Painfully Rich Page 6

  Worse still, if she understood him properly, Paul was suggesting the complete reversal of much that dear Papa had stood for. Papa had built the company by discovering oil, buying leases on the land, and then producing it. He was an oil man, not a smart financier, and he believed in sticking to the things the company did best. He had always had an honest Christian dread of debt. She could hear him now. ‘The last thing to do is borrow. The first thing to do is always to repay your debts.’

  It was over this that her arguments with Paul invariably began. What Paul had set his heart on was expansion, extending the company into every branch of the oil business – refining, marketing, and finally creating a network of gasoline stations selling Getty products nationwide. When she asked him where the money was to come from, he replied that the company had capital in reserve, and he was perfectly prepared to borrow too if necessary. He had even coined a motto of his own, which he repeated when she mentioned his father’s fear of debt. ‘Buy when everyone else is selling, and hold on until everyone else is buying.’

  In fact he was convinced that the Wall Street crash of 1929, far from being a dire warning, was actually offering George Getty Inc. the chance of a lifetime by changing the economic landscape of the oil industry. Since oil shares on the New York stock exchange had plummeted, now was the time to buy, thus picking up oil reserves at bargain prices through their undervalued shares.

  For Paul this seemed more sensible than developing fresh oilfields as he himself had been doing in the past. It also offered an unrivalled opportunity to achieve his great ambition. By carefully acquiring shares in publicly quoted oil companies, he could slowly gain control of them. Some were highly vulnerable, and he inevitably had his strategy worked out for the companies he wanted. It was time to act before the bargains vanished.

  When he explained this to his mother she sometimes became extremely agitated, but he knew exactly how to calm her down.

  ‘Times change, and this is what dear Papa would do himself if he was here,’ he’d tell her.

  Sarah would usually end by agreeing – but she was never totally convinced that he was right.

  During the next three years, Paul pursued his strategy of acquisition with the energy and skill of a raiding general bent on plunder. Anxious as ever to disprove his father, he became a most adroit financier. He was patient, fearless and extremely sharp, but behind each operation lay the thoroughness with which he made his preparations. Everything was checked and counter-checked. Nothing was left to chance.

  Even so, his first big stock deal ended in disaster. In September 1930 he finally persuaded a reluctant Sarah to agree to borrow from the Security-First National Bank for the purchase of 3 million dollars’ worth of stock of Mexican Seaboard, a Californian company with leases in the oil-rich Kettleman Hills whose shares he considered undervalued.

  After the deal, Paul had to leave on a hurried trip to Europe and so couldn’t stop the panic when the shares continued dropping. Had he been present, he would have urged his directors to sit tight – as they should have done – but in his absence the bank insisted on selling the shares to repay the loan before they sank still further – thus losing practically a million dollars.

  On his return, Paul found the boardroom atmosphere of George Getty Inc. ‘decidedly chilly’, as he put it, adding that at least ‘Mother was vindicated’.

  This was the nearest Paul ever came to real disaster. It was a sobering lesson, reminding him that to fail now would mean losing everything and prove that his father had been right. He had no alternative but to continue, even if this meant risking every penny he possessed and calling on any source of credit he could muster.

  Typically, instead of playing safe, this was the moment when he raised the stakes. Using all his energy and everything he owned, he started bidding for Pacific Western, one of California’s biggest oil-producers, whose shares had fallen in the last twelve months from $17 to $3.

  This time he succeeded. By the end of 1931 he was nearly bankrupt – but he was also firmly in control of Pacific Western. His plans were working, and next on his plan of campaign was America’s ninth largest oil company, the $200 million Tide Water Oil company. To take it was a daunting proposition for a small unknown outsider – but he needed something big to justify himself against his father, even if this brought him into conflict with his mother.

  To begin with she was acquiescent, and he was able to sell off George Getty Inc.‘s San Joaquin Valley oilfield for 4.5 million dollars without excessive opposition. This was to be the war-chest with which he planned to finance his campaign.

