Most every workday, after lunching at his favorite corner table in the Ramada Club, George R. Brown walks from the lobby of Houston’s First City National Bank Building, across Main Street, and into the old Lamar Hotel, where he takes his afternoon nap. Even at the age of 78, his eyesight failing badly, he moves through the downtown crowd in slow, purposeful strides, his back erect. Short, slim, white-haired, and with striking, arched eyebrows, he might easily be mistaken for a man of only ordinary distinction—a retired congressman, perhaps, or the name partner in some regionally successful accounting firm.
In fact, George Brown was once widely recognized to be the most powerful man in Texas. Some ventured that at one time he was the most powerful man in the entire nation, and, by extension, the entire world. Even now, despite his age and declining vision, many people think he remains the most potent individual force in the politics and economy of this state and many others.
The hotel suite where Mr. Brown will nap is numbered 8F; it is a place that should be known as one of the “secret” capitals of Texas, a true historical site. There, George Brown and his late brother Herman Brown, co-founders of Brown & Root, used to meet with the likes of the great Jesse H. Jones, builder, publisher, financier, New Deal government lender, and the reigning “Mr. Houston” for over 50 years; Judge James A. Elkins, Sr., a remarkable banker-lawyer often referred to in those days as “the secret government of Texas”; Gus S. Wortham, founder of the largest insurance company in the South; and, later, Lyndon B. Johnson, longtime beneficiary of the Brown political largesse and President of the United States.
These men, who became known to themselves and to other prominent people as the “8F Crowd,” called the shots on most major business and political developments in Texas during the Thirties, Forties, Fifties, and much of the Sixties. They would gather in 8F to relax—to drink and play poker—but also to talk politics, exchange ideas, make business decisions, and choose the candidates they would support for public office. (“Lyndon,” one or the other would reportedly command, “go fix me a scotch.”) Though each member of this all-male crowd was a strong-willed individual, they were, at the same time, a cohesive, like-minded group. Their blessing was the blessing of “The Establishment.” Their rule was a virtually unchallenged and—they would emphasize—very “civic-minded” gerontocracy.
Though hardly the hive of activity it once was, 8F still bears the vestiges of that era. On the walls and around the suite are dozens of plaques and personal mementos, including a large picture, taken in the living room, that features the Browns, Jesse Jones, and other members of the 8F Crowd. Otherwise, the place where George Brown naps is a rather typical old hotel suite: two-bedroom, three-bath, with a formal dining room, a living room, kitchen, and hall, permanently rented to and paid for by Brown & Root. “Actually, 8F is probably one of the least attractive of our private suites because it’s never been remodeled,” says Lamar Hotel manager Edward C. Davis. “But that’s the way Mr. Brown wants it. He says, ‘Don’t touch it. Just leave everything the way it is.’ ”
That sentiment bears more than a little irony, since of all his contemporaries, George Brown has recognized most clearly that the old 8F days, however memorable, have definitely passed. The government, economy, and population of Texas have grown too large and become too diverse to be controlled by a hotel-room clique, no matter how sagacious or civic-minded. This is not to say that everything now operates openly, just that private individuals and a mere handful of men cannot attain the kind of near-total economic and political dominance that was possible years ago. And no one knows this better than George R. Brown. “You know,” he said in a recent interview, “all that power they say I have is just a myth.” That, too, may be going a bit far, but the essential question remains: now that Texas has become a modern, urban state, the third-most populous in the nation, who does wield the greatest power and how do they wield it?
A popular method of answering this sort of question is to take a poll asking for the names of “The Ten Most Powerful People in Texas.” However, in an informal survey, more than 30 prominent Texans found themselves hard put to come up with any such definitive list. Significantly, though, several names did keep recurring. They were:
• George R. Brown
• Retired American General chairman Gus S. Wortham
• John Connally
• University of Texas Board of Regents chairman Allan Shivers
• Houston Post publisher Oveta Hobby
• First International Bancshares chairman Robert Stewart
• Republic of Texas chairman James Aston
• Texas Instruments founder and former Dallas mayor Erik Jonsson
• Democratic Party chairman Robert Strauss
• Real estate developer Trammell Crow
• Oilman Ed Cox
• First City Bancorporation chairman James Elkins, Jr.
• Banker-developer Walter Mischer
• Former Special Prosecutor Leon Jaworski
A number of younger men also received frequent mention as “up and coming” power holders. Among the most notable of this group were Texas Commerce Bancshares chairman Ben F. Love, Riviana Foods chairman William H. Lane, and Hunt Oil Company heir Ray Hunt.
Beyond this nucleus, the names mentioned encompassed a wide range of corporate executives, entrepreneurs, government officials, labor leaders, and even Baptist ministers and open-heart surgeons. Not too surprisingly, the majority of people nominated as “powerful” live in Houston; Dallas power was often described as “up for grabs” on a local level, while most Dallas potentates—with a few significant exceptions—were judged “not in the same league” as their Houston counterparts. Power brokers in other Texas cities were scarcely mentioned, although the name of San Antonio contractor H. B. Zachry did come up several times. At the same time, it was consistently pointed out that many of the state’s most influential citizens—Wortham, Hobby, and Jonsson, for example—are now over 70 years old, and that while they retain considerable potential power, they have generally withdrawn from the very active political and economic roles they once played.
To some extent, these results may reflect the enduring corporate legacy of Houston’s old 8F Crowd and/or what many see as a “power vacuum” in the upper echelons of the Texas Democratic Establishment. But they also may show how power has become diffuse and diversified since the end of World War II. In fact, as many of the people contacted in the poll pointed out, it has become extremely difficult to define just what the term “power” means today. Does it simply imply having more money than other people or does it also entail the ability to control votes and public opinion? Is someone powerful just because other people think he is? And what about people who possess special knowledge or technical skill in certain critical areas? One popular Texian notion is that power implies the ability to “get things done”—usually in business and politics—whatever obstacles there may be. But even this definition is vague. Does the ability to get things done in Houston necessarily translate into the ability to get things done in Diboll? How can a Houston power broker be compared, for example, with Arthur Temple, Jr., from Diboll, who owns a controlling interest in Time, Inc.? And finally, is mere ability to do things enough? Particularly among the younger generation of powerful Texans, the issue is also whether they have the “will” to use their power. Potential power, in other words, may be no power.
