George Bush and his political managers have long promoted an image of his early years in Texas as a time of entrepreneurial adventure when Bush sought and made his fortune in the burgeoning oil business, allowing him to live comfortably while holding or seeking public office for the past 22 years.

That image is rooted in fact, but it is also incomplete. Bush's years in the oil-drilling business were ultimately successful, but they were marked by frustrations and setbacks, too. He had to struggle to make a go of his Zapata Off-Shore oil-drilling company, which he launched with financial backing from his relatives. The firm was less profitable than some other comparable operations in Texas. When the time came to get out of the business to run for Congress, Bush had trouble selling Zapata.

"He didn't make a lot of money when lots of people did," observed one of Bush's close friends. "He was just not a howling success."

Bush took $1 million out of Zapata when he sold it in 1966, but over the next few years his investments did not grow. A confidential financial disclosure statement that Bush gave the Senate in 1970, when he was being considered for confirmation as U.N. ambassador, showed his investments then worth about $800,000.

To live comfortably through the next two decades while retaining the flexibility to seek or hold public office, Bush needed additional sources of income. He found them, often with the help of friends and political supporters.

For example, in 1970, while he was campaigning for Senate against Lloyd Bentsen, Bush bumped into one of his many friends on the streets of Houston. The man, Victor A. Flaherty, who had done printing work for Zapata Off-Shore, needed a loan to buy the company for which he worked. Bush agreed to lend him money, but before the deal was completed he sought the advice of Baine P. Kerr, an old Bush friend who was then general counsel of Pennzoil, the giant oil company run by Bush's old partner, J. Hugh Liedtke.

Kerr said in an interview that when Bush consulted him about the printing company loan, Kerr suggested Bush take stock in the company as part of the loan arrangement. So Bush acquired 26,000 shares of Fidelity Printing Co., at $1 per share. Three years later, when Fidelity was sold, Bush cashed in his stock for a $499,600 profit, nearly a 1,900 percent gain.

But that profit was all but offset by losses Bush suffered in the sour stock market of the early 1970s, when a financial adviser was handling Bush's investments. In 1976, according to the tax returns that Bush has released, he earned only $34,000 from his investments. Bush sought additional income when he returned to Houston in 1977.

At that time, Fred M. Zeder, a friend from Connecticut who had moved to Texas, brought Bush to lunch with a Dallas real estate man who was promoting partnership deals. Bush ended up investing $50,000 in Ponderosa Forest Apartments Ltd., a partnership described recently as "a good tax gimmick . . . and a typical Texas joint venture offering," by Horace T. Ardinger, another Dallas real estate man who also invested in the deal. The partners bought a 180-unit apartment complex near Houston that was in financial difficulty, renovated it and raised the rents.

According to Bush's tax returns from 1977 through 1985, the partnership provided Bush these benefits: paper losses totaling $225,160, which gave Bush tax savings of about $100,000; straight profits of $14,062; and capital gains totaling $217,278.

In the first Reagan administration, Zeder -- with Vice President Bush's support -- was chosen as the U.S. ambassador to conduct negotiations on the independence of the Marshall Islands in the Pacific. In recent years, Zeder and his wife have given more than $30,000 to committees supporting Bush's current presidential campaign.

Investor, Consultant, Director

In 1978, Robert A. Mosbacher, a wealthy Texas oil man who is finance chairman of Bush's presidential campaign, assembled a group of his friends and relatives in a partnership to buy small barges to transport petroleum products. Members of the group were to put up about $750,000; a bank of which Mosbacher was a director would lend the partnership $2.2 million more.

Bush invested $50,000 in this Mosbacher deal, and since has received $115,373 in income from the partnership. One of the managers of the partnership said in a recent interview that Bush's share is now worth at least $60,000, and that Bush can expect continued income of about $20,000 a year from it for the "indefinite" future.

James A. Baker III, the departing treasury secretary who is becoming the Bush campaign chairman, invested $50,000 in the same partnership. Mosbacher said that inviting Bush and Baker into the partnership was "not a big favor, but a favor." The barge deal has turned out to be "a very, very good investment," Mosbacher said.

Bush also earned money on his return to Texas as a consultant to and board member of several companies. In March 1977, Robert H. Stewart III, head of the largest Texas bank holding company, First International Bancshares of Dallas, hired Bush as a $75,000-a-year consultant and put him on the board of directors. Bush was "to perform such duties as may be prescribed or assigned by the board of directors," according to a filing at the Securities and Exchange Commission (SEC). Stewart has declined to answer questions about Bush's work for his company, and Bush cannot remember what he did for the bank, according to a senior Bush aide. Bush declined to be interviewed for this article.

Three other firms invited Bush onto their boards and retained him as a consultant in 1977. According to C. Fred Chambers, an oil man who has been Bush's friend since his early days in Texas, Bush had friends at all three firms. The chairman of the board of one of them, Purolator Inc. of Rahway, N.J., was his friend Nicholas F. Brady, selected last week to become treasury secretary. The two other companies were Eli Lilly & Co., the drug manufacturer, and Texas Gulf Inc.

