Charles and David Koch: The men who tried to buy America
Charles and David Koch are among America’s richest men - and have put their money to nefarious use, many believe. From funding the Tea Party to lobbying against measures to curb climate change, they are the scourge of progressive, liberal opinion. So how did they happen? Daniel Schulman reveals the roots of America’s right-wing pin-ups
Monday 02 June 2014
Morris eased the pickup truck to the side of the road. The wide, busy thoroughfares of 1950s Wichita, Kansas, were just five miles southwest, but here on the largely undeveloped outskirts of the city, near the Koch family’s 160-acre property, the landscape consisted of little more than an expanse of flat, sun-bleached fields, etched here and there by dusty rural byways. The retired Marine, rangy and middle-aged, climbed out of the truck holding two sets of scuffed leather boxing gloves.
“OK, boys,” he barked, “get outside and duke it out.” David and Bill, the teenaged Koch twins, were at each other’s throats once again. Impossible to tell who or what had started it. But it seldom took much. The roots of the strife typically traced to some kind of competition – a game of hoops, a round of water polo in the family pool, a foot race. They were pathologically competitive, and David, a gifted athlete, often won. Everything seemed to come easier for him. Bill was just 19 minutes younger than his fraternal twin, but this solidified his role as the baby of the family. With a hair-trigger temper, he threw the tantrums to match.
David was more even-keeled than Bill, but he knew how to push his brother’s buttons. Once they got into it, neither backed down. Arguments between the twins, who shared a small room, their beds within pinching range of each other, transcended routine sibling rivalry.
Morris always kept their boxing gloves close at hand to keep the brothers from seriously injuring each other when their tiffs escalated into full-scale brawls, as they often did. The brothers’ industrialist father had officially hired the former soldier to look after the grounds and livestock on the family’s compound. But his responsibilities also included chauffeuring the twins and their friends to movies and school events, and refereeing the fights that broke out unpredictably on these outings.
Holding their boxing gloves, Morris summoned the feuding twins from the truck. They knew the drill. He laced up one brother, then the other. The boys, both lean and tall, squared off, and when Morris stepped clear, they traded a barrage of punches.
A few minutes later, once they’d worked it out of their systems, Morris reclaimed the gloves and the brothers piled breathlessly into the cab of the truck. He slipped back behind the wheel, started the engine, and pulled on to the road.
Another day, another battle.
Pugilism was an enduring theme in the lives of the Koch family. The patriarch, Fred Koch – a college boxer known for his fierce determination in the ring – spent the better part of his professional life warring against the dark forces of communism and the collective might of the nation’s major oil companies, which tried to run him out of the refining business. As adults, Fred’s four sons paired off in a brutal legal campaign against one another over the business empire he bequeathed to them, a battle with plotlines that would seem far-fetched in a daytime soap opera. “It would make Dallas and Dynasty look like a playpen,” Bill once said.
The roles the brothers would play in the saga were established from boyhood. Fred and Mary Koch’s oldest son, Frederick, a lover of theatre and literature, left Wichita for boarding school in the North-east and barely looked back. He was uninterested in the family business and a disappointment to his tough, bootstrapping father. An intensely private man who assiduously avoided the public eye, Frederick became a prolific arts patron and collector, with a passion for restoring historic properties stretching from France’s Côte d’Azur to New York’s Upper East Side.
Their father saw glimpses of himself in his rebellious second son, Charles, whom Fred Koch moulded from an early age into his successor. After eight years in Boston studying chemical and nuclear engineering at MIT and working for a consulting firm, Charles returned to Wichita to learn the intricacies of his family’s oil refining, engineering, and ranching businesses.
David and Bill followed Charles (and their father before him) to MIT and eventually they, too, joined the family business. But that’s where their paths diverged. David became Charles’s loyal wingman, while Bill, still nursing childhood resentments, grew at first into a gadfly and then, in his brothers’ eyes, a hostile presence within the company. The public would know Bill best for his flamboyant escapades: as a collector of fine wines who embarked on a litigious crusade against counterfeit vino, as a playboy with a history of messy romantic entanglements, and as a yachtsman who won the America’s Cup in 1992 – an experience he likened, unforgettably, to the sensation of “10,000 orgasms”.
Charles and David, meanwhile, built their father’s Midwestern empire – with about $250m in yearly sales and 650 employees in the late 1960s – into a corporate behemoth that Fred Koch would scarcely recognise, a company with $115bn in annual revenues, more than 100,000 employees, and a presence in 60 countries. Under Charles’s leadership, Koch Industries grew into the second largest private corporation in the United States (only Cargill, the Minneapolis-based agribusiness giant, is bigger). Koch made its money the old-fashioned way – oil, chemicals, cattle, timber – and in its dizzying rise, Charles and David amassed fortunes estimated at $41bn apiece, tying them for sixth place among the wealthiest men on the planet. (Bill ranks 329th on Forbes’s list of the world’s billionaires.)
