From the Archives: Armand Hammer Dies; Billionaire, Art Patron
Armand Hammer, the financial entrepreneur whose extraordinary career spanned seven decades and half a dozen different businesses and whose avocation as a collector of art added to an already controversial life, died Monday at his home in Westwood.
Hammer, 92, died following a brief illness, said a spokesman for Occidental Petroleum Corp.
Although he had designated a successor, Hammer remained chairman and chief executive of Los Angeles-based Occidental, a company he built from a nearly bankrupt wildcat drilling firm into the 16th largest industrial corporation in the nation.
Rumors about his health had surfaced periodically since he had a pacemaker implant in November, 1989, but each time he recovered from whatever ailment he might have been battling and appeared in public, successfully putting those rumors to rest.
His last appearance was this month at a party celebrating the opening of what proved his final dream, the Armand Hammer Museum and Cultural Center in Westwood.
He had scheduled one final event but did not live to attend--his bar mitzvah, which was scheduled for today . That ceremony, which normally signals the entry of a Jewish male into manhood at age 13, was to have been a fund raiser for two Jewish institutions. Hammer explained the 79-year delay in the ceremony by saying that his socialist father had dispensed with religious observances when he was a child.
“He touched so many of our lives and careers that his creativity, enthusiasm and unyielding sense of optimism will be sorely missed,” said Dr. Ray Irani who has been elected to succeed Hammer as chairman and chief executive officer of Occidental.
The billionaire industrialist had cut a flamboyant swath throughout his colorful and varied career. A public figure comfortable with royalty, heads of state, the rich and famous, he stirred up controversy among not only ardent admirers of his keen intelligence and bold strategies but also scathing critics who questioned his ethics and powerful ego. A man of immense wealth, he endowed schools, museums and cancer research centers with gifts totaling tens of millions of dollars.
He maintained his daunting schedule until his death. An inveterate world traveler, he concluded major contracts for Occidental with foreign governments, made frequent public appearances at home and abroad, bought art for his estimated $450-million art collection and received countless awards and honors.
In addition, because of his early ties with the Soviet Union, Hammer retained access to that country’s leaders which were remarkable for a private U.S. citizen. In 1980, for example, after the USSR’s invasion of Afghanistan precipitated a crisis between the two countries, Hammer met with then Soviet President Leonid I. Brezhnev.
In a self-appointed quest for peace, Hammer attempted to persuade Brezhnev to pull his troops out of the country and afterward clarified for reporters Brezhnev’s comments on the situation. He continued to make trips to Moscow throughout much of the 1980s in what he described as efforts to find a solution to the conflict, which eventually was resolved with a Soviet pullout from the country.
In 1986, following the Chernobyl nuclear reactor disaster, Hammer helped arrange and pay for the emergency visit of an international bone marrow transplant team to aid the victims of radiation.
And in 1988 Hammer rushed to the Soviet Union with a planeload of relief aid, including $1-million in checks and several million dollars in emergency medical supplies, following the earthquake that ravaged Soviet Armenia.
Hammer was such a frequent visitor to Moscow that the Soviets maintained a luxurious private apartment for him in an otherwise drab-looking building on a quiet, dead-end street about five minutes from the Kremlin. Across the street for many years was the famous Tretyakov art gallery.
Asked how a man his age mustered the prodigious energy to constantly circle the globe in his Boeing 727 private aircraft to meet with various heads of state, Hammer said, “I love my work. I can’t wait to start a new day. I never wake up without being full of ideas. Everything is a challenge. I love to negotiate, to make a deal, to accomplish what I’m after.”
While Hammer’s career with Occidental was his final and most satisfying one, it was only the most recent in a series of successful ventures that began when he was a student.
Born in the Bronx in 1898, Hammer was the son of a physician and small businessman, Julian Hammer, a radical socialist and a power in the Socialist Labor Party.
Educated as a medical doctor at Columbia University’s College of Physicians and Surgeons, Armand Hammer salvaged his family’s faltering pharmaceutical business by day while studying at night.
