Thursday, February 15, 2018


King News by Moses Koenigsberg: Chapter 17 Part 2

 King News by Moses Koenigsberg

Published by F.A. Stokes Company, 1941

Chapter 17

The Sick Cat Chases the Mammoth (part 1)

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The first rumbling of the Associated Press storm that was to break upon Hearst came with word that his newspaper, the San Antonio Light, was to be deprived of its protest right. The San Antonio News was to be voted a membership. This was more than a slap in the face. It was a discrimination against a franchise-holder too violent to be other than a punitive measure. The situation was aggravated by notice that similar action was pending in Rochester, N. Y. There, also, the Hearst unit was to lose the exclusiveness of its service. Dismay seized Hearst’s advisers. This was a fight imperiling many millions of dollars represented in Hearst’s fifteen franchises—the largest number held by any member of the Associated Press.

This troublesome problem had prompted me several months before to advise a radical departure. My plan was to remove the bone of contention between Hearst and the Associated Press without real sacrifice to either side. A review of the central facts is necessary to envision the idea. When Hearst successively launched the New York Journal, the Chicago American and the Boston American, no adequate service of general news was obtainable for them from organized agencies. They were debarred from the Associated Press by the protest rights of existent members. A number of years were to pass before the United Press, under the vigorous management of Roy W. Howard, reached metropolitan stature. International News Service was organized not only to gather news for the Hearst dailies, but also to secure a permanent and inalienable source of supply.

It was possible to assure that objective without direct ownership. Operation by friendly hands could accomplish the desired end. It was my suggestion that Hearst rid himself of his Associated Press embarrassments by relinquishing formal ownership of International News Service to a purchaser on whom he could rely to safeguard his personal and his newspaper interests. I proposed to buy International News Service myself. My proposition was taken up by Hearst’s order at a special session of the executive council, his advisory board. The permanent chairman of that body was S. S. Carvalho, who had rejoined the organization some time before. The meeting began with the reading of a letter from Hearst, under date of May 6, 1926.

It told how Hearst had been startled by my proposition that he sell International News Service to me. He saw no reason to accept my offer. But the peculiar action of the Associated Press convinced him that he should maintain International News Service, if for no other reason than to protect his newspapers. This conclusion also embraced Universal Service. Nevertheless, he felt that the modifications of the present system which I had outlined might be advantageously applied to the organization under his continued ownership.

Hearst’s communication reviewed in detail my project to introduce a regime of mutuality in the relations between the news services and their clients. He accepted my plan for a committee of publishers, or at least for a Board of Control, on which the subscribing newspapers would have a 50-percent representation. He suggested the possibility of issuing stock certificates and bonds of which he would keep 50 or 51 percent. While he admitted that this would not make a wholly cooperative, mutual membership, he argued that “it would be about as good as the Associated Press” and that it would give the clients the feeling that they had something to say in the management of the institution as well as a certain permanence in the possession of their franchises. He completely endorsed the fundamentals of my proposition, but added some elements to assure his proprietary standing.

The executive council had not formulated any judgment on this proposal when the group in control of the Associated Press delivered its main assault on Hearst. It was the adoption by the board of directors of a resolution unparalleled in the annals of the organization. It was a formal declaration of Hearst's unfitness for membership. It was a patent preliminary to expulsion. Under date of October 8, 1926, it read as follows:

Resolved that in the judgment of the Board of Directors the relations of the newspapers owned by William Randolph Hearst represented in membership in the Associated Press with the news services owned by Mr. Hearst, cause an ever-recurring evasion and nullification of the obligations each to the other of members of this mutual organization and must be regarded as highly prejudicial to the interests and welfare of the Associated Press and its members, the prime object of the organization being the mutual cooperation, benefit and protection of its members.
Hearst assigned as his field marshal on this front, David E. Town. It happened that Town joined Hearst on my recommendation and despite some untoward influences set in motion by some of my associates. My friendship with Town began when he was general manager of the John C. Shaffer chain of newspapers in Indiana, Kentucky, Illinois and Colorado. It continued until his death in the ’30s. Town was engaged to carry out my suggestion that Hearst appoint a controller who would be in charge of mechanical, business and financial operations. He became one of my fellow members of the Hearst executive council.

Town’s efforts to smooth the friction with the Associated Press directors proved abortive. A clash between him and Kent Cooper, the Associated Press general manager, stressed the crisis. This phase of the trouble grew out of a demand that I cease my endeavors to persuade publishers to withdraw from the Associated Press to become clients of International News Service. An issue of fact arose between Town and Cooper as to a discussion of my activities in that respect. An exchange of communications between them was tinged with acrimony. Town reported the receipt of a complaint from Cooper on November 11, 1926.

