Bloomberg

Samsung Woos US Chip Buyers With Tech Advances, Texas Focus

(Bloomberg) — Samsung Electronics Co. announced an aggressive five-year plan to lure US chip buyers with more advanced technology, aiming to produce transistors that are just 1.4 nanometers wide by 2027.

The company’s chip contract-manufacturing unit — known as a foundry — is looking to triple its revenue by that year from the 2021 level, Executive Vice President Moonsoo Kang said at a briefing Monday in San Jose, California. To get there, the business will need to make several technological leaps and further inroads in the US market for outsourced chips.

Samsung shares rose 4% in Seoul on Tuesday after falling by almost a third this year with rising costs and a downturn in the memory market.

The Suwon-based company is the world’s largest chipmaker by revenue, but its foundry business is playing catch-up with Taiwan Semiconductor Manufacturing Co., which has a commanding lead in the market and top-of-the-line production capabilities. Samsung recently lost out to TSMC on an Nvidia Corp. order to produce the RTX 40 series of graphics cards, which moved to a 4-nanometer process.

Originally a latecomer to the foundry business, Samsung’s been in a hurry to advance its technology ahead of expanding capacity. The Korean chipmaker now sees its 3nm chip process as its “game changer,” Kang said, and first started production at that node ahead of TSMC. It’s pouring three times more resources into 3nm production than it did with previous tech generations in an effort to meet client demand.

Samsung executives at the briefing said the company’s yields — the percentage of functioning chips per production run — are now among the best in the industry. And it’s racing to stay on the cutting edge of technology. The company aims to take the lead in advanced chipmaking by starting mass production of second-generation 3nm chips in 2024 and then 2nm parts in 2025. That will set the stage for the 1.4nm products two years later.

Part of Samsung’s pitch to US customers is its decision to manufacture in America. Samsung has an existing plant in Austin, Texas, and is building one in the nearby city of Taylor. That new plant, which is set to begin operations in 2024, is likely to use the latest production methods, such as 3nm technology.

What Bloomberg Intelligence Says

Growth at global foundries, led by TSMC and Samsung, may exceed semiconductor averages in the coming decade, we believe. Beyond leveraging the rise of fabless chipmakers, the foundries may fuel growth with more orders from integrated device manufacturers. By outsourcing jobs to multiple foundries, fabless chipmakers may enjoy the benefits of improved supply security, lower costs, quicker product switches and better manufacturing technology support than producing chips at in-house facilities.

— Charles Shum, BI analyst

Click here for the full research

Samsung also aims to triple its capacity of leading-edge manufacturing by 2027. It has no plans to add to its limited availability of older types of production.

But TSMC is also beefing up its US presence. And Intel Corp., which Samsung overtook to become the world’s biggest chipmaker, is adding capacity in both the US and Europe — part of an effort to balance the industry’s heavy reliance on Asian manufacturing.

Samsung could become an even bigger manufacturer in Texas if needed, Kang said. The company has secured enough sites in the region to let it grow to meet demand.

(Updates with share price)

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Son of Jailed Saudi Cleric Says Life Threatened, Seeks Asylum in UK

(Bloomberg) — The son of a prominent jailed Saudi cleric has fled the kingdom and applied for asylum in the UK, saying his life was threatened by Saudi authorities. 

Nasser Al-Qarni said he was warned by Saudi state security officials that he would be put in jail or executed if he criticized the treatment of his father, Awad Al-Qarni. The elder Al-Qarni was arrested in 2017 for tweeting criticism of the kingdom, according to a letter from United Nations human rights envoys.

Bloomberg News couldn’t independently verify the younger Al-Qarni’s allegations of being threatened, which he made during an interview with Bloomberg News at a hotel in central London.

Saudi Arabia’s Foreign Ministry, Center for International Communication and embassies in Washington DC and London didn’t respond to requests for comment. A representative for the UK government’s Home Office said the agency doesn’t comment on individual cases.

The father, Awad Al-Qarni, was arrested in September 2017 as part of a crackdown on Saudi citizens who had been critical of the government. Then-Foreign Minister Adel Al-Jubeir said at that time that those jailed, which included clerics, academics and businessmen, “were pushing an extremist agenda.” 

Saudi Minister Says Detainees Were ‘Pushing an Extremist Agenda’

Al-Qarni, who is independent of the official religious establishment, last re-tweeted a message to his two million Twitter followers in September 2017. He was a professor at two Saudi universities and had criticized the Saudi government’s arrests and enforced travel bans targeting intellectuals, according to a letter authored by a group of six United Nations human rights envoys in November 2019, which flagged concerns about Al-Qarni’s case and the “unlawful imposition” of the death sentence on him and other prisoners.

Al-Qarni was arrested and charged based on the content of his tweets, according to the U.N. envoys’ publicly available letter. The Saudi public prosecutor had sought the death penalty for Al-Qarni and charged him with a series of alleged offenses, including “incitement to offend the leaders of other States,” “incitement to fight” and supporting the Muslim Brotherhood, which is designated a terrorist organization in Saudi Arabia, the letter stated.

The Saudi government wrote in a response to the U.N. envoys that Al-Qarni was “arrested for committing several offenses punishable under the laws applicable in the Kingdom” and added it was “committed to adhering to the provisions and rules of international human rights law.”

Human Rights Watch said in a September 2017 report that the arrest of Al-Qarni and other clerics “fit a pattern of human rights violations against peaceful advocates and dissidents, including harassment, intimidation, smear campaigns, travel bans, detention and prosecution.”

Saudi Prince’s New Role Gives Immunity on Khashoggi, Lawyer Says

The crown prince, who took on the additional role of prime minister last week, has rapidly transformed the kingdom, loosening social restrictions and seeking foreign investment. At the same time Saudi Arabia has embarked on a widespread crackdown on government critics — from rights activists to clerics. 

The murder of Saudi critic and columnist Jamal Khashoggi, in the kingdom’s Istanbul consulate in 2018 made the crown prince a pariah in the West. But amid a surge in oil prices earlier this year, US President Joe Biden visited the kingdom. The crown prince has said he didn’t order Khashoggi’s killing but said he took responsibility for it as de facto ruler. 

“Under Mohammed bin Salman, the situation in Saudi Arabia has really badly changed,” said the jailed cleric’s son, Nasser Al-Qarni, 24, who spoke through an interpreter. “If any Saudi person would like to express their opinion they have two options: face imprisonment, which could lead to the death penalty. Or you live with your mouth shut and you cannot say a word that criticizes him or the authorities.”

Al-Qarni denied the allegations against his father, whom he said was also charged with owning banned books and comments made on Twitter including advocating for the fair treatment of political prisoners. 

He said he had traveled to London to claim asylum, raise awareness of the crackdown in Saudi Arabia and to try to save his father’s life. A video posted on his Twitter account on Oct. 1 announcing he had left Saudi Arabia has been viewed about 1.4 million times.

Al-Qarni said he had attempted to advocate for his father’s release in Saudi Arabia and was interrogated by state security officials on several occasions. “They wanted me to adopt their version of the story,” he said, adding that the officials told him he was prohibited from leaving the country. He recently obtained a passport and fled the country without informing any of his family members, he said, first traveling to Jordan and then onward to London, where he arrived in mid-September.

