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The Story of Donald Trump: From Zero to Billions and Back
Hello, friend! Today I want to tell you a story that might seem familiar, as it's about a very famous guy whose name everyone probably knows – Donald Trump. But we're not going to talk about his presidency, but about how he became who he is. This is a story about how a man who started from scratch (well, almost from scratch, as his father was a millionaire, but more on that later) built an entire empire, and then almost lost it. Get ready, there will be a lot of numbers, risks, and, of course, Trump's signature bluff.
The Beginning of the Journey: Manhattan, Crisis, and "Hell's Kitchen"
Do you know why Trump's story started in Manhattan, and not, say, in his native Queens or Brooklyn, where his father built? The official version is that Manhattan charmed him from childhood. But let's be honest, charm is good, but it doesn't always explain everything. Trump's father, Fred, built in those very areas that were then considered the domain of "thugs," beggars, and garbage dumps. Crime was off the charts, and it was scary to live there. Donald himself, although he lived on a decent street, hated these places and didn't want to build there. But here's the paradox: Trump's first major construction project began precisely in Manhattan, in an area that was then, to put it mildly, not great. We're talking about the area around Pennsylvania Station, which bordered so-called "Hell's Kitchen" – a place where the Irish mafia thrived, involved in racketeering, drugs, and even contract killings. The police considered this place "hell." Why did Trump choose it? It's all about the process that was actively underway in New York at the time – gentrification. The rich began to gradually displace the poor from the city center, and it was obvious that areas like "Hell's Kitchen" would soon become a goldmine. Even amidst the dirt and danger, there were old brownstone mansions. Trump, it turned out, had a gift for foresight. But that's not all. In the early 70s, New York was experiencing a severe crisis. Real estate prices dropped by 50%, demand disappeared, the city was losing population and jobs, and was on the verge of bankruptcy. Tourists were warned: "Don't go out after 6 PM!" Against this backdrop, a recession began across the country, partly provoked by the Vietnam War. Why build at such a time? It seemed like complete absurdity. But Trump believed that New York was the center of the world, and all this would end sooner or later. He saw an opportunity in it. The Vietnam War was coming to an end, the Twin Towers appeared in 1973, and the city was becoming attractive again. Trump understood: this was that rare, once-in-a-lifetime chance to grab low real estate prices before they soared back to the heavens. Otherwise, he would remain working for his father, building housing for the poor. To find a suitable location, Trump wandered through Manhattan for hours. He even tried to join the elite "Le Club," where influential people gathered. He was, of course, immediately rejected – young, unknown, without connections. But Trump was stubborn. He managed to arrange a meeting with the club's owner, who, however, showed up with a companion and got very drunk. Trump had to drive these "elite types" home himself. On the second try, after a more sober meeting, he was finally accepted, but with a condition – not to touch other men's wives. At the club, he met the state governor, learned a lot about real estate, and found himself a lawyer who had connections with the five major crime families of New York. This lawyer turned out to be the legendary Roy Cohn – a
The Commodore Hotel: Buying a Wreck or a Brilliant Move?
All these connections helped Trump in his search. And so, in 1973, he learned that the Penn Central railroad company decided to sell off its Pennsylvania Station real estate. Among the properties was the legendary, but long-dilapidated, Commodore Hotel. Everyone around considered it a wreck that lost $15 million annually. The hotel, built in 1919, was once the largest in the city, but had aged significantly over half a century. Customers went to competitors, beggars settled in the hotel, and during the crisis, occupancy dropped to half. The lobby had turned into a flea market, the windows were boarded up, and there was dirt, rats, and beggars everywhere. The hotel was a real eyesore. But Trump saw a "gem" in it. He understood that the crisis was a temporary phenomenon, and now was the time to invest. He began actively pursuing the purchase, driving Penn Central representatives in a limousine, boasting about his father's buildings, and promising to become the city's largest developer. His energy, self-confidence, and his father's support impressed them. Trump even managed to negotiate with the Mayor of New York, an old friend of his father's, who promised that "whatever the Trumps want, they will get." However, there were conditions: a first-class hotel operator was needed. Trump approached the Hyatt hotel chain. They were initially skeptical of him, but when they learned about the super-low tax breaks that Trump had secured from the city for 40 years (saving the hotel about $4 million a year), they agreed. Although the breaks were still just a promise. Finding money for the renovation itself proved more difficult. Bankers were in no hurry to lend to a 27-year-old guy in the midst of a crisis. But Trump didn't give up. He secured tax breaks for 40 years, which was supposed to save him $56 million. This caused public outrage and criticism from competitors, who accused him of robbing the city. To pressure the authorities, Trump boarded up the hotel windows, closed it, and fired 500 employees. The city authorities, fearing disgrace and unemployment, quickly approved the breaks. The banks finally provided the money. Trump was less than 30 years old, and he already owned a landmark building. Other investors wanted to participate, but Trump already had a preliminary deal with Penn Central, which gave him exclusive rights to reconstruction. Moreover, no one even noticed that he hadn't signed a binding agreement and hadn't made the promised $250,000 deposit. He was bluffing, and everyone believed him. Renovations began in 1978, and in 1980, the luxurious Grand Hyatt hotel opened. Trump, who had promised not to marry, fell in love with Ivana Zelníčková, a Czech woman whom he made the interior designer. The hotel became a hit, and Trump became a mega-developer.
