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FREE GROWTH AND OTHER SURPRISES
Draft
Gordon Getty
FOREWORD BY THE AUTHOR
How Come This Book?
A few months ago, Robert Trivers was kind enough to send me his new book. The
title is “Wild Life”. Perfect two ways. Bob is a world authority on wildlife, to wit
evolutionary biology. But his books and papers about that are already well known.
His new one is about his own wild life, with his ideas in the background.
I’ve started my own book three for four times over the past decade. Bob’s got me
started again. Try it. It’s Bob’s real voice. One of his papers, co-authored by Huey
Newton(!), is about deception and self-deception. I never saw much of either in Bob.
I never saw a guy less anxious to impress. Fine if you knew his achievements, and
fine if you didn’t. What he wanted to talk about was great new ideas by others. It
was from him that I first heard about the Hamilton-Zuk parasite theory, and Paul
Ewald’s complementary one about parasites stabilizing population density of hosts.
Both are beautiful examples of the obvious-in-hindsight.
I realized that my book could take a cue from his. My own life hasn’t been wild. It
has been interesting because the genius of my father gave me interesting places to
be and things to do. I could say something about that.
But the book would be mostly about my ideas in economics. Bob’s ideas are well
known to anyone in his field. Mine aren’t. I’m ten years older than Bob, without
much to show for it except in composition. (My last two operas have been getting
some traction, and my SACDs get pretty good radio time.) So I’ll run my economic
ideas up the flagpole, in my real voice, and see if they prove deception or selfdeception
or something worth the time.
Declaring My Biases
I’m a big free market fan. I would love it even if I agreed with socialists that there is
something inherently iniquitous about it. There are bad guys and conflicted motives
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in markets and government both. What I love about it is the chance to prove ideas. I
love Wall Street innovations such as swaps and futures and ETFs and mortgagebacked
securities, even admitting their dangers. And who would have thought that
the San Francisco Bay area, a stronghold of political correctness at the voters’ booth,
would nonetheless innovate Siri and Alexa and driverless cars, in its free market
havens here and there, over the past five years? Remind me the last innovation by a
committee. Who would have thought we would make the world’s best car, the Tesla,
in this labor stronghold? It takes guys who prefer the impossible. It takes guys like
my father.
Yes, that was J. Paul Getty. I’ll declare a bias for him. His faults were just what we
read they were. I liked them fine. My times with him, with an exception I’ll note in
Chapter 1, are some of my favorite memories. I seem to be the opposite of pharaohs
who began their reigns by chiseling off their father’s names from the monuments
and substituting their own. That was something about a ticket to the afterlife. I put
my father’s name on things I build. The afterlife will come as it comes.
Since this book is about growth first, I should say how I feel about growth. Most
economists, which I’m anything but, treat it as a goal. I love innovation, which has
translated to growth, while worrying plenty about growth itself. What happens
when anyone can make a doomsday weapon on his desktop? Depressed people do
away with themselves every day. Some might take the rest of the world with them if
they could. Armageddonist religions wouldn’t be needed. Not even destructive
intentions need be. A doomsday weapon bought at the five and ten might go off by
accident.
Then why do I root for innovation when I’m scared stiff about its consequences?
Because alternatives are scarier still. Humans will innovate anyhow, while Big
Brother or the religious authorities aren’t looking, and I don’t like the prospects of
innovation driven underground. We’ll have to find some way to face the risks and
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manage them. This book doesn’t say how. It will open that can of worms, and others
too, and try to track some but not all to their destinations. One look leads to another.
This shows that I’m not an optimist in the sense of making rosy predictions. But I
seem to show that bias in evaluations. I’m two thirds Panglossian. (Doctor Pangloss
was the guy in Voltaire’s Candide who said that this is the best of all possible
worlds.) I side with the good doctor in that I cannot imagine an improvement to this
world or to the human race. I see the dangers and evils, such as Armageddonists, as
somehow part of the scheme. The world would not be better if it posed no threats
and challenges to solve. To solve them is not to wish them away. The stories of
Aladdin’s lamp and the monkey’s paw tell us that each wish after the first is to undo
the one before. I think that’s what Shaw was telling us in Don Juan in Hell. Don Juan
and the others are free to go to heaven whenever they like, and occasionally do.
