In 1932, the Wall Street Journal ran a story, datelined San Francisco, that began like this:
Five years ago, Oliver Twining rarely was early for work. As the chairman on Pacific Bank & Trust Company, Mr. Twining regularly strolled into his office twenty minutes late. “Rank has its privileges,” he would explain.
Today, however, Oliver Twining is rarely late for work.
Now self-employed, he operates 14 hours a per day on the corner of Church and California Streets, shouting “Apples for sale!”
Oliver Twining is just one of many former bankers trying to piece their lives back together in the wake of 9,000 bank failures in the last three years.1
The lede is catchy today; in 1932, it was startling.
The author was a twenty-three-year-old reporter named Leslie Bernard Kilgore, a name obscure enough even within financial-journalism circles and virtually unknown outside them. Over a career that flowered in the postwar boom, Kilgore would become one of the most significant journalism figures since the muckrakers, and his belief in readers’ hunger for deeper knowledge about complex subjects would transform business journalism and American newspapering more broadly.
Around midcentury, business news transformed itself from its narrow messaging function into a profession capable of explaining complex problems to a mass audience. The main method was the Great Story, the long-form narrative that delved deeply into subjects of journalism’s choosing. One editor in particular—the great Kilgore—was responsible for creating what was essentially a story factory, laying the infrastructure of the production of Great Stories for a mass readership. The long-form narrative is an essential building block for accountability reporting, the subject of chapter 4.
To understand the problem before Kilgore came along, let’s look at a not-untypical story, chosen more or less at random, from the front page of the Journal in 1934. It begins: “Atchison, Topeka and Santa Fe Railway had net income in 1933 after all charges approximating, 3,632,819, or $2.93 a share, on the 1,241,727 preferred shares outstanding, S. T. Bledsoe, President, stated. In 1932, the company had net income of 7,545,007, equal after paying preferred dividends to 55 cents a share to 2427060 shares of common stock.”2 Random facts issued by an institution without context—shades of CNBC. The four-paragraph story doesn’t mention why the railroad’s earnings were off so much year-over-year, though the Great Depression might have had something to do with it. In fact, without news generated by the Roosevelt administration (e.g., “To Concentrate on Debt Erasure Administration Plans Center First on Farm and Home Mortgages,” January 8, 1934), a reader leafing through the front pages of the Depression-era Journal would have little idea the country was going through particularly hard times at all. But this was “business news” then: meat-and-potatoes coverage, unambitious, unimaginative, and, in a profound way, blinkered. It purported to cover business, finance, and the economy, but its own strictures would not allow it even to approach the things that mattered—great economic shifts and the causes and effects of the Depression. By abstaining from original reporting—or news that doesn’t come from a corporate or institutional source—business-news organizations, for all their apparent activity, rendered themselves deeply passive, powerless to affect the public agenda. Instead, business journalism was, like the rest of the country, carried along with the flow of events. Worse, as Noam Chomsky and others might have it, by confining itself to role of intramarket news service, the business press could fairly be accused of amplifying and reinforcing elite narratives, valid or not. Still worse, voices that might be able to provide helpful information to the public, policy makers, and even to markets are excluded.
It’s not that the journalism was “wrong,” only that its self-imposed limitations were so severe as to produce an understanding of business and the economy that had little to say to all but a narrow band of people on matters of interest in only the short and medium term. By defining its purview as the most recent announcements of business and financial institutions and the government, business news tied its own hands, rendering impossible the idea of looking independently at the economic movers of its world. Had financial papers, for instance, looked more closely at the margin-lending practices of brokerages houses and the new retail “wire houses” in the late 1920s, the public—and investors, too, for that matter—could have been prepared for the Great Crash to come. Instead, poorly informed Americans stampeded into stocks in unprecedented numbers, roughly doubling in number to about 10 million investors, or about 8 percent of the population, between 1927 and 1930, the worst possible time.3 As recently as 1917, only 0.5 percent of Americans had owned stocks.4 In this way, even the Journal’s wildly bullish editorialists could be seen as victims of this information vacuum.
But change was coming, and the first great catalyst would not be the Wall Street Journal, which, during the 1930s, despite the work of its new and only star, was still stuck in the legacy of Clarence Barron’s access journalism. It would take another great twentieth-century journalism figure to lead the way.
In September 1932, an article appeared under the headline, “No One Has Starved,” an ironic reference to a callous remark made by President Herbert Hoover earlier that year. The piece was a well-reported, sharply written condemnation of the nation’s haphazard approach to mass unemployment relief, which at the time relied on an inadequate and inefficient patchwork of private charities that left legions of people homeless. Overwhelmed local governments responded by essentially deporting vagrants from their borders, which resulted in a vast, wasteful shuffling of the poor from town to town, state to state. As the story explains:
Dull mornings last winter the sheriff of Miami, Florida, used to fill a truck with homeless men and run up to the county line. Where the sheriff of Fort Lauderdale used to meet them and load them into a second truck and run them up to his county line. Where the sheriff of Brevard County would not meet them. And whence they would trickle back down the roads to Miami. To repeat.
The piece says a recently passed federal relief law, while inadequate to the overall problem, nonetheless marked a turning point:
The difference will be made by the Emergency Relief Act. Or rather by the fact that the Emergency Relief Act exists. For the Act itself with its $300,000,000 for direct relief loans to the states is neither an adequate nor an impressive piece of legislation. But the passage of the Act, like the green branch with which young Mr. Ringling used to lay across the forks of the Wisconsin roads for his circus to follow, marks a turning in American political history. And the beginning of a new chapter in American unemployment relief.5
The author was Archibald MacLeish, who in the following year would win the first of three Pulitzer Prizes for poetry. The publication was a fledgling business magazine called Fortune.
When Henry R. Luce was planning a new magazine about the business world to extend his growing Time empire in the late 1920s, he was looking for a new journalistic approach, one that avoided both what he believed was the raucous muckraking of the early part of the century and the puffery and the boosterism of Roaring Twenties business news. A leading business publication of the era was World’s Work, which had been chronicling American business since the 1870s and which Luce biographer Alan Brinkley sees as a precursor and possible model for Fortune.6 The monthly, which had a circulation of about 100,000 in the 1920s, conducted broad-ranging inquiries into in the social, political, and cultural contexts of business. A single issue in 1929, for instance, includes pieces on the economics of managing the White House; the arcane field of book collecting; and the character of the Harvard business school. It sought talented journalists to make stories broadly interesting to a wide readership. At the same time, though, World’s Work was an unapologetic cheerleader for business. It expressed unvarnished admiration for “captains of finance and industry” and trumpeted its optimism about the “Greatest of Bull Markets.” It was blindsided by the Great Crash, and by 1932 it had been merged into another magazine, which itself later folded.
Fortune was to be different. Its mission was to capture the sheer scale, grandeur, and vitality of business, which Luce called “the dominant institution of modern civilization.” “Where is the publication,” he asked in a business proposal for his new magazine, “that even attempts to portray Business in all its heroic present day proportions, or that succeeds in conveying a sustained sense of the challenging personalities, significant trends, and high excitements [sic] of this vastly stirring Civilization of Business?” The real story, he insisted, wasn’t just about the day-to-day doings of industry and financial markets but the deeper, hidden workings of economic life, “the daily activity of millions of men throughout the country and throughout the world.” His new magazine, he said, would be the “log-book, the critical history of Twentieth Century industrial civilization.”7
Luce set as the magazine’s mission nothing less than to “assist in the successful development of American Business Enterprise at home and abroad.” In another departure, he also insisted his new magazine cover companies at arms-length. “Not always flattering will be these descriptions,” the prospectus said (in what Brinkley calls high Time style), for Fortune is “neither a puffer nor a booster. Both of ships and of men, Fortune will attempt to write critically, appraisingly … with unbridled curiosity.” Luce insisted his magazine would, physically, be the “most beautiful in the world,” bound in cardboard and printed on mat paper so heavy that only one printer in the country, Osborne Chromatic Gravure Company, in New Jersey, could handle it.8 He commissioned the artist Thomas Maitland Cleland to revive an eighteenth-century typeface, Baskerville, for the text, along with other eminent artists and designers—Diego Rivera, Fernand Leger—to create elegant covers that, for aesthetic reasons, would eschew headlines. Stories were to be accompanied by elaborate illustrations and even oil paintings. MacLeish’s “No One Has Starved” was illustrated by a charcoal-and-pastel tableau of shantytowns by Reginald Marsh. That issue’s cover, a gray etching and engraving of a mass of men called Breadline, was later acquired by New York’s Whitney Museum of American Art. Luce spared no expense. For a feature later in the 1930s, headlined simply “Power,” Luce’s editors commissioned six original oil paintings by realist painter Charles Sheeler, who had been sent around the country to depict the spectacle of dams and power plants. Photographers for Fortune would include Margaret Bourke-White, who took magisterial photos of industrial landscapes and incisive portraits of business elites, for whom Luce’s magazine coined the term “tycoons.”
