The Arrogance of Power (25 page)

Noah Dietrich, certainly the closest person to Hughes at the time, said the billionaire had supported Nixon as early as the 1946 run for Congress and contributed to every subsequent campaign. He also provided large sums for the personal use of Nixon and members of his family. Nixon, for his part, went out of his way while serving in the Senate to praise Hughes for the measures he was taking against filmmakers he believed to be Communists. “Hughes' stand,” he said, “deserved the attention and approval of every man and woman who believes the forces of subversion must be wiped out.”

By 1954, according to Chuck Giancana—brother of the Chicago mob boss, Sam—Hughes was telling associates that he had Vice President Nixon “eating out of his hand.” The first detailed evidence of Hughes's help and financial largess, though, dates from 1956, during the long period of uncertainty over whether Nixon would again be Eisenhower's running mate.

In July that year Harold Stassen, former Minnesota governor and assistant on disarmament to the president, held a press conference. A specially commissioned poll, he announced, had indicated that Governor Christian Herter of Massachusetts would be a far more attractive vice presidential candidate than Richard Nixon. Stassen urged the Republican party to support Herter and asked Nixon to back out. His initiative gave rise to what became known as the Dump Nixon movement.

Years later Nixon made light of this effort, saying it was the work of “wishful thinkers” from whom he “could afford to remain aloof.” At the time, however, he was not at all aloof. “He was running scared,” recalled Patrick Hillings. A push to rally support for Nixon was soon under way, boosted by a secret operation financed by Howard Hughes.

Soon after the Stassen press conference the telephone rang in the Washington office of Robert A. Maheu Associates, a company that offered “private investigations,” that catchall term for a multitude of shadowy services. Maheu, aged thirty-nine, had been an undercover agent for the FBI during the war and was now on a monthly retainer for the CIA. He said later that his role was to perform “impossible missions.” (His exploits, indeed, are said to have inspired the TV series
Mission: Impossible.
)

The agency assigned Maheu the sort of tasks it needed to keep “deniable,” activities that ranged from providing sex services for some foreign statesmen to the sexual compromising of others, illegal wiretaps, and assassination planning. He had also worked, at Nixon's bidding, on an undercover operation
against the Greek oil tycoon Aristotle Onassis.
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For some time now, too, Maheu had been handling assignments for Howard Hughes.

The Hughes work had begun prosaically enough. The billionaire had asked for an investigation of the first husband of the woman he was soon to marry, the actress Jean Peters. Soon afterward came instructions to snoop on Ava Gardner to find out who she was seeing. Then, following Maheu's successful handling of a would-be blackmailer, Hughes phoned to express his satisfaction. “From that point on,” as Maheu put it, “I was Howard's man,” eventually replacing Dietrich and serving Hughes for fifteen years. First, though, came the assignment of ensuring that Stassen would fail to unseat Nixon as Eisenhower's running mate.

The operation to block Stassen was bankrolled by Hughes after a request by unnamed “leading Republicans.” Maheu responded by hiring an undercover man to pose as a volunteer and infiltrate Stassen's headquarters. He thus learned that Stassen was planning to unveil a new opinion poll at the convention. It was to be a phony poll, Maheu has claimed, heavily stacked against Nixon. To preempt Stassen's plan, Maheu used Hughes money to conduct a poll of his own, with results showing that far from lagging behind as a vote getter, Nixon was far ahead.

The penetration of Stassen's office, meanwhile, yielded even more ammunition. “There was a ‘cover' placed on Stassen's wastepaper basket,” Maheu said in the seventies, “and the results of that cover . . . well, let's say it turned the tide.” Asked what information was found in the basket, Maheu shook his head. “It wouldn't,” he said, “be in anyone's best interests to discuss it.” Stassen, for his part, was still insisting years later that “the whole story cannot yet be told.”

The 1956 convention ended in total victory for the Nixon forces. The climax came when, minutes after Stassen had regaled the press with the poll unfavorable to Nixon, a U.S. senator made him look foolish by announcing the opposite findings provided by Maheu. Stassen capitulated and wound up being forced to second Nixon's nomination in the name of party unity.

