H. Ross Perot
1930-

Businessman, politician

New Political Force

Third parties and third-party candidates typically share several characteristics on the American political stage: they do not get elected; they may attract significant voter interest in one election, but both the candidate and party soon thereafter disappear from the public's radar; they do not have an effective state-by-state grassroots organization; and any success they might enjoy contains the seeds for their eventual demise as the major issues they champion are absorbed by one or both of the major parties. H. Ross Perot, however, was not typical, nor was the third party he inspired and initially bankrolled. He ran for president as the Reform Party candidate in 1992 and 1996, and though he lost, he made a credible showing. The Reform Party continued to exist at the end of the decade, with several well-known political figures vying to run under its banner in the 2000 presidential election. In addition, it had success organizing on a grassroots and state-by-state level, and succeeded in electing a governor (Jesse Ventura, Reform-Minnesota). Finally, neither of the major parties successfully captured the major issues fueling support for the Reform Party. At the end of the decade, Ross Perot's political vision continued to draw support across the United States.

Texas Background

Henry Ross Perot was born on 27 June 1930 in Texarkana, Texas; it was here that he grew up and went to public school and junior college. His family was of modest means, and he and his sister enjoyed a close relationship with their parents. Perot won an appointment to the United States Naval Academy and graduated in 1953. He served several years on a destroyer and aircraft carrier before leaving the Navy in 1957. In 1956 he married Margot Birmingham and they raised five children. They settled in Dallas after his discharge from the Navy and he went to work for IBM as a salesman in the data processing division. Yet, Perot was neither content with, nor temperamentally suited for, the life of an IBM salesman. With the help of a S1,000 loan his wife provided from her job teaching school, he went into business for himself, starting a small data-processing company named Electronic Data Systems (EDS). The new business was wildly successful, becoming a multimillion-dollar corporation with thousands of employees. It also made Perot a well-known figure in both Texas and national political circles. He later sold this company to General Motors and earned a seat on the GM Board of Directors—a position he later resigned. Subsequently, he started a new business, Perot Systems.

Taking Control

Patiently waiting tor events to play themselves out was never part of Perot's style. Instead, he was more comfortable taking matters into his own hands. In the 1960s and early 1970s American prisoners of war (POWs) held in North Vietnam became an increasingly serious domestic political issue. U.S. negotiators were well aware that the POWs served as a bargaining card for North Vietnamese authorities, an increasingly valuable chip as Americans focused on the POWs' plight and put pressure on the U.S. government to secure their release. It was in this context that Perot became involved in shadowy, ultimately unsuccessful schemes to rescue the POWs. In 1979 Perot directed a successful rescue effort of EDS employees who were being held hostage in Iran. His reputation as someone who could design solutions for seemingly intractable problems and make things happen led him to become involved in attempts to solve serious public policy problems in Texas. He was chosen to lead the committee charged with stemming the flow of illegal drugs; five new laws were ultimately enacted into Texas law. He also worked to improve public education in Texas, and set a national trend by linking the issue with local economic development. When he was motivated, he was willing to pledge immense personal effort, and often a financial commitment, into its resolution.

Running for President

The decision to run for President of the United States can never be taken lightly, as an individual has to have enormous energy, an ability to inspire others to work hard with little obvious payoff, and the capability to raise vast sums of money or a willingness to spend one's own fortune. In addition, a prospective candidate must be able to tap into some strongly felt issue that concerns millions of Americans, but that is not being addressed suitably by other candidates. For Perot the task was even more difficult because the issues motivating his run forced him outside of the normal two-party structure of U.S. politics. He had to create a grassroots political movement and, ultimately, a political party that captured the imagination of Americans who somehow felt that they were not being adequately served by the political establishment and, in order to have a voice, to overcome the welter of disparate state laws and regulations that discouraged such candidacies. Against all odds, Perot overcame these hurdles, fueled in part by the political tract United We Stand, armies of paid and unpaid signature gatherers, and lawyers willing to go to court to get Perot on the ballot. In the process the movement became a third political party—the Reform Party. Many issues championed by Perot and his party were either ignored or only peripherally discussed by Republicans and Democrats in 1992. Yet, he struck a chord with many Americans who felt that politics and government had become a closed game for a self-serving elite that ignored the problems faced by the average people.

