Wall Street Gothic:

The Unlikely Rise and Tragic Fall of Financier Floyd B. Odlum

© 2018 David Clarke, Jr.

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 AUTHOR’S NOTE
July 2018

For the last twelve years, I have been working on a biography of financier Floyd B.

Odlum (1892-1976). This has involved a significant amount of research, not only about Odlum

himself, but about his wives Hortense McQuarrie and Jacqueline Cochran, as well as his

friend/nemesis Howard Hughes, his publicist Alexander Gumberg, and his associates Richard B.

Scandrett, Jr., Edwin Weisl, Peter Rathvon and David G. Baird. It has also involved a significant

amount of research on a number of companies that Odlum controlled or was involved in creating,

including Atlas Corporation, Chatham Phenix Allied Corporation, the Goldman Sachs Trading

Corporation, Paramount, RKO, Convair, General Dynamics, Hilton Hotels and Indian

Motocycles (that is how the name was spelled). I have made three visits to the Eisenhower

Presidential Library in Abilene, Kansas to spend a total of sixteen days going through Odlum’s

papers. I have also visited the Library of Congress (to go through Odlum-related material in the

papers of Justice Robert H. Jackson and the “Morgenthau Diaries) and the Wisconsin Historical

Society in Madison (to review Gumberg’s papers). I have interviewed the widow of one of

Odlum’s sons (both of whom predeceased their father), and three of Odlum’s five grandchildren.

Other interviewees have included Aldine Tarter, who for many years managed the Ranch where

Odlum and Cochran lived in Indio, California, and my law partners Harry McPherson and

Lawrence Levinson, former aides to President Johnson, and their friend Michael Janeway, all

three of whom shared their recollections of Weisl, the consummate insider who was a confidante

of both President Johnson and Odlum. Regretfully, Tarter, McPherson and Janeway have all

passed away since I had the good fortune to speak with them.

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 The biography is not finished, but the draft has grown to mammoth proportions: more

than 275,000 words on more than 700 pages with almost 1,400 footnotes. I have developed a

great deal of new information, and, even where I have drawn on previously published

information, I believe I have marshalled it in new and useful ways. As a result, even though the

biography is not finished, I have decided to make the latest draft available on the Internet at this

time in the hope that other serious students of American history, particularly American business

history, will find my research interesting and useful. If you do, please use it only in ways that are

consistent with my copyright, and include an appropriate citation to my work.

To facilitate use of the material I am posting, I am making this preliminary document

available without charge. It includes this Author’s Note, the Introduction to the biography, and a

detailed 21-page Expanded Table of Contents that summarizes what is covered in each chapter in

each of the five parts of the biography. Anyone wishing to dig deeper can then contact me at

davidclarke56@hotmail.com to purchase some or all of the biography for a modest charge ($4.95

per part or $19.95 for all five, payable through PayPal). Anyone who purchases any part of the

biography and finds that the discussion of the particular topic in which he or she is interested is

not complete is encouraged to contact me again, I which event I will be happy to provide my

research on that topic. Whenever I update a part, I will provide a revised version free of charge

to any prior purchaser.

Thank you.

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 INTRODUCTION

Few Americans of the Twentieth Century were more deeply involved in major events, or

had more contact with great and famous people, and yet are as unknown today as Floyd Odlum.

During his lifetime, the press followed his every business move, he was regularly profiled in

newspapers and magazines, and he was a guest on television and radio programs. His death in

1976 was reported on the front page of the New York Times. Since then, however, he has been

largely forgotten.

Most of what is written about him today is the result, not of his own accomplishments,

but of the accomplishments of his famous second wife, Jackie Cochran, who was the head of the

WASPs during World War Two and later the first woman to fly faster than the speed of sound.

Yet, while Jackie’s achievements resulted first and foremost from her own courage, ability and

boundless ambition, they also resulted from the virtually unlimited financial resources Floyd

placed at her disposal starting in the 1930s, a decade when only the very rich – or those backed

by the very rich – could afford to fly airplanes. And before Floyd and Jackie had ever met –

when Jackie was still working in the beauty salon where the first Mrs. Odlum got her hair done –

Odlum had already risen in less than forty years from being the youngest child of a poor

Midwest minister to being the head of the largest investment trust in the World – one of the few

investors who had not only survived the Stock Market Crash but profited handsomely from it.

(Not bad for someone who, as a young man, made five cents an hour piling scrap lumber in a

mill yard, and who once rode an ostrich in races against a horse at a Michigan racetrack.)

At one time or another in the years to come, Floyd Odlum would play a key role in

convincing General Eisenhower to seek the presidency; acquire one of the country’s leading

defense contractors; finance the development of the Atlas rocket, the rocket that threatened to

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rain nuclear destruction on the Soviet Union and carried the Mercury astronauts into orbit;

control one of Hollywood’s five major movie studios, reluctantly siding with Orson Welles in the

battle over whether RKO should release Citizen Kane in the face of opposition from William

Randolph Hearst, but then unleashing the hacks who drove Welles out of Hollywood; control

other businesses as diverse as the Bonwit Teller Department Store (the presidency of which he

gave to his first wife the year before their divorce), Greyhound Bus Lines, Northeast Airlines and

the manufacturer of Indian motorcycles; and participate in takeovers of Madison Square Garden

and Paramount Pictures and the formation of Hilton Hotels and General Dynamics.

In addition to President Eisenhower, who frequently spent time at Floyd’s and Jackie’s

ranch in the California desert and wrote his memoirs there, the Odlums’ closest friends would

include Amelia Earhart (who spent most of the month prior to her disappearance in the Pacific at

the ranch), Edward Teller (the “Father of the H-bomb”), Chuck Yeager (the first pilot to break the

sound barrier, who served as Jackie’s coach when she became the first woman to accomplish the

feat), Curtis Lemay (the Cold War commander of the U.S. Air Force) and Howard Hughes (who

bought RKO from Odlum and later hired Floyd to become the manager of his business empire

before reneging on the deal).

For all of the success that Odlum achieved, however, his life ultimately can be described

only in terms of Greek tragedy. Indeed, with rhetorical exaggeration, one of his grandsons has

likened the Odlum family to the “House of Atreus,” the legendary royal family of Mycenae that

tore itself apart for generations in a frenzy of adultery, incest, murder and cannibalism. Unable

to live in “the shadow of the great man,” angry over their father’s rejection of their mother, and

disturbed by Chuck Yeager’s status as Floyd’s “surrogate son,” both of Floyd’s real sons killed

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themselves, Stanley by drinking himself to death at the age of forty-one, and Bruce by putting a

gun to his head and pulling the trigger at the age of fifty.

Meanwhile, at the peak of his financial success, Odlum lost his golden touch as an

investor. “Uranium is the oil of tomorrow,” Floyd proclaimed, “and tomorrow isn’t very far

away.” He made the biggest bet of his career on the radioactive mineral, setting up shop in a

hotel suite in Salt Lake City and buying claims from famous prospectors Charlie Steen and

Vernon Pick. Within a few years, however, the government curtailed the purchase program that

had triggered the uranium boom, no private demand materialized, and Odlum lost his shirt.

Pick’s famous strike had been profiled in Life magazine, and Odlum had named it “Hidden

Splendor” after buying it from Pick for $9 million in cash and a customized airplane. Now, it

was ridiculed by locals as “Odlum’s Hidden Blunder.”

For years, rheumatoid arthritis had forced Odlum to conduct many of his business

dealings from a superheated swimming pool at the Cochran-Odlum Ranch in the California

desert near Palm Springs. By the 1970s, Floyd was bedridden, and he and Jackie were so

reduced in circumstances that they agreed to Bruce’s scheme to develop the property. Hindered

by drinking and drug use, Bruce had no more success as a real estate developer than he had

previously had as a rancher, writer, corporate dealmaker, artist or “independent movie producer.”

The development failed, and lenders foreclosed on the property. After a final conversation with

his father, Bruce went to a secluded place with a gun in his hand.

Finally, an issue that demands exploration is the degree of Floyd’s complicity in Jackie’s

bizarre alteration of her life story. Throughout her career as a famous aviator, Cochran portrayed

herself to the public as an orphan who had been raised in the most wretched poverty by a foster

family she described in hateful terms. Overcoming this terrible legacy, she supposedly picked

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the name “Cochran” out of a phone book and made a success of herself through pluck,

determination and hard work. This version of Jackie’s life story was included in her 1954

autobiography and in a biography that her estate authorized in 1987, seven years after her death.

