In August 1981, on an island cattle ranch in Texas also populated by alligators, a group of California engineers and space buffs test-fired a 55-foot rocket designed by a college dropout and paid for by wealthy Texans. America's first commercial space-launch vehicle was blown 250 feet into the air by a spectacular explosion that set the surrounding grass afire. No one was hurt.

Neither the National Aeronautics and Space Administration nor the country's large aerospace companies had a hand in this launch attempt. The Percheron Project was strictly a private venture, and the people responsible for it aren't at all embarrassed or even very much disappointed that it blew up. They are convinced that there is money to be made in building cheap rockets to life commercial satellites into orbit. Percheron, despite the explosion, was a first step, and it earned its participants a measure of respect in a status-conscious industry.

It took one year and $1.2 million to design, build, and test the rocket. For Gary Hudson -- a college dropout turned space prophet, and the originator of the Percheron Project -- it meant converting theoretical musings into the real thing. For David Hannah, Jr., Houston-based real estate developer, it meant backing with cold cash what he knew to be God's will. For a group of young California engineers, it meant adventure. Ralph, the alligator, got extra chicken for putting up with all of them.

David Hannah, 60, makes his money by recognizing the potential value in a parcel of laud, but in the late 1970s he acquired an interest in the commercial potential of space. He persuaded himself that NASA was neglecting a large share of the market by concentrating its resources on the sophisticated -- and expensive -- shuttle. He could not, however, persuade the Carter Administration that there were users for low-cost, expendable launch vehicles, users for whom the shuttle fees would be too expensive.

Then he met Hudson. "Until Gary came along," says Hannah, "I was convinced that the only one who could launch rockets was the government." Hudson persuaded him that civilians could get into the space transportation business.

Jim Fruchterman in early 1981 was working on his Ph.D. in electrical engineering at Stanford University. "From way, way back," he says, "I always wanted to be an astronaut." NASA officials told him that, in addition to a degree, he needed "operational experience." When he met and talked to Gary Hudson, he saw a way to get some.

Fruchterman decided to work for Hudson on the Percheron Project for the same reasons that had already attracted engineers David Ross and Clif Horne. "Here Hudson was, talking as a matter of course that he was actually going to build rockets okutside of NASA," says Fruchterman. Ross told his mother he would kick himself for life if he passed up the opportunity Hudson offered.

People say that Gary Hudson has a silver tongue. It is, at least, persuasive. With no money himself, he persuaded Hannah and his friends to part with $1.2 million of their own. With no formal graduate education himself, he persuaded several engineers with Ph.D.s to sign on as his assistants.

Hudson is 32, has a slight build, and speaks so quietly that his voice sometimes shades to a whisper. His favorite science fiction author is Poul Anderson, whose stories and novels usually take an optimistic view of the future, which frequently turns out to be both capitalistic and libertarian.

Leaving college in 1971 after his third year, Hudson read and thought a lot about space, and before long such companies as IBM and 3M were paying him to lecture. He talked to groups of corporate managers matter-of-factly about ideas once considered pure science fiction and still thought of by less imaginative thinkers as fanciful.

Tele-tourism, for example: A safely earthbound individual dons a special helmet, but instead of a transparent glass face, the front of the helmet contains a TV screen. As the wearer moves his head, remote TV cameras track that motion -- side-to-side, up or down. The cameras look where the wearer looks, and he sees what they see. And if the cameras were, say, on the moon... or better yet on a lunar rover that the teletourist could drive remotely from his own earthbound seat...

Or asteroid retrieval: When Hudson talks about sending rockets to capture passing asteroids, the only uncertainties relate to such questions as where the asteroids should be positioned for mining. "An asteroid 100 meters in diameter contains, among other things, $1 billion worth of nickel and three years' supply of cobalt. If you put it in orbit while you mine it instead of bringing it to the surface, you don't have the problem of gravity to deal with," he says.

Nothing quite so exotic was on Hannah's mind, though. Their oral agreement, made in September 1980, called for Hudson to deliver, for $400,000, the design of a rocket that he could then build and test for another $600,000. The launch date was July 4, 1981.

Hudson had brought together the cash and the engineering talent. Now, for the first time in his life, he had to deliver a product.

The design problem facing Hudson and his newly formed company, GCH Inc., was not so much technical as it was economic. "It's easier to build a rocket engine than the engine for a jet plane," he says. The Percheron had to be cheap enough to justify its cost in launching small commercial payloads and just reliable enough not to lose too many of them. He called it Percheron because, like that breed of workhorse, the rocket had to be big and dumb.

Since Hudson fancied himself a rocket designer, he insisted that he, not the engineers working for him, would design the Percheron. Between September and Christmas of 1980, Hudson produced and rejected a dozen or more design schemes.

