Harry Weinberg
Harry Weinberg was an American billionaire businessman who founded The Harry and Jeanette Weinberg Foundation, Inc., a private charitable foundation, with over $2 billion in assets in 2018 and headquartered in Owings Mills, Maryland and Honolulu, Hawaii. The foundation is named for Mr. Weinberg and his wife of 58 years, Jeanette Gutman Weinberg.
Beginnings
Weinberg was born on August 15, 1908, in the city of Sambor , then part of the Austro-Hungarian Empire. His father Joseph Weinberg came to Baltimore, Maryland in the United States on November 17, 1911, on the S.S. Breslau. He sent for his family some months later, and his family arrived in August, 1912, on the S.S. Köln. Sambor became part of Poland after World War I and then part of Ukraine after World War II.Harry Weinberg was the second of seven children, born between 1906 and 1922, of Joseph and Sarah Weinberg. The children's names, by order of birth, were Henry, Harry, Betty, William, David, Nathan, and Sidney. Two other children were born but died early, one in 1918 during that year's Influenza Epidemic. David, Nathan, and Sidney were born in the United States, and the other four were born in Sambor. The family lived in Southwest Baltimore City, on 2028 Eagle Street, and then a block away on Wilkens Avenue. Sarah Weinberg, a homemaker, died of cancer in 1935 at age 54. Joseph Weinberg, primarily a metal worker who operated a body-and-fender repair business, died of stroke in 1961 at age 80.
Early years in business
When World War I ended in 1918, the ten-year-old Weinberg took advantage of the celebrations by selling small American flags on the street, until the celebrations died down. He either finished, or dropped out of, the sixth grade in a Baltimore public school. Thereafter, he worked in the body-and-fender business of his father, until as a teenager of 16-18, he emancipated himself and moved to Philadelphia to work for a tire retreading company, which he ultimately purchased from its owner. By 1928, he moved back to Baltimore to start his own used tire business there. At first, he sold used tires from the street, but quickly established credit and opened his Camden Tire Company in a storefront in the 400 block of West Camden Street in 1929. A bit later, he moved his business to a storefront at 211 South Paca Street, a better location. He learned the basic skills about running a retail business -- how to keep books, read a balance sheet, and maximize profits in limited square footage.His business was across the street from a saddlery, located at 501 West Pratt Street owned by Morris and Herman Gutman, who befriended Weinberg. Weinberg met Morris Gutman's older daughter, Jeanette, and later married her on March 22, 1931, at a local Reform Jewish synagogue of which the Gutmans were members. Harry and Jeanette Weinberg had their only child, Morton Weinberg, in December 1933.
In 1936, Weinberg sold his interest in Camden Tire Company to his brother, William. Harry already had begun to purchase real estate and stocks as investments. After the Great Depression began in late 1929, real estate and stocks could be purchased at relatively low prices. His first commercial property investment was on Hanover Street in Baltimore City. He continued to purchase commercial real estate in Baltimore, obtaining loans often from his father-in-law. Weinberg, his wife Jeanette, and baby Morton moved to 3110 Liberty Heights Avenue in Baltimore City. By the end of 1936, Weinberg's total annual real estate-related income was about $9,200, on assets of $63,700. In addition, he had additional assets in stock holdings.
In 1938, he began to manifest philanthropic interest, when he pledged his own stock holdings to help sponsor several of his wife's relatives so they could emigrate from Germany to the United States and avoid Nazi persecution and the genocide of Jews and others that was soon to follow. When the United States declared war on Japan and Germany in late 1941, Weinberg already was 33. He was declared '4F' -- ineligible for service in the armed forces -- because of an inoperable hernia. However, the Weinberg family provided four men to serve in the United States military -- William, David, Nathan, and Sidney -- and all four returned after the war uninjured.
In 1939, Weinberg obtained ownership of the New Joyce Hotel, across from Camden Station in Baltimore. The hotel quickly became a popular stop for soldiers and support personnel moving between various military training camps on the Eastern Seaboard during the war. Weinberg hired his older brother, Henry Weinberg, to manage the hotel bar, which was bustling with activity during the war. Weinberg sold the hotel in the late 1950s.
