribution was, mostly? JTJ: Financial. He was an excellent financial man. KFN: Do you remember where he came from? JTJ: I know exactly. He was an accountant and lawyer by training; came to Houston following WWII as an IRS officer. He spent five-six years as an IRS officer auditing some of the major organizations in Houston, including our own. Then he opened A.J.Farfel & Co., a CPA firm. He did that for, I guess, 15-20 years and then gave that firm to his employees. It was a successful firm and is now Peat Marwick Mitchell in Houston. He was President of Pyramid Rubber Co. , which during WWII made an absolute mint of money because they had stockpiled most of the natural rubber available for baby bottle nipples. That's the only thing the federal government released natural rubber for and they owned the company. He was Board Chairman of Spaulding Sporting Goods Co., a big company. Their principal product was golf balls. . .which are, here again, wrapped in rubber. He was in a lot of things. . .real estate. . .a real entrepreneur. If it had possibilities, he would take it on, quite a venture capitalist. He gave me long lectures on the investment of money and gold. . .he said it was the worst investment of all. He said its dead, inert. . .money invested in gold does nothing. Money should be invested in production, something that's created. KFN: Well, he proved that. JTJ: Oh yeah, he proved that. He wasn't wrong very often. KFN: How did you guys get along as a team on the board? JTJ: Pretty good. I think everything was pretty copasetic most of the time. There were disagreements, sure. There are bound to be lots of disagreements in any company. Those were either settled, worked out or laid to rest before they ever got to board level. We didn't have to worry around with much of that. When Chuck left the company, that did get to the board level who accepted his resignation. KFN: If you could start over again, back when you first joined the board in the early years. What would you have done differently from what they had going? Brought on different people, tried different strategies, different economic directions. . ./ JTJ: No, I think they did pretty well like they did. On the board, I didn't talk very much, unless I thought something was going the wrong way. (This part unintelligible. . .the parrot drowns out Mr. Jones). But I didn't do that very much. I don't know that I'd have done anything very differently. I think CRS. . .although with many name changes. . .has been quite successful and done a damn good job. . .they've left very happy tracks behind them all through Texas. KFN: That's the point of our effort here, to find out why that happened. JTJ: I think this, in very large measure, is the pattern set by old Bill Caudill. He was kind oaf bear of a guy, but a great fellow. KFN: And of course, Tom, keeping up with the production end of it. JTJ: Oh yes. Tom had a little hand on the sales effort, too. Quite a bit. . .he was damn good at it. KFN: I'm sure he'll be glad to hear that. Did you follow the company at all when you left in the mid-eighties or so? JTJ: It was 84-85, something like that. Yes, I kept up with it. Certainly I kept up with Tom, Herb Paseur. . .I see quite a few of them. KFN: Let me go back and ask you one other thing. Did you get involved with any of the management of the company at all, anything internally, management-wise, how they were running things? JTJ: Not particularly. Tom might have been worried about something and talked to me. He likes to have somebody to bounce things off of. So I got involved in very small ways. But to be available to have things bounced off you is pretty good service sometimes. KFN: Oh yeah, especially with your background in your other interests. At the same time you were serving on the CRS Board, what other positions did you hold? JTJ: At one time or another during that period of service, I was involved with television. I was no longer involved with the Houston Chronicle. I resigned from the Chronicle because I had bought its radio station and didn't want to be in conflict with that. I was a director of what's now Texas Commerce Bank. It was then the National Bank of Commerce; I was director of the Houston local Chemical Bank, Chemical Bank & Trust, which was later absorbed by National Bank of Commerce. I was a director, just retired a couple of years ago, of American General [later AIG] for thirty years, and a director of Fishbach Corp. Fishbach Corp. is a New York contracting company. With a conflict of interest, I left the CRS Board. [The corporation's name is misspelled throughout this oral transcript. Correct spelling was "Fischbach".] KFN: So with the banking, communication and Fishbach, can you make any comparisons as to how they conducted business in those other industries vs. this one. Is there anything you . . . . JTJ: The difference between the boards? KFN: The boards, exactly. JTJ: There was a lot