-Caveat Lector-
an excerpt from:
The Breaking of a President 1974 - The Nixon Connection
Marvin Miller, Compiler
Therapy Productions, Inc.©1975
LCCCN 7481547
--[13a]--
THE
HOWARD HUGHES
CONNECTION
Now that Richard Nixon has resigned the presidency, the country is being left
with many unanswered Watergate-related questions. One of these unresolved
areas concerns the large contributions and loans made to Nixon and his family
by Howard Hughes. With the investigations now stopped, impeded or in some
cases limited by Nixon’s remaining friends in Washington, it may never be
known exactly what Hughes got for his money, or even if Nixon and Bebe Rebozo
diverted any of the Hughes campaign contributions for their own personal use.
It has even been strongly suggested that the burglary of the Watergate
headquarters of the Democratic National Committee was done at least in part
to cover up the Nixon-Hughes connection. Democratic National Chairman
Lawrence F. O’Brien, who had done legal work for the Hughes organization, was
believed to have incriminating documentation about the Hughes contributions
to Nixon in his files at the Watergate office. Other copies of these
documents were said to be in the possession of Hank Greenspun, publisher of
the Las Vegas Sun. According to testimony by Nixon’s former aide Jeb
Magruder, when G. Gordon Liddy met with then Attorney General John H.
Mitchell on February 4, 1972, to push the plans for burglarizing and bugging
the Watergate offices, Liddy was also instructed to "review the situation to
see if there would be potential . . . for an entry into Mr. Greenspun’s
office."
Watergate burglar James McCord claims in his book A Piece of Tape that in May
1972: "Hunt told me that the Howard Hughes organization was going to have an
aircraft standing by outside of Las Vegas for a burglary team of Hunt’s and
Liddy’s, after an operation they had planned against Hank Greenspun, editor
of the Las Vegas Sun. I was later to learn that Hughes was at that time in
Nicaragua. Frankly, I’ve always believed that what was planned was that the
Hughes aircraft was to fly the burglary team from Las Vegas into Nicaragua."
According to Hunt’s testimony before the Senate Watergate Committee, he met
with Ralph Winte, head of security for one of the Hughes companies in early
1972. Winte told Hunt that he would try to produce a floor diagram of the
Greenspun office for the burglary team. Hunt asked Winte for assistance with
hotel-rooms and automobiles in Las Vegas, and Winte agreed to supply these.
Two weeks later Hunt and Liddy met with Winte at the Beverly Wilshire Hotel
in Beverly Hills. At this meeting there was a discussion of using a Hughes
airplane after the burglary of Greenspun’s office. The contents of
Greenspun’s safe were to be divided between the burglary team and the Hughes
interests. However, the idea of the burglary was later dropped. Neither Winte
nor Howard Hughes were subpoenaed by the Watergate Grand Jury or any other
official investigative body to answer questions about their role in the
proposed burglary in Las Vegas, their knowledge of documents in the
possession of Lawrence O’Brien, or the nature of the Hughes contributions to
Nixon.
That these specific and obvious questions are still unanswered as the
Watergate investigation winds down is bad enough, but perhaps even more
important is the fact that the American public is being cheated of a chance
to understand the political behavior of a billionaire who has had extended,
involved and very suspicious relations with organized crime figures from the
early 1930’s to the present. If we are correct in suggesting that the
National Crime Syndicate has been learning how to manipulate the political
process by grooming and influencing politicians, it is important to know just
where and how organized crime is coordinating these manipulative -efforts
with other powerful sections of the business community.
When law enforcement officials warn that organized crime is infiltrating
legitimate business, it is only logical to assume that criminal elements will
also be involved in the political lobbying routinely done by these
businesses. And just as it was previously suggested that the American public
would benefit from knowing more about the profitable relations of billionaire
Nixon-supporter Daniel Ludwig with organized crime in the Bahamas, it is even
more important to know the truth about the greater involvement of Howard
Hughes with these same elements in Hollywood and Las Vegas.
