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C. Arnholt Smith, part two

The decline of a western tycoon

C. Arnholt Smith today at his home in Rancho Santa Fe
  • C. Arnholt Smith today at his home in Rancho Santa Fe
  • Image by Dave Allen

By the early 1960s, C. Arnholt Smith, had sold out of National Steel and Shipbuilding, and he turned his attentions to the tuna canneries, taxicab companies, airlines, ranches, hotels, baseball team, and skyscrapers that made up his Westgate California conglomerate. But each of these enterprises' consumed large amounts of borrowed cash, and the expanding debt took on the aspect of a mushroom cloud by 1969.

Johnny Alessio (left), Smith (second from right) working on a charity for Tijuana, c. 1961.  I supported two orphanages in Tijuana for years and years. Johnny Alessio had a couple, so I said, “He’s got two, dammit, I want two.”

Johnny Alessio (left), Smith (second from right) working on a charity for Tijuana, c. 1961. I supported two orphanages in Tijuana for years and years. Johnny Alessio had a couple, so I said, “He’s got two, dammit, I want two.”

That year marked the first public questioning of Smith’s methods when on April 16 the Wall Street Journal’s lead story was headlined “Self-Dealing Tycoon/How a Californian Uses Publicly Owned Firms To Aid Private Ventures.” The reporter, Byron Calame, had spent six months researching documents from around the country to piece together Smith’s questionable transactions involving stock and loans from the Smith-controlled U.S. National Bank. That story touched off several state and federal investigations that ultimately led in 1973 to Smith’s removal as chairman of the bank and of Westgate.

Congressman Bob Wilson, Richard Nixon, Smith c. 1960. I took him and Mrs. Nixon out on the boat several times when he had meetings in San Diego. We had a good-sized boat at that time, and I remember we’d take her out in the bay. We didn’t bother her, just let her sit and read.

Congressman Bob Wilson, Richard Nixon, Smith c. 1960. I took him and Mrs. Nixon out on the boat several times when he had meetings in San Diego. We had a good-sized boat at that time, and I remember we’d take her out in the bay. We didn’t bother her, just let her sit and read.

In a federal bank fraud case brought by the Securities and Exchange Commission, Smith plea bargained for a nominal fine and probation. District Attorney Ed Miller’s office then produced a 64-count indictment against Smith, which was later reduced to one count of grand theft and four counts of tax evasion.

U.S. National Bank, c. 1966. U.S. National Bank did loan money to these subsidiary companies of Westgate California, because why the hell would we go somewhere else when we had a bank to finance things?

U.S. National Bank, c. 1966. U.S. National Bank did loan money to these subsidiary companies of Westgate California, because why the hell would we go somewhere else when we had a bank to finance things?

Smith was convicted in May of 1979 and sentenced to three years in prison. On appeal the tax charges were affirmed as misdemeanors, the theft conviction was upheld, and Smith’s sentence was reduced to one year in custody. According to the appeals court riding, the theft was ultimately tied into the sale of the San Diego Padres to Ray Kroc, at which time Smith embezzled $8.9 million from Sovereign States Capital, one of the corporations he controlled, and used it to pay off loans from that same corporation. Near the end of ten hours of taped interviews, it became dear that Smith never did understand the theft charges, and when confronted with details of the state’s case he drew a blank.

U.S. National Bank, c. 1962

U.S. National Bank, c. 1962

Smith spent eight months in county jail and on work furlough, from which he was released in July 1985. Three days before he was released, he was served with divorce papers from his wife of 17 years, Helen Alvarez. He now resides with his daughter Carol in Rancho Santa Fe. — Editor

Westgate Tuna Plant dedication, 1961. I was hustling private investment to come in and invest in tuna canneries because we were trying to expand our fleet.

Westgate Tuna Plant dedication, 1961. I was hustling private investment to come in and invest in tuna canneries because we were trying to expand our fleet.

As I look back over my life, I think I put a hell of a lot more into this community and this town than I ever took out of it, that’s for damn sure. We built National Steel, the cannery. I supported two orphanages in Tijuana for years and years. Johnny Alessio had a couple, so I said, “He’s got two, dammit, I want two.” So there were four orphanages we were taking care of. And in the ’60s, we created two hotels and built a modem bank building downtown. And U.S. National Bank was buying up smaller banks around Southern California until we finally had 60 branches. I just think of the many, many smaller companies that we actually put together and helped that were a credit to the economy of the community.

Smith with Jimmy Durante

Smith with Jimmy Durante

For most of this time, I was on salary at National Steel and at the bank. My income came from bank dividends, primarily, around $225,000 a year. I took the dividends in stock and didn’t always sell the shares but just kept chunking them away to keep my ownership in the bank in proper proportion to what it was before we made all these bank acquisitions. Otherwise I would have lost control of the bank. I didn’t keep the bank stock personally; it was held by U.S. Holding Company and my mother and myself, the three of us. My mother had a fair chunk of it.

President Dwight Eisenhower (left), Mamie Eisenhower (center), Smith (right), c. 1959. We were giving him a breakfast at the Cuyamaca Club. I was sitting next to him, and we were talking about San Diego, and he said, “Is the El Cortez Hotel the best hotel you’ve got in San Diego?”

President Dwight Eisenhower (left), Mamie Eisenhower (center), Smith (right), c. 1959. We were giving him a breakfast at the Cuyamaca Club. I was sitting next to him, and we were talking about San Diego, and he said, “Is the El Cortez Hotel the best hotel you’ve got in San Diego?”

The United States Holding Company was a stockholder of the Westgate California Corporation and was the largest stockholder in the bank. The holding company did a lot of other things. It owned real estate, it served in a fiduciary capacity for loans, and it was really what it says, a holding company. I was president and chairman of U.S. Holding. My wife Lois, my daughter Carol, and I owned most of the U.S. Holding Company stock. The holding company probably owned 52 percent of Westgate California.

Smith's daughter Carol, c. 1958. My wife Lois, my daughter Carol, and I owned most of the U.S. Holding Company stock.

Smith's daughter Carol, c. 1958. My wife Lois, my daughter Carol, and I owned most of the U.S. Holding Company stock.

At this time, the bank law said that the subsidiaries of a holding company could borrow money like other companies. And U.S. National Bank did loan money to these subsidiary companies of Westgate California, because why the hell would we go somewhere else when we had a bank to finance things? But in the early ’60s we started being criticized by federal bank examiners who said we were violating the loan limit of the bank because they said the whole operation was all kind of directed by one source — me.

