The Other Zillionaire Who Bailed Out the Washington Post

Meyer in the 1940s

Eugene Meyer in the 1940s

In 1933, The Washington Post was in a death spiral. As a writer for Fortune put it 11 years later, “its playboy owner … had milked the paper of its assets until it could no longer pay the newsprint bill for its scraggly circulation of 52,000.” The bankrupt newspaper was auctioned off, and went for $825,000 to an anonymous bidder who after a few days revealed himself be Eugene Meyer.

Meyer was a hugely wealthy former Wall Street tycoon who had just spent a frustrating three years as the Herbert-Hoover-appointed Governor (analogous to today’s chairman, but with less power) of the Federal Reserve Board. He had tried to buy the paper before — in 1929, for $5 million — but was turned down. And a few years before that, he had offered to buy the Washington Herald from William Randolph Hearst.

As Merlo J. Pusey tells it in his 1971 biography of Meyer, the conversation went something like this:

“What,” [Hearst] had asked, “makes you think it would be a good idea to sell one of my Washington newspapers?”

“You are reported to be losing about a million and a half a year,” Meyer had replied.

Money-losing newspapers, then, are nothing new. The reason they lost money in the 1920s and 1930s was in some ways similar to why they are struggling today — because there were so many alternatives. The big difference was that back then, the main competitors for readers and advertisers were other newspapers. In Washington, at the time a city of fewer than 500,000 inhabitants without a lot of suburbs, there was only one really successful paper in 1933, the Evening Star. But there were five dailies in all. Scripps-Howard’s afternoon tabloid Daily News likely turned a profit, given the Scripps-Howard penchant for keeping costs low. But Hearst’s morning Herald and afternoon Times and the morning Post all found it hard to make money even in good times, and gushed red ink in the depths of the Depression.

Nowadays, of course, the newspaper business can be tough even if you’re far and away the leading newspaper in a big, news-addicted metropolitan area, which is why the company controlled by Meyer’s descendants sold the Post last year to Amazon founder Jeff Bezos. That marked the beginning of another saga of an enormously successful businessman from a different industry buying the struggling Post for non-financial reasons, and attempting to set it aright. In Meyer’s case, things turned out spectacularly well — the money-losing Post became the basis of a new family fortune that appears to have grown even bigger than the one he amassed in his Wall Street days. It seems pretty unlikely that things will turn out that way at the Post for future Bezoses (Bezii?). But hey, you never know.

I started studying Meyer for an Atlantic column on the pre-monopoly-era economics of the newspaper business. His story didn’t end up fitting in, but I felt compelled to tell it somewhere. The man was impressive.

Eugene Meyer was born in 1875, the son of a businessman and banker who had emigrated from Strasbourg to Los Angeles 15 years before. Marc Eugene Meyer (the father) moved the family north to the Bay area when his eldest son was a young boy, then moved East after the Panic of 1893 to become a partner in the New York office of the investment bank Lazard Frères. Young Eugene, who had just finished his freshman year at UC Berkeley, transferred to Yale.

After graduating, the younger Meyer went to work with his father at Lazard, but didn’t stay there long. His father had promised him $600 if he hadn’t taken up smoking by age 21. Meyer earned that reward, and quickly built it into $5,000 by investing in the common stock of the Northern Pacific Railroad. Then he made a big bet on the 1900 elections. Meyer expected Republican William McKinley to win, and expected this victory to unleash a stock market boom. As insurance he bought some gold bonds, which he figured would soar in value if easy-money Democrat William Jennings Bryan prevailed, but put most of his $5,000 into options to buy railroad stocks at specified prices after the election.

McKinley won, easily. Meyer held onto his options, cashed in his gold bonds the morning after the election, and bought more options. Then, the January after the election, he sold them all — for $50,000. With that he quit Lazard, bought his own seat on the New York Stock Exchange, and embarked on a remarkable career as an investor and sometime investment banker. His most lasting accomplishment was bringing five companies together in 1921 to create the hugely successful Allied Chemical and Dye Company (which later became Allied Signal, which merged with Honeywell in 1999), but he also was a big investor in Fisher Body (maker of most of the bodies for GM cars) and the Anaconda Mine. He wasn’t as iconic a figure as Bezos today, and wasn’t quite as rich either. But he was in the same general territory.