difference. KFN: Okay. Can you describe some of the more unique things that set them apart? JTJ: The Fishbach Corp. was essentially a family company, founded by Harry Fishbach and Bob Moore, two men. Moore sold out a few years after the war. Harry Fishbach and his sons stayed on and they pretty much dominated the company, a New York organization. The people on the board had all been there a long time and it was a very close board. The ones who lived in New York, especially, used to see each other socially. . .very willful, argumentative. It was necessary to have a lawyer on that board and they did. Fischbach & Moore, Inc. of Dallas (F&M) was sued for rigging contract bids on nuclear power plants ~~~~~~~~~ Result of the trial convicting the defendants was appealed and opinion announced in 1984 at 750 F.2d 1183 in The United States v. Fischbach and Moore, Inc. For approximately seven years, from 1974 to 1981, representatives of several electrical contracting companies met at the Duquesne Club in Pittsburgh. The purpose of these meetings was to allocate electrical construction projects, by bid rigging, at the Western Pennsylvania Works (Works) of United States Steel (USS). Whenever one of the companies desired to rig a bid, that company's representative would telephone the other contractors and arrange a meeting. After deciding among themselves which firm would receive the contract, that firm's representative would contact the other contractors and would tell them what bid to submit, ensuring that his firm's bid would be the lowest. Some of the firms kept track of the allocations to ensure that each contracting company received its fair share of work.... F & M brazenly committed a grave crime. The jury found the company guilty of conspiring to commit per se violations of the Sherman Act in a series of meetings that obviously were illegal. Moreover, F & M was one of the ringleaders of that conspiracy. As to the sentences imposed in the same jurisdiction, the penalties levied on the other defendants in this case provide a good example. Every individual defendant received a fine and a prison sentence; all the corporate defendants received one million dollar fines.  ~~~~~~~~~~~~ APRIL 25,1990 from AP-- "We believe that this prosecution and the fact that Mr. Milken has admitted to guilt will send the right message to the financial community," Assistant U.S. Attorney John K. Carroll told the court. Mr. Carroll said that after sentencing is completed, the public "should conclude that justice has been done."  Milken was composed as he described the work of Drexel's Beverly Hills, Calif.-based junk bond department and his unlawful actions. He broke down in discussing his personal struggle during the four-year investigation. In addition to conspiracy, Milken admitted to violations including:   —Violating federal disclosure requirements by failing to record a deal compensating Boesky for trading losses in Fischbach Corp. in 1984. Boesky had acquired more than 10 percent of the takeover target on Milken's recommendation and Milken promised to to cover any trading losses. —Securities fraud involving the sale of MCA Inc. stock by Drexel client Golden Nugget Inc. in the fallof 1384. Milken said he arranged illegal trades to cover losses by Boesky, who agreed to buy blocks of MCA stock to mask sales of large positions and create the appearance of market demand. Milken said his plea was an admission of personal responsibility "and not a reflection of the underlying soundness and integrity of the capital markets in which we specialized." "Our business was in no way dependent on these practices," he said. "Nor did they comprise a fundamental part of our business and I regret them very much." Junk bonds grew from an obscure form of debt to a $200 billion market almost entirely because of Milken, who controlled a wide network of buyers and sellers and wielded enormous power. The market virtually dried up last fall because of problems involving several large defaults and Milken's departure from the scene. ~~~~~~~~~~~ KFN: As a moderator. JTJ: But they all liked each other very much but were mostly individuals, men who had been CEO's of various contracting organizations, which had been taken over by Fishbach [sic]. They were all successful, all had very strong opinions. Sometimes it seemed to me that the one who could holler the loudest was the one who. . . . It wasn't quite that bad but it was a very open board. American General was more like a bank board. You had a very set agenda, stuck to it. As you come to everything on the agenda, the Chairman is more like a school teacher. He recites everything, explains the items, including all ramifications, and there is not as much feedback from the various board members because, everything is talked about and the only feedback you get is if somebody really does object. In those days, banking was a pretty well regulated industry, so there