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People Top 5
LAST UPDATE: Tuesday February 10, 2015 01:10PM EST
PEOPLE Top 5 are the most-viewed stories on the site over the past three days, updated every 60 minutes
- October 26, 1981
- Vol. 16
- No. 17
Wheeler-Dealer Armand Hammer Pounces on the Main Chance Like a Dog on a Bone
Even a dead-on portrayal, however, could hardly have done justice to the complex octogenarian. Hammer, who heads the nation's 11th biggest oil company, Occidental Petroleum Corp., is an M.D. who never practiced medicine, a businessman with a record of outrageous success in industries as diverse as pharmaceuticals, whiskey, cattle and oil, and an international trader with a perplexing reputation as the Soviet Union's favorite capitalist. Yet at 83, Hammer takes greater pride in his $56 million art collections, which contain more masterpieces than many museums, and in his philanthropy, which is devoted to world peace and cancer research. Most of all, perhaps, Hammer delights in the first-name privileges he has enjoyed with world leaders from Franklin (Roosevelt) and Vladimir (Lenin) to Ron and Leonid. He was doubtless the only convicted offender—for illegal donations to the 1972 campaign of his good friend Dick (Nixon)—to grace an aisle seat near the altar at the recent wedding of his old pal, Wales (Charles, Prince of).
"I believe in face-to-face negotiations," says Hammer of his penchant for cultivating the powerful. "To cut the red tape, you first have to have the support of the man on top. So I go to the prime minister or president and find out what he wants for his country." Or, occasionally, what he wants for himself. In 1972, while negotiating a 20-year, $20 billion fertilizer chemicals deal, Hammer presented Soviet Party Chairman Brezhnev with two letters in Lenin's own hand. Brezhnev was moved to tears, says Hammer, and insisted that the American accept his gold watch and chain. The fertilizer deal went through.
Another of the fruits of Hammer's détente is the apartment he describes as "the finest in Moscow, with a dishwasher, deep freeze and Russian maid." There are, of course, those who wonder about the implications of such singular luxury. "My predecessors fawned over Hammer," says Malcolm Toon, U.S. Ambassador to Moscow from 1975 to 1976, "but I am always uneasy about people who have close, warm relations with the Soviet leadership. There is no doubt that anybody who moves in and out of Russia the way Hammer does has KGB clearance." Still, Hammer could hardly be classified as a Communist sympathizer. "I tell the Russians in no uncertain terms that I don't think their system works," he declares. "The way to fight Communism is to let it collapse. In the early 1920s I was the only private individual there who owned an automobile. Today, half of the million automobiles they produce each year are going into private hands. I believe that every man who owns an automobile in Russia is no longer a Communist—he's a fervent believer in private property."
Curiously, Hammer is both the great-grandson of a czarist loyalist who built warships for Nicholas I and the son of a Russian-born gynecologist who was a founder of the American Communist Party. Born in 1898 in a coldwater flat on New York's Lower East Side, Hammer was named by his father for the Socialists' arm-and-hammer emblem as well as the romantic lover in Dumas' Camille. After high school Armand spent nights studying medicine at Columbia and days bailing out the family's near-bankrupt drug business, which Hammer turned into a million-dollar enterprise. At one point the firm bought huge stores of war-surplus medical supplies and sold them to Russia at a huge profit. Soon afterward Hammer graduated near the top of his class and won a coveted internship at Bellevue Hospital. That summer he sold the company and went to epidemic-stricken Russia to offer medical aid and collect on some bills.
The year was 1921. While American farmers were burning their grain surpluses, famine was sweeping the Urals. Hammer bought a million bushels of U.S. wheat at a dollar each and had them shipped to the Soviet Union in exchange for $1 million worth of Russian goods, principally furs. The deal netted Hammer a 10 percent commission and, more important, caught the eye of General Secretary V.I. Lenin, who summoned him to Moscow to express his gratitude. "When he told me Russia was adopting the New Economic Policy and was going to give concessions to foreigners," Hammer recalls, "I thought it was a great opportunity, a turning point in my life."
Indeed it was. Hammer abandoned his internship and by 1924 had secured the first foreign concession, a dormant asbestos mine in the Urals. He also had negotiated sales concessions with the Soviets for 38 American companies making products from typewriters to tractors. By 1928 he was living in Moscow, married to Russian concert singer Baroness Olga von Root, and playing host to Western visitors including H.G. Wells, Gene Tunney, Douglas Fairbanks and Mary Pickford. In 1930 the Stalin regime bought out his holdings for several million in cash and promissory notes. Hammer bought up at discount the same kind of notes from other American businessmen, who considered them worthless, and reaped a windfall a short time later when the Russians paid off at full value. In 1931 he returned to New York, bringing with him a hoard of antiques once owned by the Romanovs; these he sold through U.S. department stores.
