THE GREAT SILVER HUNT

I think the best way to describe Nelson Bunker Hunt is this; Archie Bunker with couple of billion dollars in the bank. He does not smoke, drink or gamble. The son of a flagrant womanizer, who openly produced two completely separate families, and a third in secret (fifteen children in total by three women), Nelson is a major financial supporter of Fundamentalist Christian political groups. Nelson was friends with and a financial supporter of both Senator Jesse Helms.of North Carolina and Senator Strom Thurmond of South Carolina. He is also a major financial supporter of the John Birch Society. He collected a thousand thoroughbred race horses and yet always flies coach. He is famous for searching his couch cushions looking to recover lost change, his own and visitors.

Said a family member; “Sometimes he’s brilliant. The rest of the time you wonder whether he’s really there with you or not.” Said a business partner; “He doesn’t just want some of it. He wants it all.” Said his father, legendary oil man Haroldson Lafayette Hunt Jr.; “I could find more oil with a road map, than Nelson could with a platoon of fancy geologists”. Says Nelson himself; “Worrying is for people with strong intellect or weak character.”

But maybe the key to his personality is that Nelson Baker Hunt was born a second son. Nelson’s eldest brother, and his father’s “run away favorite”, Hassie Hunt, was an oil wildcatter and “a millionaire in his own right by the age of 21.” And then this older, smarter brother developed schizophrenia and his desperate father decided to treat him with a lobotomy. Since that "Hail Mary Pass" of treatment, Hassie has been and will be under 24 hour nursing care for the rest of his life. Thus Nelson became the repacement son. But he was never his father’s favorite. And that may explain why one dark night in 1974 Nelson and a staff descended upon New York City in three charted 707 jets, paid for and then transported 40 million ounces of silver to Nelson's leased vaults in Switzerland.

Now, silver is a commodity, like wheat or oil or steel. You can buy a commodity, and you can even sign a contract pledging to buy it at a set price some time in the future. These futures are a bet as to what the price of that commodity will be. The vast majority of futures traders never intend upon taking delivery of the actual commodity. They merely bet on the market, providing producers and buyers a hedge against price fluctuations. In most cases,  these bets can stabilize the market, which is good for everybody. And to encourage trading in futures, they are bought at only a percentage of the actual price, called a “margin”. But Nelson was willing to suffer the expense of transportation, storage and insurance, by actually taking delivery on his silver, because he believed in a doomsday fundamentalist theology,  that the world’s financial markets were going to collapse. Paper money would be worthless. A commodity like silver would still have intrinsic value.

In 1974 the world wide production of new silver was 245 million ounces, while annual consumption was 450 million ounces. The imbalance (67%) was made up through recovery of “scrap silver”, everything from industrial applications to melting down family heirlooms. But that imbalance also meant that the control of a tiny percentage of the world’s silver could swing the price. This meant that every ounce of silver that Nelson bought and stored in his Swiss vaults was another ounce removed from the market. And that drove the price of the remaining silver up. As the price went up, the silver in Nelson’s vaults increased in value. He cashed in on that increase by using it as collateral for loans, which he used to buy more silver and silver futures. He was gambling that the price would always go up, and he had enough control of the game, called leverage, to insure that it did.

The price rose from $6.22 per ounce in November of 1971 to $11.00 per ounce by the end of 1979. Nelson now controlled 1/3 of all the silver in the world, not sitting in various government vaults. But Nelson’s manipulations had not gone unnoticed. Tiffany took out a full page ad in the New York Times naming Nelson, and stating, “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver.” By the end of December 1979 the price of silver had risen to over $50 an ounce. Five years after that first late night silver flight, the Nelson and his brother, had earned between two and four billion dollars in paper profit from the (by then) 100 million ounces of silver they owned and had future contracts to buy even more.

But while Nelson had been buying silver futures “long”, betting that the price would go up, he was also squeezing the manufacturers who needed silver. They would have to pass their price increases to the millions of customers who used their products, all in the name of higher profits for Nelson Baker Hunt, his family and friends. On January 7, 1980 the United States Commodity Trading Commission, which had oversight of the futures market in America, issued “Silver Rule 7” which increased the margin required for silver futures. Four days later the price of silver had fallen back to $25 an ounce.

As the value of Nelson’s collateral began to plummet, the brokerage house and banks which had made him loans to buy silver futures, now put the squeeze on Nelson. By March they had issued a “margin call” of $100 million on those loans. In effect, Nelson would either have to make that payment, or fulfill the entire contract, and take delivery on and pay for $1.7 billion in silver.