Perhaps the most remarkable thing about Fortune’s early days was its stable of journalists: an eclectic group of poets, authors, screenwriters, and novelists, including MacLeish, James Agee, Dwight Macdonald, Wilder Hobson (a jazz expert), James Gould Cozzens, Robert Cantwell, and others. When asked why, Luce pronounced that it was easier to turn poets into business writers than to teach accountants to write.9
While his relationship with his writers was famously contentious, even Luce’s detractors on the staff would allow, if grudgingly, that he was a fierce advocate for storytelling and had a knack for it. In a collection of reminiscences of former Fortune writers, one writer recalls how his editor had ordered big cuts in a lengthy story on the Chicago political machine, including many details about the operation; Luce sent orders down to restore the details on the ground that “successful ward politics is built out of the strictest attention of district politics to very small things.” Pieces routinely ran to thousands of words; one on the industrialization of Texas ran to 14,000.10 Long-form business writing had found a home. Fortune pioneered the corporate profile, which its writers called “corporation stories,” long, in-depth analyses and critiques of an organization’s inner workings; today these are a business-news staple. And its writers explored the growing “documentary style” of the era, which combined elegiac, sometimes sentimental photographs and text to tell individual stories with the statistical analysis of Fortune’s reporting.
In contrast to Clarence Barron’s Wall Street Journal staff of timorous high-school graduates, Fortune’s staff was a cantankerous group of bohemians and intellectuals, mostly leftists. It’s true that many of the writers went to work for Luce because jobs at the time were scarce. As Macdonald, later a fierce critic of the magazine, would put it: “Nobody bothered talking about ‘selling out’ while I was at Fortune—you don’t talk about rope in the house of the hanged.” Luce, for his part, found himself forced to tolerate a magazine that often strayed far to the left of his own philosophy of “corporate liberalism,” which saw modern corporations and their managers as agents not just for prosperity but for social comity and well-being. When asked why he, a staunch Republican, employed so many “Reds” on his staff, Luce replied, through clenched teeth, “Goddamn Republicans can’t write.”11
Fortune, to be sure, was probusiness. It sought to foster what Luce saw as the country’s emerging meritocratic class and had a “declared mission,” as one of its writers would put it, to “celebrate the marvelous accomplishments of American business, the virtues of the free-enterprise system and, the sure prospects of millennial prosperity.”12 The magazine explored the new social aesthetic that the modern industrial world was creating. Brinkley notes that the first issue chose, of all places, the Swift Meatpacking Plant in Chicago to illustrate the beauty and power of technology. Photographs by Bourke-White showed rows of hogbacks in almost abstract form, part of an orderly, mechanical operation devoid of carnage. The accompanying text similarly describes the efficiency, even beauty of the process. The choice of the Swift plant was pointed. The same plant had been the target of Upton Sinclair’s grisly muckraking 1906 novel, The Jungle. The use of Swift made two points for Luce’s new magazine: to demonstrate the advances of modern industry and to separate Fortune’s new form of clinical, polished journalism from, as Brinkley puts it, “the censorious, emotive language of The Jungle.”13
But from the start, Luce knew the magazine, to succeed, had to be willing to offend the very businessmen at whom it was aimed. Fortune would find out why things worked well or how they could work better. An early story that explored the instability of some of the ships on the prestigious Matson Line prompted demands for a retraction from the shipping company. The magazine refused. When the shipper canceled its advertising contract, Luce responded: “Good! Good! Ought to lose an account every month!”14
In its early years, Fortune succeeded in pushing the definition of what business news could be, not that this was terribly difficult. Under its first defining managing editor, Russell “Mitch” Davenport, the magazine did notable, hard-hitting work. An investigation of Ivar Krueger, a notorious international swindler and maker of munitions for Europe, helped to spark a congressional probe into the international arms trade. Other work included sharp, fair-minded reporting on the labor movement and the New Deal. And some of its journalism would be difficult to imagine even in today’s incarnation of Fortune. A 1934 piece on the arms trade, “Arms and the Men,” carried this subheadline: “A primer on Europe’s armament makers; their mines, their smelters, their banks, their holding companies, their ability to supply everything you need for a war from cannons to the casus belli; their axioms, which are (a) prolong war, (b) disturb peace.”15
As the Depression deepened, Fortune began to look beyond business per se to explore the everyday lives of unemployed laborers and farmers. In the early 1930s, the magazine presented, “The Faces of Harlan County” during a miners’ strike, chronicling the increasing number of Depression-era homeless travelers. It published a series on the “Life and Circumstances” of individual farmers, workers, and merchants. Suddenly, business news was not about what an institution said yesterday. “Articles such as these … demonstrated a broadened understanding of the America nation,” writes the historian Michael Augspurger in An Economy of Abundant Beauty: Fortune Magazine and Depression America, a nuanced look at the magazine’s early years.16
The magazine’s radical tilt was not always popular among Fortune’s elite readership. Advertising sales representatives complained to Luce that they were having trouble selling ads for a magazine that seemed, to them, to have an antibusiness bias. After “Arms and the Men,” the magazine felt obliged to respond in print to complaints that it was “going leftist” by saying that Fortune “doesn’t plan to join a crusade” and reaffirmed its dedication to objective, “full,” reporting.
Eventually, Luce did rein in his extraordinary staff, and the year 1936 was the turning point. The magazine assigned James Agee and the photographer Walker Evans to chronicle the lives of white sharecropper families in the South. Agee, who had a drinking problem and whose work was often deemed unusable by editors, turned in a massive, idiosyncratic manuscript that Fortune’s editors ultimately spiked. Agee would take a long time to find a publisher for the work that was the basis for Let Us Now Praise Famous Men, published in 1941 to lukewarm critical attention (to be revived in 1960s as an avant-garde triumph). The breaking point for Luce, though, came with a scathing four-part series on U.S. Steel by Dwight Macdonald, by then a Trotskyist sympathizer. Macdonald’s fourth installment approvingly quoted Lenin and depicted the company as “bereft of both the social intelligence of Communism and the dynamic individualistic drive of capitalism.” The ensuing battle with “the fawning editorial scalpel of Luce’s rewrite men,” as Macdonald would later put it, prompted him to walk out of his “plum $10,000 a year job.”17 The story was rewritten, Macdonald wrote, “chiefly because I had made it so completely damning that it was simply unanswerable. It was just too good. I wonder if it is still in the files, or if it was burned sheet by sheet in Luce’s ashtray.”18
One staffer of that era, John K. Jessup, wrote, “Luce knew what he wanted: that Fortune, without compromising its role as critic of American business, should explicitly accept and support the private enterprise system.”19 The intellectuals on the staff had difficultly accepting a bias of any kind, and Luce’s dictum touched off a wrenching period of arguments and bitter intraoffice memos. Jessup, who sympathized with Luce’s view, took the position that “the profit-system is a fact, not a cause.” Thereafter, Fortune steered a more conventional path, one more recognizable to its modern readers.
