Investigations: Decline & Fall

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nonexistent anhydrous ammonia storage tanks. The ammonia is a gas under normal atmospheric conditions; it must be stored in tanks to keep it liquid. Working with Superior Manufacturing Co., a Texas firm that made ammonia tanks. Estes persuaded a lot of West Texas farmers to go through the motions of purchasing tanks from Superior on credit, taking out mortgages on them, and leasing them back to Estes. Estes conveniently made the lease payments equal to the mortgage payments, so the farmer would not have to pay out any money. Estes explained to the farmers that he needed the tanks for his operations, but was short of working capital and simply wanted to use the farmer's credit to obtain the tanks. In return, he offered the farmer a fee of 10% of the price—in effect, something for nothing.

In this implausible way, Estes collected more than $30 million in mortgages on imaginary tanks. He used the bogus mortgages as collateral to borrow roughly $22 million from commercial finance companies in New York, Chicago and other cities. To get the finance companies to accept the mortgages, Estes and his henchmen had to fake a lot of documents relating to the farmers' personal finances. One Estes secretary later admitted to typing five phony documents on five typewriters.

Estes' grain-storage kingdom grew fast —the amount of grain in storage soared from 2.3 million bushels in March 1959 to 54 million in February 1962. But there was an oversupply of grain-storage facilities in West Texas, and Estes could not keep his warehouses full enough to reap really massive profits. After the collapse, amid mounting evidence that Estes had been doing favors for Agriculture Department officials, the department put out these figures as proof of its virtue: early this year Estes' facilities were 43.4% filled with federal grain as against a Texas statewide average of 48.6%; later on, Estes' figure rose to 58.3%, but the state average also went up, to 62.9%. Said a White House staffer: "If Estes was spending a lot of money at Agriculture, he sure wasn't getting much for it." The Schemer. All the while that Estes' assets were growing, his liabilities were mounting even faster. In 1960 he ventured on another desperate scheme for making big money. Estes had found cotton-farming profitable. The only obstacle to growing more cotton and making more profits was that the U.S. Government, in exchange for its generous price supports on cotton, imposes strict acreage controls.

Each cotton farmer has an acreage allotment, which cannot be sold or otherwise transferred; it remains attached to the parcel of land.

But the Government makes a special exception for farmers whose land is taken over under the right of eminent domain —to make way for a new highway, perhaps. In such a case, if the displaced farmer buys another farm within three years, he has the right to transfer his old cotton allotment to his new land.

Schemer Estes saw a way to get hold of allotments so he could increase his cotton plantings and profits. He and his agents persuaded numerous farmers in Texas, Oklahoma, Georgia and Alabama, who had been dispossessed by eminent domain, to buy Texas farm land from him, transfer their allotments to the new land, and lease the land-plus-allotments back to him for $50 an acre. Each farmer agreed to pay for the land in four equal