Today, this story is still repeated on many of the websites about her that are maintained by

museums and other institutions.

Beginning with the 2001 publication of a brief biography of Jackie by one of her nieces,

however, it has become clear that the life story Jackie told was to a large extent fictional. A

document from Jackie’s FBI file that I obtained pursuant to a Freedom of Information request

clinches the case. At age fourteen, Jackie became pregnant and then married the father, a much

older man named Cochran. Neither the child nor the marriage were ever acknowledged publicly.

The child died at the age of four when he managed to get hold of matches and start a fire. The

marriage ended in divorce when Cochran accused Jackie of adultery. At the time, Jackie was

engaged in an affair with a married man who provided the cash for her first car.

It is perhaps not surprising that Jackie suppressed these intimate and embarrassing

details. What is surprising is the fact that, while her “foster” family had to struggle to make ends

meet, Jackie did not grow up in wretched poverty. Moreover, there is every reason to believe

that the “foster” family she described in such hateful terms was in fact her real family, which she

later supported with Floyd’s money even as she was denying its existence in public.

Floyd Odlum created or otherwise accumulated a huge quantity of papers in his lifetime.

After his death, more than 140,000 pages of material were deposited in the Eisenhower

Presidential Library. In addition, in the early 1960s, Floyd dictated several hundred pages of

memoirs. The only copies of most of these are still in the possession of Jackie Cochran’s estate.

Until 2013, the papers deposited at the Eisenhower Presidential Library were closed to the

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public. During that time, by arrangement with Jackie Cochran’s estate, I was the only visitor

who was ever given access to them. In addition, the memoirs have never been reviewed by any

outsider except me.

Many biographies of Jackie Cochran have been published. Brief sketches of Odlum’s life

and career, each only a few pages long, have been included in a number of books, including

Chuck Yeager’s 1985 autobiography, Roger Franklin’s 1986 history of General Dynamics, Raye

Ringholz’ 1989 history of the uranium boom on the Colorado Plateau, and Edward Teller’s 2001

autobiography. However, no full biography of Floyd Odlum has ever been published. I am

convinced it is a story worth telling.

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 EXPANDED TABLE OF CONTENTS

PART ONE: RISE

1 Ancestry

The ancestry of Floyd Bostwick Odlum (“FBO”) can be traced back to an English soldier
who fought in Ireland in the Seventeenth Century. This chapter includes information from
original sources I located (including letters at the University of Hull in England) about an Odlum
who, during the Napoleonic Wars, served as an officer in the British Royal African Corps, a
military unit the British created to guard Gorée, the infamous former slave station located on an
island off the coast of West Africa. In the Winter of 1805-1806, this Odlum was wounded in a
battle with pirates off the coast of Africa and then captured by a French warship. This chapter
also includes information from original sources in FBO’s papers about his immediate forebears.

2 Childhood

FBO was born in Michigan, the son of an itinerant Methodist preacher from Canada.
This chapter is based largely on letters and newspaper clippings from FBO’s papers.

3 Out West

The summer after FBO’s graduation from high school, his mother and her younger
children, including FBO, moved to Boulder, Colorado because his mother was suffering from
tuberculosis.

That fall, FBO entered the University of Colorado. FBO’s papers include many
newspaper clippings and other contemporaneous materiala about his time at the University, from
which he eventually graduated with a law degree. While at the University, he was
extraordinarily busy with extracurricular activities and even found time to travel into Denver,
where he worked as a reporter for the notorious Denver Post, visited the racetrack, and had a
series of colorful adventures in the city’s red light district that he later described in his
unpublished memoirs. He was friendly with fellow student Gene Fowler, who later became
famous as a newspaperman, Hollywood screenwriter and author, and together they made the
acquaintance of Buffalo Bill Cody.

After graduation, FBO moved to Salt Lake City and got a job as an in-house lawyer with
a public utility. He married a Mormon girl named Hortense McQuarrie, and they had their first
child, a son named Stanley. Although “Tenney,” as she was known, was eventually married a
number of times, one of the discoveries I made during my research was that she had a previous
marriage before her marriage to FBO that she never acknowledged publicly.

4 Wall Street

The public utility for which FBO worked was controlled by Electric Bond and Share
Corporation (“EBASCO”), an affiliate of General Electric. FBO came to the attention of the

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hard driving head of EBASCO, Sidney Zollicoffer Mitchell. FBO was brought to New York to
work for Simpson, Thacher & Bartlett, the Wall Street law firm that did EBASCO’s legal work.
He soon became so indispensable to Mitchell that he went to work for EBASCO. By the late
1920s, FBO was Vice Chairman of EBASCO’s foreign subsidiary and, with a power of attorney
from Mitchell, travelled extensively in Europe and South America buying up a half billion
dollars’ worth of local utilities. Among other things, his efforts to make a deal with the
government of Romania led him into a whirlpool of political and romantic intrigue, including an
attempt by Madame Olmazu to seduce him at her apartment in Paris, all of which he later
described in his unpublished memoirs. [At precisely the same time that FBO knew Olmazu,
Albert Braitou-Sala painted a portrait of her that was published in magazines on both sides of the
Atlantic.]

5 Alexander Gumberg

Alexander Gumberg was a Russian émigré to the United States who devoted his career to
improving relations and fostering trade between the two countries. The night the Bolsheviks
took power in 1917, Gumberg was one of the five Americans who drove around Petrograd in a
truck distributing leaflets. One of the others was the journalist John Reed, who immortalized the
incident in Ten Days That Shook the World. Gumberg was close friends with Lenin and Trotsky
and leading American liberals such as Senator Borah, the La Follette, Raymond Robins and
Upton Sinclair, but also with leading Wall Street figures such as Morgan partner and future
Ambassador Dwight Morrow and lawyers Thomas Thacher and Allen Wardwell. [Morrow was
Charles Lindbergh’s father-in-law. Until he died unexpectedly in late 1931, Morrow was a
leading contender for the Republican presidential nomination. In an original document I found,
Gumberg said: “I have known intimately the two greatest intellects of this generation, and they
were very curiously alike, Lenin and Morrow.”] During his lifetime, despite his Wall Street
connections, Gumberg was frequently suspected of being a Soviet spy. More recently, the fringe
that believes in a longstanding “One World” conspiracy has identified Gumberg as a secret agent
for Wall Street interests, given the task of fomenting the Russian Revolution. In the mid-1920s,
British passport authorities briefly confused Gumberg with Michael Gruzenberg, an important
Comintern agent who, using the alias “Michael Borodin,” played an important role in
establishing Communism in China. Although this was an obvious error and was quickly
corrected by the British, the supposed identity of Gumberg and Gruzenberg has now become, via
the dubious scholarship of Anthony Sutton, a mainstay on the Internet.

In any event, during his time at Simpson, Thacher & Bartlett, FBO befriended Gumberg.
When FBO went into business for himself in the 1930s, he employed Gumberg as an advisor and
publicist. FBO became acquainted with Gumberg’s friends on the American Left. Gumberg’s
extensive papers are at the State Historical Society of Wisconsin, located at the University of
Wisconsin in Madison. They provide a wealth of detail that I have included in this chapter.

6 Atlas

In 1923, FBO, his friend George Howard and their wives pooled $40,000 and formed an
investment trust that eventually became the Atlas Corporation. Initially, FBO continued to work

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for EBASCO, and picking stocks for Atlas was a hobby. This chapter describes the early history
of the company, including several re-incorporations and the admission of additional investors,
including the wealthy Canadian A. E. Worswick. By September 1929, Atlas had approximately
$6 million in assets (according to standard press accounts of FBO’s career) or approximately $8
million in assets (according to my research). That month, on the very eve of the Stock Market
Crash, Atlas raised approximately $9 million from new investors.

This chapter examines the impact of the 1929 Market Crash on Atlas. This turns out to
be the first instance in which the truth is different from the standard press accounts of FBO’s
career. The standard account is that Atlas had approximately $15 million in assets when the
Crash came, FBO saw the Crash coming, and he was holding the vast bulk of Atlas’ assets in
cash when the Crash occurred. In fact, Atlas had approximately $17 million in assets when the
Crash came, FBO did not see the Crash coming, and he was holding the vast bulk of Atlas’ assets
in common stocks when the Crash occurred. Fortunately for FBO, most of these stocks were the
stocks of utility companies, primarily EBASCO, which were hit less by the Crash than the
common stocks of many other types of companies. Nonetheless, Atlas’ portfolio lost more than a
fifth of its value in the Crash, and FBO’s subsequent reputation as one of the few investors who
had seen the Crash coming was undeserved.

