Harris L. Kempner, Sr.

Duration: 1hr: 58Mins
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Uncorrected Transcript

Interview with: Harris L. Kempner, Sr.
Interviewed by: Unknown Interviewer
Date: January 15, 1976

Archive Number: OH 088

 


F:         Perhaps we could begin with just some personal information about yourself. If you could take us back to your early memories here on the island and bring us up to, say just before World War II.

HK:      It’s just a brief period? Well, I was born here in 1903. My family moved into the house where I grew up when I was an infant. The house is on 1502 Broadway and still stands and still has people living in it. My mother and father had been married a little less than a year when I was born and was followed by 5 other children. One of them died in infancy, so we grew up together then 1 brother and 3 sisters. The youngest of whom was 10 years younger than I.

            It was a very warm and charming household in many respects. My mother was a great hostess, a great lady. She was a French extraction. Although she had to go back to her grandfather to find someone who had actually been born in France, but she was interested in running a house with the food and condiments in a very gracious French style, which we all grew up with and which we’ve missed ever since.

            02:43   As is usual in Galveston, there are no well defined neighborhoods. We lived on, as I say, on Broadway. Across the street in a much older house, was an English family named Stewart who had children of almost the same age as ours. They left shortly before the World War I, and we were all pretty young, but we had an interesting sort of a combination friendship and rivalry in our group.

            My father, of course, he was appointed by the government, and he was commissioner of finance and revenue and the first city commission installed him in Galveston right after the 1900 storm. He served in that capacity for a number of years, and he later ran and was elected mayor of Galveston for one term. I don’t know exactly when, about 1915, 16. I can remember vividly some hand paintings that some of the seniors would hand us at these elections when people would come around and serenade. You’d see all kinds of people in the streets.

            I remember we always had a governess, and for awhile when we were all so young, we had two. One or the other would drive us in a pony cart that we had which was a little basket cart driven by a pony. I always resented it terribly, because I wasn’t allowed to drive very much, and I thought it was undignified sort of a vehicle to be seen in. At a time I had to put up with that.

            World War II did you say?

F:         Yeah.

HK:      Well, I’d better get on, hadn’t I? Another distinguishing feature about my youth was—it was a little later—beginning about the time of World War I when I started going off to school—it was the fact that my parents always took me in. In fact, as the other children that got older, into their social life. We lived where children used to be segregated, and we all shared each other’s activities, to a degree at least.

            Well, let’s see, I went away to Marshalltown school from the fall of 1917 to June, ‘20, when I graduated. I went to Harvard in ’20, graduated in ’24. Then I went to Europe for a year and spent most of it in Paris perfecting my French which I still think I speak, although some Frenchmen don’t agree. We ended a round of our offices we had established by—in fact, long before that time—into national cotton merchandizing operation, which we sold American and Mexican cotton to all the countries in the world that consume cotton. We had offices in a great many of these places, and I would go from place to place to meet our agents and to meet our customers and prepare myself to come back and enter into the business, which I did in 1925. While I was in Europe that year, I took a summer course at Soabarden (??).

            06:41   When I came home then in ’25, about the time that this building was actually finished building, and have been in the family businesses ever since with the exception of the war years. I went, in early 1942 to Washington to work in Mr. Barstall’s office who was an undersecretary of the navy. I stayed there until October of ’45. I went in as a lieutenant and came out as a commander. I was married in 1939. We had our honeymoon in Europe just before the war broke out. We came back on practically the last voyage of the Normandy.

            We had two sons. The eldest is Harris Kempner, Jr. The younger was Miriam Lee Kempner who was killed in Vietnam in ’66. That about brings me through World War II, or I could go on for hours.

F:         I think that’s fine. I remember reading something about Franklin Delano Roosevelt visiting Galveston in ‘37. Do you remember his visit?

HK:      In what year?

F:         Thirty-seven.

HK:      Yes, I do remember his visit. At that time Mr. Adrian Levy was the mayor of Galveston. Mr. Levy is now an uncle-in-law of mine, but was then a very close friend of the family. he is a man who does things with a great deal of panache, and he received Mr. Roosevelt extremely pleasantly. I remember he likes to tell the story—as a matter of fact, he’s an excellent man for you to get for a similar interview—he likes to tell the story of how he had to hold up some ceremony, because a young congressman, possibly even then a young legislator from Texas insisted on being President. His name his Lyndon Johnson, so the thing had to be held up, and nobody knew who Lyndon Johnson was, but he still had it held up.

            They had a parade through the town, and—I think—they stayed at the Galvez. They had a big, open meeting down here on the plaza off in front of the Santa Fe. I don’t know that I actually met Mr. Roosevelt out at that time. Of course, my parents did, but I don’t think that I did. That’s really all I remember about that.

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F:         Let’s go into several of the industries now that Kempner is connected with. We’ll begin with the Imperial Sugar companies.

KH:      Imperial Sugar Company is a good candidate for a company that’s been doing the same thing in the same place for the longest time in Texas. When the early people came in from the states into Mexico, to which Texas then belonged in the early part of the 19th century. They came in with the slaves through the Austin grand, and they settled on the great river valleys, the rises in Trinity and in Colorado. These lands were ideally suited for crops such as cotton, sugar, and indigo, all of which required a substantial amount of slave labor, because of the nature crops before they were mechanized.

            10:45   Sugar was grown in many places along the rises, but including the one which is now Sugar Land which was then part of the Williams grand, the same Mr. Sanford Williams whose house is here in Galveston, otherwise known as the . . . of the Texas revolution. This was, of course, what they did, is they grew sugar and they milled it. Then it was sold what to use would be a somewhat unpalatable form but which was perfectly satisfactory to them.

            When the Santa Ana narrowly avoided—in fact, Santa Ana wanted to destroy that particular farm when he crossed the rises on the way to San Jacinto. He was a great friend of Mr. Williams and very angry at Mr. Williams, because he sided with the Texas revolutionaries instead of with him. He went to what he thought was the Williams’ plantation, but he made a slight mistake, and it was someone else’s plantation, so the Williams’ plantation survived Santa Ana.

            It could not survive very well the end of slavery, which came, of course, right after the Civil War. All the other sugar plantations closed down. This one survived on a moving basis. Then it was bought by a man named Cunningham, known as the Cunningham refinery. It was bought by my father and my uncles along with a Mr. Eldridge in the early part of this century, and they set about, along with a good bit of land adjourning it, and they set about remodeling the refinery and making it the mill and making it into a real refinery.

            12:40   In about 1920-odd, because of the growth of disease of the sugar, they stopped growing their own sugar and starting importing it largely from Cuba, but some a number of other places. From that small beginning, the Imperial Sugar Company has grown to a position where it has an enormous consumer preference in Texas and 88 percent of all cane sugar used in Texas is Imperial. They distribute, of course, in other states, but their main business is in Texas. They import the sugar from all over the world. Hawaii is a big supplier. They have been instrumental in aiding the people in the Rio Grand valley to establish their raw sugar production, and they buy their entire crop. They’re very proud of their quality and the service they’ve given to the people of Texas.

            There are some books on this subject. Do you want any mention of that sort of thing?

F:         Perhaps we could take notes about those after we—but you mentioned something about disease of the sugar?

HK:      The plant disease, some kind of plant infestation, blight of some kind that they were unable to eradicate that finally found new strains of sugar which would resist it or the virus itself died out because of lack of anything to feed on. The crop yield was so small that they couldn’t continue to grow sugar. This was true in Rio Grande valley too. They grew some sugar there through the years, but very little, but they couldn’t grow it anymore either. This new development in the valley like the crop in Louisiana is based on another strain that presumably is new to the virus. I’m sure that’s one of the things that they watch very closely now.

F:         Something else probably that was instrumental in perhaps shifting your concerns to buying the sugar from abroad rather than growing it, and that was the evolution of convict labor. Can you expand on that?

HK:      Yes, well, I’m glad you mentioned that. The reason that the culture of sugarcane, un-mechanized sugarcane, requires very heavy amounts of labor, both for the planting and for the harvest and practically no labor in between. This is obviously uneconomic for a normal labor force. You’d have to find something completely different for them to do for the months, and most of the year. This was bridged in Sugar Land by the use of contract convict labor with some of the nearby prison farms which had been going on for many years before we took it over. It was, of course, a very inefficient labor. Obviously—I mean—they had no reason to be efficient.

            It was only a sound method because there was no other way to do it, not on its own merit. I think before the system of contracting convict labor was eliminated, I think we were already out of the growing of raw sugar. In the meantime was, of course, the buildup of Sugar Land, which was a sort of a secondary prison camp to a rather startlingly pleasant and well-endowed community.

            16:23   A great deal of that’s been done by the various companies, not only the Imperial Sugar Company, but also the Sugar Land industries which have been there. There are some cog made companies which are all controlled by the Kempner’s and have endowed the community with schools and hospitals. Not all of the schools, but the first schools and the hospital and a good deal of paving and development and selling the houses at reasonable prices to the people who wanted to live there, the subsidizing and that type of thing.

F:         Is the Imperial Sugar Company a chartered corporation in Galloway? Is that correct?

HK:      I think it is—I think if this interests you. Everyone was owned in H. Kempner. H. Kempner is a very peculiar animal. It’s known as the Massachusetts Trust. We have 5 trustees, and they have very broad powers. It was formed in that matter, because our interests when we did form it, which was about 1917, was so diverse that it wasn’t possible to obtain a charter for a company like that under the Texas law.

            In the H. Company was Shoreline Industries, which in turn owned Imperial Sugar. It was the ownership of the United States National bank, at that time the Texas Bank and Trust Company, but since the United States National bank, the Texas Prudential Insurance Company, all of these were owned or controlled—maybe not all of them in their entirety, but most of them with very large, heavy stock ownership in H Kempner. Just after the second war, we began—the technical term is spinning these companies off, most of them, so that they would stand on their own bottom and their stockholders would participate directly in the management and directly in the earnings and dividends, and not filter through H. Kempner.

            At that time, it was found convenient to charter Imperial Sugar in Delaware. I think it’s chartered in Delaware. That’s just a lawyer’s choice. We operate as a Texas corporation.