They come back because they can’t stand the boredom.
Where I find fault, and differ with Pangloss, is as to the doctrines we are taught.
Whatever I study, I seem to find a good measure of nonsense taught along with
wisdom. This book is about what I find of both in economics. And a problem I try to
solve, not wish away, is the danger of losing sight of the points on which Pangloss
was right. My verse and music try to remind us.
And I’ll admit a bias for the surprises my title promises. I love upending what we
had all assumed. Fun! And all the more fun when I can show that famous economists
had already seen and said some of the same things I do when we read those
economists again. Surprise need not be true novelty. My free growth theory is really
John Stuart Mill’s, although no one seems to have noticed the paragraph I quote
from him. My next generation theory really belongs to my 17 th -century rhymesake
Sir WilliamPetty, who happens to be my nominee for greatest economist of all time.
In a way, I could also credit it to the period of production theorists John Rae, Nassau
Senior, William Stanley Jevons and Eugen von Boehm Bawerk. They need only to
have considered human and total capital as explained by Petty two centuries before.
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This reveals my bias for economic history. It seems dry as a bone until you find
something terrific like those insights. It happens that I had written both theories,
and published one, decades before I found those great precedents. Should I have
been chagrined? Of course not. Forgotten or unnoticed precedents are at least as
much fun to point out as the surprises they showed ahead of me.
I will also reveal a bias for evolutionary biology. Its main axiom, the biological
imperative, becomes one of mine. The idea is that behaviors are selected for
successful reproduction. I will try to show that the classical school treated this as
axiomatic from Petty through Smith, Malthus, Ricardo and Mill. Malthus was only
the most obvious case. It lapsed from attention when a brilliant new insight called
marginalism preferred to do without explanations for tastes.
Above all comes my bias for the great thinkers in those fields. We saw that as to Bob
Trivers. Although I often cite them to disagree with them, I see all as giants from
whose shoulders I slip in trying to climb. I don’t kick sand on 97-pound weaklings.
Mill was a mensch who gives us all lessons in attribution and generosity, particularly
to schools he disputed, and who nonetheless didn’t mind being a minority of one in
his books or in parliament.
Petty was something beyond. Polymath, self-made tycoon, anatomist, music teacher,
father of national accounts, originator of present value theory and human capital
and next generation theory, and esteemed by both Adam Smith and Karl Marx for
other innovations I don’t mention. Such men are understood slowly and
incompletely.
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CHAPTER 1: RECOLLECTIONS
I never finished a course in economics. I started one at the University of San
Francisco sixty years ago, and dropped it when I couldn’t see the foundations. But
the bug had bitten me. I knew that one day I would try on my own.
I always loved logic. My favorite philosophers at USF were the pre-Socratics who
liked nothing better than to confound common sense. A brilliantly vexing example
was Zeno the Eleatic and his argument that Achilles can never catch up to the
tortoise; Achilles must first reach the line where the tortoise was last, and the
tortoise has since moved on. Logic can play such tricks. But I sensed that economics
was the place to try its limits. Dropping the course didn’t mean giving up, and logic
would be the key.
Neither did I take a course in business administration or investment. My major was
English literature. As a grade schooler I had asked my father about this. Where and
what should I end up studying? He had read economics and petroleum geology at
Oxford, and I supposed he would advise something like that for me. I got a surprise.
Career-oriented majors were fine but not necessary. A grounding in the liberal arts
could be as much or more. The trick was to learn how to learn. That sounded right,
and anyhow right for me. So I chose USF, a twenty-minute walk from home until my
mother moved us to San Rafael, a half hour drive across the Golden Gate Bridge, and
followed my intuitions toward English lit and history and music and philosophy.
