The movie theater was added in the mid-1930s, when Lasker unexpectedly received repayment on a debt that he had considered bad. It accommodated up to sixty people, was air-cooled, and showed several first-run films a week. “There just isn’t a place to compare with it,” said Hertz.45
Mill Road Farm, Lasker admitted, was his creation. Unlike her husband, Flora was never interested in the trappings of wealth. “She never wanted it,” Lasker said of the estate. “She got a great deal of pleasure out of it, but . . . her whole life would have been different and happier if we had just always lived on five or six thousand dollars a year.”46
Within a few years of returning to Chicago, Lasker could already see the effects of his reinvestment of time and energy in the agency’s Chicago headquarters. Billings had increased almost 30 percent between 1924 and 1926, and the agency’s stable of clients was steadily being upgraded.
But even this substantial progress wasn’t good enough as his agency fell further behind its increasingly potent competitors. In 1926, Lord & Thomas (with billings of $18.8 million) was eclipsed by a resurgent Ayer ($26.1 million) and the steadily expanding J. Walter Thompson ($20.7 million). And although reliable figures aren’t available, Lasker’s agency was now being challenged by a formidable fourth-place finisher: BDO.47
Meanwhile, another young agency, Young & Rubicam, was creating a different kind of stir. It was founded in Philadelphia in 1923 by Ray Rubicam—a refugee from the Ayer agency—and John Orr Young, who had spent two years in Lord & Thomas’s Chicago office, where he clashed with the powerful Claude Hopkins. Young & Rubicam won the General Foods account, and—in response to pressure from that key client—relocated their agency to New York, where they built up a respectable book of business ($6 million, by 1927).
But in these early days, the challenge they presented to the industry’s status quo owed more to their unorthodox approach than their billings. Unlike the established agencies, Young & Rubicam was a free-spirited shop, full of unconventional characters who kept odd hours and didn’t respect protocol. And in explicit contrast to the Hopkins model, which counted on constant reiteration of simple themes until those themes were exhausted, Ray Rubicam pushed his creative talents to constantly develop new directions for his clients.48 By 1945, Young & Rubicam could boast of $53 million in billings, second only to J. Walter Thompson ($73 million).
Against this turbulent backdrop, Lasker decided to take drastic action. For the first and only time, he brought in a partner, and changed the name of his agency: a step he hadn’t taken even when he assumed control of Lord & Thomas decades earlier.
Through his friend David Sarnoff, head of the Radio Corporation of America (RCA), Lasker met a rising advertising star named Thomas F. Logan. Logan had been the Washington correspondent for the Philadelphia Inquirer for ten years before starting his own agency in Manhattan in 1919, quickly becaming known as a “wizard of institutional advertising.”49 According to Lasker’s aide-de-camp Ralph Sollitt, Logan was deeply involved in the formation of RCA and had helped bring Sarnoff into the company. “Logan was the man more than anybody else,” Sollitt said, “who picked out Sarnoff, and who sold Sarnoff on the idea of going into the Radio Corporation.”50 Sarnoff chose Logan’s agency to represent RCA, and Logan began polishing Sarnoff’s reputation as a major corporate leader.