They preferred to operate quietly – to run, as David once put it, “the biggest company you’ve never heard of”. But Koch Industries’ products touch the lives of all Americans – from the gas in their tanks to the steak on their forks and the fertiliser that helps their crops grow, and from the plasterboard, windowpanes, and carpets in their homes and offices to the paper towels and disposable cups they keep in the pantry. The company ranks among the world’s largest commodities traders, operates three ranches that sprawl over 425,000 acres, and processes some 750,000 barrels of crude oil daily. A day doesn’t pass when Americans don’t encounter a Koch product, though they often probably don’t know it. Koch Industries is omnipresent, but the Kochs managed to remain so under the radar that many Americans confuse the pronunciation of their surname with that of a former New York City mayor, Ed Koch, rather than pronouncing it like the soft drink Coke.
David has lived the quintessential billionaire’s life. He traded provincial Wichita for New York City, where his name is etched into the façades of some of Manhattan’s most important cultural landmarks, including the Lincoln Center theatre that’s home to the New York City Ballet. When not in his ocean-front mansion in Southampton, his Palm Beach villa, or Aspen ski lodge, David and his family reside in a storied Park Avenue high-rise, former home to John D Rockefeller Jr, among other heirs to vast industrial fortunes.
Charles, by contrast, remained in his hometown, a city with an unassuming, head-down and entrepreneurial character that matched his own. He lives in a modern, boxy mansion of stone and glass on the same compound where he grew up – just the multibillionaire next door in his east Wichita neighbourhood, where strip malls and chain restaurants have overtaken the once wide-open terrain.
Schooled by his conservative father in the evils of government, Charles gravitated to libertarianism, a philosophy that advocates the maximum of personal and corporate freedom and the most minimal government, if only to tend to the defence of these liberties. He grew to believe zealously in the power of markets to guide human behaviour, and to loathe the government regulations and subsidies that distorted markets – and behaviour itself – by trying to impose false order. Blending the ideas of the libertarian movement’s intellectual forefathers, Charles devised a unique management philosophy that placed a relentless emphasis on the bottom line, where even the lowliest pipefitter was meant to envision himself as an entrepreneur. This system, which Charles called Market-Based Management, helped him to build a conglomerate that generates massive profits, but which has often found itself in regulators’ crosshairs after blood was spilled or waterways were contaminated.
Charles has done more than just construct one of the world’s largest industrial empires. With David, he has spent decades trying to remake the American political landscape and mainstream their libertarian views. Together, the brothers pumped hundreds of millions of dollars into this endeavour. Unlike other major political donors, they offered more than just money; a strategic vision. They funded academics, think-tanks, and political organisers to coalesce public support around their causes. The Tea Party movement that rose up after the election of President Barack Obama germinated, in part, from the intellectual seeds that the Kochs had planted over the years. Though the brothers downplayed any connection to this cadre of irate citizen activists, they helped to provide the key financing and organisational support that allowed the Tea Party to blossom into a formidable political force within the Republican Party – one that paralysed Congress and eventually ignited a GOP civil war.
Politicians, as Charles sees it, are merely vessels for the ideas you fill them with – or as one of his political advisers once put it, stage actors working off a script produced by the nation’s intellectual class. So while creating and financing the intellectual infrastructure to promote their ideology, he and David have backed a constellation of conservative candidates to do battle in the political arena – politicians such as Wisconsin’s Scott Walker, who upon assuming the governor’s office in 2011, staged a fractious showdown with the public employee unions of his state; or South Carolina’s Jim DeMint, one of the ringleaders of a Republican revolt against raising the debt ceiling that brought the nation to the brink of default. Charles and David brought their political resources to bear as never before during the 2012 election, which Charles called “the mother of all wars”. Yet they emerged from the crucible of the campaign having gained little more than a reputation as cartoonish robber barons, all-powerful political puppeteers who with one hand choreographed the moves of Republican politicians and with the other commanded the Tea Party army. As with all caricatures, this one bore only a faint resemblance to reality.
For all the unwanted attention that the Kochs received during the 2012 campaign – including the “other Koch brothers”, as the media sometimes dubbed Frederick and Bill – America came through that political battle knowing little about who they really are. Like other great dynasties, the Kochs have a mythology of their own that polishes the rough edges of history into a more pristine version of the truth. And the family’s legacy (corporate, philanthropic, political, cultural) is far more expansive than most people realise – and will be felt long into the future.
This is an edited extract from ‘Sons of Wichita: How the Koch Brothers Became America’s Most Powerful and Private Dynasty’, by Daniel Schulman (Grand Central Publishing, £17.95)
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