Insisting, “It has not been easy for me” and that “my whole life has been a ‘no’ and I fought through it,” Donald Trump said Monday his father’s “small loan” of $1 million got him started as a developer. This version of events, which seems intended to show he is somehow a self-made man, represents a new direction for the candidate and fails to give Trump the elder the credit he deserves.
Although Trump may have been told “no” on occasion, his early success depended on many important “yesses” that were obtained with his father’s ample assistance. Privileged to have a name that opened doors at banks and insurance companies and New York City Hall, Trump also benefited from financial assistance that was worth many times more than $1 million. He and his businesses have also enjoyed public help in the form of tax breaks, loans from his siblings, and protection from bankruptcy courts worth well in excess of $100 million. However it was his father who made sure Donald got a big head start in life.
As Donald Trump began his career in real estate, his father was one of the richest individuals in America, with a net worth of roughly $200 million. (The equivalent today of $1 billion.) The candidate is correct when he says that Fred Trump was never eager to work in Manhattan, but this didn’t make him a minor leaguer.
Fred built 15,000 apartments in Brooklyn and Queens, which generated a river of cash that he used to retire debt and invest in new projects. When Donald made his first big deal, to replace the decrepit Commodore Hotel at Grand Central Terminal with a sparkling Hyatt, he depended on his father’s good name and his credit with lenders, which was worth tens of millions of dollars, according to Wayne Barrett’s 1992 book, “Trump, The Deals and the Downfall.”
It was Fred Trump, not Donald, who possessed the political capital — earned through donations to various candidates — that impressed trustees who sold Donald development rights at the hotel site. And it was Fred who reassured city officials that, “I’m going to watch the construction and provide the financial credibility.”
According to Barrett’s book, Donald could not get the money on his own, so Fred guaranteed half the $70 million cost of the project and Hyatt guaranteed the other. Fred was so instrumental in overseeing the project that he attended contract signings and, as was his custom, handed out souvenir silver dollars to those present.
(Evidence of Donald’s limited financial strength was revealed in public documents related to his negotiation of a prenuptial agreement with first wife Ivana in the 1970s, according to Harry Hurt III’s book, “Lost Tycoon.” Although Donald had made public claims of great wealth, his taxable income at the time was less than $2,200 per week. He controlled a small interest in one of his father’s many companies and received regular but modest payments from family-related trusts.)
Fred Trump’s political credibility was also essential to Donald’s first big success. In his book “The Art of the Deal,” Donald wrote that “the only way to get financing was if the city gave me a tax abatement.” Part corporate welfare and part urban renewal scheme, the tax abatements allowed property owners to pay lower taxes than they would normally pay. Donald’s application got lots of attention from city officials, who eventually gave him a $40 million reduction. Without this gift from his father’s friends, Donald’s first project would never have been started.
Having been schooled by his father, Donald also became a friend and donor to politicians. When it came time for him to seek tax breaks for his signature project — Trump Tower on Fifth Avenue — he was able to access city officials on his own. This time he was turned down, but he didn’t give up. He turned to the courts and eventually prevailed to the tune of $50 million. For a project completed at a cost of roughly $200 million, where apartment sales quickly brought in $277 million, the abatement provided for a windfall.
Given Fred Trump’s fortune, and his influence, his son Donald had advantages worth tens of millions of dollars more than the simple $1 million loan he mentioned in New Hampshire. However his father’s wealth provided him with even more direct benefit. In the early 1990s, as two of his casinos went bankrupt and his Trump Airlines failed, he went to his siblings for loans totaling $30 million.
As reported in The New York Times, this money allowed Trump to stay in business at a time when he was $900 million in the red. It was lent with the understanding that, if necessary, Donald would repay it from his share of his father’s estate. (Fred was alive but affected by the early stages of Alzheimer’s dementia at the time.)
Complex as it may seem here, the history of Donald Trump’s finances has always been murky. Over the years most of his activities have been carried out in privately held companies, which issue no public accounting reports, and he has always contested estimates appearing in the financial press.
Until now, however, it has been clear that Trump saw no virtue in politicians’ claims to humble beginnings. As he explained in his 1999 book “The America We Deserve,” these candidates say, in effect, “…their families have been losers for years and years and `Elect me, because I’m a loser.'”
Now, as he says that he only benefited from “a small loan” of $1 million, Trump is signaling that he sees the value in a little humility.
As the child of one of America’s wealthiest men, who received an Ivy League education and then entered the property development world at the top, he may have trouble persuading the voting public of this view. However by now he is a man who knows how to get to “yes” on his own.