He ended up earning $1 million before he graduated in 1921, in part by buying vast quantities of whiskey just before Prohibition and selling it later as medicine to drugstores. He never practiced medicine.
Hammer traveled to the Soviet Union later in 1921, equipped with an ambulance and fully stocked World War I surplus field hospital, to help the country ravaged by revolution. Instead, witnessing the massive starvation, he worked out a deal to swap U.S. grain for Russian hides and furs. The grain contract won the attention of Vladimir I. Lenin, who befriended Hammer--an association that enabled him to retain close ties with Soviet leadership no matter what the political climate was between his homeland and Russia, the land of his ancestors.
In a long-ago interview with The Times, Hammer reminisced about his meetings with Lenin:
“He had such an influence over me. He was terrifically charming. He had the kind of charm Franklin D. Roosevelt had. He won me over with his sincerity. When he told me about the children crying for bread, there were tears in his eyes. He convinced me he was there to do a lot of good for the Russian people. I wanted to help him. It changed my whole life. He said, ‘We don’t need doctors, we need businessmen.”
Hammer stayed in Russia for nine years, during which he collected art treasures and represented dozens of U.S. companies, handling nearly all trade between the United States and Russia. He ran an asbestos concession in the Urals, and when that was cancelled in 1925, he set up a pencil factory, licensing technology from A. W. Faber of Germany.
Lenin’s death, and the ascent of Joseph Stalin, caused Hammer to return to the United States in 1930. He set about building successive fortunes by dealing in the Czarist art he had collected, distilling whiskey and breeding Black Angus cattle.
To market his “Romanov Treasures,” Hammer arranged to sell the pieces through department stores. With his brother, Victor, who died in 1985, Hammer set up the Hammer Galleries on 57th Street in New York and proceeded to establish himself as liquidator of the William Randolph Hearst art collection.
Asked how he managed to build so many fortunes, Hammer responded:
“A friend once said that Dr. Hammer will go into a business he knows nothing about and within weeks will know much more than anyone else in that business. I think that is true. I study so that I can pick up the phone and talk to any expert or scientist. That is the only way I can check where the trouble is. I can’t wade through a lot of executives and wait for them to solve (a problem).”
Moving to California in 1956, ostensibly to retire at the age of 58, Hammer invested $50,000 in two wells owned by a faltering oil company named Occidental Petroleum, more as a tax shelter than an investment. When the wells produced oil, he worked out a partnership with the drilling contractor--and ended up launching his most spectacular career.
Running his company with near-imperial control, Hammer became a key figure in the tumultuous upheavals that shortly engulfed the energy industry.
His company earned the admiration of geologists around the world for its phenomenal success in locating oil in the Middle East, the North Sea and South America. But none of Oxy’s finds was more significant than the rich deposits it discovered in Libya during the 1960s.
These discoveries catapulted Occidental into the big time, but they also imperiled the company in 1970 after Moammar Kadafi overthrew Hammer’s good friend, King Idris. The new revolutionary government began demanding more money for its oil and threatened to confiscate Occidental’s holdings if the company did not agree.
Against the advice of his Board of Directors--who feared he would be arrested--Hammer flew to Libya to negotiate a new agreement. After a week he agreed to an increase of 30 cents a barrel. (Oil then sold for less than $2 a barrel.) Although no one knew it at the time, that minuscule increase was the beginning of the end of cheap oil, for other oil-producing countries soon followed Kadafi’s lead.
The agreement caused Hammer--who never had been accepted as an industry “insider”--to be regarded as a betrayer by the energy fraternity, a man who could not be trusted. Hammer countered their criticism by maintaining that the major firms did not lift a hand to help him with the Libyan negotiations.
As Occidental--which has branched out over the years into chemicals, coal and agriculture-- swiftly climbed up the ranks of the nation’s largest corporations, shareholders were enriched by dividends and stock splits. They showered their affection and appreciation on Hammer every year at the annual meeting, which was held invariably on his birthday, May 21. Shareholders sang “Happy Birthday,” read poems and made speeches extolling his leadership.
