Howard Hughes Builds a Business Empire Summary

  • Last updated on November 10, 2022

A young aviation hero and one of the wealthiest men in the United States, Howard Hughes drew on his fortune to create a business and political empire.

Summary of Event

The Hughes cone bit, an ingeniously engineered rock drill patented in 1909 by Howard Hughes, Sr., established the Hughes Tool Company of Houston, Texas, as the sole supplier of a tool essential to the world’s petroleum industry. Described as one of the greatest inventions affecting that industry, the cone bit was the basis for the Hughes fortune. Howard Hughes, Jr., inherited the Hughes Tool Company in 1924 and subsequently controlled it until its sale in 1972. The company provided the profits, credit, financial leverage, and basis of influence that made possible the assemblage and maintenance of his business empire. Hughes Production Company Hughes Aircraft Company Hughes Tool Company [kw]Howard Hughes Builds a Business Empire (1924-1976) [kw]Hughes Builds a Business Empire, Howard (1924-1976) [kw]Business Empire, Howard Hughes Builds a (1924-1976) Hughes Production Company Hughes Aircraft Company Hughes Tool Company [g]United States;1924-1976: Howard Hughes Builds a Business Empire[05990] [c]Business and labor;1924-1976: Howard Hughes Builds a Business Empire[05990] [c]Trade and commerce;1924-1976: Howard Hughes Builds a Business Empire[05990] [c]Government and politics;1924-1976: Howard Hughes Builds a Business Empire[05990] Hughes, Howard (1905-1976) Hughes, Howard, Sr. (1869-1924) Maheu, Robert Aime Humphrey, Hubert H. Nixon, Richard Gay, Frank William

Young Hughes worshiped his father and enjoyed a sheltered upbringing. From his early years, he was shy and awkward, obsessed with the state of his health, and indifferent to his educational opportunities. He dropped out of college, showing few signs of independence or indications of purpose. Howard Hughes, Jr., was an apparently unpromising, although good-looking, eighteen-year-old millionaire at the time of his inheritance. Within a few years, however, Hughes’s growing (if carefully disguised) egomania, his ruthless instrumentalism, and his iron will brought him national attention because of his attempts to conquer Hollywood. Beginning in the 1920’s and continuing into the 1940’s, he produced a series of controversial films, including Hell’s Angels (1930), Scarface (1932), and more than a dozen other films with which his name and those of stars he ostensibly created were identified. In 1947, he bought a controlling interest in Radio-Keith-Orpheum (RKO), Radio-Keith-Orpheum[Radio Keith Orpheum] then later sold it and founded his own studio. His playboy activities as well as his reserved manner, which eventually devolved into phobias and reclusiveness, further ensured public fascination with his exploits and the mystique that soon surrounded him.

It was as a flyer that Hughes joined the ranks of the nation’s heroes. Although his father had wanted Hughes to become an engineer, young Hughes’s maiden flight in a Curtiss seaplane in 1921 revealed what became his sole undying passions: flying and aviation. By 1932, having acquired an Army Boeing pursuit plane from the Department of Commerce and work space in Burbank, California, leased from Lockheed Aircraft Corporation, Hughes established the Hughes Aircraft Company. Aviation;Hughes Aircraft Company He modified the plane into his H-1, eventually the most advanced aircraft of its time. Decades later, Hughes Aircraft was one of the country’s leading defense contractors.

The 1920’s and 1930’s were marked by the public’s infatuation with Hollywood and captivation by the accomplishments of fliers and aircraft designers, Hughes included. Hughes, and indirectly his aircraft company, earned his earliest aviation encomiums by setting speed and distance records. In 1934 and 1935, for example, flying his H-1, he garnered first place in various air meets and established new short-distance “flight over land” speed records. In 1935 and 1936, he broke records for transcontinental flights and won the coveted Harmon Trophy.

These accomplishments paled in 1938 when, piloting a twin-engine Lockheed, Hughes circled the world in less than four days, eclipsing the record set for that feat by veteran flyer Wiley Post. All these flights and the tests that preceded them were dangerous, and Hughes experienced three serious crashes. Like his wartime construction of the world’s largest airplane, the Spruce Goose, Spruce Goose (airplane) all were immensely expensive. All these efforts and achievements, as Hughes then acknowledged, were made possible by the expert teams of designers and mechanics that his tool company fortune allowed him to enlist.