Once back in the U.S., he and Olga, the mother of his only child, Julian, were divorced. (Now 52, the younger Hammer, an electronics engineer in L.A., sees his father frequently.) Hammer's instinct for the main chance remained unaffected. He foresaw the repeal of Prohibition and the subsequent demand for whiskey barrels, so he began importing seasoned white oak from Russia and established his own barrel factory. Later he bought a New Hampshire distillery to turn rotting Maine potatoes into blended whiskey. That operation, too, was sold at a profit. Near the end of World War II Hammer found himself hankering for a prime steak and decided to buy a live steer to produce it. When his directive turned up instead a pregnant Aberdeen Black Angus, Hammer went into the cattle business. He auctioned off his famous Shadow Isle herd for more than $1 million in 1954, shortly after his champion bull, Prince Eric, died trying to reach a heifer on the wrong side of a barbed-wire fence.
Two years later Hammer's 12-year second marriage, to socialite Angela Zevely, ended in a bitter divorce that made The Police Gazette. An old acquaintance named Frances Tolman noticed the story and wrote him a letter. Their friendship was quickly rekindled, and they were married in 1956. Afterward Hammer retired to L.A. with his wife. Then, looking for a tax shelter, he loaned Occidental, a struggling California-based company, $50,000 to finance the drilling of two wells. He also obtained control of the moribund Mutual Broadcasting System, put it in the black in one year and sold it for a $1.3 million profit. Meanwhile Occidental's two wells both came in. Hammer came out of retirement. Spurred by its new president's shrewdness, audacity and uncommon good luck, the company went on to become an American giant. Last year Occidental's net income was $710.8 million on sales of $12.5 billion. Among its subsidiaries are Island Creek Coal, the third largest U.S. producer; Hooker Chemical; silver and gold mines in Nevada, and oil shale projects in Colorado.
But the course of Hammer's profits hasn't always run smooth. Occidental's business practices have been investigated by the SEC four times since 1971. (Neither admitting nor denying the allegations, the company agreed to an order to refrain from future violations of the Federal securities laws.) More seriously, he was found guilty in 1975 of making $54,000 in illegal contributions to President Nixon's 1972 reelection campaign. Hammer maintains his innocence, and claims that still un-released Watergate tapes will exonerate him. Because of his age and health, he was sentenced to only a year's probation and fined $3,000. He collapsed soon afterward with a potentially fatal heart condition.
Unintimidated by his brush with mortality, Hammer today claims, "My arteries and blood pressure are as good as those of a man half my age." He takes care of himself, relying on a modified Atkins diet, daily exercise and a half-hour morning dip when he and Frances are at their four-bedroom home in L.A. But the Hammers see less of that residence, and their others in New York and Moscow, than they do of the five-star accommodations they rate on the road. First, there are Armand's charities to attend to. "I would like to feel I've done something else besides make money," he says. To that end, he has willed part of his art collection to the Los Angeles County Museum; donated the island of Campobello, which he had bought from Elliott Roosevelt in 1962, as a joint U.S.-Canadian peace park; sponsored an annual world peace and human rights conclave, and contributed heavily to cancer research. Observes one associate: "He has a hunger to be remembered for doing good things."
Hammer's involvement in art also gratifies that ambition, plus his passion for ownership. Yet being a patron is not without pitfalls; his first public exhibition, at the Smithsonian, was treated to an embarrassing critical buffeting. "I needed a jolt like that," he says. "It was hard for me to believe that the great artists had bad days." He persuaded John Walker, director emeritus of the National Gallery of Art, to help him upgrade his collection. Today his old masters, combined with his extensive Daumier collection, are worth an estimated $50 million. Last December, for $5.8 million, he also bought the Codex Leicester, an early-16th-century Leonardo manuscript that will next be displayed in Florence, Italy in February. Hammer lends out his art liberally, and he and Frances try to attend every opening.
Proud of his role as a pragmatist who moves easily between societies posed at nuclear sword's point, Hammer volunteers his services readily as an international messenger with top-level contacts. While doing so, of course, he never neglects Occidental's interests. Still firmly in control of the company, he has axed so many heirs apparent that they have been sardonically called "Hammer's Other Collection." Says one executive: "Since he built the business, it's quite natural for him to stick to his familiar success formula. He regards the company as a family-type enterprise." Hammer admits he runs the multinational "on intuition," but would dispute those Wall Street analysts who predict Occidental stock will jump 10 points the day its founder steps down as chairman. "A lot of people have opportunities and just don't recognize them," says Hammer. "If I see something has promise, I give it my all."
Currently that means jetting to oil operations on six continents, while hedging his bets with investments in a variety of synthetic fuel projects. Unless alternative sources of fuel are found, he believes, the price of oil will hit $100 a barrel in three to five years. For Hammer, that represents a danger, but also a rare opportunity. And when opportunity knocks, Armand Hammer is always at home.
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