Means of Ascent (20 page)

Now, however, with the path closed, it was deferred no longer. During the war, Lyndon Johnson grabbed for money as eagerly as he had grabbed for political power. Inexperienced in business, he displayed, for some years at least, little business expertise or instincts. But he didn’t need any. For the basis of his business enterprise was not business but politics. His first step, in fact, was a case study in the use of political influence to amass wealth.

T
HE INSTRUMENTALITY
was a radio station—KTBC, in Austin.

In few businesses was the role of government as crucial as in radio, for not only were the very licenses which allowed the use of the airwaves granted, and periodically renewed, only at the sufferance of the Federal Communications Commission, but the FCC possessed virtually unchallengeable authority over every aspect of a station’s operations.

KTBC proved the point. Although radio was a booming business in 1942, the Austin station wasn’t participating in the boom. The application filed with the FCC in December, 1935, by its three owners—a University
of Texas law professor, A. W. Walker, and two attorneys, Robert A. Stuart and
Robert B. Anderson (who became Secretary of the Treasury in the Eisenhower Administration)—for an FCC construction permit, the
first step toward obtaining a license, wasn’t even approved until nineteen months of bureaucratic red tape, which included six separate hearings, had elapsed. And although the owners had requested permission to operate virtually twenty-four hours a day, the permit they finally received, in July, 1937, allowed them only to share a frequency, 1120 kilocycles, with WTAW, the station of Texas A & M College, eighty miles from Austin; the FCC granted KTBC only the daytime
hours, denying it the evening hours, the most valuable time on radio; KTBC was to be only a “sundowner,” a station required to go off the air at sundown, as early as five o’clock during the winter months in which radio listenership was highest because inclement weather kept families inside. Given the lack of evening hours, it was almost irrelevant that 1120 (later changed to 1150) was too high on the dial for widespread reception because in the Austin area that
end of the dial was already crowded with the city’s other station, KNOW, and with two powerful San Antonio stations, WOAI and KTSA, whose signals, much more powerful than KTBC’s, drowned out the Austin station except on a narrow frequency, and limited its range to the area immediately around the city. A “sundowner” had little chance of obtaining an affiliation with a national network. Businesses that wanted to advertise on the popular evening network shows
would advertise on either KTSA, which was part of the popular
CBS network, or on WOAI, which was an
NBC network affiliate.

There had never been much money behind KTBC. The three owners had started it with an investment of only $27,000, and that had all been spent. Its “headquarters,” located over the Austin School of Business in a small building on Colorado Avenue, consisted of a studio, a control room, three small offices and a classroom the station was allowed to use as a reception area when the school, as KTBC’s lease put it, “does not have a class
actually reciting there”; since the station could not afford the rental for even such modest facilities, it gave the school three hundred dollars’ worth of air time a month in exchange. KTBC’s only other physical plant consisted of an antenna and transmitter located on a plot of land north of Austin. The station’s management was similarly makeshift. So amateurishly produced and written were its own shows that local merchants had little incentive to
advertise on them. And they didn’t. Each year, KTBC’s financial picture worsened: in 1942, advertising revenues totaled $26,795, expenses $33,026; at the end of 1942, the station’s debts were more than $19,000; the station had been kept afloat during 1941 and 1942 only by $5,000 in loans from Professor Walker, loans which consumed the last of his available capital. Employees were wondering from
day to day when the
station would go off the air for good. Better management would not have made much difference, however. So long as the conditions imposed by the initial license—the restrictions on its hours and its unfavorable location at the crowded end of the dial—remained, the station could never be very profitable.

