Estherville Daily News from Estherville, Iowa on February 1, 1972 · Page 12
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Estherville Daily News from Estherville, Iowa · Page 12

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Estherville, Iowa
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Tuesday, February 1, 1972
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Page 12
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Who's Hughes? ESTHERVILLE DAILY NEWS, TUESL, FEB. 1, 1972 Page 12 $2 Billion Conglomerate Sprang From Drill Bit EDITOR'S note: It began modestly enough in Houston, Tex., with a new kind of oil well-drilling bit. But now the Hughes Tool Co. is a splendid business conglomerate. Airlines, gambling casinos, mines—you name it. And ruled by a man who has not been seen in public in almost 20 years. Following is the first of four articles on the many faces of Howard Hughes. By JACK LEFLER Assocatd Press Writer LOS ANGELES (AP) Hughes Tool Co., the cornerstone of a $2-bilIion business enterprise, is as spectacularly visible as its sole owner, Howard Hughes, is mysteriously invisible. Its success, founded on a revolutionary oil well-drilling bit, has made its reclusive owner one of the world's richest men. The furor over the authenticity of an autobiography of Hughes, which McGraw-Hill Publishing Co., originally planned to publish in March, has focused public attention on the corporate kingdom over which Hughes rules from his secret hideouts. Hughes Tool (Toolco) and its oil tool division are based in Houston, Tex. Its other major properties include a helicopter manufacturing division in California; an airline, Hughes Air- west, in Western states; hotels, gambling casinos, mining claims and other properties in Nevada; Hughes Television Network, and huge real estate holdings in Arizona and California. The vast operations have been commanded by Hughes, now 66, in imperious manner, usually by telephone. Some of his top executives have never seen him. He hasn't made a public appearance since 1953. Last Jan. 7 a man identified by Hughes' public relations spokesman as the billionaire industrialist held a telephone news conference with seven news reporters to deny the authenticity of the McGraw-Hifl manuscript. The newsmen, who were assembled in Los Angeles, said they were convinced the voice on the telephone was that of Hughes. Hughes holds no title with Toolco except that of owner. Operations are handled by executive vice president Raymond M. Holliday and senior vice presidents Frank W. Gay 1 and James R. Lesch. What was to become a fabulous enterprise was born in 1909 at Goose Creek, Tex., when Howard Hughes Sr. successfully tested the rotary rock drill bit he had invented. The bit consisted of 166 conical cutters of milled teeth which chiseled and crushed rock so it could be brought up through the drill stem from the bottom of the drilling hole. It solved the problem of drilling through rock. It's estimated that 75 per cent of the oil wells in non- Communist countries have been drilled with Hughes bits. Young Hughes' parents willed him a 60 per cent interest in the tool company and, newly orphaned, he took over its operation in 1923 when he was 19. He later bought the other 40 per cent interest from relatives. Value of the company at the time of the father's death was variously estimated at $10 million or more but Hughes said the government appraised it at $650,000. While Hughes is reputed not to have been seen in Toolco's Houston offices since 1926, the company flourished under his direction and the operations of his hand-picked executives. The oil tool business grew until it now employs about 4,000 persons at Houston and has other manufacturing plants in England, Ireland, Canada, West Germany, Italy, Argentina and Brazil. The tool division's annual revenues have been estimated at $75 million. Because it is privately owned, Toolco issues no reports on sales and earnings. Hughes, who had long been interested in airplanes, left Texas for California in the 1920s and became a legendary figure in aviation. He set many world , speed records and designed aircraft. He also became enchanted with motion pictures and actresses as well. He produced a number of famous movies, among them "Hell's Angels" and "The Outlaw," and for a while owned RKO studios. Noah Dietrich, who was Hughes' chief executive from 1925 until they split in 1953 takes issue with those who give Dr. K. L. Johnson Dr. J. J. Roberts OPTOMETRISTS Contact Lenses 362-4213 123 North Sixth Street Diagonal from the Post Office Hughes the lion's share of credit for building Toolco. "He can't explain the growth of his empire," Dietrich said in an interview recently. "He left that part of the business to me. "In those days his main interests were romance, airplanes and motion pictures. None of those produced any profits." The first big diversification move under the banner of Toolco was the founding of Hughes Aircraft Co. in Culver City, Calif., in 1931. With the burgeoning of commercial aviation and the approach of World War n, Hughes Aircraft quickly became a giant in its field. It was one of this country's major wartime suppliers of aerial weaponry. In 1954, Hughes turned the aircraft company over to the Hughes Medical Institute, which he formed as a phi- lanthropical organization, to carry on medical research. All its profits go to the institute, of which Hughes is the sole trustee, and it no longer is under the corporate umbrella of Toolco. Hughes Aircraft, which has been estimated to be worth $500 million with annual sales about equal that amount, manufac­ tures communications satellites, guided missiles, aircraft armament systems and other electronics gear. The most spectacular deals in which Hughes involved Toolco were majority ownership of Trans World Airlines, and resulting legal hassles; and ownership of Nevada hotels, casinos and other properties, and resulting legal hassles. Hughes started buying into TWA in 1939 and took control with 77 per cent of the stock in 1947. After the commercial jet age dawned, Hughes, with his customary deliberation, waited five years before ordering jetliners and other equipment costing $497 million. Partly because of the late starts in jets, TWA lost huge amounts of money, and financial institutions which had loaned money for the air­ craft purchases became concerned. Toolco lost control of TWA in 1960 when creditors forced Hughes to place his stock in a nonvoting trust.' TWA management sued Hughes, alleging mismanagement. Claims and counterclaims amounted to $481 million. A judgment of $137 million was won against Hughes but is yet to be collected. Fareway\s Feature HILAND POTATO FAREWAY'S HOME MADE B B QUE RIBS Budding Smoked Ham, Turkey, SLICED BEEF c P™'* flpk8 " ^ Pkgs. S | 00 Boneless OCEAN PERCH LB. 49 c Morrell Coarse Ground RING BOLOGNA Ring Each 79' Lean Bulk * PORK SAUSAGE 2 | LBS. $|29 Tom Thumb CHUCKWAG0N PATTIES TS" Morrell CHOPPED HAM LB. Fareway Finest % GROUND BEEF : | LBS. $219 U.S.D.A. Choice BEEF QUARTERS CUT WRAPPED, FROZEN Fareway Bakeshop Specials! POTATO ROUS $100 REG. 39$ PK.GS. Old Fashioned CINNAMON ROLLS REG. 49$ PKG. 39 Fareway's Feature Fareway Bakeshop Special WHEAT BREAD MORRELL'S BONELESS BEEF ROAST LB. MORRELL'S LEAN CUBE STEAKS LB. Fareway Frozen Food Features! REUNION WHOLE KERNEL or CREAM STYLE CANNED CORN 1 LB. CANS CASE OF 24 ... $3.98 CHEF BOY-AR-DEE CHEESE PIZZA MIX OLD HOME - 6 FLAVORS FRUIT PIES FLAVOR-KIST CRACKERS With Purchase Of 63$ Pkg. Of Flavor Kist Fig Bars At 53$ SILVER DALE FROZEN VEGETABLES BROCCOLI GREEN BEANS CAULIFLOWER LIMA BEANS MIXED VEGETABLES 10 OZ, PKGS. 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