We had this beef with one examiner, Jack Baker, about over-loans, which means a bank exceeding a ten percent limit of a bank’s loan portfolio on loans to any one borrower. You always have some guy in the pack that tries to make a name for himself, so Baker started raising hell. What he tried to do was put all our subsidiary companies of Westgate California into one package, as if it were one loan to one company, which would have made it a violation of the limitation. He claimed USNB loans to the subsidiaries totaled something like $17 million. 1 don’t know exactly, but that’s possible. Just look at the tuna cannery. The inventories in a cannery would be very substantial, and they’d have to be warehoused. Of course, with warehoused food, you can make a larger loan, percentage-wise, than you could on a normal house loan. And National Steel, when it was building those big ships, was using a whole lot of money. So it’s possible we were using that much money.

But Forbes magazine once reported that USNB eventually loaned something like $345 million to companies that I controlled. Maybe it was 50 or $60 million at any one time, but it was never as high as they said.

Anyway, after Baker did that, I talked to the U.S. Comptroller of the Currency, and he said that as long as each subsidiary is a separate company, if it has its own separate management, its own capital, you can treat it just as any borrower or customer. So as long as the parent company does not borrow any money — that would be Westgate California Corporation — the subsidiaries could do whatever they wanted. Westgate did control those other companies. There was, to that extent, some centralization of direction. But we never had Westgate, as a corporation, borrow ten cents from U.S. National Bank.

Jimmy Saxon was comptroller then. And the assistant comptroller, who I knew even better, was Bill Watson. Since we were taking over many banks, I had to go back and get their permission and approval to take them over, and I just got acquainted with them. I made it a point, I think, to try to become friendly with them because we needed their blessing and their help.

That Baker was my enemy, that damn guy. He dinged us every time he had a chance. He was always banging on us. He just made himself so damn obnoxious. Another big beef we had with him was over the Bank Act provision that said letters of credit that the bank issued need not be shown on its balance sheet; it was just like a side guarantee. Baker insisted that it had to be on the balance sheet and tried to make great capital out of that. Again I went back to see Watson and Saxon and said, “That crazy son of a bitch, can’t he read?”

But Baker just tried everything he could and made such a damn pest of himself in Washington that Saxon hauled him back there, and they had a big to-do, and they bounced him up to Alaska, put him in the deep freeze. He still tried to get us, but there was nothing he could do. They wouldn’t let him examine any of our banks.

Baker was the only one we had trouble with. The rest of them were all right. I didn’t personally entertain the examiners while they were in town, but our officers took them out to lunch. They were pretty circumspect; they wouldn’t let you do much. But after they got acquainted with us, they’d go out to lunch. Not with me — I didn’t take any of them out to lunch. The different branch managers would. And one of our bank executives, Lou Lipton — he was kind of a public relations man — he’d take them out, take in a ball game, and innocuous things like that.


Lou Lipton was the standard bearer in the local Democratic Party. And of course, he was a hell of a good help as far as the bank was concerned, because he represented an active interest in our business. I was a Republican, but I helped Democrats too sometimes because I felt we were trying to help the right people into office, not necessarily because they were Democrats or Republicans.

When we wanted to support a politician, I wouldn’t actually contact him directly. With Nixon I did, and also his close associates, but either Lipton or one of our Republican quarterbacks would contact these other politicians and help them with money. I was a target of political fundraisers like every guy in business. Politicians would hustle people they thought they could collect money from, like me, Major Fleet, Henry Fenton, George Daley, Pappy Hazard, and all those local businessmen. We stuck together, very definitely. About eight or ten people in the city really packed quite a wallop when it came to helping people who wanted our support. We could really throw some muscle and weight behind them. And we were quite careful to be sure we were helping the right guys as we went along.

Our advertising agency, Barnes Champ, was involved in the campaigns of some of these politicians. Like so many things that had to do with the activity of the overall Westgate organization, we had acquired a very small advertising agency to do the normal run-of-the-mill things. Gradually, we absorbed several advertising agencies, which ultimately became Barnes Champ. They did all of our bank advertising for USNB, tuna ads for Westgate California, and they handled political campaigns too. If someone hustled you for some campaign money, you might say to them, well, you tell such-and-such an advertising agency what the hell you want, and I’ll see that it’s paid for. So the agency paid for the ad.

We had quite a few employees of Westgate and the bank who were involved in politics. Don Keller worked for the bank in the early days. I’ll never forget, it was in 1945 or ’46, one day he came down to see me and he said, “I think I’ll run for district attorney.” I thought I’d bust a rib. I said, “What the hell makes you think you can be elected?” So we got a pool of money together for old Don Keller, and by God, he surprised everybody and won. He was district attorney down here for a long, long time — 20, 30 years, until 1970.

I wasn’t a member, but some of our people were active in the county Republican Central Committee. Of course, that was the wheel from which politicians sought financial help, and through that, our political connections just developed. Like our support of Earl Warren for governor when we were approached by his people in the mid-1940s.

Les Gehres, Admiral Gehres, was the chairman of the central committee for many, many years. He ran our tuna fleet, and being an admiral, he thought that was great stuff. Milton Filias, who was president of the San Diego Chamber of Commerce, worked for us. He came in originally as an attorney and contract administrator and finally wound up at the head of National Steel and Shipbuilding. And Doug Giddings, chairman of the city park and rec board, also came in as an attorney for U.S. Holding Company and served as an attorney for the bank at one time. Giddings and Filias were both on salary to us.

Frank Thornton, on the San Diego planning commission, was a real estate administrator for us and a political liaison man with the Republicans. Lou Lipton was on the civil service commission. And Mel Wilson, who was with the U.S. National Bank when I acquired it, was also on the Republican Central Committee.

We didn’t employ these people because of their active political lives, but they were like-minded people, I guess. In management you kind of drift to a feeling of association with kindred spirits. Like Jim Copley, he and I were good friends. He didn’t pay attention to what I was doing; he ran his own show and his own ship. But we worked together on lots of projects. If I needed some help, I’d call him up and I’d tell him what we were doing, and he’d say, “I’ll send you a check.” It was very easy. I remember Jim’s first wife. She was a very nice gal. She was a lot more vivacious and exciting than the present Mrs. Copley. But Helen was very sweet and kind of quiet.

But anyway, everyone in town seemed to kind of support the Republican movement. I helped out Congressman Bob Wilson a lot in his campaign contributions with personal funds, out of my own pocket. Bob and I were very, very close because he was a politician. I think he introduced us to the government procurement agencies when we owned National Steel, but he never intervened as a congressman to help us get any contracts.

I also supported Dick Nixon throughout his career. I knew him from my days in Los Angeles and because I was quite active in Republican politics here, and I very definitely hit it off with him. I’d talk to him about politics, give him my words of advice, and he’d ignore them, of course. I took him and Mrs. Nixon out on the boat several times when he had meetings in San Diego. But he wasn’t much of a sportsman, and she hated the meetings with a passion. She’d elect to get out and get away. We had a good-sized boat at that time, and I remember we’d take her out in the bay. We didn’t bother her, just let her sit and read.