There are also some social and historical complications. Prior to World War II, economic power generally dominated political power in Texas, which, in turn, usually held sway over special types of power like labor power and religious power. This is still essentially true, but in recent years groups whose power is rooted in the political process (labor unions, minorities, women, environmentalists) have been sapping power from the state’s conservative economic elite. The actual dimensions of their gains is a subject of endless debate, but it is clear these newly franchised groups have at least established their political strength, as the election of Fred Hofheinz as mayor of Houston, the defeat of San Antonio developers in the recent aquifer dispute, and the defeat of the Trinity Canal and other recent Dallas political developments have shown.
At the same time, however, what might be called Big Corporate Power has been extending and strengthening its influence. Big Corporate Power is the highly structured, intricately interwoven brand of economic power held in and wielded through Texas’ major banks, corporations, and law firms. These institutions do not just provide fat paychecks for wealthy and potentially powerful executives. They are also our major employers, our major taxpayers, our major product providers, and, alternately, our major troublemakers and civic benefactors. In short, the ascendancy of Big Corporate Power is perhaps the central fact of our postwar economic and political lives. The postwar boom, accelerated recently by the formation of multi-bank holding companies, has displaced older, stereotypically Texian types of power like that of the landed ranching families, the oil-rich wildcatter, and the free-wheeling entrepreneur. Many members of these family groups still retain considerable wealth and influence, but they have gradually become joined with—and in many cases, subordinate to—the Big Corporate structure. Meanwhile, the relocation of national corporations in Texas and the growth of home-based companies have made the dynamics of power within the Big Corporate world more and more complex. The result has been less power to relatively independent personalities like the Murchisons and the Marcuses and more power to institutionally oriented power teams like those centered around the great Dallas banks and the family and corporate descendants of the 8F Crowd.
One of the best ways to make sense of all this is to examine the overall pattern of connections, or “interlocks,” between the state’s largest corporations and bank holding companies. Unfortunately, this approach has been so abused by “investigative” journalists and polemical sociologists that the most useful insights it provides are often overlooked. It is wrong to assume that every director or board of directors always has an effective say in the operation of a particular company. And it is just as wrong to assume that an interlock between two corporations or between a corporation and a bank necessarily constitutes evidence of a dark conspiracy or antitrust violations. Big corporations need to do business with big banks because small banks generally do not have adequate capital for their enterprises. And if it so happens that the executives or directors of at least five oil and gas companies sit down at the same table every time Houston’s First City Bancorporation holds a board meeting, they can even more easily get together at a men’s luncheon club or on the golf course. Still, a look at the relationships between the twenty largest Texas-based corporations and the state’s seven billion-dollar bank holding companies can reveal a great deal about who wields power in Texas, provided a sense of history, social context, and actual business practices are kept in mind.
For example, it is immediately apparent that Big Corporate Power in Texas arranges itself along a well-defined Houston-Dallas axis. Nineteen of the twenty largest Texas corporations and six of the seven bank holding companies with assets over $1 billion are located in either Houston or Dallas. Ten of the twenty largest Texas corporations, including Shell and Tenneco, the first and second largest, have their headquarters in Houston. Nine of the twenty largest corporations, including the third, fourth, fifth, sixth, and seventh largest, are based in Dallas. The Tandy Corporation, the state’s twentieth-largest corporation, is the only one of the top twenty not based in one of these two cities; its headquarters are in Fort Worth. Nearly all these major corporations are “linked” through a common director to one of the state’s billion-dollar bank holding companies. Six of these billion-dollar banks have their main bank in Houston or in Dallas; the other is located in Fort Worth. In the past five years, as these bank holding companies were formed and began acquiring other banks, they made the Houston-Dallas axis even more solid. Large Houston banks like Houston National now are part of Dallas-based holding companies, and vice versa. As Robert Steward, chairman of the state’s largest holding company, First International Bancshares, puts it: “The holding companies have brought the state together. I’m now down in Houston frequently and I have an interest in the city I never had before.”
What may not be so readily apparent from simply charting these interlocks is that much more Big Corporate Power emanates from Houston than from Dallas. For example, although the numerical breakdown of the state’s twenty largest corporations is about even between the two cities, the ten corporations based in Houston have combined annual sales of roughly $20.5 billion, while the nine corporations based in Dallas have yearly sales of $15.8 billion. Houston also claims more Big Bank money and more total bank deposits than Dallas. Dallas, with the state’s two largest billion-dollar bank holding companies, First International Bancshares and Republic of Texas, counts total Big Bank assets of about $10.2 billion. Houston, with four of the state’s billion-dollar bank holding companies, has total Big Bank assets of nearly $11 billion. The case for Houston’s predominance as a center of power finds even more support when factors like population growth and economic diversity are considered. Not only is Houston already larger and getting larger faster, it also claims solid bases in energy, agriculture, and manufacturing, and the third-busiest port in the nation. Landlocked Dallas, with so much of its business centered around retailing, insurance, and light technology, is not nearly so well blessed.
The deciding factor, however, may well be Houston’s giant law firms (“Empires of Paper,” TM, November 1973). Houston boasts three of the six largest law firms in the country—Vinson, Elkins, Searls, Connally & Smith; Fulbright & Jaworski; and Baker & Botts. Each now employs about 200 lawyers. Three other smaller Houston firms—Andrews, Kurth, Campbell & Jones; Butler, Binion, Rice, Cook & Knapp; and Bracewell & Patterson—also rank among the largest in the country. Neither Dallas nor any other city except New York has such a formidable legal armada.
The role these big firms play as coordinators, executors, and brokers of Big Corporate Power can hardly be overestimated. In a state where power is seen as the ability to “get things done,” they are the place to start. Twelve of the twenty largest corporations in Texas, including at least two based in Dallas, are represented fully or in part by one of the big Houston firms. So are hundreds of other important Texas and national companies. Besides handling every conceivable corporate legal problem, the Houston firms exercise hefty political clout, especially in state government. Their power may be largely derivative—that is, it may originate with their Big Corporate clients—but the lawyers are often the actual power wielders, particularly when power involves getting things done by or through government. Seldom, however, do the partners in the big firms stoop to take so visible a role as public office. Instead, they operate in an unseen way as mediators between their clients and those already in office. They also screen and approve political candidates, allowing—or denying—them access to the true sources of wealth, their Big Corporate clients.
