Katherine Graham To illustrate, nothing exemplifies my concern better than the recent two part series on Asbestos 'prepacks' ran by Fortune. This prompted me to write a letter to Fortune, which they requested to publish in the upcoming edition and from which I quote. "I have long had serious concerns about America and especially regarding what I deem to be a shift from a 'truth' based society to a 'what we can get away with' society or in more philosophical terms a post-modern society. My fund has a lot of money invested in the US, although we have scaled down our investments to about 20% of our portfolio. One of the main reasons for this is that there seems to be a lack of honor, sensibility and realism that got America to where it is today. Sure enough, there is not a total lack of such institutions, but it pales in comparison of its stature of yesteryear. There are few things more telling of America's state of mind than the tobacco, asbestos and fat issues." "Once, much later Warren and I discussed woman bursting into tears in business situations [Katherine Graham had a particular bad case of this] and I reminded him of our ride to Glen Welby. 'Well", he said, smiling, "we made several hundred million dollars then. The next time you burst into tears, call me first." He added, "Look at it this way, Kay. If you hadn't bought it in, I would have burst into tears, so one of us had to cry." Become a Complete Fool
I recently finished 'Katherine Graham, Personal History' which is her autobiography. I do not intend to try and summarize the book, but I do wish to share with you a number of thoughts around the book. For those who never heard of her, she relates to this forum in her capacity as previous editor/owner of the Washington Post, one of Berkshire's most profitable investments.
It took my quite a while to finish the book due to a busy schedule over the last couple of months and that unfortunately detracted from the reading experience. 'Personal History' comes in at just over 600 pages of fine print and I do think it is important to maintain momentum when reading it. For one there are a myriad of relationships, historical facts, the historical context and the various administrations to keep track of. When you stop and go every now and then you tend to miss a lot of what the book has to offer. So I would recommend that one try to get through the book quite quickly and it is not a bad idea to keep an encyclopedia or Google handy.
I found Phil Graham, Katherine's husband, particularly interesting and an extremely gifted man, whose advice was sought by a number of presidents. Lyndon Johnson once named Phil as one of the three men whom most influenced his life, together with his Dad and Franklin D Roosevelt, "who was like a daddy to me". Upon remarking he added, "Phil used to abuse me and rail at me and tell me what was wrong with me," Lyndon recalled, "and just when I was ready to hit him, he'd laugh in that way of his to let me know he loved me. And he made me a better man."
The following also illustrates how one comes across nuggets of gold in this book. Johnson told this particular story of Sam Rayburn, one of the longest serving representatives in American history and also very influential in Johnson's life. At the beginning of his political career, and still an unknown young man, [he was] looking for a place to stay in a small Texas town. Everyone turned him down - all the important people, including the bankers, the newspaper editor, and the judge. Only an old blacksmith agreed to take him in for the night. Much later, now famous and powerful, Rayburn returned to the town, this time with everyone wanting him. He told them all no and asked for the old blacksmith. The two of them stayed up very late talking and when Rayburn finally said he had to get to sleep, the blacksmith said, "Mr. Sam, I'd just like to talk to you all night". Johnson said this is how he felt about his friends at the Washington Post on his final visit there and having said that, everyone burst into spontaneous applause, even those that did not like him very much.
Anyway, getting back to Phil. Round about 1939 he was in his first year of Washington life and clerking for Supreme Court Justice Felix Frankfurter. The latter was a gifted jurist and founding member of the American Civil Liberties Union. Phil and Felix worked well together but were known to argue non-stop for days on end when they disagreed about an opinion. For example they once argued a case, which seemed like the whole day, all the way to Felix's house where Phil dropped him off that evening and as soon as Phil walked in the door his phone rang. Guess who? Phil simply took the call and the argument carried on. On this particular occasion it ended with Phil saying (now remember he was the clerk of a Supreme Court Justice) "Well, I don't care what you do Judge. I just don't want to se you make yourself look silly!" This was not the end of it. It carried on and on. Eventually they could delay no longer and ended up working all night to finish the opinion. When they returned home in the wee hours of the morning the Judge was so tired he didn't give the cab driver due attention when asked for his address. Apparently the driver looked at the Judge and said, "What's the matter? You stupid or something?"
Not all is fun and laughter and some things I read I found to be down right scary. The following will need a bit of color to give it context in my personal capacity. I have been worried about the 'state of the American nation' for a number of years. Now let me state right at the start that I have no interest in bashing America. I have long admired and respected many of its people and institutions and would not have put my investor's hard earned cash into American companies if I felt different. However, my concern for the quality of the American fabric as it stands today compared to that of days gone by prompted me to firstly short the dollar and secondly move a lot of money out of America over the last number of years.