HUGHES INHERITS HIS WEALTH
In 1908 his father patented a revolutionary new oil-drilling bit which he had
developed with a partner, Walter B. Sharp. The new bit was rumored to cut
rock like cheese, when the old cork-screw types would fail, but Hughes and
Sharp wouldn’t sell their new device; they only leased it out at very good
fees. And to keep the secret of the three revolving and interlocking cutting
surfaces, Howard Hughes Sr. would carry the bit to the drilling site in a
gunny-sack and personally attach it to the drilling-shaft with no observers
nearby. Then he would leave an employee at the site to prevent anyone from
pulling up the bit and studying its design. Later, when the general design
did become known, Hughes Sr. had made enough money to hire skilled lawyers to
successfully protect his patent from infringement.
Sharp died in 1917 and Hughes Sr. bought out his interest for $325,000. In
1921 the young Howard Hughes was sent to the Thatcher School in Ojai,
California. Fifty miles away in Hollywood, novelist Rupert Hughes, uncle of
Hughes Jr., was working as a screen-writer. On weekends Uncle Rupert used to
bring the lonely boy into Hollywood to watch movies being made. The
16-year-old Texan was fascinated both by the process of moviemaking and the
beautiful girls who worked at the studios. He used to sit on the set making
notes of how he believed he could do things better than the director.
In 1924 his father had a heart attack and Howard Hughes persuaded a court to
declare him a legal adult, although he was not yet 21 years old. After a long
argument, he then persuaded his relatives to sell him their inherited
quarter- interest in the Hughes Tool Company for $325,000, so he would have
100 per cent ownership. Soon after he moved to Hollywood and backed an
unsuccessful movie. Then he backed two movies that showed a profit, and
decided to direct films himself. During the next 30 years, from 1926 on, he
visited the Hughes Tool Company in Houston only once.
In 1927 Hughes began to film Hell’s Angels, a movie about World War I flying
aces competing for an English society girl, played by Greta Nissen. Halfway
through the film, on October 6, 1927, Warner Brothers released The Jazz
Singer starring Al Jolson, the first movie with spoken dialogue. Hughes
decided to re-shoot his own film with sound, and replaced Greta Nissen, who
had a heavy Norwegian accent, with Harlean Carpentier, better known as Jean
Harlow. Harlow, who had been working in Laurel and Hardy comedies for Hal
Roach, was hired by Hughes for $125 a week. The film was completed in 1930 at
a total cost of $3.5 million.
HUGHES RUNS OUT OF CASH
In 1930, the profits from the Hughes Tool Company were $3 million. But by
this time Hughes had lost $5 million on the stock market, had agreed to pay
out $1,250,000 in alimony to his first wife, had bought a yacht for $350,000,
had lost $500,000 building a steam car, and paid $325,000 to get his girl
friend Billie Dove divorced. And just before the 1929 stock market crash, he
got involved with an unscrupulous group investing in automobile stock, which
eventually cost him another $5 million.
Then there was a $1.5 million loss in a company designed to produce color
film, and another big amount in an attempt to set up a theater chain. Hell’s
Angels lost $1.5 million when it was first exhibited. And then there was an
expensive chain of romances with famous actresses and starlets including Jean
Harlow, Billie Dove, Ginger Rogers, Ida Lupino, Ava Gardner, Katharine
Hepburn, et al. The money for all these expenditures came from the Hughes
Tool Company, but the profits from Houston couldn’t keep up with Howard
Hughes’ investment losses and playboy gifts.
By 1931 Hughes had run out of money. The Depression had hit the oil-fields
and Hughes Tool Company showed a loss for the first time, a situation which
continued for the next four years. Hughes was forced to borrow $2 million
from a New York bank to finish five pictures he had agreed to deliver to
Joseph Schenk at United Artists. Three of the pictures were expensive
failures. The remaining two, The Front Page and Scarface, the classic
gangster movie, made money but not enough. Hughes had to stop making films.
At one time Hughes had to borrow $2000 from his assistant, Noah Dietrich, to
meet his Hollywood staff payroll.
HUGHES MEETS THE MOB
Hughes’ biographers say little about the very lean years between 1931 and
1934, other than that Hughes Tool Company got into the brewery business at
the end of Prohibition. But a correlation of names and dates shows that
through his Hollywood and other business investments, Hughes undoubtedly had
met and had business relations with the important bootleggers, gamblers and
bucketshop operators of the late 1920’s who were to become the nucleus of
today’s organized crime. In the early 1930’s these men were already investing
in the faltering motion picture industry and the weakened brokerage houses of
Wall Street. They were almost the only ones around with cash, and it would be
surprising if Hughes had not turned to them for help at one or more times
during these critical years. Even Meyer Lansky and Moe Dalitz came to
Hollywood, staying at the bungalow the Syndicate rented in the old Garden of
Allah at Sunset Boulevard and Crescent Heights.