Wave-rider was an early idea based on the ability of a rocket of a particular shape to rise its own shock wave when traveling at six or seven times the speed of sound. Gumdrop was nearly as wide at the bottom as it was tall, but it tapered toward its tip. Big Mac, on the other hand, was round -- 10 feet in diameter along its entire 15-foot length, except for a short nose cone. Six-pack was a cluster of six first-stage rockets surrounding a single-rocket second stage.

Hudson never took those designs to Ross or the other engineers. "Usually we heard about them over the water cooler," Ross says. "And, quite literally, some of them lasted only as long as it took me to get back to my calculator." During the winter Ross, at 31 the oldest of the GCH engineers, began to wonder, just a bit, whether Hudson was the technical rocket expert he would have people believe. Both Ross and Fruchterman had assumed that Hudson held an engineer's degree. He had, after all, never given them reason to think otherwise. "And if he is a little eccentric, well," Fruchterman recalls thinking, "the project wouldn't have started without him."

Near Christmas, about on schedule, the design coalesced. Percheron would not be a single-launch vehicle, but a cluster of rockets. Three Percherons and a small second stage would lift a light load into an orbit near earth; seven, with the small final-stage rocket, would put a payload into geostationary orbit, 22,300 miles above the earth.

The design wasn't terribly original. Others, including NASA, had designed clustered rockets. The Percheron's design turned out to be very much like a small rocket designed in the 1960s, but never manufactured, by TRW Inc. Ross, who noted the similarity, says that recent research he has done suggests that most of Hudson's rocket designs came from design literature that already existed. "That was a pattern with Gary," he says, "taking old design things and presenting them as new ideas."

Old or new, the design pleased Hannah, whose personal $400,000 had thus far financed GCH. It pleased him enough that he continued sending checks to GCH's rented plant in Sunnyvale, Calif., every week or two until new investors could be found. He felt, he says, that he was "getting value for his money," despite some evidence that not every dollar was wisely spent.

At one point, for example, Hudson had been toying with the idea of building a rocket 10 feet in diameter and 75 feet high, something that would really impress potential investors. He bought rolled sheet aluminum to build the beast before scratching the design. For months the useless aluminum occupied a corner of the rented building GCH occupied in a Sunnyvale industrial park. So did two large propellant pumps from a NASA Titan rocket. Hudson paid a friend, Bob Truax, nearly $20,000 for them before deciding not to use propellant pumps. Truax, who built the rocket that almost carried Evel Knievel across the Snake River Canyon in 1974, needed the money for another project (see "Who's Who in the Space-Launch Biz," page 68) according to GCH technical director Eric Laursen. Hudson also acquired a pair of obsolete guidance systems built for the X-15 rocket plane. "At the time," says Hannah in Hudson's defense, "they looked like they might be useful."

Fortified with a fresh infusion of cash from Texas and spurred by Hannah's urgings to get the machine on the launch pad as quickly as possible, Hudson's crew set to work in January 1981 to build a single prototype.

A rocket itself, as distinct from its engine and the electronics in its nose cone, is little more than a hollow tube filled with fuel. In Percheron, the upper portion of the rocket held liquid oxygen. A welded plate separated the liquid oxygen from the kerosene stored in the lower half. Because both fuels have to be pressurized to 150 pounds per square inch (about the pressure of 10 atmospheres) to burn properly in the engine, it is important that the welds holding the rocket shell together and holding the plate separating the two tanks be entirely leakproof. One way to test the welds is to fill the rocket with water under pressure.

On the February morning of the pressure test, Ross arrived wearing a swimsuit, goggles, and fins. He was, as it turned out, dressed appropriately. Water poured from all parts of the rocket.

The welds were later redone by a different outside contractor, but in the interest of time Percheron was never water-tested again. No one quite knew what would happen in the summer when both tanks were pressurized with fuel in them.

Percheron's engine also got less-than-rigorous testing. "I regard it as unimaginable that you would set off a rocket with tons of propellants in it without any prior experience, but that's pretty close to what we did," says Fruchterman.

Eric Laursen and his technicians built a scale model of the engine. One April afternoon they fastened it securely to a test stand that Truax had built at the Fremont Airport, south of Oakland. The idea was to fire the engine and measure its performance characteristics, but before all the test-recording instruments were turned on or the videotapes were rolling, Hudson overheard one of the technicians counting: "... 9... 8... 7..."

"No," he shouted, "No!Not yet!"

"It's too late, man," drawled the laid-back Californian. "... 3... 2... 1..."

Voosh! The engine fired, but no recording was made of its performance. So they did it again.

During the second and final firing of the two-foot-long model, an excess of liquid oxygen prevented it from reaching its maximum power.

"The test was not an engineering success, but given the money," says Frucherman, "it had to do."

