Free People, Free Markets. George Melloan
past, were suddenly urgently needed to mount the war effort. New Deal schemes to reorder the economy were set aside to unleash the creative and productive forces of a capitalist system. The problem of financing the war effort through bond issues was given serious attention. So was the danger of inflation as huge new demands were placed on the nation’s productive capacity.
The private sector responded magnificently to this new urgency, converting plants previously making autos and home appliances to the production of tanks, warplanes and munitions in a matter of weeks.
Journal editorials and editorial page articles offered advice to policy makers. On December 17, a Journal editorial surprised readers by departing sharply from traditional free-market arguments to support price and wage controls. It argued, rather disingenuously it would seem in hindsight, that the question was “simple.” Would controls aid the war effort and “help sustain the morale of the fifty million or more who must sustain themselves to equip, clothe and nourish our fighting forces? We believe a thoroughgoing price control will serve those ends.”
No doubt Congress and the administration didn’t feel they needed the Journal’s imprimatur, but they surely welcomed it. They quickly set up the Office of Price Administration to put ceilings on consumer prices. It worked reasonably well, although that was probably mainly due to the fact that the sale of war bonds was soaking up a lot of the extra cash civilians soon were earning by working overtime in defense plants.
Three years into the war, however, the Journal made it clear that its support for controls applied only to extraordinary circumstances. On February 28, 1944, almost three months before the Normandy invasion and 18 months before the war’s end, the Journal was arguing that all wartime restrictions on the economy should end when hostilities ceased.
In 1942, Hogate was incapacitated by a stroke. He decided to name as general manager a veteran executive named Joseph Ackell, who had invented the new high-speed ticker, consolidated the Dow Jones wire service into a nationwide web and was running the Journal’s production operations. Grimes objected on grounds that the appointment would weaken the power of Kilgore and that the company had always been run by newsmen. According to an account by Bill Kerby, Grimes called the Bancroft family business adviser in Boston, Jack Richardson, and told him that if the Ackell appointment went through, Grimes, Kilgore and Kerby would probably resign. The upshot: Kilgore became general manager of Dow Jones, Bill Kerby became managing editor of The Wall Street Journal and Buren McCormack, another DePauw graduate, became assistant managing editor. Grimes would remain editor and have general supervisory authority over news operations.
Barney had been a Hogate protégé, so the Kerby story is a bit puzzling. But although Hogate was very ill, he was still head of the company and may have felt that turning over routine management tasks to Ackell would not preclude his choosing a successor at some later date. He remained in nominal charge of the company, despite frequent absences because of successive strokes, until his death in 1947 at the young age of 49. At that point, his title was chairman. Barney had become president in 1945, but his elevation was not made public at that time. He became CEO on Hogate’s death.
Hogate’s early death was attributed by some of his associates to the heavy workload he had carried during the Depression out of devotion to the task of keeping Dow Jones alive. Hogate had literally worked himself to death, they felt. There is little doubt that he justified the faith that Barron and the Bancrofts had invested in him in 1928. He had built a solid journalistic organization.
Faced with newsprint shortages and other limitations, Dow Jones continued to struggle during the war, but Journal circulation rose, to 64,400 in 1946 from 35,395 in 1942, thanks no doubt in part to Kilgore’s efforts to make it more readable and concise. Editorials gave full backing to the war effort, although at one point the Journal cautioned against excessive rationing of consumer products beyond products, such as automobile tires, that were vital to keeping the military well supplied. It argued that there should be as little distortion of the normal workings of the market as possible so that production and distribution of nonessential goods would proceed normally.
Grimes set editorial policy. He was a scrappy, no-nonsense little guy with a talent for clear, logical argument. He had tutored young Barney Kilgore, his successor as Washington bureau chief, in the ways of Washington and the New Deal, and they remained close. As editor and chief editorial writer, he would bring crispness and cogency to the opinion page’s views on public policy questions.
A framed copy of the signed editorial Grimes wrote marking the opening of the Journal’s new Midwest edition in Chicago on January 2, 1951, still hangs on the wall of the editorial board’s conference room in New York to remind present-day writers of the direction set long ago. It’s titled “A Newspaper’s Philosophy.” The last paragraph sums up editorial policy with, “. . . we make no pretense of walking down the middle of the road. Our comments and interpretations are made from a definite point of view. We oppose all infringements on individual rights, whether they stem from attempts at private monopoly, labor union monopoly or from an over-growing government. We are not much interested in labels, but if we were to choose one, we would say that we are radical. Just as radical as the Christian doctrine.” Grimes’ declaration sounds a lot like what William Peter Hamilton had written a half century earlier when he asserted that there were not two sides to every question.
On July 8, 1944, a little more than a month after the successful Allied invasion of the European mainland, a Journal editorial offered an assessment of the government’s war finances, pointing out that only 33% of what the government spent in the most recent fiscal year was borrowed, whereas the percentage was 71% of a considerably smaller amount the year before. “We have, then, improved the financing of this grossly expensive war. But it is none too good yet.” The Journal was worried about the inflation that might be induced by war financing combined with price controls and the potential postwar transition from a wartime to peacetime footing as pent-up consumer demand overwhelmed the capacity to produce consumer goods.
The Journal also took note of deliberations on a postwar international monetary system then under way at Bretton Woods, New Hampshire. It noted that some proposed provisions of the planned exchange rate stabilization fund (later named the International Monetary Fund [IMF]) might raise eyebrows in Congress. One proposal would direct a country to lend to the fund when its currency was in short supply among trading partners. The Journal observed that this would mean that the Federal Reserve, not investors or banks, would be indirectly financing U.S. exports. The Journal would support exchange rate stabilization in principle over the years to come but would have much more to say about the actual workings of the IMF, a lot of it critical, in the future.
One of the most significant events of the century, the dropping of atom bombs on the Japanese cities of Hiroshima and Nagasaki, would be treated in the kind of matter-of-fact tone that characterized Journal editorial writing. An editorial on August 7, 1945, was titled “The Power of the Atom” and referred to the long-standing hope, going all the way back to before World War I, that as weapons became more destructive, men would cease to wage war. “Between the destructive powers of armies of 1914 and those of today, there is probably as much difference as those of the Civil War and Caesar’s legends. President Truman’s announcement of the discovery and use of the atomic bomb raises the prospect that by tomorrow today’s explosives may seem like so many popguns.”
But the editorial contained a note of hope, anticipating what future president Dwight Eisenhower would call an “atoms for peace” plan as atomic fission was employed as an energy source. “The force that today blasts a city into dust may soon be harnessed to render obsolete all gadgets big and little. From the oxcart to the automobile, from the treadmill to the steam engine and the dynamo were but a brief few hours in history and the world as we know it now moves even faster.”
Raymond Moley, a member of FDR’s original brain trust who had broken with Roosevelt in 1936, was writing a column for the Journal in 1945. He noted that news services were carrying jokes and puns about the bomb, such as a line that the United States had sent Japan an “atomized statement.” That might sound shocking today, considering the thousands of Japanese civilians incinerated by the bombs, but most Americans in 1945 thought that no fate could be worse than the Japanese deserved after their sneak attack on Pearl Harbor and their