Free People, Free Markets. George Melloan
embodiment of its future. He was moving up quickly as a protégé of Hogate, just as Hogate had been a protégé of Barron. Like Barron, he was a prodigious producer of intelligent, engaging copy. He wrote, as Barron had advised in his essay on good writing, with the reader foremost in mind and would later, as Dow Jones CEO, establish that principle as a Journal hallmark, which likely contributed to its remarkable ability to attract readers throughout the last half of the 20th century.
Kilgore started on a mundane job in New York in late 1929, just before the crash, checking the performance of the Dow Jones news service, delivered by broad tape “tickers,” designed in house, to customers around the country. His role was to keep tabs on how often important stories ran on the ticker before competing wire services offered them and how often the competitors won the race, and by how many minutes or seconds. In the wire service business, a few seconds is a win; 20 seconds is a major victory. Though a routine job, it taught Barney a lot about business news coverage.
Hogate pushed him ahead quickly, shipping him to San Francisco to be news editor of the West Coast edition. It was there in March 1932 that Kilgore started writing what he called his “Dear George” column in the form of a letter to a fictitious correspondent about issues of the day. Hogate soon picked it up for the New York edition, putting it on the editorial page and explaining in an italic precede: “This series of letters in so far as persons mentioned therein are concerned, is fiction, of course. But the problems discussed are real.”
The first column was about deflation, perhaps the foremost problem of 1932, the year the U.S. economy sank to its lowest point in the Depression. Wrote the 23-year-old columnist: “Did you ever stop to think what deflation is? It isn’t a thing more than a bull market in money . . . Right now prices are low and dollars are high. And what that does to a lot of people is plenty.”
He would add in a later column that the “problem with inflation or deflation is not one of condition but of a change of condition . . . it is a change in the value of the dollar that wreaks havoc with the economic order.” The Kilgore column generated a spate of approving letters from readers, particularly after Barney invited his fictitious correspondent to write him with his own thoughts, thus provoking letters from readers.
The Journal had found a new voice in this talented writer from Indiana, one who spoke to the reader in a plain, conversational tone and explained complex issues in simple terms. Kilgore biographer Richard Tofel wrote that the column was “an extraordinary breath of fresh air in the musty precincts of financial journalism, and newspaper journalism generally.” Tofel went on to write that “Kilgore’s new column assumed that its readers were interested but not expert, eager to understand but currently confused, particularly as the economic order seemed to collapse around them.”
C.W. Barron would have been pleased with the emergence of this young man who consciously or unconsciously adhered to the maxim Barron had laid down years before: Put the reader first. Indeed, Barney in one of his columns, would repeat an observation about the stock market that both Barron and William Hamilton had made in various ways during the Journal’s earlier years, instructing “George” that the market “is a place where all knowledge about everything that has the slightest thing to do with business and trade is brought to bear eventually upon the price of securities representing equities in that business and trade.” It was another way of saying that Charles Dow’s creation of indexes that would measure market sentiment had been a marvelous invention.
Kilgore was brought back to New York and started a new editorial page column, Reading the News of the Day, which was more explicitly journalistic in that “news of the day” meant exactly that. Along with a wide range of subjects, he addressed the issue of barriers to trade, warning cotton farmers in the South that, because of their dependence on foreign markets, they had better “think twice before taking up the cry, ‘Buy American.’” In another column, he wrote that the history of helping the farmer in the last few years “has been a process of trial and error, with some pretty good-sized errors.”
As Kilgore’s fame spread, it was not long before he, as with Barron, was being interviewed by other journalists. He made guest appearances on NBC’s nationwide Red Network, something that thrilled his parents, Tecumseh and Lavina, in South Bend when they picked it up on Chicago’s WMAQ.
Kilgore, although from a Republican family, was initially friendly toward the New Deal. He was particularly impressed with the quiet conversational tone of Franklin D. Roosevelt’s fireside chats, which also were broadcast on network radio. He initially was hopeful about the National Industrial Recovery Act, which attempted to form businesses into cartels that could raise prices and, so it was hoped, put business on a sounder footing. The NRA was set up to implement codes governing prices and wages for individual industries.
But Kilgore decided to make a tour of cities to question people about how the NRA was working, an innovation that would give rise later to the popular Journal technique called the news “round-up,” which anticipated the modern craze for opinion polling by sending reporters out on the streets to buttonhole citizens and get their views on a particular topic. As he surveyed the impact of NRA rules on individual business, he became more and more skeptical and said so in his writings. The New Deal’s efforts to regiment business was not lifting them out of depression but instead sowing chaos, particularly with its efforts to raise wages while at the same time, in contradiction, trying to control prices.
The NRA, headed by a thin-skinned army general named Hugh Johnson, was not pleased with Kilgore’s reports. In a speech to the American Federation of Labor in Washington, General Johnson left little doubt that he was attacking The Wall Street Journal when he declared that “the idea of a Wall Street journal going out to demonstrate through the little fellow the failure of a great social regeneration is one of the grimmest, ghastliest pieces of humor of all the queer flotsam of our daily work.”
The general’s fit of temper was probably a reflection of his own realization that the NRA was something of a mess. The Journal was the least of his problems. The NRA, which some later historians would call an experiment in proto-fascism, was short-lived. In 1935, the Supreme Court issued a ruling striking down the NRA as an unconstitutional exercise of government power. By that time, there was little enthusiasm in Congress for trying to salvage any parts that might have passed court muster. It died a timely death as a two-year-old.
The period of grace granted by the Journal to the New Deal withered away quickly. Even as early as April 1933, only a month into FDR’s administration, Journal editors were beginning to have doubts. They opposed FDR’s decision to take the United States off the gold standard, call in monetary gold at the traditional price of $20.67 and then raise the exchange price for gold in central bank transactions to $35 an ounce. FDR’s controversial Executive Order 6102 exacted a $10,000 fine and a potential prison term for any American citizen caught “hoarding” gold.
FDR’s move was intended to devalue the dollar in international exchange markets to reverse the deflation that had begun with the 1929 crash and to create inflation instead. A dollar was now worth only one thirty-fifth of an ounce of gold in international exchange, whereas it would buy over one-twentieth of an ounce before FDR’s unilateral devaluation.
This disturbed the Journal’s inflation hawks. An editorial observed that “Just as the United States was the first nation to abandon gold voluntarily it is now the first to deliberate publicly on the expediency of debasing its currency in the absence of the traditional compelling reason thereto. For certainly the national budget could be balanced within a reasonable time without it. We are a nation calmly discussing inflation ‘as an instrument of national policy’ whereas heretofore it has always been begun stealthily by finance ministers desperate to conceal national bankruptcy from the people or from an armed enemy at the gates.”
The Journal was, of course, referring to the age-old practice of governments deliberately cheapening their currencies, thereby exacting a tax from savers and consumers in the form of a lowered value of their money and savings. What Barney Kilgore would have called a “bear” market in money effectively lowered the cost of paying off government debt, thereby easing the path to greater indebtedness. Whether FDR could have ended deflation by less drastic measures would be much debated. It would have helped to have had a central bank better