Hughes was intimate with Johnny Roselli, Longie Zwillman’s man in Hollywood,
and was said to be an "admirer" of the gangster I style" when he produced his
early film The Racket. When Hughes returned to the film scene in 1939 to
produce and direct The Outlaw with Jane Russell, he met Bugsy Siegel and
Frank Costello. In a discussion at the Cocoanut Grove, Hollywood’s famous
night-club, Hughes tried to get Costello to invest $250,000 in a film, but
Costello didn’t think Hughes was a good risk at the time.
THE NATION’S TOP AVIATOR
Hughes first learned to fly in 1925. During the filming of Hell’s Angels he
did some stunt-flying when the hired actors refused to work for safety
reasons at the low altitude required, and Hughes had the first of the three
serious plane accidents in his life. In 1934 he entered his first airplane
race for amateurs in Miami, and won. In 1935 he broke the world’s speed
record, flying a plane that he and two engineers had built behind locked
doors. In 1936 he established a new coast-to-coast speed record as well as
new records between New York and Miami, and between Chicago and Los Angeles.
In 1938 he flew around the world in record time, was named Aviator of the
Year, and was presented with a trophy for the aviation achievement of the
year by President Franklin D. Roosevelt. There were parades in New York,
Chicago, Los Angeles and Houston for the man who was to become the United
States’ most famous recluse.
In 1937 Hughes bought the controlling interest in Transcontinental and
Western Airways (TWA). In 1939 he built a mock-up of a fighter plane to try
to get a government defense contract. However, Gen. Henry H. (Hap) Arnold,
commanding general of the United States Army Air Corps, could not get
permission to see the plane in the Hughes hangar at Lockheed Airport, and
Hughes didn’t get the contract. In 1941 Hughes built an aircraft plant in
-Culver City, California, but the insulted chief procurement officer for the
U. S. Army Air Corps, Gen. Oliver P. Echols, said: "That son-of-a-bitch will
never get a dime’s worth of contracts out of me as long as I’m in this
office!" After going over the heads of the military men to the Office of
Production Management headed by William Knudsen,
Hughes got contracts to build struts for the B-25 bomber, also cannons and
machine-gun chutes.
When Hughes couldn’t get a big plane contract from the government although he
designed some planes with important innovations, he hired Johnny Meyer,
public relations man who had previously worked in motion pictures. From 1942
to 1946 Meyer spent $170,000 from coast-to-coast wining and dining U. S.
Senators, governors and generals. Meyer got close to Elliot Roosevelt, then
an Air Force colonel, by arranging a date with Faye Emerson for Roosevelt.
When Roosevelt married the lady, Johnny Meyer was not only best man but
picked up the tab for the wedding and honeymoon on Hughes’ expense account.
In late 1943 Roosevelt arranged to have Hughes Aircraft awarded a contract
for 100 F-11 reconnaissance planes at $700,000 each. But by the time of the
U. S. victories over Germany and Japan, no deliveries had been made because
of mismanagement at Hughes Aircraft. The Army rescinded its order for the 100
reconnaissance planes and took only three. A contract for three large "flying
boats" at a cost of $6 million each was likewise not fulfilled, although $20
million of government money had been expended on a prototype. The government
cancelled this contract also, and Hughes completed the prototype long after
the war ended, with some added millions of his own.
On July 7, 1946, Hughes personally test-flew the first F-11 and an
experimental propeller failed, causing him to crash. He suffered severe
injuries including nine broken ribs, a broken collar-bone, broken nose, bad
bums and a collapsed lung. His chances of survival rated at 50 per cent, but
he recovered despite his refusal to use sleeping pills or pain-killers of any
kind.
THE KINGMAKER
In 1946 Senator Owen Brewster opened an investigation of why Howard Hughes
had not delivered any planes during wartime on his $90 million worth of
contracts from the government. Johnny Meyer’s testimony about the use of free
booze and party girls to get contracts for Hughes made damaging headlines.