Early on the morning of Thursday March 27th, 1980, before the commodity markets opened, Nelson’s younger brother and partner, Herbert Hunt,  placed a telephone call to the chairman of the Futures Commodity Trading Commission and asked him not to open the silver market. The reason given for the extraordinary request was that the Hunt brothers would not be meeting their margin calls that morning – “would not”, Hunt had said, not “could not.”  As John Bloom noted in an article he wrote for the magazine “Texas Monthly” “Here was one of the leading spokesman for unbridled free enterprise in America, asking a federal regulator to close a market. If the federal government would not do that, then he simply wouldn’t pay up.”

That day, the silver markets did open. They just collapsed. The price of silver futures fell to $10.20 an ounce. The day passed into history as “Silver Thursday”.

As the Federal government attempted a postmortem, they discovered that Nelson Hunt had assets of $1.5 billion, and now owed $2.43 billion. In addition he owned 6.5% of one of the brokerage houses which had loaned him money on the Silver Futures, a fact never revealed to the Security Exchanges Commission, which regulated those houses. That was illegal. And, the feds also discovered that Federal Reserve Chairman Paul Volcker had met with Nelson several times in an attempt to find funding to save him from bankruptcy. As Time Magazine noted, Volcker’s “continual monitoring of the situation was interpreted by bankers to mean that the Federal Reserve…favored some kind of bailout to keep the Hunts from going under…(which) showed that when big speculators lose millions, “telephone calls come to Paul Volcker for a quick fix.” Those banks put together a one billion dollar line of credit to save, not the Hunt brothers, but the brokerage house he had defaulted. Yes, it has all happened before.

The aftermath to Bunker Hunt’s silver manipulation is also informative. The banks eventually went after the Hunt’s seeking return of another billion dollars lost in their game. Like all good defendants, Nelson countersued, accusing the banks of lending him money because they knew he couldn’t possibly repay it. It was an absurd argument, but it allowed the Hunt’s fifteen lawyers to negotiate a reduction of the repayment. In 1998 a federal jury found both Nelson and Lamar (another brother) guilty of fraud and conspiracy to monopolize the world's silver market. Nelson was banned for life from ever trading in futures again. And finally Nelson Bunker Hunt was forced into Chapter 11 bankruptcy.

The extended family remains wealthy and politcally well connected. Nor was Nelson reduced to poverty, either. A reporter for the Dallas Morning News in March of 2009 found the 83 year old living “in relative modesty in a North Dallas house with his wife of 57 years”. Nelson insisted he had no regrets.

In better times, Nelson Baker Hunt said, “People who know how much they're worth, aren't usually worth that much.” Stephen Susman, one of Nelson’s lawyers, said, “These people are gamblers. If you’re a gambler, you take your shot.” Except, of course, these powerful folks always think they have the biggest gun in town.

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ELEPHANT DIAPHRAGMS

I want to begin by stating the facts. When Joe Frisbie died in 1940, his widow, Marina, inherited the family bakery. She continued to run the ovens on Kossuth Street in Bridgeport, Connecticut for another 18 years, baking up to 80,000 pies a day. As was the industry standard at the time, each of the tin pie plates was stamped with the company name, and carried a 5 cent deposit, to be repaid for every pie tin returned to the bakery. In 1958 Marina sold the family business to Table Talk Pies, out of Worcester, Massachusetts, and Frisbie Pies ceased to exist. Table Talk is still in business tho, and bakes 220,000 pies a day. Those are the facts. But despite those facts, somehow the legend has been perpetrated that students at Yale University began throwing the pie tins, and thus invented the Frisbee.

The first problem with this legend is that Yale University is not in Bridgeport. Yale is in New Haven, which is 20 miles further to the north. And that is a very long way to throw a Frisbee. There are other problems with the legend, all of which give me the feeling that the Yale alumni were throwing something around besides pie plates. But despite these facts, an original Frisbie Pie tin still sells on Ebay for about $25 – a 25,000% increase in value, primarily because of its mythical connection to a plastic toy. The non-immaculate conception of the Frisbee is a much more interesting story than the myth.

According to the tale as related by Fred Morrison - to writer Ben Van Heuvelen a few years before Fred’ death -  back in 1937 then 17 year old Fred and his fiancé Lucile Nay (that's him, above, but not her) were in her back yard tossing around the lid from a can of popcorn, because they didn’t have a football. The lid’s flight was horribly erratic, and the teenagers made a game out of trying to predict which direction the lid would take on each toss. Over that California winter, the pair began playing the game with various lids and plates, looking for a better “spin”. And one spring afternoon, while they were tossing a five cent pie plate around on the beach, a man approached Fred and asked where he could buy the toy. Fred immediately sold him the lid for a quarter – a 500% profit.