I was active in the finance department of Nixon’s campaign for the presidency in 1968. I hustled money from other people, and I contributed a lot of money myself. Maybe $250,000. And I was with him on election night in New York. It was very exciting, of course. All these dispatches and reports were coming in, and everybody was higher than a kite and drinking champagne. It was really quite a gala. Nixon was very relaxed and happy, completely different from the politician who was always on the stage. I went to the White House several times and went to a lot of parties and concerts there. They were some parties.

I also remember one evening with him up at the Marine base, at the commandant’s house, they were having a party and I was looking for my wife — this was my second wife, Helen — and jeez, I couldn’t find her. Apparently, Dick had maneuvered Helen into the john, and they were drinking highballs. I finally found out where they were and had to jerk her out. When he got to drinking, he was really something.

One reason we decided to get into the hotel business was because of the man who was president when Dick was vice president — Dwight Eisenhower. One time when Eisenhower was here, we were giving him a breakfast at the Cuyamaca Club. I was sitting next to him, and we were talking about San Diego, and he said, “Is the El Cortez Hotel the best hotel you’ve got in San Diego?” I said, “Yes, Mr. President. Of course, we’ve got the Coronado Hotel, that’s very nice, but in San Diego, no, that’s it.” And he made a funny face; he must have thought, well, that’s pretty odd for a city growing like this. And I think that’s probably what gave me the spark that we really should have a decent hotel in San Diego. The U.S. Grant Hotel at that time was pretty sad. It was terribly neglected and had gone way, way down. But it was Eisenhower that planted the seed for the Executive Hotel and the Westgate Plaza Hotel.

We built the little one first, the Executive Hotel, as a businessman’s hotel. It was really intended to be kind of like a men’s club, because a lot of attorneys and business people kept rooms there. People that lived in La Jolla, for example, might keep a suite of rooms to give to their friends when they came into town. Or when they were tired and didn’t want to drive home.

The little hotel, at First and C, opened around 1969. The big one, the Westgate Plaza, at Second and Broadway, opened around 1973. It was very expensive to build, and I think our average room was $60 a night. I shook and shivered when we thought about it at the time. But we did real well because it was the only nice hotel in San Diego at the time. It catered to dignitaries. The King of Spain stayed there. The Copleys had a suite up there, and two or three corporations.

Of course, before we built the hotels, we put up a new bank building for U.S. National Bank. In the early ’60s, the bank was expanding a lot. It wasn’t the biggest bank in town, because we had Security Pacific and Bank of America. The First National Bank was larger than we were, but we were right blowing on their heels. Actually, USNB was a commercial bank; the First National Bank didn’t really get behind struggling companies and try to make them grow like we did, helping people like Pappy Hazard, Henry Fenton, and other contractors. We were pushing to become a billion-dollar bank, which kind of puts you up in a different class among the banking world. If you’re down below that, you were kind of like a junior in the world of finance.

So in the early ’60s, USNB was still on the same little corner we were when the bank was first organized, right on the northeast comer of Second and Broadway. It was a little five-story building, 50 by 100 feet long, and we really filled it like a rabbit warren.

Of course, all banks reached for an identity or a landmark or whatever, and I was kind of concerned about whether we were stepping into too big a fight. Southern California First had built ahead of us, at Fifth and B; Dick Silberman and Charlie Saylick jumped in and they built the building. And Charlie Fletcher jumped in and built a building on Seventh and Broadway. There was just this kind of boom in high-rise buildings, just as we're going through now.

So I went back to Washington and talked to Bill Watson and the new Comptroller of the Currency, and they agreed with our thinking, that U.S. National Bank did need something to identify it. We had about 60 branches all over Southern California, but our puny little headquarters kind of made people come in and say, gee, this is a bank? It looked like a hock shop.

The new building opened in 1966, across Second from the old bank. And it did make a tremendous difference in business. It made the bank look like Los Angeles or Chicago or other institutions. And there was the feeling that the U.S. National Bank related the size of a bank building to the size and strength of the bank. It really doesn’t mean a damn thing, but it was important.


I remember very well when Bob Peterson and Dick Silberman came to town. They should have been my friends and acted like they were my friends, because we actually helped finance their acquisition of control of the First National Bank in the ’50s. And one time we had worked up a deal to merge their Southern California First Bank and U.S. National Bank. But when we went to the Comptroller of the Currency, he wouldn’t let us do it. He felt that the combined banks would be unfair competition to the smaller banks. But I thought that would have been a hell of a good merger and give San Diego a billion-dollar bank right off the bat. At the time, we were reaching for a banking institution to help the industries. I thought the merged banks would be the right size and we could handle most anything.

Peterson did his damnedest to sell the Jack In The Box system to Westgate, and I wish to hell I’d taken him up. It was something brand new and a big, sprawling industry, and they were going like gangbusters. But we couldn’t buy them all. But that’s one I sure missed.

The three of us were very active contestants, I think, for goodness in the town. They were the head honchos of the Democratic forces, and I was on the Republican side. Silberman and I were never very close. I think he wanted to bump me aside. There’s plenty of room in town, but everybody wants to be number one. Dick was very ambitious. And I think he and Peterson did a lot to maybe stir up as much dust as they could that involved me and the organizations I was with.


My son, C. Amholt Jr., was working at the bank in the ’60s. He had been man-ager of a branch and came down to the head office and took over some of the departments here. I used to have some terrible arguments with my son. He was the younger breed of executive, and he thought we were doing a lot of things wrong.

It was mostly over mechanical things, long before the banks were automated as they now are, and we were kind of dragging behind. He came up with a lot of good ideas that eventually were incorporated into the bank systems. He didn’t lack credits at all, and he was actually very interested in the machinery of the bank. Now everything is by computers, and that effort that he was doing was kind of the forerunner of the computerization of the banks. He used to drive me nuts, but he was really a very intelligent man.

I remember he told me one time when we were having one of our internal arguments, he said, “You know, you're the biggest problem of my life.” I said, “I’ll correct that very easily. I’ll just go out and let you take over.”

In reading the biographies of many companies where fathers had sons following them, that same thing happened, and they really had very bitter differences sometimes. We never reached that point, but I know he made me madder than hell one day, and I said, “Goddammit, I’m going to step out. Since you know it all, I’ll let you run it.” And he said, “Oh, no, no.” He just wanted the fun of picking on me.

My son had very high blood pressure that we were not aware of. He had been given a commission in the Navy, but when he went up for his physical, they wouldn’t take him. The same thing happened when he came up on the draft. He popped a blood vessel in his head, finally, and left this world. He was a real nice guy — a nice, handsome man.

I’ll never forget that afternoon. He called me from Long Beach and said, “I think I’ll stay up here a couple more days. We’ve got this problem.” And about 7:00 o’clock I was still in the bank when I got a call from Long Beach. They said, “You better get up here.” ‘What's the matter, what’s the matter?” “Well, just get up here, get up here,” they said. So I raced down to the airport, chartered a little plane, and flew up there. By the time I got there he was gone. What a shock that was.