However, the greatest source of power for some of the big Houston firms—and a real key to their role in the overall structure of Big Corporate Power—is their relationship with banks. In Houston, unlike in other cities, the law firms dominate the banks. The most notable of these arrangements involves Vinson, Elkins and First City Bancorp; and Fulbright & Jaworski and Southwest Bancshares. Baker & Botts, the third largest of the Big Three Houston firms, has great influence over many mid-sized banks. In these cases, the power exercised is in no way derivative—it is direct and pervasive.
Given all this, it is not so surprising that the majority of the people most frequently mentioned in the poll as being “the most powerful” in Texas live in Houston. This becomes even less surprising when the historical roots of Big Corporate Power in Texas are explored. At least four of the state’s twenty largest corporations and two of its billion-dollar bank holding companies trace their beginnings right back to Houston’s 8F Crowd. The key figures initially were Jesse Jones and Judge Elkins. In addition to his many other business exploits, Jones founded the National Bank of Commerce, which ultimately became Texas Commerce Bancshares, the state’s fourth-largest bank holding company. During his tenure as Federal Loan Administrator and Secretary of Commerce under FDR, Jones also lent out money that was used to found Tenneco, now the second-largest corporation in the state. Judge Elkins, meanwhile, founded the First City National Bank, the main bank in what is now the state’s third-largest bank holding company; he also built his adopted law firm of Vinson & Townes into the great paper empire of Vinson, Elkins, Searls, Connally & Smith. These men soon found themselves with a protégé: Gus S. Wortham, founder of American General, first an insurance company and now a massive multipurpose conglomerate that ranks as the tenth-largest corporation in the state.
However, as George Brown describes it, the real turning point for the 8F Crowd—and the turning point for Big Corporate Power in Texas—came just after World War II when he, Wortham, Charles Francis (of Vinson, Elkins), and others founded Texas Eastern, now the state’s twelfth-largest corporation, by buying the Big and Little Inch pipelines from the U.S. government. “We just formed one corporation after another after that,” Brown recalls, adding wryly, “Business was more fun in those days.”
Indeed it must have been, for the 8F Crowd had by that time gained unequaled influence in state and national government. Through aggressive campaign funding and organizing they launched, elevated, and at times even destroyed the careers of dozens of politicians. Their key cronies were the famous duo of Sam Rayburn as Speaker of the House and Lyndon Johnson as majority leader in the Senate. Later, John Connally took over the Governor’s Mansion and LBJ moved into the White House.
The most notorious beneficiary of this politicking was Brown & Root. The company’s more famous government-sponsored undertakings include building the NASA Manned Spacecraft Center, drilling the Mohole Project aimed at penetrating the earth’s mantle, and building, in a construction consortium, most of the U.S. facilities in Viet Nam, a $900 million cost-plus contract that was the largest ever awarded in the history of the U.S. government. These contracts were just the tip of the iceberg. The 8F Crowd and their friends also cashed in on all sorts of secondary bonanzas stemming from such things as the location of the Space Center (built by Brown & Root on land once owned by Humble Oil) and the offshore drilling experimentation done in the Mohole Project. In 1962, George Brown sold Brown & Root to the Halliburton Company for a reported $37 million. Brown also gained a great deal of stock in the much larger Halliburton and a seat on the board of directors; Brown & Root, meanwhile, continued to operate independently. Later, Brown’s longtime associate Herb Frensley joined him on the Halliburton board. The Dallas-based arm of the 8F Crowd’s legacy in Big Corporate Power, Halliburton is the state’s fourth-largest corporation and the world’s largest supplier of oil well equipment.
Today George Brown remains extremely active. He still serves on the boards of Halliburton, Texas Eastern, First City Bancorp, and ITT. He operates at least one of his oil companies, Brownco, and he donates generously to favored political candidates across the state and around the country. But he no longer plays a day-to-day management role at Brown & Root or in many other parts of his economic empire. Power in other portions of the 8F legacy has also become diffused. Judge Elkins’ non-lawyer son, James A. Elkins, Jr., sits as chairman of the board of First City Bancorp, but he does not exercise the kind of influence his father did. The dominant men in the law firm of Vinson, Elkins have become John Connally, managing partner A. Frank Smith, and noted tax authority Marvin Collie; Connally sits on the board at First City Bancorp, Collie at First City National. At American General, Gus Wortham’s successor, former Chamber of Commerce president Ben Woodson, is already training his successor, Harold Hook. And the Jesse Jones empire is now divided among the Jones family heirs; Houston Endowment (a foundation that owns the Houston Chronicle, the Lamar Hotel, and much else); and Texas Commerce Bank, the main bank for Texas Commerce Bancshares.
Meanwhile the political power of the 8F Crowd and its descendants, though still considerable, has apparently been on the wane. The 8F group can still draw on talents of premier lobbyists like Houston lawyer Searcy Bracewell, but LBJ is dead and gone, the Bentsen candidacy has faltered, and the Texas congressional delegation no longer has the all-white-male-conservative character—or the number of key committee chairmanships—it once held. If certain demographic factors promise to keep increasing Texas’ representation along with that of other “sunbelt” states, it is equally significant that the internal dynamics of Texas’ national power have become more fragmented and complex. This in and of itself would not present an insurmountable problem save for the fact that the 8F Crowd—like the Democratic Party—hasn’t produced a leader who can organize and direct their economic legacy and unite the various political factions.
“The 8F people would really like to have John Connally become their new team captain,” observes one Vinson, Elkins lawyer, “but he’s more interested in running for president.” Worse, Connally must now run as a Republican. But despite the Nixonian blemishes he suffered in his bribery trial, Connally remains, as many Texas businessmen and power brokers put it, “in a class by himself.” More charismatic than LBJ ever was, Connally commands a ready conservative political following and draws support from an even larger group of money men. He also possesses a business acumen LBJ never had. “John Connally is the man in Texas—both publicly and behind the scenes,” declares a high-level business source. The same could never have been said of Lyndon Johnson. Unfortunately for Connally and his supporters, his political party switch may yet deprive him of the one thing (besides more money) he covets: that trip to the White House.
