Howard Hughes: Eccentric aviator

23:47And as the title suggests, it's also about his passion for flight. And that is the next business venture we'll discuss. us. In 1932, Hughes had purchased a military pursuit plane from Boeing. Although the plane was restricted for Air Force use, Hughes had made special arrangements with the Department of Commerce to own one. He then formed the Hughes Aircraft Company as a subsidiary of the Hughes Tool Company to improve the Boeing plane for racing. And he'd go on to use the tool company as a kind of, you know, holding company for all his other business interests. A bit like, if you remember, Warren Buffett bought this old company called Berkshire Hathaway as the huge kind of holding company, central investment company, even though, for example, Berkshire Hathaway was originally a textile company and ended up being the biggest shareholder in Apple, for example.

24:30Now, after Hughes won a race in his upgraded plane, aviation becomes more than just a hobby. He hired engineers and mechanics to build the fastest plane in the world, in his words, and planned to sell his new plane to the Army Air Corps as a military pursuit vehicle. At a cost of$120 ,000, he creates the Hughes H1 and sets the world record speed for land planes at then unheard of 352 miles per hour. He then broke another record in the H1 flying across the USA in seven hours, 28 minutes. That cut two hours off the previous record, which by the way, was also set by Hughes. And in 1938, he set another record flying around the world in 91 hours, this time in a plane built by another company, Lockheed.

25:14But by now he's this famous aviator. But despite these record breaking feats, when Hughes pitched the H1 plane to the US Air Force, they actually turned him down. So in 1939, he decided to refocus and buy into commercial airlines instead. Welcome to Transworld Airlines or TWA, which older listeners will remember as a brand name on the tail fin of many planes. It was a major passenger airline of the era that had been undervalued since the Great Depression. He was able to buy 21 % of the company for$1.6 million. He later upped his stake to 45 % and would ultimately hold over three quarters of the shares by 1963.

25:52But way back in 1939, Hughes came in with a 10-year plan for TWA, which included making it the leader in US coast-to-coast flights, his record-breaking route. So their planes were made by Lockheed, so Hughes worked with their engineers there to design a plane with transcontinental range that fitted 20 sleeper compartments and flew 100 miles per hour faster and 10 ,000 feet higher than the then market leader. Now, under his guidance, TWA doubled its income by 1940 and increased passengers by 57 % in 1941. He went on to make TWA the first American airline to provide nonstop transcontinental flights to the public.

26:31And oh yeah, also the first to provide freshly brewed coffee and in-flight movies, things that we all take for granted today. For sure. Yeah, the in-flight movie. Of course, he's a big movie buff himself. But for every success, Hughes seemed to have a failure. And Hughes' next aeronautical venture was a giant, literally giant dud. When the USA entered World War II in 1942, German U-boats were sinking Allied ships at a very alarming rate. And there was a desperate need for aircraft that could transport goods and troops over long distances without relying on those vulnerable sea routes across the Atlantic.

27:02It's called the Battle of the Atlantic, the whole thing, U-boats everywhere. An industrious called Henry Kaiser had the idea of building a flying boat, a massive plane that could land on water. Kaiser approached Hughes and thanks to Hughes's aviation reputation, they won a government commission to build the plane in 1942. The H4 Hercules, an A-engine, 200-ton, 750-person plane, this thing is huge, was the world's largest aeroplane with a wingspan of 320 feet. And it was nicknamed the Spruce Goose because it was built mostly from wood due to wartime restrictions on aluminium and other metals. Can you imagine having a 200 tonne plane which can fit 750 people made of wood?

27:45It sounds like a cruise ship. Have you seen, I mean, the pictures of it are actually amazing. This thing is giant. And if you look at it, you think how on earth did that ever get off the ground? And actually, in a way, it didn't. Yeah, two years into the project, Kaiser actually left, didn't he? Yeah, he was frustrated the plane was still not completed. The delays were largely due to Hughes's micromanagement of the project. By the time the plane was complete in 1946, the war it was designed to be a part of was over. Oops. So Hughes was placed under investigation by the Senate Special Committee to investigate the National Defence Programme as well as the Spruce Goose.

28:20Hughes had also failed to complete another plane for the government. Now Hughes himself nearly died in a crash on a test flight for that second plane in 1946. He was left with serious injuries and the high doses of morphine he was given in hospital left him with an addiction to painkillers many believe directly or indirectly caused his death. But in August 1947, still in recovery from multiple fractures and third degree burns, Hughes was brought in to testify at a Senate committee investigating war profiteering. So the government had spent$40 million of taxpayers' money and Hughes hadn't delivered a single working plane.