Altogether, Bush made $112,000 from these four companies in 1977, according to his tax return for that year.

Bush continued these arrangements for 2 1/2 years until he gave them up to work full time as candidate. During that time he collected more than $275,000 from these four corporations. Such arrangements for former holders of high government posts are not unusual.

The story of Bush's financial life can be told in part because of his voluntary disclosures. Since his days in the House (1967-71), he has been a strong advocate of full disclosure by members of Congress and government officials. He released statements of his holdings while he was a congressman though they were not required. He also made income and net worth statements public in 1979, along with his tax returns, when he ran for president.

Heading Off to the Oil Fields

When Bush graduated from Yale in June 1948, he set off to Odessa, Tex., to make his fortune. His first job was working in a firm run by Neil Mallon, his father's Yale classmate and fellow member of Skull and Bones. Mallon, who ran Dresser Industries, made Bush a trainee in the company's West Texas oil business. In subsequent years, Bush worked for Dresser in Texas, California and then in Texas again.

In 1950, Bush decided it was time to strike out on his own. His uncle, G. Herbert Walker Jr., raised $350,000, the initial capital of Bush-Overbey Oil Development Co. Inc., which Bush established in 1951 with John Overbey, a Midland oil man. Bush and his uncle created a new entity called Walker-Bush Corp., which became the owner of Bush-Overbey in 1954.

"Overbey was the land {expert}, did most of the land," according to Scotty Alcorn, a geological engineer who knew Bush in Midland. "But as far as public relations and getting along with people, it was George."

In his autobiography, "Looking Forward," Bush writes: "My uncle, Herbie Walker, had helped us with funds . . . . But in business as in politics, you can only go so far relying on the backing of relatives and friends."

Bush writes that he met another investor, Eugene Meyer, then owner of The Washington Post, through Bush's father's investment banking firm, Brown Brothers, Harriman and Co., which had done business with Meyer. On one business trip to Washington, Bush persuaded Meyer to invest at least $50,000 in a Bush-Overbey oil venture.

Bush's uncle was a major stockholder and member of the board when Bush and two Texas friends, J. Hugh and William Liedtke, formed Zapata Petroleum Corp. in 1953. His Wall Street firm, G.H. Walker & Co., was chief underwriter for the initial sale to the public of Zapata's stock and convertible bonds. In 1954, when Bush set up Zapata Off-Shore Co. as a subsidiary of Zapata Petroleum, Walker again was a major stockholder and helped sell the bonds that paid for purchase of the first offshore oil-drilling rig.

Bush's new endeavor turned a small profit in 1955 and 1956, its first two years in operation, but business slumped in 1957, and in 1958 Zapata Off-Shore lost more than $500,000. In the annual report to stockholders that year, Bush apologized: "We erroneously predicted that most major {oil} companies would have active drilling programs during 1958. These drilling programs simply did not materialize. . . ."

The next year Bush and the Liedtkes decided to split up because the Liedtkes wanted to end their oil-drilling activities and concentrate on purchasing oil-producing properties or land for exploration. With their part of Zapata, they formed Pennzoil Corp., now a multibillion-dollar enterprise.

Walker, Bush's uncle, was again the moving force in organizing a group of relatives and friends who put up $800,000 so Bush could buy out the Liedtkes' interests in Zapata Off-Shore.

Bush thought of his company as family, kept the stockholders informed through folksy letters in his annual reports, and created one of the first stock-option programs for his employees. He kept his own salary low, paying himself $30,000 a year at the beginning and only $45,000 12 years later.

By the early 1960s, Bush's small, conservatively run company looked as if it might be left behind by the rest of the high-flying Texas oil industry. New technology made possible giant offshore oil-drilling platforms, new companies entered the field and competition for offshore drilling contracts grew. Like other companies, Bush's tried to expand through diversification, but with no success. Zapata invested in a New Jersey plastics machinery company, a Texas company that made pipe linings and a gas transmission company; none made money for Zapata.

Bush gave up the presidency of Zapata Off-Shore for four months in 1964 to run his first unsuccessful campaign for the Senate. He returned to the company after his defeat.

In September 1965, Hurricane Betsy destroyed the company's newest and largest drilling barge, worth $5.7 million, in the Gulf of Mexico. Zapata's employees had named the rig the "Maverick." Its crew had been safely evacuated and the loss was covered by insurance, but the impact on the company was nevertheless severe. Bush, as recently as last week, remembering the event, told a reporter that one of the moments he remembered from the past was "looking for a rig until your eyes hurt."

In the 1965 annual report to Zapata Off-Shore stockholders, Bush reported that the company had a good year, but added that the loss "was a substantial one for Zapata. This was our newest rig and one of our very best {drilling} contracts."

Looking to Sell Zapata

Bush was planning to run for Congress in 1966, and so began to look for someone to buy the Zapata shares owned by himself, his relatives and friends. He believed "it was not right for him to be responsible for the company and devote most of his time running for political office," according to Robert H. Gow, who was treasurer of the company at the time and the man chosen by Bush to look for a buyer.

