Future Forum: Guilt, Innocence, and the Death Penalty 
About a Boy 
Shrinking Giant
Once upon a time, the Matador Ranch was a cattle empire of more than a million acres. Today its herds graze a mere 128,000. That transformation is a tale of modern Texas.
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The Matador was profitable under the Scots’ strict management, especially during World War II, when beef prices rose and the company’s income skyrocketed. So it was surprising when rumors circulated in 1950 that the ranch might be sold. “Taxation is what finally got them,” says historian William Pearce. “They were taxed in the United States and in the United Kingdom too. So I think they just gave up the ghost.” In June 1951 the investment firm Lazard Brothers (now Lazard Frères) offered $23.70 per share for all of the 800,000 outstanding shares of the Matador Land and Cattle Company. The Scots accepted the offer, and Lazard put the ranch into voluntary liquidation, forming fifteen corporations and dividing the land and cattle among them. In 1953 Fred Koch’s Rock Island Oil and Refining Company bought three of them, the Wolf Creek, TeePee, and Rodatam (“matador” spelled backward) corporations, the latter of which included the Scots’ headquarters. The rest of the Matador was sold to groups and individuals and divided into many small ranches and tracts sold to cotton and wheat farmers. The Scharbauer Cattle Company of Midland bought some of the land that had once been part of the XIT, and the State of Texas bought land in Cottle County and turned it into a game preserve.
Fred Koch (pronounced “Coke”) was born in Quanah in 1900 and grew up around historic ranches like the Four Sixes, the Waggoner, and the Pitchfork. But buying the Matador wasn’t just a sentimental decision for Koch, who also owned ranches in Montana and Kansas. Strong-willed and independent, he was a shrewd businessman who carefully analyzed everything before he spent a penny. His father, Harry, was a Dutch immigrant who became a pioneering newspaper publisher in Quanah.
The younger Koch attended Houston’s Rice Institute (now Rice University) for two years and earned a degree in chemical engineering from the Massachusetts Institute of Technology. He made his fortune when he and another inventor came up with an improved process for making gasoline out of crude oil.
Fred Koch’s mantra, drilled into every employee, was that change wasn’t only good, it was necessary to survive. That philosophy was fine in a technical business like oil and gas, but it was foreign to a traditional industry like ranching. Sterling Varner, who was Koch Industries’ president from 1974 to 1986 and then its vice chairman for three years, recalls that Koch was always experimenting on his ranches, trying different kinds of feed, grass, and irrigation techniques.
After Fred Koch died in 1967, his son Charles took over Koch Industries and transformed it into a multibillion-dollar conglomerate. With annual revenues of more than $30 billion, Koch Industries is the second-largest private company in the country, behind agriculture giant Cargill. Its main business is refining oil and operating extensive networks of pipelines, but it is also one of the nation’s top producers of beef. Beyond the Matador, Koch has a major presence in Texas, with two refineries in Corpus Christi that handle more than 325,000 barrels of crude a day, a pipeline system that runs from Corpus Christi to San Antonio, Austin, Waco, and Dallas—Fort Worth (the company is the largest supplier of jet fuel to the Dallas—Fort Worth International Airport), feedlots in Hale Center and Lubbock, and about four thousand employees.
Koch is a private company in more ways than one, with a long history of keeping a low profile and shunning attention. Recently, though, it was catapulted into the public eye by an extremely bitter family feud. Two of Fred Koch’s four sons, William and Frederick, sued their brothers Charles and David, who own most of Koch Industries and are, respectively, its CEO and executive vice president. (David, who is William’s twin, lives in New York City, where he and his wife recently bought Jacqueline Kennedy Onassis’ Fifth Avenue apartment.) In their suit, William and Frederick said that, when they sold Charles and David their stake in Koch Industries for almost $1 billion in 1983, their brothers misled them about the value of some Koch assets and that they are owed billions more. The long fight got so nasty that William accused his brothers of everything from racketeering to stealing oil from an Indian tribe. In June a jury in Topeka rejected William and Frederick’s claim, but William vowed to appeal.