was not as much reason for much feedback, as long as you stayed within the law. American General [founded by Gus Wortham] was very much the same, possibly a little more discretion than the bank but not much. The one time when you had a whole lot of board feedback was if the bank ("hook 'em horns". . .you know where I went to school) was going through a change of direction or policy, something like that. . .if they were planning on a merger, a purchase, a major acquisition. That's when things really got out, but the routine, day-to-day things were not discussed, as say, they were on the CRS Board. They were on the Fishbach [sic] board. KFN: They were discussed on the Fishbach [sic] board? JTJ: Everything was. KFN: Everything was? JTJ: Just about. If it wasn't discussed, they'd bring it up and ask. . . ."where do you buy your pencils?" KFN: Is that right? And CRS had a kind of mix of that, some details but not much. And in the banking and insurance. . . . JTJ: Much more structured. KFN: They didn't bring out the details as much. . .they were pretty much set anyway. JTJ: Toward the end of my tenure on the CRS board, it was becoming more structured because it was getting so damn much bigger. So many different things to discuss, there had to be more structure to the board. KFN: Was the attention to detail in Fishbach beneficial to them? Could they have done better without so much attention to detail? JTJ: I don't think it would have made much difference, either way. The strength of Fishbach is that they had a core of employee built up over 25-30-40 years, who were extremely loyal. . .never underestimate people like that. . .god, they're important in the contracting industry. . .their various branch supervisors, people like that. You could have wiped out the Board of Directors and they wouldn't have known it for a year. The company would have just gone on. Sooner or later, they would have needed a board but actually the main things we discussed were major trends we saw coming up, things like that. There was a lot of petty discussion. We didn't actually quarrel of where they bought pencils, but it was. . . . KFN: A level of detail there. JTJ: And in the contracting business, you have a tremendous loophole for theft in purchasing, and the internal audit report was always a big part of the meeting. Outside auditors don't audit anything like that, so we had fairly substantial internal auditing system because there were literally buying millions of dollars worth of supplies every week or so. This is the biggest electrical contracting firm in the U.S. and about third in the world. A lot of that stuff can fall thru the cracks, one of the big problems. . .like the restaurant business. If you close the back door, you make money; if the back door's open, you don't. Something else I've been in too. KFN: Really? Holy cow. You've certainly seen a lot of action. Then the CRS Board had a sort of happy balance between detail, vision and planning. JTJ: I think so. It was a very happy and, I think, an effective board. KFN: Did they socialize with each other as much as the other boards? JTJ: Once or twice a year we would have a get-together. KFN: Okay, but not real tight. . .no outside relationships or anything. JTJ: A couple times a year there would be a get-together when wives would be invited. KFN: Would it have helped if you had been a little closer with these board members on the outside, socially. JTJ: No. KFN: You don't think so. . .wouldn't have had any effect? Okay. Some folks mentioned that as being a.. . . . JTJ: I think it was all right like it was.. If you wanted to see each other outside, you could. There were some business-related functions when they would invite the directors, sometimes all of them, sometimes just the ones in Houston they could get together in a hurry. They would get together, maybe for some potential major client who was in town. . .buy him a drink, give him a nice little snow-job. KFN: Did you notice during your tenure an evolution of the board to a broader perspective. . .from design to. . . .? JTJ: A little bit. We took in more outside members, and that broadens it some. KFN: Were you really the first outside board member? JTJ: No. John Naisbitt and Aaron Farfel were both there when I got there. I don't know which of them was the first outside member. I kind of think it was Aaron but am not sure. KFN: Was this before Naisbitt wrote Megatrends? JTJ: It was before. . .he wrote Megatrends while he was on the Board and after I got on it. He sent me an autographed copy and didn't even ask me for any money. KFN: That was an incredible book and he struck a cord with folks all around the country. Don't know if it's true or not but it created a lot of interest and is still selling right now. You've been going for an hour now. This is a long interview. JTJ: It's long enough as far as I'm concerned. I've told you everything I know. End of taping session