7 “Trust-Gobbler”

It was in a three-year period shortly after the Crash, between May 1930 and June 1933,
that FBO showed his financial genius. Most investment trusts (of which the Goldman Sachs
Trading Company and its progeny, Shenandoah Corporation and Blue Ridge Corporation,
became the most infamous) had been wildly overpriced before the Crash. In the wake of the
Crash, on the other hand, they were so underpriced that their shares were actually selling for less
than the value per share of the investments in their portfolios. Many people realized that, if you
could gain control of such trusts and liquidate them, you could make an immediate profit. FBO
was practically the only person who not only realized this but had the assets and the audacity to
carry out the plan. Between May 1930 and June 1933, Atlas gained control of twenty-two other
investment trusts which it eventually liquidated. The “trust gobbling” culminated with the
acquisitions of Goldman Sachs Trading Company, Shenandoah and Blue Ridge. When the
liquidation process was complete, Atlas was the largest investment trust in the World, with assets
of more than $150 million, and FBO, who had left EBASCO to work fulltime at running Atlas,
was well known to the American public in much the same way that Warren Buffett is today. This
chapter examines several of the takeovers in detail. Among other things, based on the results of
a later investigation by the Securities and Exchange Commission (the “SEC”), it describes how
Atlas paid bribes to the directors of its targets to help grease the skids for its acquisitions.

8 Power Brokers

This chapter provides mini-biographies of three men whom FBO met during his “trust
gobbling” days and who became close associates: Sidney Weinberg, Edwin Weisl and John D.
Hertz. Weinberg, the head of Goldman, Sachs, was one of the most powerful investment bankers
of his generation, and one of the few important Wall Street figures supportive of FDR. Weisl, the
consummate insider, yet virtually unknown to the public, was a partner at Simpson, Thacher &

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Bartlett, a de facto partner at Lehman Brothers, and one of LBJ’s closest advisors. Before
becoming a partner at Lehman Brothers, Hertz founded Yellow Cabs and the rental car company
that bears his name. Later, he bred and raced Triple Crown winner Count Fleet and became
heavily involved in the affairs of Paramount Pictures. Among other things, Weinberg and Weisl
helped introduce FBO to major figures in the Democratic Party, including FDR and LBJ. (When
LBJ was stricken with kidney stones became ill during his 1948 Senate campaign, it was Jackie
who flew him to the Mayo Clinic for treatment.) Hertz, on the other hand, helped usher FBO
into Hollywood.

9 Bonwit Teller

One of the miscellaneous assets that Atlas ended up with as a result of its “trust gobbling”
was Bonwit Teller, an upscale woman’s store in Manhattan. This chapter tells the story of how
FBO installed his first wife, Tenny Odlum, as president of the store.

10 Floyd Odlum in His Thirties and Forties

This chapter describes FBO at this stage in career. Among other things, this chapter
mentions the birth of Floyd’s and Tenney’s second child, a son named Bruce.

PART TWO: JACKIE COCHRAN

1 Bessie Pittman

This chapter tells the true story of the woman who became known as “Jacqueline
Cochran.” She was born Bessie Pittman in the panhandle of Florida. At the age of fourteen,
Jackie became pregnant and then married the father, a much older man named Cochran. The
child died at the age of four when he managed to get hold of matches and start a fire. The
marriage ended in divorce when Cochran accused Bessie of adultery. At the time, she was
engaged in an affair with a married man who provided the cash for her first car. Later, after
learning her trade as a beautician in Pensacola, where she dated Navy fliers, Bessie changed her
first name to “Jacqueline,” made her way to New York City, and landed a job at Antoine’s, the
prestigious beauty salon located in Saks Fifth Avenue.

2 Floyd and Jackie

During the Winter, Antoine’s customers went to Florida, so Antoine’s sent its hairdressers
to Florida as well. When an extra woman was needed at a dinner party, one of the hairdressers
might be invited. According to Floyd and Jackie, they met in early 1932 when they were seated
next to each other at a dinner party in Miami hosted by Stanton Griffis, an investment banker
who was a business associate of Odlum and who later served under President Truman as
Ambassador to Poland, Egypt, Spain and Argentina.

There is an alternative version of how Floyd and Jackie met. Sydney Guilaroff worked at
Antoine’s with Jackie and then went to Hollywood, where he served for many years as the
hairdresser at MGM. In his memoirs, he claimed that Hortense Odlum was a customer at

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Antoine’s, Jackie overheard her saying that her husband was exhausted and was going on a
cruise by himself, and Jackie then booked herself on the same cruise and seduced him.
According to Guilaroff, this real life event was the inspiration for “The Women,” a play by Clare
Booth Luce that enjoyed great success on Broadway and then was made into a blockbuster
movie at MGM. (One of the stars of the MGM production was Floyd’s best friend in
Hollywood, Rosalind Russell.) For a number of reasons that I explore in this chapter, it is
unlikely that Guilaroff’s story is true. Yet, as I also discuss in this chapter, Jackie’s memoirs
contain a reference to “The Women” that may be an inside joke of some sort.

In any event, regardless of how they first met, Floyd and Jackie became romantically
involved. In 1935, in a scene straight out of “The Women,” Hortense Odlum traveled to Nevada
and divorced Floyd. The following year, Floyd and Jackie were married. They honeymooned on
Griffis’ yacht.

3 Jackie Cochran’s Early Flying Career

When Floyd and Jackie first met, she told him about her dream of owning her own
cosmetics business, and he told her that, if she wanted to have a national business, she should
learn how to fly. He then bet her the cost of the lessons that she could not get her pilot’s license
during her next vacation. She took lessons at Roosevelt Field on Long Island and won the bet.
(In fact, there is reason to think that Jackie had a head start, having finagled off-the-record flying
lessons from some of the fliers she dated when she was living in Pensacola.)

After Jackie received her pilot’s license, she began to enter air races, an expensive hobby
in which she was able to indulge only because she had Floyd’s financial backing. For the first
few years, here efforts resulted in expensive failures. By the late Thirties, however, she had
established herself as the leading female aviator in the World. For three consecutive years, from
1937 through 1939, she was awarded the Harmon Trophy as either the outstanding female flier in
the United States or the outstanding female flier in the World, and in 1938 she won the race for
the Bendix Trophy, the most hotly contested air race in the World. These achievements gave
Jackie access to powerful people. It was Eleanor Roosevelt who presented the Harmon Trophies,
and Jackie was asked to join the committee that awarded the annual Collier Trophy for
achievement in aviation, a group that included, among others, Henry H. “Hap” Arnold, the
commander of the Army Air Corps.

4 Investing in Jackie

This chapter is based on a remarkable document contained in Floyd Odlum’s papers at

the Eisenhower Library – a ledger in which he accounts for Jackie as though she were an
investment. What the document shows is that, year after year, Jackie spent a multiple of the
salary that Odlum paid himself at Atlas, so that, by the time the United States entered World War
Two, his net worth was exhausted, except for his ownership interest in Atlas Corporation and the
ranch that he and Jackie acquired near Palm Springs, California.

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5 The Legend of Jackie Cochran

In her autobiography, The Stars at Noon, and numerous press accounts, Jackie claimed
that she was orphan who did not know who her real parents were, and that she had been raised in
wretched poverty by foster parents she described in hateful terms. It is not surprising that Jackie
suppressed the intimate and embarrassing details about her early pregnancy, marriage and
divorce. What is surprising is the fact that, while her “foster” family had to struggle to make
ends meet, Jackie did not grow up in wretched poverty. Moreover, there is every reason to
believe that the “foster” family she described in such hateful terms was in fact her real family,
which she later supported with Floyd’s money even as she was denying its existence in public.
This chapter explores the largely fictional story that Jackie told about her upbringing and the role
that Floyd played in propagating it.