But conditions could be changed, and changed quickly. For the restrictions on KTBC were, after all, restrictions that had been imposed by government. Lyndon Johnson had already learned, in obtaining lucrative “change orders” for Brown & Root on its
Marshall Ford Dam contract, how easy it was to alter conditions imposed by government. Walker, Stuart and Anderson (and
James G. Ulmer, a Yale graduate and radio
entrepreneur who owned several Texas radio stations, and who had been given some form of interest in KTBC in return for his managerial expertise) wanted to change the severe restrictions on its operations; the reasons for KTBC’s problems, Walker would say, were simply that “we did not have a network affiliation and we couldn’t operate at night”; Ulmer was later to say that he had “completed all the engineering” data
necessary for a contemplated application to the FCC for a change to a lower frequency and longer hours, but ran into more FCC delays unrelated to that change. And when, in frustration, the three owners tried to sell the station, they found that the FCC wouldn’t even let them do that. In December, 1939, their “
State Capital Broadcasting Association” had given an option to J. M. West, a wealthy oilman, rancher and publisher of the
Austin Tribune
, to purchase KTBC for $50,000, contingent on the required FCC approval of the transfer of the station’s license to him. But in February, 1940, the FCC replied to the transfer application by revoking KTBC’s license, stating that it had learned that Ulmer had a “hidden interest” in the station. The three owners responded that the FCC was mistaken, that Ulmer’s interest did not extend to stock
ownership. Wanting to make the point moot, however, since their only interest in the station now was to sell it, within a month, on March 25, 1940, they made arrangements that would “
eliminate any monetary profit of any kind to which … Dr. Jas. G. Ulmer might ever become entitled to from the proceeds of the sale of said capital stock,” although he would continue to manage the station. They then agreed to sell KTBC to West for
$20,000—plus $12,000 to cover the station’s debts at the time. Confident that they had certainly met any conceivable objection to the sale, the three owners again asked the FCC to permit the change of ownership.

The owners of KTBC may have moved quickly, but the FCC did not. It moved, in fact, not at all, for more than a year; although the Commission was finally to concede that Ulmer had indeed “completely … relinquished any … interest which he may have had” in the station’s ownership, it did not issue this ruling for fifteen months, during which
time KTBC was operating under a series of temporary
licenses while hearings and bureaucratic complications dragged on. And when, on June 26, 1941, the FCC gave KTBC a regular license, it nevertheless did not approve the transfer to West—this time because he was a newspaper publisher, and the agency had recently decided to hold hearings on “
Order 79,” an overall policy that would bar newspaper publishers from owning radio stations; until these hearings were completed, the FCC said, all
applications from publishers were being placed in a “pending” file. Nor did the delays stop there. In August, West died, and left his option to his two sons and a conservative Republican businessman from Austin,
E. G. Kingsbery. When they petitioned the FCC for a ruling—
any
ruling, favorable or unfavorable—on the transfer request so that at least they would know where they stood, the Commission returned the petition, saying
that it had been submitted in incorrect form. In 1942, KTBC was still snarled in bureaucratic red tape. By refusing to allow nighttime hours, the Commission was making operation of the station economically unfeasible for its owners. But since the Commission had refused, for almost three years, to rule on the Wests’ option to purchase the station, and the option remained in force, the owners couldn’t sell it to anyone else. The FCC was, in effect, forcing them either to
operate at a loss, or to close down, thereby surrendering their license. But closing down would mean that Professor Walker would never get his $5,000 back; in addition, there was now also a $4,000 loan one of West’s sons had made to keep the station going, a debt the owners felt obligated to repay.

They were frantic to sell. Walker wrote to FCC Chairman
James Fly directly. He told Fly of the “hard struggle to keep this station on its feet.” Only his loans had done so, the professor wrote, and “I have gone the limit of my personal ability” and could make no more. He was expecting to be drafted momentarily. There was, he said, no alternative to selling; he pleaded with Fly to allow the transfer of KTBC’s
license to the Wests.
But the FCC still refused to approve the sale. Fly’s only reply to Walker was that Order 79 continued to preclude FCC consent to the proposed sale of KTBC.

Ulmer was also frantic. Before his death, West, increasingly intrigued by radio’s potential, had offered to buy all Ulmer’s radio stations for $750,000, and to allow him to continue managing them. But, determined to have an outlet in the state capital, the oilman made his offer contingent on FCC approval not only of their sale, but of the KTBC sale as well: if Ulmer obtained FCC approval of the KTBC sale, the whole deal was on; if not, it was off.
And Ulmer’s money was running out.

And then, in 1942, Ulmer made a fatal misstep: he decided to retain an attorney who was known to have influence with government agencies, and the attorney he chose was Alvin Wirtz.

