he proceeds almost to triple his tonnage, more men must be added; and
sheer numbers of staff have a way of upsetting organizational
structures. The present setup allows him to step into any decision
anywhere in the organization. True, he frequently delegates decisions,
even some major ones. But it will be a severe strain on him either to
make or to delegate any more decisions than he already does.
frugality, as Saunders wrote, made him almost an ascetic, despite his
his work to the ultimate degree, Ludwig is unable to take much pleasure
from anything else…He counts calories religiously, and occasionally
brings a diet book into the office to show to some employees who are
gaining weight. He likes martinis, but later on leaned toward the milder
substitutes like buttermilk and soda. As one friend summed it up,
“Ludwig doesn’t drink much, he doesn’t smoke at all, he doesn’t
entertain lavishly. His only bad habit is work – and that he can’t
reporter phoning Ludwig's New York headquarters will be airily told by
the operator that there is no Daniel Ludwig in the company--at least,
not on her list of telephone extensions. Further inquiry will reveal
that a shadowy figure answering to that name does occasionally drop
in, but nobody admits to knowing exactly who he is, what he does or how
he can be reached.
but most Americans had never heard of Daniel Keith Ludwig. Even the
sophisticated New Yorkers who fancied themselves to be the smartest and
well-informed people in the world, had not the slightest idea that that
limping old man they see striding up the street was the world’s
was hard to figure out. In the days of mass media coverage and public
obsession with world’s records, a man managed to accumulate a billion
dollar fortune with no one becoming aware of it?
Dan Ludwig was able to do just that. His footprints can be found all
over the world.
owned what is probably the world's biggest private shipping fleet
--bigger than those of either Stavros Niarchos or Aristotle Onassis. The
fabulous Greek shipping tycoons made considerably more splash than
Ludwig and are far more colorful, but in sheer fortune-building Ludwig
towers high above them. His fleet approximates five million deadweight
tons and includes the five or six biggest oil tankers ever built.
was also the major shareholder in a string of savings-and-loan
companies; a large collection of hotels, office buildings, and other
real-estate ventures in the U.S. and overseas; coal and iron and other
natural-resources developments from Australia to Mexico; petroleum and
petrochemicals refineries in Florida and Panama.
amassed this huge collection of businesses in an atmosphere of eerie
silence. For many years, he and his second wife lived in an
unostentatious house in the commuter town of Darien, Connecticut.
"We almost never saw them," says a neighbor. "They never
came to cocktail parties around town or anything like that. Nobody knew
exactly who they were. I always thought he was some kind of bank
executive--you know, a salary guy, maybe forty grand, nobody very
in his prime was a tall, lean, ruggedly handsome man. He was born in
June, 1897, in South Haven, Michigan, a small lakeside community. His
father was a real-estate broker and speculator, comfortably successful
but not rich. Young Daniel was fascinated by boats and ships. At the age
of nine he found a sunken 26-foot diesel boat that had been abandoned as
not worth the salvage costs. He bought it from the owner for $25, which
he amassed by working and by borrowing from his father. He raised the
boat and spent an entire winter repairing it. The following summer he
earned some $50 by chartering the boat. This was his first experience in
the shipping business, and he enjoyed every minute of it--particularly
the knowledge that he had come out with a profit.
father and mother separated when he was in his early teens, and he went
with his father to Port Arthur, Texas, a shipping town in which the
father had found some real-estate opportunities. Still intrigued by
ships, young Dan dropped out of high school to go to work on the
waterfront. He drifted around for a few years, ending at a marine engine
plant from which he was sent out to help install ship engines in various
ports around the country. He liked the work, discovered he was good at
it and began moonlighting, installing and repairing engines on his own.
