Series V. Hughes Tool Company, 1912 to 1990

The Hughes Tool Company served as the primary holding company for many of the subsidiary companies created by Howard R. Hughes, Jr. between 1920 and 1972. The company's origins date to 1908, when Howard R. Hughes, Sr. patented a unique rotary drill bit for oil rigs. Partnering with Walter Sharp, the two men formed the Sharp-Hughes Tool Company to manufacture the new bit. Sharp died in 1912, and in 1914, his widow sold her share of the company to Hughes, who renamed it Hughes Tool Company in February 1915.

After Hughes, Sr.’s death in 1924, Hughes, Jr. inherited seventy-five percent of his father’s company. In 1925, he gained full control of Hughes Tool Company and immediately expanded and diversified his holdings. Chartered separately from Hughes Tool Company, Hughes also took control of the Caddo Rock Bit Company in 1926, renaming it The Caddo Company, Incorporated and establishing it as his new film production arm; the profits from Hughes Tool Company provided financial backing for this and many later ventures.

Between 1929 and 1936, the Hughes Tool Company financially divested into separate companies, with Hughes Industries Company, Incorporated holding the majority of Hughes’ business interests. In September 1936, the various corporations, divisions, and holdings were rolled back into a newly formed Delaware corporation, again named the Hughes Tool Company (ToolCo). The Houston, Texas-based Gulf Brewing Company remained as an independent corporation within ToolCo.

In 1939, ToolCo acquired Trans World Airlines (TWA), holding the company until 1966. Between 1949 and 1958, ToolCo held controlling interest in the RKO Radio Pictures suite of film, theatre, and radio companies, which continued to operate under the RKO name. In 1968, Hughes sought another airline venture, completing the acquisition of Air West – renamed Hughes Air West – in 1970. During this same period, ToolCo acquired seven casino-hotels, a television station, a radio station, a regional airport, and hundreds of acres of commercial and residential property in Las Vegas, Nevada.

Hughes sold the original tool manufacturing arm of Hughes Tool Company to a consortium of his senior employees in 1972; they retained the company name and offered an initial public offering, netting Hughes 150 million dollars. The real estate holdings of ToolCo were transferred to the Summa Corporation as a new holding company, while the aircraft division was vested to the Howard Hughes Medical Institute, founded as a research facility in 1951. The now public Hughes Tool Company merged with Baker International in 1987, bringing the company to a close after seventy-two years.

Sources:

Kuldell, R. C. “Letter.” The Atlanta Constitution. March 27, 1931.

Frank, Peter H. “Hughes and Baker in Merger.” The New York Times. October 23, 1986. Accessed April 21, 2022. https://www.nytimes.com/1986/10/23/business/hughes-and-baker-in-merger.html

“Hughes Tool: its Background.” The New York Times. October 23, 1986. Accessed April 21, 2022. https://www.nytimes.com/1986/10/23/business/hughes-tool-its-background.html