There was no surge of interest in Zapata, according to Chambers, Bush's friend, whose company was in a long-term drilling partnership with Zapata Off-Shore. Gow said, "There weren't a lot of people who really wanted to buy it."

Kerr said, "The industry was in an expanding mode and he {Bush} wanted out for personal reasons." Kerr said that Pennzoil -- where Kerr then worked -- took a brief look when Bush was trying to sell Zapata Off-Shore, "but oil drilling was not a business Pennzoil wanted to be in."

Michael Thomas, then a New York investment banker with Lehman Bros., who worked on the sale of Bush's company in 1966 and subsequently joined the board of directors under the new ownership, said: "Big money was needed quickly, rigs grew bigger by the day and {Bush} was left with outdated equipment in the struggle. {Bush} wasn't raised to be a businessman under those circumstances."

William S. Farish III, a friend of Bush who became involved in Zapata Off-Shore and today manages Bush's financial trust, agreed. Bush "wasn't going to be one of the 'go go guys' in mergers and acquisitions," he said.

Finally, on Feb. 7, 1966, 160,000 shares held by the Bush group, including almost 50,000 owned by Bush, were sold to D. Doyle Mize, a Texas entrepreneur. Mize drove a hard bargain, Chambers said, "but George just wanted to get out and he {Mize} was the only game in town."

According to Gow, Bush had wanted to sell for cash, but had to settle for a three-year note from Mize. Under its terms, Mize would pay the stockholders 6 percent a year on the $3.2 million purchase price for three years, then pay for all the Bush group's shares during 1969.

"I'd achieved everything I'd hoped for when we moved to Texas," Bush wrote in his autobiography. "I'd helped build a company from the ground up. Most of my investments, despite the ups and downs of the oil business, had been profitable. Zapata Off-Shore was thriving."

By Texas oil-business standards, the $1 million that Bush was eventually to receive for his portion of Zapata Off-Shore was a modest profit for his 12 years running the company.

Bush's association with Zapata Off-Shore was not over, however. Mize quickly began to expand Zapata, but ran into financial difficulties when the collateral he had put up to back the $3.2 million note to Bush and his partners lost much of its value. Mize had to find a new source of financing or forfeit Zapata back to Bush, who was then campaigning for Congress. Bush's friend Kerr said in an interview that the last thing Bush wanted during his House campaign was to be drawn back into the management of Zapata.

A Bush friend stepped in, heading off that possibility. Farish, whose friendship with Bush began on the tennis court, put up $3.2 million that Mize used to pay off the Bush group in cash. In return, Mize gave Farish and his partner in the deal a new note for $3.2 million and an option to buy 69,000 shares of Zapata Off-Shore within three years. Within one year, with Zapata booming under Mize's aggressive direction, Farish and his partner exercised their stock options and sold out, making a $1.7 million profit.

Farish said in a recent interview that he came into Zapata Off-Shore as an investor, not to rescue Bush. "I knew Zapata well, knew the company was in A-1 shape, {and} saw it as a good investment."

Bush said in a 1979 interview that selling Zapata when he did "cost me a bundle, but that's fate. I don't look back on it. I suppose we could have canceled out of the deal -- found some loophole. But I don't believe in doing business that way."

But the history of the company's growth raises doubts about Bush's contention that he lost a lot of money by selling out when he did. Zapata company records show that net assets grew from $7.7 million in the last year Bush had control to $361 million four years later. It appears to have been Mize's aggressive business tactics that increased Zapata's value. According to company officials, Mize would not have run Zapata if Bush had retained ownership.

A Comfortable Portfolio

When Bush became vice president in 1981, he put most of his assets in a blind trust to be run by Farish's firm. In 1984, those assets were valued at $879,381, according to a statement released by Bush's office. No more recent valuation has been made public. According to Bush's tax return for 1986, in that one year he realized capital gains of $430,165 from the trust from the sale of a number of investments.

Bush's only public embarrassment involving his personal wealth occurred during his vice presidential years. He sold his home in Houston in January 1981 for $843,000, giving Bush a capital gain of $596,000. Bush concluded, on the basis of advice from his lawyers, that he did not owe tax on this gain because he used the proceeds from the sale to buy his home at Walker's Point in Kennebunkport, Maine. For tax purposes, Bush claimed that home -- which he bought from his aunt, Mary Walker -- was his "principal residence."

The Internal Revenue Service, however, determined that the vice presidential residence on Massachusetts Avenue NW, supplied free by the government, was Bush's primary residence, not the vacation home in Maine. The IRS ruled that the tax had to be paid on the capital gain from the sale of the Houston home.

In 1984, Bush paid the IRS $129,000 in taxes for 1981 and another $45,000 in interest. He said he was going to appeal the IRS decision, but he never did.

Bush recently released his tax return for 1987, showing that he has now built up a portfolio sufficient to assure him a comfortable life. It showed that he earned $114,681 in salary as vice president, and $193,715 from his investments. His disclosure forms indicate that his net worth is $2 million to $3 million. "He is well off," a senior Bush aide said recently, "but not rich."

Staff writer David Hoffman and staff researcher William F. Powers Jr. contributed to this report.

NEXT: Bush's political personality.