At the age of nineteen he had more private contracts than he could
handle, so he quit his job. It was the last job he would ever have.
was in the mid-1930s, when the late-blooming Ludwig was nearing the age
of forty, that he finally began building the foundation of his present
monumental fortune. That was when he discovered OPM.
had borrowed money often before, of course, starting with his first
ship-salvage venture at age nine. "But," says a Chase
Manhattan Bank officer, "it hadn't been what you could call
creative borrowing. He hadn't learned how to use other people's money as
a lever to increase his own economic horsepower."
arrived at his success formula in two main steps. The first step came
when he wanted to borrow some money to buy an old general-cargo ship and
convert it into an oil tanker. (Oil transport paid more than dry cargo.)
He went to various banks in New York.
looked at his frayed shirt collar and asked what he proposed to put up
as collateral. He had to admit he owned but little in the way of worldly
goods. He did have one elderly tanker afloat, however--the one in which
his back had been hurt--and it occurred to him that he might be able to
make a deal involving this ship.
came to this bank," says the Chase man, "and told us he had
his tanker chartered out to some oil company. The monthly charter fees
he received were just about equal to the monthly payments he'd have to
make on the loan he wanted. So, he proposed to assign the charter to the
bank. The bank would then collect the charter fees directly from the oil
company, and that money would go toward paying off Ludwig's loan."
many bankers it seemed like a crazy setup. Yet, it was in reality as
safe for the bank as almost any small-business loan. Ludwig alone might
not have been a four-A credit risk, but the oil company's credit was
good. The bank could assume that, barring unforeseen economic
catastrophes, the oil company would faithfully keep up its charter
payments on the tanker. Even if Ludwig's new ship-converting venture
sank as had some of his others, the bank would still keep getting its
money as long as the old tanker and the oil company stayed afloat. In
effect, Ludwig was boosting his own feeble credit rating by using the
bank made the loan on that basis. Ludwig bought the old general-cargo
ship he wanted, converted her to an oil tanker, chartered her out,
used her to get another loan on the same basis, and converted still
another dry-cargo ship to oil.
went on for a few years. As each loan was paid off, Ludwig came out with
free-and-clear title to a ship. The charter fees for that ship stopped
flowing to a bank and began flowing into his pocket. His cash position,
his credit rating, and his shirt collars improved rapidly.
now, he was struck by a still more intriguing idea. If he could borrow
money on an existing ship, why couldn't he also borrow on a ship not yet
was his second giant step in learning the uses of OPM. Ludwig's new
proposition went something like this. He would design a tanker or some
other ship for a specialized purpose. Before the keel was even laid, he
would find a customer to charter her when she was completed. Waving the
charter contract, he would walk into a bank and ask for a loan with
which to build the ship. The loan was to be of the deferred payment
variety, under which the bank expected little or none of its money back
until the ship was actually afloat. Once she was afloat, the charter
fees would be assigned to the bank and the loan would be paid off as
before. Eventually, when the entire years-long transaction was
completed, Ludwig would sail away as owner of a ship in which he had
invested barely a dime of his own money.
again the proposition startled the banks. But once again it made sense
when examined closely. Ludwig's own credit rating was now quite
acceptable--and, as before, he was backed up by the credit of his
charter customers. "A loan arrangement of this kind," says the
Chase officer, "is what we call 'two-name paper'--meaning, in
effect, that payment is guaranteed by two different companies or men who
are more or less independent of each other economically. That is, if one
gets into trouble and defaults, the other won't necessarily be in the
same trouble and if all goes well will honor the obligation. The bank,
you see, gets an extra measure of safety for its money."
was now well launched on his great fortune-building odyssey. He had
started by renting space in other people's docks and shipyards. Now he
began building his own facilities--using OPM, of course. His small
shipbuilding company prospered and grew explosively during World War
II, when the U.S. government was a greedy customer for every tanker he
impressive postwar boom began to show itself in the late 1940s, and
Ludwig looked for ways to expand. He decided (as did many other
shipbuilders and shipping operators) that the United States had become
one of the world's worst places in which to base a business of his kind.
