The Chief

by David Nasaw

  With no ready market for a major stock offering, Joseph Kennedy attempted to raise money for the Chief by floating smaller bond issues, one of them on Hearst’s magazines, which were less infected with his politics and, therefore, less suspect for investors. It is possible that Kennedy himself planned to bid on them. Unfortunately, because of regulations passed during Kennedy’s tenure at the S.E.C., Hearst was required to draw up “registration statements” for his proposed offering and place them “on exhibition” for public comment. The response was immediate—and entirely negative. In placing the registration statements before the public, Hearst revealed his darkest secret: that he was over his head in debt. Time magazine ridiculed the offerings Kennedy had prepared as “two of the most remarkable registration statements ever filed.” Buried in the 250 pages of text and tabulations, Time reporters claimed to have found “many a Hearst publishing secret, many a Hearst business oddity.... One thing is crystal clear: Mr. Hearst needs cash.”17

  Time was not the only critic. Dozens of separate briefs protesting the bond issues were filed with the S.E.C. by individuals, Hearst’s political opponents, and even the American Legion, which had up to this point been one of Hearst’s staunchest political allies. Kennedy’s chief assistant in Washington took note of all the charges, identifying as most serious the claim that the registration statements were fatally flawed because they made “no mention ... of the nation-wide boycott of Mr. Hearst which is seriously affecting the circulation of his publications.”18

  While Kennedy’s lieutenants were convinced that the registration statements would, in amended form, receive S.E.C. approval, they were concerned at the almost total lack of interest among investors in the Hearst offering. They had contacted everyone: Harry Stuart at Bache Halsey Stuart and top executives at Prudential, Kuhn Loeb, and Blythe and Company, but had no commitments as yet. Even with Joseph P. Kennedy, one of Wall Street’s shrewdest investors and a former chairman of the S.E.C., behind them, there appeared to be no market for Hearst’s issue.19

  On February 18, Hearst and Marion returned to San Simeon after an absence of almost nine months, still with no resolution of the ongoing financial crisis. “As usual when Mr. Hearst is here he wants a lot of work done,” George Loorz, the construction supervisor at San Simeon, wrote Morgan in San Francisco. Recognizing, in the end, that there was no money to start even half the projects he intended, Hearst agreed to scale down his plans. Still, he was quite happy, Loorz reported, when work was renewed on the hillside: “He comes out often and goes around with keen interest in everything.”20

  Relocated in California, Hearst went back to work on Marion’s screen career. Since moving to Warner Brothers from MGM, Marion had made three films, each one a critical and commercial flop. Hearst, of course, blamed the failures on the studio, which he claimed had been negligent in finding the right properties and screenwriters for Marion. In February, Marion began shooting her fourth Warner Brothers feature, Ever Since Eve, in which she played a stenographer who, tired of men chasing her, disguises herself as an “ugly duckling,” only, in the end, to be discovered for her true natural beauty by her co-star, Robert Montgomery. The film failed at the box office.21

  After four disasters in a row, Hearst was still not ready to give up. There were two more projects on the drawing board. He vetoed the first, a film adaptation of the Broadway play Boy Meets Girl, because he thought the project too “outspoken” for Marion, and pursued the second, the film version of George Bernard Shaw’s Pygmalion. “I would be delighted to do Pygmalion and will break any engagement and go any place to do it,” Marion telegrammed Shaw in England. “Please consider me an active candidate for the part.” The telegram was in Marion’s name, though it had been drafted on Hearst’s yellow notepaper and was in his handwriting. There was no response from Shaw. Whatever he might have thought of Marion’s acting abilities, she was not seriously considered for the part. When the film was finally cast, Eliza was played by Wendy Hiller, the British stage actress, who was Marion’s junior by fifteen years.22

  Marion’s career as an actress, with Hearst as her unofficial producer, was coming to an end. While Hearst’s Cosmopolitan Productions continued to be the nominal producer of several Warner Brothers films and a few more at 20th Century-Fox in 1939, Marion was not in the cast of any of them, and there is no evidence that the Chief played any role other than making sure they were praised in his papers. Most were B movies, like Submarine D-1 with Pat O’Brien, George Brent, and Ronald Reagan; Gold Is Where You Find It, a 1938 film about miners in which Senator George Hearst was a minor character; and Racket Busters, from 1938, with George Brent and Humphrey Bogart. There were, however, two outstanding 1939 A-list film biographies, The Story of Alexander Graham Bell, with Don Ameche, and Young Mr. Lincoln, with Henry Fonda.