But even as it navigated a tamer course, Fortune represented a sharp departure from the business news that had preceded it, if for nothing else than its emphasis on original reporting, factual rigor, extensive use of surveys, close attention to narrative and storytelling, and experimentation with graphics, art, and photography. Just as important, it set a new standard in business reporting for maintaining critical distance and editorial independence from the institutions that it covered and their powerful leaders.
Fortune also helped to establish the idea that to be relevant, business reporting needed to look beyond the immediate interests of its elite audience at issues of broader social concern. Indeed, the magazine’s current incarnation suffers in comparison to the Fortune of Luce for the ambition, imagination, and empathy of its journalism. The magazine pioneered the use of surveys and other quantitative social science methods to strengthen traditional journalism’s anecdotal approaches in an effort to capture the flesh-and-blood reality, the deeper truth about the Depression. For a piece headlined, “Unemployment in 1937,” the magazine sent field crews into eleven different American communities for eight weeks, and each crew documented the lives of “a hundred or more different marginal families.” The piece included a seven-page appendix revealing the statistical results of the study. Its goal was nothing less than to “know something about the nature of unemployment.”20 Business news was coming of age.
The journalism problem in the 1930s was the same that the muckrakers had confronted and that journalism confronts today: How to explain complex problems to a mass audience? Then, as now, the complex problem was a rogue financial system and a damaged, then wrecked economy. Other journals had picked up on the idea that business and the economy could be of interest to a wider circle and that new journalistic approaches were needed. McGraw-Hill, a New York book publisher with roots as a publisher of trade and technical journals, launched Businessweek (originally with a capital internal W) in 1929, a year before Fortune. The weekly would focus particular attention on the nation’s economy, an interest represented by a thermometer that gauged its temperature and appeared on the cover of the magazine from the 1930s to 1961. Businessweek mimicked Fortune’s coverage of subjects in distinct departments—production, marketing, labor, finance, management, etc.—and included a “Washington Outlook” to accompany a “Business Outlook” feature. The magazine, which saw itself appealing to a small-town, Middle American business class, became one of the first publications to routinely cover the regulatory and policy issues affecting business. The idea, McGraw-Hill’s president said at the launch, was to write an opinionated form of business journalism while demonstrating that “it is possible to write sanely and intelligently of business without being pompous or ponderous.”21 The last bit was a dig at Forbes, the ever-quirky business periodical, which had been published since 1917 and in the 1920s was enjoying a boomlet.
Founded by B. C. “Bertie” Forbes, one of ten children of a village tailor in the Scottish Highlands, the magazine is credited with bringing enterprise reporting to business journalism, prying loose market-moving scoops from investment-banking sources, and bringing a human element by focusing on people and personalities.22 Forbes started his magazine using money borrowed from rich industrialists, many of whom had been profiled in a book he had written, Men Who Are Making America, an uncritical look at the likes of Henry Clay Frick and Jacob Schiff. And for decades afterward, Forbes was dogged by suspicions that it cozied up to the powerful, particularly powerful advertisers. Stewart Pinkerton, a former managing editor who wrote a history of the magazine in 2011, relays an incident in which Bertie Forbes submitted an article to Thomas Wilson, the head of a Chicago meatpacking company, for prepublication review. “I have gone over the article and made only one or two slight changes,” Wilson wrote. “I am sure you will agree with me on them. Otherwise, the article is fine.” And when Bertie Forbes visited the automaker Dodge, Forest Akers, its president asked if he might want a new car. Forbes later wrote a relative, “I said, ‘I wouldn’t have the nerve to ask for one.’ But there is one now on order for me—their best four-door sedan, which should be delivered shortly.”23
Forbes did include sharp attack pieces, then an innovation, in its editorial mix. The first issue included a piece by Bertie Forbes headlined “High-Placed Misfits,” about George Jay Gould, the financier’s son, whom Forbes described as incompetent, “the Nicholas Romanoff of American Finance.” But the attack piece served mainly as a counterpoint to a broader Forbes formula: investment advice, stock market data and forecasts, inspirational stories, advice on how to succeed, lists of notable executives, and adoring profiles. The magazine traded on Bertie Forbes’s extensive contacts among industrialists for interviews and included articles, under the heading “What Business Leaders Say,” written by the executives themselves. Another feature explained “How Forbes Gets Big Men to Talk.” One such piece recounted how Bertie Forbes managed, through extensive research and persistence, to get an interview with the aging John D. Rockefeller. The titan enjoyed the interview so much that he invited Forbes to golf at his country club, where, Forbes later wrote, “he made good on his strategy to lick me.” For decades, Forbes would remain, Pinkerton says, a “not much more than a second-tier stock tip sheet … type-heavy, gray, and often quite boring to read.” But that, generally speaking, was business news, and for all of the journalistic innovations of Forbes and Businessweek, and even the achievements of Fortune, a broader revolution was needed.24
The Wall Street Journal had made some advances since the Barron days under its editor Kenneth C. “Casey” Hogate, who brought needed critical distance to the paper’s Wall Street coverage. Even so, it confined itself to meat-and-potatoes economics and corporate news that was all but impenetrable to those who didn’t follow the daily grind. The Journal’s narrow, granular, unimaginative journalism was written in a style that dared readers to read it. Page One was haphazardly laid out, marked by randomness in the story choices and lots of ads (for financial services firms, mostly) that took up half-columns on both sides of the page. The paper tracked the economy: “Steel Year-End Let Down Mild” (January 8, 1934), “Real Advance in 1935 Business Seen in Capital” (January 2, 1935), and so on. But the coverage was marked by its narrowness of scope—news that had happened the day before, government statistics and goings-on, and statements from corporations or their executives.
Worse, this journalism wasn’t even working financially for the Journal’s parent, Dow Jones. After peaking at 50,000 subscribers in 1929, the Journal’s circulation slumped through the 1930s, with profits nudging zero toward the end of the decade. Once the paper even missed payroll, and by the end of the decade it was on the brink of extinction.
In biographies and memoirs, Leslie Bernard Kilgore is presented as genial, smart, and unflappable, a straight-talking Midwesterner out of a Frank Capra movie. An iconic photograph shows him sleeves rolled up, tie undone, staring up from a manual typewriter. He rode the train from Princeton each day marking up the day’s paper. For fun on weekends, he might swap the engine of the family Ford. Unlike many news executives today, Kilgore spent hours chatting with secretaries, printers, ad salesmen—even reporters. Indeed, his trips to visit news bureaus invariably ended at some late hour in a bar with a gang around Kilgore banging away on a piano and belting out popular songs. His laconic, affable demeanor was betrayed, colleagues said, only during moments of high tension when he would be overcome by a pronounced and mysterious tic. The tic was a clue that beneath his pleasant demeanor was a determined news executive with a radical vision of what a newspaper could be and the coolness to see it through.
Like Tarbell, Kilgore was a child of a middle-class, Midwestern, Protestant home, raised in South Bend, Indiana, by a life insurance agent and a homemaker. His childhood was as idyllic as a Norman Rockwell painting. A good student, he was also a fun-loving kid who liked to build things. Kilgore’s pragmatism is rooted in his upbringing. The biographer Richard Tofel, who gained access to Kilgore’s personal letters, found among them much homespun and common-sensical advice from his dad. Once when Kilgore was away at college at DePauw and his car, a Model T nicknamed “Pandora,” broke down, his father wired back a lecture on personal finance: “DON’T SPEND YOUR MONEY TILL YOU GET IT AND THEN DON’T SPEND IT AT ALL.”25
Kilgore went to DePauw University, a Methodist institution, and went to work at the college paper. He covered a speech by Casey Hogate, another DePauw graduate who had returned to his alma mater. Kilgore asked good questions and wrote a fluid account, and Hogate eventually offered him a job.
