Had Fred Smith followed through on his threat to jump out of a window of the Union National Bank building in downtown Little Rock in 1974, the shipping business might be very different today.
But he didn’t. Smith lived another 51 years, dying Saturday at the age of 80.
Smith grew up in Memphis and moved to Little Rock in 1969.
He founded Federal Express Corporation in Little Rock in 1971 and incorporated it in Arkansas on Feb. 15, 1972.
In 1973, he moved FexEx to Memphis.
According to FedEx, Smith chose Memphis because it was centrally located in the U.S., its airport was rarely closed because of bad weather, the airport was willing to make improvements for the operation, and additional hangar space was readily available.
But on that day in 1974, Smith was distraught over family strife and Union National’s efforts to collect a $2 million loan, according to a 1993 article in the Arkansas Democrat-Gazette, which cited an at-the-time new biography, “Overnight Success: Federal Express and Frederick Smith, Its Renegade Creator,” by Vance Trimble.
It was later discovered that Smith had pledged nonexistent stock to secure the loan, on which he later defaulted, and in 1975, he was indicted, according to the newspaper article.
The information was also fuel for an FBI investigation and a lawsuit filed by family heirs against Smith. He was tried in Little Rock in 1975 and, according to the book, won an acquittal largely due to the jury’s confusion on whether he “willingly” or “wilfully” tried to con the bank out of its money, according to Trimble.
Smith had refused to cooperate with Trimble on the book, which included interviews with Smith’s mother, Sally Hook of Little Rock.
Trimble says later in the book that Smith obviously had no intention of committing suicide.
Trimble quoted former bank chairman Herbert Hall McAdams II and others, including Little Rock lawyer Griffin Smith, who was Union National Bank’s legal counsel, regarding the events of that day at the bank in 1974. The story was repeated later in court transcripts from Fred Smith’s federal trial.
Smith approached McAdams with apologies about the loan.
“He began telling me he was very upset about the whole thing,” McAdams told Trimble. “He said he was going to commit suicide. He was going to jump out of the window!”
Griffin Smith confirmed that account to a Democrat-Gazette reporter in 1993, saying Fred Smith was visibly distraught and made a vague reference to considering suicide.
Griffin Smith said he didn’t believe Fred Smith would go through with it, but “I did feel for him,” according to the 1993 article.
Griffin Smith confirmed that Fred Smith’s mental anguish was further aggravated by the fact that banking regulations require that information concerning possible bank fraud be reported to the Office of the Comptroller of the Currency, according to the Democrat-Gazette article.
Fred Smith’s father founded Dixie Greyhound Bus Lines and Toddle House Restaurants. His son inherited the bulk of his father’s $17 million estate, according to Trimble.
Smith helped his stepfather, Col. Fred Hook, with a $50,000 down-payment to buy Arkansas Aviation Sales in Little Rock in 1965, according to the book.
After earning a bachelor’s degree from Yale and serving two tours as a Marine in Vietnam, Smith moved to Little Rock, where he took over the struggling Arkansas Aviation Sales in 1969, when he was 25, according to the book.
A pilot himself, Smith converted the company into a clearinghouse for hard-to-find turbine equipment for jet engines, according to the 1993 Democrat-Gazette article.
Arkansas Aviation Sales prospered, doing $9 million in business in two years, showing a $250,000 profit, according to the book.
While at Yale, Smith wrote a term paper proposing a revolutionary way to accommodate time-sensitive shipments — and received an average grade, according to a FedEx company timeline.
That idea apparently gelled after he got to Little Rock.
“Infuriated by business snafus and delays in receiving parts, and ‘rush’ orders that arrived as much as a week after the date promised, Smith began formulating his express air idea,” according to the 1993 Democrat-Gazette article. “The idea grew as airlines, which were experiencing budget constraints, curtailed some nighttime and off-peak flights.”
In 1970, Smith became interested in financier Jackson T. Stephens’ French-built Falcon jet and the workings of the Stephens’ Little Rock Airmotive mechanical shop, which was located at what was then Adams Field.
In May 1971, Smith purchased two Falcon jets and commissioned Stephens’ company to modify them for cargo use. Smith later bought Little Rock Airmotive for $2.5 million.
Smith was heavily bogged down in debt before his first FedEx shipment of packages left the ground in 1973.
“Although the company had established a revenue vein by securing a contract with the U.S. Postal Service, which gave FedEx enough cloud to proceed further into debt in the early 1970s, plans to move the headquarters to a more ideal airport in Memphis required extensive capital from new investors,” according to the Democrat-Gazette article.
The book details considerable influence by U.S. Rep. Wilbur Mills, D-Ark., on Smith’s behalf to get Prudential Insurance to invest $5 million in FedEx.
Eventually, FedEx began making money. Net income was $3.5 million in 1976, climbed to $8.1 million the next year, and mushroomed to $20 million in 1980.
Today, FedEx is the largest express transportation company in the world, employing more than half a million people and shipping more than 16 million packages and 20 million pounds of freight daily in about 220 countries and territories.
At the time of his death, Fred Smith’s estimated worth was $5 billion.