It expressed Cooper’s conviction that none of my colleagues were aware of the insistence or extent of the International News Service raids upon the Associated Press membership. A memorandum from Town to the executive council outlined details of Cooper’s grievance. The State of North Carolina was cited as an illustration. There these members of the Associated Press had been solicited to desert that organization: Rocky Mount Telegram, Wilson Times, Concord Tribune, Henderson Dispatch, Fayetteville Observer, Goldsboro Argus, New Bern Sun-Journal, Wilmington News-Dispatch.

Cooper added that two papers in the state—the Greenville Reflector and the Edenton News—had already been induced to resign from the Associated Press and to substitute Hearst services. He named as other newspapers that had withdrawn from the Associated Press “upon such solicitation” that year: Belleville (Ill.) News-Democrat; Yonkers (N. Y.) Statesman; Pulaski (Va.) Southwest Times; Charlottesville (Va.) Progress; Palatka (Fla.) Daily News.

All this apparently constituted a very grave affront to the dignity of the Associated Press.

Meanwhile, Hearst’s advisers had fought off a panic stretching over several months. Hearst, himself, confronted the prospect of ouster from the Associated Press with a composure at strong odds with the alarm of his lieutenants. He instructed me to draft a plan of operation for institution at a moment’s notice. This was a precaution against cancelation of his memberships in the Associated Press. Various stratagems were submitted to him. He appointed a committee for their analysis. It consisted of Bradford Merrill, Morrill Goddard and Victor H. Polachek. They joined me in urging a consolidation of International News Service with the United Press. My views, outlined at a series of meetings with this special committee, might have been thus summarized:

1. Consolidation of International News Service with the United Press can be effected on terms assuring substantial and continuing profits for both with guaranties as to quality of service for the Hearst papers and with reservations that will withhold from papers affiliated with the United Press any special or exclusive prestige or advantage.

2. Negotiations to this end should be pressed with the utmost speed consistent with secrecy and safety because better terms will be procurable so long as nothing is known of the quarrel between the Hearst organization and the Associated Press. If possible, an option for consolidation should be obtained in writing in Mr. Hearst’s favor within two weeks, to be exercised within six months. He will then be in superior position to deal with any situation that may arise with the Associated Press.

3. Immediate steps should be taken, to compose all misunderstandings between the Hearst organization and the Associated Press directors as to morning memberships. This should be possible without any real sacrifice on the part of Mr. Hearst.

Adoption of a policy along these lines was urged upon Hearst by Bradford Merrill, Morrill Goddard and Victor H. Polachek. The recommendation was incorporated in a message wired over their joint signatures.

Hearst answered immediately. His code telegram—with the usual signature, “Doctor”—was translated by Merrill at a meeting that I attended with Goddard and Polachek. It was a characteristic message. It paralleled Hearst’s abiding passion to play a lone hand. He had talked with the United Press people. They were fully informed about the situation. “Doctor” believed they were concerned chiefly over the prospect of International News Service building an organization too highly competitive to suit them. They had submitted a proposal to which he was evidently indifferent, though he had promised to resume its discussion in New York.

Roy W. Howard

Not only did Hearst indicate a disposition to pass up any deal with the United Press, but he also favored holding the Associated Press at arm’s length. He was undisturbed over the possible loss of his Associated Press memberships. He cited, by way of approval, an estimate I had prepared showing that an additional expenditure of $10,000 weekly would provide an adequate service for his publications. “Doctor” would save almost that much if he stopped his payments to the Associated Press. He was inclined to favor such a course. Then his newspapers would have their own news and not be compelled to share it with competitors. However, he would not object to the arrangement of an accord with the Associated Press on a just basis. “But don’t expect any justice,” he warned. A bit of paternal advice followed Hearst’s wired wisdom. He counseled the committee not to worry, since “we were strong enough to take care of ourselves.”

A combination of International News Service with United Press would have produced an unrivaled organization. It could not have failed to affect the course of the world’s news-gathering history. Its possibilities were destroyed at a meeting between Hearst and Roy W. Howard, head of the United Press. Hearst took umbrage at an unintentional affront. Howard told him he was not fitted to operate a news service. He believed Hearst’s dominating interest in his newspapers could not be subordinated to an interest in a news service. The purpose of the remark was certainly not invidious. But it nettled Hearst to such a degree that the negotiation collapsed.

At that stage Hearst called up to the firing line a brilliant San Francisco lawyer, John F. Neylan, who held a membership in the Associated Press as publisher of the San Francisco Call-Post. Meanwhile, Hearst had decided to adopt a program submitted to him, at my instance, by my friend, Robert Ewing, publisher of the New Orleans States. This was a campaign to shear the strength of the cabal in control of the Associated Press. That clique, known as “the big six,” consisted of Adolph S. Ochs of the New York Times, Victor F. Lawson of the Chicago Daily News, Frank B. Noyes of the Washington Star, Charles H. Taylor of the Boston Globe, W. L. McLean of the Philadelphia Bulletin, and Elbert H. Baker of the Cleveland Plain Dealer.