When Kilgore arrived at the paper in 1929, he was only twenty years old, but, just by dint of having a college degree, he was already way ahead of the young and overworked Journal staff. A gifted writer and a workhorse, he soon established himself as a star on a paper that had had no stars. He was allowed to experiment with new forms, and started what might be seen as a pre-Internet blog, “Dear George,” a loose, conversational column consisting of fictional letters by a correspondent called “C.W.,” who wrote to explain the Great Depression to a friend, “George,” in a winning, sometimes goofy style (no one knows where “George” or “C.W.” came from). A typical entry starts:
Dear George,
You will recall that I told you foreign currency rates—i.e. the value of one currency in terms of another—were determined, within certain limits, by supply and demand for foreign funds.
Kilgore also created the bloggy “Washington Wire,” a series of short, pithy dispatches of insider news from the capital that would run on Page One for fifty years. To gauge the mood of the electorate in 1938, he once stood on a corner in Erie, Pennsylvania, and interviewed more than one hundred passersby.26 Well-sourced among the powerful, he was also constantly on the road talking to businesspeople and workers. He spent weeks in central New York for a probing series on the National Recovery Administration. It started this way:
The Blue Eagle graces the doors and windows of practically every establishment in the capital city of New York. A parade that required between two and three hours to pass the reviewing stand took place on the half holiday set aside by the Governor to do honor to the NRA and its noble bird. The local NRA chairman described it as a “corker.”27
The series, which expressed the doubts of small businesspeople that the NRA was working, drew the ire of its powerful chief, Gen. Hugh Johnson, a member of President Roosevelt’s “Brain Trust,” who denounced it in an address to a Washington convention of the American Federation of Labor:
There are enemies of the NRA. Yesterday, I heard that a prominent Wall Street journal was going to conduct a survey of small employers for the purpose of demonstrating that the President’s Re-employment Agreement was a failure. I know something of Wall Street. I used to work there. It has been much maligned and also properly criticized. But the idea of a Wall Street journal going out to demonstrate through the little fellow the fallacy of a great social regeneration is one of the grimmest, ghastliest pieces of humor of all the queer flotsam of our daily work.28
If Johnson denounced Kilgore, Johnson’s boss, Roosevelt, praised him publicly after a piece in 1934 explaining the difference between the government’s raising money by selling bonds or merely issuing currency. At a news conference around the president’s desk the day the story was published, Roosevelt told the gathering:
There’s an article this morning in this morning’s Wall Street Journal by Bernard Kilgore that really anybody who writes about finances and bonuses and currency issues and so forth ought to read, because it is pretty good. I don’t agree with the story all the way through but it is a good story. It is an analytical story on an exceedingly difficult subject—on the question of issuing currency to meet Government obligations. I think that Kilgore could have gone just a bit further than he did.29
Kilgore would use other public compliments from Roosevelt to gain an interview. One 1935 background interview scheduled for a “couple minutes” lasted more than an hour.
While he enjoyed personal success, Kilgore knew his paper was going under. By the end of 1940, the Journal was adrift journalistically and financially. Circulation was stuck in the low 30,000s, and the doldrums could no longer be blamed on the American economy, which had begun to pick up steam from the government’s war preparations. Editorially, the paper was the worst of all worlds. As a general business paper, the Journal lacked the focus that can make some trade publications indispensable. Meanwhile, for a general reader looking for insight into how the economy really worked, how decisions were made inside corporations, how government policies affect ordinary people, whether institutions might be causing harm inadvertently or on purpose, or even whether a decision maker was telling the truth or stretching it, the Wall Street Journal of Charles Dow, Edward Jones, Clarence Barron, and even Casey Hogate had little to offer. In January 1941, Kilgore, who was then the Journal’s youngest Washington Bureau chief in its history, was called to New York for what he thought was a discussion of creating new columns along the lines of “Washington Wire.” Instead, Hogate and Grimes surprised him. They asked if we would take over as managing editor of the paper. Kilgore talked it over with his wife, Mary Lou, and said yes. He was thirty-two.30
The Kilgore revolution didn’t begin in 1941—and, for that matter, not all of it came from Kilgore but from Hogate; Kilgore’s key deputies, William H. Grimes and William F. Kerby; and others. But Kilgore sensed what Journal readers wanted: a broad spectrum of news, under sharp headlines, gracefully written in jargon-free prose. With no real model to guide him and in the face of resistance within Dow Jones and among advertisers, Kilgore reimagined the newspaper and its potential. The Kilgore revolution emphasized narrative over inverted pyramids, depth over briefs, words before numbers, context over incremental news, original reporting over press releases from institutions, and, above everything else, clarity. He was an enemy of jargon and insiderism and, as a result, one of the most influential editors in American journalism history. He invented the “leder,” the long-form (2,000 to 3,000 words) narrative structure that explained the world of business, markets, and corporations to a perpetually growing audience of nonspecialist, curious readers. The leder was geared to Richard Hofstadter’s “literate citizen,” and—twice a day, five days a week, year after year—it would play a key role in democratizing the knowledge of complex institutions and systems for America’s growing middle class.
And while American journalism has seen its share of starry-eyed idealists, Kilgore was not one of them. He was, to his core, a pragmatist. His letters are devoid of high-flown rhetoric about the public interest and are much more likely to include discussion of his salary and other brass tacks. Kilgore, the record is clear, cared about what worked, that is, what would put a floundering business publication on the road to financial viability. If he broadened the paper’s vision, it wasn’t because it would make the world a better place, though it did. It was because more people would subscribe to the Wall Street Journal, which could then demand higher ad prices. When he talked about his editorial strategy, it wasn’t in lofty McClurian terms but with his own brand of Midwestern common sense. When asked, for instance, why he wanted to expand the paper’s focus beyond the concerns of Wall Street professionals, he said, “Financial people are nice people and all that, but there aren’t enough of them to make this paper go.”31
The postwar media landscape was changing rapidly, particularly with the advent of television. Even back then, there was a sense that newspapers had to adapt to a new environment, one in which the audience already knew the basic facts about the day’s events. However, Kilgore believed readers would sit still for breadth, depth, and even length as long as the story was well told. Kilgore’s bet, more than anything else, was on journalistic quality. He paid business-news readers the respect of believing that they were interested in more than just business news, and he believed business news was broader than news about what some institution or executive said yesterday.
When he took over the Wall Street Journal, he won over traditionalists working on the paper’s staff or drove them off. When a copy editor named Greg Greene refused to brighten a headline according to Kilgore’s suggestion, Kilgore quietly told him:
“I’m sorry, but you either do as I say or find another job. And I mean now!”
“Okay,” said Green, “I’m fired.”
“You are,” Kilgore replied.32
This was said to be the only time Kilgore fired anyone on the spot, but it was enough. The Kilgore revolution was underway.
Hogate conceived but Kilgore perfected the “What’s News” feature, which would become commonplace around the industry. In the Journal’s case, “What’s News” was more than a convenient feature. Flagging concise summaries of stories on Page One while pointing to full stories inside the paper, “What’s News” (known internally at the “10-point”) had the effect of training readers to navigate the paper. Readers learned that a story leading the 10-point could generally be found in full on A3, which served as a surrogate front page for breaking news, while economic news could be found on A2 (depending on the era), and so on. The key aspect of the innovation is that readers could easily scan a roster of the most important breaking news stories and understand that they didn’t need to be on Page One to be important.
This bit of prosaic newspaper architecture would play an important role in the journalism that would follow. It had the effect of clearing Page One for the long-form narrative leders that would become the Journal’s hallmark and a high-water mark of American newspaper journalism. Reserving such prominent display for off-the-news features meant that the quality of those features would have to be raised to justify the display. A single column of words running down right-hand column of the paper—naked, but for the occasional stipple portrait or simple graph—provided nowhere to hide for ill-conceived, irrelevant, poorly executed, or otherwise deficient stories. A factual error might as well have been displayed in neon.