With such high visibility, Hammer attracted both extravagant praise and harsh criticism. Both were exaggerated to some extent by his seemingly unquenchable thirst for publicity and self-promotion.
The Securities and Exchange Commission, for example, watched Hammer closely from Oxy’s early days, when the company issued optimistic press releases on its prospects and played down its problems.
During the 1970s, the commission charged Occidental in four different actions with misdeeds ranging from giving out misleading earnings projections to using corporate funds for illegal political contributions and foreign payments. All ended in the signing of consent agreements in which the company neither admitted nor denied guilt.
The SEC was not the only skeptic. Despite its phenomenal success, Occidental failed to win the approval of the Wall Street investment community, which regarded Hammer’s inability to settle on a successor as a threat to the company’s future.
From 1970 through 1986 at least 10 executives who believed they were to be Hammer’s heir apparent were eased out. Joseph Baird was president for a record six years, but resigned in July, 1979, after an attempt by Occidental to take over Mead Corp. failed. Zoltan Merszei, former chief executive and chairman of Dow Chemical Co., took over for one year, then was unseated by A. Robert Abboud, former chief executive of First Chicago Corp.
At the time Abboud was named, Occidental stock dropped a point and investment bankers suggested that the move raised the question whether there was any long-term strategy or planning at the company. Analysts suggested that the company’s stock, which sold at an extremely low price compared with earnings, would rise 10 points or more whenever Hammer stepped down.
One securities analyst suggested that another reason for the weak stock showing was that “Oxy has a credibility problem. There’s a feeling from the record that Oxy tends to gild the lily. There’s always truth to what the company says, but it tends to make a good thing sound better. Armand Hammer is the P. T. Barnum of the oil business. He’s a charming pitchman.”
The firm’s current president, Ray R. Irani, was named to the leadership post in 1986. But Occidental’s fortunes remain somewhat quirky--rising and falling based on Hammer’s health. For example, in November, 1989, trading in Occidental stock was temporarily suspended on the New York Stock Exchange when Hammer was hospitalized. Prices in Occidental stock had surged in the past when Hammer was reported to be in ill health, because without the chairman’s presence, the company would become a likely takeover target.
Earlier this year, Hammer designated Irani as his business heir in an effort to stem the stock swings.
In an otherwise effusively complimentary chapter on Hammer in his book “Reflections Without Mirrors,” Louis Nizer, Hammer’s friend and legal counsel for a quarter century, wrote:
“In view of his (Hammer’s) optimism and enthusiasm, his anticipation claims, while sincerely made, are not always realized. . . . So it came about that probably the most gifted businessman of our time, who has earned unprecedented accolades, has also been subjected to embarrassing skepticism.”
Obviously the shadow of mistrust cast over his achievements nettled a man of Hammer’s pride. Nizer explained, “He (Hammer) is vulnerable because he has (former) President (Lyndon B.) Johnson’s sensitivity to criticism. So he fights back with threats of libel suits and corrective letters to . . . publications.”
Hammer’s most humiliating moment came in 1976 when he was fined $3,000 and placed on one year’s probation for illegally making and concealing $54,000 in campaign contributions to the 1972 reelection campaign of then President Richard M. Nixon.
At the time, Hammer’s doctors, friends and associates feared that the strain of the crisis might induce a fatal heart attack. The industrialist entered a Los Angeles courtroom in a wheelchair, his heartbeat monitored by equipment specially set up in a nearby room. Because of his poor health, Hammer, in a plea bargain, agreed to plead guilty to three misdemeanor charges. The specter of a possible jail sentence induced in Hammer what he described as a “sympathetic heart problem, the result of the terrible pressure I felt.”
He was hospitalized with congestive heart failure and disturbance of cardiac rhythm. And even though his condition was confirmed by seven cardiologist--including three appointed by the prosecution--his court appearance and a subsequent remarkable recovery caused critics over the years to suggest that he exaggerated his problem for political reasons.