When he bought the Post, Meyer, seemingly like Bezos, wasn’t in it to make money. In his case, buying the paper was conceived mainly as a hobby to keep him busy in retirement and give him a continuing voice in national affairs. Meyer was 57, and had seriously been considering following up his stint at the Fed by succeeding his friend Bill Ward as Republican county leader of Westchester County, New York, where he and his wife had a weekend house. But running a newspaper in the nation’s capital was more appealing.

More expensive, too. The Post didn’t break even until 1943, when the combination of a wartime economic boom and wartime newsprint rationing (which resulted in smaller, cheaper-to-produce newspapers with a higher ratio of ads to news) put lots of previously ailing newspapers in the black. Meyer had, however, brought his newspaper back to respectability well before then, mainly by putting Felix Morley, formerly a PR guy at the Brookings Institution and later the president of Haverford College, in charge of the editorial page. Morley won the Post’s first Pulitzer Prize, in 1936, and established the paper as a moderate, well-informed voice on national affairs. The paper’s reporting improved, too, but the Post didn’t really become famous for that until decades later when Meyer’s daughter was running the show.

In the meantime, the economic and demographic trends of the postwar era all played into the Post’s hands, and Meyer made all the right moves to take advantage of them. The huge increase in the size of the federal government during World War II, which was only partially ratcheted back after the war ended, left Washington much more important as both a news source and an economic force. The Post took federal government coverage more seriously than its competitors, and it also took advantage of the fact that most of the region’s growth was taking place in the burgeoning Maryland and Virginia suburbs (the District of Columbia’s population peaked in 1950). It was a lot easier to deliver a paper to those suburbs before the morning rush hour than in the middle of the evening one, and declining reliance on public transit meant declines in the single-copy sales so crucial to evening papers. It became ever more advantageous to be a morning paper, and after 1954 the Post was the only morning paper in Washington.

That was the year when Meyer, who was 78 years old and had already handed control of the Washington Post Co. over to his daughter Katharine and her husband Phil Graham, forked over $8.5 million to buy the Times Herald (the Times and Herald had combined in 1937) and merge it with the Post. The afternoon papers lived on for a couple decades after that (the Daily News shut down in 1972 and the Star in 1981), but posed ever less of a competitive threat to the Post. Under Phil Graham’s leadership, the Post Co. had also acquired a few TV stations and Newsweek magazine. Meyer’s retirement hobby had grown into a small media empire, the kind of business that, in 1973, struck investor Warren Buffett as just the thing to help him turn his small fortune into a gigantic one.

By then Katharine Graham was fully in charge — her husband Phil Graham, who suffered from manic depression, had killed himself in 1963 — and was beginning to establish herself as one of the great makers-of-big-decisions in business history. She had already plucked Ben Bradlee out of the Washington bureau at Newsweek and appointed him executive editor of the Post. When word came that a strange man in Omaha was buying a big stake in her company, she ignored the warnings of her board of directors, met with Buffett, and invited him to join the board. With Buffett as her adviser, Meyer’s daughter transformed the Post from a very good business into a juggernaut. “From the time of the company’s IPO in 1971 until she stepped down as chairman in 1993,” Will Thorndike writes in The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, “the compound annual return to shareholders was a remarkable 22.3 percent, dwarfing both the S&P (7.4 percent) and her peers (12.4 percent).”

Then the Internets came along and, two decades after Katharine Graham retired as CEO, her descendants began looking for a way out of the newspaper business. Buffett, a major Post Co. shareholder for four decades, said he briefly considered buying the paper outright last year. But he decided he was too old for that kind of thing, and Bezos came through instead.

What can the proprietor of “The Everything Store” possibly learn from Eugene Meyer’s experience? Not all that much in the way of specifics, one would have to think. Still, there were two elements of Meyer’s success that Bezos will probably have no choice but to emulate: patience, and a willingness to spend lots of money. A brilliant daughter would help, too.

Sign up for my (not-at-all-frequent) email newsletter: http://www.tinyletter.com/justinfox

 

‘A New Golden Age for Media?’ Annotated

My latest Atlantic column, headlined “A New Golden Age for Media?” online and “Start the Presses!” in the May print edition, is about how newspapers made money back before they became profit-spewing monopolies — the idea being that the future of the news media will probably look more like that than what media people got used to over the past half century.