The war between the Kochs seems far removed from the Matador, where Charles and William worked in the summers when they were growing up. Although the Kochs are absentee owners—unlike the proprietors of a lot of historic Texas ranches, who lived on the land and became the equivalent of Texas royalty—they aren’t completely objective about the Matador. Sterling Varner says that Koch’s top brass has considered selling from time to time. “Every once in a while they’ll say these ranches aren’t returning a very good profit and we ought to sell them. But Charles always puts the price up so dadgum high he’ll never sell,” Varner says with a laugh.
Like his father, Charles Koch expects the ranch to be run as a business. “We’re always focused on the bottom line,” says Bob Kilmer. The ranch is profitable when the weather and the cattle market cooperate, he says, but in keeping with the company’s super-private nature, he won’t divulge any figures. The Matadors are encouraged to come up with new ideas for increasing profits. For instance, several of them thought up the idea of rotating cattle through a series of paddocks to keep the grass from becoming overgrazed, and they can fine-tune the project as needed. “Our guys have a lot of autonomy and decision-making rights,” Kilmer says, “and they’re accountable for their decisions.”
In the early part of the century, the ranch regularly employed more than one hundred men and ran about 70,000 head of cattle; now it has only eight full-time employees and runs about 7,500 head on its 128,000 acres and 75,000 acres it leases. Like many ranches, it contracts out most of its fencing work, windmill repair, and branding to cowboys who are basically day laborers. “It’s nothing like it used to be when I started working here,” Kilmer says. “We did everything ourselves back then. Basically our guys today do full-time cattle care.” That has allowed the Matador to double its ratio of cattle to men from about 500 to one in the early eighties to around 1,000 animals per employee now.
The Matadors keep trying new ideas. They’ve introduced new grasses to complement the native grasses on the ranch. Instead of building concrete watering troughs, they’ve found a more economical and efficient trough made from huge rubber tires originally used on mining equipment in Arizona. And they’ve put up electric fencing rather than the more-expensive barbed wire for some of the pastures inside the ranch’s perimeter. “That goes against the grain of some dyed-in-the-wool cowboys,” says Kilmer, “but at some point economics has to come into play.”
Until recent decades the Matador’s cattle had a well-deserved reputation for wildness. There were so many dense thickets of mesquite brush and shin-oak in the draws that it wasn’t uncommon for cowboys to find ten-year-old “outlaw” cattle that had never been branded. Much of the brush where the cattle used to hide has been cleared, and the once-wild cattle are pretty docile now, although Kilmer says that mavericks still manage to evade roundups. The ranch occasionally uses a helicopter for rounding up cattle and is using dogs for the first time in one area.
But the biggest change on the Matador is the cattle themselves. Historically, the ranch ran Herefords, which Murdo Mackenzie had worked so hard to improve when the Scots owned it. In the mid-eighties, though, the Matadors noticed that their Herefords weren’t fetching top prices. The main problem with the Matador cattle was that the meat wasn’t marbling, so after careful research, the ranch started cross-breeding its Herefords, first with Brahman bulls, then with Black Angus. “We literally bought Angus by the truckloads,” Kilmer says. “Within five years we turned our cow herd black.”
Although its focus is on producing beef, the Matador is diversifying in one area: It’s allowing a lot more hunting. Mule and white-tailed deer, quail, turkeys, and doves are plentiful, so the ranch is leasing more of its acreage to bird hunters and offering guided deer hunts.
Kilmer drove me out to one of the corrals to watch a crew branding the black calves born this spring. Branding is one thing that hasn’t changed much at the Matador, except that now the ranch hands heat the irons in a propane burner instead of a campfire. As the cowboys seared the V brand into the hide and a sweet, smoky smell filled the air, a hundred years seemed to fade away. One part of the Matador legend, at least, lives on.
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