Several critics of the Saudi government have faced punishment for using the US social-media platform. In August, Salma Al-Shehab, a Saudi student at Leeds University in England, was sentenced to 34 years in prison in part because she maintained a Twitter account and used it to follow and retweet dissidents, according to Human Rights Watch. Al-Shehab was detained in January 2021 after returning to the kingdom.

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Apple iPhone Exports From India Doubling in Boon to Modi’s Plan

(Bloomberg) — Apple Inc.’s iPhone exports from India crossed $1 billion in the five months since April, according to people familiar with the matter, signaling the South Asian nation is making progress with its bid to become a force in electronics manufacturing.

At the current rate, outbound shipments of India-made iPhones, mainly to Europe and the Middle East, are set to reach $2.5 billion in the 12 months through March 2023, the people said. That’s almost double the $1.3 billion worth of iPhones India exported in the year through March 2022, the people said, asking not to be named as the data isn’t public.

While India makes up just a small fraction of iPhone output, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as factory to the world. Apple, which long made most of its iPhones in China, is seeking alternatives as Xi Jinping’s administration clashes with the US government and imposes lockdowns across the country that have disrupted economic activity.

“The healthy growth in Apple’s manufacturing scale and export shows India is gradually assuming an important position in the company’s China plus one strategy,” said Navkendar Singh, an analyst at tech researcher IDC. “And for India, this a big sign of the success of its financial incentives scheme.”

Apple representatives didn’t immediately respond to an email seeking comment. The Cupertino, California-based company flirted with the idea of making its prized iPhones in India for years before Modi’s $6 billion incentive push in 2020 drove the US tech giant to get its suppliers to ramp up production.

Apple’s key Taiwanese contract manufacturers Foxconn Technology Group, Wistron Corp. and Pegatron Corp. currently make iPhones at plants in Southern India. All three won manufacturing incentives under a federal government plan.

To be sure, India is still far behind China. About 3 million iPhones were made in India last year, compared with 230 million in China, according to Bloomberg Intelligence estimates.

The devices exported from India from April to August this year comprise iPhone 11, 12 and 13 models, and exports of the new 14 line will begin soon, the people said. Apple began making the iPhone 14 in India last month — sooner than anticipated — after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks.

Beyond smartphones, India is drawing up plans to boost the financial incentives for tablet and laptop makers, hoping to woo Apple to make MacBooks and iPads locally as well as attract other brands.

But moving out of China, where Apple has built a deep supply chain for close to two decades, isn’t easy. A Bloomberg Intelligence analysis estimated it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones are being made.

 

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Billionaire Anil Agarwal’s Sterlite Tech Eyes Sales Jump on 5G Push

(Bloomberg) — Sterlite Technologies Ltd., an Indian maker of optical fiber and telecom cables, is expecting a 25% surge in annual sales by March 2023, boosted by exports as well as a homegrown push for the newly rolled 5G services.

The Pune-based company, controlled by a firm of billionaire Anil Agarwal who set up the Vedanta Group, is eyeing sales of as much as 72 billion rupees ($884 million) for the current fiscal year, Ankit Agarwal, company’s managing director said in an interview in New Delhi. Sterlite Tech posted sales of 57.54 billion rupees for the year ended March 2022.

Sterlite, which earns a little under 60% of its revenues from overseas markets, is expecting local sales to jump. Indian wireless carriers, including the one led by Mukesh Ambani, Asia’s second-richest person, plan to fork out billions of dollars as they kicked off their 5G networks earlier this month in the country of a 1.4 billion people with more than 600 million smartphone users.

Sterlite Tech plans to invest 8 billion rupees by March 2024 to increase fiber cable manufacturing to meet the expected demand surge, according to Ankit Agarwal who is part of the Vedanta Group founder’s family.

Bullish

Even though India is the last large Asian market to get on to the 5G bandwagon — South Korea was the first to roll it out three years ago — telecom firms and equipment makers are bullish on the high-speed wireless technology that’s touted to revolutionize everything from gaming to manufacturing and health care.

Ambani’s Reliance Jio Infocomm Ltd., India’s largest wireless operator, will provide the 5G network to the entire country by December next year, while No.2 rival Bharti Airtel Ltd. plans to do so by 2024. The only other local private sector operator, Vodafone Idea Ltd., also aims to begin the rollout “soon.”

Billionaire Agarwal’s conglomerate is now looking to tap more opportunities around the telecom sector’s supply chain. One of his closely-held firms and Taiwan’s Hon Hai Precision Industry Co., also known as Foxconn which assembles most of world’s iPhones, are planning to build a chipmaking facility in western India.

Sterlite Tech wants to become one of the three largest optic fiber firms globally, according to Ankit Agarwal, and will continue selling its non-core assets to generate funds toward that goal.

“We want to do fewer things,” he said. “But we want to be world class at those.”

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Stocks, US Futures Extend Gains in Broad Rally: Markets Wrap

(Bloomberg) — Stocks in Asia and US equity futures extended their advance as weak US manufacturing data damped bets on the Federal Reserve’s hawkishness.

The MSCI Asia Pacific Index rallied more than 2% to head for its highest in a week, sparked by a broad rebound in the region. Japan’s Topix stock benchmark jumped more than 3%, boosted by technology shares.

Treasuries climbed across the board, with the yield on the 10-year note extending declines after sliding 19 basis points on Monday. Stocks and US government bonds got a new lease of life after a disappointing US manufacturing report prompted traders to unwind bets for continued aggressive tightening by the Fed. The dollar fell.

Australia’s central bank surprised investors by raising interest rates by a quarter percentage point — ending a streak of outsized increases and sending the nation’s currency and government bond yields tumbling.

Read more: Wall Street Capitulation Calls Get Ever Harder as Stocks Bounce

In the latest sign the Fed’s five rate hikes totaling 3 percentage points may be taking their toll, the Institute for Supply Management’s gauge of factory activity fell to a more than two-year low. The Fed should consider stopping its tightening campaign after one more interest-rate hike in November, according to Ed Yardeni, a market veteran who coined terms like “Fed Model” and “bond vigilante.”

Fed speakers continued the drumbeat over rate hikes. New York Fed President John Williams said the US central bank has yet to raise interest rates to levels that are restricting economic growth, and tightening still has “significant” ways to go.

The Fed will continue to raise rates as it has made it clear that inflation is its number one target, according to Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “They’re gonna continue to do some things to get it down and I do think it’s gonna cause a recession next year, but I don’t think they’re gonna stop right away,” Landsberg said on Bloomberg Television.

China’s onshore markets will remain shut this week for holidays, while the Hong Kong exchange is closed Tuesday for the Chung Yeung Festival.

Elsewhere, oil traded around $84 per barrel after posting the biggest one-day gain since May as the market looked to OPEC+ to deliver a substantial cut in supply.

Brazilian assets soared after President Jair Bolsonaro secured his way to a runoff election against Luiz Inacio Lula da Silva as investors cheered on the incumbent’s better-than-expected showing and bet his leftist challenger will be forced to moderate his stances in the second stretch of the race. The real was the best-performing among the world’s major currencies Monday.