Naturally you need to read this in context of the Fortune article and would strongly encourage you to read it. Once you do then you will find the following statement bone chilling. Herbert Elliston made it on his resignation as editor of the editorial page at the Washington Post in 1953. In his farewell interview he said he had no guiding principle to leave, but if he did he would quote English author Somerset Maugham. Maugham once wrote, "If a nation values anything more than freedom, it will lose its freedom, and the irony of it is that if it is comfort or money that it values more, it will lose that too."
Ok, the following should lighten things up a bit. I am sure you all know Warren Buffett or maybe it was Charlie Munger's remark which went something along the lines of bringing up compensation issues in a board meeting is like belching at the dinner table. The origins of that analogy might very well come from Phil Graham. It was an honor to come to serve the nation in Washington, in Phil's mind and as you would expect most people shared that sentiment. In 1953 George Humphrey came to Washington at the start of the Eisenhower administration. They were having dinner at the Grahams and Mrs. Humphrey was telling Phil Graham what a great sacrifice George had made to come to Washington. Phil responded, "Would you mind if I told you something frankly, Mrs. Humphrey?" Not at all," she replied. "Well, Mrs. Humphrey, making that remark in Washington is like belching at dinner in Shaker Heights [city in Ohio where the Humphreys came from]. We think it's quite a privilege to be secretary of the Treasury." Katherine Grahams elaborates, "Needless to say, our relationship with the Humphreys never progressed much further.
I don't think I will do justice to the memory of Phil Graham or convey the significance of the man if I don't quote the following two pieces written about him shortly after his death. The first is an editorial, which read:
"Mr. Graham invested the full capacity of his mind and heart in everything that deeply moved and interested him. He was not a person given to qualified commitments to his country, his enterprise or his friends. It was this quality that precipitated the illness that led to his death... Our sense of loss is total; he was a man neither easily forgotten nor found again."
It should serve as a poignant reminder that we as shareholders sometimes deal very flippantly with ownership of that which is dear to many people. As shareholders of The Washington Post Company we have benefited from Phil Graham's blood sweat and tears. More relevant though is his legacy, which has been taken forward not only by Katherine Graham but most certainly also by Don Graham. Hindsight gives particular meaning to the following note written to staff by Russ Wiggens at the time of Phil's death:
"Philip L. Graham has left in our daily care and custody an honest and a conscientious newspaper which I know that all of you are eager to maintain as a daily memorial to his own genius and integrity. And now we must take up the duties he laid upon us, with a heavy heart, but nonetheless with a high hope that we may succeed in doing what he would have us do." That legacy as certainly been maintained.
It is fitting for this forum to end with a story on Warren Buffett. We are in the fall of 1979. Warren Buffett and Katherine Graham have been friends for many years now and they are driving to Katherine's home, Glen Welby, for the weekend. Bill Ruane from the Sequoia Fund and Sandy Gottesman at First Manhattan were selling their Post stock. This was shortly after Don Graham took over the reigns at the Post. Some say they were selling due to a lack of faith in Don, others say it was due to the fact that they have already made a killing. Considering they paid $6.50 and were selling for $21.91 the latter might have been the reason. Anyway, Warren just broke the news to Katherine, who due to her concern that there was now a lack of faith in the Post by these very prominent investors, promptly burst out in tears. Warren tried to sooth with, "Don't worry. We'll (Warren and the Post) just buy what they sell. It will be good for us and they'll regret it." Of course it did not help one little bit. Things predictably turned out exactly as Warren suggested and as Katherine Graham explains:
Katherine Graham passed away in 2001, but left a legacy we can rightly be proud of thankfully sharing in.
Martin van Blerk
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To illustrate, nothing exemplifies my concern better than the recent two part series on Asbestos 'prepacks' ran by Fortune. This prompted me to write a letter to Fortune, which they requested to publish in the upcoming edition and from which I quote. "I have long had serious concerns about America and especially regarding what I deem to be a shift from a 'truth' based society to a 'what we can get away with' society or in more philosophical terms a post-modern society. My fund has a lot of money invested in the US, although we have scaled down our investments to about 20% of our portfolio. One of the main reasons for this is that there seems to be a lack of honor, sensibility and realism that got America to where it is today. Sure enough, there is not a total lack of such institutions, but it pales in comparison of its stature of yesteryear. There are few things more telling of America's state of mind than the tobacco, asbestos and fat issues."
"Once, much later Warren and I discussed woman bursting into tears in business situations [Katherine Graham had a particular bad case of this] and I reminded him of our ride to Glen Welby. 'Well", he said, smiling, "we made several hundred million dollars then. The next time you burst into tears, call me first." He added, "Look at it this way, Kay. If you hadn't bought it in, I would have burst into tears, so one of us had to cry."