F:         The directorship of U.S. National bank, is that now a separate corporation from that?

HK:      The ownership of U.S. National bank is no longer in H. Kempner. The ownership of Imperial Sugar is no longer H. Kempner, and practically none of the operating entities which were originally in H. Kempner have all been taken out of H. Kempner and given to the individual stock holders, who in most cases were the same people who are stockholders of H. Kempner.

F:         You said the purpose of that was so that there would more of a direct control in the management?

HK:      Well there were several purposes. One fundamental reason was it was a tax impact if we sold anything or did anything, by the time we’d filtered it through H. Kempner, the taxes would eat up a great deal of it, just compared to doing it directly. The other thing was that we felt that now that we had nurtured them to this state of health and wellbeing, that they could go out in the broad world and face their corporate lassitude (??) on their own bottoms and do their own financing. Of course, we were always available for assistance at one kind or another, but that’s the general motivation.

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F:         Now back to the Imperial Sugar Company, I have a few more questions about it. I remember reading something about a reconstruction finance corporation run back in 1932. What’s the reason for that?

HK:      20:24   The reason for that was we were nearly broke. We had financed a number of fig growers in this area. We were growing these figs, and it seemed us then a very sensible thing to do. They were big users of sugar. It was a local product. We were helping the community, and they all were very short of operating capital, and so they would take the supply of sugar and even funds for other purposes on credit, and pay us when they sold the figs and made money.

            With the depression coming on and the general difficulties of a new business of that sort, they didn’t pay us back. We had a very large amount of money tied up in these things, and there was some danger that the company would not survive, so we did a number of things. We went to the RFC. We went to our bankers. We sold some valuable properties, including mineral interests in the south part of the field. The only oil found in Sugar Land has been just at the extreme southern end of the properties. Somebody made a mistake and just barely let us in. We sold out at that time to get cash to operate, and we made this known to the RFC, and fortunately, were able to pay it off at or before the due date because conditions changed around. We were able to preserve our equity.

F:         You mentioned some support from the bank? Was that in your bank?

HK:      Our support from banks was from the 2 banks in New York, the Bank of New York, with which incidentally, my grandfather first established relations probably about 1870. We have letters of him to the bank in the 1880s which clearly show he had been corresponding with him for some time. There was, to but it mildly, a long relationship. The other one was the Bank of Manhattan Company which has now been merged with the Chase Manhattan Bank. They both understood our problem, but they were concerned. They sent one of their executives down, a Mr. Simmons, who lived at Sugar Land and supervised the sort of day-to-day operations. We liked to say that because we did so well, and he could claim credit for it, that he later became president of the bank in New York. He is no longer president, but we’ve always told him that we got him the job.

F:         You helped put him there. Now what is the involved of the Eldridge family itself in the sugar company? Was there an equal stock?

HK:      23:24   Yes, Mr. Eldridge was a very remarkable man. He was very big, very small eyes, had a sort of a poor seen appearance. He had had some sort of a country store farming operation in Eagle Lake, and he came to my father with this proposal that we should take this. We put up the money, and he ran it and gave his services and received a moderate salary, but in return for that he was a half owner. In 1947, we bought out the Eldridge heirs. Mr. Eldridge had died before that and we bought out the Eldridge’s and the Sugar Land picture, the Kempner family became the sole owner.

F:         Why did you choose that time, other than just the fact of the deal?

HK:      Nineteen forty-seven? Well, he’s been dead for some years. I think his heirs—first of all, his heirs weren’t in complete agreement among themselves about what they wanted to do, and this made the problem very difficult for us. Secondly, some of theme, the more active ones, the ones who have to bear the brunt of this family just screaming their own family decide they’re all going to sell it just to get out and to give each one of them their own money and let them do what they wanted with it. We made an arrangement where we bought them out with several million dollars, and they’ve distributed among themselves, and there’s been no further connection there.

F:         During World War II, what effects did it have with sugar rationing?

HK:      Oh, yeah, sugar was rationed. When sugar rationing first came in, my father wrote a circular letter to all the members of the family in which he pointed out it was very important. He wanted to emphasize to everyone that he didn’t expect any member of the family to have more than 10 pounds of sugar, because he didn’t want anybody finding anybody connected with Imperial sugar violating the rationing rules. A number of people had been prominent enough to have more sugar, and they had to get rid of it, because he didn’t want anybody to take advantage of the position with Imperial to be better off.

            25:45   Of course, as I’ve told you, the major part of the war, I was not here, but the rationing completely revolutionized the sugar industry. In some respects, it was very fortunate for us, because the obvious rationalization and non-competitive situation was to let Imperial Sugar supply the neighborhood in which they could ship sugar with less freight and less transport than any other sugar refinery. That was certainly all of Texas and some of the bordering states. As a result of 5 years of seeing nothing but Imperial Sugar around, certainly people in Texas became so accustomed, habituated to using Imperial Sugar, in that sense it helped. On the other hand, everything was so very strictly controlled that certainly we must’ve had a very hard time making any profits. I’m not too familiar with it, because as I say, I wasn’t here, but I know the conditions generally were—they made very little money in the Kempner industries in the war period.

F:         I remember reading something—I think—perhaps from your father’s memoirs about the stock being so up at the time with very few markets that that created a problem in itself. That there was a difficulty just to have to dispose with the sugar that could not be so easily bought up on the market.

HK:      Oh, well, yes.

F:         Did that force you to go abroad to seek other markets, do you think?

HK:      Oh, no, we didn’t go abroad for sugar. We never sold sugar abroad. It was cotton that we sold abroad.

F:         Never the sugar?

HK:      No, you see, there are sugar companies in those. It would be much cheaper to go to one of the shipside refineries, and they’re all over the country except us. Practically nobody else is inland. That’s a historical accident that we’re in. I don’t say that we’ve never shipped sugar abroad, because we certainly did sell it during rationing. The government told us to, and—I believe—in 1 or 2 cases they did, because they wanted a supply of some troops or somebody. No, we’ve never sought a foreign market for the sugar. It’s not practical.

            Furthermore, there are some enormous complications which I won’t go into, about full duty sugar and preferential duty sugar with which when you ship abroad, you get certain different customs drawbacks. Just generally speaking, our sugar business has been entirely domestic. Our cotton business has been entirely export. It sort of happened that way.

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F:         Now I understand that there may be one than one national sugar company now, the American Sugar Company—

HK:      Now Amstar is—what the American Sugar Company is called now—is indeed national and by far the largest sugar company. C&H, California and Hawaii, which is a refinery in California owned by a cooperative of the 5 large sugar growers in Hawaii is, in a sense, national but not quite. I mean—they sell from the west coast, and they go as far east as they have to go to dispose of their product, but they’re not really national the way Amstar is. Those are the only 2—there is a national sugar refinery in Philadelphia, but it is quite local. It’s called national, but it isn’t national in scope.

F:         In competing for like buying your sugar abroad, like from Hawaii—

HK:      Well, that’s very interesting. When did we do it? Well, let’s say a little more about Imperial Sugar, what I’m talking about. My brother Herbert, I. H. Kempner, Jr., who graduated from Harvard in ’28, came back and took over and started to work at Sugar Land where he had always wanted to work. Gradually, he progressed through the organization and eventually became president of the Imperial Sugar Company.

            30:08   He died in ’53 from cancer. He ran the sugar company, and he was very concerned about laying in an adequate supply of sugar. As long as Cuba was available, it was a natural, because the ships could get here from Cuba in a week or even less. One of the first things we have to do to impress our customers is to have an adequate supply of sugar whenever they want it and to service our customers, not only impress them. It was very important to us to always have sufficient sugar on hand. As long as our raw supplies were that near, it was really presenting no problem, but when the Cuban embargo hit, things were very different. We made probably the largest one sugar contract ever made, but that’s because it covered about 5 years of import. We imported something approaching a million tons of sugar from the Hawaiians, from the Hawaiian sugar growers, to be shipped over a 5-year period.

F:         Now, when was this? Do you remember?

HK:      Yes, I can tell you roughly. It was—maybe it was a 10-year period. I think I’ve got to check and make sure I know when that was, because it was after World War II if that’s close enough for you. It was in the late ‘50s—I think—yeah, and maybe early ‘50s. At the same time, or nearly at the same time, we made a deal. We sold about a quarter of the stock in Imperial Sugar to the Hawaiians. They were a quarter owner of the company, because they wanted ultimately to buy the whole company, and we told them we’d go that far, but we weren’t prepared to go all the way. Now before the contract expired, but after a few years when they decided they couldn’t buy the rest of it, they asked if we would buy back what we’d sold them, and we did. It is now again—

F:         It’s in your full control?

HK:      32:35   Yes, our full control. There are other owners. I mean about 10 or maybe 12 or 15 percent of the stock is owned by the general public, but the great majority belongs to the Kempner family. Individuals have 137 stock names for the Kempner family alone, so—you know—with trusts and everything, so it’s not a concentrated ownership. As long as the family can agree, they can control it, but nobody can tell the family whether they whether they should agree or not.

F:         How did this contract—evidently, it was to your advantage?

HK:      This gave us an assured supply of sugar. Obviously, the prices—I didn’t realize I’d left you hanging. The pricing was set according to the market each month or each half month when the cargos arrived, but we were assured a supply of sugar. We still buy substantial amounts of Hawaiian sugar. In fact, they chartered some special vessels which brought in 22,000 tons at a time. The vessels piled up like sand. They have special unloading equipment to do it. We have this special facility here in Galveston to handle it.

            The contract has run out. We still buy a lot of sugar from Hawaii, but our principal supplier now is probably the Rio Grande valley, which is near in hand. We also buy from—we don’t buy from Cuba. We buy from San Domingo. We buy from Mexico. We buy from Louisiana. We buy from Brazil, Peru, sometimes even Java, whatever we can. We do have been able to find a nearby certain source of supply, if some blight or something happens to the valley, we’ll have to scramble again, but we don’t expect anything like that.

F:         Obviously, you are the biggest and the most important company for the Texas area. Who is your competitor?