The two men had dinner one evening in Austin’s Driskill Hotel, and Ulmer explained the situation. The big man with the broad smile could not have been more sympathetic. By the end of dinner, Ulmer thought he had retained Wirtz to represent the State Capital Broadcasting Association before the FCC; he was later to say that they had even agreed on a $10,000 retainer: $2,500 down, $1,000 a month for five months; the balance of
$2,500 upon FCC approval. Wirtz told Ulmer to meet him at his office the next morning at nine o’clock.

But Ulmer did not know the man with whom he was dealing. At nine in the morning, Ulmer was in the waiting room of
Powell, Wirtz, Rauhut and Gideon in the Brown Building. The secretary told him that Senator Wirtz hadn’t come in yet, so Ulmer sat down to wait. He waited for some hours, from time to time looking at a picture prominently displayed on the wall, a picture of Lyndon Johnson, bearing a fond inscription. But Senator Wirtz never
arrived. Finally, the secretary said that perhaps Ulmer should come back in the afternoon. And when he returned in the afternoon, the secretary apologized; Senator Wirtz, she said, had unexpectedly been called to Washington, and indeed had already left. She told Ulmer that Wirtz would be staying at the Mayflower Hotel, and Ulmer tried repeatedly to telephone him there, leaving messages. Wirtz never replied. In fact, Ulmer never heard from him again.

Ulmer never heard from the FCC about KTBC, either, and neither did the station’s owners, or the holders of the option to purchase it, the Wests and Kingsbery. They did, however, hear from someone else: the man whose picture was on the wall of Wirtz’s office.

Kingsbery was a conservative Republican and a tough businessman, but he was also a father. In 1941, Johnson had given his son, John, one of the coveted appointments to the United States Naval Academy at Annapolis.
“He knew there were two ways through to me, my family and my money, and of those, the most important was my family,” Kingsbery was to say. Now, when, just before Christmas in 1942, Kingsbery was asked to call on the Congressman, he brought him a
present: a quart of pure cream. That was not, however, the type of present Johnson had in mind. Alluding to the appointment of Kingsbery’s son, and then to Kingsbery’s option on KTBC, the Congressman asked Kingsbery to give him the option. If he ever lost an election, he said, he would be out of politics, and “I have no means of making a living. I want to get into some business.” Kingsbery was not particularly eager to exercise his option (“
I understood the station was bankrupt”) but felt an
obligation to the deceased West not to do anything West’s sons would not approve. He also felt, however, that he had an “obligation” to Johnson for his son’s appointment, and he told the Congressman, “
I’ll recommend that they give it to you, and then we’ll be even.”

Johnson wanted someone more influential with the West brothers than Kingsbery to join in this recommendation; in fact, he wanted even more than a recommendation from
George Brown.

Fearing that the ultra-conservative Wests would not want to sell this medium of public opinion to a “liberal,” Johnson decided that the identity of the purchaser must be concealed; he proposed that Brown act as a front for him and pretend to the Wests that
Brown & Root was the buyer. However, Brown recalls that he, unwilling to deceive friends, “told him he should do it himself”—that is, persuade them to
sell. He knew Lyndon could persuade them, he was to say with a smile; convincing liberals that he was a liberal, conservatives that he was a conservative, “that was his leadership, that was his knack.” Brown did not overestimate his man. He arranged for Johnson to meet the West brothers in Suite 8-F of Houston’s Lamar Hotel—the Brown & Root suite that was the late-afternoon gathering place of the city’s conservative rulers—led the
three men to a room across the hall and shut the door behind them. “He went in there, and in an hour he had convinced them” that he wasn’t a liberal, and he “had them liking him.” Wesley West was to tell a friend, “
I didn’t like Lyndon Johnson, but by God I went over there, and he’s a pretty good fellow.” They agreed to give him their option to purchase KTBC.
¹
Forty years later, George Brown, old now, almost blind, holding an interviewer’s arm as he walked up to 8-F to take a nap after lunch, stopped and pointed to the door across the hall: “Right there, right in that room [824], is where he bought the radio station,” he said. The Wests agreed to surrender their option on one condition: that the FCC approve the sale, which would be made not to Lyndon Johnson but to
Mrs. Lyndon Johnson.