I graduated with a degree in English lit in 1956. This was the time of skittish peace
between the Korean and Vietnam wars, and the Reserve Forces Act meant I had to
report for six months active duty starting in the spring of 57. Meanwhile I worked
for my father. I and my brother Paul, later Sir Paul, started at the bottom pumping
gas and changing oil at separate gas stations not far from our home in San Rafael.
That left time for a few weeks at a bulk plant (oil warehouse and tank farm) in San
Francisco, still working at the bottom, before I reported. Paul had served in the
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Korean war, and was now exempt. I was a shavetail second lieutenant, thanks to the
ROTC program at USF, in the quartermaster branch at Fort Lee, Virginia. My
eyesight was never good enough for the combat branches.
Ike, who was then president, had started in the quartermaster too. My military
career was not so glorious. Somehow I finished the six months at Fort Lee and seven
and half years of inactive duty following, obligating me to one weekend per month
at military posts near home, without being promoted even to first lieutenant. By
policy, I should have been promoted or busted to the ranks. I later learned that my
school chum Manuel Teles, who worked at Fort Presidio in San Francisco, had
somehow fixed the record. Thank God for old friends.
My weekends of saluting were postponed when Paul and I went back to work for my
father in 1958. My father then lived in the Ritz Hotel in Paris. He liked ordinary tworoom
suites. The sitting room was his office. His filing system was a steamer trunk.
Our job was to sit and listen as he met with executives or art people or old friends.
He would usually take us along to lunch and dinner, and wangle us along when he
had been invited out. He was the world’s most attentive father whenever we were
with him, at least, if focused elsewhere when we weren’t.
Paul went on to learn refining and marketing in Italy, after those few weeks in Paris,
while I went to the oilfields my father had just found and developed in the Neutral
Zone between Saudi Arabia and Kuwait. Paul soon learned Italian, became general
manager within two years, and ran things well. I learned only a little Arabic, but also
became manager in 1959, and soon blundered my way into two weeks’ house arrest.
I had got crossways with the local emir, Mohammed bin Nasr, not a bad guy, about
perks and privileges he and his staff expected Getty Oil to pay for.
The case against me was rigged. One of our junior staff drivers, a Kuwaiti I think,
had accidentally rammed and damaged a pipeline. He had fled the country to avoid
jail. Jails there were no fun. His supervisor, Jim Kinnell, was warned that he (Jim)
was accountable under Saudi law, and would be sent to jail instead. Jim came to me.
I realized what was brewing. Laws are flexible, and Jim would have got off with a
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caution at most if I weren’t at odds with the governor. I was obviously next. But I
was not about to gamble that the threat to Jim was a bluff. I told him that if I were in
his shoes, I would go back to England. He did. That left me. But I was in my shoes.
The blunders had been mine, and I would face the music.
My two weeks of house arrest went peacefully. The plain cement-block house had
been built for my father at our port camp of Mina Saud when he lived in the Neutral
Zone in 1953. The Emir’s identical house was a few steps away. My father’s favorite
maple sugar was still in the fridge. I read the few Shakespeare plays I hadn’t read in
college, and read or reread the complete poems and plays of John Keats.
The house arrest was probably as much dressing-down as I deserved. Paul, or
anyone else, would have handled the perks and privileges more adroitly. But our
host country, Saudi Arabia, may have picked up on something too. Getty Oil was not
one of the concession companies in the Middle East named in the baksheesh
(bribery) scandals that made the front pages over the few years remaining before
most concessions were negotiated away and host countries ran things themselves.
Back to my father in Scotland, where he was visiting his old friends the Maxwells
near Inverness, and then to the two-room suite at the Ritz in London about like the
one in Paris. He drove the six hundred miles between, in a vintage Cadillac, taking
two days and stopping to visit historic sites and museums. He needed no guidebook.
I sat in on meetings and events everywhere with him in London as in Paris. I
assumed that the Saudis had cleared the house arrest with him, and I would have
agreed as he did. He too was in different shoes. He was right. He had solved a real
problem with minimum damage. Lesson learned, and no hard feelings either way.
