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By Root 3504 0

mills. He said “there was a place in New England for a textile company that had the latest machinery and capable management,” and he and his brother Otis conceived a five-year plan to modernize.20 They spent $10 million installing air-conditioning, electric lifts, overhead conveyers, better lighting, and futuristic locker rooms in the company’s venerable red-brick buildings. They shifted from cotton to rayon, the poor man’s silk, and made rayon parachute cloth during the war, enjoying a temporary boom. Nonetheless, as time passed, cheap foreign labor kept lowering the price their customers would pay. To compete, Seabury squeezed the pay of the workers in his modern new plant. But year by year the tides lapping at his shore—cheaper foreign fabric, better-automated competition, and lower labor costs in the South—presented a rising threat to his mills.

In 1954, Hurricane Carol’s fourteen-foot storm surge poured into Hathaway’s Cove Street headquarters. Though the firm’s distinctive clock tower rode out the storm, a sea of muck and debris swamped the looms and yarn inside the building. Rather than rebuild the mill, the obvious response would have been to join the march southward. Instead, Seabury Stanton merged Hathaway with another mill, Berkshire Fine Spinning, trying in effect to build a levee against a tidal wave.21

Berkshire Fine Spinning made everything from the stiffest twills to the sheerest marquisettes, crisp curtain dimity, and fancy broadcloth shirting. Malcolm Chace, its master, steadfastly refused to sink a nickel into modernization. His nephew, Nicholas Brady, had written a paper on the business at the Harvard Business School in 1954, reaching so discouraging a conclusion that he sold his Berkshire stock.

Chace naturally opposed Seabury Stanton’s demand for modernization, but the new Berkshire Hathaway was governed by Stanton’s sense of destiny. He simplified the product line, focusing on rayon, turning out more than half the men’s suit linings in the United States.22 As Berkshire Hathaway under Stanton unreeled nearly a quarter billion yards of fabrics a year, he continued his “relentless” modernizing, pouring another million dollars into the mills.

By this time, his brother Otis had begun to have doubts about the feasibility of remaining in New Bedford, but Seabury thought the time for a textile mill to move south had passed,23 and refused to give up his dream of reviving the mills.24

When Dan Cowin approached Buffett about Berkshire in 1962, Buffett was already aware of it, just as he was of any U.S. business of a meaningful size. The money that poured into the company meant that Berkshire was worth—according to its accountants—$22 million as a business, or $19.46 per share.25 And yet, after nine years of losses, anyone could acquire the stock for just seven and a half bucks. Buffett started buying it.26

Seabury had been buying Berkshire’s stock as well, using extra cash that was not being poured back into the mills to make a tender offer for shares every couple of years. Buffett’s theory was that Seabury would continue, and he could time his own transactions, buying whenever the stock got cheap and selling it back to the company whenever the price rose.

He and Cowin set about buying stock. Had anyone known Buffett was buying, it might have pushed up the price, so he bought through Howard Browne of Tweedy, Browne. The firm was a favorite broker of Buffett’s because everyone there, especially Browne, was closemouthed, of utmost importance to Buffett given his insistence on secrecy. Tweedy, Browne had code-named the Buffett partnership’s account BWX.27

When Buffett arrived at Tweedy, Browne, which maintained a tiny office at 52 Wall Street, in the same art deco building where Ben Graham had once worked, it felt like entering an old-fashioned barbershop, with its black-and-white ceramic tile floor. In a little office to the left sat the firm’s secretary and office manager. To the right lay the trading room. Past that, in a small rented alcove half filled with a water cooler and a coatrack—in effect a sort