A little-remembered incident helped establish the notion that news organizations could and should preserve their independence from advertisers, reports US investigative website ProPublica. As Wall Street Journal publisher Barney Kilgore told Time magazine: "For years almost everything in Detroit has been 'off the record.' We just decided not to play it that way. It isn't journalism."
By Richard Tofel, president of ProPublica. (Above photo by AP)
Editor's Note: The news last week that Buzzfeed had deleted posts critical of advertisers got some of us at ProPublica wondering about any instances when news organizations stood up to advertiser pressure. As it turns out, ProPublica president Richard Tofel wrote a whole chapter of a book about one of those cases: In 1954, the Wall Street Journal and its publisher, Barney Kilgore, confronted General Motors. The little-remembered incident helped establish the notion that news organizations could and should preserve their independence from advertisers.
Here is an adaptation from the book, "Restless Genius: Barney Kilgore, The Wall Street Journal, and the Invention of Modern Journalism."
In 1954, General Motors was the largest company in the world. Its CEO was Harlow ("Red") Curtice. Curtice's world was a sheltered one. He made more money than any other salaried employee in the country. He lived, as he had since 1914, in Flint, a city where nearly two-thirds of the workforce was employed by the company he ran, and flew back and forth on corporate aircraft each week to work in Detroit. As Time magazine would soon describe Curtice's existence:
In many ways he lives a life that is beyond the comprehension of most of his car owners. Platoons of subordinates jump when he twitches. Garages filled with gleaming limousines and beaming chauffeurs stand ready to transport him wherever he desires. A private 18-plane air force of multi-engined, red-white-and-blue airplanes is at his disposal. Private secretaries and public-relations men take care of bothersome detail, see to it that Cadillacs, hotel suites, restaurant tables and theater seats are there when and where he wants them. High-salaried assistants smooth his path, greet him wherever he arrives, order his drinks, fetch his newspapers.
On May 3, 1954 Harlow Curtice can hardly have been pleased by what he found in one of the newspapers they fetched. A Wall Street Journal article laid bare a tactic the auto manufacturers had recently been deploying to great effect. The tactic revolved around the practice of "bootlegging" cars — sales by smaller, independent dealers of excess new car inventories at cut-rate prices.
GM and competitors Ford and Chrysler comprised the nation's three largest newspaper advertisers. The three companies alone (not including their dealers) accounted for about half of all newspaper spending on automobiles, and automobile advertising accounted for a little more than one-fifth of all national newspaper ads. For the Journal itself, the picture was even more dramatic: of the four largest national newspaper advertising categories, the Journal participated only in automotive; it did not publish advertisements for groceries, alcohol or toiletries.
This kind of spending yielded a certain amount of influence, and that influence, the Journal now reported, seemed to be being used to limit advertising of bootlegged cars.
The Journal story was sweeping, painfully specific, and implicitly critical of the ethics of a different industry — newspapers. The New York Times, the Journal reported, had changed its advertising policies in late April, just after the Justice Department rejected anti-bootlegging contract language proposed by GM. The Times now refused to accept advertising offering new cars for sale by non-franchised dealers. The Times's advertising director said, "It is our opinion that our readers' interest is best served by doing business with franchised dealers." New cars were defined as those with fewer than 2,500 miles on them. One independent new-car dealer continued to advertise in the Times, indicating that its cars for sale had "run over 2,500 miles." But a Journal reporter visiting the showroom noted that of the 60 cars on the showroom floor "not one ... appeared to have run 2,500 miles. Some still had shreds of factory wrapping on them." Mileage indicators on a dozen cars checked by the reporter ranged from 1 mile to 36 miles. A salesman at the independent dealership told the Journal, "We don't have any used cars. That's the only way [the Times] let us advertise."
Nor was the Times alone. The New York Journal-American had gone so far as to take out an advertisement of its own in Automotive News headlined "NO 'BOOTLEGGING' PROBLEMS IN THE NEW YORK JOURNAL-AMERICAN." The Journal story reproduced the ad. The classified display advertising manager at the New York Daily News, the nation's largest-circulation paper, reportedly acknowledged to an independent dealer that he feared the loss of other business if he continued to accept advertising from bootleggers. "Zone managers [from manufacturers] have told us face-to-face across the table what would happen to us if we took ads from discounters." The dealer had a similar experience with the New York Mirror, the city's (and the nation's) second-largest selling newspaper.