I relied on a bunch of books in writing the piece, but only had room to mention two. And while it is possible to insert links into Atlantic print articles, the last time I tried it didn’t stick, and I was in rush this time so I didn’t bother. So here are the links and other annotations I would have liked to include.

pmarca twitterFirst, to the left, is a screen shot of the beginning of Mark Andreessen’s Twitter list of the ways digital media companies can make money (read it from bottom to top). He was later nice enough to compile these and a zillion other media-related tweets in one handy blog post.

Andreessen’s tweeting didn’t inspire me to write the piece — that was Atlantic deputy editor Don Peck’s idea — but it certainly helped organize it.

I mention two books in the column, Richard John’s Spreading the News: The American Postal System from Franklin to Morse and James McGrath Morris’s Pulitzer: A Life in Politics, Print, and Power. They’re both pretty great.

Spreading the News is based on John’s doctoral dissertation, so it’s academic. But it’s good academic, offering lots of I-did-not-know-that moments, plus a framework for understanding why U.S. communications networks developed the way they did. John continues the story in Network Nation: Inventing American Telecommunications, which I cited in a previous Atlantic column. By the number of reviews the two books have gotten on Amazon, it appears that they haven’t attracted a general readership. They should. They’re both relevant to current issues such as the troubles of the USPS and the monopolization of broadband, they’re not hard to read, and they change how one sees the world.

John begins Spreading the News with a quote from Alexis de Tocqueville’s 1831-1832 travel journals, subsequently published as Journey to America:

There is an astonishing circulation of letters and newspapers among these savage woods … I do not think that in the most enlightened rural districts of France there is intellectual movement either so rapid or on such a scale as in this wilderness.

John points out that a few years later in Democracy in America, Tocqueville quantifies this observation, showing that postal revenue per person is higher in backwoods Michigan and Florida than in the Departement du Nord, “one of the most enlightened and manufacturing parts of France.” The Frenchman also offers this wonderful assessment of the inhabitants of the rude wood huts of America’s frontier:

Who would not suppose that this poor hut is the asylum of rudeness and ignorance? Yet no sort of comparison can be drawn between the pioneer and the dwelling which shelters him. Everything about him is primitive and unformed, but he is himself the result of the labor and the experience of eighteen centuries. He wears the dress, and he speaks the language of cities; he is acquainted with the past, curious of the future, and ready for argument upon the present; he is, in short, a highly civilized being, who consents, for a time, to inhabit the backwoods, and who penetrates into the wilds of the New World with the Bible, an axe, and a file of newspapers.

But I digress.

Morris’s Pulitzer is an entertaining, engrossing biography. So is David Nasaw’s The Chief: The Life of William Randolph Hearst, the source for most everything Hearst in the column. The stuff about James Gordon Bennett came mainly from Richard Kluger’s The Paper: The Life and Death of the New York Herald Tribune, a book I read back when it came out in 1986, and loved. I even visited Kluger at his house near Princeton and I thought I had written up the interview for The Daily Princetonian, but I can’t find the article in the archives. This recent Prince article about Kluger looks pretty cool, though.

Most of the other information about how newspapers made money in the 19th century came from Gerald Baldasty’s The Commercialization of News in the Nineteenth Century, which is not exactly a fun read, but is full of useful facts. My brief mention of radio’s success as an advertising medium was based on a skimming of Laurence Bergreen’s Look Now, Pay Later: The Rise of Network Broadcasting, which looked pretty interesting although I was mainly just digging for numbers. Such as, 1931 advertising revenues for the main radio networks and a couple of leading magazines:

  • Saturday Evening Post, $35 million
  • NBC, $25.9 million
  • Ladies Home Journal, $12.8 million
  • CBS, $11.6 million

For the rest of the 1930s, revenues just kept rising for the radio networks while they presumably stagnated or even fell at the magazines. NBC and CBS, Berggreen wrote, “were purveying a commodity desperately needed by a Depression-ravaged nation: free entertainment.” ABC, by the way, wasn’t created till 1943, after the FCC ordered NBC to divest a big chunk of its operations and the man behind Lifesavers candies, Edward J. Noble, bought it.

Still, print publications could make tons of money even in the broadcast era. The quote from Warren Buffett about newspapers gushing profits comes from Berkshire Hathaway’s 2006 shareholder letter. Sandwiched between the two sentences I quoted in my column was this:

As one not-too-bright publisher famously said, “I owe my fortune to two great American institutions: monopoly and nepotism.”