While Connally has “gone national,” Walter Mischer, a man of different talents and much more recent ascension, has joined the 8F group. Mischer, 53, is a native of Karnes County who, as a friend put it, “came to town and hustled those city boys pretty good.” Though his empire is relatively small by Big Corporate standards, Mischer exercises a personal control that even the most potent Big Corporate executive would envy. Having built his fortune on real estate development, he moved into banking circles, and until recently chaired Allied Bancshares, the state’s most profitable bank holding company. He also commands some of the best organized, most aggressively financed political clout in state government (some have called him the “Water District King”). Newer to power, he remains more candid about it. For example, when asked what his support for Ben Barnes had cost him in the fall-out of the Sharpstown Scandal, he reportedly answered, “One hell of an investment in good government.” A personal friend of George Brown, Mischer has made frequent visits to suite 8F. “He got so big they had to let him in the club,” said one highly placed business source. “Yeah,” replied another, “but he doesn’t sit on the front row.” Whatever the case, Mischer does not quite fill the apparent leadership vacuum in the upper echelons of the old Texas Democratic Establishment.
Instead, the actual exercise of power has fallen to the armies of “nameless” technocrats who man the big law firms and the giant corporate offices. None of these men individually rival a Walter Mischer, but collectively their influence is of unequaled importance in the routine functioning of the economy. These technocrats are now in the midst of a generational transition—some say, feud—which is particularly evident within the big Houston law firms. For years, the middle bracket—men now in their fifties—was passed over as power remained closely held by much older men or was delegated to bright young up and comers. But with the fading of the older generation, the men in the middle bracket have taken the reins and guard their new status jealously. They promise to remain at the top for years to come.
The result is that the power group descended from the 8F Crowd, while still perhaps the most powerful subgroup in Texas Big Corporate Power, is no longer the monolithic supra-Establishment it once was. And George Brown, while still perhaps the most influential man within that faction, no longer wins every battle. The continuing story of Texas Eastern’s massive Houston Center project illustrates both the potency and the complexity of George Brown’s power today. First, Brown bought up an undeveloped 33-square-block area adjacent to the core of Houston’s central business district. Then he persuaded the city fathers to let him build over the streets, obtaining, in the process, the rights to millions of cubic feet of municipally owned air space for what opponents of the project charge is hardly a fraction of its true value; the office and residential complex he is building there will be twice as large as New York’s World Trade Center. This was operating that rivaled the Space Center project in style. Later, though, Brown was unable to have Houston’s multi-million-dollar sports arena, The Summit, built at Houston Center; instead, The Summit wound up at developer Kenneth Schnitzer’s “suburban” Greenway Plaza, an outcome that would not have been possible years ago.
Another well-connected Big Corporate Power group in Houston is the one anchored by Southwest Bancshares, the state’s fifth-largest bank holding company; Anderson, Clayton, the state’s fourteenth-largest corporation; and the law firm of Fulbright & Jaworski. The central figures here include Leon Jaworski, who sits on the board of both the bank and the corporation, and A. G. McNeese, a former partner in the law firm who is chairman of the board of the bank. They have a very close—some say too close—relationship with the $45-million M. D. Anderson Foundation, of which Jaworski and several of his law partners have been both trustees and lendees. Jaworski’s aging law partner John H. Freeman is the director of the M. D. Anderson Foundation; he also sits on the board of the First City National Bank. Jaworski also used to sit on the board of Coastal States, which, despite its LoVaca gas troubles, ranks eighth among the state’s twenty largest corporations.
But even in light of the immense prestige he gained as Special Prosecutor and his obviously lucrative bank-law firm interlock, some of Jaworski’s close friends said that he should not be counted among the ten or twelve most powerful men in the state. “He’s certainly in the top twenty,” said one, “but I wouldn’t place him above that.” Though clearly a potent and persuasive man, Jaworski’s subgroup and his own role within it do not match the 8F group and the parts played by men like Brown and Connally. (An interesting sidelight is the animosity resulting from Connally’s bribery trial. Months afterward, Connally and his supporters remain embittered because Jaworski did not put a stop to the whole affair before it ever reached the trial stage.)
Of course, from a slightly different perspective, the most important subgroup in Big Corporate Power is neither 8F nor the Jaworski group nor the Dallas banks, but Big Oil. Six of the top ten and eleven of the twenty largest corporations in Texas, including the first and second largest, deal primarily in oil and gas or related industries. Eight of these Big Oil corporations have their home offices in Houston. Exxon, the world’s largest corporation, is not strictly considered a Texas-based company, but its largest subsidiary, Exxon USA (formerly Humble Oil) headquarters in Houston. With Tenneco, the state’s second-largest corporation, Exxon is probably the most active in the politics and economy of the state, a major real estate owner and lobbying force as well as a multinational concern. “When Exxon hollers ‘froggy,’ everybody else jumps,” declares one well-connected Houston oil and gas attorney.
Of course, the 8F group does exercise leverage over Big Oil. Exxon USA and three of the six oil companies among the state’s ten largest corporations have officers or directors who serve on the board of directors of First City Bancorp. George Brown himself sits on the board of two of these companies. Tenneco and El Paso Company share directors with Texas Commerce Bank. Alfred C. Glassell of El Paso Company sits on the First City Bancorp board, and Exxon USA is represented by president M. A. “Mike” Wright, who also sits on the board of the parent Exxon corporation. There are matrimonial ties as well: First City Bancorp chairman Jim Elkins is married to Margaret Wiess, a daughter of Humble Oil cofounder Harry Wiess. Exxon presidents and chairmen come and go, passing in and out of office like corporate politicians, but these connections remain.
Ironically, Shell, the largest Texas-based corporation, is probably the least interested in local and state affairs. Having just moved its headquarters to Texas in 1970, Shell is controlled by Royal Dutch/Shell in the Netherlands. Its primary concerns are national and international. Its major Houston-based project consists of a 544-acre real estate development near the Astrodome called Plaza del Oro. Outgoing Shell president Harry Bridges is perhaps the best example of how power in much of the Big Corporate world resides in the office, and not in the man. A wiry, soft-spoken Englishman who worked his way up through the company ranks, Bridges theoretically controls the greatest single Big Corporate institution in Texas. “But in reality, his job is more like a PR man’s,” observed a close friend who is the chief executive of another not quite so large Texas corporation. “He’s done a great job for Shell, but he doesn’t know what’s really going on throughout the company. And there’s no way he could. It’s just too big.” Unlike George Brown, Bridges is not an executive who holds a controlling stock interest in his own corporation, and is thus much more at the mercy of stockholders and executives. Bridges must step down this spring because he will reach Shell’s mandatory retirement age—60. If George Brown had been forced to retire at that same age, he would have missed out on the Manned Spacecraft Center, the Mohole Project, the Halliburton deal, and the entire Johnson presidency. In the game of Texas power a man 60 years old has barely finished his rookie season.