But even before the article was published, the Journal's reporting of the story had an effect. The Mirror reversed itself, and resumed accepting advertising from the bootleggers. The New York World Telegram & Sun declared that it was re-examining its policies. The ad manager from the New York Herald Tribune, the most direct competitor of the Times, told a Journal reporter, "This is a very touchy subject: I understand the F.B.I. is asking some of the same questions you're asking." He added, "I wouldn't say we have a policy."
Auto industry reaction was swift. On the day the story was published, Ward's Automotive Reports, the industry bible, cancelled the Journal's subscription to the weekly newsletter.
The confrontation between the Journal and Curtice's company was only beginning, however.
On May 28, the Journal published another exclusive story, revealing details, including rednerings of the styling of the 1955 new car models due in the Fall. Read today, Williams's story seems innocuous, even perhaps excessively promotional. It began: "Forecast for 1955 auto models: More makes will be thoroughly restyled than ever before in the half-century of automotive history."
From an industry perspective there was a big problem. But the problem wasn't the renderings — it was the story's timing. As the story itself noted, "the alterations are certainly intended to be sufficient so that 1954 models will strike their owners as old-fashioned, once the '55's are in the showrooms; they will stir the itch for a brand-new car." In the Fall that would be good for business: the '54's would be nearly all sold. But just ahead of June, traditionally the industry's biggest sales month, the revelations were thought by the automakers to cause a possible disaster: sales of the about-to-be-"old-fashioned" '54's could dry up prematurely, as buyers awaited the exciting '55's. The president of Chrysler told the reporter he "had put a dagger into the hearts of the dealers."
The automakers had traditionally avoided this problem by briefing reporters well ahead of the new model introductions, but doing so "off the record." But this year the Journal had declined to participate in the briefings, apparently recognizing that the information could be derived independently and published earlier. As Journal publisher Barney Kilgore later told Time magazine, "For years almost everything in Detroit has been 'off the record.' We just decided not to play it that way. It isn't journalism."
GM's pent-up fury at the bootlegging story and the premature release of the 1955 new car designs quickly exploded. Curtice himself had years earlier personally made the decision to begin advertising in the Journal. Now, however, on the very day the new-designs story was published, GM, acting through five different advertising agencies, cancelled all advertising in the Journal. The immediate cancellations came to just over $11,000, or about $96,000 today, but the New York Times estimated that GM had been running in the Journal at a rate of at least $250,000 annually (or nearly $2.2 million in 2015 dollars).
GM also cut Williams and his colleagues off from the weekly auto production figures released each Friday. When the Journal asked the Associated Press, a newspaper cooperative of which it was a member, to request the figures so it could use them, the AP was denied access as well. The only other source of the figures was Ward's Automotive — but that publication had cut the Journal off after the bootlegging article.
If Curtice had hoped that the Journal's conservative editorial page would now turn on its own news columns, he was quickly disappointed. On June 16, in an editorial entitled "A Newspaper and Its Readers," the Journal explained that the two news stories "did not make anything happen. They only provided some more information on what was already happening."
The editorial went on to declare that "A newspaper exists only to provide information to its readers. It has no other reason for being." Moreover,
In the end the truth about what is happening is the only thing that is of value to anybody. And 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 either to its advertisers or to business because it will soon cease to have readers.
Eight letters from readers, seven of them automobile dealers, were published in the Journal the same day as the editorial. Thomas Grasso, of Grasso Motor in Bayonne, New Jersey, wrote that the newspaper "of late has acquired a new hobby, namely, running the automobile business into the gutter." Fred Walters, of Fred Walters Oldsmobile in Newark, New Jersey, pronounced himself "disappointed and disgusted." J.R. Sutton, of Sutton Motor in Beaumont, Texas, was canceling his subscription; R.H. Horton, of Horton Chevrolet in Sibley, Iowa, wouldn't be renewing.
The advertising cancellation and press release cut-off remained unknown to the public. General Motors had not announced them, and the Journal had not reported the story. But the editor of Advertising Age heard of the cancellations at a conference in Montreal and published the story.
Once Ad Age issued a press release on its scoop, GM issued a statement objecting to the publication "of statements and particularly sketches which have as their source confidential information and material divulged in breach of a confidential relationship and in violation of our property rights."
Kilgore did not flinch. He tried to take the high road, issuing a statement that concluded, "I find it hard to believe that this represents the policy of General Motors top management, because I do not think that General Motors would use this sort of pressure to express disapproval of editorial or news policies of any newspaper."
On Monday, June 21, rather than report on the matter itself, the Journal reprinted the New York Times news story on the dispute on its own editorial page, with an introductory note that said, "Since The Wall Street Journal is one of the subjects of this story we wanted our readers to have an independent news account."