  As he was wont to do in hard times, Hearst tried to ride out the crisis that threatened to strip him of his empire by acting as if nothing were the matter. On April 1, 1937, the day after the Hearst Magazine bond issue was registered, he and Marion attended the annual Warner Brothers dinner dance in Burbank, where photographs show him in his formal dinner clothes, smiling broadly, seemingly without a care in the world. Two days later, in a backhanded acknowledgment that he might need friends in high places in the foreseeable future, he directed Ed Coblentz to make the editorial pages “less contentious and more generally interesting. Let us discuss other questions than politics.” Two weeks later, he informed Coblentz that he no longer wanted his papers to be so regularly and bitterly anti-Roosevelt, that the president should be praised when he merited it.23

  At the end of April, he celebrated another birthday, this one his seventy-fourth, at Marion’s Santa Monica beach house with a gigantic masquerade. In a manner befitting the sovereign that he had become, Hearst had directed his personal secretary, Joe Willicombe, to inform Tom White in New York that he expected “all his sons at birthday party.” Marion herself invited Joe Kennedy who graciously declined, as he had just accepted Roosevelt’s appointment to chair the Maritime Commission.24 The theme this year was “The Greatest Show on Earth.” Under a giant circus tent, with a carousel borrowed from Jack Warner, Marion and W. R. entertained five hundred guests, including Cary Grant, Leslie Howard, Clark Gable, Carole Lombard, Tyrone Power, Sonja Henie, Dolores Del Rio, Maureen O’Sullivan, Pat O’Brien, the producer Hal Wallis, and the directors Mervyn LeRoy and Ernst Lubitsch. W. R. looked dashing in his ringmaster’s costume.25

  W. R. and Marion returned to the ranch after the birthday party. On May 10, the Chief wrote Julia Morgan, “I like LOTS of light. I find almost all of our rooms too dark—sometimes almost gloomy.” He had reason to see the world in such terms. Eleven days later, he telegrammed Miss Morgan again: “I have suddenly been called to New York. I am leaving Tuesday in all probability, and may not be back until the first of July.”26

  The inevitable had come to pass. He had learned from his financial advisers, who had converged on San Simeon, that there were no funds to pay out the quarterly dividend on Hearst Consolidated stock due June 4. He had said nothing to Marion, but returned with her to the Santa Monica beach house.

  “I was just going to the studio to finish one last scene,” Marion recalled in her memoirs, “when Bill Hearst arrived at the house and said, ‘Where’s the Chief?’ It was very early in the morning, but he said, ‘I think I’ll go up and see Pop.’

  “‘Look, I don’t think it’s kind to wake him this early in the morning.’ “‘This is a very serious matter. The empire’s crashing.... We need a million dollars and the Chief has to go east immediately.’”

  Marion called the studio to say that she would be late and then got her business manager on the phone. “Get me a million dollars right away,” she told him. “I want to sell everything I’ve got—everything.”27

  Hearst was in more trouble than he had ever been. He cabled Alice Head in London to say that he would not be visiting Europe that summer as planned and to ask her for a loan of 10,000 poun
ds to pay off a debtor in England. “All I could do was to laugh myself nearly ill,” Head reported to Neylan. “The person to whom he owed his 10,000 pounds came in to see me and I only wish I could reproduce the conversation. It was quite unbelievable. However I must in justice add that since then, he [Hearst] has sent me a little bit of money on account, and what with arranging for a more extended credit, we shall no doubt get through.”28

  On May 25, accompanied by Tom White, Bill, Jr., and Marion, who insisted on traveling with him to New York, W. R. boarded the Super Chief in Los Angeles. From the train, he telegrammed Miss Morgan “to stop work entirely at San Simeon.” Morgan relayed the Chief’s instructions to Randolph Apperson, Hearst’s ranch manager and cousin: “Mr. Hearst today instructed me to tell you to close the Hilltop, dispensing with the services of everyone who is not actually required to keep the interior of castle and house in clean condition and prevent unnecessary deterioration.”