Their power was derived from the regulations by which directors were elected. There were approximately 1,200 members. One hundred owned forty bonds apiece, each entitled to 100 votes as against the single ballot of a mere stockholder. Thus less than nine percent of the membership enjoyed a balloting strength of more than 4,000 against the 1,100 to which the remainder of the association was limited.

An intensive canvass directed by Neylan, with the assistance of Ewing and a group of so-called insurgents whom he rallied to the movement, resulted in the abolition of this oligarchic rule. The Associated Press was democratized. Every member was accorded an equal voice in the naming of the directorate. Hearst had mowed down the coterie that dominated the Associated Press.

A composition of differences between Hearst and the chastened Associated Press directorate included a condition of which no member would have dreamed a year before. It was the surrender of a cardinal principle. While it involved only one locality, it proved how far a great institution may bend backward. When the Associated Press was left with a single outlet in Pittsburgh, and that a Hearst daily—the Pittsburgh Sun-Telegraph—a. troublesome snarl developed. As an Associated Press member, the Sun-Telegraph was forbidden to deliver news to a non-Associated Press agency. Because of a unique news-gathering situation in that region, neither the Associated Press nor International News Service could reasonably afford to forego the correspondence facilities commanded by the Pittsburgh Sun-Telegraph. Earnest consultations were held. Kent Cooper agreed that the Associated Press would be discreet enough to keep its eyes closed to practices that would otherwise be prohibited. But he failed to take into his confidence his Pittsburgh representative. An embarrassing complication followed. Cooper straightened it out with a special course in nictation. This was in amusing contrast with the attitude that Melville E. Stone maintained in a series of conferences with me a short time earlier.

In our several meetings aimed at unraveling tangles between the Associated Press and the Hearst organization, Stone presented in great detail a list of grievances. The case on which he dwelt most insistently arose in Rochester, N. Y. There an employee of the Democrat-Chronicle had been under surveillance for weeks. He was a copy reader. His tour of duty ended at three in the morning. He was trailed nightly. The spotters reported that he went direct from his regular place of employment to the building in which was situated the Rochester office of International News Service. This practice was condemned by Stone in the severest terms. The man was being exposed to suspicion of a heinous crime. Concealed on his person—possibly in the recesses of his mind—might be news belonging to the Associated Press. What was his purpose, so burdened, in entering the edifice in which a competitive news service functioned? The implications were awful. They recalled the traditional penalty for disclosure of unprinted Associated Press news—blacklisting for life.

It did not seem logical to me that responsibility should be impressed upon International News Service for the peregrinations of an employee of an Associated Press newspaper. There was a possibility that he was eking out his income with extra work for the Hearst bureau. If there were any obligation to determine that point, it did not seem to me to rest on International News Service. This was the weightiest of several questions that I failed to settle with “the grand old man” of the Associated Press.

The matter of greatest importance that arose in the conflict over news service involved the allegation that the Associated Press was a monopoly in restraint of interstate commerce. That averment, formally iterated in different tribunals, remains to be adjudicated. It was laid before Hearst in one of my reports outlining a method of counter-attack. It was my belief that the Associated Press would decline an issue in the courts. I felt that because of its vulnerability under the anti-trust laws, it would recoil from any judicial scrutiny of the power arrogated by its directors. The concluding paragraphs of an opinion on this subject, formulated by the law firm of Eppstein & Rosenberg, in conjunction with other attorneys, read as follows:

For the foregoing reasons, it is our opinion that the Associated Press is a combination organized for and engaged in the illegal restraint of trade, and that if proper proceedings should be instituted against it, it would be forced to dissolve.

Although proceedings might be instituted merely to restrain it from the further employment in its business of the illegal agencies herein pointed out, the effects of such proceedings, if successful, would in our opinion ultimately result in its enforced dissolution as a judgment, that so important an organization as is the Associated Press was organized and operating in violation of law, could hardly be ignored by the Department of Justice.

Upon such advice, judgment was reached that the millions of dollars represented in the memberships owned by Hearst would be exposed to too great a hazard by the institution of any suit attacking the validity of Associated Press regulations.

The handicaps imposed by deference to Hearst’s Associated Press complications did not deter either International News Service or Universal Service from setting new records in their field. Universal was the first agency to adopt automatic printer telegraph machinery as its exclusive means of transmission. It was the first to establish in America a transcontinental automatic printer circuit. These innovations were installed by Chester R. Hope, editor of Universal Service, whose vigorous enterprise contributed greatly to the efficiency of my executive staff. Under Hope's direction, Hollywood and New York’s “Four Hundred” made their joint debut as daily telegraphic features. Louella Parsons and Cholly Knickerbocker (Maury Paul) were starred on the same coast-to-coast line.