The relationship between Sarnoff and Logan went well beyond business. Logan once confessed to Sarnoff that it was a “wonderful thing to find in friendship an understanding that permits you to be wholly honest and literally think out loud.”51 Sarnoff’s relationship with Lasker (whom he first met during the Leviathan’s trial run) was equally close. To an interviewer in 1938, Sarnoff said that he would give “no one a higher rating for character and integrity than Albert Lasker,” and asserted that Lasker had a capacity for friendship “given to very few people in the world.”52 For his part, Lasker had enormous respect for Sarnoff, both as an individual and as a businessman, and in the 1930s even offered Sarnoff the presidency of Lord & Thomas at the astounding salary of a million dollars a year. Sarnoff, happy at RCA and well aware of his friend’s reputation for burning through chief lieutenants, politely declined.53
Sarnoff and Lasker talked often about their respective business challenges, including—in Lasker’s case—the struggling New York office. No doubt they also talked about Lasker’s newfound determination to groom a successor to take over the agency. With these two themes in the background, Sarnoff decided that Logan and Lasker should meet, and arranged for the two of them to join him at a Gridiron dinner in Washington. Sarnoff subsequently brought Logan with him to Mill Road Farm, where, according to Sarnoff, “those two fellows fell in love and out of it came the merger of Lord & Thomas and Logan.”54
The news, which broke in the spring of 1926, caught the business community by surprise. In a brief article that was kinder to Logan than to Lasker, Time described the merger as an unlikely marriage of opposites:
Thomas F. Logan is just the opposite of the aggressive, hammering, obviously successful Lasker. He is slimmer, fairer, quieter—not smoother, for dynamos of the Lasker type are well-oiled—but gentler, more subtly persuasive . . . The effects of his work are felt quite as intimately by the individual consumer [as are Lasker’s]—in a comfortable, punctual train; a well-appointed ship; a sound security. But the distinction between the Messrs. Lasker and Logan, in what they do and how they do it, is as marked as their conjunction is notable.55
Logan brought in a client list that included Anaconda Copper, the shipping giant International Mercantile Marine, RCA, and—most tantalizing—a General Electric subsidiary. On first glance, the initial benefits of the merger flowed mostly to Logan. The Lord & Thomas client list was many times as long as Logan’s, and the Chicago agency’s annual billings dwarfed Logan’s. (Logan before the merger was doing around $5 million a year, compared with Lord & Thomas’s $18.8 million.56) But the merger reestablished Lasker’s agency as second only to Ayer, and almost overnight created a strong presence in New York. And thinking long term, Lasker believed Logan had the skills and contacts needed to take over the whole agency.
It was not to be. On August 8, 1928, just over two years into the partnership, the forty-six-year-old Logan died at his summer home of a previously undiagnosed heart condition.57
Logan’s premature death left Albert Lasker with two dilemmas. The first was a financial settlement with Logan’s widow; the second was the continuing challenge of the New York office. The anointed miracle worker had been removed from the stage; now what was Lasker going to do about New York?
To tackle the settlement problem, Lasker turned again to Sarnoff. Lasker framed the problem as follows: Lasker and Logan had made a deal whereby Lasker would retire gradually and Logan would take over the company. Now, Logan was dead, and Lasker had yet to gain significant advantage from the partnership. Lasker had to put a value on Logan’s share of the merged company, the accumulated goodwill, client list, and other assets of which “belonged” more to Lasker than to Logan.
“I don’t know how to deal with [Logan’s] widow,” Lasker told Sarnoff. “I don’t want to do anything that would be inequitable or unfair either to her or to me.”58 Lasker then made an extraordinary request: Sarnoff would have to figure out how to settle the matter. “I hate to put you in this position,” Lasker said, “but you simply have got to take the job, being the friend of both parties, and probably the one in which his widow has the most confidence.”
Sarnoff didn’t like the prospect of being the intermediary “between a dead friend and a living friend.” Lasker insisted, however, and the RCA head reluctantly agreed to talk to Mrs. Logan. Sarnoff dreaded the prospect of broaching the subject with Logan’s widow, but she spared him that embarrassment by bringing it up herself, and essentially making the same request: could Sarnoff broker a deal with Lasker?
Sarnoff agreed to arbitrate a settlement on two conditions. First, his word would be final; both parties would have to accept whate
ver he decided. Second, no lawyers would be involved until after he had reached his judgment. Lasker and Mrs. Logan agreed to these conditions.
Sarnoff first developed a complete picture of the net worth of both parties. He was not much surprised by what he had learned. Lasker, as Sarnoff knew full well, was a very wealthy man, and Mrs. Logan was well-off. But there were other factors to weigh, as well. After thinking it through, Sarnoff reached his conclusion, and called for a meeting with Lasker. Before revealing his bottom line, he explained to Lasker how he had reached it:
Albert, there are several things I am taking into consideration. And these are the considerations: (1) That the man who is paying is alive and rich, the person who is to receive this money is a widow, whose husband is dead, and who by comparison certainly has no such wealth as you have. (2) That the man who is paying is a Jew, and the widow and her former husband are not Jews. (3) That whatever mistake is made in this figure, must be a mistake on the side of generosity. Let others criticize you for having paid too much, or her for having accepted too much, or me for having determined too much. But let there be no criticism on the reverse side of the situation.