Having been slapped in the face by opportunity, Fred and Lucile bought pie tins in bulk from a local hardware store,  and every weekend took them to the beach where they tossed the tins back and forth, to attract a crowd. The resultant sales did not make anybody rich, but this was still the depression, and every quarter helped. Then World War Two changed the world. 1946 found the couple living in an Army surplus tent in San Luis Obispo. (There was a housing shortage.)  Fred was pouring concrete slabs for home fuel tanks, and Lucile was working at a Lockheed plant. But Fred couldn’t get the profitable spinning pie plate idea out of his head, and eventually mentioned it to his boss, Warren Franscioni. Now, Warren had been a pilot in the war, like Fred, and he also saw the potential in the product, like Fred. But, it seems that unlike Fred, Warren had been paying attention in ground school, and was familiar with the work of Daniel Bernoulli.

Daniel is one of those little known people who should be more famous, for a number of reasons. I remember Daniel because his father, Johann Bernouli, was the biggest heel in the history of mathematics - a field filled with heels. Despite Daniel’s love of numbers Johann was so jealous of his own son that he forced the boy into medical school. But Daniel refused to give up on math.  At one point, father and son tied for a first place prize in physics. Johann was so consumed by jealousy that he kicked Daniel out of the house. Johann then waited until Daniel published the work he had won the prize for, and then Johann rewrote the same material, backdating it, so it looked like the son had stolen from the father. What a heel. Father and son never spoke again.

Of course what most people remember about Daniel Bernouli is that before he was 30 he had laid out the mathematics of flight, two hundred years before they would be put to use; one half the pressure of a fluid, times the velocity of the fluid squared, plus the density of the fluid, equals the Bernouli constant. And that may mean nothing to you, (it confuses the heck out of me) but it keeps airplanes and heliocopters in the air, and, with the spin imparted by a flick of the wrist, keeps a Frisbee floating on the air.

Warren explained the Bernouli laws to Fred, and Fred diagramed the basic pie plate shape, except he added a thick outer edge to mimic an airplane’s wing. He called the angle of that edge as it fattened toward the center of the plate “The Morrison Slope”. The pair then drove down to Glendale, California and showed their drawings to the Southern California Plastic Company. The manager saw the potential for their idea and his imvestment in the company was eight cylinders of a new plastic called Tennite. The pair then drove back up the coast to San Louis Obispo to do some testing. Fred drew eight variations of his original drawing. But before he handed the plastic over to a machinist to carve the drawings into reality, he changed the title on the plans, to disguise the product. He labeled the schematics “Diaphragms for Elephants”. I guess he figured that title would not arouse any curiosity.

Fred and Warren tested the new diaphragms, and delivered the one which flew the best to Glendale. In 1948 the first production run of 3,000 Whirlo-Ways (patent #183626) were squeezed out of the injection molds in just two colors, black and blue. Lucile wrote the copy for the packaging, instructing customers to “Play catch – invent games. Experiment!” In 1951 Warren reenlisted in the Air Force for the Korean War, and Fred and Lucy continued to develop the Whirlo-Ways by themselves.

Marketing now took over. The Whirlo-Ways became Whirloways, Flyin'-Saucers, Flying Saucers, and Pluto Platters. But the basics of the device did not change; it was a thing that, when you threw it, it floated and bobbed and weaved with a grace that a ball can only dream of.

In 1955, while Fred and Lucile were displaying their Pluto Platters in Los Angeles, they were spotted by two falcon hunters, who had formed a company to market their plastic sling shot, intended to propel meat into the air for training birds of prey. They had named their company “Wham-O” after the shout they made when firing their sling shots. But Arthur "Spud" Melin and Richard Knerr were smart enough to realize that most of their slingshots were not being bought by falconers. The problem was they weren’t sure who was buying them.

So they decided to change products, and jumped at the chance to use their meager sling shot profits to buy the North American rights to an Australian bamboo exercise tool which, duplicated in plastic, became the Hula Hoop. Wham-O sold 25 million Hula Hoops in four months, 100 million in two years. In 1956 the pair used their profits from the Hula Hoops to pay Fred and Lucille one million dollars for the patent and the molds of Pluto Platters.

Wham-O’s designers made some minor improvements to the platters, and in 1958, the year after Frisbie Pies shut down, they renamed the Pluto Platter as the Frisbee. Why they chose that name I have never been able to discover to my satisfaction. But I suspect somebody in the Wham-O marketing department was a Yale Alumni. The rest is not just history - its just fun!

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AIR HEADS Part Five FRESH WINDS

I had to do some work to locate the starting point for Bob Fowler’s second attempt at a transcontinental flight. For one thing it has been buried under concrete and asphalt for a century. For another, some histories have mis-labeled it as “Wiltshire Field”, but that seems to have been a "spell check mis-correction" of the name "Henry Gaylord Wilshire". If you are familiar with Los Angeles at all you recognize that name. In 1895 Gaylord bought 35 acres around what would one day become MacAthur Park. Gaylord then humbly allowed the city of Los Angeles (above) to build a road right through the center of his property, on the twin conditions that they not lay down any street car tracks, and that they name it after him. Then he promptly packed up and moved back to New York. He left his name no where else in Los Angles.