6 Amelia Earhart

Jackie had a love-hate relationship with Amelia Earhart. On the one hand, Jackie was
envious of Earhart’s fame. Both before and after Earhart disappeared, Jackie routinely claimed
credit for achievements that in fact belonged to Earhart (e.g., opening the Bendix Race to
women). On the other hand, there was a period in the early Thirties when Jackie was clearly
emulating Earhart’s androgynous style, wearing her hair short and dressing in suits with trousers.
Then, not long before Earhart’s disappearance, Jackie and Amelia met and became close friends,
so much so that there were rumors that they were lesbian lovers. Floyd was one of the major
financial backers for Earhart’s attempts to fly around the world, and, in the final weeks before
Earhart left for the flight on which she disappeared, Earhart spent much of her time at Floyd’s
and Jackie’s ranch. Subsequent to Earhart’s disappearance, Jackie’s name became linked to
various theories that Earhart survived and became a prisoner of the Japanese. These are explored
in this chapter as well.

7 The WASPs

When World War Two broke out, Jackie used various connections she had made as a
result of her flying prowess (most importantly with Eleanor Roosevelt and Hap Arnold) to
become involved in the war effort. First, she commanded a contingent of American female fliers
who served as auxiliaries to the RAF and helped ferry bombers from the United States to Great
Britain. Later, she became the head of a unit for female fliers created within the United States
Army Air Corps, the Women’s Auxiliary Service Pilots or “WASPs.” In the eyes of some
feminists, these pioneering accomplishments make her a hero. Others, however, criticize her for
perpetuating female stereotypes and suspect that she only cared about the advancement of
women when it served to advance the career of Jackie Cochran. For example, she is criticized by
some for the fact that, in determining which female pilots would be admitted to the WASPs, she
imposed strict requirements for attractive appearance and “ladylike” behavior and allegedly
excluded those she suspected of being lesbians. Similarly, she is criticized for having readily
acquiesced in the view that the only appropriate role for female pilots was to take over the most
mundane of tasks, thereby freeing male pilots for more important missions. Finally, she is
criticized for having failed to achieve full military status for her pilots, which resulted in them
being denied veterans benefits until a special act of Congress was passed in 1977, more than

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thirty years after the WASPs were disbanded. During World War Two, Jackie supported full
military status for her pilots, but only if the WASPs remained a separate unit under her
independent command, reporting only to her close friend Arnold. Her critics argue that full
military status could readily have been achieved, if only Jackie had been willing to have the
WASPs integrated into the Women’s Army Corps (the “WACs”), but Jackie vehemently opposed
that step because it would have required her to report to another woman, WAC commander
Oveta Culp Hobby, the politically-well-connected wife of a former Governor of Texas.

PART THREE: “PERSPICACIOUS OCTOPUS OF THE DEPRESSION”

1 “Tinker of Wall Street”

As it “gobbled” twenty-two investment trusts, Atlas inherited an interesting array of

“white elephants.” In addition to Bonwit Teller, which was discussed in an earlier chapter, these
included sole ownership of, or at least substantial interests in, (1) the American Trust Company
of San Francisco, the third largest bank west of Chicago, (2) the Mississippi Valley Barge Line,
(3) Alpicko Realty Trust, an entity that owned the Albert Pick Building at West 35th Street and
South Racine Avenue in Chicago, (4) Alden Corporation, the assets of which included a vacant
furniture factory in Asheville, North Carolina and seventeen vacant lots in Hoboken, New Jersey,
(5) a 1,337-acre fruit ranch in the San Joaquin Valley of California, (6) the New Yorker, a
virtually brand new hotel located near Pennsylvania Station in New York City, and (7)
Greyhound Bus Lines. This chapter tells the story of the resuscitation and eventual disposition
of these assets.

2 Special Situations

By 1933, Atlas Corporation had finished gaining control of all of the feasible candidates
among Wall Street’s undervalued investment trusts. By 1936, Atlas had completed the laborious
process of rationalizing its corporate structure, eliminating all the partially owned investment
companies of which it had gained control by arranging transactions in which their minority
stockholders were persuaded or induced to become stockholders of Atlas. FBO was in his
forties, just entering his prime. He was sitting on $150 million in assets. Not only did he control
the largest investment trust in the United States, but, in an era when the size of investment banks
was limited by the fact that they were still private partnerships, Odlum controlled one of the
largest pools of capital in the United States that was not fettered by the need to comply with the
legal regulations applicable to commercial banks or insurance companies. Only the private
fortunes of a few families like the Rockefellers were larger. The question inevitably presented
itself – What should FBO do next?

FBO never had any faith in his ability to do what an investment company (e.g., a “mutual
fund”) typically does, which is pick publicly traded stocks and passively hold them, waiting for
them to appreciate. FBO did not believe it was possible to beat the market in the fashion over
the long term. Instead, he looked for what he called “special situations.” The term is impossible
to define with precision. Sometimes it was a publicly traded stock where he thought his active
intervention in the management of the company could achieve a premium return. Sometimes it

7
was a private investment where he was backing a particular manager. Sometimes it was a
situation where he believed he was taking advantage of some market imperfection.

Of the “special situations” in which Atlas became involved in the 1930s, some are dealt
with separately in later chapters entitled “Aviation” and “Hollywood.” Those dealt with in this
chapter are the acquisition of control of Madison Square Garden, the ferocious battle for control
of Harley Clarke’s utilities empire, and the acquisition of control of Italian Superpower. (As
presently written, the discussion of Madison Square Garden includes a lengthy detour into the
college basketball betting scandal and the domination of championship boxing by the Mob, both
of which took place while the Garden was controlled by a group originally put together by
Odlum and while he continued to serve on the board of directors.) Finally, this chapter
concludes with a passage from FBO’s unpublished memoirs about his dealings with Ivar
Kreuger, the Swedish financier known as the “Match King,” immediately before Kreuger’s
financial empire collapsed and Kreuger committed suicide in one of the most infamous scandals
of the decade.

3 Aviation

One area that attracted particular interest from FBO was aviation. This chapter includes a
history of the aviation industry and then details some of Atlas’ earliest investments in this
industry – TWA and Northrop. This chapter includes a substantial amount of material from
FBO’s unpublished memoirs.

4 Hollywood

Another area that attracted particular interest from FBO was Hollywood. This chapter
includes a history of the movie industry and then details Atlas’ investments in various studios.
Among other things, the chapter discusses Atlas’ participation in the takeover of Paramount by a
group led by Hertz, Atlas’ acquisition of control of RKO, and Atlas’ status as the largest non-
family-member investor in Disney. The chapter includes a thorough discussion of Orson Welles’
career at RKO, which both started while FBO was becoming a force in the studio’s affairs and
ended shortly after FBO gained complete control. In 1941, Welles and RKO President William
Schaefer overcame resistance from William Randolph Hearst and members of RKO’s own board
to release Citizen Kane. The following year, however, Schaefer was forced to resign, Atlas
entrusted production decisions to William Koerner, the Magnificent Ambersons was butchered
(at least in the view of Welles aficionados), and finally Welles was booted out of the studio
altogether. This chapter includes a substantial amount of material from FBO’s unpublished
memoirs, which include stories about a private dinner with Jean Harlow, seeing Shirley Temple
being spanked, and befriending Rosalind Russell, but says surprisingly little about Welles or
Citizen Kane.

5 Politics

It is difficult to determine what FBO’s political beliefs were. Indeed, it is difficult to

determine whether he really had any. In the 1924 and 1928 presidential elections, he made
modest contributions to the Republican candidates, and in the 1950s, when he and Jackie became

8
enthusiastic supporters of Dwight Eisenhower, he drafted documents highly critical of taxes and
government regulation that strike a modern reader as extremely conservative. On the other hand,
he did not contribute to either party in 1932, and in the next four elections he was a generous
supporter of the Democratic candidates. What is consistent about FBO’s selections is that they
won: Every presidential candidate to whom FBO ever contributed money was victorious.

6 Floyd’s Power and Wealth

The broad reach of FBO’s financial interests – which was to a large extent the collateral
effect of Atlas having acquired twenty-two companies that themselves had diverse portfolios –
led many to make hyperbolic statements about his power and wealth. In 1935, a popular author
included him, perhaps accurately, as one of thirty “Men Who Run America.” That same year, a
United States Congressman reacted to Atlas’ investment in RKO by claiming that America was
witnessing a “conflict between Atlas and the House of Morgan for control of everything,” a
statement that was decades out of date for Morgan but nothing less than preposterous for Atlas.
The inaccuracies reached their peak after FBO and Jackie passed away, when Jackie’s estate
cooperated with a book that included the statement that FBO had been “one of the ten richest
men in the World.” Incredibly, statements like this still get repeated in other publications and on
the Internet.