“Nixon knew what I had done for him,” Maheu said in 1996, “but he expressed no gratitude. . . . I saw him the day after we defeated the Stassen threat; he never even said thank you.” Hughes, for his part, was delighted that Nixon had been so well looked after. “It wasn't that he thought Nixon was doing such a good job,” Maheu reflected. “It was more that he felt the vice president was malleable.”

In December 1956, just weeks after Eisenhower and Nixon were returned to the White House, Hughes provided a different sort of assistance. While the Stassen episode remained a secret for nearly twenty years, this new intervention soon leaked, causing incalculable damage to Nixon's political hopes and
long-term reputation. According to Noah Dietrich, he brought the disaster on himself.

It began, Dietrich said, with a call to Hughes's Los Angeles headquarters by one of the millionaire's lawyers, Frank Waters. “Look, Noah,” Dietrich quoted Waters as saying, “Nixon keeps approaching me. . . . His brother, Don, is having financial difficulties with his restaurant in Whittier. The Vice President would like us to help him.”

“Help him in what way?” Dietrich asked.

“He needs some cash. Actually, he needs two hundred and five thousand dollars.”

Even Dietrich, long used to Hughes's excesses, balked at this figure: $205,000 in 1956 was the equivalent of more than $1.25 million today. “That,” he said, “is something I'm not going to take the responsibility for.” Although he regularly disbursed some $500,000 per year for political purposes, it typically went out in relatively small amounts, never as such an enormous amount for a single individual. Dietrich explained that Hughes himself would have to authorize such a huge payment, and he subsequently did. “Hughes called me the next morning. . . . He said, ‘I don't give a darn about the size of it. I want to do it, because it's a chance to cement a relationship.' ”

The only relationship Hughes had any motive to cement was the one he had with Richard Nixon. There would have been no gain whatsoever in committing such a sum to
Donald
Nixon, an ebullient and overambitious middle-level businessman who was forever embarking on grandiose schemes. He was president of Nixon's Inc., a business consisting of a drive-in restaurant featuring a sandwich called the Nixonburger, the grocery store that had once been his parents', and a coffee shop—all in Whittier—and was building another Nixon drive-in at Anaheim. He also had major debts and faced bankruptcy if he failed to obtain major financing.

As Dietrich put it, “The whole thing had a bad smell to it.” He was even more troubled when told that the $205,000 was to be accounted for as a loan. The Hughes Tool Company was not in the habit of making loans, let alone to businessmen totally unconnected to the oil or aviation business. The proposed loan, moreover, was to be secured with the deeds of a vacant lot and a gas station lease worth less than half its value. A transaction of this sort with the brother of the vice president of the United States, by a company holding major government contracts, would look highly suspicious.

Dietrich, who liked Nixon and had voted for him, was so worried that he flew to Washington with a warning. “I feel compelled to tell you,” he informed Nixon, “if this loan becomes public information, it could mean the end of your political career.” Unfazed, Nixon replied, “Noah, my family comes ahead of my political career, and Don wants this and he's got to have it to survive.”

The loan duly went ahead, but under conditions of extraordinary secrecy. On paper it was made not by Hughes Tool but by Hughes's attorney, Frank Waters, a former Republican politician and a friend of both Nixon brothers.
Waters gave the money to Nixon's mother, who in turn made a loan to Nixon's Inc. Months later, to bury the transaction even deeper, the paperwork was moved out of Waters's name into that of an accountant not on the Hughes payroll.

Hughes's massive cash outlay disappeared within weeks of reaching Donald Nixon. Whatever happened to the money—it was supposedly used to service old debts—Nixon's Inc. was still drowning in a sea of red ink. Dietrich made a last-ditch effort to save it from going under, first asking Richard Nixon's approval to bring in accountants to reorganize the business. When Donald resisted their suggestions, Dietrich again traveled to Washington to see the vice president. Richard Nixon rebuffed him, saying, “Pull 'em off. . . . my brother wants to run it his way.” Nixon's Inc. did go under two weeks later, just as the accountants had predicted.

The Hughes loan might well have remained secret forever were it not for the very measures taken to conceal it. By 1960, when Nixon and Kennedy were battling for the White House, the accountant holding the deeds had fallen out with Hughes officials. A Democrat, he leaked the story to the Kennedy camp, which ensured the press heard about it. Nixon would never again be free of the Hughes loan scandal. It was to be investigated and reinvestigated—in 1960, 1962, 1968, and 1972.