It was clear to both of us that I was not cut out to be a line officer, meaning one who
runs things from day to day. My mind goes off on tangents instead of tracking
arguments in real time. It works for me, but not as an administrator. We decided to
try me as a consultant.
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That began at my father’s Spartan Aircraft Company in Tulsa, Oklahoma. He hadn’t
meant to buy it. He had bought control of Skelly Oil, centered in Tulsa, and Spartan
turned out to be one of its holdings. Then came Pearl Harbor. My father was 48
years old, and had been a yachtsman. He took a navigation course at USC along with
kids half his age, led the class, and volunteered for sea duty. His old friend James
Forrestal, Secretary of the Navy, steered him to Spartan instead. Spartan could make
training planes and could train pilots. My father accepted. He paid himself a salary of
one dollar a year.
He had decisions to make when MacArthur and Matzushita signed the peace treaty.
The training planes were not meant to leave the ground. Spartan lacked the
capacity to make the real thing up to competition. The demand for training planes
pretty much ended with the war. My father could sell out or find another use. He
decided to make house trailers. It worked. I had lived in a Spartan trailer in the
Neutral Zone, like the rest of the senior staff, when I stayed at our Wafra oil field
rather than the house at Mina Saud. We and the market had liked them fine.
Herschel Shelton had been one of my father’s right-hand men during the conversion
to trailers. He said that the place to look for him was never in his office. You would
find him in overalls under a trailer on the factory floor, with a welding iron or
riveting gun. He liked to be able to do any job his workers did. How else would he
know if they were doing it right?
I stayed in my father’s house at Spartan, as at Mina Saud. It stood at the opposite end
of the runway from the offices and trailer plant. I drove another seasoned Cadillac
that my father had left in case he came back. Max Balfour, who ran Spartan, called it
a clunker. It clunked me around the countryside on weekends, or to Jamil’s
restaurant or Cap Balfour’s house for dinner, or downtown to the movies or
symphony or opera house. Cap (Captain) Balfour had flown in World War I, and
showed crippled hands from when his plane caught fire. He was cranky, urbane and
razor-sharp. His problem was that Spartan couldn’t seem to come out in the black.
He worshipped my father, and figured he had let him down. He seems to have
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brought his moods with him after work, which my father generally didn’t. That cost
him his sunny young wife. I somehow got a pass. I could understand him, and I was
my father’s son.
My advice in the end was that my father should sell. Meanwhile I was taking an
interest in economics again. Business was about rate of return. Spartan’s was
negative. What was the benchmark? I did a little study.
It is easy to see that return tends to even out from one company or industry to the
next. We pour investment into high-return prospects, and unintentionally drive that
high return down toward the norm by expanding the capital denominator. I didn’t
know that Robert Turgot had written the same in 1766. But what struck me was the
impression that return, net of inflation, seemed to revert to a norm over time. Why
were interest rates, averaged over business cycles, about the same then as in
Dante’s time or Julius Ceasar’s? Why should human impatience be a steady norm?
That puzzle nagged me for about a quarter century until I found the answer.
Another decade or two would pass before I learned that Sir William Petty had found
it in the seventeenth century.
I went home in 1961 to study harmony and counterpoint at the San Francisco
Conservatory of Music. I had found time to compose a few things at the house at
Mina Saud with a piano I had bought in Kuwait. They included an a cappella
(unaccompanied) choral setting of Tennyson’s “All Along the Valley”, and something
to which I later fit Emily Dickenson’s poem “Beauty Crowds Me” in my song cycle
“The White Election”. The composer Charles Haubiel published “All Along the Valley”
in his Composers’ Press in Los Angeles in 1959. The one change he suggested, an
unexpected D flat major resolution, is the best touch in the piece. I had noticed
copies in music shops in Tulsa. So it seemed about time to develop that interest too,
and the conservatory back home seemed the logical place.