Another notable Houston power group consists of Republican oilmen J. Hugh Liedtke, William T. Liedtke, and Robert A. Mosbacher. Generous Nixon contributors, the Liedtke brothers were temporarily the subject of national news early in the Watergate scandal when it was discovered that a large portion of the money in Watergate burglar Bernard Barker’s bank account had been flown from Houston to Washington on Pennzoil’s corporate jet; somewhat less publicized was the fact that both the brothers and Pennzoil were later cleared of any wrongdoing by Representative Wright Patman’s subcommittee and by a federal grand jury. The Liedtkes’ claim to fame in the Big Corporate world is less clouded. With now CIA chief George Bush, they made an old-fashioned post-war fortune from oil discoveries in West Texas’ Permian Basin. Then, as Bush entered public service, the Liedtkes engineered a startling series of mergers that eventually created the giant Pennzoil, currently the state’s eleventh-largest corporation. Also an influential Republican contributor with family and financial ties to the East, their friend Robert Mosbacher has made his money in independent oil operations from Texas to the Philippines. He currently serves as President Ford’s campaign finance chairman; his brother, America’s Cup sailor Emil “Bus” Mosbacher, was President Nixon’s chief of protocol. But while Mosbacher and the Liedtkes share most of the basic values of the 8F group, their officially Republican affiliation sets them apart from the mainstream Democratic Establishment. Consequently, many feel their clout in Washington is far greater than any power they could hope to attain in their own home state. The Liedtke brothers thus received frequent mention in the poll, but were usually described as “not quite in the top ten.”
At the Dallas end of the Big Corporate axis, power is much more scattered and, generally speaking, more local in nature. There are few men in Dallas whose status as state and national power wielders really compares with that of Houston potentates, and Dallas businessmen, despite their overarching civic-mindedness and municipal boosterism, will privately admit it. “Houston is just more outward looking than Dallas,” says a longtime Dallas Establishment leader. “The oil business and the port force Houston to look beyond its borders—that’s one reason we built DFW airport. Dallas, on the other hand, is a more conventional business center based on banking, insurance, and retail. Landlocked cities usually look inward and Dallas is no exception. The Texans with national and state power—the Cabinet members, the ambassadors, the governors, the senators—none of them seem to come from Dallas.”
Big Corporate Power in Dallas revolves primarily around the big banks, First International and Republic of Texas, the state’s first and second largest holding companies. Before holding companies hit Texas, their root banks—First National and Republic—formed the cornerstones of one of the most tightly knit municipal Establishments in America. Self-made, small-town-born men like Nate Adams of First National and Fred Florence of Republic not only built their own banking empires, they also guided the development of the surrounding oil fields, the growth of local corporations, and the overall destiny of the city. With R. L. “Bob” Thornton, Sr., of the Mercantile Bank, they also formally organized the Dallas Establishment when they founded the Dallas Citizens Council. Through that organization and the larger, more conventionally political Citizens Charter Association (CCA), Dallas’ influential bankers and other corporation heads joined together to control virtually all major political and economic developments in Dallas from 1937 up to the present.
Today the big banks remain the foremost centers of power in the city, and their top men are still among the most widely respected leaders in Dallas and in the entire state. At First International, the mantle has been passed to Robert H. Stewart III, a smooth, well-tailored 50-year-old whose grandfather also served as chairman of the board. Groomed for power since he was a young man, Stewart was named more frequently than any other Dallasite as one of the “most powerful” people in Texas. On a day-to-day basis, he shares internal bank responsibilities with president Dewey Presley, but he is clearly the top man. “There can be no discussion of it,” a well-known Dallas developer observed. “In Dallas, Bobby Stewart is it.” Equally influential in the eyes of many is Republic chairman James Aston, a transitional figure between the second and third generations of Dallas bankers. At the age of 64, he has delegated some measure of authority to four younger men—James Keay, Charles Pistor, James Berry, and William Hatfield—but he remains the father figure, the unifier, and the scion of the public good. “Our purpose,” Aston has said, “is to build the country, not just to make money.” Aston is famous for being able to raise large sums of money almost effortlessly, most often for his favorite charity, Southwestern Medical School.
Unfortunately for Dallas, however, other traditional elements of Dallas power, particularly retail, have suffered an actual decline in power in recent years as absentee owners have bought out some great local institutions. The Neiman-Marcus chain, for example, is now a subsidiary of Carter, Hawley, Hale of New York; Sanger Harris belongs to Federated Department Stores, and Titche’s to Allied Corporation of New York. The Dallas Times Herald has become a part of Otis Chandler’s Times-Mirror empire, and in nearby Fort Worth, Amon Carter, Sr.’s power base, the Fort Worth Star-Telegram is now owned by Capital Cities Communications of New York. Meanwhile, the advent of single-member districts has eroded the political power of the CCA. In fact, for the first time in recent memory, no candidate for mayor or city council in the upcoming special city election even wants a CCA endorsement.
“I think the disaffection for the Establishment is a little exaggerated,” says one longtime Dallas potentate. “The CCA is interested in the good of Dallas and that’s all. If they have to take a back seat in an election, they will. I know that sounds too good-goody, but it’s true. Still, I don’t think there’s any doubt that there has been a significant diffusion of power here.” One of the most dramatic illustrations of the changed nature of Dallas power was the defeat of the Trinity River Canal project, Dallas’ proposed link to the Gulf of Mexico, despite the all-out efforts of Establishmentarians like food chain executive Robert Cullum, insurance man Ben H. Carpenter, and second-generation Fort Worth magnate Amon Carter, Jr.
The character of power in Dallas is further illustrated by the men who help form the connections between the city’s big banks and major corporations. Most have bases independent of the Big Corporate structure and remarkably little interest in exerting leverage over it. Trammell Crow, a man said to own more real property than any other individual in the United States, represents this type. Crow sits on the boards of First International, Zale, and Campbell Taggart, but his money and power come from real estate development. He possesses numerous high-level political connections—in fact, when President Ford last visited Dallas, he spent some time at Crow’s house—but, as a friend of Crow observed, “Trammell sticks pretty much to his own business. He’ll give big political contributions but he doesn’t get involved much beyond that.” The same holds for independent oilman Edwin L. Cox. A director of both LTV and First International, Cox owns some of the greatest oil and gas production outside the majors. “No one really knows how much money Ed Cox has,” says one Dallas business leader, “but he’s definitely in the Big Rich.” Still, Cox does not normally exercise the potentially political clout his wealth provides. Instead, he devotes what might otherwise be political portions of his time to his activities as chairman of the board of Southern Methodist University, and to raising funds for charity.