Buffett then launches into an extended (it starts on page 11 and takes up all of page 12) and very good explanation of why newspapers used to be a great business but aren’t anymore. It’s too long to quote, so just read the letter. Fun bonus: Margaret Sullivan, now the excellent public editor of The New York Times, rates an admiring mention.

Finally, while my Atlantic piece was in the editing process, Buzzfeed founder Jonah Peretti posted a fascinating memo to staff in which he too compares the current media environment to that of before 1950. At one point he writes:

These days, media companies don’t have natural monopolies or oligopolies where one or two newspapers dominate a local market or a handful of broadcasters are the only options on a limited dial. There is more competition, the market is more fragmented, and gatekeepers have less power. Advertisers have more ways to reach consumers so they aren’t as dependent on publishers and can negotiate lower rates. In fact, some smart people in our industry don’t think it is possible to build a huge new media company anymore, that the golden age is over, and that all the growth now will be limited to pure technology companies.

Which is basically the argument of my column, although I wouldn’t say it’s impossible to build a media empire, just really, really hard. “This pessimistic view is wrong,” Peretti continues,“because it is focused entirely on what has been lost (monopoly pricing power, etc) and ignores what has been gained. This is a common psychological trap: People tend to be overly focused what is lost, while under-appreciating gains.”

The gains Peretti sees have to do with technology, scale, and diversity of talent. I totally get how those three factors all help Buzzfeed now. And I wouldn’t put it past Peretti to become the new Henry Luce. I wouldn’t bank on it either, though — and I really wouldn’t bank on Buzzfeed continuing to thrive long after Peretti and Ben Smith have retired, as Luce’s Time Inc. did. But then I do prefer history to futurism, which I guess makes me a backward-looking guy.

How to enjoy a Southern snowstorm

Birmingham 1993

That’s me in front of my apartment building in Birmingham, Alabama on Saturday, March 13, 1993 — the day after the Storm of the Century dumped more than a foot of glorious snow on a city not used to such stuff.

I remember that as a magical weekend. I spent it with a pack of friends who lived in the neighborhood, which was just off Highland Avenue on the city’s Southside. On the night of the storm most of us lost power, but one guy didn’t, so we hung out in his apartment for most of the evening till the lights began going back on elsewhere. The next day was all about tromping around Southside and throwing snowballs, then walking two miles to the Alabama Theatre in downtown Birmingham to watch Garrison Keillor’s Prairie Home Companion. None of us had tickets, but it didn’t matter. The inhabitants of Birmingham’s wealthy and hilly southern suburbs who did have tickets were mostly stranded in those hilly suburbs, so new audience members were needed. My main memories of the show were of Keillor using part of the segment where he reads notes from the audience to help arrange SUV-pools home through the snow, and of Emmylou Harris — who had spent the entire day making the normally less-than-three-hour drive from Nashville — making her way onstage about halfway through.

After the show we walked to one of the few restaurants open on the Southside, where Keillor then showed up and everyone applauded him, to his apparent discomfort. Before that we had stopped by the offices of my employer, The Birmingham News, where I shared a few Prairie Home tidbits with the reporter writing a story about it, and realized I probably should have been helping out all day. Still, hardly anybody was actually going to see the Sunday paper, there was of course no online edition to worry about, and I also don’t remember the storm requiring the kind of all-out disaster coverage that last week’s two inches of snow in Birmingham did, for the simple reason that nobody was on the roads when the snow fell. The weatherpeople had seen the storm coming days before, and all of Alabama battened down for it. There were complications: Hundreds of thousands of people lost power for a couple of days, and my memory is that while Jefferson County stationed the four snowplows at its disposal at strategic locations on the eve of the storm, it then sent the drivers home and they weren’t able to get to the plows the next morning. But it still took Emmylou Harris less time to drive from Nashville than it did to cross metropolitan Birmingham or Atlanta last Tuesday or Wednesday.

This time the storm was much smaller, but the weatherpeople totally whiffed on it and it happened on a Tuesday morning instead of a Friday night. It was also a colder-than-usual Birmingham snow day, meaning that nothing melted. Plus, people in Birmingham don’t have much experience driving in snow, snow falls infrequently enough that it makes no sense to have massive snow-removal infrastructure, and the city’s main commuter routes almost all involve curves and steep hills. Same goes for Atlanta, although I don’t know that the hills are quite as steep.

Yeah, maybe the response could have been organized better, and metro Atlanta is a bit of a public-transit disaster. But the only clear lesson I can take from this, and from every snowstorm I’ve ever been through, is that snowstorms are a lot more fun if you live where you don’t have to drive to get to the stuff that matters.