  Half the gardeners, a large part of the orchard crew, two watchmen, and most of the household staff were let go. Hearst instructed Morgan to keep on only a few “mechanical men,” a truck driver, and “two or three maids to dust and clean and take care of the inside.” W. R. Williams, who managed his San Simeon warehouses, was to be relocated to the castle “to check on the art things and especially the tapestries.” The zoo animals were to be sold or given away. The first to go was the elephant—to the Los Angeles Zoo. A Barbary sheep, the black leopards, a java monkey, and most of the bears were sent to the San Francisco Zoo, then known as the Fleishhacker Zoo.29

  On board the train taking them to New York, Hearst was, Marion remembered, “very worried and after we had dinner in the dining car, he said, ‘I guess I’m through.’” When she told him that she had raised $1 million to help him pay off his debts, he refused to accept it. “‘Don’t give it to me. I’ll tear it up. Anyway, what’s a million dollars when there’s fifty million dollars involved?’”

  Marion left the dining car and walked back to the drawing car, where she tried to give her $1 million check to Tom White. He too refused to accept it, but she insisted until he took it from her.

  On arriving in New York, W. R. and Marion were driven to their suite at the Ritz Tower on Park and 57th Street. The next morning, Marion awoke to find that “W. R. [had] gathered everybody but me together for a conference in my drawing room.” After a lengthy argument, which Marion tried her best to overhear, the decision was made to accept her check—as a loan—with Hearst’s Boston newspapers as collateral.30

  With the markets closed to new bond or stock offerings and the banks and Canadian paper mills unwilling to refinance their outstanding loans, the one way to raise capital was to sell assets, including publications, real estate, and art. The only outstanding questions left were which assets would be sold and who would do the selling.31

  Everyone agreed that the Chief would have to name some sort of trustee to get him through the current crisis and restore confidence in the investment community. The politicking among his advisers was intense. There were factions within factions, each lining up behind a different candidate. The leading candidates to take over Hearst’s financial affairs included Joseph Kennedy, Jack Neylan, Tom White, and Judge Clarence Shearn, who had been Hearst’s chief counsel thirty years earlier and now worked for Chase National Bank. Hearst found it difficult to choose among them.

  W. R. and Marion remained at the Ritz Tower for most of June. When Cissy Patterson wrote that she and President Roosevelt had exchanged “pleasant words” about him, he wrote her back, almost piteously hopeful that the president was prepared to welcome him back to the Democratic camp:

  I am very glad indeed to hear of the President’s pleasant words. Of course you know that I have the highest regard and esteem for him personally and that I differed from him merely on certain principles—a difference which he did not have to be concerned about as the result showed. I, however, was concerned about it. I found myself in a Republican camp. I was a fish out of water. I had always been a progressive—a radical. I had nothing in common with reactionaries.... After the dust of the campaign has settled, and in view of the great vote of confidence in the President and his POLICIES, I had time for contemplation. I am in heart and soul a democrat. I believe that the people’s will should be obeyed....I am naturally pleased that the President feels friendly and I hope you will tell him so.... If ever there is anything the President wishes, I hope that he will tell you or me. We will try to comply. If he wants me at any time I am at his command. If he does not, I am going to be a Democrat and not a Republican anyway.32

  For the first time in his life, the Chief was forced to concentrate his attention on selling rather than acquiring assets. He was, his son Randolph remembered, willing to do “anything else but get rid of papers. He loved his newspapers and the people who worked for them.” But the losses were too great and the prospects for recovery minimal. He suspended publication of the morning New York American, merging it into the new Journal-American, traded newspapers in Albany and Rochester with Frank Gannett so as to eliminate competition, and leased his Washington papers to Cissy Patterson.33

  In late June, he left New York to attend a newspaper publishers’ meeting in Chicago. Though his world was rapidly crumbling, he tried to remain upbeat, writing Joe Kennedy to thank him for his assistance and assure him that he was giving his recommendations “the most thoughtful consideration.... There are quite a number of matters encouragingly under way.”34