Weinberg's next major investment was to purchase a controlling interest in Baltimore Brickyards, a local publicly held corporation that owned numerous small brick manufacturers and vacant land in Baltimore. This purchase came about after BB refused to consider his offer to purchase just one abandoned brickyard owned by BB. An acquaintance of his who owned stock in BB confided to Weinberg that the family that dominated the BB board of directors had told the other directors that the company should not sell to a Jew. Outraged, Weinberg commenced a highly motivated and detailed study of the company. That study revealed that BB was asset-rich but earnings-poor, and was a prime takeover target. The company's books listed its various property-holding values at book value, but not at the much higher current market value; the books made the company appear to be worth less than market value. Yet, BB's publicly traded stock was severely depressed and could be purchased on the open market for below $1 per share. He quietly began to buy as many outstanding shares of BB as possible. After he obtained a 40 % ownership interest by purchasing all the outstanding shares available on the public market, he purchased another 10+ % of the outstanding shares of BB from a local financial institution that held those shares in trust accounts for some of its clients. Weinberg now had ownership of a majority of BB's stock. When promptly thereafter, he entered BB's offices and announced his intention to take over operating control of the firm, a buy-out of Weinberg's stock interest was negotiated by BB's directors; BB transferred to him the parcel he originally wanted, plus many other land parcels in exchange for his stock. He resisted anti-semitism and made a profit doing so.
Transit empire
At various points in his business career in the 1950s and 1960s, Weinberg owned controlling interests in four mass-transit bus companies -- Scranton, Pennsylvania; Honolulu, Hawaii; Dallas, Texas; and New York City. In the first three cities, Weinberg ensured that the bus companies' extensive holdings of real estate unrelated to their transit operations were spun-off into separate corporations not subject to public utility regulations. When later each company's bus operations were purchased by its city through actual or threatened eminent domain proceedings, Weinberg, at least, retained ownership of the unrelated real estate. To tell the full story would take volumes, so provided here is only a relatively superficial summary of his transit holdings.He was introduced to the mass-transit world in 1948, when the Baltimore Transit Company sold inexpensive second-mortgage bonds backed by BTC's real estate and other assets. Once again, he saw that the difference between those assets' "book value" and their current fair market value presented him with an arbitrage opportunity to earn a substantial return. Knowing that BTC's real estate was worth far more than reported on BTC financial statements, Weinberg was confident in the repayment of the bonds.
His faith in real estate paid off when BTC returned to solvency, paying off much of its debt through the sale of some of BTC's valuable real estate not needed for its transit operations. Weinberg earned a large profit when the second-mortgage bonds were repaid to him. In the process, he learned a wealth of knowledge about the operations of mass transit bus companies and their "hidden" real estate assets.
Scranton Transit Company ("STC")
In 1953, Weinberg began investing in the Scranton Transit Company, starting with its bonds. Weinberg researched STC's financial situation and discovered that the market value of STC's real estate and other assets was substantial, notwithstanding low book values. He slowly and steadily purchased more and more of the STC bonds, typically at bargain prices, from the various bondholders. By 1954, now owning a large share of STC's debt, he joined STC's board of directors, which resisted his efforts to reform the company's operations for the benefit of its investors. A transit strike by the unionized employees of STC crippled the company and hurt Scrantonians reliant on bus service. STC missed two straight bond interest payments. Weinberg, as the principal bondholder, forced STC into Pennsylvania state court receivership. Bondholders had first priority over other investors. The state court awarded him control of the reorganization of STC. Weinberg took over control of the company, and through a series of prudent business moves -- including cutting inefficient service, working with the union to keep wages steady, and the like -- brought the company back to financial health. The company returned to private management out of receivership, with Weinberg installed as chief executive officer and chairman of the reborn STC.Weinberg made other investments while working on the STC matter; he invested in real estate and the stocks of other companies. He began buying small businesses in the Scranton area. He created diverse holding companies to manage his various properties. One of these holding companies was Scranton Corporation, which, among other things, operated the Scranton Lace Company and held controlling interests in the Hal Roach Studios in Culver City, California, the Mutual Broadcasting System, and Storm Vulcan in Dallas, Texas. Weinberg eventually made Scranton one of his three hometowns, at least for eight years, renting a large apartment there.
In the latter 1960s, Weinberg sold STC to the City of Scranton, but Weinberg companies retained ownership of former STC real estate holdings, unrelated to transit needs, that had been spun off into separate companies.
Honolulu Rapid Transit Company ("HRT")
In the mid-1950s, Weinberg quietly began to purchase shares of HRT stock through a local friend. By 1958, he had acquired about ten percent of the outstanding shares of the company and was its largest single shareholder. Most of HRT's assets were in real estate holdings. HRT's financial statements listed only the various properties' book values, and many of those book values reflected the much lower costs of the 1890s. All non-transportation-related real estate was owned by HRT's wholly owned subsidiary, Honolulu Limited, created in 1954, which became HRT's investment company in 1959.After a hard-fought battle to obtain a seat on HRT's board of directors, and his purchase of even more of HRT's stock, a Weinberg proxy was elected to the HRT board in 1957. By the end of 1958, Weinberg owned nearly 35 % of HRT's stock. In February, 1959, Weinberg obtained a seat on the board of land-rich Honolulu Limited. By July, 1959, Weinberg also won a board seat on HRT -- the "parent" bus company. He gained influence on the Honolulu Limited board as a result of astute business recommendations that were followed by that board. Honolulu Limited, at Weinberg's urging, used some available corporate cash to purchase a 32 % interest in the Dallas Transit Company, a bus company of which Weinberg also had been buying stock separately. Also, at Weinberg's recommendation, HRT's assets were reduced to those reasonably necessary to operate the public bus business and public bus routes, and most other assets unrelated to that purpose were transferred to Honolulu Limited for investment purposes.
