Texaco Tussle

While Ralph Clinton Holmes was in Europe in 1927, Chairman Amos Leonidas Beaty of Texas Corp. arranged that henceforth all department heads should meet daily with the executive committee instead of with Mr. Holmes the president. When President Holmes returned he demanded that Texaco's department heads should again meet with him, not with Mr. Beaty and the executive committee. One day as high-salaried Texaco operating executives hovered uncertainly between Mr. Beaty's and Mr. Holmes's doors, Mr. Holmes called for a showdown. The embarrassed executive committee gave President Holmes a vote of confidence. Chairman Beaty resigned then & there. Few days later he moved into an office directly above Texaco at No. 17 Battery Place, Manhattan.

Last spring, as happened with Texaco's first president Joseph Stephen Cullinan in 1913 and with Chairman Arnold Schlaet in 1920, the question of who was to run the biggest independent oil company in the U. S. again popped up. Ralph Clinton Holmes, by this time not only president but acting chairman of the executive committee and board of directors, again called for a showdown. This time he lost. Mr. Holmes was reluctant to move from his big paneled office in the Chrysler Building but when he did he took offices, like Mr. Beaty, a few floors above his old company. Last week in that office, unlike Mr. Beaty, he had a platoon of stenographers working busily on a campaign to justify his reign. Out to Texaco stockholders and the Press went a 43-page booklet containing Mr. Holmes's version of last spring's boardroom battle and a list of his good works. With it went a letter from a stockholders' committee, asking for proxies for a special stockholders' meeting in October. Mr. Holmes swore that he was not trying to regain the Texaco throne but only desired election of twelve additional directors. Mr. Holmes openly protested that Texaco had too long been dominated by the Lapham family who had three of the 13 seats -- John H. ("Jack") Lapham and his cousin Henry G. Lapham and a Lapham nominee. Albert Rockwell. Seven directors are company executives. "No strong man, or any one above the average, has ever survived a Lapham board. . . . Every constructive or corrective effort, or activity, ever made has been carried out over the protest or objection of some, if not all, of the Lapham representatives," roared Mr. Holmes. To Mr. Holmes the most sinister in fluence in Texaco is Jack Lapham. A slim, blue-eyed, soft-spoken man of 51, whose father was one of Texaco's founders, Jack Lapham lives in Austin, plays polo, flies his own planes. Though no single one of Texaco's 90,000 stockholders owns more than a 2% interest, the Lapham family owns 250,000 shares of the 9.000,000 out standing. With nothing particular to do Jack Lapham has always liked to spend his time on Texaco affairs, in Texaco meetings, in Texaco fields and refineries. President Holmes, whose library on Napoleon is extensive, found this interest very annoying. Texaco has had a tradition of down right individualism ever since it was founded by John Warne ("Bet-a-Million") Gates & friends in 1902 -- a longshot bet on a little $3,000,000 concern which had grown out of a wildcat gusher in the Spindletop pool. Ralph Holmes went to Texaco at its founding. Grandson of an oilman, he was raised in Olean, N. Y. near the Pennsylvania oil fields, quit school to go into refining. For Texaco he helped develop the famed Holmes-Manley gasoline cracking process, helped push its distribution into 51 foreign lands and into all 48 States (more than any U. S. oil company). Now 59, short, stocky, bulb-nosed Ralph Holmes is known chiefly as a refining man and a bear for work. After Mr. Holmes was boosted into the presidency (by the Laphams), he saw to it that his $500,000,000 company was run on Holmes ideas. Last spring he even edited an issue of the Texaco Star, monthly house organ. Editor Holmes blistered the oil industry, collectively and individually, for its colossal sins and the issue raised a storm in the oil world. Directors who had never seen Texaco in the spotlight were alarmed. Furthermore, they were mortified by a frank Holmes telegram to President Roosevelt demanding Governmental intervention and suppression of racketeering. The directors remonstrated. President Holmes said he would run the company as he saw fit, directors or no directors. Day before the annual meeting Jack Lapham marched into Mr. Holmes's office: "Mr. Holmes, we don't like your policies and we don't like what you are doing. We have arranged that I shall be chairman of the board and you president--we to share equally all responsibilities. . . . There is dissension in the ranks."

After much wrangling the arrangement was modified. William Starling Sullivant Rodgers, tall, thick-set vice-president, was elected president, Jack Lapham became chairman of the executive committee and Mr. Holmes was shelved as board chairman. Week later at a board meeting Mr. Holmes pre-emptorily demanded resignations from the Laphams and four other directors. When they were refused Jack Lapham moved that Mr. Holmes resign and if he did not that he be ousted. Mr. Holmes was automatically out. Kindly Charles Bismark Ames, a former vice president, was recalled from the American Petroleum Institute to head the board. Last week in answering Mr. Holmes's attack Texaco officials swore that as long as Mr. Holmes was president he had never asked for more directors; that many of his accusations were just not true; that by omitting many material facts he suggested conditions which did not exist. At the same time Texaco announced the election of three new directors representing estates of Texaco founders and the resignation of Henry G. Lapham, Boston broker and donor of Yale's famed field house, who had wanted to leave Texaco for the last six months. Oilmen nodded knowingly at Texaco's explanation of the real reason for Mr. Holmes's present accusation: "Mr. Holmes's resignation was not due to differences of opinion in respect to ... policies but to his intolerant attitude towards his executive staff, members of the board . . . and the executive committee. His domineering, arrogant methods not only antagonized Governmental authorities but also executives of companies with which we have business relations. By his arbitrary and unreasonable conduct, he was rapidly destroying the morale. . . . He was impatient of advice, resentful of opposition, and appreciative of only those who agreed with him. ... If he was unconscious of the increasing opposition to him and his methods it was because he was surrounded by the fog of his own egotism."--

--The summer edition of the Manhattan telephone book, which went to press before he resigned, carries the listing, not under Texas Corp., but in the H's: "R. O. Holmes, chairman of the board, 135 E. 42nd.... Murray Hill 2-7700.

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