  From Chicago, Hearst and Marion took the train West as far as Winslow, Arizona, where they boarded a plane for San Simeon. On the first of July, Hearst and Marion’s plane touched down on the landing strip at the bottom of the hill. The reduced household staff had been notified in advance to make ready Casa Grande for their return. While waiting for his ritual summons to the hillside to discuss building plans with his Chief, George Loorz received a visit from Randy Apperson, Hearst’s cousin, who confided to him that Mr. Hearst had returned from New York “a pathetic, broken man.” “I am so sorry for him,” Loorz wrote Morgan in San Francisco. “Randy reports Miss Davies to be very considerate of him, to be his only real comfort. They are here on the hilltop alone. She stole him away from New York as he seemed so worried and confined there that she feared he might not stand it.”35

  The unthinkable had come to pass. For fifty years, Hearst had ruled his empire as autocratically as his heroes Julius Caesar and Napoleon Bonaparte had theirs. He had trusted no one, rejected suggestions that he share power or delegate decision-making, and refused to name a successor. At age seventy-four, he was as hearty as ever and convinced that if left alone he could once again pull off a miracle. But no one, with the possible exception of Marion, believed him capable of making the tough decisions that were necessary and cutting back on personal and corporate spending. The Chief was a builder, not a wrecker; an accumulator, not a liquidator. The banks and Canadian paper mills refused to loan the corporation anything as long as the old man was in control. They, too, had read the articles and books about the Lord of San Simeon and his spendthrift habits. They wanted firm guarantees that any funds loaned to the corporation would go to pay off corporate debts, not to buy more art or animals for San Simeon.

  To satisfy the demands of his creditors and secure the funding he needed to save his newspapers, Hearst decided in the end to select Judge Clarence Shearn over White, Neylan, and Kennedy as his trustee. On paper, at least, Shearn was an ideal candidate. He was neither an outsider like Joe Kennedy nor one of the Hearst insiders who had gotten him into trouble in the first place. More importantly, he was connected to Chase National Bank, one of Hearst’s principal creditors. Hearst appointed Shearn to an irrevocable ten-year term as trustee and granted him sole voting rights over all stock in Hearst’s principal holding company, with the understanding that the Chief would retain editorial control over his publications, subject to the Judge’s authority to oversee spending.36

  Shearn went to work immediately. He finalized t
he terms for a $1.6 million bridge loan from Chase National Bank and then, no doubt because it was a requirement for securing the loan, slashed the Chief’s salary to $500,000 per year and terminated payment on the $700,000 in preferred stock dividends that were due him. Hearst was directed to deed Wyntoon and much of his art collection to the corporation and informed that if he wished to live at San Simeon he would have to pay rent for it and cover the costs of maintenance, future construction, and noncorporate expenses.37

  In a series of telegrams, memoranda, and phone calls to associates whom he expected to intervene on his behalf, Hearst pleaded with Shearn to reconsider. Why should he have to pick up all the costs for San Simeon when he lived there only three months a year and it was used more as a “business headquarters” than a private residence? Like a spoiled child, he threatened to close the ranch if he didn’t get his way. “You have got to face some facts along with theories in this matter" he wrote the corporation’s tax attorney. “I am talking seriously about this matter. I am not going to be burdened with all these charges. I cannot be."38

  Fair or unfair, the decision had been made and Hearst knew it. The problem wasn’t Shearn personally, though Jack Neylan, Joseph Kennedy, and later Marion herself would hold the Judge responsible for treating the Chief so harshly. The reality was that Chase National Bank—and Hearst’s other creditors—were now in charge. As Edward Clark, who served as liaison of sorts between Hearst and Shearn, wrote the Chief in December of 1937, corporate money from this point on could be spent only in the “direct interest of the corporation.” Though Hearst had insisted—and Clark agreed—that he had assembled “the loveliest Arabians and Morgans in the world” at San Simeon, the corporation would not pay for them because the horse farm was not “a necessary adjunct” to corporate business activities. The same was true of the San Simeon orchards and the gatekeepers and the construction crews and most of the servants, gardeners, and landscapers. The corporation would cover the costs of a “skeleton staff, sufficient to maintain the property” at Wyntoon and San Simeon, but nothing more.39