  By March 1932 Tide Water stock had slumped to a record low of $2.50 a share. But Paul knew that over-hasty buying could raise the share price and alert the Tide Water management to the threat he represented. It was time for wariness and anonymity – qualities he had never lacked. By the end of March Paul had somehow acquired a significant holding in Tide Water without anyone in the company knowing who he was, or being any the wiser.

  During this period following his father’s death, Paul’s financial situation remained closely tied in with his private life. Had he lost his nerve, as well as that million dollars on the Mexican Seaboard deal, he would have been tacitly admitting that his father had been right to disinherit him. But since he had such faith in his own future, and since his plans were steadily maturing, he had no need to worry over any criticism from the grave on the subject of his ‘immorality’.

  As a result, the period following his father’s death saw Paul as sexually adventurous as ever, and finally hit by a fresh attack of his old affliction – marital fever.

  This time the cause was slightly older than before. But although Ann Rork was all of twenty-one when Paul became involved with her in the autumn of 1930, she had barely changed from the dimpled nymphet of fourteen he had attempted to seduce some eight years earlier. She must have been a precocious adolescent, for Paul had been taking her to bars and night-clubs even then – until angrily warned off by Sam Rork, Ann’s extremely jealous father, who had heard about Paul Getty’s reputation.

  Rork himself was an old-time Hollywood producer, faintly famous as the discoverer of the star of silent movies, Clara Bow, the original ‘vamp’. He adored his quick-tongued daughter and encouraged her ambitions to become a star by giving her the juvenile lead in A Blonde Saint, a forgettable romantic drama starring the matinée idol Gilbert Roland. But by 1930, Rork, who was badly hit by the great Depression, was more amenable when his daughter’s multi-millionaire admirer started calling her again – even if he was now thirty-seven with three failed marriages behind him.

  Paul had to break off the romance in the autumn of 1930 to get to Germany as fast as possible in order to contest the divorce proceedings over Fini. Since her father’s lawyers in Berlin were still trying to extract punitive damages, Paul was determined to appear in court in person, but his appearance made little difference. Helmle was as difficult as possible. His detectives produced fresh evidence of yet another woman living with Paul during his period in Berlin, and, unable to get the settlement he wanted, Dr Helmle got the case postponed until Paul agreed. As Paul would not agree, he had no alternative but to return to America still legally encumbered with Fini as his wife.

  So marriage had to wait as far as dark-eyed, baby-faced Ann Rork was concerned. Not that it seemed to matter deeply. Ann was grateful to her rich protector, and since he insisted that he loved her, she was perfectly prepared to wait.

  In August 1931 Paul moved her into an apartment in the New York Plaza and, telling her that he’d like to marry her, asked her if she felt the same. When she nodded, he said, Tine. Then we’ll get married here. Since we love each other we don’t need anybody else, nor do we need a licence or a ceremony.’

  And that, it seems, was that. Many years later Ann told Getty’s biographer, Robert Lenzner, ‘I really thought that Paul was God. His knowledge was so awesome. He was,’ she added, ‘my first lover, and a very considerate one at that. I was introdu
ced properly. And I certainly hope I pleased him.’

  It seems as if she did, for the next few months saw them very much together, first in Germany, and then early in 1932 in Paris, where they stayed in Paul’s old bachelor apartment near the Eiffel Tower. But as soon as Ann discovered she was pregnant, the idyll ended and he behaved as he always did at the prospect of a family.

  Four years later, Ann’s divorce court testimony would catalogue the same old list of grievances as all his wives had done before – neglect, abuse, and the times he left her to go out with other women. She claimed that sometimes she was so unhappy that she had even tried to kill herself by swallowing iodine – which burned her throat, but otherwise failed to harm her.

