Fifty years ago today, The Washington Post, then a distinguished wreck, was sold at bankruptcy for $825,000 to a financier who knew nothing of the newspaper business.
Thursday, June 1, 1933, was one of those pleasant Washington spring days, the temperature ranging from 56 to 67 degrees, with men in straw boaters and white Panama hats. The new president, Franklin D. Roosevelt, his whirlwind first 100 days about to come to an end, had driven to Annapolis to hand out diplomas at the Naval Academy. And in a Senate committee room on Capitol Hill, an enterprising circus press agent created a memorable photograph by thrusting a female midget onto the lap of financier J. Pierpoint Morgan Jr.
The crowd had gathered that day on the well-worn steps of The Post's longtime E Street home, a few doors west of the National Theatre, because the newspaper, founded in 1877, had fallen on hard times. Its troubles were induced by both the Great Depression and the extravagant mismanagement of its owner, Edward Beale (Ned) McLean, whose wife, Evalyn Walsh McLean, sported the Hope Diamond. By the time of the sale McLean was in a Montreal hospital, already on a downward spiral to an alcoholic's death. Evalyn McLean sat at a third floor window in the Romanesque-Gothic Post building, overlooking Pennsylvania Avenue, with two socialite friends, Alice Roosevelt Longworth and Virgina Bacon, wife of Rep. Robert Low Bacon. McLean's two sons were in the crowd as was diplomat David K.E. Bruce.
The International Paper Co. had forced the bankruptcy sale to collect $700,000 The Post was unable to pay. McLean had been ousted by court order from management of the paper, and the American Security & Trust Co., executor of his father John R. McLean's will, backed the sale to stop the severe financial hemorrhage of the family estate.
Most of the crowd that jammed the steps and spilled across the sidewalk was made up of creditors, would-be purchasers and their lawyers, worried Post employes and spectators from The Post's four rival daily newspapers. These included the wealthy and dominant Evening Star; the snappy Scripps-Howard tabloid, the Daily News, and the two papers owned by William Randolph Hearst, the morning Herald and the afternoon Times. Eleanor (Cissy) Patterson, editor of the Herald, was there alongside Hearst's attorney, Geoffrey Konta. In 1931, Hearst had tried to buy The Post for $3 million.
Also on hand were Star executives Frank Noyes, Newbold Fleming, Samuel Kauffmann and Victor Kauffmann. In the crowd, too, was David Lawrence, publisher of the United States Daily (which evolved into the magazine U.S. News & World Report), who two years earlier had offered a $3 million deal to buy--and kill--The Post. Another would-be purchaser had been Mary Harriman Rumsey, who with her brother W. Averell Harriman and Vincent Astor, had planned to install Raymond Moley, the FDR brain truster, as editor. Instead, they founded Today, later merging it into Newsweek magazine, which the Post company would buy in 1961.
Now the moment of truth had come for the 55-year-old Post. In the center of the midday throng stood auctioneer Vernon G. Owen. (In the crowd, too, was Owen's son, Thornton Owen Sr., today the retired head of Perpetual Savings and Loan Association). The auctioneer described briefly the Post's property and which of its debts the buyer would have to assume. In addition to $25,000 to be a bidder, the winner would, at once, have to put up an additional $75,000. The sale would not be final until confirmed by the court in perhaps 10 days.
The first bid, $250,000, came from Bascom Timmons, long a Washington correspondent for Texas papers, who would not disclose his principal. Timmons, now 93, said recently that he was bidding for Texas banker Jesse Jones. But Timmons dropped out at $370,000. Quickly bids came from Evalyn Walsh McLean's attorney, Nelson T. Hartson, then of Frank Hogan's law firm, and from Hearst's man Konta. The only other bidder was 38-year-old lawyer George E. Hamilton Jr., who refused to say for whom he was speaking. Hamilton began at $500,000.
Hartson stopped at $600,000. That left Konta and Hamilton. In jumps of $25,000 each, the bidding quickly ratcheted up to $800,000. The Herald next day recorded the finale:
"A pleading note in his businesslike voice, the auctioneer exhorted:
" 'Eight hundred thousand dollars bid. Do I hear 825? I have $800,000. Will you offer 25?'