HK:      Amstar was a competitor and the beet sugar people are competitors. You see, I’m talking only about cane sugar. You asked about National Sugar Company. It’s something like the Great Western Sugar Company, which is entirely beet. It’s pretty much a national company, and maybe 1 or 2 others. They’re always competitive. I’ll put it another way. Over a period of any years period, they’re always competitive. They’re not competitive every day, because they have fluctuations depending on whether they have enough left out of the crop to sell or not, because they can’t get some more right away as we can from our market.

            35:21   They’re very competitive, and they always undersell cane sugar. It’s been a tradition of the business that they will sell with a differential than the cane. People who can use beet sugar, and chemically there’s very little difference between beet and cane. They’ll frequently buy it, particularly industrial companies, but we still manage to do pretty well.

F:         What effect did the recession have on the sugar processing?

HK:      This last one?

F:         Right.

HK:      Oh Lord, this was an awful situation. You see, there’s been a world surplus of raw sugar as long as the memory of man runneth. It’s a thing that’s ideal for tropical countries to grow, a place to use a lot of labor. It’s labor intensive, and there’s always been a glut on the world market of raw sugar. All of a sudden, primarily because—well, first because the prices were so low. Prices were down as low as 4 and 5 cents a pound for raw sugar. These people found something better to do.

            All of a sudden, the enormous prosperity of the Mediterranean company, particularly the Arab countries, were enormous consumers of sugar. They like everything very sweet. All of a sudden they—not the few upper crust, but the whole population could afford it—so the demand for sugar has increased coincidental with the decline in supply. This during late 1973 and ’74, drove up the price of sugar to unheard of heights. It was up to about 60 cents a pound—I believe—at one time.

            This is disaster for somebody like a refinery. You see, the bulk of our profit—in fact, our entire profit—is the difference between what we pay for the raw sugar and what we sell for the refined. If we can’t raise the refined sugar prices as fast the raw sugar prices went up, which we couldn’t, we would be selling at a loss, which we were. Although we defended ourselves as best we could by keeping a little bit ahead. It was that in turn that hurt us when the price started to go down, because it’s now down to about 14 cents.

F:         What caused this?

HK:      The fact that people wouldn’t pay that for very long. They always speak of amounts of sugar inelastic, which in economic jargon you may not know means that it doesn’t vary too much with the variation of price. A variation of that size and price shows that sugar isn’t all that inelastic. The consumption in America went down from 102 pounds per person to about 97 pounds a person of sugar.

            38:25   Of course, the impact of fructose and other corn substitutes for sugar has been terribly favored by the fact that they are still pricing on $2.50, $3.00 corn, and they could undersell us very radically. People shine off and use the substitutes, causing it to go down. The production hasn’t increased very much. It’s increased some at those prices, but not all that much. Even 14 cents a pound is a high price to start with for sugar.

F:         For it to have been that high initially, and then for a drop still to have occurred without a change happening in production, well then what does that say about the initial setting on the price that was so high?

HK:      You must remember that nobody sets these prices. The market sets it. The people meet in the futures market or they meet at trading, but sure, there was enormous speculation in the sugar. A great many people bought sugar futures and bought raw sugar, planning to sell it when it went up. Countries like Japan stocked sugar beyond their needs, because they were afraid it was going still higher, and maybe some other countries did. What happens when it starts to go down, first of all, people who have long futures in futures of stocks may be called on to sell them to protect their investment.

            The second thing is that the actual users who have stocked, stop buying. In the end of November, 1974 until the end of April, 1975, our shipments from sugar from Imperial Sugar Company were a fraction of what they had been during the rest of ’74 what they were during the rest of ’75. People just stopped buying at those prices, and really stopped and had to use up their inventory, both at home and in the stores and at the factory before they’d buy again. Of course, that drops prices awfully quickly.

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F:         In a sense, although there was an increase in price forced up by the demand, as you mentioned, but much of it was speculative that caused the drastic change?

HK:      It’s probably difficult to assign percentages, how much percentage was speculated, but what always happens in radical fluctuations like this, is people are always getting on the band wagon. They’re always hoping to do what they really don’t want to do, whether up or down, on the way up or when it crashes after it’s over. That is the inevitable thing. The fundamental reason for it was the fact that production had dropped somewhat below consumption, and consumption had increased worldwide by people who could afford to pay what they pleased for the moment.

F:         I know, just as a consumer, going to market, and I’m going to buy some sugar, right. These so-called house brands, now how are they packaged? I mean—do you—?

HK:      We supply most of the house brands in Texas, and they’re packaged. It’s the same sugar. I mean—I hate to tell you, because we spend all these millions advertising Imperial Sugar, but it’s exactly the same sugar as in the Imperial package, unless somebody has prescribed something differently, which they’re not likely to do, because they don’t want it that much more expensive for them. It just has the house brand.

            42:05   Now we decide to do it, and it was a terrible decision for us to make. We decided that if we were going to sweeten the business, we had to sell what our customers wanted, and if a chain store wanted stuff packed in their own brands, we gave it to them. It is destructive. As I say, the image we tried to produce over the years by advertising Imperial sugar and selling cookbooks and this and that. Do you have a cookbook?

F:         I’m afraid I don’t.

HK:      Get one of those sugar packages and tear it off. I’d give you one, except I don’t have it here.

F:         When did this happen, in the ‘50s with the chain stores?

HK:      Oh, this has been going on ever since the war. They’ve gotten much more active in the last 4 or 5 years, 10 years. It’s a marketing tool. If they want to have lost leader, they’ll advertise the house sugar at a lower price than Imperial, although it might have cost them more.

F:         I wondered how that worked all these years.

HK:      It’s just the people don’t want to be at the mercy of someone else’s brands, that’s all. They won’t just ask you, of course. If they get mad at Imperial, they can go buy the house brand somewhere else. It may cost them more, and they have to pay more freight to get it, but if all the customers were used to Imperial sugar as they were, and they got mad at us or something, then they’d have a terrible time persuading them to substitute Amstar.

F:         Now, to Sugar Land—you’ve mentioned several like a hospital—I guess—that you’ve funded there.

HK:      Let me talk about Sugar Land a little bit, and maybe then you can ask me afterwards. Imperial Sugar Company is just one thing at Sugar Land. For years we ran a very large comprehensive farming and retail operation there under the name of Sugar Land Industries. We were cotton, potatoes, and alfalfa and sorghum and all kinds of things. We had a feed mixing plant and an alfalfa drying plant, and we sold the cotton and all this type of thing. We raised cattle, and we had an extensive organization and all that.

            44:28   There was a relatively large population of people dependent on the Kempner Industries, because not only the sugar company and the Sugar Land industries, but there was a bank there and a telephone company, all of which—the last 2 didn’t have many people, but they had some.

            We early took it upon ourselves a position of civic responsibility towards the community. We did a lot of drainage. They built there the first school system I know about. It was sort on the California style with open porticos and runways between places, which as I remember it, the Sugar Land industries did entirely, and they gave the endowment. When the school board was set up, they took over from there, and they endowed them with some little reserve money that they could use from time to time.

            Way back in the ‘20s we sold some railroads out in west Texas somewhere and used that money to establish the Eldridge Memorial Hospital, the Laura Eldridge Memorial Hospital, it was properly called, which is still there. It’s now called the Sugar Land—I don’t know what it’s called, either Sugar Land Hospital or the Eldridge Hospital. We endowed that and set it up and, of course, the hospital association ran it from then on. Recently, we gave them a land for churches, and we helped them buy the city hall. They’ve got a new city hall which we helped them to buy.

F:         How active are Sugar Land industries in Sugar Land?

HK:      Right now Sugar Land Industries is in the process of liquidation. We sold—we actually closed it in December of ’73—all the land there to the Heinz interest, and they’re developing it, but we don’t own any land there anymore. Of course, we had before that closed out our farming operation. We closed out our cattle operations and the retail operations.

F:         Why?

HK:      Well, it didn’t make any sense to have it. It was all part of the whole. With the taxes on the land going up enormously, if they were going to stay in agricultural capacity, which is what we would use them for, they couldn’t afford to pay those taxes. They were being taxed at the suburban rate, ex-urban rate, and the freeway was just finished and it seemed like this was about as a good value time as we could get. The southwest freeway goes right through there now.

            47:29   We haven’t been paid for it all yet. Mr. Heinz owes us a lot of money. It’s secure though, might mean we have it back some day. Once having sold the land, it didn’t seem to be any point at all in keeping the organization together to run these rather businesses that have no real future there.

            Now we do still have the bank, and we do still have the telephone company. We expect great things of them.

F:         What competition do you have, say, in the telephone company itself?

HK:      In the Texas system—which is not very efficient because they don’t have any utilities commission in the Texas system—in the Texas system, the territory that each telephone company has built up is sort of left to them. Bell, for example, wouldn’t come in with a whole new system into Sugar Land. They will have telephones in some of the major—arrangements will be made so Mr. Bell would get the most benefit, so that somebody at Texas Instruments, for instance, which has a very large plant at Sugar Land, could call Houston and Dallas and mostly go over Bell. They could call directly without having to go through the Sugar Land switchboard. Bell has a working arrangement with these small independent telephone companies.

F:         I remember reading something involving that ranch sale that there were some difficulties on the board itself?

HK:      Yes, well, we had originally decided to sell the stock in the Sugar Land industries to some buyers, which would have been a favorable tax treatment, but required the consent of all of the stockholders, 100 percent. One set of stockholders owning 1 ½ percent of the company decided that they didn’t want it. It turns out that they thought we should help them get more money for it, so they refused, so we had to do something else.

F:         The stockholders were the Thomas’s?

HK:      That’s right.

F:         In a sense, then it was favorable, because there was more money that was received as a result of the—?

HK:      Yes, as a matter of fact, but of course you must remember that if we’d done what the Thomas’s urged us to do, we’d have gotten more money, but we wouldn’t have gotten anything like as much as we did get. Their stubbornness in refusing the first sale, matched by our stubbornness in refusing the sale they wanted us to make, the net result was favorable to all of us.