International News Service performed a historic feat in the sending and transcribing of news by radio. The potentialities of this pioneer achievement have yet to be measured. Its first public demonstration was made at the American Newspaper Publishers’ Association convention at the Waldorf-Astoria Hotel in 1924. In room 1590 of that hostelry,  journalists gathered from day to day for a week to watch a typewriter capture from the air and transcribe a complete news report at the rate of sixty-five words a minute. It was the International News Service High Speed Automatic Radio Printing System. It was the result of more than three years of experimenting.

The inventor was William George Harold Finch, afterward recognized as one of America’s leading radio engineers. Finch was an insurance company inspector of wireless sets in Buffalo in 1921. I was combing the country for an instrumentality with which to push International News Service ahead of its competitors. The search had been suggested by the pyrotechnic advances in wireless. Word reached me of a relay invented by Finch. A week later he was installing a laboratory in the offices of King Features Syndicate. Lieut. Col. Archibald M. Stevens and William A. Bruno were engaged as his collaborators. After a series of successful tests covering many months, the cooperation of the Federal Wireless and Telegraph Company of California was enlisted. Rudolph Spreckels, the managing director, brought the president, Ellery Stone, to New York to confer with me.

Spreckels agreed to join the Hearst organization in the erection of three powerful wireless stations to blanket America. The commercial facilities were to be used by the Federal Wireless and Telegraph Company and the news channels by International News Service. Hearst showed keen interest. His executive council opposed the project. Meanwhile, my friend, R. R. Govin, now the owner of four dailies in Havana with circulations exceeding those of all the other newspapers in Cuba, expressed eagerness to associate himself with the undertaking. A meeting was held on Hearst’s yacht. Spreckels, Govin, Arthur Brisbane, Bradford Merrill and Louis B. Eppstein, counsel for King Features Syndicate, attended. It was Brisbane who devised a way to overcome the objection raised by the executive council. He suggested that Hearst and Spreckels share equally in the underwriting. Both assented. It was agreed that a total investment of $1,750,000 would suffice.

Spreckels and Stone brought a staff of technicians to New York. More than twenty men busied themselves in a New York hotel suite perfecting details of the organization. Their task was being completed when Hearst telephoned me. He wanted me to meet him at the office of Martin Huberth, manager of his New York real estate operations. It was a spot suited for privacy. Showing more embarrassment than I had ever noticed in him, Hearst called off the deal with Spreckels. He explained that his financial advisers had counseled against it. Not long afterward Spreckels sold the Federal Wireless and Telegraph Company to the Postal Telegraph Company for $20,000,000. That did not underline the wisdom of the advice Hearst had accepted.

The revolutionary changes with which radio was to overwhelm the empire of news were slow to reveal themselves to those most concerned. They flashed on me in a dramatic episode. It was August 2, 1923. Charley (C. O.) Powers, political editor of the Boston American, an old friend, hailed me on Broadway that afternoon. We had not met in years. Powers punctuated the chat with an astounding remark. “Harding is going to die,” he said, as if repeating an authoritative message. “What do you mean?” I asked in amazement. “Coolidge luck,” was the crisp answer. “It’s proverbial among those who have watched his career. I can trace every step in his advance to some circumstance of fortune. That night, Fred Mayer, a member of the Friars Club, burst into the room where I was seated, with the excited exclamation, “President Harding is dead!” Both the manner and the substance of his announcement shocked me. It was incredible. How could this stockbroker, without any newspaper connections, get such tremendous news before it reached me, the president of four different news organizations with worldwide affiliations? The thought was almost insulting. Mayer was insistent. “I know it’s true,” he said. “I just got it over my radio set.”

At that moment a page summoned me to the telephone. Clyde West, night manager of Universal Service, was on the wire. In the excitement that possessed him, his sense of values was upended by an enthusiasm for his calling. The order in which he stated the facts of his message is unforgettable. He was a newspaperman whose work was more important than the world’s history.

“Boss,” West’s voice came in shrill contrast with his customary drawl, “we’ve just scored an eight-minute beat on the death of the President.” Then, without waiting, he went on to tell how James R. Nourse, the Universal Service correspondent accompanying the presidential party, had come in first. Nourse’s room was on the same floor as Mr. Harding’s quarters in the Palace Hotel in San Francisco. He was on the way to the elevator when a slight commotion attracted his attention to the presidential suite. He was at the door before the doctor had announced the tragic news.

West was still on the telephone when a recollection of Charlie Powers’ weird prediction gave me a start. And then even that strange coincidence faded into a commonplace beside the phenomenon which had enabled such a person as Fred Mayer to apprise me of an historic event. In one stroke, providence had sliced apart the chief domain of the Fourth Estate. The radio had come to share the primacy of the press in the world’s greatest cultural function—the dissemination of current intelligence.


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