Policy Proposals

Perot's presidential campaign emphasized issues designed to appeal to those who normally feel left out of the political process. He argued that elected officials were living too well and doing so on the tab of the American taxpayers. Perot proposed that retirement systems and health coverage for members of Congress and the president should be more like those of average Americans, and that gifts and free meals be eliminated for these officials. He also argued for balancing the budget, a balanced-budget amendment to the Constitution, and a line-item veto. His campaign reform proposals included a shorter election cycle to lessen the financial burden of running for office and restrictions on raising money, including a ban on raising money from outside the district (for campaigns for House of Representatives) or state (for Senate campaigns). Perot also argued that House members should be limited to three terms and Senators to two terms. The North American Free Trade Agreement (NAFTA), which had been negotiated by the Bush administration and signed in 1992, was designed to gradually eliminate trade barriers between Canada, Mexico, and the United States. Many Americans, however, felt it would accelerate the trend of manufacturing jobs leaving the United States; Perot picked up on this theme, saying that the "giant sucking sound" people could hear was that of jobs going to low-wage countries. This issue figured prominently in Perot's political appeal after NAFTA went into effect on 1 January 1994 and had a central place in his 1996 run for president. Other issues Perot proposed included designing a new and simpler tax system; reforming Medicare, Medicaid, and Social Security; and changing lobbying rules.

Election Results

Perot and the Reform Party ran a distant third in both the 1992 and 1996 presidential elections, but that should not obscure the importance of the man and party. In 1992 Perot received about twenty million votes, which was 19 percent of those cast for president. Subsequent analyses suggested that his appeal was most strongly felt by those who either did not normally vote or who usually voted Republican. Although he did not win a single Electoral College vote, his totals in several key states may have allowed Bill Clinton to capture those states from President George Bush. In other words, it is likely that Clinton owes his 1992 victory to Perot voters who might otherwise have voted for Bush. In addition, Perot's showing indicated that many voters felt that they were not being represented by the two major parties. In the 1994 congressional elections the Republican Party, under the leadership of Newton Leroy "Newt" Gingrich (R-Georgia), incorporated many of Perot's proposals into its Contract with America, which is credited with propelling the Republicans into control of the Congress that year. In 1996 Perot's second run under the Reform Party banner resulted in a much smaller vote total of just 8 percent, yet it was significant that this third party had survived the years between elections and remained a viable force. While many observers felt that the 1996 election showed that Perot was beginning to wear a little thin on the American electorate, his ideas continued to be salient.

Sources:

Albert J. Menendez, The Perot Voters & the Future of American Politics (Amherst, N.Y.: Prometheus Books, 1996).

H. Ross Perot and Paul Simon, The Dollar Crisis: A Blueprint to Help Rebuild the American Dream (Arlington, Tex: Summit Publishing Group, 1996).

Perot, United We Stand: How We Can Take Back Our Country (New York: Hyperion, 1992).

Gerald Posner, Citizen Perot: His Life and Times (New York: Random House, 1996).

Sean Wilentz, "Third Out: Why the Reform Party's Best Days Are Behind It," New Republic, 221 (22 November 1999): 23-25.

Henry Ross Perot

Businessman and activist, Henry Ross Perot (born 1930) founded the successful data processing company, Electronic Data Systems (EDS). He entered politics in 1992 as the Independent Party candidate for U.S. president.

Ross Perot was born in Texarkana, Texas, on June 27, 1930. His father was a cotton broker and horse dealer. The young Perot was much impressed by his father's negotiating skills and by his mother's discipline and religious principles. Perot grew up in Texarkana and spent one year at the local junior college. He then attended the U.S. Naval Academy, graduating in 1953, the president of his class. After graduation, he spent four years at sea.

At the Naval Academy Perot had received a basic education in engineering. He had no special training in electronics or computing. However, his personal qualities impressed an IBM representative who visited him on the aircraft carrier to which Perot was assigned. When Perot left the Navy, he was hired by IBM to sell computers in Dallas. He was most successful. At the same time Perot became convinced that a business could make money by leasing unused computer time to clients who needed it. IBM wasn't interested in the concept, so in 1962 Perot started his own business, Electronic Data Systems. His first client, Collins Radio in Iowa, flew tapes and personnel to Dallas to have programs run on a computer at an insurance company there.

In the years that followed, EDS expanded. Operating under contract, EDS personnel ran entire data processing departments for insurance companies, banks, and state and national governments. In the mid 1960s the U.S. Congress passed national health insurance programs for the poor and elderly. These programs, Medicaid and Medicare, were administered by individual states. EDS expanded its programs for processing medical insurance claims from private companies to state offices. This business accounted for about a quarter of EDS income by 1968 and proved highly profitable. At the end of the 1960s EDS went public. Perot sold a small fraction of his shares in the business for $5 million.