Two days later, the Journal's editorial page again entered the fray, with an editorial headlined, "A Difference of Opinion." In a tone following Kilgore's lead, more in sorrow than in anger, the newspaper declared "we regret our present differences with General Motors Corporation." The editorial said that GM's statement "has, perhaps without realizing it, raised some very basic questions about the business of the press." It canvassed these questions before concluding,
We do not intend to suggest that a newspaper has the right to demand that a company disclose trade secrets or that it advertise. But our business is publishing information, not withholding it. When there is news available about so vital a segment of our economy as the automobile industry we intend to be free to use our own best judgment about publishing it, undeterred by the fact that it may not be 'authorized.'
And the fact that a company happily chooses to advertise with us cannot be allowed to put the newspaper under any obligation to the advertiser which breaches its obligation to all its readers.
We are sorry there is a difference of opinion about this. But for us to follow any other course would, we believe, make it impossible for us to fulfill our function as a newspaper.
Kilgore thus drew the lines clearly between himself and Curtice. For him, and for the Journal, this was a matter of high principle, a matter of essential institutional identity. For GM, as the Journal saw it, it was just a matter of business. The implication: there would be no compromise. Kilgore was prepared to wait out GM, confident that waiting would bring results. He wrote to his father that he thought the controversy "will blow over and I think a big company makes a mistake by getting mad and doing such things."
But he was not unaware of the short-term cost, and, as if to underline the point, the Journal ran a brief story two days after the editorial setting out the American Newspaper Publishers Association's annual statistics on the largest advertisers in newspapers. GM, of course, was first. Kilgore also told Time, "The Journal is not mad at anybody. I have a General Motors car — and I certainly don't intend to sell it."
Others were less kind to GM. Ralph Ginzburg, who later gained fame for his prosecution on obscenity charges but was then a reporter at LOOK magazine, wrote to GM's Public Relations Department from his home in Brooklyn "[a]s an owner of a General Motors car‚... to express my indignation"; he stated that, "By pulling your advertising out of that paper, you've demonstrated that your own integrity does not measure up to that of The Wall Street Journal."
A letter from the publisher in Tide magazine, an advertising trade journal, was even tougher on GM. Tide publisher Reginald Clough called GM's reaction "one of those backward steps in the gradually improving behavior of business", and attributed it to "red-headed temper" a thinly-veiled swipe at Curtice personally. Tide called for an end to the boycott. A Tide news story concluded that "Eventually, say some automotive public relations men, GM will have to back down."
Kilgore was not, however, under the illusion that everyone, or even every Journal reader, would see it his way. A week after the publication of "A Difference of Opinion," the Journal ran 10 letters from readers in response to the design story and the Journal's two editorials. The first, from V.C. Marshall of New York City, said, "I believe you rendered the economy a disservice when you stressed the glutted conditions you expected to become rampant throughout the used car markets. Likewise you were grievously wrong to publish advance information about what any one manufacturer was contemplating doing in the way of design for the 1955 car." The letter was published without editorial comment, even though the story had directly predicted no such glut, and had, of course, published advance information about the plans of all manufacturers.
On the same day these letters were published, Kilgore sought to defuse the escalating crisis.
The vehicle that he chose was another letter from a Journal reader. Roy Brenholts of Columbus, Ohio had written in support of the Journal's "Difference of Opinion" editorial, and had asked that the Journal forward his letter to General Motors. Just three paragraphs in all, his letter included the following:
I have two Cadillacs and a Ford. I was considering trading the Ford for a Chevy. Now I will trade for another Ford. I had considered trading one Cadillac for a new one. Until General Motors tells you they will stop their Hitlerite attitude I will not consider another Cadillac.
Kilgore wrote back to Brenholts himself, saying that, because "you have‚...made some statements I am sure the company would want to know about", he was making an exception to policy and would pass along Brenholts's letter to GM. But he also told Brenholts that, "I personally hope that the action of the company with respect to its advertising does not represent the considered judgment of General Motors top management." Kilgore concluded his letter by advising Brenholts against answering boycott with boycott. "Please do not misunderstand me," he wrote. "I appreciate your support of our editorial position. I just don't think that differences of opinion in one particular field should be allowed to spread into others."
Then, clearly by design, and on the very same day, Kilgore turned around and sent both Brenholts's letter and his own reply to Red Curtice. He ended his letter to Curtice with something of a plea for reasonableness to prevail:
As a newspaperman I don't suppose I should complain about articles published in other newspapers and magazines, but I do feel the publicity about our differences of opinion have tended to prolong those differences and I am particularly aware of the possibility that various members of our own organization may be unduly influenced by published material. The same thing might possibly be true on your side.