Back in New York

After three years in Massachusetts, my family and I moved back to New York in September. The photo below, which currently serves as the backdrop for this blog, was taken one evening this fall from the friend’s vacant apartment we were staying in (with bean bags, AeroBeds, and a couple of Ikea tables as furniture) on West 72nd Street. The rainbow’s cool, but I especially like the plane flying right over it.rainbow2
We’ve since moved into our own apartment in Morningside Heights. The view isn’t as grand. In fact, last Saturday, it looked like this (my son took the picture):Citibank fire

That’s because the Citibank on the corner was on fire — for 30 hours. I’m thinking that’s unlikely to happen every weekend, though.

I’m still with the Harvard Business Review, doing a lot more writing and a lot less going to meetings (because the meetings are all up in Massachusetts). I’m kinda sorta starting to work on another book. And yeah, I’m glad to be back.

Hirschmania

AdelmanMy review of Jeremy Adelman's wonderful new biography, Worldly Philosopher: The Odyssey of Albert O. Hirschman, was finally published in the New York Times Book Review on Sunday.

I say finally because I turned the thing in on March 18, and I think the editors only changed one word in the interim (switching out "doorstopper" for "doorstop," which seemed like a good move). I'm not complaining at all — one knows going in that a NYTBR review may take months to appear, and the Times paid me long ago. But it was still maddening to write something with great enthusiasm and then not see it for months and months and months. It took great willpower not to write Barry Gewen at the Book Review e-mail after e-mail asking, "When's it coming out? Huh? When?"

Anyway, the publication led me to go back and read some of the other things written lately about Hirschman and the Adelman biography. I had avoided other reviews at first because I feared they might taint mine, then because I was so frustrated that mine hadn't been published yet. Now I could finally savor them, and it turns out they're all worth savoring.

The first I read was an essay on Hirschman's legacy by Daniel Drezner. My review — and to a certain extent Adelman's book — focused on why Hirschman wasn't as influential as other economists of his generation such as Milton Friedman and Paul Samuelson. Drezner, though, is a political scientist, and from the perspective of a political scientist Hirschman was pretty danged influential. "Anyone working on issues of economic power, economic development or economic ideas cannot do so without either building on or tangling with Hirschman’s legacy," Drezner writes, concluding that Hirschman's work "is the purest example of political economy since the days of Adam Smith."

After that I moved on to Roger Lowenstein's essay in the Wall Street Journal. Lowenstein was the "journalist friend" mentioned in my review who urged me to read Exit, Voice, and Loyalty, and his piece focuses mainly on that brilliant book. Lowenstein makes a heartfelt plea for more voice and less exit, or at least a healthy balance between the two. "Hirschman saw that when organizations make it easy to exit, voice is weakened," he writes. "Yet, for voice to be effective, a possibility of exit must be present." (The "business-school professor" who pushed The Passions and the Interests on me was Rebecca Henderson of HBS.)

In The New Yorker, Malcolm Gladwell got a lot more space than Drezner or Lowenstein or I, and he makes good use of it. When I first saw the headline ("The Gift of Doubt") in the magazine a few weeks ago, my initial reaction was of course, &^%#$@£ Gladwell, coopting Hirschman to say some facile thing or other. But it actually turns out to be a great and complex essay. It cannot, thus, be summed up in a paragraph, but I especially loved this passage about Hirschman and his brother-in-law and mentor, Eugenio Colorni:

Hamlet shouldn’t have been frozen by his doubts; he should have been freed by them. Hamlet took himself too seriously. He thought he needed to be perfect. Colorni and Hirschman didn’t.

Then there's Cass Sunstein's take in The New York Review of Books. Sunstein may be the most Hirschmanesque (Hirschmanian?) of modern public intellectuals. He crosses disciplinary boundaries, he writes for scholars and for laypeople, he mixes hope with skepticism, he doesn't think the fact that most plans go awry is a reason not to make plans. "Hirschman’s work changes how you see the world," Sunstein writes. "It illuminates yesterday, today, and tomorrow. His categories become your categories." Sort of like nudging.

I finished Adelman's book totally enamored of Hirschman and his way of looking at the world, but dubious of how much impact such a doubt-filled approach could have in an intellectual arena dominated by dueling certainties. After reading what everybody else had to say, I'm a bit more hopeful. Hooray for that!