28:57The spruce goose alone was estimated to have cost$25 million,$18 million from the government and$7 million from Hughes' own funds. Defence procurement is a famously risky game, but Hughes still wanted to prove his enormous plane could work. So during a break in the hearings, he flew back from Washington to California for a publicity stunt to test the plane. 29 passengers on board, mostly journalists, the plane lifted 70 feet into the air and flew for 30 seconds at 100 miles an hour. it was never flown again and Hughes ended up paying$1 million a year to keep it in a climate-controlled aircraft hangar.

29:32The danger of making a plane out of wood. As a journalist, would you get onto the Spruce Goose? Do you know what? I think it depends what point in my career it was. Now, no way. As a young journalist, I think that if I didn't go, there would be plenty of hungry journalists like yourself who would have taken my place. Oh, I don't know. As a nervous flyer, I don't think I could handle the idea of being on a plane that big. Maybe I would have gotten onto the series. I think you would have done. But nervously, I wouldn't be happy about it. Well, that 30-second flight, which did not end in tragedy, it's important to say, was shown on newsreels across the country.

30:03And that was enough because Hughes came out of the Senate hearings victorious in the most important court of all, the court of public opinion. So his testimony was broadcast nationally. He appeared calm and charismatic. He often used humour and plain language. You know, this really contrasted with the way the Senate committee worked, dry, bureaucratic, boring, in other words. Yeah, and despite his wealth, Hughes positioned himself as, if you like, the underdog being unfairly targeted by political elites and framed the investigation as a politically motivated attack. Does this remind you of anyone?

30:37Anyway, as I say, he framed this investigation saying it was a politically motivated attack rather than a legitimate inquiry into wartime profiteering. Now, the Senate hearings themselves were essentially inconclusive and the lead investigator, a senator called Owen Brewster, actually suffered more reputational damage than Hughes himself. But beating Brewster wasn't enough for Hughes, who pursued a vendetta against the senator. When Brewster came up for re-election five years later, Hughes secretly funded his opponent to the tune of$60 ,000 in a primary campaign that saw Brewster beaten and his political career brought to an end.

31:11Take that, Brewster. Talk about vindictive. But even while Hughes was pouring money away on vendettas and unsuccessful airplanes, money was pouring in from other parts of his empire. So the Hughes two companies annual profits grew from 33 million in 1942 to 55 million in 1948. A subsidiary company, the Gulf Brewing Company, boomed during the war, selling 483 ,000 barrels of beer for a profit of 2.3 million. And in 1943, Hughes had returned to film production with a Western called The Outlaw, starring Jane Russell, with whom, of course, he was having an affair. Of course. I think I've heard of The Outlaw.

31:48It's quite a famous film, isn't it? Yeah. Well, you'll be interested to know that Hughes famously designed a special bra of all things. Using his engineering skills to great effect. Yeah, she maybe should have worked for Triumph, actually. He actually wanted to emphasise Russell's figure and he fought with the censors to retain scenes highlighting her chest. That battle actually delayed the film's release until 1946. But when it finally came out, The Outlaw was actually a big box office hit. Then in 1948, Hughes became a studio owner himself when he paid nearly$9 million for a controlling stake in RKO, very famous name in film history.

32:25He soon, though, cut staff from 2 ,500 to just 600. But his micromanagement of the studio and egocentric decisions destroyed this once great studio. And this is a moment when we start to see his germophobia becoming a real issue. Apparently, he would do insanely expensive things like shutting down the whole studio lot for weeks at a time to try to control dust. Blimey. In 1955, Hughes finally sold RKO for$25 million. Now, that may look like he made a bit of a profit, but it's thought he lost$3 to$4 million every year that he owned the company. And RKO closed for good in 1959. So while he did have a lot of hits, film is not the industry that made Howard Hughes a billionaire.

33:07And in the late 1940s, it seemed unlikely that the airplane industry would either. The Hughes Aircraft Company had shrunk down from 6 ,000 employees to just 800. But Hughes was desperate to keep it going. So when an engineer suggested they pivot into electronics, Hughes agreed. And this is a smart move. Despite his run-in with the Senate committee, Hughes now planned again to secure government contracts. He would make Hughes Aircraft an unofficial test lab for the US Air Force and begin to employ research scientists. soon the company had 3 ,000 scientists on staff. They also had a near monopoly on Air Force electronic systems.