This chapter attempts to paint a more accurate picture of FBO’s power and wealth. In the
second half of the 1930s, Atlas was the largest investment trust in the World. FBO and Jackie
lived in an apartment at River House on the Upper East Side of Manhattan and a ranch in Indio,
California, near Palm Springs in the Coachella Valley. Even by the standards of the day,
however, FBO paid himself a modest salary for the chief executive of a publicly traded company,
and his net worth, which was heavily concentrated in Atlas securities, paled by comparison to
those of the truly wealthy.

PART FOUR: HOLDING PATTERN

1 Curtiss-Wright

Because of FBO’s aversion to being a passive investor, over time he intentionally shrank
Atlas in size, because it had more money than he felt he could profitably employ in “special
situations” which would receive his active attention. One of the more spectacular transactions
that he ever dreamt up was a “merger” between Atlas Corporation and aircraft manufacturer
Curtiss-Wright that he proposed in 1940, a transaction that was in essence a sale by Atlas of its
large pool of cash to an entity that needed it more than Atlas did. Alas for Floyd, he was unable
to persuade the market of the merits of his proposal, and the transaction was not consummated.
As described in the next chapter, the episode won him the enmity of a powerful figure, Secretary
of the Treasury Henry Morgenthau.

2 Public Service During World War Two

Based in large part on original materials (e.g., Jerome Frank’s papers at Harvard Law
School, the so-called Morgenthau “Diary” and Robert Jackson’s papers at the Library of

9
Congress), this chapter begins by detailing FBO’s unsuccessful efforts to obtain two jobs in
Washington that he really wanted – the “Czar” of aircraft production, and the custodian who
would manage assets seized from enemy governments. FBO assiduously courted Frank, and the
latter ultimately sent FDR a glowing letter of recommendation on FBO’s behalf, which is ironic,
to put it mildly, given that Frank was chairman of the SEC when it published the report
describing the bribes that Atlas had paid to the directors of the investment trusts it targeted for
acquisition. Frank in turn enlisted his former aide Lauchlin Currie to lobby on FBO’s behalf for
the aviation job. (At the time, Currie was FDR’s White House economist. It is now well
established that he was a Soviet agent.) Despite the lobbying by Frank and Currie, FBO did not
get the job because of the animated opposition of Morgenthau, whose wisecracks about FBO and
his wife are recorded verbatim in the so-called Morgenthau “Diary.” Later, FBO courted
Jackson, who was then the Attorney General of the United States, for the custodian job. As
things turned out, however, Jackson declined to make the appointment because he had been
nominated for the Supreme Court and felt the choice should be made by his successor.

Eventually, in the Summer of 1941, FBO found himself having breakfast with Henry
Hopkins, FDR’s closest advisor, while the latter was still in bed. Hopkins offered FBO a job he
did not want – the head of the division within the Office of Production Management which
would try to ensure that, as the United States economy ramped up to a wartime footing, a
significant percentage of the government contracts went to small business. When FBO asked to
have a few hours to think about it, Hopkins got up, put on his bathrobe, and marched FBO down
the hall to the President’s bathroom, where FDR was shaving. The President repeated the offer,
and FBO felt he had no choice but to accept on the spot.

Weinberg, who acted as an informal talent scout for the President, told FBO that FDR and
Hopkins “had foisted on me the meanest job in Washington.” Perhaps no one could have
succeeded at the job. It was highly unlikely that, under pressure to arrange huge increases in
production, government contracting agents could be induced to break out of their established
relationships with major defense contractors. In any event, for the first time in his life, FBO
failed miserably. Working himself into a state of exhaustion, and faced with a raft of adverse
publicity, FBO ended up in the Mayo Clinic with the first onset of the rheumatoid arthritis that
plagued him for the rest of his life. In early 1942, in one of the innumerable shakeups in the
defense production apparatus, FBO found himself out of government.

3 David Baird

As mentioned earlier, it somehow has become common for FBO to be described as “one
of the ten richest men” in the United States or even the World. In fact, as a result of Jackie’s
spending, from World War Two onwards FBO was increasingly in debt, and the debt was secured
by a mortgage on the ranch which grew larger and larger. FBO’s major creditor, and the holder
of the mortgage, was David Baird, a mysterious figure who was involved in a scandal involving
FDR’s son Elliott and later was the subject of an extended Congressional investigation led by
Wright Patman. This chapter details what I have been able to find out about this enigmatic
figure.

10
4 Back to Business

This chapter examines various investments that Atlas made after FBO ended his stint in
government service and turned his attention back to business. In 1943-1945, Atlas (1) acquired
control of Northeast Airlines, (2) joined with Conrad Hilton to buy several hotels, starting with
the venerable Plaza Hotel in New York City, and ultimately was involved in the formation of
Hilton Hotels, (3) underwrote a significant securities offering for Pan Am when no traditional
investment bank would touch the deal, (4) traded in and out of the stocks of several smaller
automobile manufacturers that were rumored to be merging to form a rival to the “Big Three” of
General Motors, Ford and Chrysler, (5) purchased Liberty Magazine, a move that a cynic would
say was undertaken solely so that Liberty could hire Jackie as a “war correspondent” and send
her to witness the closing events of the War in the Pacific, and (6) purchased control of the
manufacturer of Indian motorcycles. With the benefit of hindsight, we can now see the first
signs that FBO had lost his magic touch. While some of these investments were successful,
some of them were financial disasters. Indeed, as we will see in a later chapter, while it took
more than a decade for the losses really to begin to mount, the investment in Northeast Airlines
eventually did more than any other investment to end FBO’s career at Atlas and sink the
company. Similarly, although Atlas’ investment in the manufacturer of Indian motorcycles was
never mentioned in any of the published profiles of FBO, it sucked millions of dollars out of
Atlas before FBO finally gave up and abandoned it as a complete loss.

It is difficult to avoid the conclusion that Atlas never would have become involved with
Northeast Airlines had it not been for FBO’s marriage to Jackie and Jackie’s friendship with
Earhart. Like Charles Lindbergh, Earhart sought to cash in on her fame as a flier by associating
her name with various airlines, which for their part were eager to have the imprimatur of a
famous flyer as a way of proving to potential passengers that flying was safe. FBO was often
involved in one way or another in Earhart’s ventures (as was, among others, Amelia’s lover Gene
Vidal, a famous athlete who was the father of Gore Vidal and who served as the chief federal
regulator of airlines in 1934-1937). The last of the passenger airlines in which Earhart, Vidal and
their associates were involved had been founded by several New England railroads and
eventually evolved into Northeast Airlines. In 1943, federal regulators ruled that Northeast
Airlines would never be awarded any new routes as long as it was controlled by the railroads.
This created what FBO saw as a “special situation.” Atlas acquired a controlling interest in the
airline from the railroads and installed Jackie on the board of directors. Soon thereafter, the
airline, which had previously served just New England, was awarded a desirable Boston-New
York route.

After 1945, FBO proved that he was still far from finished by making two substantial
investments that performed spectacularly well for Atlas. The resulting successes preserved his
public reputation as a financial wizard well into the 1950s. First, Atlas acquired control of
Convair, a major defense contractor. Second, Atlas took large positions in the stock of several oil
companies. In each instance, FBO proved the validity of the dictum that the best time to buy is
when everyone else is selling. The stock prices of both defense contractors and oil companies
were depressed because of the end of World War Two. In the case of Convair, however, FBO
somehow anticipated the spectacular rebound in the defense industry that soon occurred when
the Cold War began in earnest. In the case of the oil companies, FBO had determined that they

11
owned proven reserves that, even at current prices, were worth more per share than the price at
which their stock was selling. In essence, Atlas was investing in oil itself, taking advantage of a
market imperfection analogous to the one that had prevailed with investment trusts fifteen years
earlier.

5 Howard Hughes

FBO first met Howard Hughes when the latter contacted Jackie out of the blue with an
offer to buy or rent one of the airplanes FBO had acquired for her to use in air races. Over time,
as Hughes’ mental health worsened and he retreated more and more from interaction with others,
FBO survived as one of the few people outside Hughes’ own sycophantic inner circle with whom
Hughes continued to have contact. Many of FBO’s unpublished memoirs are stories of his
dealings with Hughes. They are included here.

6 The Sale of RKO

In 1948, Atlas sold its controlling interest in RKO to Hughes, who proceeded to wreck
the studio.