In March, 1960, Weinberg was elected Chairman of the Boards of HRT and Honolulu Limited. As board members retired or rotated off these boards, Weinberg's associates joined these boards. By March, 1961, Weinberg owned 60 % of HRT stock and eventually would own 95 % of the stock. By the end of his complete takeover of these corporations, he earned the moniker "Honolulu Harry," in the press. It was a moniker by which he would be known by some for the rest of his life.
Eventually, the HRT bus business was purchased by the City & County of Honolulu. As in Scranton, Weinberg and his companies retained ownership of Honolulu Limited and its properties. In addition, Weinberg and his companies independently had been purchasing real estate in Oahu, Maui, Kauai, and the Big Island of Hawaii, and this process continued throughout Weinberg's life.
Dallas Transit Company ("DTC")
Weinberg's move into Dallas was very similar in principle to that in Hawaii. The combination of Honolulu Limited's and his own ownership of DTC stock amounted to about 44 % of DTC's outstanding common stock. In January, 1960, Weinberg was elected Chairman of the Board of DTC. He relocated three of his brothers -- Nathan, David, and Sidney to Dallas to become full-time executive employees and officers of the company. Soon thereafter, Nathan became president and chief operating officer, David became corporate treasurer, and Sidney became corporate secretary. DTC created a wholly owned subsidiary, Dal-Trans Service Co., that was free from regulation by the Dallas Public Utility Commission. DTC began gradually transferring all non-utility assets of DTC into Dal-Tran.He found other inefficiencies in the operation of DTC, most notably that in the pre-Weinberg era, many of DTC's non-union employees had procured their jobs as political favors. These non-productive political types were fired. DTC ordered service reductions on many unprofitable lines, comprising about seven percent of the system's bus mileage. To avoid union strikes in June 1960 over demand for higher wages, he negotiated with union leaders by tying wage hikes to fare increases; if the city would grant the fare increase, then the employees would get a wage increase. When the PUC denied the fare increase request, he avoided a strike by offering smaller but temporary wage increases. By this point, Weinberg controlled 78 % of DTC stock.
During the period of Weinberg's control of DTC, the bus company hired African-American bus drivers for the first time ever in Dallas. This decision, announced by Nathan Weinberg, DTC President, in May 1963 was the subject of front-page news articles, editorial comments, and letters-to-the-editor, largely derogatory. As the ridership was heavily black, Harry and his brothers felt that diversity among the drivers should be a given.
By 1964, however, the City of Dallas came to the conclusion that it was impracticable for a private company to operate the mass transit bus lines in the city. This conclusion was typical of those of other cities in the U.S.; to make the buses serve all the people, they would have to be subsidized heavily and managed by the municipality. By the Fall of 1964, the City of Dallas purchased DTC for $5.5 million. DTC was represented by Robert Strauss, later to become a major national figure in law and politics. He continued to control Dal-Tran.
New York City's Fifth Avenue Coach Company ("FACC")
By the Spring of 1961, Weinberg also held non-controlling interests in transit operations in Nashville and Memphis, Tennessee; Richmond and Roanoke, Virginia; Akron, Ohio; Springfield, Illinois; and Baltimore, Maryland. But the biggest system was in New York City, and Fifth Avenue Coach Company was the largest privately held mass transit bus company in the nation. FACC also had highly valuable real estate assets, most of which were not necessary to the bus operation, and the FACC financial statements listed the properties' value based on "book value" -- the original cost of the properties -- not their very substantial fair market value. Weinberg started to purchase shares in the stock of FACC perhaps as early as 1956, but the Dal-Tran purchases of FACC stock brought Weinberg's share of FACC to about 25 % by May 1961; he was the largest single stockholder. On February 14, 1962, with FACC suffering financial stresses and outright deficits from a variety of sources, Weinberg was granted five of the fifteen FACC board seats and was elected Chairman of the Board.Weinberg set out to restore FACC to financial health. His plan was to obtain a basic fare increase and to reinstate the five-cent transfer, as the company was running a large operational deficit. New York Mayor, Robert Wagner, however resisted with all his might. In addition, the transit workers union called an illegal strike in March 1962. In New York, unlike in Scranton, Honolulu, and Dallas, New York residents had viable alternatives to buses -- the subway and walking -- and they started using the alternatives. FACC announced plans to eliminate "all unprofitable night and Sunday service and lay off 1,500 workers," although far fewer actually were affected. The union resisted, and the buses remained out of service.