  As these unhappy lovers still weren’t married – except in the eyes of Paul Getty’s private deity – the relationship would presumably have ended there and then but for the child she was carrying. For just as with his earlier children, George and Ronald, Paul, who hated families, still had a superstitious sense of the importance of his offspring. Not that this meant that he possessed the faintest glimmerings of parenthood, or a vestigial desire to have his children near him. He emphatically did not.

  But on a recent visit to San Simeon, William Randolph Hearst had lectured him on his responsibility to father several heirs to make a dynasty. Paul liked the idea of a dynasty, and Hearst’s words appear to have impressed him.

  There were problems over Ann, however. An heir needed to be born in wedlock, and although he was perfectly prepared to marry her, he was still legally joined to Fini, and getting old for a second bout of bigamy.

  As summer ended Paul and Ann were on holiday in Italy, she heavily pregnant, he compulsively unfaithful. In Rome he was off to night-clubs, and in Naples, he dragged her, puffing and protesting, to the very crater of Vesuvius. Then it was back by ship to Genoa, and the ship was still at sea on 7 September when Ann produced a third son for her lover. The baby was premature, extremely small, and when the ship called at the port of La Spezia, the child was registered Eugene Paul Getty.

  Paul and Ann returned to California, taking an apartment in the hills of Santa Monica. At first Paul was wary of introducing Ann to his mother as his wife – partly because she wasn’t and partly because Fini had been Sarah’s favourite. Paul’s divorce from Fini had not been finalized until that August – with heavy damages and Fini having custody of two-year-old Ronald, who would spend the next few years with her in Switzerland. Paul was deeply resentful over what he thought a grave injustice and a dreadful waste of money, and as far as Dr Helmle was concerned he would never forgive him – nor forget what happened.

  But at least this meant that he and Ann could now legitimize their child by marrying – which they did in Paul’s favourite marital rendezvous of Cuernavaca, in December 1932. This also meant that Ann was finally allowed to meet his mother. Understandably, perhaps, the two women never cared for one another, and in later years Ann blamed Sarah for the break-up of her marriage. But in the meantime, Paul had done what he’d never done before. He had bought himself a beach house facing the sea at Malibu, where he and his young family could all live happily together. Except that they didn’t. Paul was as firmly bound as ever to his mother, and still kept clothes and possessions in his room at South Kingsley Drive – as well as a so-called ‘love-nest’ up in Santa Monica where he took his women. Ann felt lonely and neglected as she watched the ocean.

  ‘Since you’re so rich, why do you have to work?’ she asked him – a question which he didn’t deign to answer. By the time their second son, Gordon, was born in December 1933, they were barely speaking to each other.

  Legend has it that Paul arrived at the hospital to see his wife and newborn child, glanced at the baby, muttered, ‘Uh-huh, it looks like you’ – and rapidly departed.

  Paul had more important things to think about than babies, being obsessively involved by now in one thing and one thing only – the battle for Tide Water Oil. This ailing giant was a seemingly impossible prize for an isolated aggressor like Paul to conquer, and as he pursued it he displayed a range of qualities which account for much of his subsequent success – total concentration, mastery of detail in the complicated deals involved, a love of risk, and a cool ability to exploit any opportunity which worked to his advantage. He was still pursuing his strange solitary game, which only someone with an absolute obsession had any hope of winning.

  He knew that to win he had to have the one thing his father had purposely denied him – full financial control of George Getty Inc. Not until he had all Sarah’s capital in addition to his own could he borrow on the scale he needed. If this had to lead to further battles with ‘dearest Mama’, so be it.

  Now it took more than visits to the sea-lions to convince her, and she fought a long delaying action. Finally he won by endless argument, and as a Christmas present at the end of 1933 she almost gave him what he wanted. As a negotiator she was quite his equal when it came to it, and in a deal which she specified would terminate ‘if not accepted by you in writing on or before noon of 30 December’ she offered to sell Paul her two-thirds interest in the family company, in return for promissory notes for the purchase price of $4.6 million, bearing a fixed income of 3.5 per cent a year. Businesslike as ever, she signed her offer ‘Yours very sincerely, Sarah C. Getty’.