F:         In a sense then, they weren’t really angling for the high interest?

HK:      No, they had a pet pool called the RSC group, which bid us $3 million more than the original sale we’d made in which they wanted us to sell to.

F:         Was that Mr. Perrin White?

HK:      No, the White and Hill were the ones that we did not sell to. That company was RSC, and it was the initials of the 3 partners. They, the Thomas’s at one time, were going to have a share in some of the land themselves, which was not known to us at that time. They later gave that up, but we didn’t sell to them anyway, and then finally we sold to Heinz at a much larger price at that time.

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F:         That’s—I guess—one example of some distinction from one of the banks. What’s it been like serving as chairman of the Imperial Sugar Company?

HK:      The tradition throughout the Kempner family for the 60 years that I’ve been looking at it—maybe it’s been 55 years that I’ve been attending meetings and looking at it—has been that things are explained to people, and the industry has backed the judgment of the family managers. The family managers have traditionally taken relatively small salaries. Contrary to many family institutions, the stock is distributed equally among all family members, not concentrated among the people who manage it. In other words, my grandmother had 8 children, and they all got an eighth of the company. Four of them were boys, and they did the work.

F:         What happened after your father’s death in ’67, in terms of the dividing up of the—?

HK:      Of course, my father’s death was the effect where it was divided up among his children. My mother died in ’70—I think—and that was divided equally among us, among the 5 children. My other 4 was living, and my brother’s widow and children. You see, my father and mother had given away a great deal of what they had before they died, but that gives it away on that basis. This is exactly the point. The girls and the husbands of the girls and the children who don’t do the management share and share alike with the people who do, do the management as far as the stock is concerned.

            53:23   The managers now get more reasonable salaries than they did then, because it is more difficult to live. This type of family cooperation and delegation, it’s been a big advantage to us on several occasions where it’s been necessary to have family agreement to do certain things to meet certain either legal requirements or certain favorable tax ratings. It was sort of a shock when you find out that this no longer prevailed, and the people who preferred to handle lawsuits and things of that sort, and then go ahead with it.

            There have been disagreements, of course. We flourish on difference of opinion and arguments. None of us are very certain. There is no absolute correctness about anything, so an argument and a disagreement is one thing. To have to bring suit against people doing their job in the factory is another.

F:         As far as that goes, that’s really the only incident in which it has come to that?

HK:      Yes.

F:         —a legal suit?

HK:      That’s right, or even close. That’s another difference.

F:         Could you give us some examples of how you—?

HK:      Well, it was one branch of the family some years ago who had a very fortune into the cotton business, and they wanted out of that part of the business and also out of the other part connected with it, or semi-connected with it.

F:         What part was that?

HK:      That’s the H. Kempner, residual H. Kempner. The H. Kempner Cotton Company was a cotton company, another one of those things that has been spun off from H. Kempner. H. Kempner itself was what was left after all this was spun off, which H. Kempner Company now is sort of an investment deposit. They thought the cotton business was doomed and that they would rather pick their own investment deposit.

F:         When was this?

HK:      I don’t know—in the ‘50s. No, let’s see—yeah, in the early ‘60’s, in the ‘60s. We have finally weighed on a considerable negotiation. We agreed on bidding them out of those 2 companies. We just bought out, and then that dissidence was taken care of. As I say, that was a far different point of view.

F:         Could you give us the names?

HK:      56:11   Yes, it was the then Mr. Thorn, Mary Jean Thorn who is now dead, later married Elvin Price Jones. She wanted out for herself and her mother, Mrs. Dan Kempner, and so we got them out, be bought them out on the basis that we considered fair and equitable, and have them take it to the stockholders.

F:         We need to talk a little bit about the United States National Bank, of course. I understand it was nationalized in 1924.

HK:      The United States National Bank’s origin began in something called Ireland Civic Savings Bank, which was a bank in Galveston in the 1880’s. I don’t know how old it was, but it started existing in the 1870s and ‘80s. They got into difficulties, and they asked my grandfather, the original Harris Kempner, to come and straighten out their bank in which a great many of the small people of the community were depositors and trustees.

            He went and he spent a year there. He had never been a banker before, but he did straighten them out, and he didn’t accept any salary for it. They gave him a very handsome, very rather decorative, silver service with a huge tray and coffee and tea and all this, which my grandmother about a few years before her death, in a handwritten card left to my son Harris Kempner, Jr. She didn’t leave it to me, and she didn’t leave it to him when he was born. She only left it to him after she got to know him well enough to think he was worth it.

            Then a few years later my grandfather decided that he liked banking, so he bought the Ireland City Savings Bank, or control of it. He also put up a lot of money for stocks in a number of Texas banks. He was instrumental in starting a number of banks all through Texas.

            58:24   Then after my grandfather died in ’94, my father and uncle took it over, and Mr. Lee Kempner, my uncle, was a banker, and he concentrated on the bank, and changed it about that time to the Texas Bank and Trust Company, so it would have a little broader aspect, and he had a state charter. Then they decided, as you say, just after the first World War that they would want to become a national bank and broaden this thing to the United States National Bank. If there was another generation, they might have called it the Universal National Bank. They keep growing. It has grown consistently, and—I think—a useful part of the community all that time.

F:         Do you know why the decision was made then to become a national bank?

HK:      No. It’s a normal progression. I mean—probably there were restrictions by the state bank and commissioner on what a state bank could do.

F:         Yes, I believe that there was even prohibition against state banks for some period of time earlier.

HK:      Not at that time. As a matter of fact, there was a time when banking was prohibited in Texas. That’s a very interesting story, so I can tell you about how the Galveston merchants issued script because there were no banks and there was no currency, and how they used the house money as it were. It came passed from hand to hand, a very interesting example of what money is and how it depends so entirely on the conscious of the person holding and on practically on nothing else, but that’s another story.

F:         Could you say that these personal relationships that have been created really by the grandfather and continue to be expanded by your father, say with the New York Bank, what you mentioned the—

HK:      Bank of New York, in particular.

F:         —that they were also instrumental in the growth of this bank and banking?

HK:      Well, not a problem.

F:         Through the connections?

HK:      Yeah, not really. In other words, they didn’t—you’d have to know this—that banks have correspondents almost everywhere. If there is a correspondent who has a customer going to do business in the community where they have a correspondent, will affirm with that correspondent and undoubtedly we profited by some of that. Mainly we profited because there were people that were there, and they knew us well enough that they would advance us money at times we needed it, and we could consult with them. We kept the relationship very close all these years. We still see the president of the Bank of New York every 3 or 4 months, either up there or down here, and the connection is close. We also have connections in a number of Texas banks. It’s pretty difficult to say that any of that had anything specific to do with the growth of U.S. National bank. It undoubtedly helped just by being there.

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F:         Do you remember during the depression just how the bank was situated?

HK:      1:01:39            Yes, I remember how the bank was situated in the depression. In 1932, I remember [laughing] we had a—I guess it was the president of the bank in New York—he wasn’t then president, was then a senior vice president—was here, and he didn’t have enough cash to buy his railroad ticket. There wasn’t any way to get cash, because the banks were closed. I guess it was ’33, because it was the time that I got married. We found some cash we found around here and gave him the few hundred dollars to buy the ticket, provided the bank in New York would make the same amount of cash available to my cousin, the same Mary Jean Pawn who was living in New York and was running out of cash too.

            My uncle Lee Kempner resented very much having to close the bank. He resented very much having to issue the preferred stock which was forced on all banks about that time and had felt that he’d ordered his affairs in such a manner that he was then going to ride this thing through and didn’t need this assistance. We felt very strong during the depression at the closing of the banks. Now of course, before the depression was over everybody suffered in many ways. The bank was never in any danger at any time. I knew this personally.

F:         To what do you attribute the growth here in Galveston in the U.S. Bank? Would you consider saying, for example, first off that Hutch and Sealy may be less competitive?

HK:      It’s difficult to describe to you. You have to go back a little. You see, Hutch and Sealy is a private bank before they were nationalized, was a peculiar bank. They didn’t have as many deposits as some of the other banks in town. Of course, you didn’t really know what they had, because they didn’t publish all of that information as a private bank.

F:         It was private.

HK:      They were a more influential bank, and throughout the state they financed a whole lot of cotton things.

F:         Aren’t the oldest bank too?

HK:      Yeah, that gets complicated too, and I’ll come to that in a minute. They’re much older than we are, as far as that’s concerned. You mean that.

F:         Yeah.

HK:      1:03:52            Then when Hutch and Sealy, when they nationalized and of course they were smaller than we were, Moody and ourselves and Hutch and Sealy were running primarily, but I think we were the largest. Then they merged with First National Bank, which is the oldest national bank in Texas by a long shot, by several years. They became larger than we were. Then in the last 4 or 5 years or so we have on several occasions been larger than they. Recently, as you might’ve seen in the paper, they are again substantially larger than we. It’s not really been an effort to be the largest that has particularly interested us very much. It’s much more important to make money and to have a reputation than to be the largest. Galveston isn’t the type of community which is terribly impressed about the size of anything.

F:         Have you considered yourself merging with First National Bank?

HK:      Well, yes in a way. We had some deep concern in this, but it was a little difficult to accomplish because the CD Smith foundation controlled both banks. It was obviously a logical thing to merge with themselves than elsewhere.

F:         What happened to your bank when other Galveston banks closed?

HK:      Oh, we certainly got some business from them, because those people, they went around, and the other Galveston banks. We got some.

F:         Do you feel that it was quite influential perhaps?

HK:      Oh, there were certainly other banks, and it was not a good thing for us. I don’t think it is when any bank closes. It was too bad that they did the exact things they did, because some of them were unfortunately, not legally acceptable, and we don’t like to see any occasions like that happen. It’s always damaging to banks, any bank, even away, much less concerned me when I was here. This was not overall a good thing for us, even though we did get something in it.

F:         What was the effect of the recent recession on the bank?

HK:      Oh, it’s been difficult. We don’t have any New York state or city bonds, but we have a number of loans, and we don’t have any big amount of real estate loans. We have a number of loans which have been imperiled by the economic conditions in this country, yes.