33:43Noah Dietrich, who remember was kind of Howard Hughes's right-hand man in business, had to take out a$35 million bank loan to help with the expansion. But the company was soon grossing$1.7 million a day. Then US President Harry Truman even described Hughes as the human linchpin of America's air defences. So he's come a long way from being holed up before a Senate Committee. By 1953, Hughes Aircraft was employing 17 ,000 people and had a backlog of$600 million in federal contracts to provide radar, missiles, and other advanced electronics to the Air Force, while the CIA ordered$250 ,000 in espionage equipment.

34:21And back then, while the company were no longer making planes, in 1948, they'd started making helicopters. Their first designs in the early 50s weren't that successful. But the 1956 Model 300, with a clear bubble-enclosed cockpit design, you can see that in your mind's eye, was successfully marketed to television crews, police departments and private owners. The company would go on to provide the military helicopter central to the US's operations during the Vietnam War. I think, in fact, being a bit of a nerd about this stuff, I think those Vietnam helicopters are called Hueys and I'm pretty sure that is because of the Hughes influence.

34:57Wow. So Hughes actually had a dastardly plan to undercut his competitors' bids by building these Huey helicopters at a significant loss and thus become the army's sole supplier of helicopters and then hike up the price, that actually backfired on him. He delivered about 1 ,500 helicopters to the army at a loss of millions of dollars and he still never got that exclusive deal. So he's making mistakes in business nonetheless. But even when things were going well financially, Hughes himself was the problem. In 1953, Hughes' aircraft was booming, but staff were leaving. They are often cited working with Hughes as the reason they quit.

35:33The Secretary of the Air Force issued an ultimatum. Hughes had 90 days to reorganise the company so he would not be actively involved in its management or Air Force contracts would be cancelled. That is quite the ultimatum. I mean, yeah, it's quite something that the US Air Force is saying, either you get lost or the contracts are out. Well, on the 90th day, Hughes extracted the aircraft division from the Hughes Tool Company umbrella and he made Hughes Aircraft a standalone company. And then he established the Howard Hughes Medical Institute as a non-profit medical research organisation and assigned all of the aircraft stocks to the institute.

36:09And finally, he made himself the institute's sole trustee. So doing quite a lot of behind the scenes work. Making some moves here. And this sleight of hand seemed to appease the Air Force. It also created a tax shelter because by transferring ownership to this non-profit institute, he shielded its profits from corporate income tax because at that point, non-profit companies were tax exempt. So while the new arrangement saved Hughes a lot in taxes, it actually didn't help those working for him. In 1957, Noah Dietrich, remember Hughes' right-hand guy, finally quit. The pair fell out over money and after an aggressive phone call, Hughes had the locks changed at the corporate headquarters and fired all of Dietrich's associates.

36:49Dietrich didn't forget this. He wrote a biography of Hughes in which he said that Howard Hughes's, in his words, arteries pumped ice water and that he never knew a man who was so totally devoid of emotion. Well, talk about a takedown. Now, that same year when he was 51, he was married 30-year-old actress Jean Peters. The pair wed under fake names and they didn't live in the same house initially. And when they did, they only saw each other for just 20 minutes each day. They eventually divorced in 1971, having not seen each other for nearly four years. That all sounds to sound like the perfect marriage.

37:23And that was just not a marriage at all. But after losing Dietrich, Hughes had effectively become a recluse. He gave his last in-person interview in 1958 and began conducting all of his business by telephone. A real work from home pioneer, you might say. Yes. Now, Hughes may have been hiding his appearance, also fearing it would reveal his mental and physical health struggles. So Hughes had suffered serious head injuries in three separate plane crashes and, as discussed, was becoming increasingly addicted to various painkillers. And soon his erratic behaviour would cost him TWA too. He'd bought the company great success, but a series of overblown purchases, a refusal to cooperate with regulators, his erratic management style led to increasing tension with the airline's board and government authorities.

38:10In fact, although Hughes had been essentially running the company since the 1930s, He'd never attended a single board meeting. He'd never had an office at TWA and was never officially an officer or director of the company. So when he entered into various legal battles with TWA's trustees, they actually had the upper hand. And in 1966, Hughes was forced to sell his shares for just over$500 million, ending his direct involvement with the company. But for our purposes, that sale did confirm one thing. Howard Hughes was a billionaire. The 500 million he made added to the value of Hughes' tools and its subsidiaries meant he was worth at least a billion.