  This income from her son was to be her widow’s pension, and as a sweetener she offered Paul a timely Christmas present for himself – an additional gift of $850,000 if he accepted.

  He had no alternative, for by now his fight for Tide Water was in the open, and he was up against an equally determined enemy – the massive Standard Oil company of New Jersey which was already the major shareholder in Tide Water. But once again Paul was lucky. Federal anti-trust legislation was making Standard disburse its shares – which it was placing in a brand new company called the Mission Corporation.

  In this multi-million dollar game of chess, Paul’s next move was obviously to purchase as many Mission shares as possible, thereby boosting his holding in Tide Water. But once again he found himself checkmated by his mother.

  He was still unable to convince her of the wisdom of George Getty Inc. buying Tide Water stock, and since she owned promissory notes from Paul for $4.5 million, she could effectively prevent this happening. For as Paul rapidly discovered, no bank would lend him on the scale he wanted once they learned that he was four and a half million dollars in the red – even to his mother.

  So began the last round in this curious contest between ’beloved Mama’ and her ‘dearest child’. To continue buying into the Mission Corporation, Paul needed Sarah to liquidate his debt. As he reminded her, she had no need of the $140,000 he was paying her each year in interest, since her annual expenses never topped $30,000.

  She seems to have agreed, but then like the smart negotiator she was, she switched the argument. What she was really most concerned about, she said, was not herself but future generations of the Gettys. Paul might be right. Time would tell. But when Papa had left her all his money, he was really leaving it in trust for the grandchildren, and for all the unborn Gettys to come after. She couldn’t bear to think that by letting Paul have his way she might be depriving future generations of their patrimony.

  She had clearly discussed this with her lawyers, for her solution to the problem was ingenious. She would set up ‘an irrevocable spendthrift trust’ to protect the interests of his children against the possible results of his business speculation, and contribute an initial $2.5 million to it from her own resources. By placing the family capital in a trust the money would be protected against Paul’s supposed ‘spendthrift’ tendencies, and also against his own possible bankruptcy.

  He agreed and contributed some over-valued shares he owned in George Getty Inc. so that the trust could begin at the end of 1934 with a capital of $3.368 million.

  This was the start of the famous Sarah C. Getty Trust, which would dominate the family finances for many years to come.

  Fina
ncially the arrangement suited Paul extremely well, since he was appointed principal trustee with absolute power to use the trust’s capital according to his judgement for any transaction which involved the family’s oil interests – such as acquiring further shares in the Mission Corporation or Tide Water.

  It also suited Sarah, since it satisfied her conscience over her duty to the family fortune and her otherwise unprotected grandchildren.

  As far as the beneficiaries of the trust were concerned the terms were simple. To satisfy Sarah’s primary concern that her son should meet his duties as a father, it made suitable provision for his wife Ann, and his four children, ten-year-old George II, four-year-old Ronald, two-year-old Paul Jr. and one-year-old Gordon. For as long as she remained legally married to Paul, Ann was to receive an annual ten per cent of the trust’s income, but payments to the children were unequal. During 1934, the $21,000 of the trust’s income remaining after Ann had been paid was shared out as follows. Paul Jr. and Gordon were each paid $9,000. George II was paid nothing as he had already benefited from the $300,000 legacy from his grandfather, the late George Getty. And Ronald’s portion was limited to $3,000.

  This disadvantage was placed on Ronald because his father seems to have convinced Sarah that Ronald would be receiving substantial money from the will of his maternal grandfather, Dr Helmle. It was a disadvantage which would weigh heavily on him in the future, once the trust itself increased dramatically in value. For a further condition of the trust was that if it earned more than $21,000 a year George, Paul Jr. and Gordon were to share equally in the excess. Ronald was specifically excluded from any further income from the trust beyond his annual $3,000.