My daughter talked me out of just selling off everything at that point and getting out of the business. I had thought about it lots of times, because of working long, long hours. I don’t think I left the office building very often before 10:30, 11:00 at night. In the evening, after dinner, was when everything was quiet and I could really go over the reports and the statements and plans and what was going on.

About a year after my son died, around 1967, my divorce from Lois was finalized. I think the divorce came about when I began to realize I was kind of a lone soldier in our relationship, so to speak. We had really drifted farther and farther apart. And through politics, I had gotten acquainted with Helen Alvarez. I liked the company of Helen and the activities she was involved in. And it was one of those things, it happened. Of course, when I suggested a divorce to Lois, she was horrified. I’m not sure she was really surprised, though. She had — I shouldn’t say men friends — but she had friends that were men who played bridge, and she was of a different world.

In the settlement, we split everything down the middle. She got shares in the bank and shares in the holding company and everything I had. She had a hell of a nice income, plus the home in Old Town that I’d built and given to her. And her attorney even said, “Empty your pockets.” He made me divide the damn money that I was carrying right there on his desk. That’s the honest to God truth.

I met Helen very casually here in San Diego in the late ’50s at a political dinner at the El Cortez Hotel. I think the first time I ever really talked to her was at a political convention in Sacramento. Helen was so different from Lois. Lois was quiet and withdrawn. I liked the beach, the mountains. She didn’t. I shouldn’t say Helen liked the beach, but she went along with it. I liked to dance, she liked to dance. We used to go on boats, went to Europe, did all the things that people who are happy do. She was part owner of Channel 8 at one time and is now involved in Channel 69. Helen lived in La Jolla, right behind the Del Charro Woods hotel, when I met her. J. Edgar Hoover used to hang around there, and Helen knew him quite well. She would meet him in Washington sometimes. And I met Hoover in La Jolla too. He was a very odd guy, very peculiar.

My daughter reminded me of the time Helen said she wanted me to be a single man who could marry her, and then she left for Europe and said we shouldn’t be seeing each other. But Carol encouraged me to go after her and patch things up. So I phoned Helen and finally met up with her in Austria. We came back here and were married in the little chapel in the U.S. National Bank Building. We had a very beautiful little chapel that was used by people when they were upset, to go in and meditate and things. We were married in that little chapel. Her son was the best man, and Carol was the matron of honor. Then we took off for Europe right afterward.

THE DOWNFALL

It was around 1970 when things started to fall apart. I lay my troubles to Ed Miller, the district attorney here, and his henchmen. They had just cut down my friend Johnny Alessio for tax evasion, and the word was on the street that now that they had Johnny, they were going to get me. I used to laugh like hell and say, well, get me for what?

At that time Peterson and Silberman were backing Ed Miller, and I strenuously backed his opponent, Robert Thomas, for district attorney. It was a very nasty campaign. I think Ed was out with his henchmen to cut me down, and eventually they sure enough did. Miller got the Internal Revenue Service to file a criminal tax-evasion charge against me. They based it upon the fact that I was taking stock of my own family companies and using it under very carefully drawn agreements that allowed me to do it. These bailment agreements were drawn by attorneys outside the bank.

A bailment agreement is in effect an agreement between two people where one will give you stock or horses or land or whatever that you trade or sell, and at the end of a certain period of time you have to hand it back. In the meantime, if you should lose through bad investment, the guy that loaned it to you is just out of luck. He has no recourse on you. The purpose of that is to be sure that there would be no IRS complications whereby the use of the stock that I was getting from our family companies might be considered income. While I could use it, say, for collateral, I was still obliged to hand it back at some particular time.

Very often, stock and bond brokers would be short of U.S. National Bank in the marketplace. They’d have to replace it, and they couldn’t get it anywhere else other than to bid the price up and raise hell with it. We would actually loan them the stock or sell it to them at a fixed price and agree to take it back when they had replaced it on their own shelves, so to speak.

One of the IRS agents who finally came to work for Westgate came to me one day and said, “Goddammit, you’ve stuck your neck out here. We’ve got to go through and identify each goddamn certificate you’ve used.” Some of them had been sold and I didn’t buy them back, I just replaced the stock.

We had to identify every share of USNB stock and what had happened to it. I had to go back and buy off some stock that had been sold, just through confusion. I stupidly paid no attention to the individual certificates and what they cost. If I had ten shares, I’d throw it on the USNB shelf. If someone needed ten shares, I’d go to the vault and grab ten shares and sell it to them. So we had to trace way, way back and figure out how we got each share, who we bought it from, what we paid for it, what we sold it for. We had to go through 700, 000 shares. I had a terrible time. It was so stupid, really. It was crazy — like looking at a box of apples and trying to decide what you paid for each apple in the box. It took two huge national audit firms two years to track this out. It was a tremendous job. But the whole thing was really a technical matter, and Miller tried his damnedest to hang me on it.

When the federal government filed bank fraud charges against me, none of the federal judges down here wanted to hear the case, so they imported a judge from San Francisco. He listened to the arguments and finally said it should never have come to trial. He called the attorneys together and said we gotta work out an agreement. He found there might have been technical violations of the law that were not fraud in the sense that I was trying to steal something. I entered a plea of no contest in June of 1975, and they fined me 40,000 bucks and put me on five years’ probation.

And, jeez, Ed Miller and his cohorts just hit the ceiling then. He was just furious because he figured I was going to the slammer in a big way. So when the judge made his ruling, Miller really went to work on the state, and he used the same damn argument with the state, about the bailments and the excess loans, and he just kept pounding and pounding and pounding the franchise tax people.

Sometime in the early ’70s, Silberman had hired away one of my three personal secretaries. I think he lured her away sending her to Acapulco for two weeks. Of course, she knew everything that happened at the bank and what I was doing there. A private secretary is like an attorney. They shouldn’t divulge any information, but of course, it happens all the time. I’m sure that ended up hurting me, going into Ed Miller’s ears through Silberman.

Miller said he’d prosecute if the state would go forward. They indicted me in December of 1975, and, God, that trial lasted about a year, I think — a long, long time. Jeez, it was brutal. And the jury finally found that I had stolen money from my own family and from my own companies. Therefore, I had income that I didn’t report, stolen income because of the stock certificates. And I was convicted of income tax evasion, state income tax evasion. And I got sentenced to the clink for a year and also put on probation.

One thing the public didn’t ever know is I gave that son of a bitch Ed Miller a bunch of money after he was elected at the request of Bob Peterson. About $15,000, I think, to pay off campaign debts. Peterson said, “You guys have been feuding,” and I remember we had lunch up there in their offices on Sixth Street.