Chapter 1: Recollections 1/06/16 5
I studied there from fall 1961 through spring 1962. I was probably the only
composition student already published. My teacher in both the fall and spring
classes was Sol Joseph. He was a legend there. Most of what he taught confirmed my
instincts. Maybe five percent was old rules I didn’t think much of, and five percent
good ideas that hadn’t occurred to me. All was useful anyhow as a guide to what
leading authorities have thought and taught. That was the point. We were to accept
what we liked, and anyhow learn the lingo.
Those two courses covered traditions of the eighteenth and nineteenth centuries.
Most composers in the 1960s, and probably some or most of my classmates, thought
of that as a stepping stone toward study of the serialism and other atonalism then in
vogue. I skipped those classes. I realized that I was a nineteenth-century composer
at heart. Now the world seems to have spun back to where I was all along. For most
composers now, atonalism is one of the colors on our palettes. Even I use some. So
did Bach. We reach for that color when we want to express disorientation or angst. I
found I could get more said most of the time with major-minor scales.
Five short piano pieces I wrote then were published by Belwin Mills in 1964. As my
father’s son, you might imagine that I was asked to pay the costs. Nope. Neither had I
paid a cent to Composers’ Press. Vanity press exists, but that was not the business
model of those two firms. I got standard royalties from sales, not amounting to much,
and they got the rest.
Six published pieces by age 31 would not have impressed Mozart or Schubert. By
lesser standards, it was a pretty good start. There are distinguished composers who
have never found a publisher. Tomorrow the world! I would write operas and
symphonies! What happened instead was sixteen years of writer’s block, or eighteen
since finishing the pieces in 1962. I suppose I was trying to say “Shazam!” and turn
into something I wasn’t. The ice would break in 1980, when I realized that Billy
Batson would have to do. But that gets me ahead of my story.
I married Ann in 1964, making it a banner year on that count even more than the
publication, and went back to work for my father. That took us to New York in 1965.
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Tidewater Oil Company, which would merge into its parent Getty Oil Company a few
years later, had red ink problems in its Eastern Division. My job was to see why.
Eastern Division was run by “Jim” Jiminez, an upbeat guy I liked. I don’t think he
took the red-ink problems home with him as Cap Balfour had. He reported to my
half-brother George at corporate headquarters in Los Angeles, and George reported
to my father in London. George had earned his job as president by outstanding
performance at every level on the way up, which is more than you could say for me
in the Neutral Zone. But George was touchy. He had a chip on his shoulder. I think
my father liked to ride him, and he sometimes felt unappreciated. You have to shrug
that off. George was doing fine. The problem in Eastern Division was not in him, and
it was not in Jim Jiminez. Then what?
I looked at the books. The red ink had nothing to do with management. Eastern
Division did refining and marketing. Its new refinery in Delaware had been
optimized to process heavy Wafra crude oil, which then was over a dollar cheaper
per barrel on the market than the lighter and easier-to-refine crude we produced in
Texas and the Central Basin. Tidewater’s Western Division refinery at Martinez, by
contrast, had all the cheap oil it needed in our own San Joaquin field. The Martinez
refinery was old, and more expensive to operate. But the net advantage still went to
Western Division by about a dollar per barrel. Meanwhile gasoline sold for about a
dollar less per barrel, although only two or three cents less per gallon, in the
refinery-loaded east than in California.
Management can’t do much about import quotas and market conditions. I reported
to my father that Eastern Division was at least as well run as Western Division,
where the ink was black thanks to cheaper crude and pricier gasoline.
Then could we cut costs or boost receipts in other ways? I proposed that we close
our old and inefficient Boston Harbor terminal, where barges unloaded gasoline into
our tank farms to be trucked to stations, and supply Boston from our new terminal
at Providence two hours’ drive away. If that worked, other distribution
consolidations seemed possible. I later proposed much the same thing for our
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operations in Japan, where the new terminal at Kawasaki could theoretically obviate
the older and clumsier one in Tokyo Harbor. I realized that plant-closing might be
unthinkable in Japan, but thought that something good might come of the idea.
Sometime a little later came my lawsuit against my father. It isn’t my happiest
memory. There had been a stock dividend years before, when I was still in school.