Hughes also displayed a more important, if less apparent, ability to sell. His capacity to wheel and deal, to marshal and manipulate the hopes, ambitions, and loyalties of a wide range of people, and to invoke his public image to influence the curiosity of the media gave him tremendous power in his business affairs. The Hughes Tool Company, the operations of which he largely ignored, reliably supplied his capital; his personal talents helped bring together a remarkable array of enterprises.

By the early 1950’s, in addition to his control over the economically invaluable tool company, Hughes owned Hollywood’s Hughes Production Company and Hughes Aircraft. By 1944, he had acquired 45 percent of the stock in Trans World Airlines Trans World Airlines (TWA), a major international carrier with exclusive foreign and domestic routes. TWA became his favorite possession, one to which he made significant initial contributions. He helped conceive the Lockheed-built Constellation, the fastest long-range piston-driven passenger aircraft in the United States when it entered service in 1946. He selected other outstanding aircraft for the TWA fleet, and his salesmanship, publicity, and governmental influence were exploited on TWA’s behalf.

During the 1960’s, Hughes increased his holdings. Through stock ownership in the Atlas Corporation, for example, he gained control in 1961 of Northeast Airlines, a regional carrier. After moving to Las Vegas in 1966, he spent $65 million in one year acquiring four of the Nevada city’s larger hotel-casinos and hundreds of acres of valuable real estate that were available for more casinos and housing subdivisions as well as an air charter service (Alamo Airlines), North Las Vegas Airport and its ancillary motel and dining facilities, the KLAS television station, several luxury ranches, and two hundred Nevada mining claims. Such acquisitions made Hughes Nevada’s biggest private landowner. He reputedly was the nation’s wealthiest individual.

Significance

The Hughes empire, from its inception until its founder’s death in 1976, bore the imprint and suffered the consequences of Hughes’s increasingly distorted perceptions and priorities. Hughes paid scant attention to the chief personnel or to the fundamental operations of most of his enterprises. Few of his top executives or his chief aides ever met or spoke to him directly; other key figures may have done so only once or twice in a quarter of a century. This was true even for the Hughes Tool Company in Houston, the principal source of his wealth and operating capital. He never visited the company after 1938. Fortunately, the firm for years was under the capable direction of Noah Dietrich. Dietrich, Noah

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Hughes owned or controlled what at best was a mixed collection of enterprises. The Hughes Tool Company pumped out capital almost in complete isolation from Hughes’s other ventures. The general affairs and accountings of the other business interests were recorded for Hughes by Frank William Gay, a Mormon whom Hughes dissuaded from an academic career when he recruited him in 1947. Gay’s job was to reorganize and manage Hughes’s inconspicuous Romaine Street operational base in Los Angeles. Gay and his Romaine Street staff specialized in catering to Hughes’s personal eccentricities, including his phobia about germs, his passion for starlets, and his drug addiction. The staff also handled the paperwork generated by Hughes’s complex business adventures, legal battles, secret political dealings, and ongoing business and governmental negotiations. Like the tool company, Gay’s Romaine Street operations were rarely visited by Hughes.

Hughes operated under the assumption that anyone could be bought. Friendless and egocentric, he authorized—or, out of negligence, permitted—lavish salaries and perquisites for his immediate aides and even for a number of associates with whom he never deigned to meet. In exchange, such persons were expected to behave as if their lives and loyalties were fully under his control. They might be called on to minister to his whims, to suborn politicians, or to conduct clandestine negotiations on his behalf. Through the years, he fortuitously attracted people of genuine talent to his organizations, few of whom stayed for long. He was less interested in utilizing engineering skills, scientific training, or executive abilities than he was in manipulating subjects.

Accordingly, by the end of the 1960’s, Hughes’s immediate aides and those with whom he did business were largely an unsavory lot. They included Las Vegas’s Mafia casino owners, corrupt judges, cash-hungry politicians, sycophantic newspaper publishers, purveyors of worthless mining claims, quack doctors who plied Hughes with codeine and other narcotics (and were presumably culpable for his death), and pliable public officials, including a Nicaraguan dictator, a Bahamian president, U.S. attorney general John Mitchell, Vice President Hubert H. Humphrey, and President Richard Nixon.