Not surprisingly, a camaraderie developed among the people building Percheron. They were working together days, nights, weekends toward a common goal. They were going where no small group of people, working without a corporate or government safety net, had ever gone before. In the beginning, that camaraderie included everyone at GCH. There were hot-tub parties at Hudson's rented house in the hills west of Sunnyvale. "We had all read The Right Stuff," says Fruchterman in clear admiration of Tom Wolfe's account of America's astronauts, "and in the backs of our minds we envisioned ourselves as Chuck Yeagers. We weren't quite risking our lives, but we were definitely undertaking something new and different. That meant that beer call [as in The Right Stuff ] was very important."

Later, during the summer, the project would become a different sort of adventure, and the camaraderie would dissolve. Hudson began to lose his hold on the two groups he had catalyzed for Percheron. The engineers, working alone in Texas to prepare a launch site, became increasingly independent and wary of him. Hannah and the investors he had brought into the project grew doubtful about Hundson's continued role in their business. But in April, none of this was apparent.

Hannah had collected 10 investors who, among them, put up $1 million in a limited partnership to fund GCH's rocket development work. All 10 were also shareholders in a new company, Space Services Inc. (SSI), which was the general partner in the limited partnership, and which would survive when the partnership dissolved at the completion of the Percheron test launch.

In May, Ross, Fruchterman, and Horne were dispatched to Texas to build a testing and launching facility on Matagorda Peninsula, a narrow strip of land running parallel to the Gulf Coast south of Houston.

Heavy equipment -- generators, compressors, a four-wheel-drive vehicle, a small mobile home, and a van full of electronics -- had to be barged from the mainland. Ross and Fruchterman, both pilots, commuted by rented plane to the abandoned airfield where the test firing would take place. The treetop-level flying they did for most of the summer was part of the Percheron adventure for them and nearly cost them and Caroline Williams, GCH's business manager, their lives one afternoon when unexpected thunderstorms blocked the small plane from first one, then another, then another airfield.

For a time, federal officials, curious about the unusual activity on the normally uninhabited land strip, suspected the GCH crew of being drug runners. Later the crew was invaded by press helicopters when word of what they were really up to leaked out.

The press, the Feds, and the Texas mosquitos, however, were less of a problem than were some members of the family that owned the peninsula. On June 24 a deputy sheriff served Fruchterman with legal papers. The minority owners wanted no rocket launched from their land, and rather than step into a family feud, Hannah decided to leave.

Leaving meant barging all the equipment further south to Matagorda Island, owned by Percheron investor and American Liberty Oil Co. chairman Toddie Lee Wynne, Sr. It also meant the loss of four weeks' work. And it put further strain on Hudson's small company, which by this time was suffering serious internal problems.

The two resources Hudson had catalyzed a year earlier -- the financial and the technical -- were slipping from his control. It appeared to him that they were, in fact, allying with each other against him.

Hudson was the president, chief executive officer, and majority stockholder in GCH. It was his company. But it was completely uncapitalized and had just one source of revenue, Hannah, who doled out cash when and as he saw fit. "I was not running GCH," says Hudson now. "I didn't have control of the money, and later I didn't have control of the people."

Until April when SSI and the Percheron limited partnership were formally created, GCH did not even have a contract with Hannah. Even today Hannah and Hudson hold different views of who was to own what on completion of the Percheron Project.

Hudson expected GCH to build and test Percheron for SSI and then to go on building rockets. But he had no business plan or market study. Who was going to buy them? Would GCH launch them or sell them?

Hannah, on the other hand, saw SSI as the surviving company in the project. It would become a full-service, commercial space transportation business. It might build its own rockets, but it would be selling launch services, not hardware. Hannah wanted to merge GCH into SSI, and in June he offered Hudson stock and a contract.Hudson stalled, and the issue festered through the summer as the Percheron launch date was pushed further and further ahead.

Inside GCH a crack developed, then widened. Hudson was not an engineer. He, like Laursen, Tom Brosz, and Anne Roebke -- friends he had brought with him into GCH -- were self-taught rocket and space enthusiasts. Rivalry and distrust began separating Hudson and this group into one camp, and Ross and the engineers with academic degrees into another. Ross, especially, saw his opinions and advice ignored during the design and construction of Percheron. The rivalry turned openly hostile in July when Laursen and his crew finally arrived in Texas where Ross and the engineers had already been for several weeks. The question was, since Hudson remained for the most part in California, whether Laursen or Hudson would be in charge of the launch site. As with the merger issue, Hudson let this one fester.

On Tuesday, July 7, the finished Percheron prototype was trucked out of Sunnyvale as far as the New Mexico state line without serious mishap. But there it collided head-on with red tape. No one had applied for a special permit to truck an over-length rocket through the state. Highway officials told driver Don Ambrose to park his truck and head for a motel. They would get the paperwork done in a day or two.