If you have any good ideas on how we might sort of break this thing up I would appreciate having them.
For his part, Curtice recognized that he had made a mistake. The ban on the Journal receiving GM press releases had been lifted as soon as the controversy became public. On July 1, the day after the second batch of letters appeared in the Journal, the newspaper was provided with GM's weekly production figures. The weekly story on industry output appeared in the paper on Friday, July 2. But there was no crowing — the GM figures were mentioned only in the ninth paragraph of the article, and with no reference to the controversy, or to the source of the figures. (By the next week, Ward's Automotive had also lifted its collateral ban on the Journal.)
The day the weekly production story appeared Curtice replied to Kilgore. He defended the GM position on the rederings, even as he disclaimed any interest in refusing to cooperate with the Journal news department. His letter did not mention GM advertising. But it did invite Kilgore to visit him in Detroit on Wednesday, July 7, following the Independence Day holiday weekend.
Kilgore did not see Curtice's response until Tuesday, July 6. He instantly sent a wire to Curtice, saying that, "[I]f your schedule permits", he would arrive at 11 a.m. the next morning. At 6:35 that night, Curtice replied by telegram that "WILL BE GLAD TO SEE YOU TOMORROW MORNING AT ELEVEN AM."
Kerby recalled the following account of the meeting from Kilgore:
I just told Curtice that as much as we would like to be friends with General Motors and as much as I hated losing all that advertising, I couldn't let anyone dictate what the Journal could or couldn't print. Besides that, I told him, if I did what he wanted I'd lose two of the best editors in the United States. In time I could replace the advertising, but I'd be damned if I knew where to find new editors.
The two men considered "just letting things take their normal course without a public statement of any kind" but concluded that "a public finish seemed necessary." They hammered out an exchange of letters during the meeting. Curtice's letter to Kilgore was dated the day after the Detrot meeting, and written "in accordance with our discussions." Curtice's letter went on to rehearse GM's legal arguments on the impropriety of the Journal's receipt and publication of the renderings. GM, he wrote, had had two choices: sue the Journal, or break off business relations, and had — generously, he suggested — chosen the latter course. The company's public statement had been issued only because of an inquiry from the Associated Press. In future, Curtice warned, GM might choose to sue in such a case.
But having thus supported his more bellicose colleagues and mollified his lawyers, Curtice finally climbed down publicly. His letter concluded,
It was never our intention to interfere with your editorial policies, and I am surprised that anyone would seriously think otherwise. I might point out, by way of explanation, not justification, that where such a purpose is sought to be accomplished by a coercive practice, you will generally find that a legal remedy is not available.
I regret the misunderstanding that has developed, and trust that our position is now clear to you.
The nation's largest corporation, and the newspaper industry's largest advertiser, had capitulated to The Wall Street Journal. Kilgore had sought an opening and found one, had shown respect, but had not deferred. The entire incident would be chalked up to a "misunderstanding," and GM did not promise there would not be a recurrence. But the Journal would continue to receive production reports, the bootlegging and new model design articles would stand unchallenged for accuracy, and GM advertising in the paper would resume.
Kilgore's letter to Curtice in response was dated the next day. Kilgore wrote that he "too, regret[ted] that a misunderstanding has developed and from your letter I think misunderstanding was unnecessary." He noted that the normal flow of news releases had resumed, and matched Curtice's reservation of the right to sue with his own reservation of the right to make editorial decisions, and to use both authorized and unauthorized sources.
The Journal published the exchange of letters between Curtice and Kilgore on July 12 — and did so without comment. Three weeks later, Curtice confirmed in writing that GM had decided not to sue, and that the "controversy" was "closed."
Yet, however modestly they portrayed it, the showdown with General Motors had been a watershed moment for Kilgore and the Journal. Kilgore's deputy wrote that it "firmly established in the public mind, including millions who never had read The Wall Street Journal, and presumably never would, that here was a newspaper of unshakable independence and integrity. GM had done us a priceless favor." David Lilienthal, former Tennessee Valley Authority and Atomic Energy Commission chairman, wrote Kilgore that it was "a classic in the history of newspapering." Author Edward Scharff later concluded that this "new-won reputation was worth inestimably more than the General Motors advertising account." Donald MacDonald, then a junior ad salesman but later head of all sales for the Journal and Dow Jones, summed up the implications simply: "Our future was assured."
- ProPublica is an independent, not-for-profit investigative US online news and features magazine.
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