Pete Wilson was elected mayor for the first time the same year Ed Miller became D.A. I was never really close to Wilson. We helped him, of course, in all of his campaigns. He said he refused money from me, but I don’t think he declined money to the best of my knowledge. It would be a rare day in June that a politician would refuse money. Sometimes these people would make these statements to guarantee their independence because we were very active politically as an overall organization, not only in San Diego but Los Angeles, Sacramento, San Francisco, Phoenix, Arizona, different places that we operated. Pete Wilson took contributions through our committees and things we had. I didn’t go around personally and hand it out. They’d make their pitch to these clubs or organizations we had where we would decide which candidate to support, and the club or group would then arrange to get the funds to them.


I stepped down as chairman of U.S. National Bank early in 1973. The bank was declared insolvent that fall. I think when the storms come and blow, I mean, they just use every damn reason or excuse to tear somebody down as you go along. Our bank, in my opinion, was solvent. We were selling fed funds, we were not out of money, and the operations of these various companies were working themselves out.

I looked upon the bank as a constructive engine, you might say, in creating things. Let’s just take National Steel and Shipbuilding Company, for example. We made a hell of a lot of loans to them in its growth period, but look at what it is today. It’s the largest shipbuilding company on the Pacific coast. The bank through its efforts actually created things for the community to make money and to prosper, and along the way it might have been looked upon by people less venturesome that it was very risky to do, but I think I had the full confidence of the Comptroller of the Currency and the examiner’s office. Only one or two of the examiners didn’t like me, and I didn’t like them.

But as for questions that came up at the trial about loans to companies that I had a big piece of, what the hell does it mean to anybody to have control of a company if you can’t personally profit from it? You might have a piece of it and invest a lot of your own dough. Christ, I went out on a limb very often for National Steel and Shipbuilding Company, taking a sack full of my U.S. National Bank stock on to New York, borrowing money, and lending it directly to the steel company. There was no other avenue or means to do it. But it’s like a farmer who is planting crops and trees and orchards, and people say, gee, that’s pretty risky, you shouldn’t do that. But in the long haul it was really a contribution to the community to have it develop that way.

Westgate is an example of a tremendous source of wealth coming into the community here. It was created wealth. It created jobs for thousands of people, and whatever profit remained here stayed here. I didn’t ship it to Switzerland or anything like that.

Let me cite an incident that was in my mind when I talk about lending money to create industries. The crawfishing season came on at a certain time of the year. We would stock up and lend to Westgate’s crab-harvesting company, you might say, enough money to handle their needs and supplies for the season if they were up there. Now this was a loan made to the crab-packing company. After they had processed the crab on shipboard and were ready for a sale, they couldn’t sell it from Alaska, they’d have to ship the product down here, and Westgate’s sales company would have to borrow the money to buy the finished product from the crab-processing company, and they borrowed it from U.S. National Bank very often. So here again was a loan originally for the guy that went out and caught the fish, processed it, then the distributor had to borrow the money to pay them back. It was a revolving credit, much like you loan money to a farmer to plant a wheat crop. Then he’d borrow the money to process and sell it. This was a long-established practice.

FACING FACTS

What all this material indicates is that Mr. Smith and certain relatives and associates have profited handsomely from transactions with Westgate California and USNB, both of which are publicly owned. — Wall Street Journal, April 16, 1969

Let’s use U.S. National Bank as an example. Why the hell would I want to lean on the bank when I already owned control of it? It made no sense.

That story was a real hatchet job. The Wall Street Journal bugged and bugged and bugged me. They wanted to do a story on me, and I kept saying, “No, no, no.” And the last guy that came through, he said, ‘Well, you’ll be sorry. You’ll wish the hell you had talked to us.” But they were going around to everybody. Our dear friends around the country were saying, “Hey, the Wall Street Journal was in here asking a lot of questions about you, what’s going on?”

Westgate California hit its profit peak of about $3.4 million in ’62 and has performed erratically since. — Wall Street Journal

I think we had good years and we had bad years. If, for example, we wanted to break into the Chicago market with our tuna fish, we’d spend a godawful amount of money to try to get our product moving onto the grocery shelves, and we’d take a hell of a beating for a while until it caught on.

Westgate California owns a 40 percent interest in certain tuna boats, with the remaining 60 percent being held by relatives and business associates of Mr. Smith. In a number of instances, the private firms have obtained U.S. National mortgage loans on the vessels. One such 1967 loan exceeded the total assessed value of the boat, and other loans have ranged from 78 to 94 percent of the boat's assessed value. In all these loans, the entire boat has been pledged as collateral, meaning that Westgate California's equity is being used to obtain financing for the private firms. — Wall Street Journal

Well, I think I can best answer that by reversing the thing. I was hustling private investment to come in and invest in tuna canneries because we were trying to expand our fleet, and the interests that were sold or put together were very profitable to the individuals, and then the Westgate Seafood Products would probably take an interest in it and manage the vessel and operate it, but it was not to the advantage of Westgate that private people had an interest in the vessels there. It would be just like your neighbors maybe get together and say, hell, we’re going to buy a 20 percent interest in the ABC tuna clipper. Well, they’d come to the bank and make a loan on the tuna clipper itself through the syndicate, and it would then fish for the seafood division. It was just like the gasoline service stations you might put together to help move the product for Standard Oil Company.

In the late '50s, Smith ended up hiring two of the IRS agents who were assigned to the books of U.S. National Bank before the examination was completed. — Wall Street Journal

That’s not true. We did hire agents who had been beating on National Steel and Shipbuilding. They came to me, I didn’t go to them. They had spent a hell of a lot of time trying to ferret out some of these things here. I remember particularly in the inventory treatments of the steel parts and plates and things that were left over. How did you treat those? Did you treat them as scrap or did you treat them as common inventory? And I remember Henry Miller, who was kind of the head of the two guys there, he said, “Christ, I’m getting so goddam tired of this shit. If you ever need a good tax man, let me know, because I’m resigning.” And I said, “Sure, we’d love it.” And then we actually put him in charge of everybody’s tax returns. He was our IRS; he looked over all our returns. He’s the guy that brought to my attention the fact that I was using U.S. National Bank stock indiscriminately as to its source and its cost under the bailment agreements. That was the basis of the state conviction, that I stole certificates from my family-held companies and made a profit on it, that it was theft and therefore I owed taxes.

Smith couldn't afford to stumble. Nearly all of his 720,000 USNB shares, 36 percent of the outstanding, were pledged with other banks and insurance companies as collateral for loans to Smith. If the stock dropped, the loans would come due. Smith saw to it that the stock didn't drop. — Forbes, 1975

Well, sure. I used bank stock as collateral to borrow money. Actually, I personally loaned National Steel a lot of money, but we couldn’t place the loans elsewhere, so I actually just grabbed a sack full of stock, went back East, and borrowed money and advanced it to the steel company. How the hell did those people know? They didn’t have any access to our books. It’s just conjecture.