38:49And just two years later, Fortune magazine declared Hughes to be the richest man in America with an estimated net worth of$1.3 billion.

39:03Now, beyond a billion is where Hughes' story gets really weird. And to be honest, where better to get weird than Las Vegas, Nevada? Hughes moved there to avoid California state taxes on the money he got from selling TWA. Get this, he travelled by private train in blue pyjamas and was carried by Stretcher into a service elevator of the Desert Inn Hotel Casino to the ninth floor penthouse suite. That's how I get to work every morning. He was meant to stay just 10 days. But when staff asked him to leave after four months, he bought the whole hotel and ended up living in that room for four years. Plus, he went on a shopping spree.

39:42He spent$65 million in one year acquiring various properties, businesses, four large casinos, real estate to build more casinos, the North Las Vegas airport, several luxury ranches, 200 Nevada mining claims and the local television station. Apparently, he bought the TV station because he was an insomniac who wanted to watch TV all night and it actually stopped broadcasting at 11pm. So talk about moulding the world in your image. All of this made Hughes the state of Nevada's biggest private landowner, with almost 2 ,000 hotel rooms and 20 % of the Las Vegas Strip under his control. In fact, a researcher from the University of Nevada credits Hughes with changing the perception of gambling in Las Vegas, saying Hughes bought a new respectability that encouraged public corporations to buy or invest in Nevada casinos as they never had done before.

40:30But Hughes' mental health was deteriorating during his time at the Desert Inn. and he had the windows darkened. He often sat naked in the dark. He used layers of tissues to touch doorknobs and demanded his aides pass him items wrapped in tissue or paper towel. For months, he refused to bathe and would only have his hair or nails cut once a year. Ooh, this is the gross bit. In two years, his bedsheets were only changed five times. The carpet in his bedroom wasn't vacuumed, the room wasn't dusted, the bathroom never cleaned. Worse still, he filled his closet with jars in which he had urinated and the room stank of his rotting teeth and fungus-contorted nails.

41:11You're forgiven if you want a wretch at this point. In 1970, exactly four years after he entered the Desert Inn, he left for the Bahamas, where he spent the next few years on and off still conducting business via telephone. We go back to the scene at the beginning. He was 70 years old when he died on that plane. It was headed to a New York hospital where he was being taken for emergency medical treatment. He died of kidney failure almost certainly caused by his extensive use of painkillers and it was a matter of chance that he died flying over Texas. Remember the state where he was born. But possibly fitting that the famous aviator died as he lived on a plane.

41:48At the time of Howard Hughes' death, his estate was estimated to be worth two and a half billion dollars but he had no children or wife and there was no will. Now we could do a whole show about all the false claims to his estate. It actually took 34 years before the last payment was settled in the year 2000. So what an incredible story. No wonder they made a film out of him and he became so famous. But now it's time to judge him. This is where we go through a bunch of categories. So we're going to give them a ranking out of 10 on those categories. Let's start with wealth. Two and a half billion, barely entry level for these days.

42:23But he was the richest man in America at the time. But to be fair, he did inherit quite a lot from his dad. He did. But sometimes we, in this, look at how he spent it and there's no flies on him when it comes to this. Oh, yeah. He loved to spend money. I mean, you know, fast cars, planes. Movies. Movies, movie starlets, you name it. I mean, I feel exhausted just reading this story. Don't you, a little bit? He certainly had quite a life. And also the thing I keep coming back to is paying a man to divorce his wife so that he could get with the woman. buying at a local tv station because it used to stop playing movies at 11 buying a hotel basically whatever happened whatever resistance he ran into he would buy his way out of so i think he would score quite highly for me he's a nine out of ten for sure nine yes definitely nine i agree controversy terrible treatment of women the worst i mean even though he seemed to just attract women non-stop you know all these hollywood stars that we still know about today to the richest man in America.

43:23Yeah. I mean, also putting aside his treatment of women sounds like he wasn't a great person to work for either. Let's face it. I think he's definitely more than eccentric. Yeah. He's not a harmless eccentric by any means. And there seems to be no limit to what he would buy his way out of. Apparently in the 1930s, he ran over and killed a pedestrian, bought his way out of that situation. Wow. So he really has a score pretty highly, I think. Controversy. I mean, they've made films about how weird he was i think it's a 10 yeah i would say or maybe a nine yeah i would say probably a nine out of ten nine out of ten yeah so giving back this is like philanthropy stuff like that um he set up this non-profit howard hugh's medical institute but the irs the tax man in the us investigated it for years as congressman accused it of channeling only a small fraction of its earnings from hugh's aircraft into medical research yeah apparently during its first full year, it actually spent less than$45 ,000 on research.

