King of Wildcatters

The President of Minneapolis' Northern Ordnance, Inc. is a profane, rambunctious, Texas-born individual named John Blackstock Hawley Jr., 44. In the space of 15 months, Gunmaker Hawley has also become the biggest driller of wildcat oil wells in the U.S. And in all the rough-&-tough oil industry no one has yet been able to top Hawley's three-word description of himself: "I'm a pirate."

Gunmaker Hawley, who also has described himself as the "world's greatest hydraulic engineer," jumped into the oil industry with his own characteristic platform: "Oilmen are a bunch of fuddy-duddies." He thought the U.S. needed a new system of exploration in order to avert a potential oil shortage. Said he: "We shouldn't be thinking in terms of individual oil fields. We should think of new oil provinces."

The Hawley system to find these provinces was to "drill all over hell." Confidently oilmen sat back and waited for Tenderfoot Hawley to go broke. By last week there was little chance that this would happen. In Hocking County, Ohio, Wildcatter Hawley had brought in a new well, this time gas. But he had high hopes of drilling deeper and striking oil.

Why should a gunmaker go into the oil business? Hawley's stock reply: "Why not? Hell's bells, look at Harry Sinclair [president of Sinclair Oil Corp.]. He was a Kansas druggist. And Frank Phillips [board chairman of Phillips Petroleum Co.]. He was a barber."

Break the Rules. Hawley proudly brags that he knows nothing about oil. But he firmly believes that: 1) all Texans are automatically oil-wise; 2) the way to get ahead fast is to break every rule in the book. The son of Major John Blackstock Hawley, who ran the water system for the U.S. Army in France in World War I, Wildcatter Hawley started breaking the rules after he graduated from Cornell in 1920. A consumptive, he was sent to a sanatorium to rest. Instead, he invented a score of gadgets, earned $27,000.

He went to work for Minneapolis' Northern Pump Co. Four years later he bought the company, with $100,000 netted by more inventions. By 1938 he employed 200 workers, making hydraulic pumps and Navy equipment. Then the defense boom buried him under an avalanche of Navy orders. He enlarged his plant, but it was still too small, so he sold it to General Mills for $1,000,000. Then he formed a new company, Northern Ordnance, Inc. (with all stock owned by Northern Pump), and shopped around for plans for a new plant outside Minneapolis. He was told it would take 90 days to draw the plans.

Hawley profanely went to work to do the job himself. Keeping awake on whiskey and antisleep pills, he planned and built the plant in 60 days.

The Unbelievable. He devised brand-new production-line methods to turn out the infinitely intricate gun mounts, which contain some 7,000 watchlike parts. To man his plant in manpowerless Minneapolis, he raided other companies, even gave his workers a $10 bonus for each new worker brought in. To whoop up pro duction he served turkey dinners in the plant for 25-c-, gave War Bond door prizes, installed foot baths for employes, bombarded them with such Hawley slogans as: "Let's work like hell for liberty." The Navy showered "E's" and praise on Hawley. Said one admiring naval officer stationed at the plant: "We have surpassed predictions that were called fantastic. . . . We are two months ahead of the unbelievable."

These circus methods, added to Hawley's impatience with slower-witted businessmen; made him into a Minneapolis legend. Stories about him were born, many of them apocryphal. Most apocryphal: Hawley supposedly invited bankers and businessmen to an elaborate banquet. After dining and wining them he stood up and supposedly said: "You guys have probably been wondering for hours why I invited you here. You hate my guts. I hate yours. Well, I'll tell you why I asked you--just to tell you all to go plumb to hell."

All this, and shrewd management, boomed parent Northern Pump's profits from their 1937-39 average of $22,000 to $21,179,000 in 1942--before renegotiation and taxes, of course. Hawley's salary kept pace with the rise, climbing from $49,000 in 1939 to $448,000 in 1941.

When the Navy started to renegotiate Northern Pump last year, Hawley howled that the Government was "reneging" on its contract. At the time, he was also occupied in denying a Minneapolis gibe that his yacht was named "Navy Gravy." He had once tried to start a nationwide campaign against the renegotiation act, wired Congressmen (at a rumored cost of $100,000) and mailed handsome brochures to some 14,000 businessmen. He insisted that if he made big money out of the war it was only because he was doing a superlative job. But the Navy ordered him to turn back $15,000,000, left him $949,000 profit in 1942 after taxes and renegotiation.

What Northern Pump made last year Hawley will not say.

New Worlds. But he had enough cash to make a spectacular splurge in the oil industry. He opened offices in Tulsa, hired a brace of top-notch geologists. He dazzled the industry by plunking out $100,000 for a 160-acre lease in Oklahoma which a farmer had bought for $200. Hawley sank two dry wells, gave up. Said his top geologist, H. L. Scott: "Frankly, that deal was one hell of a big mistake."

Undiscouraged, Hawley set rigs drilling in Kansas, Oklahoma, Illinois, Arkansas and Louisiana. He blandly ignored gloomy geologic reports. In many cases he bet on his hunches. He put down 13 wells before he even struck gas--and that in small quantities. On his 22nd well, in Cowley County, Kansas, he finally struck oil. But it was a piddling 25 bbl. a day. Hawley kept as closemouthed on the cost of these wells as he generally is on all his business. But oilmen guesstimate that with the wells costing from $30,000 to $125,000 apiece, he must have lost $1,000,000 or more.

A Province. But his big strike came last month, after he made a deal with the Carter Oil Co., a Jersey Standard subsidiary, to drill a 15,000-acre tract in Montana, near Roundup (pop. 2,645). Every Rocky Mountain geologist had thumbed it down. But Hawley struck oil on the west side of the tract. Hawley and the Carter Co. promptly divided their holdings in the area, Carter taking the western half and selling the eastern half of the area to Hawley. Smartly he moved his rig to the eastern side. There he brought in a 5,000-bbl. well, setting the oil industry abuzz with hopes of a huge new pool.

Shortly after, he opened up two new pools in Victoria and Coke Counties, Texas. By last week he was drilling for oil, or preparing to, in 18 states. Confidently he announced that his first oil "province," the one near Roundup, Mont., and his Texas wells will pay off more than 10-to-1 for the cash sunk in dry holes.

Who Pays? Many oldtime oilmen are caustically critical of Hawley's ventures. They complain that he is spending "tax dollars," i.e., cash made on war contracts, which would otherwise be paid in as taxes to the Federal Government. They point out that with Northern Pump probably in the overall 80%-tax bracket, Hawley stands only one-fifth of the loss in dry holes and Uncle Sam foots the bill for the rest. And the 20% he puts into a dry hole can be charged off against taxable income. Even when Hawley strikes oil--and the company's income is boosted by oil sales--he still has his 27 1/2% depletion allowance plus sundry "intangible costs" allowed under the tax law. And if he sells his producing wells he still stands a good chance of having his profit classed as a capital gain--which is taxable at only 25%.

But Hawley vows he has no intention of selling his wells. He insists that his plunge into the oil business is no dodge to evade income taxes: "A dollar is a dollar and ours are no different than anyone else's. Northern Ordnance has 6,000 employes. We've got to engage in big operations if we're going to have jobs for them after this war."

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