One other thing that I thought about saying in the review but decided not to was that, for the first couple hundred pages or so, I thought Adelman's book might be the best biography I had ever read, period. It mixed the politics and the personal so smartly and so wisely that I was in awe of the accomplishment. I'm still in awe, but the second half of the book (about Hirschman's academic career) just couldn't be as compelling as the first, so T. Harry Williams' Huey Long retains its place at the top of my list. Although one of these days I should probably reread that to see if it's really as good as I remember.

Joe Nocera’s Microsoft Trial Coverage

I have a column in the January-February Atlantic on the tendency toward monopoly of Internet businesses. The initial inspiration came from an executive education class that a bunch of us Harvard Business Publishing managers took at HBS in the fall. Felix Oberholzer-Gee and Bharat Anand taught us about modern media business models, and I was struck by how many of the terms and concepts they were using reminded me of the Microsoft trial 15 years ago.

Once I started working on the piece, I needed a refresher on the trial, and while I briefly thought about checking Ken Auletta’s book out of the library, I remembered liking Joe Nocera’s trial coverage in Fortune much more than Auletta’s in The New Yorker (Joe’s my friend, and I worked at Fortune at the time, so I’m biased, but his articles were better). So I went to CNNMoney.com and dug up the full collection. And now that I’ve gone to all that effort, I figured I should share. For any future students of the Microsoft trial, this is your one-stop Nocera shop (that is, until CNNMoney or Time Inc. goes and changes all the URLs) (Update: with Fortune and CNN no longer part of the same company, the URLs did in fact all change. The old URLs are, impressively enough, all redirecting to the new ones for now, but just in case I updated everything):

Microsoft Goes to Court Big Question: What If They Lose? Oct. 26, 1998

High Noon: Both sides came out with lawyers blazing as federal antitrust chief Joel Klein’s prosecutors went gunning for the Bill Gates gang. Behind the scenes at the Microsoft trial, Nov. 23, 1998

His Own Worst Enemy: Bill Gates flops on video. The judge rebukes a Microsoft lawyer. An Intel exec testifies for the feds. In round two of our coverage of U.S. v. Microsoft, software’s heavyweight takes it on the chin, Dec. 7, 1998

Spin City: As the Microsoft trial proceeds, the appearance of truth is becoming as important as the truth itself. At least, that’s what the spinmeisters for both sides seem to believe, Dec. 21, 1998

The Empire Strikes Back: As the antitrust trial slogged into the holidays, Microsoft and its CEO tried to make nice and plead their case to the press. But something didn’t quite ring true, Jan. 11, 1999

Muddied, But Unbowed: After three months of testimony, the government closed its antitrust case with two witnesses, one powerful, one pathetic. As Microsoft emerges to present its defense, one thing is clear: Gates & Co. have been embarrassed, but the government has not landed a knockout blow, Feb. 1, 1999

Hang-’em-High’ Boies: The government’s lawyer says he’s not a showman, but he’s putting on some performance, February 15, 1999

Witnesses in Wonderland: On trial in Washington, Microsoft saw its witnesses get skewered, its video crash, and its prospects for victory take a serious turn for the worse, March 1, 1999

Let’s Go To The Videotape: Armed with dueling tapes, the government and Microsoft quibbled over download times and modem speeds. Thanks to one strong witness, the software giant actually turned this sideshow into a moral victory — but was it too little, too late? March 15, 1999

Is Boies’ Paper Trail Microsoft’s Burial Ground? As the trial headed into a recess, Microsoft had one foot in the grave — thanks mostly to its own witnesses and its own documents, March 29, 1999

Microsoft And Me: With the trial on hold, talk of a settlement emerges. Our diarist heads to Redmond to see if the defendant really has compromise in mind, April 26, 1999

Microsoft Tries To Crack AOL’s Case: With the trial set to resume, our diarist returns to check in on a key deposition, and finds that Microsoft is still…well, Microsoft, June 21, 1999

The Big Blue Diaries As the trial resumed, the government produced a Microsoft competitor with a telltale journal. But did the evidence show a crime? July 5, 1999

Curtain Call: In the last act of the antitrust trial, Microsoft made another dogged attempt to plead its case. But the judge was obviously unmoved, July 19, 1999

Microsoft’s Trials: Thou Shalt Not Lie, Dec. 6, 1999

Post-trial:

