Thursday, March 08, 2018
King News by Moses Koenigsberg: Chapter 19 Part 2
King News by Moses KoenigsbergPublished by F.A. Stokes Company, 1941
The Freedom that has Passed (part 2)link to previous installment
Closing the door of the Hearst organization behind me opened the way to the most attractive prospect of my career. It concluded in a spectacular episode of big business, suggesting less the dream of a group of financiers than the imagination of a dramatist. The project was a merger of newspapers more extensive than any chain in existence. It was devised by Eugene Greenhut, who put together the $70,000,000 consolidation of Hahn Department Stores, Inc. The presidency of the amalgamated newspaper corporations was offered to me.
Greenhut evolved a method that removed my objection to chain operation of daily publications. He worked out a system by means of which each unit maintained local autonomy in matters involving the relationship between the publisher and the reader. The effect was to pool the various ownerships and thus stabilize the value of their securities, at the same time assuring central direction of all measures deriving advantage from consolidated effort.
Several months were devoted to preliminary organization. In the summer of 1929 we had assembled a tentative list of sixty-six dailies for admission into our nationwide family. From this roster thirty-five were selected as initial members. At that juncture news of our plans reached print. First publication was made by the Boston American on June 12, 1929, under a headline filling the greater part of the upper half of the first page and reading: $100,000,000 Newspaper Merger to Cover Country.” The story broke in Boston because of the disclosure of a letter written by Whitcomb & Company, who had been entrusted with the task of acquiring New England newspapers. The Boston American’s narrative included a passage from the Whitcomb & Company communication, with this excessively flattering passage: "The presidency of the corporation has been offered to a man whose work in newspaper circles in the past ten years has never been equaled.”
|June 16 1929|
The largest property that we decided to take over was the Denver Post. Its value was fixed at $15,200,000. A program was arranged for the execution of formal options in New York at the rate of one newspaper a day. The conclusion of this phase of the elaborate transaction would consume approximately six weeks. No publisher showed more enthusiasm for the deal than Frank P. Glass, owner of the Montgomery Advertiser. We had been friends for more than a quarter of a century. He told me he intended to use the cash that would be paid to him for the purchase of a splendid country estate which he had selected to present to his wife.
Glass was telling me about this while W. R. Weiler, president of the Allentown Call Company, with his treasurer and business manager, P. W. Leisenring, were preparing to sign the contract for the sale of their newspaper. They were in the office of Root, Clark, Buckner & Ballantine. That was the law firm founded by Elihu Root. With Weiler and Leisenring was Frank Hambleton, head of a Baltimore investment firm.
Hambleton was acting for the banking houses with which he was associated in financing the enterprise. He had picked up a pen to affix his signature. At that moment a member of the law firm entered the room in great excitement. There was a long distance call for Mr. Hambleton from Baltimore. It was so urgent that all other business must be interrupted. Hambleton withdrew to answer the telephone. He never returned. That was the black Wednesday in October, 1929, on which American securities were engulfed in a veritable cataclysm. Some time later Hambleton’s name was added to the list of suicides caused by that debacle.
By one of those psychologic freaks that contribute to the infinite variety of life, the dimensions of my disappointment were obscured by a picture in which comedy vied with pathos. It was painted by the mingled rage and chagrin of Frank P. Glass. Thirty years before he had been my employer. He was old enough to be my grandfather. He held a similar seniority to the wife whom he had taken to bosom a year or two before. Collapse of our undertaking blasted his promise to her of the handsome villa upon which their hearts had been set. He placed all the blame on me. He had been trapped by reliance on our long friendship. The blow to his pride blinded him to the vastness of the misfortune that had befallen all of his fellows in the project.
Out of the wreckage came a series of incidents pungently described by Gene Fowler in his entertaining volume, Timber Line. Gene began his climb to the lettered heights as a reporter in Denver. Later, he brightened the galaxy of King Features Syndicate stars. So there was first-hand coloring in his story of my negotiation with Frederick G. Bonfils for the purchase of the Denver Post, in the course of which it became necessary for me to act as general manager of that extraordinary newspaper.
The New York banking firm of Eastman, Dillon & Company had approached me with a proposition to buy the most desirable of the properties that I had approved for the Greenhut venture. There could be no hesitation in selecting the Denver Post. In many respects that publication was unique. Its earnings and circulation outclassed those of any daily published in a community of equal population. It is doubtful that as many as twenty newspapers in the entire country exceeded its regular net profits. And its impregnability was maintained despite the fact that no citizen of the state of Colorado was more cordially hated than its publisher.