As the debt of his private companies to the bank or Westgate mounted, the private companies urgently needed cash to repay loans or to service them. At this point Smith used a new gimmick. He would open secret accounts at USNB in the names of Westgate subsidiaries , then he would borrow the money on behalf of the subsidiaries from USNB and deposit the proceeds in secret accounts. The next step was for him to transfer the money from them to his private companies. The private companies could then pay off their loans to the bank. — Forbes

It’s Greek to me. I can’t understand what in hell they’re talking about. When the story came out, I raised hell with them, but it was done and published.

William Martins examination led to the eventual closure. He claimed that Smith's self-serving loans had grown from $20 million to $254 million.... Westgate's bankruptcy trustees have charged that “the peculiarly intimate relations" between C.A. Smith and the Comptroller's office benefit both at the expense of Westgate and the public. — Forbes

In a sense the comptroller was our boss and laid down the rules so we could open a bank, open a branch or sell one, do things. Anybody with an ounce of brains would try to be friends with your boss. But that doesn’t mean that the comptroller would lean our way. Over the years, the comptroller was actually kind of a political animal appointed by the administration, and it just makes sense to be friends with your boss. But the loans to Westgate subsidiaries never were more than 50, 60 million.

U.S. National Bank has loaned the Westgate California Corporation $160 million over the past four years, it was disclosed yesterday in court. The loans were undisclosed on books of Westgate. — San Diego Union, September 11, 1973

Well, it was not Westgate itself that was borrowing the money. It was the subsidiaries of Westgate, and it could well be that over a four-year period we would rack up that total amount a target figure of around $25 million, maybe 30, of loans, but they were revolving credits. It was 40, 50 million at a time.

Anybody who says these were loans to Westgate is just wrong. I think they just dubbed anything having to do with Westgate Seafood and the tuna clippers or canned fish or lobster or shrimp or any damn thing as Westgate California Cooperation.

We kept an eye on the percentage of loans that were out to Westgate subsidiaries. We had a target figure of around $25 million, maybe 30, 40, 50 million at a time.

And we used other banks continuously—on the East Coast, Chicago, Kansas City, Dallas. We had big lines of credit with them, carrying receivables for National Steel and Westgate Seafood. I would call on them to help carry excess loans. In other words, if our loans got a little bit heavy in U.S. National Bank, we’d endorse them and ship them out. And the relationship between the U.S. National Bank and Westgate California was most instrumental in getting enough credit to make everything fly. The other banks looked at that as added security.

The $1.2 billion bank was declared insolvent October 18, 1973, five month after Smith was forced out of any official position in the bank.—San Diego Union, June 27, 1974

The bank was never insolvent. Insolvent means that you can’t pay your depositors the money they have on deposit. If you pay off your depositors, you’re not insolvent. The bank was growing, growing, growing through all this time. It didn’t go down.

In the case of U.S. National Bank, the FDIC retained assets with a book value of $438 million. But much of that total includes bank loans which are of doubtful collectibility. About $345 million of the total represents indebtedness to borrowers connected with the bank's former president and controlling shareholder, C. Amholt Smith. — San Diego Union, December 13,1974

When Crocker Bank took over USNB, the stockholders at Crocker paid an $82 million premium for USNB as a growing business. But they had in their damn purchase agreement a clause that they could throw out of the deal any USNB assets that they didn’t want, and the FDIC would buy them for cash and take them over. Well, that was totally wrong. There was nothing wrong with many of those loans. They were low interest rates, like five or six percent. But Crocker didn’t want them and just fobbed off the loans to the FD1C, the public, and turned around and laughed like hell and invested the money in fed funds and other things. But that was a rape of the USNB stockholders that never should have happened. That was thievery, that’s all it was. There were quite a few Westgate-related loans that they threw back to the FDIC, but they were loans that the FDIC ultimately collected. They weren’t losses. But if you bought a bank and you had a chance to say, well, I don’t want this chair, give me money instead, you’d probably throw all the bad furniture out of the bank if you could. It was terrible.

A new board of directors was appointed to operate Westgate as part of the SEC settlement. Westgate, which has approximately $150 million in debts, entered Chapter X bankruptcy proceedings early this year. The FDIC claims it holds $90 million in loans made to Westgate by USNB. — San Diego Union, May 4, 1974

I was furious at what took place there in declaring the bank insolvent. For example, they sold the Westgate Plaza Hotel, and this was Herb Kunzel, president of Solar, who was appointed to head Westgate as bankruptcy trustee by his friend Judge Neilson. Kunzel was kind of the leader of the left-wing Republican Party, and I was on the very right wing, and there had always been personality clashes back and forth. I’d known Kunzel for years, and he and I were not even friends in high school. When he was appointed trustee, I practically died. He was the least qualified person they could have found.

So what would you guess they sold that hotel for? They sold it for $12 million. The guy paid $1 million down and then let the FDIC finance the balance of it at six percent carried over a long, long period of years. Why the goddam hell would they do that other than to tear us up? The hotel was no problem. The $12 million didn’t help anybody along, and the hotel was worth much, much more than that.

They did the same damn thing with everything. They were just sacrificing it. We had a produce company in Los Angeles that was the biggest produce house in the city, I believe. They sold the damn thing for $4 million. The guy that bought it turned around and sold to some foreign interest, I think, for $25 million. It was just looting, that was what it was.

It wasn’t like these companies had become bad loans. But they just gave them away after many, many years of hard work putting those things together. It just killed me. That hotel today is probably worth 80, 85 million. They sold the U.S. National Bank building for $21 million. Why sell it? What the hell for?

Financial losses are only the beginning of Westgate's headaches. Haskins and Sells, the auditing firm Westgate hired on to look at its 1970 books, insisted on qualifying its opinion on the conglomerate's business dealings. [Auditors] didn't think that $11.4 million in receivables could be collected and doubted that $30 million of the company's investments could be realized. The $11 million involved debts owed to Westgate by several San Joaquin land-development firms owned by business chums of Smith. The $30 million amount was money Westgate had sunk into Westgate Plaza Hotel, the Executive Hotel, and San Luis Rey Downs. The hotel resort group sustained operating losses of $2.7 million in 1970. Haskins and Sells was dismissed after its performance on the 1970 audit. — The Door, January 1971

True, we did dismiss them. We had been dealing with another large audit firm, and we’d always get into a hell of a brouhaha at the end of the year about how certain entries and transactions were treated. There are so many things on the books that can go one way or another way.

Supposing you’re planting an orange orchard. You could treat a hell of a lot of that as expense if you wanted to keep your profits down. Or you could capitalize it. Judgment calls. At National Steel, we could treat the residual leavings of steel plate and steel beams as scrap, if we wanted to. And yet you’d go into the scrap pile and pull out pieces that might fit in some subsequent construction job.

