Howard Hughes: The Autobiography

29

IN THE TWA case they’d been trying to subpoena me for six months but they hadn’t been able to find me. I know how to vanish, I’ve had decades to practice. For the most part I was playing golf in Hawaii or traveling with Helga, both activities under another name.

We went to Paris. Helga took me to all the art museums and I developed a taste for the Impressionists. I even bought a dozen Monet, Degas, and Renoir oils, not because I thought they’d go up in value, although I suspect they will, but because I really liked them. I decided not to hang them anywhere – I was sure someone would get wind of it and try to steal them – so I wrapped them up in a lot of cardboard and paper and crated them and stored them in a locker I rented in Orange County, California. They’re not even in my name. I arranged for a bank to pay the rental forever, and I padlocked the storage locker, and I have the key. If I died tomorrow, no one would know what lock that key fit, and those paintings would sit there forever.

You’d better do something about that. You could be hit by a bus, and the world would lose a dozen important paintings.

Yes, I will. Remind me, will you?

Anyway, during that period when I was dodging the lawsuit, and Jean and I had separated, Helga and I rented a little house in France, in a village just outside of Aix-en-Provence. I set out to learn French. It’s one of the few things in my life I’ve tried hard to do where I failed miserably. One of the others is to become friendly with French people. They’re charming, and often cultured, but for a man like me they’re Martians. And, although they respect my eccentricity, in other respects they regard me as someone from Pluto.

Meanwhile the flood of subpoenas mounted, demanding my presence in court, and eventually I couldn’t ignore them. From Marseilles I flew back to the States and conferred with my lawyers. It was a dollars and cents proposition in many ways. If I appeared I might be able to win the case, or more probably the judgment against me could have been reduced to ten or twenty million dollars. As it was, I knew that if I didn’t appear it would cost me well over one hundred and forty million.

But at that point I rose to the occasion. I felt I had demeaned myself so much by this enormous involvement with the case, and with the fight for control of the airline, that I couldn’t go any further without destroying myself. There was something in me, thank God, that really fought against this self-destructive process that had been the theme of my whole life, and I clung to that something like a drowning man clings to a plank.

When it came time, when I was subpoenaed, the horror of it finally got to me. I made a vow then that I would not only not go into that court, but never go into any court again in my life, either to defend myself or to attack anyone else.

I was fed up with the niggling, mean, unimaginative aspects of the business world. But I had visions of worthwhile things to be done in that world. There was nothing small-minded and petty about those visions, including what I tried to do in Las Vegas. But I’ll get to that in its proper place.

The upshot of the TWA lawsuit, however, was that they got a default judgment against me for $137 million and they threw out my countersuit. It was a judgment with treble damages.

A bond was put up by Toolco. The issue is still in the courts, and it’ll probably stay there as long as I’m alive. I don’t need the money, but those bastards aren’t going to get their hands on it. I’ve got that money earmarked for a nobler purpose.

The lawsuit, in any case, was totally unjustifiable. Of course they did their damndest to justify it. Ernest Breech made a public statement, just the sort of thing you would expect him to say, to the effect that as the new president of TWA he had an obligation to the stockholders and to the people who worked for the airline to sue me. He felt that was a cardinal principle of American business – the obligation to the stockholders to sue. It was a lot of doubletalk, because he forgot to mention that I was the principal stockholder and he was suing me with my own money.

After I went through the horrors of that lawsuit and the countersuit and the demands that I appear in court, I was totally fed up. I washed my hands of the whole thing.

But you held the stock.

I still liked TWA as an investment, and I liked it until 1966, when I sold it. Everyone has written that Ernie Breech and Charlie Tillinghast, who followed him, did such a great job of managing the airline and therefore made my fortune, or part of it. That’s a lot of crap. Tillinghast did do a good job of managing the airline, but that’s no more than you expect of the president of an airline, and the years between 1960 and 1966, when I was relatively inactive in TWA, using my weight here and there and holding the stock, were boom years in the American economy. Everyone prospered. I fail to see why such great credit should be given to Tillinghast and why everyone should demean me. If I had been running the airline, it would have prospered in exactly the same way, or maybe even better. They were also boom years in the stock market. That was the big bull market – with the exception of the 1962 drop it was just up, up, and away, until the spring of 1966.

I had taken my licking in the stock market back in 1929, just like everyone else, and after that I took the market a little more seriously. On my payroll I had what’s called a technical analyst. A technical analyst doesn’t just look at the value of a company. He looks at the movement and internal conditions of the market as a whole, and he looks at the movement of an individual stock, and he says, based on the price-and-volume movements of that stock, ‘It’s going to go up, or it’s going to go down.’ He doesn’t care whether it’s TWA flying around the world or whether it’s some company in Dogpatch that makes toothpicks. That toothpick company – if the movement of their stock is healthy, then it’s a buy. And if the price-and-volume dynamics of a stock like Xerox is poor, then no matter how good the company’s prospects look, then it’s a sell.

At the end of ’65 and the beginning of ’66, if you were at all aware of the internal condition of the stock market, you knew it was going to fall on its ass. In my view the market is a law unto itself. Stocks are worth only what people will pay for then. There are many old sayings about this: ‘Don’t fight the tape,’ and so forth – meaning that if you buy a stock and that stock goes down, then you were wrong to buy it, despite the fact that everything may look good for that company and you can’t understand why the price of the stock should sag. The fact that you can’t understand it doesn’t mean a thing, except that you can’t understand it. I once had a talk with Bernard Baruch about this and he disagreed with me. But I’ve made a lot more money out of the market than Baruch ever did. And with him it was a full-time occupation.

In the beginning of 1966, people on the inside and the banks who fix the prime rate of interest knew that the market was headed for a terrific drop. And I knew it, too. Every single technical indicator confirmed it. That’s when I decided to sell. Moreover I had other uses for the money. I didn’t see any sense in it just sitting there in stock certificates when I had already formed a plan – more than a plan, a vision – about the Las Vegas area, for which I needed cash. I’d been thinking about this for several years already. So, to put things as simply as possible, I decided to sell out my block of TWA.

It was the second largest underwriting in history. Merrill Lynch did the job for me, palmed off a lot of the business on other people, spread it around and did a very competent job. I have to give them full credit for that.

Nobody knew whether the fact that I was dumping was of any significance. They could have decided that I knew something that other people didn’t know – and the stock would have plummeted.

Or, as in fact happened, they could have decided that this was a tremendous buying opportunity. TWA had been virtually a privately-held corporation until then. I owned seventy-eight percent of the stock. Wall Street banged the drum that this was a great opportunity for the American public to have a share in a company that had previously been closed to them. The stockbuying public and the mutual funds liked that idea. They came running like chickens to a bag of corn. They bought. An example of mass stupidity.

They bought at $86 a share, which was just about the top, the all-time top, for the stock. The underwriters and Merrill Lynch got their cut out of it, you can be sure of that. They never lose. Merrill Lynch made more than $3 million, and there was another fifteen or sixteen million that went to other brokerage houses and all those other guys who dip their fingers in the pie. You know those gravestone ads – this was one of the longest in history, and some very fine firms were associated with it.

The check was placed in my hands for something like $566 million, which was the largest check ever issued to an individual, to my knowledge. I packed the bundles of cash in my suitcase and flew to Las Vegas.

You took that much cash with you?

No, no, that’s just a figure of speech. I rarely have more than a five-dollar bill in my wallet. I didn’t have enough money on me the other night to pay you that bet on the baseball game, did I? I’m cash-poor, I’ve told you that.