Bonfils agreed to deliver the Denver Post for the same price that had been offered to him by Greenhut in my presence. Of course, Eastman, Dillon & Company wanted a certified audit of the books. That presented a snag. Bonfils insisted on utter secrecy until the transaction was completed. He objected to “a stranger prying into his accounts.” It would disturb the confidence of his staff. It would lead to damning rumors. “Gossip about the sale of a newspaper,” he said, “must be prevented with the same care with which mention of a woman’s chastity is guarded.”
|Frederick G. Bonfils|
On a visit to New York in 1927, he confided to me that a conservative estimate of his assets exceeded $45,000,000. The figure was not astonishing. His late partner, Harry H. Tammen, had gleefully narrated to me several times how in 1894 he had checked the counting of $880,000 in cash in Bonfils’ safe deposit vault in Kansas City, Mo. This money had come from operation of the Little Louisiana Lottery. That was before the beginning of the strange partnership that for thirty-five years challenged the credulity while exciting the amusement of the newspaper world.
In singularly melodious tones, Bonfils filled a simple talk about the stars with more poesy than most verse-makers write into their studied stanzas. Within the hour, he chuckled in satisfaction over reducing the compensation of an employee who had “tried to work a smart-Aleck trick to get a salary rise.” Amassing wealth hardened the enamel that encased Bonfils’ individuality. He had always been penurious. But as each million piled up in his strongbox, he grew increasingly censorious over the sumptuary indulgences of his companions. Once, when his chiding became nettlesome, I tried to silence it with a quip. “You are no richer than I am,” was the taunt. Bonfils turned purple. His pet pride had been gouged. “What do you mean?” he sputtered. “It’s simple, was my answer. “I can spend a dollar with less of a wrench than it costs you to spend a dime.” Even that failed to stop his private lectures on frugality.
Half a dozen trips to Denver and twice as many long-distance telephone conversations in the winter of 1929-30 finally resulted in a program acceptable to Bonfils for effecting the desired audit of his books. My installation as general manager of the Denver Post was the first step. After some weeks in that position, it would be logical for me to make the next move - the employment of an expert of my own choosing for a thorough survey of the publication’s financial affairs. This would be so much of a routine procedure as to obviate speculation.
In due time, Herbert W. Cruickshank came to Denver. We had never met before. But those who questioned him gained the impression that we might be old acquaintances. Cruickshank did not reveal that he was chief auditor of the Frank E. Gannett chain of newspapers. Gannett was eager to acquire the Denver Post. Eastman, Dillon & Company had made a tentative deal with him. It would be consummated if Cruickshank turned in a satisfactory report.
If, as has been said, a banker finds poetry in profits, Eastman, Dillon & Company read an epic in the figures that Cruickshank forwarded. The annual net profits of the Denver Post during the preceding eight years showed an average of $1,313,659. That was after the deduction of income taxes and other adjustments. The gross earnings for 1929 were $2,094,818.66. Eastman, Dillon & Company’s manager of new business, Melville P. Dickenson, hurried to Denver. His meeting with Bonfils closed in a bit of melodrama. Cruickshank stood beside me as a witness while Bonfils and Dickenson solemnly shook hands, sealing the agreement for the sale of the Denver Post for $15,200,000.
Bonfils left my suite in the Park Lane Hotel to fetch his lawyer. Dickenson and Cruickshank went into several forms of silent but sincere celebration. They were participating in the biggest deal of its kind yet reported. Thus far, there had been no public record of a newspaper sale for a sum approaching what Bonfils would receive. My own exhilaration may not have been undiscernible. A fee of $300,000 was coming to me. Dickenson, six feet two, was eight inches taller than Cruickshank. This difference made it somewhat uncertain whether they were attempting a jig together or going through a secret fraternity ritual. The telephone bell distracted my attention. It was a call from Bonfils. He had been gone less than fifteen minutes.
“Everything is O.K.,” he said, “but I must tell you that those people won’t get one ounce of my white paper. I wouldn’t give them enough to dry their hands. Oh! I wouldn’t go that far; but you know what I mean.”
That was Bonfils’ way of “putting over a fast one.” The white paper, or newsprint, was scheduled as surplus. If that were withheld, all the other items in the same account would be similarly treated. Bonfils was breaking the news to me that, before the sale was completed, he intended to declare out in dividends his accumulated profits amounting to $1,634,976.46. He was adding that sum to the price he had agreed upon. Gene Fowler tells how this was identical with a trick worked by Bonfils and Tammen in their sale of the Kansas City Post a few years before. In that instance, the sellers picked up an extra tidbit of approximately $100,000. In this case, the entire transaction was ditched.
