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Speculations, Bubbles, and Leveraged Buyouts

Countless fortunes have been made by speculating in land and commodities. As new continents were discovered and developed, intrepid speculators purchased vast tracts of land, waiting for settlers to arrive and land values to appreciate. For example, thousands of square miles were purchased or wrested from Native Americans by European speculators, to be resold to pioneers at enormous profits. Commodities are often bought in bulk to be sold at great profit as the need for grains, metals, or raiment is recognized. Perhaps such speculation is necessary for the free flow of goods. Less justifiable is the profiteering that accompanies war, as the necessities rendered unavailable by battle are hoarded by speculators and sold to a desperate population at usurious prices.

As the wealth of humankind was gradually transferred from land and chattel into currency and stock shares, the opportunity for speculation increased and gave rise to that modern and apparently unavoidable phenomenon of modern economics—the financial bubble. Fortunes were made and lost in the infamous tulip mania in the Netherlands in the seventeenth century, as the Dutch genius for trade and finance was temporarily overwhelmed by a frenzy to purchase tulip bulbs at rapidly appreciating prices—until the bubble collapsed, bringing ruin. The notorious John Law brought a great fortune to himself and ruin to thousands of speculators in the Mississippi Company and South Sea Company bubbles of 1720.

All of the modern advances in technology have been accompanied by financial frenzy, none more so than the railroad. Even as profitable an enterprise as the discovery of massive amounts of gold in South Africa caused a bubble in the Kaffir stock panic on the London exchange in 1896. The greatest opportunity to create speculative fraud and financial bubbles is the pyramid scheme, perfected by Charles Ponzi in the 1920’s and much-practiced by hucksters and scam artists—large and small—ever since.

The greatest vehicles for speculation are the world’s stock markets, where fortunes are made and lost every day. The sudden rise and fall of the prices of securities—the “Nifty Fifty” in the 1960’s, the dot-com boom and bust of the late 1990’s, and the real estate collapse of 2008—combine both scandal and mania.

In the modern market, venture capital firms can raise funds for the leveraged acquisition of established companies, based on massive borrowing. In the 1980’s, Michael Milken pioneered this method of acquiring debt to finance company takeovers. He was the catalyst that enabled Reginald F. Lewis to acquire the billion-dollar Beatrice Foods, while investing only a fraction of the purchase price from his own funds. In 1989, Milken was convicted of stock price manipulation and sentenced to ten years in prison. Although he was excoriated in the press as the symbol of Wall Street greed and corruption, Milken received support from Lewis during his criminal trial. Lewis may have been paying back a favor to the man who arranged his leveraged buyout of Beatrice Foods, or perhaps Lewis believed that Milken’s innovative financing schemes were necessary to allow an outsider like Lewis to rise to the heights of the business world.

Great Lives from History: The Incredibly Wealthy

Reginald F. Lewis

by Howard Bromberg

American industrialist and attorney

Employing the financial device of a leveraged buyout, Lewis became owner and chairman of the TLC Beatrice food conglomerate. The first African American to own a company with revenues exceeding $1 billion, Lewis generously donated to various charities.

Sources of wealth: Law practice; sale of products; investments

Bequeathal of wealth: Spouse; children

Early Life

Reginald Francis Lewis was born during World War II in a segregated neighborhood in Baltimore, Maryland. He was the only child of Clinton and Carolyn Cooper Lewis. When he was five, his mother left her husband, who was often absent from home, and moved in with her parents, Sam and Sue Cooper. His mother worked as a waitress and store clerk, and Lewis grew close to his grandparents. Lewis attended St. Francis Xavier Catholic elementary school. When he was was nine, his mother married Jean Fugett, who was a positive influence on young Lewis.

Lewis attended Dunbar Public High School, where he excelled in sports, earning varsity letters in baseball, basketball, and football. He received a football scholarship to attend Virginia State College, the oldest state African American university in the nation. Up to this point, Lewis seemed primarily interested in sports. In college, however, he developed two new aspirations: to improve academically and to become a millionaire, as he announced to his friends. Lewis became a member of Kappa Alpha Psi, a historic African American fraternity founded in 1911. Under a program for minority students, Lewis enrolled in Harvard Law School upon graduating from Virginia State in 1965.

First Ventures

After graduating from Harvard Law School in 1968, Lewis took a position as an associate lawyer with the prestigious New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, earning a salary of $10,000 a year. On August 16, 1969, he married Loida Nicholas, a Filipino American. After two years in the corporate law department of Paul, Weiss, Lewis left the firm to become a partner in a start-up law firm that focused on New York City’s African American community. Several of the partners of Paul, Weiss were surprised that Lewis was taking what seemed to be a risk with his promising career. For Lewis, however, his new firm, Wallace, Murphy, Thorpe and Lewis, represented a chance to reengage with the African American community. He also sensed that the firm presented opportunities to make money in new entrepreneurial ventures, and that he was dynamic enough to take advantage of these opportunities. For example, through his new contacts, he was appointed to sit on the board of directors of the General Foods Corporation. While on the board, Lewis was involved in sixty-four business deals associated with General Foods. He also obtained the music rights to the film The River Niger, and he was instrumental in blocking the sale of Essence magazine to the Johnson Publishing Company.