F:         Your investment in other state banks, is that—?

HK:      Understand my grandfather is doing this in a number of places. There’s only about 2 left now, one particular, one at Alban, which is now controlled by Mr. Walter Hall in which we have a substantial interest. They’ve been very successful. They’ve turned it. Either before or after we sold out, they went into good hands, but we only own stock in it and outside interest in that one bank now.

            It’s gotten this mostly, because any international trading in cotton, grain, silver, metals, one sort or another, is all just a fascinating sort of thing, because you have kinds of different people, all kinds of different commercial morality, all kinds of different customs and manners. The more when you get into an international field like that, you find that the field itself has a influence on the morality and the manners of the people who are in it. Cotton people are people that you—somebody goes to Taiwan, actually to Hong Kong as I did the other day. I write to a man that I hadn’t seen for 3 or 4 years that used to be our agent there, suggesting that he look up this person and be of assistance to her, which he did without thinking twice.

            There’s a sort of a stamp on, one you sort of recognize sometimes, even the spotted language, ethnic differences. Somebody described it by telling this slightly off colored story, which you know how old it is because it’s talking about the time when only men were in this social ethics class at this university. The professor says at the end of the year, he says, “Gentlemen, we’ve discussed some rather intimate problems over the year, and I’m expected to write a paper over the summer. I wonder if you’d mind sharing some more of your intimate details with me.” He said, “For instance, I know you’ve all dreamt about having sexual intercourse, and I suspect that most of you have had it. I’d like to know what you prefer.”

            1:09:17            Everybody in the room put them up for the actual sexual intercourse except the one guy in the back of the room who said he preferred the one he dreamt about. The professor was very interested in him, and he said, “Why, Mr. Jones, do you feel that way?” He said, “Oh, professor, I meet a much nicer class of people.” That’s the cotton business too. It’s done to you by a very nice class of people. You can cut that off your tape if you want to.

F:         I think that will enliven this tape considerably.

HK:      At any rate, we used to go—you’d take an almost annual, at least annual trips abroad either to Europe or to Asia. You’d talk to these people. Sometimes you’d spend a week changing languages once or twice a day. Not that I can speak all those languages. You’d have to have either a translator or adjust your mind to catching the words that you did know. Although I’m reasonably fluent in French and I have a smattering of German, that’s where I leave it, leave it to our agent. Of course, our agents in these countries always are fluent in at least 2 or 3 languages.

            We have our representatives everywhere. We have a front office at one time in Liverpool and in Malan and Osaka. They directed things and saw the agents generally. We went back and forth. The government imposition in the handling of cotton, their restrictions into putting up these government stocks and lending money above the market price of cotton gradually and inevitably ate into the ability of the individual cotton trader to make his own decisions and plan a campaign. We were probably the oldest cotton firm that continues its existence ever since the first World War. I mean—the older ones got out about that time.

            About ’67, we decided we’d have enough. We got out of the business lock, stock, and barrel over a year or 2. We merged part of the cotton business with Frenfall Shorebocken and Peruks in Dallas. It’s not called Shrebock, Kevin, and Peruks. I’m the only common stock holder in that company from the Kempner family. The others all had preferred stock which has not been redeemed, so they’re out of the cotton business completely. I take my chances with them on the common stock.

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F:         What was the purpose of selling out then?

HK:      Well, because we weren’t making money, and it didn’t look as though we would. The cotton business requires a special type of talents. I’ve worked very closely for years with a man named Raina who was here. He was slightly older than I, and life was pretty bad. The government restriction I said made us feel that we weren’t going to get over this situation very soon. Actually, of course, in the last few years, the cotton has free from government restraints, and again, like sugar, has had an enormous advance and a very substantial decline, then now a further advance. Not a further advance, but a noted advance up to nearly the earlier levels.

            1:12:48            We got out and although it caused me some disappointment, because it was where I had, as you say, my principle interest. I’m glad that some of those decisions are behind us.

F:         Was there any dispute in getting out at the time?

HK:      No, the only dispute came that we should’ve gotten out sooner, as I think I outlined you, a little sooner. No, there were a lot of people that—if Harris is willing to get out, let’s do it. They didn’t want to wait.

F:         They relied on your judgment?

HK:      Well, they didn’t have any ways to not to be really. [laughing] Over the years, we made considerable money in the cotton business. The last years of our existence, we did not. We were losing money, and it’s uncomfortable to anybody to see a statement come out year after year with negative or flat results.

F:         I’d like to go back a few years now and try to trace really the history of the Kempner interests in cotton industry. You were actually president of the exchange of ’41 before you went off.

HK:      Oh yes, I don’t know the dates too well. I’ve been the vice president, president of the Galveston Exchange. I’ve been a director and president and vice president of the Texas Cotton Association. I’ve been director, vice president, president of the American Cotton Shippers Association, and I’ve been the director of the New Orleans Cotton Exchange.

            You see, in the old days, as I’ve told you about the financial stringency. Galveston was the point of distribution for all of Texas, and people would come down here and get goods. Country merchants would come to Galveston and get goods to stock their store and sell to their customers for the year. They’d go up in their wagon trains and the railroad as far as it went and then on the wagon train to these places. They wouldn’t pay until next year. They came down usually at Mardi Gras time when the cotton crop was in, and they got the money from their customers, and they’d settle for the whole year.

            1:15:07            It was a very highly risky business and very large margins, because they had many failures. The method of payment, the only cash crop people had, largely speaking, was cotton. It soon sprung up, the system of sending the cotton down to the man who granted the credit to people like H. Kempner or like W. R. Moody and Company, like several other firms like that who handled the cotton. We became—it was called cotton factors. We sold the cotton for these farmers to people who came here from Brandon and Liverpool and Mohave and places like that to buy cotton for their merchants over there or their mill.

            This was only a short step then to go ahead and to sell to those customers in those places and countries. We actually set up our first foreign office in about 1898 in Mohave—not an office, an agency, and we gradually expanded it to all over. In those days you would finance or draft some in London. They’d have an acceptance line. My father speaks of it at some length in his book if you’ve read that, and how excited that he was at this mysterious system going.

            Cotton is a highly competitive—there’s nothing like it left that I know of. Maybe some others, but the market left is the grain business, which is under so much criticism these days, and in my opinion, outside of the actual dishonesty of people, and not usually the heads of the firm, the criticisms are unjustified. That’s what happened to the cotton business, now of course, they sell to Addison Clayton. The largest of them all has gone out of the world cotton business. They’re still very active and very much in the business of selling vegetable oil products, including cotton products and soap and margarine and things of that sort. They’re not in the raw cotton business. They’re not in the cotton merchandizing business at all any more.

            Hornberger, who was probably the next largest and was reputed to have been one of the most successful, has sold out to Cargill who are grain operators, and you’ve seen that, right? The story is that usually Hornbergers are huge because they ignored the cook who had been owing them in grain and is also in the cotton business.

F:         Right. Well, I remember your selling your cotton press to Cooking Company here in Dallas, and that was the biggest story in 2 years—I think—the news prized it in ’50.

HK:      Yes, we sold it to them in about 1950. Then we built another one on the wharf property, which we later sold to the Bluebonnet compress which is also owned by Kevin Prudes. We’ve had two compresses here. We’ve had three, because that one on Broadway was a relatively new one built about 1950. That’s new.

F:         Other than your own individual holdings now—

HK:      Then there’s nothing. That’s just an accident that I have the common stock and the others have the preferred. They didn’t want too many common stock owners.

F:         You mentioned the navy office during the war. Was it pretty well settled that you would come back to the family business after service? Were you tempted by other offers?

HK:      1:18:55            You see, I wasn’t all that young. My youngest son was born in April of ’42. Immediately after his birth I went up there. I was 39 years old then. I had a very interesting war with a lot of very remarkable people surrounding me, and very highly talented. There was occasional talk about doing something else, but I never considered it too seriously.

F:         When you were growing up, and even in the ‘20s after you graduated from Harvard and came back, did they program you as the cotton man for the Kempner’s? How was that done?

HK:      If it was programmed, it was rather subtle. Yes, there’s a general attitude that I would come back and go in the business. It’s sort of a hierarchical thing.

F:         I just noticed the extremely—well, it was a division of labor really amongst the Kempner culture.

HK:      That’s right. Is it all for the cotton alone? No. That I would come back was sort of subtly programmed. That I was come back into the cotton business was not at all. That was entirely up to me. I just became interested in it, because—I think—because it had such an international scope. Of course, I’d spent that year abroad. It was the most active part, the most complicated part of our business, and somebody had to relieve my father of some of those details, and that way I got in.

F:         With your knowledge of languages—

HK:      Yeah, well, the language helped, but just knowing what these extraordinary peculiar terms meant. Some of these things go back for years and years, insurance terms and things go back a long way. My brother curiously enough, at an early age had stated his firm intention of going to Sugar Land. The next generation we had more difficulty with. Some of them have come back, and one hasn’t, and I don’t know whether my youngest son would’ve or not. He sounded to me as though he had quite different ideas.

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F:         Now all along, well, with the cotton industry and in the sugar industry, although the sugar refinery is still relatively small, say in size, have you had any labor problems in terms of strikes?

HK:      Let’s just talk about Sugar Land. That was up for awhile. Mr. Eldridge ran that thing in a strictly old fashioned way. What he said went. He had coined his lights. He took care of the people who worked for him. They didn’t really have any right to make any decisions of their own.

            1:22:04            My brother that I told you graduated in ’28, came back just as the New Deal was inaugurating and coaching the immunization plan. He went back in ’33 or something and took a special course at Princeton on labor relations, and came back and set out to urge further and expedite the formation of national unions. Everybody was willing to form a company union here. He urged that they did not do that. They formed a national, so it wouldn’t be rated all the time by those people. We have been at Sugar Land dealing with unions for over 40 years now, and have never had a strike, although we’ve had some rather proactive negotiations sometimes. All of these unions have been national unions. It has not always been the same one.