The innovation created a virtuous cycle. The more prominent the space, the better the stories needed to be; the better they were, the more prestige attached to the paper, raising the bar ever higher. In time, column six of the Journal’s Page One would become arguably the most prestigious real estate in American journalism. The stacked, single-column headlines of the leders became elegant prose poems, literate word games that were another means to draw a casual reader to a story that might otherwise go unread. Kilgore and company jettisoned trade terms where possible, emphasized careful editing and depth reporting, and even brought in an outside lecturer on writing, who impressed the staff by demonstrating that the greatest English prose could be understood by a twelve-year-old and flattered them by declaring the Journal’s Page One “the most readable front page in America.”33
In 1943, he added the A-Hed, the apropos-of-nothing feature that anchored the front page and showed off some of the paper’s most sparkling writing. The features were so light they were said to “float off the page,” but the reporting behind them was usually arduous and could take days or weeks. Among the early pieces were “The New Poor: Mr. A. Was Too Busy to Live Expensively; Now, He Hasn’t the Money” and “Home Grown Hemp—U.S. Revives Industry of Colonial Days to Assure Supply In War.”34 All these changes to Page One were designed to clear space for, highlight, and make more attractive the main thing the paper did: stories.
The reaction to Kilgore’s changes was muted at first. Circulation and advertising remained sluggish through the early 1940s, and the changes faced resistance both within the newsroom and among advertisers.35 Hogate and the Bancroft family, who controlled the Journal, backed Kilgore, who displayed outward calm. But after a while, even he grew discouraged. Things got so bad that Kilgore even considered jettisoning the name the Wall Street Journal on the ground that it conveyed too narrow a focus. He ordered readership surveys on whether some other name would drive home to readers the paper’s new approach. “I am inclined to think that perhaps we have a double problem”:
One angle is the term “Wall Street” in our name, which ties us close to a specific segment of the financial field and may make our future progress unduly dependent on the prevailing view of the stock market. We do, of course, cover the stock market, and I believe that the broader we make our coverage, the better financial newspaper we are. At the same time, the increasing portion of our readership is nonfinancial.36
Among the names he kicked around in a 1947 memo to Hogate was “World’s Work.” He continued: “I had a notion the other night that perhaps ‘North American Journal’ might be euphonious. … Perhaps the name, ‘Business Day,’ would not be too bad.” Fortunately, the elegant (if narrow-sounding) name stayed.37
Eventually success came: The Journal’s circulation began to edge up from the trough of around 30,000 to 42,393 in 1943, 55,000 by 1945, 129,878 in 1948, and 145,000 in 1949.38 Coverage expanded further as the paper reported on events such as the Cold War, Brown vs. Board of Education, and the launch of Sputnik. A turning point came in 1954, when the rising business paper faced a standoff with its biggest advertiser.
“G.M. Blacklisting Wall St. Journal,” read the New York Times headline over a story detailing how the world’s largest manufacturer had pulled its ads from Kilgore’s paper and cut Journal reporters off from any news from GM.39 Indeed, when the Associated Press, of which the Journal was a member, asked the carmaker for its weekly production figures on the Journal’s behalf, GM cut off the AP, too. GM’s show of muscle had come in response to beat coverage by the Journal’s Detroit bureau, which had unveiled the carmaker’s strategy to force newspapers around the country to decline ads for new cars submitted by unauthorized car dealers. (The unauthorized dealers were selling at cut-rate prices surplus new cars they had taken off the hands of authorized dealers. GM didn’t mind the practice; it just didn’t want it advertised.) The story, combined with the Journal’s revealing the designs of new 1955 cars while the ’54s were still in the showrooms, led to a confrontation between GM CEO Harlan Curtice and Kilgore. GM threatened to sue for theft of its property.
Kilgore stood his ground, albeit in his low-key style. “The Journal is not mad at anybody,” he told the Times. “I have a General Motors car—and I certainly don’t intend to sell it.” On July 12, 1954, the Journal published an exchange of carefully worded letters between Curtice and Kilgore in which GM denied any attempt to interfere with Journal editorial policy. Kilgore was polite but gave away nothing. GM backed down, and the ads resumed. The standoff was a turning point in the newspaper’s history, publicly reinforcing the church-state division between editorial and advertising at the paper and affirming the standard for American journalism. It certainly didn’t hurt circulation, which passed 295,000 in 1954, 365,000 in 1955, 570,000 in 1958, and 784,000 in 1961. In 1966, circulation crossed a million.40
The Journal’s rise from obscure and financially shaky trade journal to the world’s leading monitor of markets, corporate behavior, and the economy was attributable, of course, to much more than Kilgore, who was diagnosed with colon cancer in 1965 and died two years later at the age of fifty-nine. Nor was it entirely because of the paper’s new journalism. The Journal’s parent company, Dow Jones, was, until the late 1980s, a dynamic and innovative company. Kilgore had an important mentor in Hogate, supportive owners in that generation of the Bancrofts, and fine lieutenants on both the editorial and business sides, including Robert M. Feemster, one of his era’s great ad salesmen, and Joseph J. Ackell, who laid the foundation for the Journal to print in plants around the country via satellite. To a large extent, the Journal under Kilgore rode the greatest postwar expansion in U.S. history and reaped the benefits of the creation of the new managerial class that was one of its byproducts.
But few would argue that Kilgore’s broad editorial vision didn’t play a decisive role in the Journal’s rise and that Kilgore’s Journal wasn’t decisive in redefining business journalism and journalism itself. The American business press from its inception through the postwar boom years was characterized by rising economic power, confidence, and ambition, and it championed a broadening of journalistic vision that revolutionized the definition of “business news” and altered the relationship between journalism and the institutions it covered.
Kilgore will never be confused with Sam McClure or Ida Tarbell. He was no muckraker, though, as we’ll see, the Journal and business news generally added investigative reporting to their arsenal. And while he had bedrock values that made momentous decisions like the GM standoff seem easy, he expressed them in pragmatic terms. As a Journal editorial put it during the GM affair, “When a newspaper begins to suppress news, whether at the behest of its advertisers or on pleas from special segments of business, it will soon cease to be of any service to its advertisers or to business because it will soon cease to have readers.” Integrity was as much a business equation as anything else. So, too, were his journalism ideas. After all, he still liked Wall Street types, but there just weren’t enough of them “to make this paper go.”
In emphasizing depth, writing, careful editing, and context; by broadening business journalism’s field of vision to include social issues, urban affairs, investigations, and foreign policy, as well as business-news staples like earnings, government reports, tips from insiders, and official pronouncements from institutions; by quieting the front page and relaxing the requirement to report only what happened “yesterday”; and by emphasizing the importance of storytelling, Kilgore played a key role in democratizing business news. While the Journal remained in some ways a form of elite communication—and its demographically wealthy audience would support the notion—under Kilgore it became more accessible to the curious layperson who didn’t need to work on Wall Street or even in business to gain insight into both. The paper’s extensive reach became even more evident in 1979 when its circulation hit 1.76 million, passing for the first time that of the New York Daily News, then reigning as the largest-circulation paper in the nation. The Journal had become America’s most popular newspaper.
The Kilgore revolution and its emphasis on storytelling laid the groundwork for great accountability reporting in the leading business-news organization, and they helped transform business news generally. To read business journalism as it came of age in the 1970s and 1980s is to understand why the comings and goings of business executives and Wall Street bankers suddenly became so interesting to millions. Obviously, many nonjournalistic factors, including the bull market on Wall Street that began in 1982, contributed to the burgeoning reader interest in business and finance. But the journalism must also be taken into account. And, after Kilgore, business journalism flourished financially and moved to the front rank of American journalism, powerful, sophisticated, and, in some cases, fearless.
Forbes, which had languished in third place among business-news weeklies behind Fortune and Businessweek until the late 1950s, came into its own after Bertie’s death in 1954 and the assumption of leadership by his flamboyant son. Malcolm Forbes became an iconic spokesman for both the magazine and a brash brand of capitalism. He ostentatiously flouted his private plane, Capitalist Tool; ever-larger Highlander yachts; and his rich art collection, which included a trove of Fabergé eggs, on display in the lobby of the magazine’s headquarters, a mansion on Fifth Avenue. Forbes threw lavish parties, rubbed elbows with global elites, and kept the world guessing about his romantic life, conducting, among others, a long-running “are-they-or-aren’t-they?” relationship with Elizabeth Taylor. (They weren’t; after his death in 1990, a gay and lesbian weekly, Outweek, reported Forbes was gay, a conclusion supported by Christopher Winan’s biography the same year).41 Journalistically, however, Forbes’s most important and smartest decision was to elevate James W. Michaels as top editor of Forbes.