Based on the purely financial considerations, Sarnoff told Lasker that Logan’s stock was probably worth about $240,000. But that wasn’t the right figure. Instead, he proposed that Lasker pay Logan’s widow $1 million. “You can afford to do it,” he told his friend, “and by paying substantially five times what a court of equity might determine, you will more than answer all the specifications I have laid down.”
Lasker was stunned; he had expected a buyout figure closer to a quarter of a million dollars, and the price Sarnoff named—a million dollars!—seemed exorbitant. Swallowing hard, he said that he would abide by his friend’s judgment. “I think you have decided more than I should be asked to pay, [and] more than she is entitled to,” he said, “but when I asked you to take this job of mediator, which was a labor of love more than anything else, I meant it, and I said I would accept your decision, and if you say one million dollars, one million dollars it is.”
The story had an ironic postscript. Mrs. Logan—an avid horsewoman—turned over $300,000 of her settlement to the exclusive Sleepy Hollow Country Club in Scarborough, New York, so that the club could build a well-appointed stable for its members’ horses. At the time, Sleepy Hollow rigorously excluded Jews.
This stung both men. “The horse was eligible,” Sarnoff grumbled, “but not me.”59
Lasker’s second business dilemma involved far higher financial stakes, and took much longer to resolve. The New York office, now largely built around the staff inherited from Logan, was still struggling. Many of Logan’s employees had come to him through clients and were not advertising men. Because New York was home to two major accounts—RCA and American Tobacco—the office was in little danger of being shut down. But Lasker was frustrated at the many people working for him in New York who didn’t appear to be doing much work. “Lasker not only despised these men who were not advertising men,” recalled one associate, “but they were getting dough besides, and his dough.”60
Lasker now had to choose a new director for the New York office almost sight unseen—in part owing to the suddenness of Logan’s death, but also to Lasker’s increasingly fragile mental state toward the end of 1928. He first installed Logan’s longtime colleague, Ames Brown, in the job; but Brown didn’t prosper. In the end, Lasker turned to his utility man, Ralph Sollitt.
He took the job reluctantly. “Sollitt never wanted to be head of this business,” Coons recalled. “Sollitt didn’t consider himself an advertising man; he just wanted to help Lasker.”61 Within several months, however, Sollitt had cleaned house, buying out all of the Logan holdovers—the cost of which reached into the millions of dollars—and bringing in an almost entirely new staff.
Albert Lasker’s record of accomplishment in the 1920s documents a business genius at the height of his creative powers. The second golden era at Lord & Thomas was powered mainly by an amazing burst of creative energy from him.
By 1928, though, Lasker was drained. In that year, he had yet another serious breakdown—at least his third—and spent several months at the Johns Hopkins hospital in Baltimore recovering. He ventured out from Hopkins only sporadically, and then only to deal with serious crises.
One of these crises was a proposed summit in Washington with George Washington Hill, called at Hill’s urgent request. Everyone understood that when Hill called a meeting with Lord & Thomas, he expected Lasker to attend—a challenge, in this instance, since Lasker was hospitalized and incommunicado. Neither the subject nor the outcome of that meeting was recorded, but one aspect of it remained etched indelibly on the minds of those in attendance.
Sollitt was there. He recalls that against almost incredible odds, considering the depths of his depression, Lasker summoned up his energetic, passionate self. “The part that Mr. Lasker performed,” Sollitt later said, “would have been enough to send most anybody to the hospital, because he was so intense and acting and dramatizing everything.”62 After battling his way through a three- or four-hour marathon with the indomitable Hill, Sollitt recalls, Lasker had “fought the thing and got it all shaped around the way he could.”
At the end of the slugfest, an exhausted Lasker announced, “I am glad that is over; now I can go back to Johns Hopkins and finish my breakdown.”
Unlikely heroics like these compelled people to close ranks behind Lasker in his dark periods. Family, employees, and most clients—with the notable exception of George Washington Hill—learned to live without Lasker, when necessary. The brilliance that shone through his creative periods more than made up for the intermittent darkness.