When questioned, Nixon tried either to make light of the loan or to claim he had not been involved. “I had nothing to do with making that loan,” he told one journalist. “It was to my brother. . . . My mother deeded the property to the lenders. She lost everything she had. . . .” There is no evidence that Hannah Nixon “lost everything she had.” Although the vacant lot used as collateral was eventually transferred to Hughes's proxies, she retained her house and other properties. Indeed, the conditions of the Hughes loan waived “all rights to assert any claim or deficiency against Hannah Nixon.”

As for Richard's insistence that he had played no role in the transaction, signs to the contrary abound. The signatory on the lease on the vacant lot, executed shortly before the loan was made, was notorized by one William Ridgeley. This was an employee of the disbursing office of the U.S. Senate in Washington, where the vice president's office was then located. Nixon, moreover, covered up not only his exchanges with Dietrich but other compromising details. During a meeting about the loan a Hughes lawyer had gone out at one point to “call Dick” and returned saying he had spoken with “an aide to the vice president.” Thereafter Nixon was referred to in Hughes reports and correspondence in code as the Eastern Division or just plain East. “There was never any confusion,” one of the accountants said long afterward. “It was the vice president.”

Nixon later flew to California to discuss conveyancing of the property provided as security for the loan, “to establish a capital gains situation for his mother.” It was his old law partner Thomas Bewley who drew up the documents that ensured Hannah Nixon would pay no tax on the transaction.
Finally the corporation commissioners' office in Los Angeles contained a list of proposed stockholders in Nixon's Inc. One of the names on it was Richard M. Nixon.

Who profited from the transaction? When Donald Nixon's business was floundering, Dietrich said, he suggested a linkup with the Carnation Milk Company. When it finally collapsed, Donald was appointed to a lucrative post as PR executive for Carnation. The company's president, Alford Ghormley, had been a contributor to the Nixon fund, and then Senator Nixon had been responsive to his pressure on milk quotas.
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Did Nixon personally profit from the Hughes loan?

Contacted in 1996, Hughes's attorney Frank Waters refused to be drawn on whether the $205,000 went not to Donald's business but to his brother, the vice president. “I won't answer,” he said. “He is dead. He is gone. And I hope he is in the arms of the Lord.”

A different reply came from Arnholt Smith, the munificent San Diego millionaire who knew Nixon from childhood and was long one of his most generous backers. “I think it was really for Richard,” Smith said, “to help him live. He was a relatively poor man.”

Some of Nixon's Democratic foes speculated in private about where at least a portion of the money had gone. Within a month of the Hughes loan's being approved, Nixon bought a grand new house in Washington, once the property of former Attorney General Homer Cummings. He reportedly paid seventy-five thousand dollars for a sixteen-room Tudor-style château, set in leafy grounds overlooking a park. Nixon maintained he purchased it solely thanks to a mortgage. Yet he was reportedly able to do so before selling his existing house.

Was Howard Hughes rewarded for his largess? Some observers believed so. The Internal Revenue Service had been blocking the billionaire's efforts to have his Hughes Medical Institute declared a charity and therefore granted tax-exempt status. The institute, announced as providing millions of dollars to “combat disease and human suffering,” was a tax dodge, 84 percent of its vast income going not to medical research but to Hughes. Two months after Hughes made the Nixon loan, the IRS reversed its decision. Because IRS files are so tightly held, there is no way of determining what caused the change of course.

In the months before the loan, moreover, and against the advice of his senior executives, Hughes had committed his company to the largest airplane order in aviation history: more than four hundred million dollars for new passenger jets and equipment. The massive outlay, which represented more than the value of the company's assets, was made at a time when the Hughes airline, TWA, was losing ground to its competitors and showing a loss. In the month of the Hughes loan the Civil Aeronautics Board gave TWA permission
to raise huge loans, in a manner contrary to its usual restrictions. In the months that followed, the airline was granted new domestic and international routes and long-delayed fare increases. The new president of TWA, appointed soon after, was one of Nixon's financial backers.