Inside the Minds of Joel Klein and Bill Gates, May 1, 2000

I Remember Microsoft: Once computing’s red-hot center, Microsoft now has a tough time retaining its best and brightest employees. Here, some who left reflect on what they learned–and why they find life on the outside so much more alluring, July 10, 2000 (special bonus: current People magazine movie critic Alynda Wheat was the reporter/fact-checker on this one)

 

Mistakes, I’ve made a few

I just sent off a list of corrections to HarperCollins before the paperback version of Myth goes out for another printing. It's not a very long list: a misplaced apostrophe, a "Buffet" where "Buffett" was intended, and a couple of modest fixes suggested by readers, which I discuss at the end of this post. But this is not the first list of corrections I have sent to my publisher, and it seems long past time that I assembled all the errors in one place.

There were two major waves of typo discovery, one when I got my first copy of the book and discovered a mess of misspellings in the last two pages of the epilogue (which were added after the book had been copy-edited) and another when the copy editor of the English edition read through the book. The substantive errors, on the other hand, came to light in dribs and drabs. Several were pointed out by concerned parties Dick Thaler and Gene Fama; the other corrections all came from careful readers of the book. Here's a rundown:

1. On pages 101 and 102, the original account of the first event-study research, conducted by Fama, Mike Jensen, and Richard Roll, depicted it as mostly Jensen's idea. Fama remembered it differently—and Jensen and Roll said Fama's recollection sounded about right. Here's the new version (Lorie and Fisher were James Lorie and Lawrence Fisher, the driving forces beyond Chicago's Center for Research on Security Prices, or CRSP):

At first Lorie struggled to get scholars interested in using the market data that he and Fisher had collected at CRSP, and asked his Chicago colleagues for help. Fama suggested to Jensen and Roll that they use the database to test how quickly the market reacted to new information. Together with Fisher, the trio examined price movements before and after stock split announcements.

2. On page 186, I wrote that Dick Thaler had been denied tenure at the University of Rochester. That wasn't quite right, Thaler informed me. As it now says in the book, "He tried to leverage a job offer from Cornell University into a promotion to associate professor at Rochester but was turned down."

3. On page 187, I had Thaler as a co-founder of the Society for the Advancement of Behavioral Economics. He was involved with group, but wasn't a co-founder.

4. On page 190, I wrote that when Charlie Plott had asked Gene Fama for advice in the late 1970s in testing the efficient market hypothesis in an efficient market, Fama had replied that his theory "only applies to the U.S. stock market." Fama wrote me to say that, while he didn't remember what exactly he said to Plott, it couldn't have been those words, because he'd already published papers on the efficiency of markets other than the U.S. stock market. Plott figured Fama must be right about that, so we came up with a redo that was somewhat less dependent on purported dialogue from three decades ago:

"He said his theory has nothing to do with experiments," Plott recalled—it applied only to markets in the field. "But aren't the principles of economics general enough to apply to both situations?" Plott remembers wondering. Fama's take, decades later: "Experimental research is no substitute for empirical work on real market data."

5. On page 201 I said the two papers from the behavioral finance session at the 1984 American Finance Association meeting that were subsequently published in the Journal of Finance had both been previously rejected by academic journals. That wasn't true of Thaler and Werner De Bondt's paper on market overreaction (it had never been submitted anywhere), so I deleted that assertion.

6. On p. 319, I mistranscribed a quote from John Maynard Keynes. The corrected quote:

The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.

Some of these errors were fixed in time for subsequent hardcover printings of the book; all were fixed in time for the paperback. But the e-mails from readers keep trickling in.

The most substantial error discovered since the paperback release has to do with Jan Mossin, the Norwegian economist who was one of the several fathers (or at least an uncle) of the Capital Asset Pricing Model. I identified him on page 88 as affiliated with the University of Bergen; in fact, he taught at NHH, which is rendered in English as either the Norwegian School of the Economics or the Norwegian School of Economics and Business Administration. It is near Bergen, but it's separate from the University of Bergen. The next paperback printing will also mention, if there's space, that Mossin got his Ph.D at Carnegie Tech. This seemed relevant given the school's role elsewhere in my book. The definitive online biography of Mossin, in case you're curious, is here.

Also, on page 242, I referred to NYSE specialists and Nasdaq market makers on second reference as "brokers." A reader suggested that wasn't quite right, so I'm changing it to "securities firms."

Got anything else for me?