We had treated it a certain way on the books. I read the law as saying it should have
been treated another way. The law was probably on my side, and common sense on
my father’s. Judge Peery wisely found a way to make common sense win in the end.
Meanwhile I had accused my father of nothing worse than oversight. My visits to
Sutton Place, now with Ann and the boys, went the same as before. The lawsuit
seldom came up and was discussed in easy terms when it did. I suggested to him, for
example, that he might want to settle with my stepmother Teddy in case there could
be claims by the estate of my late half-brother Timmy. He did. Somehow we got
through the lawsuit without bad blood. One would not have guessed so much was at
stake. The stock dividend had been a huge one. What I learned from my father, then
most of all, was perspective. He believed in an even keel. Zeno the Stoic, not the
Eleatic, would have met his match.
The lawsuit lasted from 1966 through 1971. In hindsight, thank gosh he won. If I
had, tax consequences would have been ugly all around. Again I had learned a lesson,
and again there were no hard feelings either way.
I continued to do consulting jobs for him throughout the lawsuit and after. I charged
expenses, but no fee. And I didn’t pad expenses. If I had, you can believe he would
have seen it. I stayed in a single room in the best hotels, ate three squares a day, and
paid for anything else myself. I was trying to make the point that I didn’t want to be
paid. Neither had my father at Spartan during the war. The idea was for me to be of
use. I was paid like everyone else when working for my father full-time, but never
on consulting jobs.
Those now came once or twice a year, and lasted for a week or two each. Composing
was still on the back burner. I was keen on physics, economics, human origins and
Chapter 1: Recollections 1/06/16 8
city planning. It became clear that all but the third needed better math skills than I
had. So I bought the Barnes and Noble textbook on College Mathematics, got through
it in a week of hard work, and then began on the Johnson and Kiokemeister textbook
on calculus along with Halliday and Resnick on physics. Together they took me
nearly a year. At the end, I was allowed to sit in on the freshman physics finals at Cal
Berkeley, where the same two textbooks were taught.
It was the finals for physics majors, and meant to be tough. Cal took physics
seriously. Not every freshman was destined to go farther. Some should be steered
towards engineering, which pays better anyhow. There were 10 questions. Three
hours were allowed. Each of us had a calculator and nothing else. Not even a table of
integrals. My God. I had to remember them or rederive them. There are some that
had taken even Newton and Leibnitz months to solve. I don’t remember any of the
questions. There were 200 to 300 kids in the room. Maybe 20 or 30 orientals, about
three women, no blacks. Not one finished early. And some figure to be Nobelists by
now. We’re talking about Cal. I had answered seven questions when the three hours
were up. Was that good enough? I got a call in a few days. I passed, and beat the
class average.
My old friend Matt Kelly warned me about this time that George was in trouble. Matt
had known George’s new wife Jackie, and had been invited to dinner there. Matt’s
impression was of out-of-control mood changes. He said that George at one point
had drawn him aside, shown a pistol and warned him about paying too much
attention to Jackie. The next minute they were back at the table in jolly spirits. I
learned later what was wrong. George thought he had a weight problem, although I
never noticed one. Doctors prescribed amphetamines in those days to control
appetite. They revved him up and made it hard to sleep at night. So the same doctors
prescribed barbiturates at night to get him to sleep. Uppers and downers are
dangerous enough. Add a drink or two and you’ve got trouble.
Of course I should have told my father. But I didn’t want to be the one. I liked to
boost my brothers. Many must have seen the symptoms Matt saw. Let them break
Chapter 1: Recollections 1/06/16 9
the news. But the others must have felt as I did. We waited too long. I got a phone
call in 1973. George had died at Mount Sinai Hospital. There was an empty bottle of
sleeping pills.
My father’s death came in 1976. Ann and I had got word it was coming a few weeks
before. We were there. So was Norris Bramblett, an accountant who had worked for
my father since I was in school. My father trusted him. So did I. He had only a fourth
grade education, but a PHD’s worth of character and sense. My father, Zeno the Stoic
when things got tough, cracked jokes to the end. Norris alone could understand him
by then. He translated patiently. My father was giving me one more lesson. He
lapsed into a coma. Ann and I were called down from our bedroom when he died.