Chapter Seventeen
Retrenching and Reshaping
ON OCTOBER 12, 1927, Lasker’s eldest child, Mary, married Gerhard Foreman, the son of Oscar G. Foreman, a director of Chicago’s Foreman National Bank. It seemed an eminently suitable match: Mary and Gerhard were in love, and two powerful Chicago Jewish families found themselves united.
The couple was married at the Laskers’ Glencoe home, with only members of the two families present.1 The mansion was lavishly decorated for the occasion, and the young couple was thrilled to learn that it was to be their wedding present: Albert and Flora would live full-time at Mill Road Farm.
Gerhard was named for his grandfather, who had emigrated to the United States from Darmstadt, Germany, in the late 1850s and founded the Foreman Bank in 1862.2 The bank in the late 1920s was run by Gerhard’s father, Oscar, who was chairman of the board, along with a third-generation Foreman, Harold, who served as president. With all of these close family ties, Gerhard seemed assured of a bright future with the bank. Lasker was pleased to see his daughter married to a man with such strong prospects; in addition, Lasker biographer John Gunther reports that Lasker was “enormously fond” of Gerhard and admired his judgment.3
As Lasker looked back on the relationship a decade later, he recalled that the young couple was very much in love when they got married, but over the next several years, fissures appeared. There were “a good many private unhappinesses,” he said, pointing to the couple’s reluctance or inability to have children.4
Albert Lasker largely sidestepped the market crash of 1929, thanks to savvy investment decisions by his friend and neighbor, rental-car mogul John Hertz. Lasker and Hertz had a joint stock market account that was managed by a Chicago investment adviser.5 Both men were authorized to make changes to the account, and Hertz exercised that authority during the summer of 1929. Early one morning, Hertz called Lasker and told him that he was going to “sell everything,” despite the surging market.6 Lasker protested, but finally accepted his friend’s judgment. Several months later, the stock market collapsed.
Lasker’s stock in several privately held companies, including Kimberly-Clark, was immune to the wild swings of the public markets and generated a substantial dividend stream. But he kept much of his non–real estate wealth in the cash acco
unts of Lord & Thomas, so that business had to be managed carefully.
Managing the firm in the Depression took some counterintuitive thinking. Many of the agency’s largest clients suffered, and Lasker urged them to cut their advertising budgets—despite public statements by Lord & Thomas president Ames Brown in early 1929 predicting a good year for advertising.7 Early on, for example, Lasker told American Tobacco’s George Washington Hill that he should drastically reduce his advertising budget. The domineering Hill initially responded by threatening to raise his advertising budget to $25 million, but Lasker coolly replied, “If you [do], you are not going to spend it through me. I won’t place it for you.”
Lasker won this topsy-turvy argument; the following year, he talked Hill down again, to $10 million, and the following year to $8 million. Then Lasker called other clients, told them American Tobacco had agreed to cut its advertising budget by 33 percent, and advised them to do the same. “Never mind where the billing of Lord & Thomas falls, never mind anything about that,” he told them. “I instinctively believe that we are in for worse times before they are better, and I propose that any clients that are served by me shall survive.”
Meanwhile, Lasker did his best to help friends. Several of them lost huge sums on their margin accounts, and Lasker gave them loans to keep them afloat, most of which were never repaid. Lasker grumbled that he was helping his friends do the “very thing that I wouldn’t do myself”—i.e., buying on margin and playing a highly volatile market that he had abandoned—and later estimated that he had lost somewhere between $5 million and $7 million in bad loans to friends.8
By 1931, the Foreman Bank—which in December 1929 merged with the State Bank of Chicago, and was now the Foreman-State Bank—was on the brink of becoming yet another casualty of the Great Depression. The bank had overextended itself in speculative real estate loans, which quickly went bad in 1929 and 1930 as borrowers’ negative leverage caught up with them. Throughout the early months of 1931, the bank became increasingly unstable and by early June the crisis was coming to a head. On Thursday, June 4, whispers of a run on the Foreman-State Bank were in the air in Chicago’s Loop district and representatives of the city’s leading banks gathered in great secrecy at the home of Melvin Traylor, president of the First National Bank, to head off a crisis.9 Traylor’s solution was simple: a takeover of Foreman by First National.
The Man Who Sold America: The Amazing (but True!) Story of Albert D. Lasker and the Creation of the Advertising Century Page 33