Of course, Dallas does boast an important national power in Robert Strauss. A former member of the State Banking Board and old friend and political associate of John Connally, Strauss has both economic clout—through the legal-financial operations managed by his brother Ted—and political clout by virtue of his position as Democratic Party chairman. He can quite quickly get men like George Brown on the phone—for advice, for money, for whatever—and he knows it. Dallas also has a figure of increasing statewide prominence in Jess Hay, chairman of Lomas & Nettleton Financial Corporation, the largest mortgage company in the United States. A longtime political activist, Hay headed Governor Dolph Briscoe’s 1974 campaign fund-raising effort; he is also a Democratic national committeeman, and, at the age of 45, still young enough to have a great deal ahead of him. However, despite the fact that he exhibits unusual insight into the ever-increasing importance of simply being able to get a “fair hearing” from the government bureaucracies, he has yet to attain the leadership status of Strauss and the big bankers.
Meanwhile, those great Dallas leaders of recent yesteryears—men like Erik Jonsson and developer John Stemmons—are now getting old, and, as many see it, “fading into the sunset.” They could still exercise enormous power and influence if they chose, but they have gradually retired from the business and political scenes to devote their spare time to assorted “good works.” In their wake, young men like Ross Perot, Jimmy Ling, and Sam Wyly come and go, shooting to great heights and falling back even faster, never really achieving the status of the established and the accepted. As one Dallas executive observed, “There’s no one around today who could get another Dallas/Fort Worth airport built the way Jonsson did.”
Jonsson himself—who if Jesse Jones was “Mr. Houston” has surely been “Mr. Dallas”—characteristically disagrees with this sort of dire prophecy for the future of Dallas leadership. “Building a new city hall or even a new airport is easy,” Jonsson said in a recent interview. “Those are managerial problems, the sort of problems someone with corporate experience is trained to handle. The original leadership of the city ran big companies, and so had I. We were used to thinking that way. The big problems are people problems, and those sort of problems—take desegregation, for example—keep getting harder.” Jonsson’s Texas Instruments is one of the most spectacularly successful homegrown corporations, so successful, in fact, that Jonsson was named one of 29 businessmen in Fortune magazine’s Business Hall of Fame. Jonsson built TI with the help of loans from Fred Florence at Republic, and when he was asked to run for mayor of Dallas in the wake of the Kennedy assassination, his gratitude and civic spirit made it impossible to say no. Jonsson ran Dallas like a well-oiled corporation: goals were set, plans devised, resources allocated. In the process, the city lifted its sights from the trauma of Dealey Plaza. By taking so prominent a political position, Jonsson was following in a tradition of direct political participation first set by R. L. Thornton, who was mayor in the Fifties. None of Houston’s 8F Crowd ever became so directly involved in local politics. The current generation of Dallas potentates seems convinced those days are over. When James Aston, Fred Florence’s successor at Republic, was asked to run for mayor in 1974, he refused. John Schoellkopf, a young Establishment investor, was the best candidate the CCA could come up with. He lost. In the days of Adams, Florence, and Thornton, that would never have happened.
No one understands better than Jonsson what the growing influence of Big Corporate Power is going to mean for Dallas. “I can look out my window and see buildings going up all over Dallas, some of them ten, fifteen miles to the north. Those buildings represent great new power, and power of growing corporations and new corporations coming in. The people who run those corporations are going to help Dallas by helping our economy. They’re going to be busy with making their corporations grow, but they’re not going to be able to afford to let their headquarters city go to hell in the hand basket. That’s how I’ll get them to lend a hand.” But other Dallas observers are convinced the new corporate heads are going to shrink away from the really thorny problems, and will instead busy themselves with pure good works. “Sure they’ll do what some of the older people like [John] Stemmons and [Robert] Cullum do now. They’ll make sure the United Fund drive doesn’t fail, they’ll get behind the bond issues. But that will be it,” says a longtime member of the Citizens Council. “But they won’t be able to get anything done, and they may not even want to. People just aren’t as interested in the classic Dallas sort of power anymore.”
One young man who shows great promise, however, is 32-year-old Ray Hunt, an heir to Hunt Oil Company and the sole executor of H. L. Hunt’s billion-dollar estate. “He’s the only likely new George Brown on the horizon,” said one seasoned Democratic power. Traditionally, the Hunts have remained outside the Dallas Establishment and mainstream civil affairs, as the family’s cantankerous arch-conservatism and old man Hunt’s myriad eccentricities offset the potential influence their money would seem to imply. But lately, Ray Hunt has emerged an apparent winner in the struggle between the children of the old man’s first marriage (among them Herbert, Bunker, and Kansas City Chiefs owner Lamar) and the children of the second marriage (Ray and three sisters). He has become active with various projects at SMU, started D magazine, and participated in financing the Reunion project, aimed at revitalizing his city’s downtown core. “Frankly, the Hunts haven’t always been very good citizens,” a prominent Dallas businessman observed, “but this young man Ray is really first class. He’s responsive and very intelligent. I think he’s really going to be a comer.”
Recently, Hunt’s associate Walter Human and home-builder David Fox have helped form a promising organization called the Dallas Alliance. A tri-racial group with a number of young Establishment members, the Alliance has come up with a desegregation plan for the city’s schools. Despite initial setbacks this effort suggests that Dallas might soon find itself with a more modern successor to the old Citizens Council, but with more realistic goals and a broader political base.
In addition to the Houston-Dallas axis, the web of Big Corporate Power in Texas has an important Austin arm: the University of Texas System. Not too surprising, the importance—and power—of this ostensibly educational institution derives from money. With an endowment of over $1 billion, the University of Texas is the second-richest institution of higher learning in the world. The Permanent University Fund, itself just a portion of the total wealth, accounts for $792 million. If the University’s endowment money were considered bank assets, it would rank as one of the largest bank holding companies in the state. The people who control this enormous financial empire, supposedly in trust for the people of Texas, are the members of the Board of Regents, a group endowed with almost total power over University affairs. They have the final say on everything from appointment of professors and teacher salaries to the granting of the lucrative and multitudinous construction contracts for expansion programs totaling over $700 million in the last ten years alone.