Labor costs, materials prices, and taxes were all too high, and the
entire shipping industry was bogged in a vast, tangled sea-weed-bed of
tariff problems and other governmental restrictions. It was time, Ludwig
thought, to look around the world.
the early 1950s, he found an enticing deal in Japan. The Japanese,
losers of the war and at that time economic losers too, had a huge naval
shipyard at Kure--birthplace of battleships, aircraft carriers and other
giant craft. The war's end had closed it down, throwing thousands out of
work and plunging the region into a severe, long-lasting, and seemingly
incurable depression. The Japanese government was anxious to get
something started there but was treading warily for fear that Kure might
be turned into an American naval yard and permanent military base. When
Ludwig came around--a private American citizen with lots of cash and
even more credit--the Japanese welcomed him joyfully. (One local
official, it is said, literally had tears of happiness streaming down
his cheeks as he signed some contracts later.) The Japanese quickly made
a deal with the taciturn American. In return for certain easy
concessions on his part--he had to hire Japanese labor and use Japanese
steel, for instance, which he wanted to do anyway--they gave him a
cheap, long-term lease of the Kure shipyard plus an attractive
assortment of tax and tariff deals and other pot-sweeteners.
built tankers, iron-ore carriers, and other ships at Kure from then
until the present time. He built bigger and bigger ships; each
succeeding generation could carry more cargo at a cheaper rate per ton.
He sold some, kept others. As his fleet expanded, he set up new
companies around the world to operate the ships--companies incorporated
in nations such as Liberia and Panama, which offer a shipper all kinds
of advantages in terms of taxes, labor laws, and ship-registration
expenses. In time he began to fit new pieces into the structure of his
global empire. He acquired mining and petroleum properties whose
transportation needs could be served by his ships. He set up banking and
loan companies that could participate in the financial flow his empire
generated. He amassed what must surely be one of the highest piles of
wealth ever shoveled together by one man.
man? That is almost literally true. Ludwig owned many of his ventures
and properties outright; he is majority owner of most of the others.
Ludwig has never been attracted by the idea of equity financing, in
which you raise money for a venture by selling some or most of the
ownership and future profits to other people. Ludwig hasn't wanted a
horde of stockholders telling him what to do. He has always preferred to
move ahead by borrowing other people's money and keeping the ownership
for himself. Except in a private deal, it has never been possible to buy
stock in any Ludwig venture.
1967, Ludwig launched his biggest enterprise ever – an attempt to
convert four million acres of Amazon rain forest into productive
forestry operations, rice paddies, cattle ranches and mines. This
project was so vast that even Ludwig couldn’t keep it secret. It was
the ultimate exploiter – Ludwig—against the earth’s largest
jungle. Ludwig was leveling rain forests with tractors and bulldozers,
fire and explosives, airplanes and herbicides, chain saws and axes, in
order to grow a tree brought from Asia by way of Africa. Within a few
years, he turned thousands of square miles of tropical forest into a
charred, blackened battlefield littered with stumps.
1986, much of Ludwig’s fortune were turned over to two foundations –
one in Zurich and the other in New York – set up ostensibly to find
cures for cancer but more probably as a preventive medicine against
paying a sizable portion of his wealth in taxes.
remained a mystery until his death in 1996.
successors, whoever they turned out to be, may have wished in the end
that the great borrower had engineered the colossal structure in a
different way. But, at the moment, one achievement stands out starkly.
Daniel Keith Ludwig came from nowhere and made himself one of the
richest men on earth.
US President Nixon gave $100 million in the "war against
cancer" - D.K. gave considerably more!
LICR (Ludwig Institute for Cancer Research) is now the world's largest
academic institute dedicated to the fight against cancer, and is ranked
alongside the Red Cross, the World Health Organization, and the World
Bank in terms of research impact. It is also the only academic institute
that sponsors its own clinical trials in cancer therapies - no
pharmaceutical shareholders involved! - (Sarah White - LICR)
Very, Very Rich and How They Got That Way – Edited by Max Gunther
Invisible Billionaire – Jerry Shields
Ludwig Institute for Cancer Research