            We think our labor relations at Sugar Land are particularly good. It doesn’t mean that something might happen any minute. Now here in Galveston there have been strikes in the compresses with cotton people and the longshoremen, but these strikes have never been against us as such. They’ve been against the industry, which we have a voice but not that exciting. I think our labor relations here have been good too. Certainly the people who work for us have always seemed to us to have been good.

F:         Can you give me some examples of any one of those strikes that was not necessarily against you?

HK:      The last time the longshoremen went out on strike, which I don’t remember, but it’s about 4 or 5 years ago. They tied up a port for months, and that meant that all the compresses here were idle. There’s no way to deal with the cotton except maybe loading it through railroad cars. There was some talk at one time of actually picketing, but it had nothing to do with much with the planter’s compress or cooks compress.

F:         It was just the longshoremen?

HK:      It was the longshoremen, and in some cases, and it’s been years since there’s been a compress labor strike that I can remember, many years ago. Then again, it was because they dealt fundamentally with the association. First of all, you have to get yourself together, and then you have to deal with them. Of course, every now and then, somebody breaks out of the association and makes their own settlement, because they want to.

            1:24:50            Of course, Galveston has been a union town forever, and we have grown up dealing with and accepting and even favoring the unionization and union demands and union handling of things. I really can’t say that we ever had any particular labor troubles. We certainly haven’t had them at Sugar Land.

F:         How did containerization affect your managing of cotton?

HK:      It happened a little bit after I was out, but it’s been affected very radically, and it may have a very disastrous effect on Galveston unless something is done about the rate situation. Certainly for a steamship liner to pickup a box of something in San Francisco or Los Angeles or San Pedro or somewhere, and ship it to the Far East is a hell of a lot cheaper than shipping it from Galveston. If they think somebody’s going to absorb the rail freight all the way over, then we’re going to lose a lot them. That’s a serious problem for the poor.

             Of course, something like containerization is going to come and going to increase. It’s an economic method. Some of the make work provisions surrounding it now are bad enough to be changed, but the real thing is they got to make each part of it pay its own freight, so that the people absorb charges to favor one port or another.

F:         You mentioned that the government regulation of produce—I guess—and also the grading of cotton?

HK:      Not the grading so much, but you see the government had a loan provision. First of all, they have restrictions as to how much cotton should be grown. Then they have a load provisions into which cotton would be given to the government on a non-recourse loan, which a farmer could take 1 bale or 1,000 bales into the government, have it graded and stapled, as you say, and then get his money for it. They wouldn’t have to pay anything in interest or storage or anything unless or until the market went up sufficiently to allow him to sell the cotton at a profit over those charges.

            1:27:12            This meant that an awful lot of cotton was locked up at pricing that was unrealistic compared to the world price of cotton, which American cotton has to compete. We rapidly became a residual supplier of cotton. They only came to us when they’d exhausted everybody else. This meant that it was almost impossible for a merchant to analyze a supply and demand situation or talk to his customers around the world and decide what they needed and go out and buy it for them and sell it, because if you paid the artificial loan price the government set up, he would not be competitive. He couldn’t sell it. If he didn’t pay, he couldn’t get it. Of course, some of us went to Mexico. Some went to Brazil. Some went all over the world, and some—

F:         To Egypt? Did you have any interests?

HK:      No, we went nowhere in Egypt. We were only briefly in Brazil, but we’ve been to Mexico, and substantially we’re out now. Then, of course, there’s Nicaragua, the other Central American countries. There were a lot of them then. It was simply the government regulations. It’s one person just simply priced American cotton out of the market, and that’s what’s fundamentally the problem. We finally, that year when I was president and I went up. It was also the year when they had a new—in fact—it was Eisenhower. I think it was. I remember arguing for hours with Mr. Benson, the Secretary of Agriculture, about the desirability of putting this on a subsidy basis.

            If they wanted the farmer to be paid something, a particular percentage of the price for cotton, let him sell the cotton at the market, and pay him whatever the difference was that they thought he deserved. That’s the social measure. The other way, it interfered with the cotton business and made it impossible for the farmer ever to grow cotton as a market proposal, because the more cotton you piled up in the loan, the bigger the weight on the market ultimately, and there might be boosts.

            Mr. Benson, although in agreement in principle, he never did anything about it, and we finally got Humphrey when he was Vice President, and we did get exactly the sort of situation I’m talking about. Since then, cotton has been relatively free from government restriction. Of course, you never know when it’s going to go back. They were always asking for it to go back.

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F:         You lobbied then for special cotton, especially in your lobby of administration.

HK:      Yes indeed, in my capacity as director and committee chairman and vice president and president of the American Cotton Shipper’s Association and indeed of the Texas Cotton, I spent a lot of time in Washington talking to all kinds of congressmen and people. It’s sort of a function of the job. I think I understood the economics of it, and I’ve always been interested in arguing, and so I’ve testified before committees and shown them charts.

F:         How cooperative has Jack Brooks been?

HK:      Oh very, but, of course, this was largely before Jack Brooks. Clark Thompson was very cooperative. He was a congressman then. Do you remember? He was very cooperative. I was there in 1933 when they put the plow up campaign in. I was very young for that time. I went over with Mr. Clayton. Senator McKellar came in, and our turn came to speak and it was this big conference. We said something about how serious of a matter this was, how you were going to further the growth of cotton in Brazil. You were going to do all of things, because by holding up this umbrella, everybody else would go under it and sell out just before our level was reached.

            1:31:30            He urged that they review the situation a little longer and try to see what all the implications would be. McKellar got up after a little bit, and he said, “Ah, I don’t want anymore waiting around here. I don’t anybody to tell you to wait. The farm is in dreadful state.” He said, “You’ve got everybody here. You’ve got the ship,” and he looked right at us, and he says, “and you got the barnacles too.” He said, “Two minds, well, get it done,” so they did it, and the result was exactly what Mr. Clayton said. These other countries greatly expanded their production. We became a residual supplier.

            It’s taken us years—we’re back now primarily because—last year we began residual supply because our crop is so short and our prices are so high now. The rest of them are coming up to us all of a sudden. It’s a far reaching effect of interference in these matters is something to be weighed carefully. Everybody does these things with the best intentions, and there are many reasons why a farmer should be supportive and help to make a living, and particularly the smaller so-called family farms. I used to ask these people what a family farm was. It finally got down to the point where if there’s a Bible on the table, it was a family farm, and that’s all you could find out.

            There was always the small farmer, many very small farmers who are enormously efficient, particularly if they have a little capital to go with it. Most of them they were talking about were farming on hillsides and irregularly shaped land, places where they couldn’t take advantage of cost saving devices. They’re bound to go out. People talk about the aggregate business giants driving them out. It’s an inevitable thing. It’s a question of efficiency.

F:         Now in ’67, I read in the newspaper about when the executive vice president ran and 2 other agricultural department officials were arrested for aiding and abetting in attempt to be involved in the agricultural department?

HK:      Mr. Rainer was in Memphis visiting a man named Simms with whom we did business for over a number of years. Apparently, Mr. Simms had made some effort to bribe a government classer of some kind. Mr. Rainer was involved in it simply by being there. No one ever produced an evidence of any kind that he had given anything to these people except a drink of whiskey or that he had had any knowledge of what was Mr. Simms was doing. The case was later dropped even against Mr. Simms, but they did have some evidence that he might’ve been involved in this matter. They had none for Mr. Rainer and it was a very unpleasant experience. Eventually, his case was severed from the others and was dismissed.

F:         What had they even charged Mr. Simms with doing?

HK:      1:34:39            When you take a bale of cotton to the government examiner, what he classes it gives it its value or at least is an important part of determining its value. If the color or the amount of leaf—and he pulls a staple to see its length and strength. He puts all of this on the coded card that the code is known to everybody. They would simply bribe him to give it a higher classification than he would’ve inspected, easy to do, because it’s an art not a science. A man can call a bale of cotton strictly, and another man could call it mentally. It might make a difference of $5 a bale in the price, but it would be awfully difficult to prove which one was right, unless they go grossly over pull it, it’s a relatively safe way to earn dishonest money.

I want to emphasize for your record that Mr. Rainy was—nothing was ever found about him. We made our own investigation, because we would’ve taken action ourselves, and we found nothing, and nor did the district attorney up there. He finally dismissed the case.

F:         Too the Kempner share was known for selling a certain quality of cotton.

HK:      Yeah, of course, if we had a bale of cotton with the government classification on it, and we sold it on that classification, we were no longer responsible for it. Now if we had sold it under our own classification, it wouldn’t make any difference how many people would pry, we’d still have to stand behind it.

F:         I’d like to talk just a few minutes about the Texas Prudential Insurance Company and the selling out before that time of your interest to W. L. Moody. Would you tell us about that?

HK:      Oh, I know where you got that. You got it from dad’s book.

F:         Partially.

HK:      I don’t know. You see, along about the turn of the century, shortly after—I don’t know exactly when—the Texas legislature passed a law that said that all the national insurance companies, Aetna, Metropolitan, and those of us doing business in Texas, particularly life insurance companies, would have to invest in Texas either in loans or securities or something, some proportion of the premiums they got out of Texas. I don’t know if it was 100 percent or 90 percent or 50 percent, some substantial percentage.

F:         Was this the Robertson Act?

HK:      1:37:16            Yes, exactly right. These high and mighty insurance companies made a big mistake. They decided they didn’t need Texas as much as Texas needed them. They’d get out and see what Texas would do, so they did, most of them, if all of them. People like Mr. Moody immediately saw the opportunity because he pointed out to my father that they could put off some securities as capital, securities that they didn’t have to give away. They’d just lend it to the insurance company as a capital base, take that insurance company’s stock and return it—lend it, really—but sell it to them for the stock. This company could stop operating, and there was this whole field in Texas, much less in other places.

            They did and Mr. Moody—the thing about a life insurance company is that you have to spend a great deal of money to set up agencies and sell it. After you get enough sold then this money comes back, but while you’re waiting it takes a lot of money. Mr. Moody was very courageous and very far-sighted, and he had no problem in putting up the money and running it in a tight way so that they improve very rapidly.