"From Hamilton, wedged in the center of the throng, came an offer of $825,000.
"Bidding ended at this point, but not until Hartson ran back to see Mrs. McLean. Impatient at this further delay, Hamilton threatened to withdraw his bid unless the sale was promptly closed.
"Three short words marked the passing of The Post into new hands: 'Going, going, gone.' "
The News reported hearing Patterson say to Konta when the bidding reached $800,000: "Make 'em pay more for it." But Konta replied: "That's all it's worth." When it was over Mrs. McLean told reporters: "I have done everything I could to save The Post. I love this old paper, I bid $600,000 to keep The Post for my boys but I could go no higher. Some day, perhaps, the papers will pass back to us. Who knows?"
Hamilton went inside the building to write a check for the additional $75,000, then left saying only that the new owner would continue to publish the paper. Eugene Meyer's identity as that new owner was not disclosed for 12 days more, until court confirmation of the sale.
Under the court order, the buyer was to pay $500,000 of the purchase price at once and the remainder in two equal yearly installments. Instead, Meyer paid the total at once. He established The Washington Post Company with paid-in capital and surplus of $1,250,000, with himself as president, his wife, Agnes Meyer, as vice president and Floyd R. Harrison, his right-hand man, as secretary-treasurer.
After the sale confirmation, Hamilton went to The Post building where he found Meyer already drafting an announcement of his ownership for Page 1 of the next morning's paper of June 13. It included this statement:
"It will be my aim and purpose to improve The Post and to make it an even better paper than it has been in the past. It will be conducted as an independent paper devoted to the best interests of the people of Washington and vicinity, and hopes to have their interest and support.
"I think I should, in this connection, make it clear that, in purchasing The Post, I acted entirely on my own behalf, without suggestion from or discussion with any person, group or organization."
That second paragraph was to squash rumors that he planned to make The Post a mouthpiece for his Republican Party or for some Republican candidate.
It was a monumental gamble the 57-year-old Meyer took.
What he bought was chiefly a name and opportunity. The Post's physical plant at 1339-41 E St. NW (part of the site of the new Marriott hotel now under construction) was close to being a shambles. The staff, what was left of it, was mostly second-rate. Advertising had all but disappeared and the circulation figures--54,476 daily and 62,522 Sunday--were suspect. In 1933, The Post carried only 13.9 percent of the advertising linage in the city's five dailies and it had only 12.2 percent of the total circulation.
Meyer would freely concede that, "In my first two years, I made every mistake in the book." On June 21, replying to a congratulatory message from former president Herbert Hoover, Meyer wrote, "Just at present we are swimming in red ink, but I am optimistic enough to feel that it will be possible to change that situation within a reasonable time."
In fact, it would be nearly 10 years before The Post showed a profit and not until 1954, when Meyer and his son-in-law, Philip L. Graham, bought their morning rival, the Times-Herald, that the financial success of The Post was assured. But to reach that point, Meyer had to pump in many millions of his own.
Today, The Post's daily circulation averages 747,676 and its Sunday circulation recently passed the one million mark, becoming one of only six American Sunday papers in that category. Last year's company revenues topped $800 million with the newspaper's revenue alone accounting for about half that figure. The Washington Post Co., now ranked 342nd on the Fortune 500 list, is one of the most successful and profitable in the nation.
Eugene Meyer's gamble half a century ago has become one of America's great success stories. CAPTION: Picture 1, Conducting the auction was Vernon G. Owen with notebook. To his right was Eugene Meyer's lawyer, George Hamilton Jr., wilt felt hat and handkerchief. By Arthur Ellis -- The Washington Post; Picture 2, The newsroom of The Washington Times-Herald was nearly empty one night in 1954 when the paper was bought by The Post. UP; Picture 3, Eugene Meyer and his son-in-law Philip L. Graham look over the first edition of the combined Post and Times-Herald in 1954. Harris and Ewing; Picture 4, The Post's E Street building and other physical assets were worth perhaps $100,000.