Yarns, including the version by Gene Fowler, have been printed about the meeting at which my relations with Bonfils were broken off. It is true that I reproached him rather sharply. But it is not true that physical violence attended the break. Bonfils’ share in the squabble was characteristic. Instead of defending his action, he tried to prove that it entailed a loss to me smaller than I reckoned. He asserted that his penciled memorandum that I held set my compensation not at $300,000, but $200,000. His passion for parsimony extended even to a canceled liability. Paring a dead promise to pay gave him a satisfaction akin to scaling a live obligation.
The trend of journalism in the depression of the ’30s turned my mind to lessons taught by the balance sheets and operating statements I had examined in selecting candidates for the Greenhut merger. In the previous generation, the ordinary newspaper was one of the cats and dogs in the backyard of finance. The industry was considered too hazardous on the whole for sound investment. Competitive uncertainties were incalculable. "Anybody can toss a printing press into a cellar and start up as a rival for your business,” said one banker in explaining the refusal of a loan to a solvent daily.
The sobriquet grew increasingly appropriate, as he consigned to the graveyard successively the New York Press, the New York Morning Sun, the New York Mail and the New York Globe. Selling the New York Herald to the New York Tribune in 1924 was his final contribution to journalistic necrology.
During the decade which ended that year, the list of American newspapers suffered a mortality of 27 percent—greater than has been recorded in any period of quadruple length. The obituary roll numbered 566. The roster of 2,580 dailies in 1914 was cut to 2,014 in 1924. Thus, that ten-year span witnessed 80 percent of the shrinkage that took place in more than a quarter of a century— from the 2,580 in 1914 to the 1,878 in 1940.
Munsey found great pride in an ability to assess the worth of a contemplated purchase, offhand or otherwise. Such a feeling was almost essential to his method of negotiating for a newspaper. No standardized formula existed for evaluating a periodical publication. One theory favored the capitalization of readers at so much per head. Offers to prospective members of the Greenhut merger were based on a multiplication by ten of the average net earnings for the last preceding five years. Overtures were made to various dailies on estimates of their profits. The Holden estate, owning the Cleveland Plain Dealer, refused to consider a proposal of $22,000,000. From this point, appraisal of newspaper properties entered the field of pure speculation. In that zone of statistical adventure one need not have rated as an expert to guess the worth of the New York Times or of the Chicago Tribune at “anywhere between fifty and seventy-five millions each—or more.”
The sale of the Philadelphia Inquirer for approximately $15,000,000 in 1936 to M. L. Annenberg supplied no additional yardstick of value. On the contrary, it emphasized factors that commanded recognition as determinants of worth as important collectively as the record of earnings. A study of the variations in these phenomena had meantime led me into a new field of newspaper work. I set up a service of private counsel for publishers. Out of the tasks thus assumed, a perspective was formed clearer and more comprehensive than any view afforded me along the firing-line of direct responsibility. It is from that vista that these pages have been written.
The newspaper dedicated to its readers can neither be built nor destroyed from the outside. Its fate is decided wholly by inner forces. It can make no errors of commission. Its only blunders are those of omission. Of such is the kingdom of journalistic service. But why, at the zenith of its usefulness, was the press called upon to meet the fiercest and bitterest attacks in its history? The Fourth Estate alone can answer. It became a victim of its own vices.
It was a far cry from the internal newspaper disaffections incipient near the close of the century to the widespread schisms that cropped up thirty-odd years later; but it traced a course of grave culpability. Few publishers put forth any effort during that period to correct the untoward conditions that were accumulating elements of explosion. No motion was made to abridge or modify the right of arbitrary dismissal. Pension plans were mentioned, but they remained in the pigeonhole of deferred business. There was no serious discussion of steps to insure job steadiness. There was no recognition of either the advisability or the validity of stated allowances for payroll severances.
Instead, the ax of retrenchment continued to fall in the news department without conventional restraint of any kind. Salaries were reduced at will. Working positions were consolidated with consequent multiplications of duties. The reporter had neither recourse nor redress. Small wonder that envious eyes turned across the aisles of newspaper servitude to the shelter of industrial organization—the alliances of printers, engravers, stereotypers, pressmen and even truck drivers—which commanded a share in the regulation of employment and wages. Small wonder, too, that when the hour of temptation struck, this privilege enticed many thousands from the ranks of professionalism into the folds of union labor.
The harvest of nettles came in the 1930s. By that time the hardbitten journalist was amenable to almost any regimen for relief. In 1933 the American Newspaper Guild was organized. It consisted of editors, reporters and artists. Trade unionists found ready converts among those who, under more satisfactory craft circumstances, might have scorned vocational parity with the butcher, the baker and the buttonhole maker.