Key events this week:

  • Eurozone PPI, Tuesday
  • US factory orders, durable goods, Tuesday
  • Fed’s John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday
  • Eurozone services PMIs, Wednesday
  • OPEC+ meeting begins, Wednesday
  • Fed’s Raphael Bostic speaks, Wednesday
  • The Reserve Bank of New Zealand meets, Wednesday
  • Eurozone retail sales, Thursday
  • US initial jobless claims, Thursday
  • Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
  • US unemployment, wholesale inventories, nonfarm payrolls, Friday
  • BOE Deputy Governor Dave Ramsden speaks at event, Friday
  • Fed’s John Williams speaks at event, Friday

Will earnings disappoint and push equities to new lows? This week’s MLIV Pulse survey asks about corporate earnings. It’s brief and we don’t collect your name or any contact information. Please click here to share your views.

Some of the main moves in markets:

Stocks

  • S&P 500 futures added 1% as of 6:58 a.m. London time. S&P 500 Index rose 2.6% Monday
  • Nasdaq 100 futures climbed 1.2%. Nasdaq 100 Index advanced 2.4% Monday
  • Japan’s Topix index rose 3.2%
  • South Korea’s Kospi index surged 2.5%
  • Australia’s S&P/ASX 200 Index gained 3.8%

Currencies

  • The Bloomberg Dollar Spot Index was down 0.2%
  • The euro was up 0.2% to 0.9845 per dollar
  • The Japanese yen dropped 0.2% to 144.81 per dollar
  • The offshore yuan climbed 0.7% to 7.0547 per dollar
  • The British pound advanced 0.3% to 1.1328 per dollar

Bonds

  • The yield on 10-year Treasuries fell almost two basis points to 3.62%
  • Australia’s 10-year yield dropped 17 basis points to 3.73%

Cryptocurrencies

  • Bitcoin climbed 0.1% to $19,619
  • Ether rose 0.1% to $1,325

Commodities

  • West Texas Intermediate crude rose 0.4% to $83.97 a barrel
  • Gold was up 0.2% to $1,702.73 per ounce

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Venture Capital Giant NEA Appoints Its First European Partner

(Bloomberg) — New Enterprise Associates, one of the world’s largest venture capital firms, named Philip Chopin as its first Europe-based partner amid a broader expansion into the region. 

It’s the latest in a string of prominent US VC firms to push deeper into Europe, and follows Sequoia Capital and Philippe Laffont’s investment firm Coatue Management in hiring local teams. Bloomberg News previously reported on NEA’s possible hiring in March. 

NEA has struck previous deals in Europe from its US base, but Chopin said in an interview that “the consensus among the firm is it’s just easier if you have a team on the ground.”

Europe’s venture sector has boomed in recent years, deploying more than $100 billion across 2021 in a record year, according to a report compiled by investment firm Atomico. However, there remains a gap when it comes to growth financing that is holding European growth back, according to a separate report from venture capital firm Lakestar.

Chopin joins NEA from 83North, where he worked on investments in companies such as SellerX and HungryPanda. He will be based in NEA’s London office along with two colleagues, and there are plans to grow the team further, he said. 

NEA has invested in more than 36 companies across Europe, with a focus on the UK, Germany, France and Switzerland, the firm said in a statement. Chopin will concentrate on consumer, financial technology and enterprise software deals, it said.

 

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EV Demand Sparks Revival of US Manganese Mining After Decades

(Bloomberg) — South32 Ltd. aims to accelerate development of the first new US manganese mine for decades as carmakers rush to secure supply of the metal needed in electric vehicle batteries.

Automakers are “super keen” to secure supply from the company’s Clark Deposit in Arizona, which would become the only local source of the metal, Chief Executive Officer Graham Kerr said in an interview. “Probably the bigger challenge is can we get it to them quick enough?”

Demand for manganese from the battery sector is set to surge ninefold by 2030, the fastest growth rate of any of the industry’s key metals, according to BloombergNEF. Prospects for production in the US are also being bolstered by efforts to reduce supply chain reliance on China under President Joe Biden’s Inflation Reduction Act, or IRA.

Ford Motor Co. and General Motors Co. are among automakers aggressively adding new raw materials supply deals and seeking to accelerate development of local sources, stoking competition for commodities with rivals including Tesla Inc.

Read more: Joe Biden’s Climate Bill Has the US Battery Industry Revved Up

South32’s Arizona-mined manganese would be attractive to US carmakers because it would help them claim tax credits under Biden’s IRA, Kerr said at the company’s headquarters in Perth. The law, enacted in August, will grant credits for products with a percentage of materials extracted and processed in the US, or in nations that have a free trade agreement with Washington. 

Discussions with prospective customers have included the potential to add refining in the US to deliver electrolytic manganese metal products, which would avoid the need to send raw materials to China or elsewhere for processing into specialist battery inputs, according to Kerr.

“It wouldn’t be a high-end refinery from our side,” he said in the interview last week. “It would be a relatively simple process.” 

South32 rose as much as 6.2% in Sydney trading Tuesday, outpacing gains in Australia’s benchmark index.

South Africa, Gabon and Australia account for more than two-thirds of production of manganese, mainly used in the steel sector, and domestic output in the US — which once had mines in states including Virginia — ended in the 1970s. China currently dominates refining of the metal into materials used in the battery sector, accounting for 95% of manganese sulfate production capacity last year, according to BloombergNEF. 

Development of the Clark Deposit at South32’s Hermosa mine project could be accelerated under US legislation aimed at promoting fast development of clean energy and other infrastructure projects, Kerr said. 

South32 has allocated $290 million of capital expenditure to work on Hermosa for the current fiscal year, including for a pre-feasibility study of the Clark Deposit. That work will examine potential plans for development and is expected to be completed this year, according to the company. The deposit contains an estimated 55 million tons of ore with a 9% manganese content.   

The project may also be eligible for US government funding, Kerr said. US Energy Secretary Jennifer Granholm in July urged miners, including Australia-based companies, to explore potential support from agencies including the Department of Energy’s loan programs office.

(Adds share price in 8th paragraph)

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Musk’s Texts Over Twitter Deal Included Ex-Wife Talulah Riley

(Bloomberg) — A trove of text messages between Elon Musk and his contacts, made public last week as part of ongoing litigation with Twitter Inc., contained several mysteries.

Some could be solved via context clues; Musk texted often with someone called JackJack, who is clearly Twitter co-founder Jack Dorsey. But who was TJ, the person with strong opinions about Twitter’s content decisions?

That’s Talulah Riley, the English actress and writer who is Musk’s ex-wife, according to people familiar with the matter. Her middle name is Jane.

“Can you buy Twitter and then delete it, please!? xx,” began a thread from TJ to Musk on March 23. 

The text messages between Musk and Twitter executives, close friends, potential investors and Silicon Valley luminaries shed light on how a $44 billion deal by the world’s richest person to buy the social media company came about — and ended up in court.

Musk’s Twitter Texts Show Enmity With CEO, Friends Horning In

The texts show who wanted to be part of the buyout and reveal the inner circle’s musings on who should run the company if Musk did come to own it. They were disclosed as part of Twitter’s lawsuit to make Musk follow through on his $54.20-per-share offer, which is slated to go to trial in Delaware Chancery Court later this month. 

While many of the text messages involved pleas to put money in the deal, Riley’s were more focused on politics. “Please do something to fight woke-ism.” she wrote, “I will do anything to help! xx.”

She was especially concerned about the suspension of the Babylon Bee satire site’s Twitter account, calling it “crazy” in a text to Musk. “Raiyah and I were talking about it today,” she wrote. “It was a f–king joke. Why has everyone become so puritanical?”