The Haskins and Sells people came out from the Hast Coast, and, gee, they were terrible in the way they looked at what we were trying to do. Instead of being constructive in how we treated these things, they took the negative part. They went out and looked at a ranch and said, hell, this place is worth only so much money. How the hell did they know? They didn’t have it appraised. It was just their own horseback opinion.

I remember we had a hell of a row with them up there about a piece of land that we had bought that was very productive. We sold it at a profit, and they wrote it down as if it was a very speculative property that could never amount to anything. It was a judgment call. And we did finally dismiss them.

Smith was convicted of signing false tax returns for '71 and '72, evading state income taxes in both those years, and grand theft of $8.9 million from Sovereign States Capital, one of his companies, in 1973. The grand theft charge involved a complex transaction in which Smith allegedly sold surplus stock certificates and shareholder advances of the San Diego Padres, which he once owned, to Sovereign States for $8.9 million. Smith in turn paid the same amount to reduce his debt to Sovereign States. — San Diego Union, May 31, 1979

We established Sovereign States Capital in the ’50s primarily as the arm in our farming activity and various land and farm developments that we were involved in. Sovereign States never borrowed a dime from USNB.

When I bought the Padres, it was a minor-league team. I paid about $300,000 or thereabouts for it. The $12 million figure was what it cost to get into the major leagues. I had to borrow from banks to pay the other clubs in the league, a million dollars a copy, to buy our way into the league. I don’t remember where I borrowed it from. I think I got a big chunk of it from the Marine Midland Bank in New York, maybe five or six million. The loans were secured by bank stock and by Padres stock, and when I sold the franchise to Kroc, of course, I did not sell the stock of the Padres organization. That was kept to be liquidated. He just bought the franchise and the assets. The $12 million from Kroc went to pay the notes that I had borrowed from the other banks to acquire the franchise from the major-league association.

I sold the Padres to Ray Kroc at a luncheon table. I wanted to get rid of the team because we were losing our shirt in the damn thing. We had been approached by a group from Washington, D.C. to buy the team. I’d agreed to sell it to them, so they gave me a good-faith deposit. But when the city heard about it, they were ready to tar and feather me for losing the team for San Diego. I don’t know who the hell they thought the team belonged to. But anyhow, under pressure I backed away and gave the Washington people back their dough. It was $100,000, and my wife Helen had to write them the check.

Buzzie Bavasi, who ran the team, called me up one day and said, hey, I want you to have lunch with some people that might be interested in the Padres. So we had a private luncheon at the Westgate Plaza hotel. Everybody was milling around, about 20 or 25 people. And some man sitting next to me at the table, who I’d never seen before — I didn’t really meet him — we talked about everything under the sun except the Padres. So he says to me, “I hear you own the Padres.” “Yes, I control it.” And he said to me, “I hear you might possibly sell it.” I said, “Yeah, I’m thinking about it.” He chewed on his lunch a little bit, then he said to me, “What do you want for it?” Great negotiation. He caught me flatfooted. I didn’t know what to say.

I remembered I had invested about $12 million in it, so I said, “Well, $12,500,000.” Christ, I could have said 20 just as easily. He thought for a minute, and he said, “I’ll take it.” That was it. He said, “I’ll have my lawyers get in touch with you.”

So as we were moving out, I got over alongside of Bavasi and said, “Christ, who the hell is that jerk?” He was a very nondescript-looking guy. Bavasi said, “Jeez, don’t you know?” “No, you didn’t introduce me.” “He’s the guy that owns McDonald’s.”

As we sauntered out in the lobby, Kroc says, “Is there a phone around here somewhere?” So he got on the phone and in a very high-pitched voice he said, “Mommy, I bought us a baseball team today.” There was a long silence, but I imagine what she said to him. He hung up the phone and left, and that’s the only time I really ever saw the guy.

I kicked myself all over the lot afterwards. If Buzzie Bavasi had told me who the hell this fellow was, I’d have been a little sharper, but I thought he was just making conversation. He just took me off my feet when he said he’d take it. And then he and Bavasi got into a hell of a brouhaha that I got hauled into, because Bavasi thought he was going to be smart and tell Kroc he bought the team but he didn’t buy all the equipment that went with it. He tried to keep it. And Kroc just got madder than hell. He said, “You made a deal, Mr. Smith, and I expect you to honor it.” I said, “What the hell’s the problem?” “Bavasi won’t turn over the baseball bats and the uniforms and all the other gear to me.” I think Bavasi thought Kroc just bought the franchise, but that was a shabby thing for him to have done. So I said, “As far as I’m concerned, you bought the team, and the team has to have uniforms and bats, so you get them.”

The Padres’ brown uniforms came about partly because of National Steel. We had painted a lot of the buildings brown, and I was always climbing around there and getting brown paint or rust on myself, so I just fell into the habit of buying brown suits. So some of the people in the Padres’ management thought they were pleasing me by selecting brown uniforms for the team.

Now the Padres are another case of something that I did that brought credit and profit to somebody in the community. It’s helped put San Diego on the map, and yet I walked out of it with nothing. I get sucked into these things, I think, more as a kind of civic undertaking, something like an athletic contest you get yourself into and try to make it go and put it over.

MR. SAN DIEGO GOES TO JAIL

In 1975 I knew that they were threatening to indict me. They wanted me to appear before the grand jury and testify. My attorney said, hell, no, you’re not going to go down there and testify to those guys and let them poke you to pieces. They’ll find something that they can hang you for. So they actually went forward with it. I remember I was in the hotel with Judge McCue, the bankruptcy judge. We were going over some things that needed to be resolved in the liquidation. And this plainclothes guy comes in and arrests me. And the goddam bastard, we were walking down the street from the hotel to county jail, and about a block away from the jail he said, “I’ve got to put the cuffs on you.” “For Christ’s sake, what for?” “Well, I have to do it.”

So they put the cuffs on my associate Phil Toft and me and walked us in, just to humiliate us, that’s all it was, because of the TV cameras and everything. The press was all set; they knew what was happening. They made us look like a bunch of rum runners.

The case finally went to trial in 1977. And my attorney said that it was up to them to prove the charges, and if they got me on the stand and started me talking, then they could just rip me up one side and down the other. He said to just go ahead and let them put their case on. He said, “They haven’t laid a glove on you.” He always said that. “They haven’t laid a glove on you.” I wish to hell I would have talked at the trial, because I think it would have made the jurors or the press — anybody — have my viewpoint. It never has been really brought out very far. They convicted me of grand theft and tax evasion, and it was upheld on appeal.