7 Independent Artists

Even after Atlas sold RKO, FBO stayed interested in movie production through an entity
called Independent Artists. The other major participants in the venture were FBO’s close friend
Rosalind Russell and her husband Frederick Brisson.

8 Revolt of the Admirals

After Secretary of Defense Louis Johnson cancelled the Navy’s “super carrier” program
and focused defense expenditures on B-36 bombers that the Air Force was buying from Convair,
the Navy orchestrated a campaign to discredit Johnson, Secretary of the Air Force Stuart
Symington and FBO. It was pointed out that Johnson had been a director of Convair before
entering government service. It was alleged that FBO had paid for Harry Truman’s 1948
campaign and that Jack Northrop’s “flying wing” design had been unfairly rejected by the Air
Force because Northrop refused to merge his company with Convair. The campaign even
included innuendos that Jackie had engaged in a ménage à trois with Symington and Air Force
General Hoyt Vandenberg. Lengthy Congressional hearings were held. Ultimately, FBO and his
allies outmaneuvered the Navy and left it with a black eye. The affair became known as the
“Revolt of the Admirals.”

9 I Like Ike

FBO and Jackie played major roles in persuading General Eisenhower to run for
President. FBO financed many of the early activities of the unofficial campaign. Jackie traveled
to Paris with the film of the famous midnight rally at Madison Square Garden and was present
when it was screened for the General, then the Commander of NATO – a pivotal factor in Ike’s
decision to run.

12
10 The Sale of Convair

In 1953-1954, Convair became one of the major building blocks of General Dynamics,
and FBO joined the General Dynamics board of directors. This only occurred after FBO had
unsuccessfully explored the possibility that Convair or perhaps Atlas in its entirety would merge
with several of the smaller automobile companies with which Atlas had previously flirted to form
a truly formidable competitor to the “Big Three” of General Motors, Ford and Chrysler.
[Although there were substantial business reasons for Atlas to fold Convair into General
Dynamics, it has to be mentioned that, once again, an Atlas transaction had a side benefit for the
career of FBO’s wife. In 1953, Jackie wanted to become the first woman to break the sound
barrier. To do that, she needed a jet fighter. Convair did not make one. The United States Air
Force was willing to let her use Edwards Air Force Base and lend her the services of Chuck
Yeager as a coach, but, despite her excellent contacts with the top brass, they would not let her
use one of the USAF’s jet fighters. General Dynamics, however, already had a subsidiary,
Canadair, that manufactured the F-86 Sabre. On May 18, 1953, just six weeks FBO and John Jay
Hopkins, the chief executive of General Dynamics, completed their business deal, Cochran broke
the sound barrier flying one of the Canadair fighter jets.]

11 The Sale of Oil and Then a Breathing Spell

Atlas sold its investment in oil at a substantial profit. For some months, Atlas sat on the
resulting pile of cash, while the financial press eagerly waited to see where FBO would invest
next.

12 Floyd Odlum in His Fifties and Sixties

This chapter describes FBO at this stage in career.

PART FIVE: DECLINE AND FALL

1 Hortense Odlum

After divorcing Floyd, Tenney had a number of bizarre marriages and divorces. This
chapter also describes the rest of her tenure as president of Bonwit Teller.

2 Stanley Odlum

FBO’s son Stanley Odlum was intelligent, handsome and personable, but he was never
able to live up to his father’s expectations. At one point, he was hailed in Time magazine as his
father’s up-and-coming protégé, but he never stuck to anything for long, never made a success of
himself, and earned a minor footnote in legal history when he was one of the defendants charged
in the SEC’s first-ever insider trading case. He developed a serious drinking problem. While
still in high school, he killed someone in an automobile accident when he had been drinking.
During World War Two, he flew bomber missions over occupied Europe, was shot down, and
was incarcerated in a German POW camp. At the end of the war, he narrowly avoided falling

13
into the hands of the Soviets. After the war, he was a noted playboy, with several marriages, a
number of romances recounted in the gossip columns, and at least one more serious automobile
accident. Eventually, in 1957, he drank himself to death while still in his early forties.

3 Bruce Odlum

FBO’s son Bruce Odlum was extremely talented, but he also was a spendthrift who flitted
from one mania to another: pianist, harpsichordist, writer, painter, rancher, corporate dealmaker,
moviemaker and real estate developer. He once played tennis against Don Budge at Forest Hills.
He was a licensed pilot. He fell in love with Spanish and Mexican culture. After graduating
from college, he did graduate work in Philosophy but failed to receive his Ph.D because,
although he completed the necessary courses, he lost interest before he finished writing his
doctoral dissertation. His first marriage, to the daughter of a family of flamboyant European
refugees, ended in a messy divorce that was only resolved when FBO hired a private investigator
who caught Bruce’s wife having an affair. As shown by papers at the Eisenhower Library, FBO
constantly hectored Bruce to live within his means and focus on some particular occupation or
profession, but it did not work. Bruce became a drug user, and was given to bohemian excesses
such as trying to cajole his often-naked artist’s model and his second wife into a ménage à trois.
As we will see in a later chapter, Bruce’s life ended as tragically as Stanley’s.

4 A Spanish Affair

One of Bruce’s many ventures, which his father backed financially, was a movie shot in
Spain called “A Spanish Affair.”

5 Uranium

As mentioned above, after Atlas sold its investments in Convair and oil, it sat on the
resulting pile of cash for some months, while the financial press eagerly waited to see where
FBO would invest next. Ultimately, FBO made a huge bet on uranium. A uranium boom was
then underway on the Colorado Plateau because the government was purchasing large quantities
of the mineral for nuclear weapons, guaranteeing high prices and even paying bounties to
encourage domestic exploration. Violating his own dictum that one should always move against
the crowd when investing, FBO decided that Atlas should invest heavily in a swiftly rising
market. Among other things, Atlas bought the claim of the famous uranium prospector Vernon
Pick, paying him with $9 million in cash and a customized airplane. Realizing the risk FBO was
taking, Atlas’ board decided that the investment trust would invest only in proven reserves and
ignore wildcatting. In the wake of this decision, FBO and various partners continued to make
personal investments in wildcatting. “Uranium is the oil of tomorrow,” FBO declared, “and
tomorrow isn’t very far away.” To make sure he had the advantage of the greatest possible
expertise, he placed Edward Teller, the “Father of the Hydrogen Bomb,” on Atlas’ payroll, and
arranged for Teller to profit handsomely on trades in General Dynamics stock. The two men
agreed “not to publicize” the consultant relationship. In fact, I do not believe that the financial
benefits Teller received from Atlas have ever previously been made known.

14
 Within a few years, however, it became clear that civilian demand for uranium was not
going to develop nearly as fast as FBO had believed, the government decided that it had enough
uranium for defense purposes and stopped guaranteeing the price and paying bonuses, and the
market for the mineral collapsed. Atlas and FBO ended up losing heavily. FBO had renamed
Pick’s claim the “Hidden Splendor Mine.” It became known instead as “Odlum’s Hidden
Blunder.”

6 Howard Hughes Revisited

FBO’s relationship with Hughes was complicated, to put it mildly. As mentioned earlier,
in 1948 Atlas sold its controlling interest in RKO to Hughes. Atlas made a healthy profit on the
deal, as Hughes paid much more than Atlas had originally paid, but, still, at the time, many saw
the transaction as a sweetheart deal for Hughes. It was speculated that Atlas was currying favor
with Hughes because it wanted TWA, which Hughes now controlled, to buy airplanes from
Convair.

As was also mentioned earlier, once the increasingly erratic Hughes gained control of
RKO, he proceeded to wreck the studio. Eventually, to extinguish the litigation commenced by
disgruntled minority stockholders, Hughes took the business private in a transaction that was
structured in such a way that a public company survived that owned nothing except cash and a
huge tax loss carry forward that could be used to shelter future income (if there was any). By
now, FBO had sold Convair and was anticipating that Atlas would soon begin to reap huge
profits from its investment in uranium. As a result, he coveted the tax loss carry forward, and
Atlas engaged in a long, heated battle with Hughes for control of the shell public company.
Eventually, Atlas prevailed, completing a transaction in which it exchanged newly issued shares
of Atlas stock for all of the shares of the shell public company. Ironically, this exchange resulted
in Hughes owning a larger percentage of Atlas’ stock than Odlum did.