Mayor Wagner quickly persuaded Governor Nelson Rockefeller to get a bill passed in the State legislature to begin condemnation proceedings to take over the facilities and operations of FACC. The bill was passed and was signed by Rockefeller on March 22, 1962. Mayor Wagner had the New York Transit Authority operate the FACC lines. Thereafter, an arbitration proceeding determined the amount of compensation shareholders, including Weinberg and his companies, would receive for the taking. Weinberg did not end up with ownership of any New York real estate, as there had not been enough time to spin off the non-utility real estate into a separate company. Thereafter, Weinberg had no further investments in New York businesses, other than using New York stockbrokers for his securities purchases and sales.
Real estate empire
By the time of his passing in late 1990, Weinberg and his companies owned huge real estate holdings in the State of Hawaii, with lesser holdings in Baltimore, Maryland; Dallas, Texas; Scranton, Pennsylvania; Grand Rapids, Michigan; Dyersburg, Tennessee; and a sprinkling of small holdings in some other states. By then, he was the largest individual landowner in Hawaii. He undertook an intense study of the major landowning companies in Hawaii and discovered what he already suspected -- that the true value of their real estate holdings was multiples higher than the 19th Century book values reported in their financial statements. He steadily purchased publicly traded stock in these companies, hoping to eventually earn a seat on their respective boards and push their business strategies toward a more profit-conscious goal beneficial to shareholders. A recitation of details here would be voluminous and so will be avoided. Suffice it to say that these companies included American Factors, Dillingham Corporation, Maui Land & Pineapple, and Alexander & Baldwin. In each case, he would acquire substantial stock holdings; the incumbent board would resist his efforts to gain board seats; he would argue at board and shareholder meetings for a more profit-aggressive, shareholder-friendly business strategy that would require sale or development of raw land ; and the companies would trade some of their real estate holdings to Weinberg in exchange for his stock holdings. One could call this process "greenmail". In the process, Weinberg came to own massive amounts of real estate in Hawaii. He held a non-controlling 39 % stock interest in Maui Land & Pineapple at the time of his death.Other holdings
Although he owned real estate worth hundreds of millions of dollars, the majority of Weinberg's assets was in securities. He was a highly focused securities investor who made his own decisions. Wherever he happened to be at the moment -- including Hawaii, which was in a time zone 5-6 hours earlier than that of the East Coast -- he would call his stockbroker each weekday morning at 9:00 Eastern Time to give him orders to buy and/or sell. He enjoyed reading financial statements and other materials about publicly traded companies, and had a knack for figuring out the hidden value in each. In many cases, that hidden value was real estate. In addition, he owned a few metal stamping factories -- in Dallas, Texas; Grand Rapids, Michigan; and Dyersburg, Tennessee. Each of these factory operations was sold within five years of his death.Personal life
Weinberg married Jeanette Gutman on March 22, 1931. They were both Jewish, attending a Reform Jewish synagogue from time-to-time. Jeanette died in August 1989 at age 80. They were married for 58 years. They had one child, Morton Weinberg, born in December 1933, who died of cancer and complications therefrom in October 2012 at age 79. Morton and his first wife, Joanie, had four children – a girl and three boys. In order of birth, the grandchildren are Catherine, George, John, and Peter. Catherine has two children, Anthony and Chad. Harry and Jeanette had many nieces and nephews.Harry and Jeanette Weinberg had homes, at various times, in Baltimore, Scranton, and on two Hawaiian islands. Mr. Weinberg had no hobbies, although he did enjoy watching westerns on television in his free time and loved looking out at the beauty of Hawaii. His political orientation was moderate overall; he was not committed to any party and generally voted for the candidates he thought would be best for the economy and the country.
Weinberg developed multiple myeloma in the early 1980s, and although he was in remission after cancer treatment, he required regular blood transfusions for the remainder of his life. Weinberg died on November 4, 1990, in Honolulu, Hawaii, at the age of 82. He and his wife are buried in Baltimore, Maryland, at the same cemetery as are his parents and Jeanette's Gutman's parents. Other than a modest bequest to his four grandchildren, he left all his assets to charity. Everything except for his non-controlling 39 % stock interest in Maui Land & Pineapple was added to the assets in his foundation. The stock interest in Maui Land & Pineapple was left to The Harry Weinberg Family Foundation, a support foundation of The Associated: Jewish Community Foundation of Baltimore, which uses distributions primarily to assist the lower-income Jewish individuals in the Baltimore area. That stock interest later was sold by The Harry Weinberg Family Foundation to Steve Case, AOL founder.