Ambrose went to the motel -- but not for long. After dark he hijacked his own truck and again headed east for Rockport, Texas, this time sticking to the back roads where he was less likely to be spotted.

Meanwhile, the press was waiting. The Percheron Project, says Ross, had become the biggest thing to hit south Texas since the previous hurricane. Local and national print reporters milled about. TV film crews flitted in helicopters. When arrival time came and passed with no truck, no rocket, and no word, SSI's recently hired press officer had to concede that they had not the slightest idea where Percheron was. Hours later Ambrose telephoned from west Texas and complained about washed-out roads. Early the next morning, he arrived.

The plan was to conduct two, or possibly three, test firings of the engine with Percheron bolted firmly to the test stand. The first firing would last about five seconds, a "burp" test. If the static tests went well, the rocket would be launched out over the Gulf of Mexico.

With a successful flight under their belts, SSI investors hoped to attract $20 million to $60 million in second-stage financing through a public stock offering. Just building and testing the Percheron would exhaust the $1.2 million in private capital already invested in the project. They needed much more to get their space transportation business off the ground.

Hannah had visited the California plant every week or two through the winter and spring to check on Percheron's progress. With the rocket now in Texas he could keep tabs daily -- and did.

The July 4 launch date had long since passed, and Hannah began pushing Ross and Laursen to move more quickly. They think he pushed a bit too hard. Sometimes Hannah would announce the time and date of some event to the press without getting a firm commitment from the GCH people, who then had to hustle to meet the deadline. In late July relations between Hannah and the GCH crew deteriorated to the point that Ross put himself and his engineers on eight-hour days -- about half their customary shift. He calmed down, though, and work picked up again. "I could only stand it for about three days," Ross says.

July 31, and finally the Percheron is set. The rocket is bolted to a steel test stand 19 feet high, which in turn is anchored to concrete pilings extending 3 feet into the Texas soil. Pipes carry cooling water through the stand's metal structure to prevent heat damage during the test firing. The water comes from the pond of Ralph, the local alligator, who must be diverted from his home pond with chicken carcasses while suction pipes are installed in the pond.

At 2:45 p.m., 3,700 pounds of liquid oxygen are pumped from storage tanks into the upper portion of the rocket. Sixteen hundred pounds of kerosene go into the lower tank. At 4:20 engineers begin pressurizing the tanks, and by 5:45 the pressure in both has reached 137.5 pounds per square inch without a leak. The welds hold. At 5:50, after a five-minute countdown, Laursen pushes the igniter button.


At 5:56, another try, and still nothing. The burp test fizzles.

The test was canceled, the tank pressure was relieved, and the rocket was checked. Kerosene, leaking into the engine, had wet the igniter and prevented it from lighting.

Hannah told the entire crew to take the weekend off and send the bills to him. Only one technician was jailed for excessive relaxing. That evening Hannah drove Ross and Clif Horne to the Houston airport so they could fly to California for the weekend. On the way he repeated an offer he had made earlier that month. Ross and his engineers, Hannah said, should leave GCH and come to work for SSI directly. They would receive stock in the company, and Ross would have a seat on the board. "He told me," says Ross, "that the best motivation he could give me was to make me independently wealthy." Ross and Horne agreed to consider the offer.

The next test firing was scheduled for Wednesday, August 5.

The procedure was the same except this time the igniter was wrapped in a plastic trash bag to keep it dry in the event of a leak.

"... 10... 9... 8... 7..."

Ross hit the igniter button, and just as it should have, smoke appeared at the rocket's base.

"... 6... 5... 4... 3... 2... 1... 0"

Laursen pushed the button opening the liquid-oxygen valve and a split second later another button controlling the kerosene valve.

"Shit!" said Laursen. (ABC had to edit its videotape before the evening news.) There were eight second while the crew in the control van waited to learn where the first pieces of the exploding rocket would fall back to earth. Then they put out the grass fires and started the cleanup.

In September, Hannah withdrew his merger offer to GCH and his employment offers to Ross and the Percheron engineers. Based on conversations he had had after the Percheron test with NASA engineers, and based on prayer, Hannah had decided that solid-fuel rockets held the key to commercial space transportation. How does he know he has made the right decision? "Technology," he answers, "is only part of a project like this. You can't make decisions without also having faith." His company, now called Space Services Inc. of America, expects to test-launch its first rocket in August.

On October 1, after the Percheron explosion, Ross, Horne, Fruchterman, and Williams incorporated Phoenix Engineering and began preparing a business and technical plan for building low-cost, liquid-fueled rockets.

Laursen remains unemployed.

Hudson is still majority stockholder of GCH, which owes Hannah slightly more then $200,000 for cost overruns on the Percheron Project. "We are very actively doing nothing," he says.