Wilshire Boulevard’s beginnings were very humble indeed, bisecting mostly beet fields. In 1910 that made the intersection of Wilshire and Fairfax Avenue an ideal location for an airfield, close to the budding metropolis of Los Angeles (above) - 320,000 citizens already - but open enough to allow pilots to crash regularly without killing the neighbors, because there weren’t any, except for a few deceased Dire Wolves stuck in the tar of the nearby La Brea Tar Pits (below), just down the street. (BTW: "la brea" means tar in Spanish - so the "La Brea tar pits" translates as 'the tar - tar pits').

There should be a plaque in the sidewalk or something at the corner of Fairfax and Whilshire, because not only did Bob Fowler re-start his transcontinental flight from here on October 19, 1911, but it is also where, in 1921, Ameila Earhart took her first flight lesson, in a Curtiss Jenny. In fact, lots of aviation history  happened at that corner.

Movie maker C.B. DeMille (below) , in town to direct the first blockbuster “Squawman”, operated an airline out of there for a year or so (Mecury Aviation- above), until his airline went bankrupt. 

Then in March 1921 the air field was bought by flyer Emory Roger and his wife, and was renamed “Rogers’ Field”. Emory then started up “Pacific Marine Airways”, in partnership with Sid Chaplin, brother to Charlie Chaplin. They flew Hollywood vactioners to and from Catalina Island,  and sold Curtiss airplanes out of a showroom on the field - at least they did until Emory died in a plane crash in November of 1921. Then Emory’s widow ran the field until 1923, when she sold out to developers, and the airfield disappeared. That is what happens to everything historic in Los Angeles, sooner or later.

But that was all in the future in 1911. On October 19, 1911 Wilshire Field was just an open space out at the end of Wilshire.

Late on that October afternoon Bob Fowler, at the controls of his new Wright B Flyer, renamed the "Cole Flyer", lifted off and headed east. He made only 9 miles that first day, landing in Pasadena. But the important thing was that he was back in the race.

Bob’s financial backer, Reed Grundy, had always wanted him to start the race from Los Angeles because the mountains Bob had to cross here were so much lower that the Sierra east of San Francisco, and because the Los Angeles Board of Reality was coughing up a $10,000 bonus if Bob Fowler started from L.A. - okay, Grundy mostly liked L.A. because of the bonus.

In fact, early the next morning, on October 20, as Fowler was preparing to take off from Passadena, he was called to the phone. It was Grundy. He  had just been offered another paycheck if Bob made an appearance down Fairfax Avenue from Whilsire Field at the L.A. Motordrome with Barney Oldfield and other big name racer car drivers. But Bob put his foot down and said he’d rather give up flying all together than start this trip a third time. Grundy got the message and Bob flew on to Riverside, California, probably spitting and cursing all the way about what a jackass his manager was. I’m sure NASCAR drivers feel the same way about their sponsors, once in awhile.

In two days of flying Bob Fowler had covered only 69 miles. And the next day, October 21st, went even slower, because he was approaching the San Gorgonio Pass. The pass is only at 2,600 feet altitude, but it runs 22 miles long between the 9,000 foot tall Mt. San Gorgonio and the 11,000 foot tall Mt. San Jacinto, making it one of the deepest passes in the United States. For a cloth and wood airplane flying at between 2 and 4,000 feet above the ground, passing between the towering mastiffs meant dangerous cross winds. The Cole Flyer struggled to make progress, and Bob gritted his teeth and kept going.

Just as the 14,505 foot tall Mount Whitney stands just 76 miles west of Badwater, Death Valley, at 282 feet below sea level, Mount San Jacinto stands less than 100 miles west of the Salton Sink, at 220 feet below sea level (far upper right in the above photo). The line from the Gulf of California, through the Salton Sea, Death Valley (and north to Mono Lake) is the hing along which California is being twisted, torn apart, bent and ripped  between the San Andreas Fault and a newly forming rift valley which, eventually, will fill as a new arm of the Pacific Ocean. Someday, in fourteen or fifteen million years, this is going to be the new west coast.

But having finally left this geological drama behind him, Bob Fowler was now over flatlands and flying in cool winter temperatures across the Arizona desert. On October 25th he landed in Yuma, Arizona (above). Finally, after almost sixty days of starting and stopping and starting and crashing, Bob Fowler had escaped California.

Two hundred miles later, following the Southern Pacific Railroad line, Bob landed at Tuscon, Arizona. And there Bob had a brief encounter with a fellow traveler, the only other man on God’s green earth who truly understood what he was going through; Cal Rogers. They were together barely long enough to shake hands, and nobody had time to produce a camera. And then they separated without so much as a backslap or a pause to compare notes: so much for the brotherhood of the air. After all, there was a race on.

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