            The rest of the story—I can’t do better than what you read, but it roughly goes like this, because I know it from the same source you do, really, dad’s talk—that he came one day to dad and said that he was doing all the work, and that we were benefiting from his work. He didn’t think that made sense, and he’d like to buy us out. Dad said that he didn’t particularly want to sell. Of course, Mr. Moody insisted that maybe Mr. Moody would like to sell out, and so Mr. Moody came back again and said that one of the insurance examiners or someone had told him that he thought the situation was bad and that either Moody or Kempner should get out and the other one run it.

            1:39:23            Dad and Mr. Moody made a buy and sell agreement. We offered to buy it for so much, to sell it for so much. He offered to buy it for so much. He accepted our sell offer and bought us out. Dad found out later that the insurance commission that he had quoted had not said anything of the kind, and he had always felt that this wasn’t a completely an above board action on Mr. Moody’s part, and he’s always resented it very much. That was the start of the American National Insurance Company under Mr. Moody and its enormous progress since, which we’re all aware of.

            At that time, dad decided we would start an insurance company of our own, and found a man named Cunningham, no relation to the Sugar Land Cunningham—who was an insurance man, and we started the Texas Prudential on a much smaller scale. Mr. Cunningham was not a particularly good operator. He should’ve chosen someone else, or we should’ve found someone else to replace him in an early state, but he did build up the Texas Prudential, and it was as I told you, entirely owned by H. Kempner—or not quite entirely—controlled by H. Kempner. Some stock was elsewhere. After awhile my uncle S. C. Kempner and Mr. Cunningham got older and—I think—before he died, went over to take over the operation of the company. It was then that they bought the high school and remodeled it and put the Texas Prudential there.

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F:         What problems did Mr. Cunningham have in operating it?

HK:      An insurance company is a very peculiar—in the first place, it’s a people thing. You have to get agents. You have to inspire their loyalty. You have to pay them. You have to sort of make sure that nobody bribes them away, takes them away from you by extra payment.

F:         Like American National?

HK:      Or nobody takes—yeah, or anybody—or decide how much you’re going to pay to get a good agent from somebody else. Then besides that is the operating part, but then there’s the whole investment thing and the handling of where you put your funds and what securities you buy and when you sell them. It’s a highly specialized thing. Mr. Cunningham was trying to do all of those things. He wasn’t qualified to do any of them. He wasn’t as qualified as most people, as he thought he was, but the company grew and prospered. Pat took it over, and it grew and prospered considerably more, and then Pat died.

F:         This is your—?

HK:      Uncle S. E. Kempner. He died in ’54 or ’55, and several people came down to buy the company. We ran it for a year or so with management, people who were under Pat when he died and decided that those weren’t the right people. Rather than go and look for someone else and run it ourselves, we decided we would sell it, so we did. We sold it to Western and Southern, a mutual company in Cincinnati. All of that money came into H. Kempner. It didn’t go to the individuals.

F:         It seems like then the number of current interests of H. Kempner is very small other than Sugar Land and the Imperial Sugar Company as such.

HK:      1:42:55            Right now H. Kempner as such doesn’t own any operating companies. The family members do. H. Kempner does not. H. Kempner’s investment trust, they have substantial interest in a few companies, which they don’t control, and they have a general investment portfolio.

F:         Are these investments like nationally?

HK:      Yes, a great bulk of them. A number of them are special local situations, but most of them are national. Of course, H. Kempner is still a private bank. We take accounts. We make loans. We don’t advertise it, and we don’t seek the public business, but we get some. We’ve been a private bank under special dispensation, because you have to grandfather clause to be a private bank. You have to identify the bank for some years before 1970—I think—to get permission to operate as one.

            The only really active one I know that’s left, now that W. M. Moody and Company has sort of closed, the only active one I know is the D and A Ebner. I know one of the sons, Antonio, which is Dan Uppenheimer. We’re available, but we’re not active. We have the right to be, but we’ve never pushed it. H. Kempner today is an investment trust.

F:         At one time—I believe—your grandfather was an original founder and director of the Santa Fe Railroad?

HK:      That’s right, the Gulf out in Santa Fe. My grandfather was one of the original founders and director. It was sold to the Atchison and Topeka Center. They’re the big center. My father, while it was the Atchison and Topeka Center, they owned the Gulf in Santa Fe. My father, during almost his entire life was the director of Colorado, not to the Atchison, but a subsidiary of the Atchison. Yes, there’s a little town out in west Texas somewhere called Kempner, Texas. I had a picture of it of the road sign there. It’s because they named all of those towns after directors—you know—Rosenberg, Sealy, Willis, Blomhiddenheimer (??), are all named after directors of Santa Fe.

F:         Any railroad interests now?

HK:      No.

F:         None whatsoever?

HK:      No.

F:         What about the inner urban queen?

HK:      I’d sure like to see the inner urban back here. We had a number of small railroads throughout the state at one time, mainly owned out at Sugar Land, Port Elizabell Railroad and other one was something. We had what was a Sugar Land railroad. We sold those in the late ‘20s.

F:         The foundation itself was set up in what, ’50?

HK:      1:46:04            The Eliza Kempner fund? It was originally called the Galveston fund, and was set up right after the second World War. I suppose ’50 is a good date. It later was changed to the Harrison Monte Kempner fund.

F:         You’re chairman of that board?

HK:      I’m chairman of the board of trustees of the foundation, and the other members and I, assistance Mrs. Thompson and Mr. Howard Weston of Cincinnati, my cousin, and my nephew, James Kempner, and Mr. Arthur Albert. This organization identifies with the 5 that run that.

            You see, we lived through some rather troubled times, and we had a number of charitable organizations and organizations doing good works, more then than now really that sort of depended on us for annual contributions of varying sizes. We were somewhat disturbed because we thought that after World War II like most large wars, there would be a period of considerable depression, and we didn’t know whether we’d earn enough money to make these charitable contributions that these people were relying on.

            1:47:24            There was no way under the tax laws to set aside money in the good year to pay out in the bad year. You had to pay it out or you couldn’t get it deducted. We decided to set up the foundation so that way we would set up a reservoir of money which we could pay out as needed. Since then the foundation has grown somewhat larger than we anticipated at that time, largely because it was an unfortunate investment, and we’re still spending more money than we take in, but we’re still there.

F:         What are your main support demands?

HK:      Benefit of mankind, you might say. We do a substantial amount out at the medical school. We’ve endowed at least 3 professorships out there. We support the United Way here—I think—probably a larger, relative contribution than anybody in town, judging by my standards, at least.

            We have a very interesting thing, a scholarship loan program which we’ve been engaged in for some years now, to which we lend money to work with the perspective students at all stages of their career, all the way from corrective reading to PhDs at Edinburgh in Latin or something. We lend them money, and we ask them to pay us back, but we don’t charge them any interest. This has been a very satisfactory thing. You see kids come up here. His mother works perhaps as a checker in the grocery store. You wonder how she gets him through high school. He’s a bright boy. He has a chance to go to college, or he can become a theatrical designer, or whatever. He gets this loan, and he can wait to pay it back if he has to until he’s out earning money.

            As I say, it’s been highly satisfactory, and I think a great social utility as we make absolutely no distinction about race or color or creed or anything of that kind. As a matter of fact, somebody asked, “How do you choose them?” I said, “I mainly choose them if they come and ask me to get it.” [laughing] Right now it’s very different, because we’ve got about nearly 10 percent of our assets in these non-productive investments. They don’t pay any interest, so we don’t earn anything on them, and we just can’t go anymore.

            The only ones I can make now is when I get payments back, and these payments—although I have a very efficient lady in Loraine Top down at the bank administering it—there’s apparently something to be desired. Some of it’s our fault because we allow them to wait 4 or 5 years after they get out of college, so they can earn money to do it. Some of it is their fault, because they forget how glad they were to have the money, and think how sorry they are that they have to pay it back.

F:         There always comes that time, doesn’t it?

HK:      That’s a highly satisfactory program that foundation has operated. We’re not big enough to set off on a campaign. Of course, another thing we did—I was going to say curing the housing situation, which is where I’d like to go—but we did, I must say in our defense. We didn’t put any money in it, either the foundation or ourselves, but we put an enormous amount of time and energy in it, and we used the foundation as a device to set up the parkland, which operates the parkland departments, which is a rather role, and of course, the housing project in the west there. It’s supported by FHA.

            1:50:59            I mean—if we don’t go broke between now and between we build in 30 or 35 years afterwards, and you pay off all the debt, the foundation will own the land and the buildings. I don’t know what the buildings will be worth in 30 years, 35 years from now. There’s no financial involvement in mall park, but we did work awful hard to get it together, very complicated.

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F:         Any other housing efforts? You say you’d like to go in that direction.

HK:      Yes, there are some other housing efforts. We haven’t done it through the foundation, though. We got the idea some years ago that the process of housing building called a stack house—which involves building things out of really out of sacks of sand with some cement in it—would be ideal. We thought we could fix it so that we had a sweat equity which you take a family of people reasonably skillful with their hands, and so they could build a house themselves with good plans for them.

            The plan didn’t require elaborate wood joining. You’d have to have plumbers, of course. We built some out in the west end between Amenin and on about 57th Street, 59th Street, which are still there and apparently they’re lasting very well, but the trouble is we found out that it requires a really expert plasterer. You really can’t do it just with the home labor. Although it was cheaper after we got our learning curve down. The first ones were quite expensive until we got the learning curve. We just felt that it wasn’t the cure-all we thought it was.

            We rented those things to the housing authority at a fixed rate, and they rent it to people, and they collect the rent. We have to do the major repairs and they do the minor ones. As I say, it’s not a very profitable business, primarily because they won’t permit the rents to be raised, and the cost of everything is going up so high and it no longer makes money. We were glad to make that small contribution to the housing situation. I think it’s very helpful to a number of the people living there, because they’re much better houses than they were living in before.

F:         What about the future of Galveston as a port? There seems to be quite a controversy in the community about the proposal of the deep water port versus the recreational aspect.