Shortly after the Bee’s suspension, Musk polled his followers about free speech.

Raiyah refers to Raiyah Bint Al-Hussein, the Princess of Jordan. She is the daughter of Queen Noor and the late King Hussein of Jordan. 

In her 2016 romance book “Acts of Love,” Riley thanks Al-Hussein in the acknowledgments section, calling her “my brain twin and most beloved voice in the universe.”

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Meta Is Closing One New York Office With Cutbacks Looming

(Bloomberg) — Meta Platforms Inc. is planning to close one of its offices in New York after scaling down its expansion plans in the city, according to people familiar with the matter.

The company is exercising its option to terminate its lease at 225 Park Ave. South in Manhattan, said the people, who asked not to be identified because the information was private.

Meta has been consolidating its New York workforce, building out offices in Hudson Yards and moving ahead with plans for the Farley Building near Pennsylvania Station. The company has been dialing back some of its growth plans in the city, though, Bloomberg News has reported.

“Two twenty-five Park Avenue South has served as a great bridge space to get us to our new offices at Hudson Yards and Farley,” Meta spokesperson Jamila Reeves said Monday in an emailed statement. “We are working to ensure we’re making focused, balanced investments to support our most strategic long-term priorities.”

Meta remains “firmly committed to New York and further anchoring our local footprint,” she added.

The planned closure comes as Meta Chief Executive Officer Mark Zuckerberg seeks to make sweeping changes including reorganizing teams and reducing headcount at the company for the first time.

Hiring Freeze

Meta will freeze hiring and restructure some teams to trim expenses and realign priorities, Zuckerberg said during a weekly Q&A session with employees, Bloomberg News reported earlier. The Menlo Park, California-based company will likely be smaller in 2023 than it was this year, he said, announcing what would be the first major budget cut since the founding of Facebook in 2004.

Meta will reduce budgets across most teams, even those that are growing, and that individual teams will sort out how to handle headcount changes. That could mean not filling roles that employees depart, shifting people to other teams, or working to “manage out people who aren’t succeeding,” Zuckerberg said.

The cost cuts and hiring freeze are Meta’s starkest admission that advertising revenue growth is slowing amid mounting competition for users’ attention. Besides economic pressures, the company’s advertising business, built on precise consumer targeting, has lost some of its edge due to new privacy restrictions from Apple Inc. on tracking iPhone users. Also, rival TikTok is attracting younger users away from Meta’s Instagram platform.

Zuckerberg is also making an expensive bet on the metaverse, an immersive virtual reality future where he imagines people will eventually communicate, an effort he has said will lose money for many years.

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©2022 Bloomberg L.P.

Transcript ‘In Trust’ Episode Six: The Middlewoman

(Bloomberg) — This is the transcript for the sixth episode of the Bloomberg and iHeart investigative podcast “In Trust.” Learn more and subscribe to “In Trust” on iHeart, Apple or Spotify. 

Our transcripts are generated by a combination of software and human editors, and may contain slight differences between the text and audio. Please confirm in audio before quoting in print. 

Episode Six: The Middlewoman

Rachel Adams-Heard When I’ve talked to present-day members of the extended Drummond family, they’ve told me their ancestors got a lot of their land from non-Osage landowners, who had already gotten it from the original Osage allottee. 

And from what I can tell from the land records in the courthouse, that’s true.

The three Drummond brothers purchased a bunch of their land from White people. There was the Bill Hale Ranch. Another one called the Kyger, that Jack Drummond talks about a lot. They even bought land from O.V. Pope’s family.

And in some cases, there was a middleman. 

Actually, a middlewoman. 

Jack Drummond Anna Marx LaMotte.Terry Hammons Anna?Jack Drummond A-n-n-a M-a-r-x LaMotte.

Rachel Adams-Heard Jack Drummond tells Terry, his biographer, about a woman who made selling Osage land to White ranchers her whole business. 

Jack Drummond And then she would charge them at a high rate and then she’d lease it from the Indians at a much less price.Terry Hammons She was a middleman then right?Jack Drummond Yeah, that’s right.

Rachel Adams-Heard Anna Marx LaMotte would acquire individual Osage allotments — 160 acres here and there — and package them together as one big chunk that she would then lease or sell to ranchers who wanted large contiguous pieces of land. That meant Anna could charge more, and the difference between what she paid Osages for the land and what she got from the ranchers was her profit. 

Jack Drummond Yeah, she knew the Indians and she knew the cowmen. What the cowmen wanted was the grass, and what the Indians wanted was money whenever they wanted it, you see.

Rachel Adams-Heard Anna started out with leases. She’d lease out a bunch of Osage allotments, then sublease the combined land to ranchers. After a while, she moved beyond leasing. She started buying Osage land outright and selling the pastures she’d put together for a profit. Both Jack and Cecil Drummond bought land from her.

Jack Drummond And she was the richest person in the Osage. Terry Hammons That’s fascinating about her.Jack Drummond She was sure smart. And do you know, Terry, that later I used that land from that time on and then I said, “Mrs. Lamotte, I want to buy your land.” She said, “Alright I’ll sell it to you.” And we agreed on a price of $30 an acre.

Rachel Adams-Heard It’s clear Jack respected Anna. Terry brings her up a lot in the tapes, and every time he does, Jack speaks highly of her. Jack saw her tactics of flipping Osage land at a markup as good business. Kind of like the shirts he was charging a markup on at the store.  

Jack Drummond Well she was just, she was the smartest woman I ever knew. I’ve known lots of women, but she was a businessman-woman. 

Rachel Adams-Heard But at one point in those tapes, as he’s again praising Anna LaMotte and crediting her with a lot of his ranching success, Jack says something a little more candid about what Anna was doing. 

Jack Drummond She’d lease this land from these Indians at 50 cents an acre and the difference between what the cowman paid her and what she paid the Indians was hers. And a lot of this land she’d just steal, just get for nothing, just use for nothing.

Rachel Adams-Heard  “She’d just steal, just get for nothing, just use for nothing.” When I started looking into Anna LaMotte, I learned she was accused of doing just that. Anna faced lawsuits and at one point criminal charges over how she was getting Osage land. 

When I talk about the system the Drummond brothers learned to operate — the store, the probates, the guardianships — I want to make clear the brothers weren’t the only ones getting rich off the Osage Nation. There was the association, sure, the group of men who funneled Osage money through the store and bank, but there was also, simply, everyone else. 

The Drummond family didn’t build their ranching empire alone. They had help. Not just from the store, guardianships, other White people in Hominy. At the core of it all was allotment, and help, in the form of policy, and money, from the federal government. 

Today, I’m going to tell that story, the story of Anna LaMotte. It’s a story wrapped up in the project of allotment and Oklahoma statehood. A story about how the US expanded west and built the country we know today. 

This is “In Trust.”

I’m Rachel Adams-Heard.

To understand how Jack was able to get land from Anna LaMotte, you need to understand how Anna LaMotte got it in the first place.  And she couldn’t have done it without Oklahoma statehood. Without allotment. 

I told you before that under allotment, the government divided up land the Osage Nation held title to as a whole, and parceled it out to individual Osage citizens instead. 

In the decade leading up to those allotment negotiations, the US had dismantled the Osage Nation’s government and started cutting Osage families off from their culture. They forced children to go to Native American boarding schools and withheld their parents’ money if they refused. This all worked to severely weaken the Osage Nation’s power. 