While this was happening, the interests of FBO and Hughes began to intersect at both
General Dynamics and Northeast Airlines. These subjects are explored in detail in the next two
chapters. As we will see, in each instance, the relationship with Hughes caused near-fatal
damage to the entity in which Atlas was interested. The leading historian of General Dynamics
has explicitly wondered why FBO, who had more experience with Hughes than perhaps any
other corporate executive in America, did nothing to warn his associates against the dangers of
dealing with the man. The answer may well be that, for years leading up to his 1960 retirement
from Atlas, FBO was hoping and actively negotiating with Hughes to become the highly-
compensated manager of the latter’s sprawling business interests.

7 The Near Destruction of General Dynamics

The Fifties were a time of both great promise and great peril for aircraft manufacturers
and airlines. It was clear that commercial passenger jets were coming, but no one was sure how
quickly and whether they would be used on just the longest routes, leaving shorter routes to be
served by propeller planes. What everyone knew for sure was that building and buying
passenger jets would involve unprecedented expenditures of capital. Profits awaited the

15
companies that made the right choices at the right times, while bad choices and bad timing could
spell doom.

As it turned out, General Dynamics made all the wrong choices at all the wrong times.
Among other things, it entered into a contract to develop passenger jets for Hughes’ TWA that
prohibited General Dynamics from dealing with any other airline until it was too late to win their
business, but that did not require Hughes to pay for the planes until they were actually delivered.
(For tax reasons, Hughes planned to have his personal company buy the planes and then lease
them to TWA.) The cost of acquiring a fleet of passenger jets exceeded even Hughes’ huge
personal resources, but he was unable to accept the loss of control that would result from
borrowing the money from banks. Even when it placed his whole business empire in jeopardy,
he delayed and delayed. Things deteriorated to the point that thugs hired by Hughes invaded the
General Dynamics factory and seized airplanes on the production line to prevent them from
being completed and delivered, because that would trigger Hughes’ obligation to pay for them.
Eventually, due in large part to its dealings with Hughes, General Dynamics suffered the largest
loss that had ever been sustained up to that time by any American company.

8 The Disaster at Northeast Airlines

Northeast Airlines ended up being an even bigger financial disaster for Atlas than
uranium. The airline was a perpetual money loser that required constant infusions of cash from
Atlas. Rather than cut Atlas’ losses by dumping the investment for whatever Atlas could get,
FBO decided to double down. Having previously expanded its reach southward to New York,
the airline next went after a coveted New York-Florida route. The route was awarded in 1956,
and service was inaugurated in January of the following year. In the years leading up to this
event, however, FBO made a serious strategic blunder, deciding to buy a new fleet of state-of-
the-art propeller planes to service the route. By the time the planes were delivered, it was
already clear that they were white elephants, and that the new route could not be made to pay
unless Northeast acquired a fleet of passenger jets. To pay for them, Atlas had to pour even more
money into the troubled airline. When Northeast still did not perform up to FBO’s increasingly
wish-driven projections, Atlas finally began to look for a buyer as a way of stopping the
bleeding. At this late date, however, Hughes emerged as the only interested party. The other
major airlines had opposed Northeast’s efforts to break into the big time by securing the right to
carry passengers between New York and Florida. The potential involvement of Hughes only
served to fuel their opposition. It was not until 1962 that Hughes succeeded in getting control of
Northeast, and by then it was much too late to save either FBO’s job at Atlas or the value of
Atlas’ stock.

9 Congress, Cosmetics and the Mercury 13

This chapter begins by describing the unsuccessful attempt that Jackie made in 1956 to
win election to Congress from California’s Riverside County. With FBO sparing no expense
(Jackie spent more money on her primary campaign that year than any other Congressional
candidate in California), Jackie won a tough Republican primary. Because Riverside County had
been a staunchly Republican district, she anticipated an easier time in the general election, but
instead she was defeated by Dalip Singh Saund, a Sikh with a Ph.D. in mathematics from USC

16
who became the first Asian-born member of Congress. As the campaign slipped away from
Jackie, she increasingly lost her cool, starting to call her opponent “That Hindu” and even going
so far as to suggest that, with his dark skin, he would not be able to work with Southern
Congressmen. Some years later, she was still so bitter that, in an oral history, she descended into
an even more extreme racist diatribe when describing her defeat.

One component of the self-propagated mythology that grew up around Jackie was that
she was a successful entrepreneur in her own right. She did in fact own a string of beauty salons
and found a cosmetics line that is still being marketed with her name today. Based on documents
found at the Eisenhower Library, however, this chapter also shows that, at the time it was being
touted as extremely successful, Jackie’s business was losing money and being subsidized by
FBO, and that ownership of the business in fact passed to others years before FBO and Jackie
stopped claiming publicly that she was the owner.

A number of books have been published in recent years, recounting the previously-little-
known story of how, in 1960, twenty female pilots underwent the same battery of physical tests
as male astronauts. Thirteen of them passed, and they have been dubbed the “Mercury 13.” The
tests were performed at FBO’s expense by Dr. William Randolph Lovelace II. Lovelace was the
chief physician for NASA and also a close friend of FBO and Jackie. (Jackie first met Lovelace
in 1937 when she was working as a test pilot for Alexander Seversky at Wright Field in Ohio and
he was there at the same time testing high altitude breathing masks. Three years later, while
serving on the committee that selected the annual recipient of the Collier Trophy for
contributions to aviation, Jackie was the driving force behind the committee’s decision to award
the trophy to a group that included Lovelace. After World War Two, FBO was an important
donor to the “little Mayo Clinic” that Lovelace founded in Albuquerque, New Mexico.) Jackie
tried to run the Mercury 13 the same way as she had run the WASPs during World War Two.
Some of the women who participated in the program believe that, having already been the first
woman to break the sound barrier, Jackie honestly hoped to be the first woman into space,
despite the fact that she was now 54 years old. In any event, either because Lovelace finally
disabused her of the notion that she could be an astronaut, or because it became apparent that the
press was paying no attention to Jackie and instead adopting the attractive, 29-year-old Geraldyn
“Gerry” Cobb as the public face of the Mercury 13, Jackie suddenly lost interest in the program.
When Congress held hearings on the advisability of having female astronauts, Jackie gave
testimony that helped insure that the program would be killed. In the recent books about the
Mercury 13, Jackie Cochran is universally portrayed as a villain in the story.

10 Retirement from Atlas

In 1960, shortly after his 68th birthday, FBO resigned as chief executive of Atlas and
even as a member of the company’s board of directors. In his unpublished memoirs, FBO
insisted that the only reason he took these steps was because he had accepted an offer from
Hughes to take over management of the latter’s business affairs. Whether this was the sole
reason is impossible to know. The fact that FBO resigned even as a member of the board of
directors does suggest that he was preparing to take another job and wanted to avoid any conflict
of interest. If a coup of some sort had brought about FBO’s resignation as chief executive, it
would be a sign of unusual hostility (and unusual strength on the part of the insurgents) for the

17
outgoing chief executive to be forced to relinquish even his board seat. On the other hand, it is
clear that, for all of the success that Atlas had enjoyed during the first thirty years of its
existence, investors had begun to grow restless as losses became the norm in the late 1950s.
Thus, it is possible that the other directors had been pressing FBO to step aside.

Another unknown variable in the equation is Hughes himself. As mentioned previously,

Atlas’ acquisition of the shell of RKO had resulted in Hughes being the single largest individual
stockholder of Atlas, and perhaps he pressed for FBO’s removal. By himself, however, he did
not own enough shares to have brought about such a result, and there is no evidence of any
attempt on his part to solicit support from other stockholders for a move to oust FBO.

Certainly, David Stretch, whom FBO had hired away from Simpson, Thacher & Bartlett
and anointed as his eventual successor, was eager to take the reins. He hurried to put his own
stamp on the company and did little to honor the contributions of the founder, and he and FBO
were soon squabbling in their private correspondence. In 1962, after Northeast Airlines was
finally sold, Atlas gave up its status as an investment trust, in recognition of the fact that its
uranium properties were virtually the only assets it had left. It eventually went bankrupt under
the weight of staggering environmental liabilities. (A uranium mill that Atlas owned near the
Colorado River just outside Moab, Utah is perhaps the worst toxic waste site in the United
States.)