However, Hughes personally confronted the senators and effectively charged
that Brewster had opened the hearings against Hughes only after Hughes had
refused to merge with Pan-American Airlines, a company that Brewster was
always promoting.
When Hughes proved that Brewster had accepted favors from Pan-American, it
was Brewster’s reputation that suffered, not that of Hughes. And when
Brewster came up for re-election as senator from Maine, Hughes gave $60,000
and the help of a public relations agency to Brewster’s opponent, Frederick
Payne. Hughes instructed: "Give Payne whatever he needs, and the hell with
what it costs!" Owen Brewster, who once believed he would be vicepresident,
went down to defeat in his own state as a result of Hughes’ vengeance.
Hughes is quoted as telling his top executives: "I, Howard Hughes, can buy
any man in the world-or I can destroy him!" His former top Nevada aide,
Robert Maheu, has testified in court that Hughes once asked him: "How in the
world had I allowed President Nixon to make an appointment to the Supreme
Court without touching base with Howard Hughes first?" And when Hughes wanted
to stop nuclear testing in Nevada, he sent Maheu first to see then President
Lyndon Johnson in late 1968 at the LBJ ranch in Texas, with an offer of $1
million and then Jo President Nixon in Key Biscayne in 1970 with the same
offer. According to Maheu he went to see both Presidents but didn’t relay
Hughes’ offer on either occasion.
When Harry Truman was running for vice-president in 1944 and came to Los
Angeles, he was visited at the Biltmore Hotel by Howard Hughes and his
attorney, Neil McCarthy. Hughes waited in the outer room while McCarthy
handed Truman a cash contribution of $12,500 in an envelope. Noah Dietrich,
formerly chief executive officer of the Hughes empire for 32 years, reports
that: "During their chat Howard burst into the room and said bluntly: ‘I want
you to know, Mr. Truman, this is my money Mr. McCarthy is giving you!’ Truman
managed to laugh off Howard’s lack of diplomacy, but McCarthy had an uneasy
moment or two."
Dietrich claims that in the late 1940’s and throughout the 1950’s, Hughes’
political contributions ran between $100,000 and $400,000 per year. "He
financed Los Angeles councilmen and county supervisors, tax assessors,
sheriffs, state senators and assemblyman, district attorneys, governors, U.
S. Congressmen and Senators, and vice-presidents and presidents too. Besides
cash, Howard was liberal in providing airplanes for candidates." Dietrich
claims that Hughes learned from Juan Trippe of Pan-American how to get around
the federal law which prohibits contributions by U. S. corporations, simply
by using foreign subsidiaries. Hughes used income from a Canadian subsidiary
to send to politicians from Sacramento to Washington.
Dietrich says in his book Howard, that Hughes received many benefits from
these payoffs. For two years he staved off efforts by Los Angeles County to
condemn 120 acres belonging to Hughes Aircraft with political contributions
to the right parties. When the county needed a small plot to begin work on
the development of a small-boat marina, Hughes sold them land which
originally cost $2000 an acre, for $54,000 an acre. When he was finally
forced to sell the rest of the acreage, Hughes earned a correspondingly
enormous profit.
Pressure by a Sacramento lobbyist caused a highway to be rerouted so that it
did not impinge on Hughes property in Culver City. And when Dietrich offered
a high official of the Democratic National Headquarters a donation of
$100,000, to be applied at the rate of $5000 to any twenty campaigns he
designated, he was able to get a serious indictment against Hughes dropped.
On April 23, 1948, the United States Grand Jury in Honolulu had indicted the
Hughes Tool Company, two Hughes employees and two others for obtaining six
Douglas C-47’s from the War Assets Administration by fraudulent means. The
grand jury charged that the Hughes company had used veterans as a front for
acquiring surplus planes on a priority basis. Specifically, Hughes was
accused of paying only $105,000 for planes worth $600,000. Since one of the
veterans in the case had turned state’s evidence, it seemed almost certain
that the Hughes Company would lose the case.