Even still, Osage leaders traveled to Washington to argue against allotment. An Osage chief named Black Dog pointed to the promises the United States had made in past treaties. Another chief, James Bigheart, told U.S. government officials to look at the effects of allotment on other tribal nations. He argued that all the disparate parcels of land were too small to farm successfully and cited examples of White men who had tried and failed to farm their own plots of land nearby.

This comes up in Terry P. Wilson’s book “The Underground Reservation.” According to Wilson, the Secretary of Interior brushed aside the concerns of Black Dog and Bigheart and other prominent Osage leaders from the time and ended the meeting. He warned them: allotment was coming. 

Black Dog had raised another problem with allotment. The US government was going to base who got those individual pieces of land on a roll of Osage citizens at the time. But that process was fraught. Outsiders tried to claim they were Osage, knowing they could get a chunk of the reservation and a share of the mineral rights if they succeeded. 

Apparently, that included the Drummond family. According to a newspaper article from 1902, someone tried to enroll a member of the Drummond family in the Osage Nation. The article, in the Osage Journal, lists a bunch of last names of children whose families applied to have them added to the roll of Osage citizens. Some sixty names were approved by Osage leaders. But two were rejected, names of people the Osage Nation said weren’t Osage but had tried to get on the roll. And one of those names was Drummond. 

But back to the people who were on the Osage roll: 2,229 people. They were called allottees, and every Osage allottee was assigned a headright and pieces of land in three rounds. One of those parcels was known as a homestead allotment. The others were called “surplus land.” Those chunks of land could be far away from each other, making it difficult for Osage families to have any sort of profitable ranching or farming operation. Just like Chief Bigheart warned. 

Michael Snyder So the entire economic situation changed and White ranchers were able to sort of take advantage of the situation.

Rachel Adams-Heard This is Michael Snyder. 

Michael Snyder And I teach at the University of Oklahoma. 

Rachel Adams-Heard Michael has written a couple books about a famous Osage writer named John Joseph Mathews. Mathews wrote a newspaper column and several books, and while Michael was researching his work and reading hundreds of old newspapers, he kept seeing Anna LaMotte’s name. She was all over the papers in the early 1900s.

Michael Snyder So, they described her as attractive and charming. Anna LaMotte was associated with political power and Oklahoma statehood, declared a romantic figure by the press even amidst their scandals.  

Rachel Adams-Heard It turns out, before Anna LaMotte made it her business to acquire Osage land and flip it for a profit, she was heavily involved with Oklahoma becoming a state. The reason the Osage Nation and other tribal nations were forced into allotment to begin with. 

Michael Snyder She had been married to an Oklahoma Republican congressman named Bird S. McGuire who was a lawyer and a rancher who owned a large acreage. So she knew about ranching and large land deals. 

Rachel Adams-Heard Bird McGuire was also one of the delegates lobbying for Oklahoma statehood in the early 1900s. An op-ed from the time written by a progressive Senator blasted McGuire for taking part in, “schemes to promote the game of getting the Indian’s patrimony into the hands of those who would use it to … develop the country.” In other words, this senator was saying statehood, for McGuire, was about getting Native land.  

Anna was right alongside Bird McGuire. During the push for statehood she went with a delegation to Washington D.C., where Theodore Roosevelt held a special reception for them in the East Room of the White House. 

Michael Snyder And upon Oklahoma statehood she was presented with the Oklahoma flag. 

Rachel Adams-Heard This moment, with the flag, is almost cinematic the way the paper writes it. They’re at the capitol building. The speaker of the house presents her with the old flag for Oklahoma Territory. The paper calls it a “valuable relic.” Then, the speaker hands Anna another flag, the first state flag for Oklahoma, with a big star and the number 46 on the front. 

Michael Snyder I imagine a ritualistic kind of a scene, almost kind of a maternal sort of a some symbol, right, giving her this flag like a mother of the state of Oklahoma, perhaps. 

Rachel Adams-Heard A few years after Oklahoma became a state and the reservations were allotted out, Anna divorced Bird McGuire and married a Chippewa man named George LaMotte. George was a baseball and football star who later worked at the Office of Indian Affairs’ Osage Agency before becoming a rancher. 

When Anna and George LaMotte married, they also became business partners, and started leasing and buying Osage land. A lot of it. 

Michael Snyder There was a lot of pressure for Osages to lease their land to others, and then in a lot of cases eventually to sell it to outside parties.

Rachel Adams-Heard It’s important to understand that a lot of the disconnected parcels of land that allotment created weren’t of any use to many Osage families. They weren’t big enough to graze cattle. They were too spread out to cultivate a real farm. And the whole county was swarming with outsiders eager to get it. They’d offer to buy or lease allotments in exchange for cash, cars, anything that meant they could have control of the land.

So allotment, it was a tool Anna and George LaMotte were able to use to start their land business. A business that would quickly give them control of a massive chunk of Osage land — by one newspaper’s count, a third of the entire county.  

Remember, this was supposed to be hard to do. There were those restrictions in place that meant Osage allottees couldn’t sell or lease or mortgage their land without approval from the government. 

You heard Katie Yates Free, the real estate specialist, talk about this a few episodes back.

Katie Yates Free The restriction is that the federal government, the Bureau of Indian Affairs, they have to basically bless what you’re doing with your property. They’re like, “Okay, is this in your best interest, what you’re doing?” Because people back in 1906 and 1918 and everything were being taken advantage of. So that’s where they came in. I think that was the whole point, was to have those restrictions. So that wasn’t — they weren’t leasing to the neighbor next door for $1 a year when they could be getting $100 a year or something like that. 

Rachel Adams-Heard But Anna and George LaMotte skirted those protections. They got leases and deeds without ever going in front of a federal official who would make sure the Osage allottee was getting a fair price. Sometimes the leases were signed by White men who served as guardians for Osage children.

Michael Snyder I mean, what it comes down to is they were making shady deals that had to do with leasing Osage lands or involving Osage properties. I guess using sharp practices; they were just dishonest in how they were working with Osages, and that allowed them to fill their pockets and increase their land base.Rachel Adams-Heard So they were kind of in the business of tricking people into signing over stuff?Michael Snyder Yeah, and they were doing things where they were always supposed to inform the government — the Department of the Interior was in charge of all this. So they were kind of doing deals behind the back of the government. So they were they were ripping off Osages, and they were defrauding the government. So the government, of course, retaliated when they found out about this. But they kind of did it a handful of times, they did it repeatedly.

Rachel Adams-Heard The government first went after Anna LaMotte in 1913. She was indicted for signing someone’s name on a lease. Her indictment didn’t go over very well in the local press. The Pawhuska paper characterized it as an attack by federal investigators who were “stirring things up around here.” 

The next year, in 1914, there was another lawsuit against the LaMottes, this one brought on behalf of an Osage woman named Rose Neal Hill. In that lawsuit, Rose said Anna told her she was signing a power of attorney, when in fact Rose was signing over a deed to her land. Rose was trying to undo that transfer, and eight others, in the lawsuit. She said Anna had stolen 4,000 acres of Osage land. 

That same year, some of the indictments against the LaMottes were dismissed. A newspaper in nearby Ponca City wrote, “we were mightily pleased to find this piece of news.”

