Ludwig

"Ludwig’s father before him pioneered development of underwater mines, designed some of the first steam engines to power Russian ships, and installed the first central heating systems to warm Russian homes. Ludwig’s son after him launched the world’s first diesel-driven tugs and tankers while bargaining with the Rothschilds, struggling against Royal Dutch-Shell, and bartering with Standard Oil in Europe’s second Thirty Years War, a petroleum war for control of world markets."

"The beauty of the scheme was that it allowed D.K. to build or renovate tankers without having to put up collateral or use his own credit. The oil companies were satisfied, because they were getting their petroleum hauled at bargain rates. The banks were satisfied, because oil companies were a much better credit risk than a small shipper like Ludwig. And D.K. was more than satisfied. As long as he took care to fulfill his charter contracts, he had a small but steady income, and, more important, by the time the contract expired he was the owner of a paid-up ship without having invested any of his own money. This mutually beneficial financing arrangement, Ludwig confided to Saunders, was the foundation of his shipping empire. Once he got things rolling in the late 1930s, it was simply a matter of hard work and efficiency — plus a genius for innovative ship design — to be¬ come one of the world’s largest ship owners. In his rise to the top, D.K. had been responsible for several major changes in shipbuilding. Some were design and structural modifications to eliminate nones¬ sentials while increasing a ship’s cargo-carrying capacity. His main contribution, though, was the supertanker."

"Over the years, Ludwig earned the reputation of being the Scrooge of the shipping industry. One of his employees, a story goes, on being asked to suggest a design for a fleet flag symbolizing the Ludwig enterprises, submitted a drawing of two hands stretching a rubber dollar bill. Some years later, the captain of a Ludwig ship made the extrava¬ gant mistake of mailing in a report of several pages held together by a paper clip. He received a sharp rebuke for his prodigality: “We do not pay to send ironmongery by air mail!”"

"It was at this time that D.K. came up with the “two-name paper” arrangement he later told Dero Saunders was the chief reason for his wealth. It all sounded so simple: go to an oil company; get it to sign a long-term charter to ship so much oil on a regular basis; take the charter to a bank and, using it as collateral, obtain a loan to build or renovate a ship to haul the oil to fulfill the charter. This may sound like “the house that Jack built,” but it was advan¬ tageous to all parties involved. And Ludwig would have a steady income as long as he fulfilled his charter obligations. He would also be free of most of the bookkeeping. The oil company, instead of paying him directly, would send the charter fees to the bank, which would take out the loan payment due and deposit the rest in Lud¬ wig’s account. The plan was legal, logical, and ingenious. But there was much more to the two-name paper than D.K. explained to Saunders. One fact he did not mention in the Fortune interview was that in 1936 he was able to start his climb toward being the world’s biggest shipper mainly because he had finally managed to hook into the big time. He was now hauling oil for the Rockefeller empire."