When the $100,000 was offered and accepted, the Democratic official simply
lifted the telephone and called the criminal prosecutor. "Look, you want to
be state senator, don’t you? Okay, then let’s get Hughes out of this case." A
week later the U. S. Attorney in Honolulu agreed to drop the charges against
the company, and the two Hughes employees pleaded no contest to the charge of
defrauding the government. They were fined $10,000 each and their fines were
paid by Howard Hughes.
THE HUGHES-NIXON "LOAN"
LOAN: A lending, an advance of money with an absolute promise to repay. The
four elements of a loan are a principal sum, the placing of the sum with a
safe borrower, an agreement that interest is to be paid, and a recognition by
receiver of money of his liability for return of the principal amount with
accrued interest.
BRIBE: Anything of value; any gift or price or reward or money given with a
corrupt intent to induce or influence the action, vote or opinion of any
person in any public or official capacity.
Black’s Law Dictionary
On March 4, 1968, Howard Hughes wrote a memorandum to his then right-hand man
Robert Maheu which showed that he believed Richard Nixon was his man. "Bob,
as soon as this predicament is over," he wrote, referring to the gambling
license application for his Stardust Hotel which was then being considered by
the Nevada Gaming Control Board, "I want you to go to see Nixon as my special
confidential emissary. I feel there is a really valid possibility of a
Republican victory this year. If that could be realized under our sponsorship
and supervision every inch of the way, then we would be ready to follow with
[Governor Paul] Laxalt as our next candidate" [for Howard Cannon’s Democratic
Senate seat in 1970].
According to Maheu, Hughes was later to authorize not only the $100,000 cash
contribution to Nixon through Bebe Rebozo which figured so prominently in the
Watergate investigation, but also $50,000 to Vice-President Hubert H.
Humphrey so that Humphrey could retain Lawrence O’Brien as his presidential
campaign manager. Hughes wanted his foot in the White House door, no matter
which political party succeeded in winning the ‘68 election.
Hughes, however, had good reason to believe that he would especially benefit
from having Richard Nixon in the White House. In 1956 he had made a loan of
$205,000 to then Vice-President Nixon’s brother Donald, and received in
return from the federal government a showering of grace worth many millions
of dollars. The facts about this loan and its consequences were not really
known until 1972, when Noah Dietrich published the inside story. At the same
time the anticipated publication of Clifford Irving’s fraudulent "biography"
of Howard Hughes threatened the public exposure of certain participants who
had been paid to cover up the fact that the loan to Donald Nixon had come
from Hughes, causing them also to go to newspapermen in 1972 with details
corroborating and adding to Dietrich’s story. But even though Nixon was
thoroughly exposed as a liar and a venal politician by these new facts, he
went on to win the 1972 election by a landslide majority.
This whole episode should be a warning to those who believe that Nixon’s
resignation as President signals his complete withdrawal from American
politics. He is a very strong man, capable of "stonewalling" through even
when the truth exposes his falsifications. And the enthusiastic reception he
received in California after his unapologetic resignation speech demonstrates
that Nixon still has considerable support—a support which may even grow as
the memory of Watergate fades and extremists look for a strong man to rescue
the country from its economic crisis. Nixon is on the shelf for the time
being, but political leaders who have been groomed by powerful forces have
been known to recover from political defeat. Sometimes they can return to
power even after being imprisoned, as Hitler demonstrated. And let’s not
forget Napoleon’s short-lived comeback. Nixon’s attempted cover-up of the
facts of the Howard Hughes loan can be seen most clearly in his own book Six
Crises, published shortly before his ill-fated attempt to win the California
governorship in 1962:
"Now, it really was all over (the 1960 presidential campaign). Julie and
Tricia and I walked together down the corridor to the elevator. On the way,
we stopped to say goodbye to my mother and my brother Dun. Over and over
again in the days and weeks ahead I was to find that the hardest thing about
losing is not how it affects you personally, but to see the terrible
disappointment in the eyes of those who have been at your side through this
and other battles. It was particularly hard for Don. During the last days of
the campaign, the opposition had resurrected the financial trouble which had
forced him into bankruptcy two years before and had tried to connect me
[Emphasis added; note that Nixon doesn’t offer a denial but merely implies
that the connection wasn’t made] with a loan he had received from the Hughes
Tool Company during that period. They had, of course, conveniently ignored
the fact that my mother had satisfied the loan by transferring to the
creditor a piece of property which represented over half her life savings and
which had been appraised at an amount greater than the loan."