The son of a Buffalo burlesque owner, Michaels had distinguished himself as a wire reporter by being the first to report Gandhi’s assassination in 1948. After arriving at the magazine in 1954, he was quickly elevated and given a relatively free hand by the Forbes family. Michaels would define the magazine’s role as the “drama critic” for business—who’s doing well, who isn’t, and why. As part of that function, he would sharpen the magazine’s writing (a colleague said he could “edit the Lord’s Prayer down to six words and nobody would miss anything”) and would elevate its “attack piece.” The business investigation would become a Forbes staple.42
By the mid-1960s, Forbes’s formula for success was in place. “It was no longer the National Enquirer of business publications, as some had seen it, running rumors to titillate rich investors,” says Winans. It now included intelligent, tight analytical pieces that exposed fundamental realities of a company’s business, organization, and management. True, Forbes targets were often smaller companies or those uncovered by rivals, but Michaels also took particular pleasure in going after companies that other business publications fawned over.43 A 1967 piece about the defense conglomerate Litton Industries, a Wall Street darling, exposed weaknesses in its balance sheet and the quality of its earnings, sinking the stock price. A cover story about Avon in 1973, then a high-flying stock, portrayed its business model based on suburban women selling to their neighbors as bogus and exploitative, again sinking the stock. And the writing could be particularly sharp (a piece describing winemaker Ernest Gallo said that beneath his “crusty exterior … sits a heart of stone”). Forbes’s edgy pieces were always highly numerate, told with brevity and clarity. “Like well-crafted jury summations,” says Pinkerton, “they proved, never asserted.”44
Former Forbes staffers fondly recall Michaels’s tirades. “This isn’t reporting,” he scribbled atop one particularly credulous piece. “It’s stenography! Why is this person still on staff????” During a 1992 meeting, he blurted out, “It’s time for a really nasty story. Let’s really stir up the animals.” The result was a scathing piece on the spendthrift ways of William Agee and wife, Mary Cunningham Agee, who had achieved notoriety for mixing business and romance at Bendix Corp. and who were then involved with construction firm Morrison-Knudsen (she had had no official position but, as the magazine pointed out, occupied an office next to his and ran its charitable foundation). The headline was “The Imperial Agees.” The board eventually ousted Agee as CEO.45
Obviously, Forbes—home of the ultimate celebration of wealth, the Forbes 400 (started in 1982)—was no McClure’s. It did not rake muck. It didn’t apply its journalistic skepticism to systemic questions. Its mix was dominated by investing advice, run-of-the-mill corporate and business news, and some of the most fawning profiles in the business press. Indeed, it never fully shook its reputation, earned in Bertie’s day, for trimming its editorial content for favored advertisers and, later, friends of Malcolm Forbes. The magazine’s “unspoken dialogue” with advertisers—whether ad dollars would buy leniency—“would continue, on a very subtle level” for years. Pinkerton quotes an unnamed former senior writer who says, “There were so many sacred cows you could populate all of India.”46
Winans identifies a 1979 piece about Peter S. Redfield, then CEO of Intel, a Forbes advertiser, and a friend of Malcolm Forbes. The author, Paul Blustein, wrote a scathingly negative assessment of Redfield’s abilities, describing his “fast-buck” approach and penchant for borrowing. However, when published, the piece appeared as a bland assessment, the tough language stripped out and a banal conclusion appended: “But does a billion-dollar company have to behave differently from a $100 million-dollar company. … Keep tuning in for answers.” Blustein, now a respected author of economics books, resigned, writing Forbes in a letter: “At one point does a publisher’s ‘superior insight’ become a matter of altering the truth merely to protect the sensibilities of the publisher’s friend?”47
But the issue isn’t whether Forbes was always tough but whether it had that capacity, and, under Michaels, the answer is clearly yes. By the mid-1980s, Forbes was leading in ad pages among business periodicals and was named among the “hottest” magazines by AdWeek.48 It had won Loeb awards—the top business-journalism awards—for hard-hitting financial investigations. In 1985, Allan Sloan, one of the deans of business journalism, won one of his seven Loeb awards for an investigative piece with Howard Rudnitsky on a highflying savings and loan, Financial Corporation of America (“Damn the Torpedoes; Full Speed Ahead”); Richard Stern won for an exposé on a notorious small-stock boiler-room operator, Robert Brennan and First Jersey Securities (“The Golden Boy”).
By the 1980s, business journalism was reaching its peak of prestige and prosperity. In 1986, Businessweek and Forbes jockeyed for the most readers, each with more than 700,000 subscribers, and Fortune, which had shifted to a semimonthly schedule in 1979, not far behind. New entrants streamed into the field, and competition among the leaders was fierce. Businessweek, which fought a reputation for being the dowdy tribune of Main Street, made a splash with a hard-hitting story in 1986 about Allegheny International, a Pittsburgh appliance maker, sparking shareholder suits against its CEO, Robert J. Buckley, who was forced to resign. Buckley, in turn, sued Businessweek for libel. The suit would be settled on terms favorable to the magazine. And in the fall of 1986, the Los Angeles Times would run a story under the headline: “Forbes Has the Yacht, Fortune Has the Prestige, but Spunky BusinessWeek is coming on.”49
Businessweek’s bland, meat-and-potatoes style, established by its postwar editor Elliott Bell, continued into the 1970s. One of Bell’s successors was quoted as saying that business magazines should be like bankers. “One of the reasons you trust bankers is because they are sober and boring,” he said. “If bankers wore Hawaiian shirts and long hair, you wouldn’t trust them.”50 Businessweek adapted to business’s more glamorous times under editor Stephen B. Shepard, appointed in 1984. The magazine ran a cover on the decline of once-dominant American manufacturing companies under the cheeky one-word headline: “Oops!” It ramped up the number of covers featuring CEOs in a bid to humanize business news and it also added an investigative capacity.51
However, despite the more aggressive and flashy reporting, most of it remained comfortably within conventional, narrow frames. The same year that it took on Allegheny International, Businessweek ran a cover story that chronicled, and marveled at, the rise of bond king Michael Milken, comparing him to J. P. Morgan.52 Winans reports that Forbes had been planning a cover story making the same comparison before scaling back after it was beaten to the punch. Milken was a key figure in the leveraged-buyout boom that was then upending the country’s economy and, more to the point, would later become the center of a criminal probe, ending in a guilty plea to six counts of securities fraud and related charges, an explosive scandal that the business press would follow with particular zeal.
The Kilgore revolution was part of and helped pave the way for a wider opening in American business journalism, one that moved away from formulaic writing styles and dependence on government and other institutions for information. A series of academic studies have shown a sharp break in journalism norms in the 1960s.53 News grew critical of established power; journalists came to present themselves publicly as more aggressive; and news stories grew longer and less centered on government and electoral politics. The scholars Katharine Fink and Michael Schudson describe this great opening as the rise of what they call “contextual journalism.” While no standard definition exists, this new form is generally longer, more in-depth, less tied to the daily flow of events and institutional pronouncements, and, as a result, more critical of those institutions.
