Bette Graham, inventor, entrepreneur, and philanthropist, was born in San Antonio, Texas, in 1924. She left high school to marry a man named Nesmith before World War II. Her mother was an artist, but her own ambition to be an artist was rechanneled when her marriage ended in divorce. The couple had one son, Michael, who later became a member of the Monkees, a musical group.
In 1951 Bette Nesmith began working in Dallas as secretary to the chairman of the board of Texas Bank and Trust and as a freelance artist. In 1954 she transferred a technique from art to her secretarial work: she stopped erasing typing errors and began using tempera paint to cover them. Two years later she was sharing her mixture, which she called Mistake Out, with other secretaries. With the encouragement and assistance of an office-supply dealer, a local chemistry teacher, and an employee of a paint-manufacturing company, she experimented in her kitchen, using an old-fashioned mixer to combine paint and other chemicals to refine her product. Her son and his friends filled bottles for the fledgling company. In 1957 she attempted to persuade IBM to market her invention, but without success. Finally, a brief description of the renamed Liquid Paper in a 1958 office trade magazine produced 500 orders from across the United States. The General Electric Company placed the first single large order, for over 400 bottles in three colors, four times her monthly production. Nesmith's interest in her invention and her company backfired, however, when she was fired for accidentally putting her own company's name on a letter typed for her employer. She then left full-time secretarial work to devote her energy to Liquid Paper. In 1960 her company's expenses exceeded its income, but in 1963–64 Liquid Paper increased its weekly production tenfold, from 500 to 5,000 bottles. In 1968 the company sold a million bottles and moved into its own plant.
In 1962 Bette Nesmith married Robert Graham, who joined her in the business. By 1975 the Liquid Paper Corporation had built an international headquarters in Dallas and was producing 500 bottles a minute, but the Grahams' relationship had deteriorated, and they were divorced that year. Bette Graham resigned as chairman of the board, and Robert Graham took her place. When the board of directors changed the Liquid Paper formula and eliminated Bette Graham's royalties, she disputed the decision. The disagreement was resolved in 1979 when the Liquid Paper Corporation was sold to the Gillette Corporation for nearly $48 million.
Bette Graham later regretted her decision to leave, saying that she would not have done so had she realized that her corporate philosophy would not survive her absence. She was raised a Methodist but became a practitioner of Christian Science and gave credit to the religion for her success. She said she built her company to foster the cultural, educational, and spiritual development of its employees. To this end, she designed company committees composed of a cross section of employees and urged their participation in decision-making processes. She also helped design the company's plant and office complex to foster communication and comfort as well as productivity. It included a child-care center, a library, and a greenbelt. She also displayed her own and others' works of art.
With royalties from her formula, Bette Graham established the Betty Clair McMurray Foundation in 1976 and the Gihon Foundation in 1978 to support women's welfare and to further their efforts in business and the arts. Through them, she supported such projects as the exhibit Texas Women, A Celebration of History, career guidance for unwed mothers, shelter and counseling for battered women, and college scholarships for mature women. The Gihon Foundation's collection of paintings, sculpture, drawings, collages, and gouaches by women includes works by Georgia O'Keeffe, Mary Cassatt, and Helen Frankenthaler as well as by lesser known and beginning artists. At the time of her death Graham was planning a building to house both of the foundations and the art collection. She described herself as a "feminist who wants freedom for myself and everybody else." She died on May 12, 1980.