But in 1917, the LaMottes were on trial again. This is when the newspaper said the LaMottes claimed to control roughly a third of the entire county. During one hearing, George LaMotte told the court: “We thought we owned the world, and that the Osage country was a little kingdom.”

Just a few days after his testimony, Anna and George were found not guilty. According to a newspaper article, the jury deliberations lasted an hour and a half. As Anna LaMotte walked into the courtroom, the newspaper said she “smiled confidently” at the jurors. They beamingly returned the smile. 

Eventually, the US brought a case to prevent the LaMottes from leasing out any more Osage land. The government won, but the LaMottes appealed. In 1921, the US Supreme Court ruled the LaMottes had to turn over all leases they had on restricted Osage land. In the decision, the court wrote that those restrictions were necessary. These allotments, after all, were in quote “scattered tracts.” Without restrictions, the court wrote, “It is certain that improvident and ill-advised leases would be given and multiplied.”

From what I can tell, even after that case, Anna LaMotte kept leasing out land. Because according to Jack’s biography, he didn’t start leasing land from her until 1922. I don’t know much about those leases. Jack tells Terry a lot of his deals with Anna were informal — they didn’t put much in writing. 

But two years after the Supreme Court’s ruling, the LaMottes dissolved their business partnership. They made notice of it in the paper. The Pawhuska Daily Journal. It says “no further business is authorized to be done in the firm name.” 

All of those transactions happened pretty quickly, within 15 years or so of allotment. And even though a lot of those leases were later cancelled the LaMottes were able to reshape Osage County in that time, giving ranchers access to huge swaths of land that they could use to graze cattle and expand their operations.

There’s something else I want to tell you about the LaMottes, because the Drummond brothers didn’t just buy land from them. This whole time the LaMottes and the Drummonds and other big ranchers were buying up land, the oil underneath all that land was making headright holders some of the wealthiest people in the world. 

The same law that allotted the Osage reservation — the 1906 Act — it also created the headright system and kept the Mineral Estate in trust. But the wording in the 1906 act only guaranteed it would stay that way for 25 years.

Wilson Pipestem The policy at the time in 1906, was that we’re going to make this law — the Osages after a few decades are going to go away as a sovereign. Let’s get them assimilated. Let’s get them out of where we have any trust obligations to them at all.

Rachel Adams-Heard This is Wilson Pipestem.

Wilson Pipestem I am an Osage headright holder and a citizen of the Otoe-Missouria tribe.

Rachel Adams-Heard He’s an attorney who’s represented the Osage Nation and the Osage Minerals Council. A lot of Wilson’s work for them goes back to that trust relationship with the United States — the federal government’s obligations to the Osage Nation and headright holders. 

Wilson Pipestem  It’s not just, ‘I trust you, you trust me’ — this is not that.  So to me the highest piece of this trust relationship is the sovereign authority of the Osage Nation.  The Osage Allotment Act is unusual compared to other acts because it has so much federal control and superintendence over Osage resources. I mean, remarkable compared to any other tribe in the United States.  We embrace that in some ways, because it’s created protection, but in other ways it’s caused significant hardship as well.

Rachel Adams-Heard In the late 19-teens, that trust relationship was in jeopardy because of the wording in the 1906 Act. The Osage Nation was nearing the end of this promise that the oil and gas rights beneath the land would be held in trust by the US on their behalf.

Wilson Pipestem After 25 years, the subsurface will belong to  whoever the surface landowner is. And then there won’t be an Osage tribe as a sovereign that exists anymore. 

Rachel Adams-Heard A lot of the people who came to Osage County to buy land thought that come 1931, they would become the owners of the mineral rights underneath that land. That all the oil and gas revenue would no longer go to headright holders.

But Osage leaders pushed to extend the trust relationship over the Mineral Estate. They got lawmakers to introduce a bill that would make sure it wouldn’t go away. That all the proceeds from oil and gas drilling in Osage County would continue to go into that big pot, and be paid out to headright holders.

But that incensed big landowners who wanted to own the mineral rights. 

So some of those landowners formed a group called the Osage County Homeowners Association. Michael Snyder’s written about them, too.

Rachel Adams-Heard So you’re not talking about the homeowners association that tells you your grass is too long.Michael Snyder Right. I mean, that might be kind of sinister, too. But this is a group of homeowners and landowners, bankers, guardians, other kinds of businessmen, but they were openly doing this.

Rachel Adams-Heard This was different from the association Stivers alluded to — the men in Hominy who were accessing Osage money through guardianships and probates. The Osage County Home Owners Association was something bigger. More formal. Their purpose was to lobby against the bill that would keep the Osage Mineral Estate held in trust for the Nation.

Michael Snyder This is kind of the original roster of the group. George LaMotte was the president, and the vice president was Frederick Gentner Drummond.

Rachel Adams-Heard Later, Jack Drummond would also become involved with the Home Owners Association. The Drummond brothers, the LaMottes and other landowners, they were all working together to try and end the headright system so that all the oil and gas rights beneath the land they owned would go to them, not Osage citizens. 

This was a group made up of prominent landowners in Osage County at the time. According to one newspaper article from 1921, the most active members were also guardians. 

These guardians, their job was to protect the financial interests of their Osage wards. Yet they were actively lobbying to end the headright system and the trust relationship over the mineral estate — to end their wards’ main source of income. 

Michael Snyder They would actually go out and talk to the landowners, and canvas and just try to persuade them bring them around to their way of thinking about this. So yeah, they were aggressive. And they were they were going out canvassing and they were putting political pressure on mayors and senators and so forth. So yeah, they were they were very vocal and until the Osages retaliated they were just doing this very openly. 

Rachel Adams-Heard  The Osage Tribal Council fought hard against the Osage County Home Owners Association. They launched their own lobbying campaign, telling lawmakers that the landowners had gotten the land for cheap, that they knew when they bought it the mineral rights belonged to the tribe. And the Tribal Council was successful.

Osage leaders got the US Congress to pass a law extending the headright system and the trust relationship. Several years later, in 1938, it was extended again. And in 1978, it was extended one last time — this time in perpetuity. 

There really isn’t a lot out there about the Osage County Home Owners Association. It often gets lost in a lot of the history that’s told about the Osage Nation in the 19-teens and 1920s. A lot happened then. 

But the Home Owners Association was a big deal — a very public battle between major landowners and the Osage Nation over the mineral rights that had made Osage citizens so wealthy. A battle fought by a lot of the same men who were supposed to be looking out for Osage financial interests.

On one of my phone calls with Gentner Drummond, the lawyer running for Oklahoma attorney general, I asked him about the Osage County Home Owners Association — whether he knew anything about it. 

Gentner Drummond I was not aware of that. But had I been alive I would have certainly said the law that was passed in 1906 should be enforced. Yes, I would have done that. Because landowners — so think about it from the buyer. So the buyer is aware, because it’s a law, right? So you have to impute knowledge of the law, because it’s published, that if I buy this land in 1920, for example, that in five years I will own the minerals below it. And you’ve detrimentally relied on federal law and probably paid additional consideration knowing that you’d be a Mineral Estate owner. And then the law changes in 1925, and you’re not. See it’s really been a taking, which would be akin to eminent domain. But yeah, if I were alive back then I would have lobbied to not change the law. I would have said keep the law as is.