That left me and Lansing Hays co-trustees of the trust controlling his companies.
Lansing ran the law firm that handled nearly all my father’s business and little else.
It was a big job. Lansing was smart, abrasive, and dead honest. He didn’t mind
hurting people’s feelings. I was not immune. It didn’t matter. It wouldn’t have
mattered to my father. What mattered was that Lansing knew what trust meant, and
put the Trust first. That’s what I cared about.
Lansing was already on the Getty Oil board. I was invited to join too. We met four
times a year, most often in Los Angeles. Harold Berg, an oil engineer from Colorado,
had become CEO (chief executive officer) and chairman after George died. Sid
Petersen, an accountant, was COO (chief operating officer). Harold was a warmer
and more approachable personality. That’s what you’d expect in an oilfield guy. Sid
was reserved and analytical. That’s what you might expect from an accountant,
although Norris Bramblett fit anything but the stereotype. Harold and Sid were both
clearly well chosen. Neither then nor later did I doubt that Getty was run at least as
well as its big oil rivals.
The board too were top people. But trouble was brewing. The trust, meaning
Lansing and I, owned about 43% of the shares. The Getty Museum, also chaired by
Harold, owned another 11%. Boards and managers prefer scattered ownership, so
that they can operate more freely. Second-best would be concentration in docile
Chapter 1: Recollections 1/06/16 10
hands happy to follow the board’s guidance. But my father had made it clear to
Lansing and me that we were to trust our judgment. We should be ready “to vote the
management in and out.” Since stockholders elect boards and boards hire managers,
that meant to vote the board in and out.
No wonder they were concerned. Lansing and I were both boat-rockers. Wouldn’t it
be safer if there were a corporate co-trustee? These are usually safety-minded banks,
and many banks did business with Getty Oil.
Concerns rose when Lansing died in 1972. That left me as the sole trustee. I was less
obstreperous than Lansing, but also less predictable. Hostile takeovers were
common then, where bids are made directly to shareholders rather than cleared
through the board. Getty was rich in oil reserves per dollar of share price. It could be
a target. Board members tend to feel that they know stockholders’ interests best,
and that the angels are on the side of “friendly” or board-approved takeovers if any
at all. Stockholders don’t necessarily feel that way.
Temperatures rose when I pushed serious study of the possibility of taking Getty
private. The idea was to give up our corporate structure to escape the corporate
double tax. Management and its investment banker, Goldman Sachs, advised against.
I now think they were right, although my idea had good precedents. I pressed on,
unwisely, by trying to convince the Museum to back me. They had better sense.
It was time to heal the breach. Marty Lipton of Wachtell, Lipton, a top mergers and
acquisitions law firm, represented the Museum. He proposed a moratorium (the
“tripartite agreement”) where the Trust, Museum and company would hold the
status quo for one year. Harold Berg had retired as chairman of Getty Oil, and Sid
was now chairman and CEO. His COO was Bob Miller, a keen petroleum engineer.
Harold Berg still chaired the Museum, although Harold Williams was its CEO and
main voice. We all signed. But Getty Oil had its fingers crossed. A few days later, the
company petitioned the court to appoint a co-trustee. It proposed Bank of America.
B of A’s chairman, Chauncey Medberry, sat on the Getty Oil board. Paul and George’s
daughters joined the plaintiffs.
Chapter 1: Recollections 1/06/16 11
The Museum was more outraged than I was. Marty felt that he had been used. He
and Harold Williams, a business-savvy guy who had chaired the SEC under Jimmy
Carter, realized that if I could be hog-tied, the Museum with its 11% was the next
domino.
This was in November of 1983. Within a few weeks, the Museum and I signed a
“consent of shareholders” taking over the company. The required public disclosure
of this, on top of the tripartite agreement and co-trustee lawsuit before, was blood in
the water.