In 1935 the Guild joined the American Federation of Labor. That meant the assumption of allegiance to a separate authority. Members of the Fourth Estate pledged a loyalty apart from newspaper sovereignty. Two years later, the American Newspaper Guild transferred its membership to the Committee (afterward the Congress) for Industrial Organization. Meanwhile, the Wagner Labor Relations Act had been invoked. It enforced the employment of Guildsmen with stronger predilections for excursions in sociology than for the newspaper policies of their employers.
All the activities of the American Newspaper Guild were under the sanction of a constitution and by-laws, to which each member subscribed. Thus was violated the primary canon of the code compiled from the lessons of my professional experience. That rule prescribes that the gathering and reporting of news shall be limited to those fitted for the responsibility. It adds: “Such fitness is inseparable from singleness of devotion to newspaper duty. It can subsist only in complete independence from divergent accountability or commitment.”
The constitution and by-laws of any organization with definite objectives must necessarily exact from its subscribers an accountability or commitment. When those objectives embraced industrial, sociological or political aims, certain obligations of fraternal loyalty were attached. A constituent thus became both formally and morally answerable to a central authority. So the American Newspaper Guild established an accountability divergent from independent journalism. Its members, therefore, became unfitted for the gathering and reporting of news under the primary rule of my code of professional ethics.
If this precept prevailed, it would have excluded from eligibility in 1941 a majority of the personnel of the American press. The elimination would have involved perhaps an equal percentage of employers and employees. The quest for industrial betterment had drawn into the Guild more than a third of the 35,000 news workers. Various pursuits, apart from their newspaper duties, had long since split the professional integrity of as large a proportion of publishers.
"The freedom of the press" is dead. Its passing has escaped the notice of those who, failing to understand it in life, are unable to identify it in death. Always a magnificent mystery to most of its beneficiaries, it has left for them a heritage of little more than mixed memories. The press, that so zealously and jealously fought against infringement of its freedom, has itself strangled the “freedom of the press.” It was a slow process of suffocation, through gradual closing of the hands that guided it, until a hallowed tradition became twisted into a mockery. The tragedy traces a misunderstanding more extensive than any fallacy that ever beclouded the genius of an American institution.
The term “freedom of the press” was a misnomer. It would have been better comprehended as “freedom for a press”—the right to operate a printing machine without let or hindrance. It became confused in the popular mind with the privilege or claim of a current business. It was in no way peculiar to a completed publication. It applied not to the printed, but to the unprinted, message.
It was a franchise to publish anything typed, written, drawn or engraved. That right belonged to everybody—to Tom, Dick and Harry. But Tom took it over as his very own and Dick and Harry never complained. Apparently, they never understood. Nor did they seem to care. Tom, himself, misconstrued the nature of his prize. He tried to hold it as an endowment. He sought its enrichment with substantial favors from government. He claimed for it immunities and exemptions denied to the manufacturer, the merchant, the banker, the engineer and the artisan. Yet the grant, on which he strove to base these special privileges, was no more his than theirs.
It bestowed on him no license. It released him from no obligation. It lessened none of his liabilities. It left him amenable to every penalty assessable for a criminal publication of any nature. Yet it was the most precious of his constitutional guaranties. It was the birthright of his calling. But, too often, it went the way of that other birthright from which we derive the Scriptural lesson of Esau.
The principle of freedom for a press, as inherited from the founding fathers, has been crushed in two vises. One—monopoly —was tightened by the established press. The other—tyranny— was clamped by that coalescence of power which, through laws regulating labor relations, prescribes how the publisher may lay his hands on his own printing machine.
Gentlemen most vociferous in decrying attacks on “the freedom of the press” were most active in arrogating that so-called freedom for themselves. By means of combinations, associations and financial and political wire-pulling, the publisher already in the field closed the door to additional entrants. To found a newspaper in any city of considerable size in the ’20s or thereafter required fluid capital running into millions of dollars.
In important centers, the organized channels of news were placed under exclusive command—the Associated Press through the protest rights of its members and the United Press and International News Service through a form of contract vesting an existent client with a cumulative equity in the value of the service delivered to him. Thus the publisher on the ground was empowered in some cases to withhold permission and in others to exact a price for a newcomer’s share in a vital element of newspaper operation. The permission has never been granted. The price was usually prohibitive.