Jail was a terrible experience, of course. We had people approach the probation department and, because of my age — I was about 84 then — they’d arranged that I would be transferred quickly, right out to the work furlough center. They said I’d have to go downtown to jail for just a short time. So late in November 1984, I left my house in La Jolla and went to county jail, and it stretched out week after week after week. Finally, I was all ready to leave jail, and they had my gear all packed and we went out the back door, the lieutenant said, “Gee, I’m real sorry, but we can’t let you go. We’ve got to go back.” “What the hell for?” I was only supposed to be there a short time just to be able to go through the machinery. “I don’t know,” he said. “There’s some orders some' place.” I know what it was, I think. Ed Miller probably said let the son of a bitch cook there. And I was in there for 90 days. It was terrible, terrible.

In jail they had tiers of bunks, and one day I threw my hand back, like throwing the bed covers back, and there was a wire sticking down at the bottom of the mattress, and I ripped the skin off my hand. The nurse said I had to go to the hospital, and they put shackles on me to take me there. When I got to the hospital, I saw people I knew. I never forgot that. It’s a process of humiliation, that’s all it was.

I served my work furlough at their station around 32nd and Market, I think. I will say that the people out there were very nice. I’d asked to go out to one of the camps in the mountains. I thought it would be nice to get away. But because of my age they wouldn’t let me go, but they took real good care of me, medication-wise, and gave me an outside job. I finally became the superintendent of the grounds and had other people working under me there, which I liked — gardening. I was there about five months and then turned loose.


Helen stayed right in there like a real trooper through all the troubles. She even put up money for bills and attorneys’ fees. She was a real trooper. I also asked her for help, which was money I gave to my daughter Carol, and Helen didn’t appreciate that at all. When I asked her for a check, she would ask me who it should he made out to. I would give her some corporation name, hut she knew I was giving it to Carol.

Then one day while I was still on work furlough, Helen and Carol and I were at a meeting down at the courthouse to try to straighten out some affairs. And I think Carol asked a question or was trying to answer a question from Helen. And when Carol said she didn’t ever borrow any money from Helen, Helen just got furious because she thought I was turning on her in favor of Carol and trying to help Carol avoid paying her. Helen had a very explosive character, and she just popped her helmet and said she never wanted to see me again or talk to me again, and that was it. The whole divorce started as a money triangle between Helen and me and Carol.

And for another thing, Helen had proposed a plan to take over Carol’s ranch, Valley Lane Farms; she told me she would straighten out Carol’s affairs and then give the ranch back to her. But I don’t think she really meant that. I think she was going to take over the ranch, period. And Carol was smart enough to see through it and raised hell about it, so it didn’t happen.

Actually, Helen paid a hell of a lot of the expenses connected with the attorneys and the trial. She was very supportive of me until that one fatal day when she just blew her goddam stack.

Helen was always threatened by my close relationship with my daughter. I remember one time we were at a big dance together, and Helen was across the room when the music started. So I turned to Carol and grabbed her for the first dance. Oh, boy, Helen didn’t like that at all.

While I was getting ready to leave the work furlough center, they just served the divorce papers on me, and that’s how I found out that Helen had filed suit. And she put my things in boxes and packed them off to a warehouse. I believe she kept a lot of other things at the house that she said she couldn’t find. I knew they were in the house because I left them there. It bugged Carol no end about those things. But what the hell are you going to do when you ask for something and they say they can’t find it? I had an ivory collection that was quite valuable to me. It came from a lot of prominent people around the country who were Republicans who sent them to me. And a collection of guns and some rugs.

Helen and I had entered into a property agreement after we were married. Her earnings were hers, mine were mine. So there was no property settlement.

Helen was supposed to give me a certain amount of spousal support, $5000 a month, which was way, way out of line. But I accepted it rather than get into a big fight with her. She brought the divorce action against me, and where one spouse is thrown out of the house, so to speak, it’s up to the one that retains the house, the property, and everything to pay the dispossessed spouse a sum equal to what he used to spend on his normal living expenses. On that basis, she should have been paying me 15 or $20,000 a month. She did start to pay me something for a while, then she quit, then she started again, then she quit again. I’m living now pretty much just on Social Security.

IN RETROSPECT

When I think back over my life and what I did that was right or wrong, I can’t help but think of all the things that I created in my lifetime just out of hard work and ingenuity. We saved the U.S. National Bank from going belly up. We saved National Iron Works and created National Steel and Shipbuilding. That’s one of the largest employers still left here. There’s five or six thousand men and women down there living off the machine I built; and I did build it, nobody else did. We put the canneries to work and helped them become tine of the major contenders nationwide, and we developed real estate.

And the Francis Parker School in Mission Hills. It had been going downhill for many years, ready to fall on its can. I was interested in it because my kids went there. So I finally said, look, turn me loose. I’ll renovate the school, and you people will not be involved financially. About 35 volunteers from National Steel went up there one weekend and renovated the place. It turned the school around completely. It got on its feet and attracted new students.

We took the Star of India down to National Steel and completely rebuilt the damn thing. We saved the Cuyamaca Club. We saved the baseball team for San Diego. We built Westgate Park. And we did a lot for police officers’ wives whose husbands lost their lives in the service. We gave them an annuity for a period of time to kind of put them on their feet. We didn’t publicize it. If it had been known, they would have said the bastard is just doing that to get in with the cops. Whatever we did, we didn’t want to publicize it.

I think I can say that whatever the hell I was involved in was creative, it was not destructive. I wasn’t milking the goddam companies and sticking it in a hole in the water or shipping the money to Switzerland or anything like that. People might have criticized the way some of the things were done, but who the hell were they to criticize when they were not in there building the things that finally came out of our efforts?

I think what happened was jealousy, for one thing. And people are mean; when they have an axe to grind about some minor thing, they blow it up into a major thing. Certainly there was a hell of a contest on between Silberman and Peterson and our group there. I’m sure there were people that didn’t like me because we were doing things or being successful. Anybody that gets out in front, people start throwing rocks at them. Politicians, movie stars, anybody is a target. If you stay back in the pack, you’re all right.

But, by God, I’m working harder today than I ever did in my life, and with fewer tools to work with. Some real friends are still by me and have helped. There are few of them compared to how many there used to be at the banquet tables, the fun parties. Johnny Alessio has remained a good friend. Dick Nixon is still a friend. He was here not so long ago, and he was up at Mille Fleurs — don’t go there unless you have to, it’s very, very expensive. But anyway, he was phoning around trying to find me, but I was away somewhere.

A lot of people go through this world and they take, they consume, but they don’t leave the world any better than it was. I can feel comfortable in my own soul that I contributed a hell of a lot to the state of California and to the United States, as a matter of fact, with the different things I’ve done. Maybe a lot of other people don’t know about it, but I know I did it. And for this I’ll always feel very comfortable no matter how many rocks and brickbats are thrown.

This is the conclusion of a two-part series.

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