In the following decades Perot became known for his international and philanthropic concerns. During the Vietnam War, reportedly in response to a request from government officials, he tried to improve the treatment of American prisoners of war in North Vietnam. In December of 1969 Perot attempted to send two planeloads of food, gifts, and medical supplies to the prisoners. The Vietnamese refused to accept delivery of the goods, but the publicity surrounding the episode may have led to improved conditions in the prison camps. In 1973, after the return of the prisoners, Perot financed a weekend party for those who had been held at the Son Tay camp, as well as for a team of Green Berets who had tried unsuccessfully to rescue them in late 1970. Perot also sought out veterans for staff positions at EDS. The firm set strict standards of dress and conduct for its employees. It also required trainees to sign a contract stating that if they left the company to work for a competitor within three years of their hiring, they would reimburse EDS $12, 000 for their training.

In the early 1970s EDS attempted to improve data processing on Wall Street by purchasing a subsidiary of a stock brokerage firm. Unfortunately, the firm was in serious financial difficulties. Perot himself invested some $97 million in this firm and in another brokerage firm, before deciding to dissolve both businesses in 1974. He lost some $60 million in the process.

In the late 1970s EDS expanded to international operations. Its first overseas contract was with a Saudi Arabian university. Then, in 1976, the firm was hired to manage data processing for the social security system of the Shah of Iran. Two years later Iranian officials concluded that EDS had been paying too much money to its Iranian advisers. Iran stopped payment on its contract, and EDS notified the government that it was suspending operations. Two leading EDS officers were arrested and imprisoned. Perot set out to win their release, even paying a quiet visit to Iran himself. An EDS rescue team was formed and trained, but did not penetrate the prison where the men were held. Reportedly at the urging of an Iranian employee of EDS, an Iranian mob broke into the prison and released all the prisoners. The EDS officials escaped and, with the rescue team, fled the country on foot. Perot encouraged the British journalist and novelist Ken Follett to write a sympathetic account of the episode.

As EDS grew, it was ever on the lookout for new markets. At the same time auto manufacturer General Motors sought to diversify its holdings. Investment bankers at the Wall Street firm of Salomon Brothers suggested EDS as one of several possible acquisitions. Roger Smith, the chairman of GM, greatly admired entrepreneurs like Perot and hoped that EDS might be able to unify data processing in his company's diverse operations. Smith did not consult his own data processing staff about the proposed merger. He also apparently was unconcerned by EDS's lack of experience in the use of computers in design and manufacturing.

After lengthy negotiations, GM purchased EDS in June 1984. Owners of EDS stock had a choice of receiving payment entirely in cash or partly in cash and partly in a new issue of GM stock, designated GME. Dividends from this stock were tied directly to the performance of EDS. EDS executives expected to receive bonuses in shares of stock when their performance merited it. For the 45 percent of EDS stock that Perot owned, he received nearly $1 billion in cash and 5.5 million shares of the new stock. He also remained head of EDS and was elected to the board of directors of GM.

EDS set out to take over all data processing operations at GM. It encountered resistance from both executives and those at other levels and did not feel it received sufficient backing from Roger Smith. Perot also discovered that he did not, in fact, control the award of bonuses to EDS personnel. Moreover, GM auditors expected to review the books at EDS, just as they did at other parts of GM. Perot first broke openly with Smith in the fall of 1985 over the question of whether GM should purchase Hughes Aircraft. Perot objected and was ignored. Tensions between EDS and GM were exacerbated by the poor performance of GM vehicles in the marketplace and by Perot's criticisms of GM's way of doing business. In the fall of 1986 GM voted to buy out Perot's GME shares, ending his connection with EDS. Perot agreed and promised not to open a new profit-making data processing business for three years. By 1989 GM and Perot were in court over the question of whether Perot had held to this agreement in forming a new company, Perot Systems.

Perot was noted for his campaign to improve the school systems of the state of Texas and his contributions to various schools and educational institutions. He married Margot Birmingham in 1956. They had four children.

Perot's career took a definitive turn in 1992 when he spearheaded a campaign to have himself elected president of the U.S. under the Independent Party. Critics were amazed that this virtual, political unknown commanded 18 percent of the popular vote. Perot ran again in 1996, receiving a less impressive 8 percent of the vote. However, his presence is still felt in the realm of politics. Perot remains both a politician and a businessman. It is estimated that his net worth is over $3 billion.