Control of news sources to bar fresh publishing adventures was supported by the corralling of features. An insurmountable handicap confronts the daily unable to secure a regular supply of comics, columns and other copyrighted series adequate both in number and popularity. In many cities, these materials were removed from the market. They were bought to be suppressed. Of course, there was no statement of such a purpose. Usually, the buyer talked about “protecting his territory against destructive competition.” The syndicates were not unwilling. After all, they had no means of compelling publication of what they sold. And in time, the client might be persuaded to make use of some part of the budget for which he paid. Meanwhile, it would be futile to refuse a revenue otherwise unobtainable. That explains the “sewing up” of features under blanket contract.
To make impregnable the bulwarks erected against invasion of a publishing center, the local merchant has been enlisted. Without his patronage, a daily is hopeless. He contributes anywhere from 40 to 60 percent of its gross income. He has become a proselyte to the virtues of newspaper monopoly. He objects to spending any more money on advertising than is needed to move his merchandise profitably. He believes the job can be done more economically for him by one than by two publications covering the same community. He is selfishly interested in maintaining the established publisher in exclusive occupancy of the field. And his balance sheets are not lined for entries showing either “the abridgement of social and political expression” or “the cramping of cultural outlets.”
Equality of opportunity to publish a newspaper would not have been attained even by overcoming the obstacles thus far outlined, insuperable as they have generally proved. There would still remain several formidable barricades to scale. Behind one stands the space-buyer, second in importance only to the local merchant. He represents the difference between profit and loss on the average daily. He is variously described as the general, foreign or national advertiser. He acts through advertising agencies. They observe an unwritten agreement to withhold business from new publications for at least a year. Ostensibly the purpose is a test of permanence.
That period of starvation is accompanied by another trial even more severe. The new daily, if it has carried on to this point, will have been forced to fight for newsstand “locations”—positions on hundreds or thousands of display stations, according to the size of the city. The outcome of this struggle may prove a decisive factor in a newspaper’s life or death. It is often determined by political manipulation.
Apologists for this state of journalism may cite the launching of an afternoon paper in New York in 1940 and the subsequent planning for a new morning daily in Chicago, That plea turns upon itself. Marshall Field III was a backer of both ventures. His daring may well be explained by his own statement, “I happen to have been left a great deal of money and I don’t care what happens to it.” Freedom for a press can neither be redeemed nor restored by ransom, even with the many millions of so ardent a humanitarian as Marshall Field III.
Not until the halter of monopoly encumbered its defense did the right for a free press become vulnerable to invasion. Then the politician rode it down. At the head of a corps of union-labor pressure groups—with panzer columns made up of legislative enactments—he captured the industrial trenches of journalism. The American Newspaper Guild was installed as an army of occupation. Protests of tyranny lodged by newspapers were rejected by the courts. It is not intended here to analyze the merits of the conflicting claims, some of which, though sanctified by inclusion in the law of the land, still require judicial clarification. The facts have been set out in preceding pages.
From within the precincts of the “free press” itself have come manifestations of agencies that not only make it impossible for outsiders to enjoy freedom for a press but also curb drastically the freedom of those who have a press. They have brought into the complexities of publication a divided house, a disputed authority, and in many instances a definitely hostile opposition to the will, the wish and sometimes even the survival of the publisher.
It must not be forgotten that, despite the buffeting and confusion of a swiftly changing social order, the American newspaper has continued to maintain world leadership in the highest function of journalism—the collection and publication of news. Prodigies of reportorial performance mark the era for special study by the future historian. He will find it difficult to reconcile these exploits with the ever-narrowing constrictions which the courageous resourcefulness of the editor and the correspondent unfailingly surmounted.
No matter what vehicle may be employed for delivery—the daily journal, the radio or some medium yet to be devised—an uninterrupted flow of the day’s tidings is essential to the maintenance and progress of our culture. Though the “freedom of the press” has passed, freedom of the news must not perish. No human possession should be more zealously guarded than liberty of communication—through the air, under ground, by whatever instrumentalities the genius of man may provide. Upon that liberty depends the happiness and progress of mankind. It is the perennial prey of the world’s marauders—of all the ruthless exploiters of their fellow men. It is the only pillar upon which humanity may rest its hope of peace and advancement.
The sole sovereignty that has stood unmoved by the assaults of world revolution is that dominion of mind in which man’s soul subsists on current intelligence. At the conference of press experts convened by the League of Nations at Geneva in 1927, I remarked that news was a process of civilization. Lord Burnham, the presiding officer, retorted that he had considered civilization a process of news. Between those observations emerges a truth of supreme importance to mankind. If, from the blood-drenched wreckage through which humanity has staggered, only one sovereignty shall survive, let it be KING NEWS.
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