HK:      Oh, it would be perfect folly to write off Galveston as a port. I mean—the great bulk of the community wages’ income comes from business connected with the waterfront. The hospital is probably the largest employer in the county, but the waterfront, because they split up into many places, the waterfront is much larger than the hospital. Galveston had the advantage of some geographic features for many years. The port of entry for all of Texas until the Houston ship canal was built, it had tremendous advantages. Then it had disadvantages, because it was a hell of a lot closer for the railroads to Houston than it was here.

            1:54:30            The ships got in the habit of not regarding that distance, and not charging for it, and not accounting for it in their schedules. Because the cargo was there, they’d absorb it. Now I think, all of a sudden, it looks as though Galveston may have to go back to a geographic advantage. Those big large ships, which you can see one right there where the barge would come that loaded right in the ships, the ideal thing for them is to come in and out and turn around. They’re terribly expensive vessels, and if you keep them moving all the time, it costs much less than if they’re tied up for even 24 hours going up a channel.

            That looks as though Galveston may have some geographic advantages in the new highly technical containerization programs that are going on. Also, of course, if the onshore port which Chuck Devore is driving about comes in, that will be another variable, something we can do and hardly anybody else can do, certainly on the gulf coast. You can’t do it in New Orleans. You can’t do it in Houston. The dredging would be enormous.

            I think that there is a chance that Galveston will have a long range place in cotton, and certainly under no conditions can we give it up just because somebody says they’d rather have tourists than cargo. It doesn’t make any sense. Now tourists—I mean—bringing people to town, and particularly people who—somebody in Houston describes their tourists as somebody who came because to Galveston with a shirt on his back and a dollar in his pocket and never changed either one.

            I mean—sure tourism is grand, tourists for the hotels, that’s great. Of course, this d’Arco thing, they have no fathom of this job of creating interest in Galveston. I’m badly torn about Pier 22. I think—in the long run I agree with the wars, but it’s not a decision that I make very lightly. Particularly, I’m very fortunate because I think they can still convert—I mean—I think they can still convert Pier 22 to a picturesque adjunct to the strand, maybe not with all the ships and boats there, but with a fishermen’s wharf type of thing and some boats. That’s what it is now if you go around behind them.

            1:57:10            I think from the war’s point of view, goodness, those shrimp fishermen, they’re on Pier 20. They’re not paying any rent. They can’t even afford to fix the piers. They’re going to fall down around them anyway, and it’s too bad that they’re not available as an adjunct to the strand. If the war says the place for that is for cargo, and they have, I’m sure, otherwise they wouldn’t say so. I think they’re right to kick them out, put them somewhere else.

F:         Of course, they are going to need it, but there wouldn’t be adequate facilities under the wharfs proposal.

HK:      Even along Pelican.

F:         Yes.

HK:      Oh, well, they can be adequate. Of course, they’re adequate.

F:         As they are proposed now.

HK:      Well, maybe—I mean—that may be then, but that’s not what the fight is about, because the facilities are inadequate. If they’d put half as much energy and gain in that as they have in resisting the move, they’d have them adequate, or if they’re willing to pay for it, they’ll have them adequate. Maybe that’s the real answer. The idea of moving them to the back of Pier 9 was ideal. It seems to me that they haven’t been able to land. It belongs to Bob Smitty. He doesn’t want to sell it to them for that purpose, so what can they do? They can’t expropriate it. No, I think this was a tough decision, and I think it gave rise to a great deal of heat. As I say, I didn’t arrive at the conclusion lightly, but I think the rules are right.

[OH 088_02]

F:         Your wife has been quite active in politics herself?

HK:      Yes, indeed. She was here a minute ago. I’m sorry you weren’t.

F:         We should’ve said her on our tag. She was instrumental in changing the city charter.

HK:      Highly instrumental. If my father was still alive—you know—he was instrumental in setting up the city government in the first place. They handled it very well. They didn’t discuss it. After awhile they didn’t discuss it very much. Dad is always letting people go their own way. He believed in not trying to regulate things too highly. Yes, Ruth was very active in the League of Women’s Voters. Of course, as you know, she was on the first city council.

F:         The first woman.

HK:      The first woman as a city councilman. They had on it also the first Negro for years, for many years, in Phoebe Holmstrom. They got the Galveston, the city award for city beautiful or fine city award. It was really for good municipal management. She was always very proud of that. She was also proud of the fact that they took so much heat that first 2 years that it made it easy for all the other councilmen to do it, all the bad decisions they had to make and all the hard decisions, some good and some bad. She’s very proud of that.

F:         Why did she mind?

HK:      There was a feeling on the board and among some of their advisors that if this hard core group which was Ruth and T. D. Armstrong and Barbara Albright and Theodore Stubbs, if they ran again, they’d probably be elected, but they would be so divisive among their supporters of the council form of government, they would impair the council form of government. Ruth sometimes later came to the conclusion that this was probably not very good advice, but anyway she decided that her election was not as important as preserving the support for the council form of government, so she and the others worked very closely as a group, decided they would not run.

F:         As a group?

HK:      They didn’t run individually or as a group. Those 4 resigned, and did not stand for re-election.

F:         I had read newspaper reports that much of this divisiveness, as it’s been called, was kind of instrumented by the former council members that had been defeated earlier under the charter proposal.

HK:      I don’t know the answer to that one. I think some of the people who were on the council with them were more persuasive. I thought that the arguments are giving them more of the former city commission, and I don’t know exactly—I never decided in my own mind whether this was really what these other people thought or whether they did it for some ulterior motive. At any rate, it was convincing to them. They’re a pretty hard quartet to convince if they didn’t believe it was true. I have nothing much to say about that.

F:         What about the future of the H. Kempner?

HK:      That’s an interesting question. Well, H, Kempner itself as a trust association, has to be renewed periodically. Its present trust instrument expires in 1988, which is some 12 years away. I suppose sometime between now and then we’ll circulate and instrument to expand it to renew it for another 20 years. That’s the usual period we do. It will either be accepted or somebody might refuse to do it. I don’t what happens exactly if anybody—because if the majority—I think if anything like a majority refused and then it’s simple. Then we just disband it. If a substantial majority wants to extend it, and the minority doesn’t, then I don’t know what happens. We’ve never had that situation. We’d probably have to go to court for that or try to buy the minority out if we could agree on a price.

            I don’t know what will happen, as the family proliferates and it gets down to we’ve got children—let’s see, my son is the great-grandson of Mr. Harris Kempner. His children are great-great-grandsons. I think there’s a whole lot of great-great-grandchildren. That’s pretty far removed, you know, when you get to cousins 4 times removed or something. They live in different places, and they have different interests, and just how many of them will be a student 12 years from now and continuing this thing. I don’t know.

F:         Well, Harris certainly would be.

HK:      Oh yes, he would be.

F:         And what, Herbert?

HK:      Well, Herbert is my brother’s dad, but Herbert the 2.

F:         The grandson.

HK:      His 2, the Denny and Jim Harris L. Kempner, I. H. Kempner, III, and James Carrigon. Yes, I think so. They may not be. Let me put it this way, I’m quite certain they would not actively try to bring about the dissolution of the company, but they may prefer to see it dissolved. It’s hard to speak for what someone’s going to do 10 years from now, 8 years from now, just what the circumstances are, and who is here to manage it, and what their confidence is, and what the future is. Of course, in one sense, I don’t think everybody realizes yet how hard it would be to dissolve it. One of the reasons for dissolving it is that it looks easy to dissolve it. You just divide things up. It isn’t like disposing of the business or anything where you have problems.

F:         Well, have we covered nearly everything? Would you like to add something that you feel that should be on the tape?

HK:      Well—I think—I’d like to compliment you. I think the research you’ve done on the things you brought up were—I had no idea you knew about all of those things. It sometimes scared me a little. [laughing]

F:         You father really left quite a book. I found it very helpful.

HK:      Have you read the selected letters of Harris Kempner?

F:         Yes, I have, and the speech that was given—I believe—in ’58?

HK:      Yeah, ’58, oh, dad’s speech?

F:         No, it was in the ‘60s.

HK:      That’s right. It was to do on the first 100 years, H. Kempner, the first 100 years. That tries to paint the picture about as well as I do. Do you know Sandy’s book?

F:         No.

HK:      You may have this.

F:         Oh, my goodness.

HK:      I think you’ll enjoy it. You both laugh and cry. He’s the one that was killed, and those are his weapons.

F:         I, in fact, read in the reading.

HK:      Oh, yes, you did, good. I’m so glad you use it. There’s one which is a real work of literature and art.

F:         For our research or perhaps doing work on Galveston or on the Kempner family—

HK:      Where else would you go?

F:         Where else would you go?

HK:      Mother wrote a little book called a Blonde Saga. This you will solemnly vow to return to me if you want it. You don’t have to take it. I haven’t any more copies.

F:         Okay.

HK:      Now, give me your name, so I can call you to pass if you don’t do it.

F:         I’ll do that after the interview.

HK:      Okay, go ahead.

F:         Then if there’s nothing else you’d like to add, well—

HK:      No, I don’t think I have anything particularly. I can talk about my tennis playing and my sailing, my aging, all the other matters that come with interest.

F:         We certainly thank you for giving your time to future researchers and particularly to the Houston Metropolitan archive. I think it will be very valuable.

HK:      The connection with Houston is sort of interesting. Most of the people that I know there are people that I knew their grandparents. It goes back awhile. I hardly know any of—I get to Houston on certain limited circles anymore, and I don’t get there as often as I used to. It always amazes me how many people there are there that mention things I’ve never heard of. Of course, that’s true in Galveston too. It always amuses me too that those people that I do know well, how far back the acquaintance goes. It usually goes back to friends of my parents or my youth. It’s a lot of fun. Everybody teases me because I’m always talking about, “You’re the wrong one. It’s the grandparent.”

F:         With all the Kempner’s too, it’s kind of confusing.

HK:      You bet. Somebody once said that you walk into the assemblage around the club, and you can call them all Kempner’s, and you’re either right or you’re shot.

F:         Again, we thank you very much.

HK:      You’re more than welcome.

[Tape ends]