Further Reading

For more information on two of H. Ross Perot's greatest adventures/misadventures see Ken Follett, On Wings of Eagles (1983) and Doron P. Levin, Irreconcilable Differences: Ross Perot versus General Motors (1989). A look at the man himself, especially his relationship with General Motors' Roger Smith, is Todd Mason, Perot: An Unauthorized Biography (1990). Perot is also listed in Forbes "400 Richest People in America 1997" (July 1997). □

PEROT, H. ROSS 1930-

Tycoon

The Stuff of Fiction

The life story of H. Ross Perot seems more like a good novel than reality. A U.S. Naval Academy graduate, Perot joined IBM and soon became one of its top salesmen. But Perot wanted more challenges, and choosing to go out on his own, he formed Electronic Data Systems (EDS). Six years later he took it public, and the thirty-nine-year-old Perot was a billionaire. Perot later made headlines for his failed efforts to bring American prisoners of war (POWs) home from Vietnam, and then, ten years later, he was back on the front pages for his successful covert operation that rescued EDS employees being held in an Iranian jail by the Ayatollah Khomeini. He returned to the limelight when he became the largest stockholder of General Motors. In 1992 he ran for president.

Perot and EDS

From his days with IBM, this man from Texarkana, Texas, came to believe there was a market for someone who could design, install, and operate data-processing systems for clients. In 1962, with one thousand dollars in savings, Perot founded EDS, a computer-services company, to fill this niche. By attracting major clients, mostly large insurance companies such as Blue Cross, the company was profitable, but with revenues of $7.7 million in 1968, Fortune magazine referred to it as an industry "pip-squeak." That same year, however, Perot recapitalized his firm with 12 million shares. Then with the brokerage house of R. W. Presspich and Company, he took his firm public. Initially offered at $16.50 per share, EDS closed its first day of trading at $23.00. Perot had offered only 650,000 shares for sale, and personally held 9 million. Overnight, his EDS shares gave him a net worth of $200 million. During the great bull market of 1969-1970 EDS shot up to $150 per share, and "the Fastest Richest Texan Ever," as Fortune had dubbed him, was worth $1 billion.

The Two Rescues: Win One, Lose One

From his stock-market coup on, the wiry, five-foot-six-inch Perot thrived on media attention. In the fall of 1969 Perot began his efforts to free American POWs in North Vietnam. As part of his campaign, he collected nearly thirty tons of supplies and medicine, chartered two jets, and tried to take the cargo to the POWs. When the North Vietnamese officials refused to allow the planes to land, Perot then offered $100 million for the release of the prisoners. Although rebuffed, Perot's work led to better treatment of the POWs. Much more successful, however, was Perot's daring mission to rescue EDS employees from Iranian jails. In 1979 a disguised Perot first flew to Iran to tell the employees he was going to get them out. He then organized a private group of commandos, who succeeded in extracting the EDS workers from revolutionary Iran. Best-selling author Ken Follett's On Wings of Eagles (1983) was based on this story.

Perot and General Motors

On his fifty-fourth birthday Perot and GM chairman Roger Smith surprised the business world by announcing GM's purchase of EDS; from the deal Perot became the largest single stockholder of GM and a member of its board of directors. As GM struggled through the mid 1980s, Perot became very critical of company management. In December 1986 Smith and GM executives purchased Perot's 11 million shares for $62.50 a share, or nearly double the market price. Historian John Ingham said in Newsweek that "GM had paid Perot a cool $700 million to get out and shut up."

Act Four

Although Perot once told Newsweek magazine that he did not see himself "as someone who can save the United States," he apparently changed his mind in 1992. Fed up with the incumbent Republican president, George Bush, and not at all satisfied with the Democratic hopefuls, Perot entered the presidential race as a third-party candidate in the spring. Addressing Americans with simple language and quotable one-liners, he portrayed himself as a political outsider who could cut through bureaucratic red tape and spur economic growth. The unpredictable Perot, however, dropped out of the race in the summer only to reenter it in October. Bill Clinton won the election, but Perot received 19 percent of the popular vote, more than any other third-party candidate since Theodore Roosevelt ran on the Bull Moose party ticket in 1912.

