Armand Hammer

• Born: May 21, 1898
• Birthplace: New York, New York
• Died: December 10, 1990
• Place of death: Los Angeles, California

American merchant, industrialist, oil magnate, and art collector

Hammer made fortunes throughout his life, but he amassed great wealth when he changed Occidental Petroleum from a small company to a large worldwide oil and gas corporation. His contributions to charities were as diverse as his business ventures and included donations for an art museum and school.

Sources of wealth: Oil; manufacturing; trade

Bequeathal of wealth: Children; educational institution; museum

Early Life

Armand Hammer (AHR-muhnd HAM-uhr) was born in New York City to Julius and Rose Hammer in 1898. Julius emigrated from Odessa, Russia, in 1875, settled in the Bronx, New York, and earned his living by practicing medicine and running a number of drugstores. Hammer received a B.A. degree from Columbia College in 1919. While he was attending the College of Physicians and Surgeons at Columbia, he earned his first fortune through speculation. He and his family bought up medical supplies after the prices had dropped and then resold them when the prices rose. Hammer earned $1 million as a result of this speculation.

In 1921, Hammer visited the Soviet Union as a medical volunteer, helping victims of starvation and typhus in the Ural Mountains. Hammer knew that American farmers were burning surplus grain. After witnessing the Soviet famine, he sent the Soviet government one million bushels of American-grown wheat that he had bought for one dollar a bushel in exchange for Russian furs and caviar. Hammer received his medical license in 1924, but he had already decided to conduct business with the Russians, and he never practiced medicine.

First Ventures

Through his father’s political connections, Hammer met the Soviet leader, Vladimir Ilich Lenin, who offered Hammer numerous trade concessions. Hammer was permitted to establish an import-export business, and he imported a variety of Russian goods and exported medical supplies to the Soviet Union. He later managed an asbestos mine in Siberia and manufactured pencils. To start his pencil business, he smuggled German pencil-making machines into Moscow by breaking them down piece by piece. His plant not only produced cheap pencils for Russians but also exported pencils to neighboring nations. The A. Hammer Company made a profit of $1 million at the end of its first year. After he built more plants and the business became profitable, the Russian government bought him out for a large sum of money.

Hammer left the Soviet Union when Joseph Stalin came to power, and he stopped doing business with foreign countries. He made another fortune in the United States by selling czarist works of art he had bought in Moscow at bargain prices. He first sold these artworks at galleries in New York City and latter marketed them in department stores during the Depression. After the repeal of Prohibition, he earned millions of dollars worth of profits by making whiskey barrels with Russian oak and commercial alcohol and whiskey with rotting Maine potatoes. He founded the J. W. Dant Distilling Company after he acquired eleven distillers. He garnered $3 million in annual profits from these distilleries until he sold them in 1954. Hammer also went into the Angus cattle raising business, and in 1954 he auctioned off his herd for more than $1 million.

Mature Wealth

By the mid-1950’s, Hammer had retired and was living in California. In 1956, he and his third wife, Frances, invested $100,000 in two California oil wells that Occidental Petroleum planned to drill. Occidental owned only eight nearly played-out wells and had sales of only $30,000 a year. After both wells struck oil, Hammer decided to come out of retirement and become involved in the company’s operations; he became president and chairman of Occidental in 1957. At the same time, he acquired the moribund Mutual Broadcasting System and sold it a year later for $1.3 million. Two years later, Hammer acquired Gene Reid Drilling Company of Bakersfield, California. In 1961, when the company drilled the Lathrop field in San Francisco, it found natural gas worth hundreds of millions of dollars. Occidental Petroleum scored a major victory in 1966, when the company, which had been granted the rights to explore and use Libya’s natural resources, discovered a billion-barrel oil field. In another important deal, Occidental acquired Cities Service Company, an oil firm in Oklahoma, for $4 billion in 1982. This transaction made Occidental the eighth largest oil company in the United States. Other acquisitions included Midcon, a gas pipeline company for $3 million in 1985, and Cain Chemical for $2.2 billion.