Fink and Schudson measure the different types of journalism with a content analysis that breaks down news stories on the front pages of three sample papers (the New York Times, the Washington Post, and the Milwaukee Journal Sentinel) into five categories: conventional, investigative, social empathy, contextual, or other. The data show a steep drop in conventional stories and a sharp rise in the contextual: “Although this category is, in quantitative terms, easily the most important change in reporting in the past half century,” they write, “it is a form of journalism with no settled name and no hallowed, or even standardized, place in journalism’s understanding of its own recent past.”54
No American newspaper did more to expand the contextual form and raise storytelling to a highly refined craft, if not an art, than the Wall Street Journal. Under Norman Pearlstine’s tenure as top editor from 1983 to 1992, the Journal was a famously fractured, byzantine, and sharp-elbowed newsroom—no place for tender artists. But after Kilgore, getting “leders” on Page One became a career imperative, and the ability to conceive, report, and structure a long-form narrative was highly prized. With reporters clamoring to find a formula and their careers now riding on it, the Journal produced an in-house handbook, later published in 1986 as Storytelling Step by Step: A Guide to Better Feature Writing, by William E. Blundell, one the paper’s star feature writers. The 150-page guide walked reporters through the basics: “shaping ideas,” “story dimensions,” “organization,” “handling key story,” and “wordcraft”:
Too many reporters do not see themselves as storytellers but as something else. Some are lawyers, in effect. They believe their job is to convince people of the rightness or the wrongness of things as they have determined it, so their copy has a didactic or shrill tone. Fixated on ideas, they lack humility in their work. They may talk down to the reader or talk at him, but they seldom talk with him as the storyteller does.55
This fixation on storytelling, fussing over words, detail, narrative, character, and scene, was not about journalism for its own sake. It was a vehicle for democratizing business news, transmitting detailed information about a technical and abstract subject to a mass audience. It’s not an easy trick, and excellence doesn’t come cheap. But it’s more than a coincidence that in this era, the 1960s to 1990s—the era of the Great Story—business news shed its second-class status and joined the front rank of American journalism. It became, one could even say, glamorous.
Many business reporters became brand names and took their place in the pantheon of major American journalists: Joe Nocera and Carol Loomis at Fortune, Allan Sloan at Newsweek and later Fortune, Gretchen Morgenson at Forbes, Connie Bruck at The New Yorker, and James B. Stewart, Bryan Burrough, and many others at the Wall Street Journal. The “business book” came into its own as a genre and pushed its way onto best-seller lists, mostly to document the excesses of the go-go Wall Street era. Among the best are Bruck’s Predators’ Ball (1988), on the rise of Michael Milken and the junk-bond-fueled leveraged-buyout business; Burrough and John Helyar’s Barbarians at the Gate (1989), on the bruising takeover battle for RJR Nabisco; and Michael Lewis’s Liar’s Poker (1989), a subversive insider account of Salomon Brothers during its heyday. The thoroughness of the reporting, the clear and compelling writing, and the eye for cogent detail set standards for the field.
Stewart would draw on his Wall Street Journal reporting to write Den of Thieves, a riveting account of the insider-trading scandals of the 1980s and one of the best-selling business books of all time. Among the most elegant and sophisticated writers in the annals of U.S. business news, Stewart would have a profound effect on the craft. When business-news outlets produce inside-the-boardroom tales of intrigue and maneuvering, when tight-lipped CEOs bark out commands and pound the table, when details of what they had to eat are offered, reporters and editors, consciously or not, echo Stewart’s style of the era.
But while Stewart exemplified the style, he didn’t have a monopoly on it. Burrough, another Journal star, wrote stories that have the capacity to surprise even today. One eye-popping example was a profile of Jeffrey Beck, a banker at Drexel Burnham Lambert, known as the “Mad Dog.” Note the narrative technique as the Journal allows the tale to spool out slowly, before the surprise at the end of the passage:
Inside Wall Street’s tightly knit takeover community, everyone knows The Mad Dog. At least they think so.
Jeffrey “Mad Dog” Beck of Drexel Burnham Lambert will go down as one of the top merger “rainmakers” of the Roaring Eighties. A well-connected, often outrageous investment banker who played key roles in the decade’s two largest leveraged buyouts, Beatrice and RJR Nabisco, Mr. Beck, 43, may be the only banker in history to wolf down a box of dog biscuits to get a chief executive’s attention.
Through his career, an outsized part of Mr. Beck’s allure has been his rococo background: heir to a billion-dollar Florida fortune, decorated for heroism as a special forces platoon leader in Vietnam, rumored to have worked for the Central Intelligence Agency. No one, friends say, can make fighting in the steaming jungles of Southeast Asia come alive as can Mr. Beck, who has held many a Manhattan dinner party in thrall with his wartime tales. He likes to pull up his left shirtsleeve, point to a scar on his wrist and explain how it was shattered by a bullet from an AK-47 rifle during fighting in the Ia Drang Valley; only a bulky Seiko watch, Mr. Beck says grimly, saved his hand. For calling in napalm strikes on his own patrols and other exploits, he tells rapt listeners, he earned a Silver Star, two Bronze Stars and four Purple Hearts.
Mr. Beck’s is a stirring story, good enough, in fact, to have drawn the attention of actor Michael Douglas, who paired the Drexel banker with a screenwriter to assemble a script based on Mr. Beck’s life. Mr. Beck has served as the model for one popular novel’s protagonist, and his Wall Street career is the centerpiece of a non-fiction book to be published this fall by Random House.
Filmmaker Oliver Stone, himself a Vietnam veteran, befriended and swapped war stories with Mr. Beck during the filming of the movie “Wall Street,” on which the banker served as a technical adviser and even took a cameo role. “Jeff was on the killing edge, the front lines, of the takeovers,” Mr. Stone says in an interview. “To me, he really was the new Wall Street.”
The only problem, as a handful of Mr. Beck’s acquaintances now know, is that the banker’s stories are almost all lies.56
This jaw-dropper, a true “holy shit!” revelation, is fully supported in the lengthy account that follows. The scenes in which Beck is confronted with evidence of his lies are almost painful to read, so thoroughly is he exposed as a fantasist.
The Wall Street Journal was the global business news leader, dominant in a way difficult to imagine today. But the explosion of business reporting—of Great Stories—was in no way confined to the Journal. A roster of notable work would fill another book, but a 1988 New York Times profile of John Gutfreund serves as an example. Gutfreund engineered the rise of Salomon Brothers to a position of dominance in the bond business. He took it public and set off a trend that transformed the Street. The Times story, however, examined how Gutfreund’s taste for excess and expansion had caused the firm to slip from the top. The wickedly entertaining profile is built on carefully assembled details that neatly capture Wall Street excesses of the 1980s, such as this one about Gutfreund’s second wife, Susan, a former flight attendant: “Mrs. Gutfreund is fastidious about all areas of her life. She went to great pains to have a small refrigerator installed in the bathroom of her former apartment in the River House, in New York, because after bathing she likes her perfume to be chilled.”57
Fortune remained a source of literate storytelling and pungent stories on the business world—if tamer than in the Dwight Macdonald era. Hedley Donovan succeeded Henry Luce as Time Inc.’s editor in chief and, in the late 1970s, shifted Fortune to a biweekly schedule to keep closer to the news. The postwar staff included notables such as William H. (Holly) Whyte, author of a Fortune series about corporate life that became the best-seller The Organization Man, and the labor writer and prominent sociologist Daniel Bell.58
Fortune continued the tradition of stories that probed deeply into mismanagement, screw-ups, and manipulation at corporations. Carol J. Loomis, a business press legend still working, at this writing, after more than fifty years at the magazine, has made something of a specialty of calling powerful CEOs on the carpet. Many times she wrote of corporations increasingly bending accounting rules to make earnings appear better than they actually were (e.g., “ITT’s Disaster in Hartford” [May 1975], “Behind the Profits Glow at Aetna” [November 1982]). In a memoir article in 2005, Loomis recounts how American Express CEO James Robinson, among other high-powered figures, pressured her to soften her findings, insisting that she didn’t understand business or finance. “The problem was that I did understand how American business was being conducted, and I didn’t like it,” she writes.59
The “corporation story” remained a Fortune strength. Luce’s successors at the magazine turned its sophisticated and withering gaze on mismanagement and screw-ups across the corporate landscape. Stories by Joseph Nocera in 1997 and 1998 revealed chronic managerial problem at the Wall Street Journal’s publisher, Dow Jones & Co, including embarrassing details on snafus in the data unit that would prove the company’s undoing as well as exclusive interviews with previously silent Bancroft heirs trying to steer the company on a different course.60 These valuable stories, unfortunately, were not enough to prompt changes that were badly needed.