Rachel Adams-Heard So Gentner said he would have made the same legal argument as earlier Drummonds. That the headright system and the trust relationship should have expired. That the 1906 Act should have been the final say on the matter. That word he used, a “taking” — it’s a legal term for when the government takes control of private property. 

It’s worth mentioning that the Osage Mineral Estate is still managed by the federal government. Under current law all the land that Gentner owns, that his siblings and cousins own, they will never come with the oil and gas rights beneath it. 

But the land they do have is immensely valuable all on its own. 

That’s after the break.

I’ve told you about the ways the Drummond brothers were able to acquire land throughout the 19-teens and 1920s. How the store and probates provided a flow of money. How guardianships could be used to access pools of Osage cash — money the brothers borrowed to buy land. And how the LaMottes were a source of leases and deeds for more pastures that could graze cattle.

That was a lot of land. But it doesn’t fully explain the miles and miles of land the Drummond family would ultimately acquire. By the late 1930s, the Drummond brothers and other ranchers were given a way to use the land they had to get more land. A new tool from the US government. 

It was called the Federal Land Bank and it offered a cheap and easy way for farmers and ranchers to borrow money so they could buy land. 

Jack Drummond But you know, without the Federal Land Bank, I would never have been able to have what I have today. Because down here, the Federal Land Bank, whenever I needed money blocking this ranch, I could go to the Federal Land Bank and put up a piece of clear land and take the land that I was buying and pay for it. There never has been a time…

Rachel Adams-Heard Jack talks a lot in those tapes with Terry about finance. He called it the secret to success in the cattle business. Because all of the cattle he and his brothers grazed and the land they got, they were all assets that could secure loans. Every cow and every acre could be used as collateral to buy more cows and more acres. 

Those loans could be tricky to get back then. The long-term mortgage that we know today wasn’t really a thing. Banks were uncomfortable lending money for that long, especially to farmers and ranchers. Sometimes their crops wouldn’t grow or their cattle wouldn’t gain weight and that would affect their ability to pay off the loan.

But without access to capital, farmers and ranchers couldn’t buy their own land. And that flew in the face of what America was supposed to be about. So the US government came up with a solution. 

Judge Glock The elevator pitch is that at the beginning of the 20th century a lot of poor Americans, mainly farmers, didn’t have a lot of access to mortgage credit. And so the government got involved by creating these new institutions such as the federal land banks, and later Fannie Mae, to give them more mortgages. 

Rachel Adams-Heard This is Judge Glock. He’s not the legal kind of judge. That’s just his first name. 

Judge Glock It’s an old family name. Apparently, my great-great-grandfather was a judge and they keep passing it down with the with the futile hope that one of us will come a judge again someday, apparently.

Rachel Adams-Heard Judge works for a think tank in Austin, Texas. He wrote a book about the Federal Land Banks. It’s called “The Dead Pledge.” He also spent years as a government contractor, doing research on land rights and tribal nations in Oklahoma.

Judge Glock There was a lot of people that got their first kind of steps up in life from these Federal Land Banks. Getting tied into these federal land banks gave local individuals a source of financing that would have been impossible otherwise. But if you could tie into this big pot of federal money, then you could really expand your operations exponentially. 

Rachel Adams-Heard  The Federal Land Bank was created in the 19-teens, with 12 regional branches. For the first 20 years or so, farmers and ranchers in Osage County couldn’t access them. The Federal Land Bank wouldn’t give mortgages on land that didn’t come with the mineral rights. 

But in the late 1930s, the Federal Land Bank changed its mind and started lending to landowners in Osage County, even without the mineral rights. This meant the Drummond brothers no longer had to rely exclusively on private mortgage companies or the funds they’d borrow out of Osage accounts. Now, the federal government was there to help them turn what they’d already bought into even more land. 

In a way, these loans were subsidized. They were basically guaranteed by the government. And unlike commercial banks or local businessmen who loaned out money, the Federal Land Banks didn’t pay taxes on the interest they collected. This meant they could offer super low interest rates. Sometimes as low as 2%, when a lot of private sector mortgages came with interest rates that were at least twice as high. 

I kept seeing the Federal Land Bank show up in the ledgers next to the names of the Drummond brothers and other White ranchers. But I started to notice these loans were far less common on land owned by Osage families.  

Judge told me, there were a couple of reasons for this. The first was that getting a loan was a lot less formal than it is today. A lot of times, someone was approved based on who they knew. 

Judge Glock And so you’re not going to give loans to people you don’t know. And this may be not surprising, it also had racial implications, too. There was a lot of complaints from Black farmers that they were getting left out of this. And the same was true of Indians; a lot of Indians and Native Americans didn’t have these same connections that the the big local White ranchers and White powerbrokers had. And so instead of creating a different sort of banking structure, the Federal Land Banks kind of tied into that existing banking structure, and in that way kind of exacerbated those problems with local relationships and local power structures.

Rachel Adams-Heard But there was another reason it was hard for Osage landowners to access the types of subsidized loans the Drummond brothers could get. The land itself, allotment land, it came with those restrictions. 

Judge Glock So it was difficult. The general issue was that like so much else you needed permission from the government to get a Federal Land Bank mortgage on an allotment, and you needed the government sign off, which was often difficult to get.

Rachel Adams-Heard So there was a double-edged sword with these restrictions on allotment land. While they provided some protection from people like the LaMottes, they also made the land less valuable from a financial perspective because it was harder for Osage landowners to use it to borrow money and expand their own landholdings. 

The Federal Land Bank was just yet another example of how US policies tilted the playing field toward White landowners and worked to strip the Osage Nation and other tribal nations of their land and wealth. 

Selling on credit. Administering estates. Overseeing the finances of people deemed incompetent. Getting access to cheap debt from the government. All programs that worked to enrich a handful of White men. All of them furthering what allotment started.

By the time the Federal Land Banks came around the Drummond brothers were able to turn an already sizable ranching business into something extraordinary. They were given a huge advantage over Osage landowners — the ability to access cheap debt to expand their ranches. 

Over the last 100 years, the extended Drummond family has leveraged their land position over and over again to grow the family businesses.

I asked Devon Pendleton, another reporter at Bloomberg, who covers wealth, to calculate what that land would be worth today. She called around to appraisers familiar with Osage County, looked up recent transactions. And when she added it all up, she found that the land owned by present-day Drummonds has an estimated value of at least $275 million. 

And I want to be clear — that’s not the net worth of the Drummond family. And it doesn’t include any mortgages on the land. But that number — it shows how valuable this land can be. How valuable real estate can be. Having an asset that appreciates over time, that you can borrow off of. Land covered in bluestem grass, some of the best in the world for grazing cattle.   

(Sound of tires on gravel)

Rachel Adams-Heard …seen our first truck in like seven miles.

Last spring, I drove out to a ranch owned by Jack Drummond’s grandson. His name’s Joe Bush. He’s a rancher.

Once you turn off the county road, it’s gravel. Bluestem grass stretches as far as the eye can see. This grass is what makes ranchland profitable here, even if you don’t own the mineral rights. 

When I got to Joe’s house I parked near a huge tree. Hundreds of birds were sitting in the branches, chirping. It was a clear day. The blue sky made the grass look even more golden than usual. 

Joe took me to a picnic table on his back porch. I stepped over a campaign sign on my way in. This was a few months before the primary, before Gentner became the Republican nominee.