(The State of California had assessed the property in question—a portion of
lot 10, Tract No. 3359 in Whittier in the County of Los Angeles as per map
recorded in Book 38, pages 17, 18, 19—at $13,000 for tax purposes. Although
such assessments are generally lower than the true value, here is too much
difference between the $13,000 valuation and the $205,000 loaned to consider
this transaction a normal one, especially for a multi-million dollar
Houston-based corporation).
When Nixon was asked at the beginning of the 1962 state campaign by a Los
Angeles Times reporter what he would do if the issue was raised again, his
reply was classic Watergating: "I’ll dump a load of political bricks on
anyone who tries to use it!" And he did dump the load at a televised meeting
on October 1, 1962, when a reporter asked him whether it had been ethical and
moral to have permitted his family to receive a secret loan from a major
defense contractor. The moderator tried to cushion the situation by telling
Nixon that he didn’t have to answer the question. But in 1962 Nixon was
confident that the true facts would never be known, and so he stonewalled it:
"As a matter of fact, I insist on answering it . . . I welcome the
opportunity of answering it. Six years ago, my brother was in deep financial
trouble. He borrowed $205,000 from the Hughes Tool Company. My mother put up
as security for that loan practically everything she had—a piece of property
which to her was fabulously wealthy and which is now producing an income of
$10,000 a year to the creditor." (Donald Nixon had used $40,000 of the loan
money to build a gas station on the land, which was leased to Union Oil at a
minimum of $800 per month. When the loan was made it was uniQiproved
property).
"My brother went bankrupt six years ago. My mother turned over the property
to the Hughes Tool Company. (This is a half-truth. Mrs. Hannah Nixon
continued to appear as legal owner of the property, according to tax records.
Hughes Tool Company had not legally recorded its ownership, even though the
borrower had defaulted, because attempts were still being made at that time
to conceal the Hughes involvement in the loan-which had originally been set
up to make it appear that the funds were originating with a private party,
not with Hughes Tool Company).
"Two years ago at the presidential election, President Kennedy refused to
make a political issue out of my brother’s difficulties and out of my
mother’s problems, just as I refused to make a political issue out of any of
the charges made against the members of his family.
"I had no part or interest in my brother’s business. I had no part whatever
in the negotiation of this loan. I was never asked to do anything by the
Hughes Tool Company, and never did anything for them. And yet, despite
President Kennedy’s refusing to use this as an issue, Mr. [Edmund G.] Brown,
privately, in talking to some of the newsmen here in this audience, and his
hatchetmen have been constantly saying that I must have gotten some of the
money-that I did something wrong.
"Now it is time to have this out. I was in government for 14 years as a
Congressman, as a Senator, as Vice-President. I went to Washington with a car
and a house and a mortgage. I came back with a car and a house and a bigger
mortgage." (Nixon’s first Washington home cost $40,000 and was paid for in
part out of the $18,000 secretly donated to him by his California oil and
banking sponsors. In 1962 his California home in Truesdale Estates, Beverly
Hills, cost $250,000. This home was built by the Murchison Brothers of Texas
with a Teamsters pension fund loan. This house has a pretentious series of
12-foot high columns across its 110-foot front).
"I have made mistakes but I am an honest man. And if the Governor of this
state has any evidence pointing up that I did anything wrong in this case,
that I did anything for the Hughes Tool Company, that I asked them for this
loan, then instead of doing it privately, doing it slyly, the way he has-and
he cannot deny it-because newsmen in this office have told me that he has
said, ‘We are going to make a big issue out of the Hughes Tool Company loan.’
"Now, he has a chance. All the people of California are listening. Governor
Brown has a chance to stand up as a man and charge me with misconduct. Do it,
sir!"
This speech was the high point of the Nixon campaign. Polls taken afterwards
showed Nixon leading because of his seemingly forthright answer to the loan
question, and Governor Brown’s inability to rise to the occasion and bring
forward any facts to the contrary. But much to Nixon’s chagrin, Brown went on
to win the election. And it took ten years for the facts to appear which
could have made Brown the winner in the televised debate as well.