The most nationally famous member of the UT Board of Regents is Lady Bird Johnson, who herself wields considerable moral authority when she chooses; the most powerful, however, is the Regents chairman, former Governor Allan Shivers. Shivers is the quintessential Establishment figure, an old Austin banking and political crony of the 8F Crowd (even through his long feuds with Lyndon Johnson), and consistently nominated as one of the most powerful people in Texas. “Governor Shivers could be even more influential than he is now,” a friend observed, “if only he chose to be.” His most obvious interlocks with Big Corporate Power have been seats on the boards of two billion-dollar bank holding companies, Texas Commerce Bancshares and (until recently) Capital National Bank, both of which are located in Houston. He is currently the chairman of Austin National Bank in Austin.
Also intimately tied to Big Corporate Power is media power. In Houston, both major dailies, the Chronicle and the Post, one major television station, KPRC, and two major radio stations KPRC and KTRK, have direct present and historical ties to members of the 8F Crowd. In fact, at one point during the Depression, Jesse Jones owned both Houston newspapers and two of the radio stations. He kept the Chronicle and KTRK, now the property of his Houston Endowment Foundation and nephew John T. Jones, Jr., but sold the Post and KPRC to his friend, Governor William P. Hobby, at a bargain price. (Hobby was then in the midst of hard times financially.)
Today Oveta Culp Hobby, the former governor’s wife, still reigns as chairman of the board of the Houston Post Company. She is truly a remarkable woman who could exert great influence by the force of her intelligence and personality alone. But she also happens to have great oil wealth and a son who is the lieutenant governor of Texas. She was the only woman repeatedly nominated as one of the most powerful people in Texas. A parliamentarian in the Texas House before she married, Mrs. Hobby became the second woman in U.S. history to hold Cabinet rank; she headed the Department of Health Education and Welfare under President Eisenhower. Though not privy to the stag card games in 8F, she nevertheless shared in much of the decision making before as well as after her husband’s death. Noted for her custom of wearing hats—particularly high, wide-brimmed ones and flat barets—Mrs. Hobby is said by her friends to have “a man’s mind.” When the management of Texas Commerce Bank recently polled the board of directors about the possibility of including a woman on the board, the directors’ near-unanimous response was, “Fine, as long as it’s Oveta.” Needless to say, she is a frequent luncheon companion of George Brown; Brown’s interest in media power is partly manifested by his membership on the board of Southland Paper, the nation’s second-largest manufacturer of newsprint.
In Dallas, on the other hand, the lever for power Ted Dealey made of the Dallas Morning News is seldom used by his son Joe. The Dealey family trust breaks up by law in August 1976; what will happen then is uncertain. The Dallas Times Herald is now owned by the Times-Mirror Corporation of Los Angeles. Its young publisher, Tom Johnson, seems determined to make his influence felt in Dallas through his editorial page instead of through active involvement in Establishment politics. Former publisher Jim Chambers, described by some observers as the most selflessly dedicated of the classic Dallas Establishment people, continues with his civic work, but even he is less personally involved than he once was.
Representatives of older, more typically Texian types of power—the second- and third-generation oil rich and the old ranch families also participate in the world of Big Corporate Power. In Houston, W. S. Farish, III, grandson of one of the Humble Oil Company founders, sits on the boards of both Houston Natural Gas, the state’s fifteenth-largest corporation, and Capital National Bank, the main bank of Federated Capital Corporation. Corbin J. Robertson, president of Quintana Petroleum and guardian of the Cullen family interests, serves on the board of First City Bancorp and has organized recent lobbying efforts by independent oil men. In Dallas, John Murchison provides an interlock between LTV and First International Bancshares; his son John, Jr., is a lawyer at Vinson, Elkins. But despite their obvious personal and financial gifts, these types of men have generally left the more active—and certainly the more visible—political roles to others. At the same time, many of those who would like to continue as independent oil operators feel themselves stymied by the federal government and changing times. “Their frustration is enormous,” observed one oil and gas attorney. “They would like to be more active, but they don’t know what they can do.” The old ranch families, meanwhile, are in the midst of urbanization and division, but the most alert of them have linked up with Big Corporate Power. Ambassador to Great Britain Anne Armstrong, for example, is on the board of First City Bancorporation and Robert Shelton of the King Ranch is on the board of Texas Commerce Bancshares.
The most curious quantity in Texas power is Dolph Briscoe, a second-generation rural potentate who has risen to the governor’s office. He could, simply by virtue of his wealth and the position he holds, rank among the most powerful people in Texas. However, he appears uninterested in exercising even the most routine powers of his office. His list of campaign contributors—a group dominated by men from Texas Instruments and other large corporations—makes clear his affiliation with Big Corporate Power; his own preferences, however, seem to be for the clean and simple air of his Uvalde ranch and not for the urban power centers. By and large, he is irrelevant to modern Texas power and represents a throwback to an earlier, more rural state.
Almost as curious is U.S. Senator Lloyd Bentsen. An old-line Establishmentarian schooled by the great Sam Rayburn, Bentsen retains considerable economic power because of his family’s wealth and his previous Big Corporate connections, but he may have burned up a great deal of his political clout in his recent bid for the Democratic presidential nomination. His vote against the oil depletion allowance infuriated his many oil business supporters, and so have other politically expedient (and no doubt temporary) shifts leftward. He will probably win re-election to the Senate—if not a place on the national ticket—but his status as a power wielder has undoubtedly been diminished. In fact, Bentsen’s two principal supporters, Ben Love and Bill Lane, both younger and newer to power than the senator, were far more frequently mentioned as being among the most powerful people in Texas, especially by those in the Big Corporate world.
A native of Vernon, Ben Love came to Houston shortly after World War II and founded a paper products manufacturing plant, which he operated for seventeen years. In the mid-Sixties, he moved into banking, first with River Oaks Bank and Trust, then with Texas Commerce Bank. By 1969, he had become president of Texas Commerce Bank, and in 1972 he was named chairman and chief executive officer of both the bank and the bank holding company. Affable, articulate, and—of no small importance—a University of Texas graduate, Love, 51, seems to embody the most highly valued qualities of the new Big Corporate leader. Under Love’s leadership Texas Commerce made the transition from bank to bank holding company, and now ranks as the fourth-largest bank holding company in Texas. Meanwhile, Love himself has taken an active role as a Bentsen fund raiser, and is the manager of Bentsen’s personal finances, now held in “blind trust” while Bentsen holds public office.