Pennzoil launched a hostile takeover bid in December. My concern was that the
trust should not be locked in a minority position. I met with Pennzoil in New York.
We resolved that to my satisfaction. The Getty Oil board met, also in New York, on
January fourth. The mood was not sunny. Harold Stuart, one of the brightest and
finest board members, assumed that I had invited the Pennzoil bid. Chauncey
Medberry thought I should be sued. But Sid and the board acted responsibly overall.
We countered with a higher price, Pennzoil accepted, and we went home thinking
we had a deal.
Texaco offered a higher bid two days later. Was Getty Oil already bound to Pennzoil?
Its lawyers and mine said it wasn’t until the final agreement was signed. I had my
doubts. But I liked Texaco’s offer better, and my duty was clear. The Trust and
Museum would be paid cash for their shares, rather than locked in. I had insisted on
language in the Pennzoil agreement that bound me only as “consistent with my
fiduciary duty.” My duty, in the light of legal advice, was to accept Texaco’s offer. I
did, and voted the same way as a member of Getty’s and the Museum’s board. Those
were fiduciary duties too.
Pennzoil sued Texaco, and eventually won punitive damages of some eleven billion
dollars. The Museum and Trust had cashed out. We were not parties. The Pennzoil
and Texaco filings both spoke well of me. But there was still the lawsuit seeking a
corporate co-trustee. That would have been very dangerous before the sale to
Texaco cashed us out. A corporate co-trustee might well have assented to “corporate
Chapter 1: Recollections 1/06/16 12
defenses” blocking a sale and effectively locking the trust in a minority position. But
now that danger was over. The remaining plaintiffs were my three nieces and Paul. I
couldn’t blame them. How could a corporate co-trustee hurt?
But I was still worried. I now wanted to split up the trust into four separate ones for
my family, Paul’s, George’s, and my other half-brother Ronnie’s. Corporate cotrustees
tend to prefer the safety of acting only as required, and anyhow might not
be keen to vote themselves out of a job.
Were Paul and my nieces mad at me? Believe it. Lawsuits get that way. Lawyers on
both sides say nasty things. That lasted because splitting the Trust took time. The
math was easy, but the legal precedents were vague. My lawyer, Mose Lasky,
thought we needed new California law. Plaintiff’s counsel didn’t think so. I was
accused of stalling. Someone had the bright idea to approach Willy Brown as
Speaker of the Senate. The law Mose wanted had already worked in other states,
and Willy liked it. He pushed it through. Problem solved. The Trust was split into
four in 1988, and an unhappy chapter ended. My nieces and I are as close as ever. So
were Paul and I until his death in 2002.
My interests by the time of the split were composing, verse, economics, human
origins and evolutionary biology. Composing was going pretty well. My writer’s
block had melted away in the summer of 1980. Ann and I and the boys were in Paris
then. We wandered into Smith’s English language bookstore. I bought the Thomas
Johnson variorum of Emily Dickenson’s 1800-odd poems. “Variorum” means
including Emily’s own variations when she mailed the same poem to different
people, or put a copy in the chest at the foot of her bed.
I read them all over the next two days. Emily had been one of my favorites at USF.
She died in 1886. She had published only eleven poems. Squabbles among the heirs
delayed publication of about half the rest until Johnson published them in 1959,
three years after I graduated. Many already published had been “bowdlerized” to fit
conventional rhyme and grammar. Johnson gave us the real McCoy from her
manuscripts. All was new to me.
Chapter 1: Recollections 1/06/16 13
I had no piano in our hotel room in Paris, but set a few of the poems in my head to
write down later. More followed. One of her poems I didn’t set begins “Mine by the
right of the white election…” Election meant choice. Her white smock hangs today by
her bed in Amherst where she was born and died. White is the color of weddings
and burials. Her choice, I think, was a death marriage to the reverend Charles
Wadsworth of the Arch Street Church in Philadelphia. He was happily married. She
met him about three times in her life. I would tell her story in 31 of her poems, one