Within two years of joining Wallace, Murphy, Lewis was so successful that he bought out his partners’ shares for $32,000, assuming full ownership of the firm. Lewis hired two associates for the firm. Besides the work he was doing for the Urban Coalition and the Ford Foundation, Lewis began to aggressively attract corporate clients, such as Aetna Life, Equitable Life, and businessman Norton Simon. He also received steady revenue from working with the American Association of Minority Enterprise Small Business Investment Companies, under a program created by the U.S. Small Business Administration. With his firm prospering, Lewis felt secure enough to start a family. In 1973, he and Loida had their first child, Leslie, and their second daughter, Christina, was born in 1980. Lewis also purchased a summer home in the exclusive East Hampton section of Long Island, New York. He traveled in Bentley and Mercedes limousines.

Mature Wealth

Although by 1978 Lewis’s law practice was increasingly lucrative, netting him as much as $100,000 profit per month, he made a pivotal decision. He would transition from being a lawyer for business owners to becoming a business owner himself. In 1982, he bought a radio station in St. Thomas, hoping to launch a Caribbean Basin radio network, a project that never got off the ground. In 1983, he incorporated TLC Group L.P. as a venture capital firm to acquire and hold his businesses. In 1984, he bought the McCall Pattern Company, which sold home sewing patterns, for about $22.5 million. Lewis’s intense management style proved to be profitable for the venerable company, and in a short period he doubled McCall’s revenues. He sold the company in 1987 for $90 million. (He would later be sued by the company’s purchasers, who claimed that Lewis misrepresented the company’s assets; Lewis was eventually successful in refuting these allegations.)

A few months after the sale of McCall’s, Lewis bought Beatrice Foods for $950 million, with financing provided by the well-known leveraged bond financier Michael Milken of the investment firm Drexel Harriman Ripley. Beatrice Foods was an international food conglomerate, with operations in groceries, beverages, snacks, and basic foods in thirty-one countries.

Having risen to the highest levels of international commerce, Lewis bought a 1916, twenty-five-room, Georgian mansion named Broadview in the East Hamptons for $3.6 million. He stocked his mansion with $1 million worth of Impressionist and surrealist paintings. The following year, Lewis and his family moved to Paris, the headquarters of TLC Beatrice operations, where they leased elegant quarters dating from the eighteenth century. Lewis increased the revenues of Beatrice International Foods to more than $1 billion, making it the first African American-owned company in history to exceed that plateau. He leased a private airplane at a cost of more than $100,000 a month to travel to his businesses, vacations, and homes. He enjoyed the finest of luxuries—Monte Cristo Cuban cigars, Dom Pérignon champagne, elegant furnishings, and gourmet dinners at the famous Maxim’s restaurant in Paris with his wife.

In 1990, Beatrice generated $1.5 billion in sales, earning about $100 million in profit. In 1991 and 1992, Lewis made the list of Forbes magazine’s four hundred wealthiest Americans. He established the Reginald F. Lewis Foundation in order to disburse more than $10 million to charity. He also donated $1 million to Howard University; gave $100,000 each to the University of the Philippines and Virginia State University; funded a scholarship for the New York chapter of Kappa Alpha Psi; made benefactions to his childhood church and to the Abyssinian Baptist Church in Manhattan; presented $1 million to various African American cultural institutions; and provided $250,000 for public television. Lewis’s largest gifts were a $2 million endowment for the National Association for the Advancement of Colored People (NAACP) and $3 million to Harvard Law School, which named its International Law Center for him.

In 1992, at the height of his business success, Lewis received shocking news. Having been sick for several months, he was diagnosed with inoperable brain cancer. Lewis entrusted the management of TLC Beatrice to his stepbrother Jean Fugett. He died in January, 1993, at the age of fifty. He left the bulk of his personal fortune, estimated at $400 million, to his wife, Loida, who took over the management of TLC Beatrice International Holdings. In 2002, the Reginald F. Lewis Foundation provided funding to open the Reginald F. Lewis Museum of Maryland African American History and Culture in Baltimore.

Legacy

Reginald F. Lewis was an aggressive and successful entrepreneur, whose venture capital firm benefited from the newer forms of leveraged buyouts developed on Wall Street in the 1980’s. Having acquired the Beatrice Foods conglomerate, he showed himself to be a shrewd and capable business executive. As the first African American owner of a billion-dollar company, he was described by his widow as the “Jackie Robinson of finance.” He was admired by many for his hard work and shrewd business sense. He was a significant participant in the leveraged buyout innovations of the 1980’s—to some, an achievement, to others, a fault. Despite his taste for luxurious living, he was a generous philanthropist, making significant gifts to African American institutions and Harvard Law School.

Citation Types

Type

Format

MLA 9th

Bromberg, Howard. "Reginald F. Lewis." Great Lives from History: The Incredibly Wealthy, edited by Howard Bromberg, Salem Press, 2010. Salem Online, online.salempress.com/articleDetails.do?articleName=GLIW_1242369001242.

APA 7th

Bromberg, H. (2010). Reginald F. Lewis. In H. Bromberg (Ed.), Great Lives from History: The Incredibly Wealthy. Salem Press. online.salempress.com.

CMOS 17th

Bromberg, Howard. "Reginald F. Lewis." Edited by Howard Bromberg. Great Lives from History: The Incredibly Wealthy. Hackensack: Salem Press, 2010. Accessed December 14, 2025. online.salempress.com.

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