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Father’s remembrance of being a young Wall Street Journal reporter





William McGaughey, Sr., a public-relations professional, began his career as a reporter for the Wall Street Journal, then a small trade publication in New York City. An early break, he later recalled, was an assignment to cover what was expected to be a titanic legal battle between William Randolph Hearst and Hearst’s many creditors in 1937.

McGaughey’s son, William Jr., found this typed article intended for publication as a letter to the editor of the New Yorker on a bedroom desk in the summer of 2016, eleven years after his father’s death. The elder McGaughey was then reminiscing about his early career, especially in publications of his college fraternity, Phi Gamma Delta. He had been given a mock ceremony of graduation from DePauw at the Wall Street Journal in 1935 involving Bernard Kilgore and other DePauw alumni. In the 1930s and 1940s, a DePauw Hoosier “Mafia” led by Kilgore built up the Wall Street Journal into the mass circulation newspaper that it is today.

This first-draft article, dated March 19, 1998, was typed on stationery of the National Association of Manufacturers where its author later worked, then located at 277 Park Avenue, New York, N Y 10017.

“Letters to the Editor
THE NEW YORKER MAGAZINE

Dear friends:

Your informative article on William Randolph Hearst (March 23, 1998) flooded my mind with memories. Here are a few:

As a cub reporter on a struggling financial sheet, the topic of the day was TIME Magazine’s devastating article on Hearst’s financial problems and what influence this would have on Wall Street. The answer: catastrophic. Hearst’s advisors promptly withdrew an impending debentures offering. The problem even concerned the Federal Reserve Bank of New York whose conservative vice president (later president) was Allen Sproul, whose brother headed the controversial California higher education system which Hearst’s editorials criticized as favoring left-wing faculties.

Customarily, some widely travelled Wall Street Journal reporters, of which I was the newest member (hired April 1, 1935), forsook spring training baseball yarns, and concentrated on the Hearst dilemma. Oliver Gingold, an English Jew, was who hired in the day when a quaff of beer cost 15 cents, with sandwiches free, proposed that we speculate on what would be the greatest news story of all time.

The Herald Tribune reporter, whose predecessor the N.Y. Herald got a clear scoop in the sinking of the Titanic, offered that subject as his top choice. It was quickly determined that this might be too parochial of interest, and so this became the near unanimous selection for a compelling headline: the Second coming of Christ.

The reporter from the tabloid New York Daily News offered this: CHRIST STAGES A COMEBACK! (Gleeful outcries from the would-be editors). The New York Times reporter, Elliott Ball, later publisher of Business Week and financial advisor to Gov. Tom Dewey, speculated that his conservative paper would give it eight column headline coverage, phrased like this: J. CHRIST, ALIAS SAVIOR, RETURNED TO SITE OF CRUCIFIXION TO SMALL GROUP OF FOLLOWERS. “OK, Bell, you win,” yelled N.Y. Post reporter and later syndicated columnist Sylvia Porter. “But we haven’t yet heard from the Wall Street Journal.” I blushed at the first big attention ever accorded me by the older pundits. I gulped hard, and sputtered this line: GOD’S SON RETURNS TO EARTH TO ENDORSE MARION DAVIES’ LATEST MOVIE. Applause; I was now a member of the craft.

As the New Yorker has reported, in the summer of 1937, rather than risk placing his empire on receivership, Hearst hired the best legal talent available to make a satisfactory deal with his demanding creditors. Consequently, he hired Judge Clarence Sheran, expensive but persuasive before a jury if it came to that. The organized group of creditors also sought a legal titan to press their case. Their choice was John Davis, who had been the Democratic nominee for President in the last race in which Calvin Coolidge had emerged as a big winner.

When the hearing came up before the second highest court in New York State, Bill Grimes the WSJ managing editor, told me to get my ass up there and cover it. Why he chose a raw cub freshly out of DePauw University to cover the hearing I never knew. My speculation was two fold: No hard news would emerge from this first day in court. The other theory was that publisher K. C. Hogate, also a DePauw alumnus, wanted to give the newest kid on the block a good break.

However, on more mature reflection, I arrived at a different conclusion. Contrary to the venom in the TIME article, and a prevailing opinion across the Fourth Estate that Hearst had it coming, the generous Casey Hogate didn’t want to kick a man when he was down, nor did he think it was proper for even a minor competitor to be vilified. Too, Hogate was under some pressure from the Bancroft family, heirs of Clarence Barron, to produce more dividends for his conservative stockholders. He had taken a great risk of capital when he launched a separate WSJ edition on the West Coast to serve the emerging San Francisco and Los Angeles readership. Unfortunately, the initial edition came off the press the same day (but several hours later in Western Standard time) as the historic Wall Street crash of 1929. He hunkered down to fend off the Bancroft interests. (One Bancroft urged by the staff to understudy Hogate in New York committed suicide.) Times were tough for everyone.

With two legal giants pitted against each other, one trying to save Hearst and the other determined to take away San Simeon, his valuable art collection, his castle abroad, and perhaps even Marion Davies’s shoes and night gowns, the stakes were high indeed.

While expecting excitement equal to the final sequence of “The Perils of Pauline”, the heralded appearance of the law profession’s outstanding advocates, the arguments were conducted in the dignity of Britain’s House of Lords. While I had expected bombast and ridicule from Hearst advocate Sheran, he remained soft spoken, polite to his distinguished opponent, and the emaculately dressed Davies responded in kind. Some financial facts were laid bare for further examination but nothing not already reported in the press came to light. The respected financial and business editor of he N.Y. Journal American Merle Rukeyser was able to report in this widely read column that Wall Street took the facts in stride and no Hearst holdings lost ground.

Hedda Hopper and her Hollywood gossip rivals such as Luella Parsons were able to treat the hearings as if it was “The Second Coming of William Randolph Hearst”. So much for the legal “battle of the Century”: The Hearst magic prevailed and San Simeon was saved from the Pacific Coast vandals and raiders. While now state owned, the estate is among the architectural treasures such as the Louvre, the Getty Collection, and even the Vatican. Not bad for ‘a poor little rich boy.’”

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