Equally admired in Houston business circles is Love’s close personal friend, Bill Lane. Like Love, the 52-year-old Lane has enjoyed an almost meteoric rise. A native of Tennessee, Lane came to Houston in 1959 as president of River Brand Rice Mills, Inc. Before long, however, he built River Brand into Riviana Foods, a multi-national with emphasis on rice and specialty foods. Now twenty-sixth in size in the state, Riviana markets such diverse goods as Russian caviar and Kosher meats, the latter being a product of Riviana’s Hebrew National Division. A generous contributor to conservative political candidates of both major parties, Lane was the campaign chairman for Bentsen’s presidential effort.
Though real estate developers like Gerald D. Hines of Houston and Trammell Crow of Dallas may have a greater influence over the shaping of our environment, it is men like Ray Hunt, Love and Lane who will play the greatest future individual roles in determining the underlying politics and economy. But despite their many talents, none of them will likely attain the status of a Jesse Jones or a George Brown, and this is in no way to their detriment. As Oveta Hobby points out, “The art of running a business takes so much more time now.” One can no longer set up one corporation after another as the 8F Crowd used to do, without facing a host of federal regulations and soaring overhead costs. And leverage over the political process has become ever more difficult to gain.
Along this same line, it is important to note that the overall structure of Big Corporate Power in Texas exists in the larger national and international context. Relationships on this level are even more complex, but the New York banks and the Washington bureaucracy clearly occupy central institutional roles. Texas’ billion-dollar bank holding companies must look to their much larger Eastern counterparts—Chase Manhattan, First National City, Morgan Guaranty—as correspondent banks and regular sources of back-up funds. Large Texas-based corporations must also look to the big New York banks as well as to insurance companies and investment banking firms in order to obtain enough capital for many of their projects. In fact, the largest stockholders in most of Texas’ largest corporations are these Eastern financial institutions. From this perspective, the Rockefeller family who dominate Chase Manhattan and much else, should receive due consideration as being among the most powerful people in Texas, especially since the Vice President has established a partial claim to residency by virtue of purchasing a South Texas ranch.
On the other hand, the central domestic conflict of our time may well be the struggle between Big Corporate Power and Big Government. With each passing day, businessmen complain of more power being transferred from the private sector to the public sector and of ever increasing bureaucratic interference in their affairs. Once they sought to control government; now the emphasis is on a “fair hearing.” At the same time, however, the public learns of seemingly endless corporate transgressions—from pay-offs for local sheriffs to bribes for foreign diplomats—and hears evidence of monopolistic concentrations in one major industry after another. While businessmen see regulatory agencies as a bungling and unmerciful “Establishment” in its own right, the private citizen often sees these agencies co-opted by those who are to be regulated, and wonders who, after all, does rule—the government or the Big Corporate bloc.
Recent Mideast oil developments have also added an international dimension to the “Who rules?” question: is it us or the Arabs? Should the Shah of Iran or some other person like Sheik Yamani now be included among the most powerful people in Texas because of their enormous influence over the state’s most important industry? Clearly, their price hikes and political policies have made the state’s already giant energy corporations even bigger and more crucial to the U.S. economy.
These, then, are the main outlines and many of the important faces in the structure of Big Corporate Power in Texas. If examining their interlocks does not quite include all the powerful organizations and power holders, it at least provides the essential schematics of the state’s dominant political and economic force. And it is critical to understand that the state’s largest corporations, banks, and law firms—whatever their internal differences—do operate as a unified force, dancers to the same tune. The source of this unity is far deeper than interlocking directors and political party affiliations. It lies instead in a more general identity of economic interests—exemplified by the eternal struggle to preserve a “good business climate”—and in shared educational and social backgrounds. For the most part, the state’s most powerful men give the impression of being almost too gentlemanly, too soft-spoken for their roles. Seldom do they display the fist-pounding and stentorian tones commonly associated with being “aggressive.” They don’t have to. An Allan Shivers, a George Brown, an Erik Jonsson need never raise his voice; people seem to listen anyway.
While they may be business rivals, the leaders of Big Corporate Power also enjoy a common social life. Each major city has its hierarchy of men’s luncheon clubs like the City Club in Dallas, and the Ramada and Coronado clubs in Houston, and a similar hierarchy of country clubs: Brook Hollow, River Oaks, Houston Country Club. These are not merely convenient places to eat the midday meal or attractive family recreation spots, but true business and political centers, and it is as such that they thrive.
“The Ramada Club is probably the new 8F,” observes a senior member of one of Houston’s leading law firms. Though he speaks with expected bias toward his hometown, he may well be right. There is no other place in Texas where so many people nominated as the most powerful in Texas meet so often and for such extended periods. On any given workday, the main dining room will be crowded with the state’s most prestigious Big Corporate figures: John Connally may be lunching with James Elkins or Marvin Collie. Allan Shivers, Robert Stewart, or James Aston may be in town for a meeting of the board of one of their banks. There will be some major oil company executives in the room, perhaps a few Arab faces now, and a host of other Big Corporate officers. George Brown will usually be there, seated at his favorite right corner table, a vantage point from which he can face anyone who enters the room. On the occasions when he lunches with Oveta Hobby, friends can be seen passing by their table, imparting a respectful greeting and bowing noticeably. Meanwhile, in the men’s grill, other executives will be eating at “the round table” or drinking and playing cards much as the old 8F Crowd did in the Lamar Hotel.
After business hours, the Ramada Club often becomes the site of more easily recognizable political activities—a candidate review or a campaign fund raiser—usually in cocktail party form. “A ticket to a cocktail party at the Ramada Club is a one-way ticket to a contribution,” observed the scion of one of the big Houston law firms. He went on to point out, very much amused, that article three of the Ramada Club House Rules specifically states that “the Club shall not be used for sectarian or political meetings.” But then power, in the last analysis, may simply mean the ability to break such rules, even if they are one’s own.
 The bank position eventually went not to Mrs. Hobby but to another woman whose intelligence is greatly admired in Houston business circles, Mrs. John Blaffer. The daughter of Dallas banker Wirt Davis, a cofounder of Republic Trust and Savings Bank, Blaffer is a Phi Beta Kappa from Wellesley. Her late husband, another Humble Oil heir, was also a member of the Texas Commerce board.