Sources:

Ken Follett, On Wings of Eagles (New York: Morrow, 1983);

"GM Boots Perot," Newsweek, 108 (15 December 1986): 56-60ff;

Arthur Louis, "The Fastest Texan Ever," Fortune, 78 (November 1968): 168ff;

Christopher Wren, "Ross Perot: Billionaire Patriot," Look, 34 (24 March 1970): 28-32.

PEROT, H. ROSS 1930-

Billlonaire populist

Fame

H. Ross Perot gained quite a bit of notoriety in the 1980s and personified the some-times conflicting trends of the decade. On one hand, Perot was a self-made billionaire who proved that the capitalist system worked; on the other hand, Perot gave voice to the feelings of many Americans who were dissatisfied with the national direction. Perot became famous for his can-do attitude.

Billionaire

H. Ross Perot was a billionaire by the age of thirty-eight. After serving in the U.S. Navy and working for IBM, he founded Electronic Data Systems Corporation (EDS). Perot ran the company like a combination of the FBI and the marines. EDS employees followed their charismatic boss, and if their loyalty wavered Perot reinforced it legally. EDS employees could not quit without losing their highly valuable stock awards, nor could they go to work for a competitor without violating noncompetition agreements. EDS fit Perot's background as a graduate of the U.S. Naval Academy. In an industry noted for its casual dress codes (with the exception of IBM), EDS was one of the few start-up computer companies that required employees to wear suits. Perot built a reputation as a maverick. In 1969 he televised town-hall meetings in support of Richard Nixon's Silent Majority. Later that same year he alienated the Nixon administration by attempting to deliver Christmas gifts, food, and medicine to American prisoners of war in Vietnam. Servicemen missing in Vietnam became an important cause for Perot throughout the 1970s and 1980s. His 1978 commando mission to free EDS executives held captive in Iran became the subject of the television movie On Wings of Eagles.

Populist

Even when things apparently went against Perot, he still seemed to possess the golden touch. In 1988 EDS sued H. Ross Perot, the company's founder. In 1984 the troubled General Motors (GM) had purchased EDS in part to enlist Perot in GM's efforts to revitalize the car maker. The chairman of General Motors, Roger B. Smith, did not get along well with Perot. In fact, they got along so poorly that GM paid Perot $700 million to leave and quit criticizing GM. Although Perot was not friendly toward labor unions, during that period his vocal criticism of Smith and General Motors management made him popular among the rank-and-file workers. Perot took on the role of the populist billionaire. On the first day that he was legally permitted to do so, Perot created Perot Systems Corporation and began hiring executives away from EDS. Forbes magazine estimated Perot's wealth at $3 billion and ranked him as the fourth richest man in the United States.

Politician

The 1990s found Perot continuing to act the part of the maverick and the billionaire populist. An independent political movement, United We Stand, rode the crest of Perot's popularity. Perot ran a reluctant, on-again, off-again, third-party campaign spending his own money in the 1992 presidential election. Following the election, many of those who had backed and supported Perot became critical of his power over the former grass-roots organization.

Source:

Todd Mason, Perot: An Unauthorized Biography (Homewood, 111.: Business One Irwin, 1990).

H. Ross Perot (Henry Ross Perot), 1930–, American business executive and political leader, b. Texarkana, Tex., grad. Annapolis, 1953. In 1957 he resigned his commission and became a salesman for IBM. In 1962 he founded Electronic Data Systems (EDS), one of the first computer data service companies. In 1984, he sold EDS to General Motors, but retained an interest in the company. Bitterly critical of General Motors management, he sold his remaining interests in EDS to GM for $700 million (1986). He diversified into real estate, gas, and oil and in 1988 started a new computer service company, Perot Systems.

Perot came to national attention during the Iran hostage crisis (1979), when he funded an operation that rescued two of his employees from an Iranian prison. In 1992, he emerged as an independent candidate for president, expressing serious concern over the national debt. After a departure from the race in July, which alienated much of his support, he returned in October and finished third in the general election with nearly one fifth of the popular vote. He subsequently opposed the ratification of the North American Free Trade Agreement .

In 1995 Perot founded a new national political party, the Reform party , as an alternative to the Democratic and Republican parties. As the party's 1996 presidential candidate, he again finished third in the presidential race, but with a much reduced popular vote. While Perot remained a significant force in the party, during the late 1990s his role was gradually eclipsed by the Reform governor of Minnesota, Jesse Ventura.

Bibliography: See K. Follett, On Wings of Eagles (1983); D. Levin, Irreconcilable Differences: Ross Perot versus General Motors (1989).