In 1972, Noah Dietrich revealed that in December 1956, only weeks after the
landslide re-election of Vice-President Richard Nixon, Dietrich got a call
from Hughes attorney and Washington lobbyist Frank A. Waters. "I’ve been
talking to Nixon," he said. "His brother Donald is having financial
difficulties with his restaurant in Whittier. The Vice-President would like
us to help him out."
"Help him in what way?" Dietrich asked.
"With a loan."
"How much?"
"$205,000."
Dietrich whistled in astonishment and protested: "Jesus, I’ve never
transferred that much money to the political account! I can’t do it on my own
responsibility. You’d better talk to Howard."
Hughes himself called Dietrich on the next day. "I want the Nixons to have
the money."
"Do you know how much is involved?" Dietrich asked.
"It’s all right. Let them have it."
Given this authorization, Dietrich had the $205,000 transferred from the
Hughes Tool Company’s Canadian subsidiary and turned the money over to Frank
Waters. But he thought "the whole thing had a bad smell to it. . . . The more
I heard about the transaction, the less I liked it. I liked Richard Nixon. I
had voted for him as United States Senator and twice as Vice-President . . .
I didn’t want to see anything happen to bring disrepute to Eisenhower or
Nixon."
Dietrich reviews some of the elements of the situation before taking his next
action, one which involves Nixon directly despite all his denials. "What was
the collateral’? Donald Nixon had applied for a loan from a commercial
lending firm and had been offered $93,000 for the entire package" (which
package included not only the $13,000 parcel but a reassignment of the Union
Oil lease. The Nixons could guarantee this lease because the president of
Union Oil, Reese Taylor, was another one of Nixon’s groomers). Dietrich
continues:
"This raises some serious questions. Why would Hughes lend $205,000 for an
enterprise on which only $93,000 could be borrowed? Why would Hughes Tool
Company, which was not a lending agency, make the loan? How would the
transaction look for a company that was deeply involved in defense
contracting and in a government- regulated airline (TWA)?
"Even though the loan was for Richard Nixon’s brother, not for himself, the
whole thing seemed fishy. An ordinary citizen with a failing restaurant
wouldn’t have a prayer of a chance of achieving such a loan. Obviously the
reason was in the fact that Richard Nixon occupied the Number Two position in
the nation. And his chances of becoming Number One had been increased since
Dwight Eisenhower’s heart attack and other ailments.
"I was thoroughly convinced that the loan was wrong-for Nixon, for Hughes,
for the state of political ethics. After fretting over the matter for several
days, I made a bold move. Without consulting Howard, I flew to Washington in
an attempt to halt the loan."
(As chief executive officer for the whole Hughes operation and working for a
very eccentric rich man who frequently would become absorbed in his own
interests, Dietrich often took upon himself major decisions without Hughes’
knowledge. At one point in his book Dietrich tells of setting up
manufacturing plants in Ireland and West Germany because of cheaper labor and
transportation costs, without consulting Hughes).
"I had no difficulty in obtaining an appointment with the Vice-President.
‘About the loan to Donald,’ I began. ‘Hughes has authorized it, and Donald
can have it. I realize it involves a loan to your brother and not to you. But
I feel compelled to tell you what’s on my mind. If this loan becomes public
information, it could mean the end of your political career. And I don’t
believe it can be kept quiet.’
"He responded immediately, perhaps having anticipated what I had said. ‘Mr.
Dietrich,’ he said, ‘I have to put my relatives ahead of my career.’ Nothing
further was said about the subject. We had lunch in his office, and I
departed more troubled than when I had arrived. I couldn’t believe that he
was so naive as to think that the affair could be kept secret.
"Having failed to scuttle the transaction, I did everything I could to put it
on a businesslike basis. The high-paid executives of the Hughes empire were
challenged with the problem of rescuing a modest Whittier restaurant from
insolvency.
"Pat DiCicco, who had the industrial feeding contract at Hughes Aircraft,
headed a management committee to survey the enterprise. When Pat first
visited the place, he kiddingly suggested dropping the name ‘Nixon’s’—‘After
all, Democrats eat too,’ he reasoned."