Regardless of exactly why he left Atlas when he did, it is clear that FBO believed that he
had an agreement with Hughes to take over management of the latter’s business affairs. Indeed,
papers at the Eisenhower Library and FBO’s unpublished memoirs make clear that, for more
than a year after his retirement from Atlas, FBO was actively involved in various aspects of
Hughes’ affairs, including managing the litigation over control of TWA in which Hughes was by
then embroiled. (Hughes was being represented in court by Chester Davis, a “bulldog” litigator
from Simpson, Thacher & Bartlett whom Hughes had retained on FBO’s recommendation.)
Unfortunately for FBO, whatever his understanding with Hughes might have been, there was
nothing set down in writing and signed by Hughes, and by the Summer of 1961 it became clear
that Hughes did not intend to formalize the arrangement or to pay FBO the compensation he says
he had been promised.

Eventually, FBO ceased his efforts on behalf of Hughes and began to contemplate suing
him. His papers at the Eisenhower Library include a draft complaint, but it was never filed.
Instead, FBO and then his friend Ed Weisl engaged in protracted negotiations with a Beverly
Hills attorney retained by Hughes. Eventually, in 1965, these resulted in a settlement agreement
pursuant to which Hughes paid FBO $350,000 over a period of five years.

Most likely, FBO simply concluded that the 1965 settlement agreement was the best
result he could obtain. Certainly, he indicated as much in a letter he sent to Weisl, thanking him
for his help. As has been the case at several other points in this narrative, however, an alternative
explanation has been published which involves scurrilous allegations about Jackie. Until Hughes
fired him in 1957, Noah Dietrich had been the manager of Hughes’ business affairs. In 1972,
after the Wall Street Journal published an article about the many difficulties then besetting
Hughes, Dietrich wrote a letter to the editor of the paper in which he stated that Hughes’ “attempt

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to induce Floyd Odlum to take over my duties and responsibilities was unsuccessful but the
details would be worth printing someday.” Dietrich died ten years later without saying anything
more on the subject. In a book about Hughes that he did not publish until 2005, Darwin Porter
claimed that he had interviewed Dietrich before the latter died, and that Dietrich had told him
that Jackie slept with Hughes, that detectives who worked for Hughes discovered that she also
had an affair with Eisenhower, and that FBO settled his case against Hughes for so little because
Hughes threatened to go public about Jackie’s affair with Ike unless FBO relented.

11 Federal Resources and the Failure of “A Spanish Affair”

Although FBO had for many decades commanded Atlas’ large pool of capital, he had
never paid himself more than $100,000 a year. He had kept much of his wealth in the form of
Atlas securities (including highly leveraged warrants). By the time he retired, the decline in
Atlas’ stock price had wiped out most of the value of his stake in the company.

FBO was also the single largest participant in Atlas’ modest pension plan. Realizing he
would need some business outlet in retirement, and retaining his enthusiasm for uranium, Odlum
agreed to swap what he had coming under Atlas’ modest pension plan in return for Atlas’
holdings in Federal Resources, one of the many uranium companies in which Atlas had invested.
The swap left FBO as the largest single stockholder of Federal Resources, and, sixteen months
after leaving Atlas, Odlum came out of retirement to run the company as “executive chairman.”
In the sad last chapter of Odlum’s disastrous bet on uranium, Federal Resources failed, and
Odlum’s financial stake in the company (which he had taken as a substitute for his pension from
Atlas) was wiped out.

Meanwhile, “A Spanish Affair” completed the destruction of FBO’s net worth. Bruce and
his father had entered into a one-sided distribution agreement with Paramount pursuant to which
FBO had in essence guaranteed Paramount that box office receipts would cover the latter’s costs.
When the movie flopped, FBO had to make good on the guarantee. Even with assistance from
Weisl, who was a power at Paramount, FBO was required to make a substantial payment to the
movie company. What little remained of the nest egg he had accumulated for retirement
disappeared in this latest disaster.

12 The Atlas Missile

The Atlas missile was built was Convair. The program started during the years when
Atlas controlled Convair, and the name of the missile was taken from the name of the investment
trust. For several years when the government stopped funding the program, FBO instructed
Convair to continue the work at its own expense.

Political columnist Drew Pearson was FBO’s most persistent critic, exposing what he saw
as his corrupt relationship with the Truman Administration and helping to defeat Jackie in her
1956 Congressional race. Yet, when the Atlas missile carried American astronauts into space,
Pearson gave credit where credit was due. In a column published in March 1962, he praised
FBO for having been indispensable to the development of the missile.

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13 The Final Years

Having sold the apartment at River House, FBO and Jackie were now retired at their
ranch in Indio, California. As they had done for decades, they entertained a steady stream of
notable figures from the worlds of politics, science and entertainment, as well as Air Force
officers such as Curtis LeMay and Vandenberg. Former President Eisenhower wrote his
memoirs in one of the bungalows at the ranch. On one occasion, the Secret Service was
nonplussed when Jackie, Ike and President Johnson drove off together without any escort.

FBO continued to putter with investment ideas. One frequent visitor to the ranch in the
late 1960s was T. Townsend Brown, a “mad scientist” who was then living as a recluse by the
nearby Salton Sea. Seen by some as a latter-day Nicola Tesla, Brown made major advances in
what mainstream science classifies as “ionic wind” technology, but Brown himself believed he
was on the verge of discovering “anti-gravity.” Posthumously, Brown has developed a cult
following, and his more wide-eyed acolytes believe that he discovered the key to UFO
propulsion. In April 1967, FBO arranged for Brown to demonstrate an “ionic wind” device at
the ranch to a group of military officers and scientists that included LeMay and Teller. One UFO
conspiracy theorist goes so far as to assert that UFOs had recently shown that they were capable
of shutting down America’s ICBM silos, and that the gathering at FBO’s home was in fact the
top-secret meeting at which the government discussed this alarming event. FBO arranged for a
company in which he was an investor to license technology from Brown, but the company went
bankrupt in 1970, and nothing ever came of the project. Even this, however, has given rise to
conspiracy theories. One of Brown’s children claims that the technology taken from her father
included ideas central to the subsequent development of “stealth” aircraft. Melding this with the
earlier allegations that FBO was involved in subverting the development of Northrop’s “flying
wing” aircraft design, there are those who continue to view FBO as the super-rich front man for a
long-running government effort to seize key defense technologies and develop them in secret.

For the reasons that have already been explained, however, FBO was in fact on the verge
of exhausting his financial resources. Through Weisl, Jackie asked for a high level job in the
Johnson Administration, going so far as to list the countries to which she thought she would
make a good Ambassador. Although she was spared being told this, the suggestion was
dismissed with contempt at the State Department.

By the 1970s, the only significant asset FBO had left was the ranch itself, and this was
encumbered by the ever-growing mortgage placed on it by Baird. Baird had always been an
extremely accommodating creditor, but, beset by his own financial problems, he had securitized
FBO’s debt, selling it to investors who were not as flexible as he had been. As the years passed,
FBO, who was now frequently bedridden and unable to manage a development project himself,
became increasingly desperate to find someone who would develop the property on terms that
would allow the debt to be paid off while leaving something for FBO and Jackie to live on. (As
early as 1964, in the settlement discussions with the Beverly Hills attorney retained by Hughes,
FBO had suggested that Hughes buy and develop the ranch.) FBO’s discussions with potential
developers appear to have been complicated by the fact that Bruce, to whom FBO had deeded a
small portion of the property, wanted to be actively involved in the project. Ultimately, either
because there was no viable alternative, or because Bruce would not cooperate otherwise, FBO

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felt compelled to enter into a contract with a group of investors that called for Bruce to direct the
development.

Even in his twilight years, FBO still knew how to generate publicity. The planned
development received extensive coverage in the Los Angeles Times, and a lengthy profile of
FBO appeared in the New York Times, which somehow managed to put a positive spin on the
fact that, to accommodate the development, FBO and Jackie were moving out of their beloved
ranch house and into a much smaller dwelling across the street. Even with all the fanfare,
however, the project turned into a complete disaster. Whether as a result of spiking interest rates
or some inadequacy on Bruce’s part, not a single home in the development was sold, and the
ranch was lost in foreclosure. In late 1974, shortly after a final discussion with his bedridden
father, Bruce went into the laundry room of the bungalow he shared with his second wife and
committed suicide by shooting himself in the head.

Less than two years later, FBO passed away. The news made the front page of the New
York Times, but thereafter FBO fell out of public consciousness. Jackie moved out of the last
home she had shared with FBO and into an even smaller dwelling in Indio. She passed away in
1980.

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