The American aircraft industry in those days wasn’t what it is today. We had to go to Europe for a lot of our planes, which I felt right from the beginning was a mistake. I felt we had to lead. And we wound up leading until recently, when we found ourselves fast falling behind because of those politicians in Washington dragging their asses about the SST.
I had already flown once as a copilot, back in the early Thirties, for American Airways, the forerunner of American Airlines. They flew Curtis Condors, which were the first sleeper planes, and we also had the first stewardesses. I flew Los Angeles to Atlanta, Kansas City, and Cleveland.
Why did you take a relatively low-level job like that?
I wanted the experience. I had it in my mind even then that one day I was going to start an airline – I didn’t know I was going to buy one. I was dreaming then of Hughes Transoceanic Airlines. And I wanted to learn from the ground up. The one thing I had never done was fly a commercial airliner, so I took the job with American Airways, using the pseudonym Charles Howard. That’s because I didn’t want people gawking at me all the time and saying, ‘There goes Howard Hughes. Go up to the cockpit and have a look at the boy wonder.’
But I didn’t make a secret of it to my people. I told them I was taking a job as a copilot on an airline. This wasn’t like my trips to Ethiopia, or the time I went down to Lambarene to see Dr. Schweitzer, or my Cuban trips with Ernest Hemingway, or my trip to India. This was something that was known to the people who were close to me.
I flew only a very short time for American Airways, because I was a quick learner. I watched passengers’ reactions and I wrote it all down in my notebook. I had a new notebook by then and I made sure not to lose that one.
It hadn’t been my plan to buy into TWA, but I knew Jack Frye, who was president of the airline, and one day he called me and said, ‘Howard, I need twelve million dollars.’ A lot of stories have circulated since then about why Jack Frye needed this money, but none of them have ever told the truth. The truth is that the Board of Directors of TWA wanted to kick Jack out.
What had he done?
There’s always a guy ready to take over and reverse the pecking order. That’s all some people live for. I’ve been through that and I’m sure Jack was going through the same thing. I don’t know what he’d done or not done. But I knew Jack, and he was a good man.
He came to me and he said he could keep control if he could get hold of a block of stock that was being peddled around by Lehman Brothers, the banking house in New York City. TWA didn’t have much stock outstanding – less than a million shares – and Lehman Brothers had about 120,000 shares that were for sale. Jack figured if he picked up that block he’d have the controlling interest and they couldn’t boot his ass out of there. And so he came to me for twelve million.
I said, ‘Okay, Jack. It’s a small fortune, but the money is yours. The only thing I want is to run the show with you.’
He thought it over for about ten seconds, and then he agreed. I guess he figured for $12 million cash it was worth letting me in on my terms.
Then a funny thing happened. I had a lot on my mind: the war was looming on the horizon and I was developing the H-1, which was supposed to be the big Army pursuit plane, and then it went to the Japs. And we had troubles down at Houston with Toolco, and Henry Kaiser wanted me to go into the car business. What with one thing and another, after I made my arrangements with Jack, they slipped my mind.
Jack called Noah Dietrich one day and said, ‘I’m Jack Frye, and where’s my money? Where’s that check? Lehman Brothers hasn’t gotten the check!’
Noah said, ‘What’s this all about?’
Jack became annoyed, understandably. Noah said he’d have to talk to me about it, which he did. I remembered. I was mortified. ‘Shit, Noah,’ I said, ‘I’d forgotten the whole thing.’ Noah asked me how much I’d agreed to pay, and I said, ‘Ten dollars a share.’
‘The stock isn’t worth ten dollars a share,’ Noah said.
‘Noah, you have no vision. It’s worth more than ten dollars a share. That stock is going to be worth a hundred dollars a share in three years, if I run that airline.’
‘That’s not the point, Howard. I had a feeling from talking to this man Frye on the telephone that he’s in a tough spot, and he needs that money from you badly. If you hold out for a week or so, if we can spin him some story that Toolco has to approve the transaction’ – because the funds had to come from Toolco, since I didn’t have a dime of my own – ‘and you’ve gone off the deep end a bit, and the board of directors of Toolco says, ‘Okay, but we’ll only pay seven or eight dollars a share for it,’ you can get it for that price.’
‘Noah,’ I said, ‘that’s not the way to do business with friends.’
But he talked me into it. Maybe I wasn’t focused at the time. I said, ‘Noah, you handle it in your own inimitable way.’
I don’t buy that. You were the boss. It was your money, and you were the one who said yes or no.
Okay, I’m not trying to slough off all the responsibility for that tricky maneuvering. I knew what we were doing. Noah got back to Jack Frye and spun this yarn about the board of directors of Toolco having to approve the deal. I don’t know whether Jack fell for it, because if Jack had an ounce of brains in his head, he’d know that when I said, ‘Shit,’ the board would squat and strain.
Be that as it may, Noah was right, and very soon thereafter I got the stock for eight and a quarter a share.
Jack Frye was a little sore at me. He felt that I’d gone back on my word, and it bothered me because in a sense he was right, and I’ve always regretted that I let Noah talk me into that. It made bad feeling between me and Jack Frye to the point where I had to appoint Noah to the board of directors of TWA after I’d taken over. Not that Noah really had any say up there, but he was a spy for me. He never got along well with Jack, because Jack always blamed him for the change in the original buying price from ten to eight and a quarter.
Eventually, because Jack disliked Noah so much, I made Noah step down from his position. But I asked him to keep in touch with a few executives up at TWA who were friendly to me and were willing to give out inside information about what Jack was doing. We set up a system where they funneled information to Noah and he funneled it to me. I had my pipeline to the head office. You understand that at the time, even though I was principal stockholder in TWA, I didn’t have a position. I never had a title.
How was it possible for you to be principal stockholder if you only had $8 million worth of holdings?
I bought more. And of course by the end of the war I wasn’t just the principal stockholder – I was running the airline. When I had free time I devoted a great deal of it to studying their problems and making suggestions. Not to be immodest, in the 1940s I was the principal factor in the growth of TWA as the only competitor that could stand up to Pan American, the python of the American air carriers. Unquestionably, TWA was the most progressive airline in the United States. I don’t think you’ll find anyone who’ll disagree with me on that. Among other things, I got Eero Saarinen to design our terminal at Kennedy Airport in New York. I told him roughly what I wanted, what I thought a terminal of the future should look like, and I said, ‘Go do it. It’s your baby.’ It’s probably the most beautiful and functional airline terminal that’s ever been constructed.
Concerning this pipeline to the head office, why were you so suspicious of people?