The committee made proposals for improving the operation, and because Donald
Nixon resented their intrusion into the affairs of the restaurant, the
committee kept Richard Nixon aware of their deliberations. Since they wanted
to avoid any embarrassment to the Vice-President, instead of referring to him
by name or title they used the code name "Eastern Division." Dietrich reports
that on one occasion, Richard Nixon telephoned him about Donald Nixon’s
resentment. Dietrich reports that when he replied that he believed the
restaurant would fail within 90 days if changes were not made, the
Vice-President said: "My brother wants to run it his way." So the Hughes
task-force abandoned its effort and soon the restaurant closed its doors.
THE "LOAN" PAYS OFF
Dietrich then says: "Something curious happened one month after the loan was
made. The Internal Revenue Service made a reversal and ruled that the Howard
Hughes Medical Foundation was entitled to tax-exempt status. The request for
tax exemption had twice been refused by the IRS and the Treasury Department.
But early in 1957, Howard was able to win that status for his Foundation,
which owned all the stock in Hughes Aircraft. Was the timing coincidental? Or
did Howard win a bargain for his $205,000?" (Another source indicates that
Hughes got his tax exemption on March 1, 1957, three months after the loan,
and that the exemption was retroactive to December 31, 1953, the date of the
Foundation’s formation.
In his book Dirty Business, journalist Ovid Demaris remarks about the timing
of the tax exemption to the Hughes loan, and asks: "How many coincidences is
a politician entitled to before two and two add up to four?" In originally
rejecting the tax exemption on November 29, 1955, the IRS had said: "The
whole setup was merely a device for siphoning off otherwise taxable income to
an exempt organization, and accumulating that income." And, in fact, Hughes
was able to save $1 million in corporate taxes on the very first day of the
existence of the Howard Hughes Medical Foundation because of the tax
exemption.
Yet more was involved than simply money. Hughes was again under investigation
by the government because of his mismanagement of Hughes Aircraft, which
after World War II had grown into one of the largest electronic firms in the
world. Most of its work was being done for the U. S. government. At one time
Hughes Aircraft employed more than 3300 Ph.D.’s and had a backlog of $600
million in contracts. But a number of high-ranking scientists and executives
were so distressed by Hughes’ inability to delegate responsibility to them
that they began to leave to set up new companies, including Ramo-Wooldridge
(later TRW) and Litton Industries. Washington bureaucrats became so alarmed
with the setbacks to government work that Secretary of the Air Force Harold
E. Talbot personally took Howard Hughes to task for the situation in the most
brutal terms. "You personally have wrecked a great industrial establishment
with gross mismanagement! I don’t give a damn what happens to you, but I am
concerned for this country. The United States is wholly dependent on Hughes
Aircraft for vital defense systems. It would take at least a year to set up
alternative sources of supply. That could be a national tragedy. It was a
terrible mistake entrusting the nation’s security to an eccentric like you!."
Then Dietrich discovered in a special audit that Hughes Aircraft had
overcharged the government by $43 million. It was at this point in time that
Hughes thought of getting into the charity business to create the illusion
that a public trust, the Howard Hughes Medical Foundation, was in control of
Hughes Aircraft. Even though the Foundation’s charter naturally vested
control in a single trustee, Howard Hughes, with life tenure and power to
name his successor, businessman Howard Hughes was not so vulnerable to
Pentagon investigation, particularly when the IRS granted the Foundation full
tax-exempt status.
Investigators say that other favorable government decisions also followed the
Hughes loan to the Nixon family. In December 1956 the Hughes-controlled TWA
was permitted by the Civil Aeronautics Board (CAB) to borrow a large sum of
money from Hughes Tool Company, although the CAB for anti-trust reasons had
previously restricted such transactions between government-regulated airlines
and aircraft manufacturers. In January 1957, just a few days after the loan,
TWA was also successful in getting permission for a route to Manila. Within
the next year TWA was able to open up a Frankfurt-Zurich link because of U.
S. government assistance, won a long delayed fare increase, and was awarded a
lucrative St. Louis -Miami route despite good reasons why this route should
have been awarded to other carriers. And since Hughes owned 75 percent of the
outstanding TWA stock, he was the prime beneficiary of any favors to TWA. It
would seem, therefore, that the $205,000 "loan" to Donald Nixon was a cheap
price to pay for all these benefits. And in retrospect, the legal definitions
printed at the beginning of this section suggest that perhaps another word
than "loan" should be used to describe the Hughes-Nixon transaction.
--[cont]--
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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