Trump Tower: A Skyscraper of Dreams and a Magical Name
Not resting on his laurels, Trump sought new projects. And he found the perfect location – on Fifth Avenue stood the bankrupt Bonwit Teller department store. The land belonged to the insurance giant Equitable Life Insurance, which had already financed Trump, so it was easy to reach an agreement with them. The problem was the "air rights" over the neighboring Tiffany store. Without these rights, the tower couldn't be made tall enough to sell expensive apartments with a great view. The chairman of Tiffany, 80-year-old Walter Hoving, was known for his difficult personality. Trump first praised his store at length, and then threatened that if he didn't get the air rights, he would build an ugly box over it. Hoving agreed, but refused to sign papers, limiting himself to a handshake. Trump panicked – he always signed everything. But Hoving turned out to be a gentleman: "I gave my word, so the deal is done." Later, Hoving's advisors realized that Trump had paid too little, but it was too late. For the construction of the skyscraper, Trump hired engineer Barbara Res, who had previously helped him with the "Commodore." He told her she was "better than ten men" and offered her to build the skyscraper as her own project, doubling her salary. Barbara agreed. Trump Tower was designed as a 68-story skyscraper (although it ended up being 54 stories). Rare coral marble was used in the finishing, and a $2 million waterfall was built. Inside, an atmosphere of a casino or bank was created, with retail spaces, offices, and luxurious apartments. The skyscraper had a stepped design, which increased costs but allowed for exorbitant prices for the apartments. The view from the windows was stunning: of the river, Central Park, the Statue of Liberty. After its opening in 1983, rumors spread that Prince Charles, Sophia Loren, and even the King of Saudi Arabia wanted to buy apartments in Trump Tower. There was no real confirmation, but the press blew the story out of proportion, giving Trump unprecedented publicity. Apartments sold like hotcakes, including to Michael Jackson and Steven Spielberg. It was said that Trump himself deliberately spread the rumors. In the end, Trump earned about $300 million on costs of $200 million. Trump Tower made him famous worldwide, turning him into a true media icon.
Atlantic City Casinos: Gambling Business and First Warning Signs
It seemed Trump was the king of real estate. But then he decided to venture into the gambling business – building casinos in Atlantic City. Why? The lucky break that comes once in a lifetime had ended. It became harder to find projects in New York, he had made many enemies, and the new mayor, to put it mildly, disliked him. Atlantic City had only recently legalized casinos, and investments poured in. Trump chose it because it was not far from New York, and because casinos were making huge money at the time. But most importantly, it was the glamour and fame that Trump so lacked. He was obsessed with publicity and attention. His lawyer, Roy Cohn, who was connected to the mafia, could have created problems with the license, but Trump was lucky. Officials wanted him to build in their city, create jobs, and attract customers with his name. The license was approved in a couple of hours. In 1982, Trump began building the 35-story Trump Plaza casino-hotel. Holiday Inn became a partner, investing $50 million and reimbursing Trump for the $20 million already spent. Trump insisted that the casino bear his name, considering himself "the most successful man in America." The casino opened in 1984, but the slot machines malfunctioned, and profits were half of what was expected. Trump blamed Holiday Inn for everything, calling them "incompetent managers." They disagreed on their approach: Holiday Inn wanted to focus on cheap entertainment, while Trump favored luxury. Ultimately, Holiday Inn sold its stake, and Trump became the full owner of Trump Plaza. But it wasn't enough for him. In 1985, Hilton built a casino but didn't get a license due to suspected mafia ties. Trump bought it for $320 million without even looking inside and named it Trump Castle. Then he acquired another troubled casino – Taj Mahal – for $273 million in 1988. It was a gigantic, almost completed casino, but the owners ran out of money.
Empire on the Brink: Debts, Bonds, and "Black Monday"
Trump wanted to create another "money-printing machine" and destroy his competitors. But then the market was hit by "Black Monday" in 1987, and a crisis began. Getting loans became extremely difficult. Analysts warned that the Taj Mahal was "killing" the already struggling Atlantic City business. But Trump assured them that everything was fine, and banks were lining up. He even refused to issue "junk bonds" (high-risk debt securities), stating that only "scum" did that. However, creditors couldn't be found, and Trump had to issue junk bonds for $675 million at a huge interest rate. This allowed the Taj Mahal to be completed, but debts grew like a snowball – $95 million had to be paid annually just for this casino. Trump bought a superyacht for $29 million, an airline for $365 million (though he understood nothing about air travel), and The Plaza Hotel in New York for a record $407 million. The empire's total debt reached $3.2 billion. He couldn't pay contractors on time ($35 million) and missed interest payments ($89 million). His empire began to crumble. The bankers who lent him money took control of his assets: the casinos, the yacht, the plane. They forbade him from taking out new loans. The casinos began to go bankrupt: Taj Mahal in 1991, Plaza and Castle in 1992. By 1992, only rags remained of Trump's empire, but interest still had to be paid on them.