Pulitzer_ A Life in Politics, Print, and Power - James McGrath Morris [56]
Pulitzer had not been long at the law books before he spotted a journalistic business opportunity. Although he had been enjoying a genteel life of travel, secure with a healthy bank balance, millions of others in 1873 faced a far different fate. On September 18, the collapse of the banking firm Jay Cooke and Company, which acted as the chief financing agent for the nation’s railroads, started a severe national depression. Among the victims of the economic downturn was the Staats-Zeitung, a small German-language newspaper in St. Louis.
The paper was put on the auction block on January 6, 1874. No newspaper had changed hands in the city since 1872, and considering the economic conditions it was unlikely that there would be many, if any, bidders for this one. But Pulitzer saw value where others didn’t. He won the auction, paying a modest sum, and announced that it was his intention to start a German evening paper. This was a smoke screen.
The Staats-Zeitung had too few subscribers to make it viable as a newspaper. But what the corporation owned caught Pulitzer’s attention. Aside from presses and typefaces, the Staats-Zeitung was a member of the Associated Press (AP). The AP had been created as a news cooperative in 1849 by leading New York newspapers to share the high costs of news dispatches rapidly distributed by the recently invented telegraph. Because it restricted its news items to its members, a membership in AP was a valuable asset. Those that were not members were excluded from a vast source of national and international news.
Membership in AP gave a newspaper a tremendous competitive advantage, and midwestern publishers had quickly grasped the importance of this cooperative monopoly. In St. Louis, all the major German and English newspapers were members of the Western Associated Press except the St. Louis Globe, which had been started by Pulitzer’s friends William McKee and Daniel Houser after they lost their share of ownership in the Missouri Democrat in a contentious court case. Their St. Louis Globe was hamstrung without membership in AP. But when they tried to buy a membership, the surviving owner of the Democrat vetoed their application.
Neither McKee nor Houser had thought to bid for the Staats-Zeitung. The mistake cost them. With the German newspaper’s corporate papers in his hands, Pulitzer went to them with a proposal. If they bought the entire corporation, they would gain membership in AP. Pulitzer would then buy back the presses, type, and office equipment that they didn’t need. The following morning, the St. Louis Globe was carrying AP stories. Its masthead explained how: McKee and Houser had purchased the Staats-Zeitung corporation and its AP membership. Then they had changed the language of the German paper to English and its name to the St. Louis Globe.
The owner of the Democrat was enraged by the legal chicanery. He called for an immediate meeting of the St. Louis board of the Western Associated Press. Gathering in the library of the Missouri Republican, the owners of the eight major newspapers listened as Houser and McKee explained the transaction and examined the documents showing their purchase of the Staats-Zeitung corporation and its assets. Hutchins then offered a resolution recognizing the legitimacy of Pulitzer’s sale. It prevailed.
The legal maneuvering over and the last of the insults lobbed, Pulitzer disposed of the Staats-Zeitung presses, typefaces, and office furniture. These were