Rachel Adams-Heard Is the attorney general sign, is that for Gentner? Joe Bush Yeah. That’s from his last run. Rachel Adams-Heard Do you think he’s going to win this time? Joe Bush I don’t know. Oklahoma is a very corrupt state. 

Rachel Adams-Heard I spent a couple hours with Joe at his ranch. He named it Tower Hills, after a phone tower on the property. It’s more than 7,000 acres in all, a lot of land for most people but on the smaller side as Drummond ranches go. He had the cattle brand stitched on the front of his boots — a lower-case “t” with an “h” coming out the bottom.

Joe Bush Well, when I moved up here I had $30,000 and a two-wheel-drive pickup. My family inherited 7,000 acres, but there was a mortgage on it, and I almost got starved out that first year. And the cell-tower guy came along and offered me $125 a month, which was the difference between food and no food. So I picked the food. I had to come up with a brand for my cattle, and I took my father’s brand, which was the “th,” which for him stood for Timber Hill. And because I had a tower, I named it Tower Hills. I made it plural because there’s more than one hill. So that’s the short story.

Rachel Adams-Heard Joe smoked cigarettes on his porch while he told me what he knew about his grandfather and his great uncles. Like Gentner, he grew up driving around with his older family members, looking out at the pastures, learning the history of who this land came from, how the family business worked. 

Some of Joe’s land Jack bought from Anna LaMotte. When I first talked to Joe, a few weeks before we met, I asked if he had heard of Anna LaMotte. Joe told me he had. 

Joe Bush Mrs. LaMotte was the, she ran the laundry in Pawhuska. Mrs. LaMotte is the person that he got all his pasture from for that first steer deal that he did. In fact that pasture where the tower is, he got that pasture from her. Rachel Adams-Heard do you know how she got it? Joe Bush No idea. I’m sure it’s in my abstracts, but no, I don’t know. I just know that, grandfather said, “that was Mrs. LaMotte’s pasture.” Rachel Adams-Heard You know, she got in a fair amount of trouble at one point.Joe Bush No, I don’t know anything about her except she ran the laundromat. Rachel Adams-Heard Yeah, I can send you the case. Basically she was accused of, indicted for convincing people to sign deeds saying that they were powers of attorney, but then she would take control of the land.Joe Bush Saying they were power of attorney, but they were deeds? No, I’m not familiar with that. Rachel Adams-Heard And yeah, in the tapes, your grandfather said something about, he said, “She would just get it for nothing. She would…” — he said the word “steal.” Joe Bush I had not heard … when he did talk about Mrs. LaMotte she was somebody that he looked up to. I don’t recall him saying anything about her being shady with the Indians. I mean, you know more about her than I do. Rachel Adams-Heard  Yeah, I can share it with you. Joe Bush I just, I didn’t know. When grandfather first described her he said she was the washer woman. And he did say she was wearing a apron because he said she dried her hands on her apron and shook his hand. So I did get that detail. But— Rachel Adams-Heard He told you that when y’all were driving one day?Joe Bush Yeah, yeah. He was talking about how he started in the ranching business and how lucky he was and he, you know, took a risk and it worked out.

Rachel Adams-Heard I brought some other documents I had that involved Jack Drummond, including some of the transcripts from the tapes, where he talks about LaMotte, and the store and the shirts. Some other public documents on guardianships, like the notes from that conversation between Jack and Fred Gentner that mentioned borrowing money from Myron Bangs’ account to buy the Bill Hale land. We looked over them together.  

Rachel Adams-Heard Did he have any suspicions? I mean, did you — according to this, he did have suspicions about Gentner.Joe Bush Yes. Rachel Adams-Heard Did he ever talk to you about those suspicions or those concerns? Joe Bush No. No, he very rarely talked about Gentner at all.

Rachel Adams-Heard And just like I’ve heard from other family members, Joe said he never knew his grandfather to be anything but an honorable man. He didn’t know about a lot of what I was telling him about the guardianships, or the probates. He didn’t know there was an undertaking business, either. He said he had heard about the silk shirts, but said his grandfather was proud to have found a market for something unique, that his Osage customers really wanted. 

Rachel Adams-Heard Just asking around about the Drummonds,  you do hear a fair amount of people who have always been told in their families that the Drummonds got their land by, you know, taking land as collateral from the store or using guardianships or stuff like that. I’m just curious, like, has anyone ever confronted you about that or have you ever heard that? Joe Bush I have not. That doesn’t mean something didn’t happen that somebody has hurt feelings over.Rachel Adams-Heard So what does it mean to you to be a Drummond today? It’s a name that carries a lot of weight here in Osage county, right? Joe Bush It does. It does. The Drummonds…it’s a mixed blessing, you know. Some of the Drummonds have done some unscrupulous things and so you’ve got to suffer through a little ill will.Rachel Adams-Heard What unscrupulous things?Joe Bush  I don’t know, you know, there’s people that feel like they were swindled or things didn’t work out or … I don’t know. There’s, oh, resentment among people that are trying to build ranches because Drummonds somehow always got there first, you know, they could— Rachel Adams-Heard But they didn’t get there first, right? The tribe got here first. So I’m just curious how this all mechanically worked. Joe Bush Well, you read the book. They actually were successful at ranching. They made money. And then they spent the money buying land. I mean that’s the magic of the Osage is that steers gain weight real good in one summer. 

Rachel Adams-Heard So I know we’ve taken a lot of your time. I’m curious what you’re thinking about all this. Do you do want to know more about—Joe Bush I’m fascinated by what you’re doing here and I still don’t know that you’re going to hit a eureka moment in your research. Maybe you will.Rachel Adams-Heard When you said you don’t think I’m going to have a eureka moment, like, what do you mean by that? Joe Bush I don’t think you’ll find a cut-and-dried, Drummonds-stole-land-from-Indians, because I don’t think they did. I think they actually did pay for it. Now, there may have been some shenanigans with the guardianship and then it’d be between that particular guardian and that particular Indian. But I think they were just, as far as my grandfather went, he felt like he was just extraordinarily lucky that he had the resources, he was able to put them together, and when he shipped his cattle he made money.

Rachel Adams-Heard Joe Bush was right. There hasn’t been a single eureka moment covering this. Not at the National Archives in Fort Worth, or the county courthouse in downtown Pawhuska. No one conversation that revealed the true scope of just how this one family got so much Osage land. 

Because there was no single strategy that built the Drummond ranching empire. Not one document, or one transaction that landed the family so much land. Instead, there was allotment. Guardianships. The store. Years of access to power and influence in Osage County, with other ranchers, guardians and government officials all playing a role. 

A lot of this at a time when the policies in place incentivized Osage families to sell — either to access money they couldn’t otherwise, or pay off a debt. In many cases, the land was already out of Osage hands when the Drummond brothers got it.

In a way, the story of the Drummond brothers’ rise family is the story of allotment. The story of a system that gave White settlers a way in. That allowed Oklahoma to become a state. That expanded the United States as a whole, and built the country we know today. 

But that’s far from all of the story. Because despite centuries of hostile US policies and boarding schools that tried to stamp out Native cultures, Osage leaders and citizens never stopped fighting for the tribe’s culture, its financial independence and its sovereignty, working against and within those systems to find a way forward. 

Over the last few decades those efforts set up the Osage Nation to do something it couldn’t for a long time. Buy the land back. 

That’s next time on “In Trust.” 

More stories like this are available on bloomberg.com

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