We had a few discussions about politics and the Korean War, and after that I said, ‘Look, let’s just talk business or we’ll have a terrible argument.’
Years later this guy wrote a preface to a book about the bombing of Dresden during the Second World War. More civilians were killed in Dresden than when we dropped the atomic bombs on Hiroshima and Nagasaki – it was a totally defenseless city with no war industry, just civilians – and Eaker said yes, it was terrible and all that, but it wasn’t so terrible, it was justifiable if you remembered that Germans were using the V-1s and they’d started the war in the first place. If he had written this piece when he was working for me at Hughes Aircraft, I would have fired him on the spot.
As for Harold George, the only thing I held against him was that he spread stories about me that I was a pennypincher, that I borrowed dimes from him for telephone calls and never paid him back. Here’s a guy who was making a hundred grand a year and he begrudged me a few dimes. He used to give me an accounting every month or two of the dimes I’d borrowed from him. He loved to twist it around and say I was a cheapskate. Who was the cheapskate, him or me? I borrowed the dimes and he complained that I hadn’t paid them back to him. So who was the cheapskate?
But they were generals, so they knew who to talk to when contract time came round. Our R & D team was headed by Dr. Ramo and Dean Woolridge, top-flight scientists, and they really produced. Hughes Aircraft made fire control systems for the F-86 and F-94 jets, and then around 1950 we came up with a sophisticated system which the Air Force accepted for the F-102 supersonic interceptor. We beat out General Electric for that one. We built a new plant in Tucson to make the Falcon air-to-air guided missile. And we got deeply into solid state physics. We make the finest germanium diodes in the United States. By 1952 we had over half a billion dollars in contracts. We had about 90% of the Air Force business in all those fields.
Ramo and Woolridge got up an expansion plan, felt they needed more laboratory space, more men to handle the flood of stuff that was coming in from the Air Force. We were in the Korean War at the time. I saw the need for this expansion, but I wanted a new plant to be built in the Las Vegas area, where I was starting to spend a lot more time, and where I could be in closer touch with it. I felt Las Vegas was a coming section of the United States, an area wide open for development, whereas Culver City was already pretty well sealed off.
Ramo and Woolridge balked. They said it would be destructive to expand the R & D section into Las Vegas, separated from the main facilities. And they were backed up by the administration, by Eaker and George. They argued with me like they were the Longshoreman’s Union, only they were management.
There were other problems, too, but they were largely Noah’s doing. Hughes Aircraft was more than he could cope with. It was making lots of money, far more than Toolco in its palmy days.
You mean that in 1952 Toolco wasn’t the backbone of your business empire?
This was part of the trouble. Toolco had fallen into second slot. Noah felt he had to take control in California – he felt he was in second place, which was true, and he hated it. And he precipitated the showdown. One year, for example, he wouldn’t pay any bonuses to the executives, and the company at the time was making a small fortune. He called it an economy drive.
I held off making any decisions. There’s a lot of talk about the ability to make snap decisions, but it’s the ability to not make decisions which can be even more important, on my level. I found that often if you just sit quiet, the problems disappear all by themselves. What’s vital today, if you keep postponing it, eventually becomes irrelevant.
At the time – with all that trouble brewing – I decided I’d better find out just how much I owned in Hughes Aircraft: how much it was worth. This was just in case I decided to bail out completely, in case I decided it was another albatross like RKO.
I don’t know if you’re aware of this, but there’s no one you can call in and ask, ‘How much is my company worth?’ You can, but they’ll lie to you, tell you what they think you want to hear. If you want to find out how much something is worth, you’ve got to find out how much someone is willing to pay for it.
For that reason, I had put Toolco on the block back in 1948. I went to Fred Brandi at Dillon Read, the New York brokerage house. Dillon Read was just starting to make inquiries when it leaked from someone and got into the papers. The people at Toolco were very upset – they wanted to know if their jobs were still safe. Apparently they liked working for me, and I was upset and embarrassed. I had to make all sorts of announcements that no one would be pushed aside if and when the new management took over.
We never could agree on a price. The Dillon Read group was offering around a hundred fifty million. It was supposed to be the largest sale of a company since the Dodge widows sold out to Chrysler. But, as I said, I had no intention of selling. I was just trying to find out what the company was worth – I think, in the end, they would have come up with about two hundred and twenty five million.
So again, in 1952, on the pretext that I was thinking of selling Hughes Aircraft, I opened up negotiations with Westinghouse, and General Electric, and Bob Gross at Lockheed.
Poor Bob, I drove him all over the desert around Las Vegas, night after night and day after day. I was used to the heat and he wasn’t. I almost always keep the windows of the car shut tight, and I stuff any cracks with Kleenex. I did that with Bob Gross in the Nevada desert. It didn’t bother me at all but he sweated like a pig, while we talked figures. We started somewhere around $35 million and I goosed him along night after night and got him to, oh, around fifty – and this was just for leasing Hughes Aircraft. I still would own the property.
Bob finally realized that I had no intention of selling, and he said, ‘Thanks for the midnight view of the cactus, Howard, but I’ve got work to do.’
But he couldn’t really be angry at me, because during these bargaining sessions I saved him from a terribly embarrassing incident. The first night, in Las Vegas, we’d stopped at a little drugstore for coffee. Bob had coffee and I had a glass of milk, and when we left, Bob stopped at the counter to pay the bill. I was looking at a magazine rack at the time, and I remember, just as he paid, as the woman took his money and turned away to the cash register, I saw something – well, I couldn’t believe my eyes. I saw Bob Gross – he was president of Lockheed Corporation, one of America’s biggest corporations – reach out and stick a candy bar in his pocket. He stole it.
When we got out outside I couldn’t contain myself. I said, ‘For God’s sake, Bob, what in the world are you doing stealing that candy bar?’
He turned red for a minute. Then he laughed and said, ‘Well, every once in a while, it’s a kick. It’s more fun than paying for it. You ought to try it some time, Howard.’
I was totally flabbergasted. He told me he did this, not every day by any means, but whenever the impulse moved him. Never anything of value, you understand, not diamond watches or sable coats – a candy bar, that’s all.
But this is just background. A few nights later, Bob and I gave up negotiating, and at about nine o’clock in the morning we were driving back to Los Angeles. We passed through one of these little crossroads towns and I spotted a 7-11. And I felt a yen for some Mallomars and a container of milk. You know, Mallomars are those puffy marshmallow chocolate cookie. Unfortunately it’s getting harder and harder to find Mallomars. The damn fools at Nabisco had a winner and they went to sleep on it. I’ve had men go out and scour the stores to find me Mallomars, and they had to go to half a dozen stores before they found them. It’s the Cadillac of cookies – at least for me.