Almost since the moment he entered his plea, Hammer vigorously protested his innocence and lobbied for an almost unheard of type of pardon in which the President would have declared that he was never guilty in the first place.
In 1989 Hammer agreed to accept a conventional pardon, which President Bush quickly granted.
Hammer told reporters after his 1989 pacemaker surgery that the procedure had substantiated his claim of heart ailments.
At the international level, Hammer was unpopular with many career diplomats who served over the years in the American Embassy in Moscow. Some viewed him as an apologist for the Soviets, and virtually all were bitter over the fact that he had access to Kremlin leaders while they did not.
It was like rubbing salt in their wounded professional pride when those same diplomats had to interview Hammer after one of his private sessions with the Soviet leadership in order to file the mandatory cable to Washington on the discussions. “What a way to conduct foreign policy!” one high ranking American diplomat fumed after one such session, the post-Afghanistan invasion meeting between Hammer and Brezhnev.
Although a lower profile might have ameliorated some of the criticism that had dogged Hammer’s tracks, he appeared unable to resist the limelight. No matter how often the story of his life was recounted, for example, he relished telling it again. In speeches he would recite repeatedly, “Overnight I became a hero to the Russian people.”
And the Occidental public relations department had to continually churn out flattering news about “Doctor,” as he was called at Westwood headquarters. Explained one former executive, “Hammer felt he had done unusual and important things in his life, and believed he should be credited with them.”
Among those things were Hammer’s philanthropy in cancer research and education.
A board member of the Eleanor Roosevelt Cancer Foundation since 1960, Hammer established a cancer biology research center at the Salk Institute in La Jolla in 1970 with a grant of $5 million. He also endowed his alma mater, Columbia University, with $5 million for medical research by establishing the Julius and Armand Hammer Health Sciences Center.
Hammer, a long-time patron of the arts, also had committed to donate his vast art collection to the Los Angeles County Museum of Art. The treasures included “Five Centuries of Art,” Hammer’s collection of European masterpieces by renowned artists including Rembrandt, Rubens, Renoir and Goya; a collection of hundreds of works by Honore Daumier and the so-called Codex Hammer, a book of sketches by Leonardo da Vinci.
But Hammer abruptly withdrew his commitment in 1987 after the museum balked at a series of his demands. Among them: that names of other donors who gave money for galleries where his paintings would be displayed be stripped from the spaces and that life-sized portraits of Hammer and his wife be permanently displayed with his art collection.
Hammer then announced plans to build the Armand Hammer Museum of Art and Cultural Center behind the Occidental Petroleum headquarters in Westwood. The museum was buffeted by major cost overruns and criticized for the limited scope of its collection, one that would have fitted in well into another museum but was not extensive enough to stand on its own.
The project also precipitated lawsuits from Occidental shareholders, who contend that company funds have been improperly used to assemble Hammer’s art collection and build the museum.
In a legal deposition taken last June, Hammer said, “There is no telling what it (the art collection) is worth. It’s probably priceless . . . I am continually adding to the collection.
“I have only two things in life left,” he continued. “One, I’ve been instrumental in trying to bring peace between the East and the West, and I’ve been thanked by presidents for what I’ve done in helping to bring (this) about. Another thing that’s left is the museum, which is most important to me now.”
In an interview with The Times in 1980, Hammer was asked if he had ever experienced failure.
“I don’t think I have ever failed,” he replied. “I always think of the worst thing that can happen. Then I take precautions to see it doesn’t.”
An associate of Hammer once observed, “All the things Hammer’s done, the gambles he’s taken, show daring. People with daring are usually self confident, because you don’t take a dare unless you think you have more than a 50% chance of winning.” He added, “When Hammer focuses on something, he never gives up. I have never seen such a combination of physical and psychological resources mustered in one man. He has not wasted one minute of the time God gave him.”
Hammer was married three times and leaves a son, Julian, who lives in Los Angeles, by his first wife. His wife since 1954, Frances Tolman, traveled everywhere with him prior to her death in December, 1989.
Funeral arrangements were incomplete.
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