|Texas oil patriarch H. L. Hunt. The Hunt family was reputed to be the world’s wealthiest. Image from The Famous People.|
The hidden history of Texas
Part 14: 1974-1995/2 — The influence of Texas’ ‘big rich’
By Bob Feldman | The Rag Blog | May 7, 2013
[This is the second section of Part 14 of Bob Feldman’s Rag Blog series on the hidden history of Texas.]
During the 1970s and early 1980s the folks who inherited the oil industry-based wealth of ultra-rich white Texans like Sid Richardson and H. L. Hunt continued to make big money — and to use that big money to exercise a special influence in both Texas state politics and U.S. national politics.
As Bryan Burrough’s The Big Rich observed:
For the state’s actual oilmen, the party that began with the 1973 [Arab oil] embargo, ran for 5 solid years. Drilling boomed. Profits mushroomed. Then, in 1978, things got even better… In just 7 short years prices rose 2,000 percent… By 1976…the children of H.L. Hunt’s two Dallas families and the corporations they controlled, were thriving as never before.
Thanks in large part to rising oil prices, the Hunts were probably the world’s wealthiest family… Their net worth hovered in the $6 billion to $8 billion range, easily topping the next wealthiest American families, the Mellons and Rockefellers…
The most successful Hunt during the 1970s was Ray, who began making over his father’s old Hunt Oil Company much as his Reunion project was changing the face of downtown Dallas… In 3 short years he quadrupled the size of Hunt Oil’s staff, increased its offshore leases from 100,000 to 1 million acres… Ray started a new magazine just for Dallas, D… By 1982 Texas Oil had luxuriated in a solid 10 years of record-high prices…
And, coincidentally, the sixth-largest contributor of campaign funds for one of Texas’s representatives in the U.S. Senate during the 1980s and 1990s, Phil Gramm, came from the Bass Enterprises investment firm that the Bass family relatives of Sid Richardson formed after Richardson’s death, while the seventh-largest contributor of campaign funds for former U.S. Senator Gramm during this period was Ray Hunt’s Hunt Corporation, according to the Center for Public Integrity’s 1996 book, The Buying of the President.
But once the demand and market price for oil began to drop after 1982, many of the independent local oil companies in Texas began to lose money or go out of business; and many could not pay off the loans that major banks in Texas had given them during the boom years of the 1970s and early 1980s. So “in October 1983… First National of Midland collapsed” and “in the next decade 9 of the 10 largest Texas banks would follow suit,” according to The Big Rich.
In 1981, membership in the Texas labor union locals that were affiliated with the Texas AFL-CIO had “peaked at more than 290,000,” according to the www.texasaflcio.org website. But the number of Texas workers who were Texas AFL-CIO-affiliated union members “then dropped dramatically during the oil bust of the 1980s;” and by 1995 membership was just 197,462, according to the Texas AFL-CIO’s website.
By the end of the 1980s many of the deregulated Savings and Loan (S&L) thrift institutions in Texas’s banking industry also had collapsed in a big way, after “real estate developers bought thrifts so they could have a private piggy bank to finance office buildings and condos no one needed,” “con artists set up loan scams and used thrifts to launder money,” and “thrift executives cooked the books and paid themselves high bonuses when their banks were actually losing money,” according to the 1991 edition of Louis Rukeyser’s Business Almanac.
As The Buying of the President observed in 1996, “Texas has the unpleasant distinction of topping the list of states with the most S&L failures with 65,” and “the state was second only to California in terms of the value of assets held by failed thrifts: California thrifts had $18,358 billion in assets compared with Texas’s $18,279 billion.”
And, coincidentally, the U.S. president who signed the S&L industry bail-out bill in 1989, George Herbert Walker Bush, was both a former Texas oil industry and banking executive and the father of Neil Bush — who was sued by federal regulators “for regulation violations that allegedly contributed to the $1 billion collapse of Silverado Banking, a Denver thrift,” according to Louis Rukeyser’s Business Almanac.
Between 1974 and 1995 another son of the U.S. President who launched Gulf War I against Iraq in early 1991 (who, himself, would become the governor of Texas in 1995 and the U.S. President who launched both the endless U.S. war in Afghanistan in October 2001 and the endless U.S. war in Iraq in March 2003) — George W. Bush II — also worked as an executive in Texas’s oil industry.
Before joining with the Bass family’s former money manager and other business partners to purchase the Texas Rangers baseball team in 1989, former Republican Texas Governor Bush was an executive at the Harken Oil and Gas firm that both Harvard University and the ultra-rich Bass family financially backed.
Another ultra-rich Texas billionaire, Ross Perot, was able to exercise a special influence on the direction of U.S. presidential politics during the 1990s — by spending $65 million of his surplus personal wealth to finance his own 1992 campaign to gain control of the White House — for which over 19.7 million U.S. voters cast ballots in November, 1992 (and for which over 7.8 million U.S. voters also cast ballots in November, 1996).
Perot had gained his initial big wealth in 1966 after his private family business, Electronic Data Systems (EDS), suddenly became super-profitable when Texas Blue Shield/Blue Cross — whose computer/data processing department Perot then headed — received a lucrative contract from the U.S. government’s Social Security Administration to develop a computerized system for paying the Medicare bills;” and Perot’s Texas Blue Shield/Blue Cross employer then gave Perot’s private EDS firm “a subcontract to take over their data processing on the new Medicare program using, of course, the system just developed at government expense” (by the same firm whose computer/data processing department Perot headed), according to a November 1971 Ramparts magazine article.
And it was also during the 1974 to 1995 period of Texas history that a Democrat, Ann Richards, was the governor of Texas (between 1991 and 1995), and that more than 70 people were killed on April 19, 1993, following a 51-day siege and an armed attack by U.S. federal government law enforcement agents on the Branch Davidian compound in Waco, Texas.
[Bob Feldman is an East Coast-based writer-activist and a former member of the Columbia SDS Steering Committee of the late 1960s. Read more articles by Bob Feldman on The Rag Blog.]