FOR ALL THE gray respectability that The Wall Street Journal exudes in its powerful national edition five days a week, its youth in the teens and twenties was raucous, a little seedy and, in all honesty, a lot more interesting to read about than its maturity in the 1980s.
Thus, although former Time and Money magazine writer Edward E. Scharff has taken on the admirable task of writing about the modern Journal, this book is a chance to re-examine some of the great characters of Wall Street. Besides Charles Dow of ticker fame and Edward Jones, a relative failure whose obituary in the newspaper he helped found was a three-paragraph item on page seven, there was the redoubtable Bernard Kilgore. Scharff's book, one of several recent ones on the Journal, offers opportunities to revive Barney Kilgore-isms, to look at how he turned a sad, corrupt newssheet into a great newspaper and to lament the diminishing number of distinguished characters like Kilgore in the business-like world of today's journalism.
Kilgore, who took over the Journal as managing editor in 1940 and converted it from a narrow stock market trade paper to the national paper it is today, liked to send memos to his editors, for example, giving them what might be called advice. In one note Kilgore, who ultimately rose to the title of chairman of the board of Dow Jones & Co. which owns the Journal, said: "If I see 'upcoming' in the paper again, I'll be downcoming and someone will be outgoing."
On another occasion Kilgore passed on angry mail about a story with a note that said: "Please answer these and tell the bastards to go to hell. But don't lose the subscriptions."
Also documented is the time when Kilgore decided that the Journal was no longer going to start putting out the Monday paper on Friday. The staff arrived for their first working Sunday on Dec. 7, 1941. At 3 p.m. the wires began sending their urgent messages that the Japanese were bombing Pearl Harbor.
FOR SCHARFF, like other chroniclers of the Journal's unusual history, these stories are still the best ones. It is only when the paper emerges into the latter stages of the 20th century -- its internal politics seeming to take on the cast of its own newspaper style as an "unrelieved gray, a visual throwback to the nineteenth century" as Scharff puts it -- that it becomes fairly starchy reading.
Perhaps the exception, whom Scharff does describe in some detail, is Dan Dorfman, one of the key contributors to the paper's "Heard on the Street" column in the late 1960s and 1970s. This was the same column that two years ago created problems for a young reporter, Foster Winans, who was later convicted of securities fraud for leaking the column items in advance to help himself and others make money on the stock market.
Dorfman, who resigned after a broker credited him with $500 in stock thereby creating what Dorfman called a "misunderstanding," was clearly one of those newsroom characters that are both interesting and dangerous, an adventurous combination that is less and less acceptable in modern journalism.
Master of a soft-sell that somehow made executives tell him their best-kept corporate secrets, Dorfman was best known in some circles at the paper for an interview with Robert L. Vesco in July 1968. According to Scharff, Vesco told Dorfman that his firm, International Controls, was planning to takeover Electronic Specialty Company, a much bigger company. Strictly off the record, Vesco said that if Dorfman wrote that he owned 5 percent of Electronic, Vesco would not deny it.
As any veteran reporter knows, that was not a confirmation that Vesco did own 5 percent, and after Dorfman wrote about rumors that Vesco was maneuvering with the huge block of 2 million shares, Vesco went to the company's chief executive and used Dorfman's article "like . . . a full house in poker," as Scharff writes, to talk about the takeover. The deal came off in a year and Vesco's share, it turned out, had been less than 1/2 percent.
As Scharff puts it "Vesco had used Dan Dorfman and used him badly."
In the early days, such antics would have made Dorfman a do-gooder by comparison. Denizens of the pre-Depression era were the toughest for Scharff to describe, he says, because even Dow Jones's archives for that period "might have fitted easily into a shoe box or two." It became apparent that Kilgore "was positively determined to eradicate (memories of) the old-boy system that had nearly destroyed the paper" in the early years of the Depression, Scharff says.
So flagrantly bullish on the market that it carried such headlines as "Stocks Steady After Decline" on its report of the stock market crash on Oct. 29, 1929, The Journal became a key part of congressional hearings on the causes of the Depression. In the spring of 1932, Congressman Fiorello La Guardia of New York testified before the Senate that even reporters were publishing prewritten stories under their own bylines, receiving cash or stock options in exchange for manipulating the market.
La Guardia produced canceled checks, one to W.J. Gomber, who wrote the daily gossip column called "Broad Street Gossip" and another to Richard Edmondson, who wrote the Journal's "Abreast of the Market."
After that, the combustible William Henry Grimes roared in from Washington to clean up the place, angering reporters by making them sign a form with their story swearing they owned none of the stocks mentioned. As managing editor, he separated news from advertising and let it be known that public relations men and their wares were anathema to him. When a friend left newspapering to go into public relations for the government, Grimes said: "There must be some flaw in his character which I didn't detect."
Over the years, The Wall Street Journal has become a great paper, but if Scharff has a flaw, it is that he is too respectful of his subject, commenting that "as much as any one publication can, it sets forth the intellectual agenda for the nation, particularly in the area of economics." He later says that the Journal is "arguably, the most powerful publication in the United States" -- a judgment I would argue with, given the competition from publications such as The New York Times, The Washington Post or, perhaps most powerful of all, The Federal Register.
Eleanor Randolph covers media news for The Washington Post's national staff.