Hammer did not focus only on oil and natural gas ventures. For example, he bought Iowa Beef Packers, the biggest meatpacking business in the United States, for $750 million in 1981; six years later, he sold 40.5 percent of this company for $960 million. He also transacted important business deals with other countries, such as selling phosphate fertilizers to the Soviet Union in exchange for ammonia and urea, constructing a phosphoric acid plant in England, and developing a coal mine in China.

Forbes magazine ranked Hammer as one of the wealthiest Americans in 1987. His fortune diminished substantially after that year and was estimated to be between $100 million and $180 million. He owned less than 1 percent of Occidental stock, and he used his unchallenged power as the company’s chief executive officer and chairman to fund his personal spending. He bought one of Leonardo da Vinci’s notebooks, Codex Leicester (written between 1490 and 1519), for $5.3 million. Occidental paid more than $80 million to build theArmand Hammer Museum; the company also provided the museum with a $36 million endowment to pay for operating expenses. The museum, opened to the public in November, 1990, housed Hammer’s art collection, which was valued at $300 million. He also donated to charities, although there was some question if these donations were made from his personal funds or from Occidental’s money. Some of his important philanthropic contributions included $14 million to the charities of Charles, Prince of Wales; donations to the Armand Hammer Center for Cancer Biology at the Salk Institute in La Jolla, California; and the Hammer Prize for cancer research, a ten-year, $1 million program.

Hammer died at his home in Los Angeles, California, in 1990 at the age of ninety-two after suffering from chronic anemia, bronchitis, a kidney ailment, prostate enlargement, an irregular heartbeat, and bone marrow cancer. He had established a confidentially administered fund to provide the proceeds of his fortune to two institutions—his museum and the Armand Hammer United World College of the American West. According to his employment contract, Occidental had to pay him a $2.3 million salary until his ninety-ninth year. A grandson from his second marriage, Michael Hammer, was the executor of his estate and the administrator of his living trust. Michael dealt with inheritance disputes and claims from charities against Hammer’s estate. At least two cases were settled. Hillary Martha Gibson, Hammer’s former mistress, claimed he had promised to support her for the rest of her life. Her claim was settled out of court in 1996, and she received $4.2 million. In addition, a political organization to which Hammer had pledged $50,000 in 1990 received the money in 1997.

Legacy

Armand Hammer left a significant legacy as both a businessman and philanthropist. He controlled Occidental Petroleum for more than thirty years, and in that time he transformed it from a small local firm to a major worldwide oil and gas company. In 2009, Platts, a leading energy information provider, placed Occidental at twenty-one on a list of the top 250 global energy companies.

As a philanthropist, Hammer donated a large collection of Old Masters and Impressionist art to the Armand Hammer Museum. This facility, managed by the University of California, Los Angeles, has contributed to the intellectual life of the campus and the community at large. The United World College of the American West, founded by Hammer in 1982, continued to pioneer innovations programs in multicultural and global education into the twenty-first century.

Bibliography

Epstein, Edward Jay. Dossier: The Secret History of Armand Hammer. New York: Da Capo Press, 1999. Based on classified Soviet documents and declassified Federal Bureau of Investigation (FBI) files, the author portrays Hammer as a corrupt man addicted to the acquisition of power.

Hammer, Armand. Hammer. San Diego, Calif.: Perigee Trade, 1988. With Neil Lyndon, Hammer writes about his life’s achievements.

Lockwood, Theodore. Dreams and Promises. Santa Fe, N.Mex.: Sunstone Press, 1997. Focuses on the personalities involved in the founding of the United World College and the school’s international perspective.

Mathews, Jay, and Ian Hill. Supertest: How the International Baccalaureate Can Strengthen Our Schools. Peru, Ill.: Open Court, 2005. Describes how the international baccalaureate program was created and instituted in the United States.

Peterson, Alexander Duncan Campbell. Schools Across Frontiers. Peru, Ill.: Open Court, 2003. A history of an educational movement that now encompasses more than 1,200 schools throughout the world.