The flowering of business reporting created a new genre of deeply reported and well-crafted stories about corporate life, the economy, financial markets, and even complex products such as derivatives. It was primarily through this simple yet time-consuming and difficult vehicle that the curious layman could now quickly and easily learn about technical subjects once reserved for insiders and specialists. One of the most important lessons these stories taught is that these subjects, once well explained, weren’t so complicated after all.
But even storytelling has its limits; another element is needed. Valuable as it may be, if kept within a narrow frame, even great businessnews reporting does not address systemic problems or speak to the public interest. In other words, while most great accountability reporting finds expression as long-form narratives, only a few long-form narratives qualify as great accountability reporting.
A look at Wall Street coverage makes the point. Even the highly accomplished coverage of the insider-trading scandals of the 1980s in the Wall Street Journal and elsewhere—considered to be a high-water mark in business journalism—followed government investigations, principally by the Securities and Exchange Commission and the Department of Justice, which were primarily responsible for exposing the ring surrounding arbitrageur Ivan Boesky, including Michael Milken and other prominent Wall Street figures.
And critics within journalism have long faulted the business press for failing to reveal brewing problems in the savings-and-loan industry during the 1980s. In a chapter entitled “Why The Wall Street Journal Missed the S&L Scandal,” for instance, Francis Dealy makes a convincing case, mainly through an admission by the paper’s reporter in charge of savings-and-loan coverage, that infighting, myopia, turf wars, and risk aversion caused the paper to skip a story that had been brewing in the local press for years. Dealy documented an odd case in which a small local paper, a competitor, actually pitched the story to the paper as something that needed to be widely publicized, only to be turned away.61
And the overwhelming amount of conventional business-news coverage of Wall Street banks—access reporting, no matter how deeply reported or beautifully written—in no way qualifies as accountability reporting. The difference is clear in major businesspress coverage of Wall Street banks. News-archive databases allow a rough categorization of “major” stories featuring Wall Street firms in four major business news publications: the Wall Street Journal, Forbes, Fortune, and Businessweek. These archives extend back to 1984. A “major” story appears on Page One of the Journal or runs to more than one page in the magazines. A review of the databases reveals that stories fell fairly easily into three categories: profiles, explanatory stories, and accountability stories.
Stories in the first category—the overwhelming majority—explore the inner workings of a Wall Street firm, usually feature the cooperation of the firm and its executives, and deal primarily with its success or failure relative to its competitors. To be sure, many stories were far from puff pieces (though there were plenty that qualify), but if they were tough they were tough only within the narrow context of profit and loss. A Wall Street Journal story from September 10, 1980, “Diversified Offering: Merrill Lynch Expands from Stocks to Gamut of Financial Services,” is a typical profile. The subheadline, “Chairman Regan Leads Years of Growth in Real Estate, Insurance, and Banking; Critics Resent the Changes,” implies some critical rigor, but a few paragraphs make clear the story’s purpose, to document a business success:
Last spring Merrill Lynch & Co. encountered the kind of customer that its chairman, Donald T. Regan, had been dreaming about for 10 years. And the man wasn’t even particularly interested in the stock market.
The dream customer was an employee of American Airlines who was being transferred from New York to Dallas. American hired Merrill Lynch Relocation Management to handle the details of the move. But that was just the beginning. Here is what followed.
—Merrill Lynch Realty Associates brokered the sale of the man’s house on Long Island and helped him find the right home in the Dallas area.
—The man obtained a mortgage through a Dallas lending institution whose funds had come in part from two Merrill Lynch mortgage insurers, AMIC Corp. and Family Life Insurance Co.; the man then insured his mortgage payments against his untimely death through a Family Life policy.
—When he decided to cash in on sky-rocketing interest rates, the customer arranged a money market investment with the local office of Merrill Lynch, Pierce, Fenner & Smith, the securities brokerage arm of Merrill Lynch & Co.
These transactions were made possible by a decade of diversification at Merrill Lynch & Co. It is a diversification that has created a supermarket of financial services and has caused Merrill Lynch to explore areas radically different from the company’s traditional securities business.
Even making allowances for this type of story, there isn’t much tension to speak of. The “critics” cited in the subheadline don’t have much to say. The story tries to point to “controversy,” but, in the end, it is pretty weak tea:
The new activity hasn’t been without controversy. Critics have voiced concern that brokerage firm diversification might dilute the company’s efforts and thus ultimately hamper its ability to raise money for industry. And competitors, particularly banks, have looked askance as Merrill Lynch has elbowed its way into precincts formally considered off-limits for securities brokers.
(MY EMPHASIS)
So much for controversy. But, in fact, the story was perfectly legitimate for what it was. There’s no reason to think that Merrill Lynch had not benefited enormously from a diversification strategy laid down by Ronald Reagan’s future Treasury secretary and chief of staff. And Donald Regan indeed was an outspoken and prescient Wall Street executive. He had, as the story notes, called for the abolition of the New York Stock Exchange rule that fixed the commission its members charged to perform stock trades. In 1975 it was removed, ushering in a new, more democratic era of stock trading. In this 1980 story Regan is heard challenging the venerated system of trading stocks by hand on exchange floors, calling it “ridiculous.” His calls for “computerized” trading would later become a reality (though remnants of the old system can be found to this day). Finally, it should be remembered, the story was written in a more innocent era, before the series of booms and crises that have gripped the Street since deregulation and when the financial sector played a significantly smaller role in the economy and political system.
The profile is a staple of all corporate reporting, and coverage of Wall Street is no exception. Sometimes the stories lean to the flattering side. “Merrill Lynch Takes a Tip from the Grocery Store” (Businessweek, July 9, 1984) looked at the same diversification strategy that the Journal had examined a couple years earlier. “Cash, Flash, and Dash: Can This Be Merrill?” (Businessweek, May 11, 1987) reported that the bank that had been known for its retail brokerage had taken the lead in securities underwriting. And “Merrill Lynch Bulls Ahead” (Fortune, February 19, 1996) looks at the firm’s string of success in several business areas: “On Wall Street’s sloppy playing field, no team has made a more surprising comeback in blocking, tackling, and most important, in scoring than Merrill Lynch. What was once a fumbling squad of beefy, slow-footed dullards has become a lean powerhouse consistently running up big-point totals against hapless opponents.”
Not all the major stories were flattering, and whether a given story is positive or negative is not really the point. There are many examples of profiles that reveal problems and challenges facing the corporations: “Merrill Lynch’s Big Dilemma” (Businessweek, January 16, 1984) discusses the bank’s problems in coping with a newly deregulated environment, trouble with an investment in a Hong Kong brokerage, and increased competition outside the securities business. “Merrill Lynch: The Stumbling Herd” (Fortune, June 20, 1988) finds reasons for the bank’s low returns on stockholder equity and other problems in the post–Donald Regan era. But what’s important is the extent to which the business news relied on access reporting and failed to attempt accountability reporting. To be clear, access reporting or, in this case, an investor-oriented approach to business news is neither unexpected nor even a problem. But it does help resolve the “Jon Stewart question”: how can so many cover something so closely, with such expertise, yet miss so much?
Explanatory stories, the second most frequent category, typically examine Wall Street firms in the wake of a government crackdown or financial disaster. Not only are they valuable in themselves, often offering insight into exactly what went wrong and why within an institution, explanatory stories feature notably among the greatest, most readable, most riveting stories business journalism has ever produced. But this category of story also fails to qualify as accountability reporting (as we’ll see in the next chapter) and necessarily does not warn the public about problematic behavior in key institutions on the business-press beat. Rather, by definition, these are after-the-fact explanations, often written in a tone of rueful omniscience and finger-wagging at what are often described as avoidable mistakes.
Clearly, even great business reporting and sterling long-form narratives are not enough to provide the curious nonspecialist with timely information about systemic problems, corporate lawlessness, and malpractitioners, and do so while they are still powerful. For what was coming in the mortgage era, it would take a far more ambitious type of journalism.