44:19By the end of 1963, its 10 years of charitable donations totaled less than$5 million, which is actually not very much. Since then, it's been a centre of excellence. 28 current and former scientists who have worked at Hughes Medical Research Institute have been awarded Nobel Prizes. So some good came of it. Yeah, but I have to say it's probably not anything that Howard Hughes did himself, other than setting it up. I'm going to give it a three out of 10. Yeah, I'm going to give it a two out of 10. Even though it is doing good work today, I feel like Howard Hughes had nothing to do with that. More by accident than design, I reckon.

44:54Okay, so two for you, three for me. Power and legacy. This is an interesting quote from him. He once said, you just remember that every man I can buy, I, Howard Hughes, can buy any man in the world or I can destroy him. God, talk about ego. Oh, blimey. That's kind of like a Roman emperor type ego, isn't it? Yeah. I mean, he gave hundreds of thousands of dollars to politicians he gave to President Nixon. He had a relentless drive for political influence. He was even, get this, indirectly linked to the Watergate scandal through his secretive contributions to Nixon's associates. But interestingly, his right hand man, Noah Dietrich, said he manipulated politicians but never voted.

45:32I mean, his legacy is probably as one of the world's most famous eccentrics, I would say. That's his legacy. Although his company's helicopters were absolutely instrumental in the Vietnam War, for good or ill. And his passion for aviation, probably through his mistakes, people learned from them. It's an interesting one because it almost feels like he had so much energy that he put towards so many different things that if he just focused all of them on a single thing, he could have actually just absolutely dominated a certain industry. But he had a scattergun mind. Yeah, well, let's face it. He's pretty weird.

46:09So I think almost sort of culturally, he's an important person because he personifies the crazy billionaire who can do whatever they like because they've got limitless financial resources and it doesn't stop them. They can buy and sell their way out of just about anything and indulge their every whim, fantasy and failing. So for that, as the world's weirdest billionaire, possibly, I'm going to give him a seven. Oh, I feel like I'd go higher than that. Right, OK. Yeah, I mean, if he basically created the archetype of the eccentric billionaire who spends his money as he wants and just changes the world in his wake because he's got the cash, I feel like that created a real mould for other billionaires.

46:55To avoid. To avoid, to try to avoid. So I think I would give him an 8 out of 10. OK, 7 for me, 8 for you. So we know he's weird, we know he's dead, but is he good, bad? or just another billionaire. So we want to hear from you. Email goodbadbillionaire at bbc.com or drop us a text or WhatsApp to 001 917 686 1176 to let us know what you think. And I've got a message here, which is on the Good Bad Billionaire phone, the dedicated bat phone, if you like, to the programme. This is from Heba. She says, hey, Heba Mohsin Waze here, a 19-year-old listener and student from India. Amazing episodes. Loved your episode on George Soros.

47:35Great presentation, amazing narration. Thank you. I often used to hear your podcast all throughout my preparation. I really appreciate your efforts. Well, we really appreciate you getting in touch, Heber. Thanks very much for that. And we've also got one from Jonathan Ansarigo, a proud listener. He describes himself from Kenya. He says, dear, the good, the bad and the billionaire team. I like that. I hope this message finds you well. Huge fan of the podcast. Thank you. Truly appreciate the balanced, in-depth storytelling you bring to each billionaire's journey. The episode on Aliko Dangote, a Nigerian billionaire, particularly stood out to me.

48:05not only because of the insight into his business empire, but also because of how fairly incomprehensive you portrayed his story within the broader African context. I appreciate that because often this is about context. Often these billionaires are ways of telling wider stories about what's going on in the society, in the world, definitely. And Jonathan has given us an idea for a Kenyan billionaire. We will have a look into that and we may well do that. And thanks in the meantime, Jonathan, for getting in touch with us. So email goodbadbillionaire at bbc.com or drop us a text or WhatsApp to 001 917 686 1176.

48:40That is goodbadbillionaire, all one word, at bbc.com or 001 917 686 1176. And don't forget to include your name and your message may be featured on a future programme. Good Bad Billionaire is a BBC World Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry. Paul Smith is the editor and it's a BBC Studios audio production. For the BBC World Service, the senior podcast producer is Cat Collins and the commissioning editor is John Manel.

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