Robert Aime Maheu symbolized much that was characteristic of all these men, namely, an addiction to influence, power, and wealth. Maheu was an intelligence agent for the United States during World War II, a former agent of the Federal Bureau of Investigation, and an employee of the Central Intelligence Agency, for which he had been detailed to mastermind the assassination of Cuban dictator Fidel Castro. He was familiar with organized crime figures and enjoyed a large number of legal, business, and governmental contacts that were deployed on behalf of Hughes’s firms.

Although he never met Hughes and eventually would sue him, Maheu was nevertheless an important front man and dealer for Hughes during the 1960’s. He was one of Hughes’s chosen instruments in the Northeast Airlines buyout. For a time, Maheu directed Hughes’s fight against the multimillion-dollar lawsuit TWA had filed against Hughes, and he negotiated with crime-syndicate acquaintances for Hughes in his Las Vegas ventures. It was Maheu who arranged for influence money to be supplied to Hubert Humphrey and, through Bebe Robozo, Robozo, Bebe to Nixon’s presidential campaign. With such dubious figures on salary, Hughes the hustler was himself hustled. He increasingly took to self-imposed, almost hermetic seclusion. His lust for unquestioning loyalty and control actually cost him tens of millions of dollars that unaccountable associates bled from him.

Nearly all of Hughes’s acquisitions lost money while he was in nominal control. All of Hughes’s wartime ventures, for example, were expensive failures. Even the fabulous Spruce Goose proved too large to qualify as a museum piece. Similarly, while its electronic missile teams performed well, Hughes Aircraft consistently incurred heavy losses until Hughes sold it, after which it recovered sensationally. RKO and TWA also lost money, as did other constituents of Hughes’s empire. In addition, in his quest for influence Hughes badly tainted the nation’s political process. The aviation hero ended life as a rich but largely unloved man whom few admired other than for his wealth. Hughes Production Company Hughes Aircraft Company Hughes Tool Company

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Ambrose, Stephen. Nixon: The Education of a Politician 1913-1962. New York: Simon & Schuster, 1987. The best portrait of Nixon and those around him. Good for context on the political world with which Hughes interacted. Chapters 26 and 27 deal with Hughes’s money and influence. An excellent historical account.
  • citation-type="booksimple"

    xlink:type="simple">Barlett, Donald L., and James B. Steele. Empire: The Life, Legend, and Madness of Howard Hughes. New York: W. W. Norton, 1979. Detailed, authoritative, and objective. Contains photos, a chronology, appendixes, chapter notes, and an unusually fine index.
  • citation-type="booksimple"

    xlink:type="simple">Brown, Peter Harry, and Pat H. Broeske. Howard Hughes: The Untold Story. Cambridge, Mass.: Da Capo Press, 2004. The authors focus on Hughes’s personal life, particularly on his romantic entanglements and his more hedonistic exploits.
  • citation-type="booksimple"

    xlink:type="simple">Dean, John W. Blind Ambition: The White House Years. New York: Simon & Schuster, 1976. An insider’s sketch of the character of those in government. Chapter 3 treats specifics of Hughes’s involvement in the Nixon administration. No notes or bibliography. Useful index.
  • citation-type="booksimple"

    xlink:type="simple">Drosnin, Michael. Citizen Hughes: The Power, the Money, and the Madness. New York: Broadway Books, 2004. Covers less ground than Barlett and Steele’s book but was the first to use thousands of documents stolen from Hughes’s headquarters as well as a thief’s testimonial. More information on personal relations between Hughes and Maheu. Good essays, photos of documents, and a useful index.
  • citation-type="booksimple"

    xlink:type="simple">Lukas, J. Anthony. Nightmare: The Underside of the Nixon Years. New York: Viking Press, 1976. Lukas was the first journalist to explore Hughes’s involvement in the Watergate scandal and the extent of Hughes’s influence with the CIA, administrative agencies, and politicians. Very valuable and an easy read.

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