The rise of the Annenbergs. The great Annenberg publishing dynasty that controlled the Daily Racing Form, The Philadelphia Inquirer and TV Guide for decades produced the fortune that allowed Walter Annenberg to establish and endow the prestigious M. L. Annenberg Schools of Communication at the University of Pennsylvania and the University of Southern California in honor of his disgraced father, a major player in Capone’s underworld.
by Allan May
M. L. Annenberg and the Growth of the Race Wire
The Annenbergs came to Chicago via a remote, desolate village in East Prussia where Moses Louis Annenberg was born in 1878 during a period of brutal persecution of the Jews. On Christmas Eve 1881, anti-Semitic feelings reached a height in nearby Warsaw when several hundred Jews were beaten to death by Christian mobs claiming revenge on "Christ killers." Moses’ father, Tobias, had seen enough. In 1882, he took the small savings he had and traveled alone to America with plans to send for his wife and eight children later. He settled in Chicago and rented a storefront building on State Street where he opened a small grocery store. By 1885, Tobias Annenberg was able to send for his family.
The Annenberg grocery store was located in the "Patch." At the time it was a tough, predominantly Irish neighborhood, which would spawn future race wire service owners James M. Ragen and Arthur B. "Mickey" McBride. Although Tobias tried to raise his children in the Orthodox Jewish religion with its traditional values, the boys – Jacob, Max and Moe -- would have no part of it. Moe came to "despise all religions as traps to keep poor people docile," according to John Cooney, in his book The Annenberg’s. At an early age, he developed a love of gambling from the card and dice games played on the sidewalks of the neighborhood. He would remain a gambler all his life.
Moe Annenberg left school when he was 12 to find work to help support the family. His first job was as a messenger for Western Union, but over the next 10 years he changed jobs whenever a higher paying one came along. During this time he worked in a livery stable, sold newspapers, and tended bar for his brother-in-law.
It is difficult to imagine now, but in 1900, when Moe Annenberg was 22 and recently married, there were eight daily newspapers in Chicago and William Randolph Hearst – with his formula for hyping newspaper sales with sex, violence and sensationalism -- was poised to launch yet another: the Evening American. To succeed, Hearst needed strong circulation men to fight his battles and one of the first men hired was Max Annenberg who had been working for the Chicago Tribune. Max turned to his younger brother Moe to help him. Starting early each morning, and working late into the night, Moe knocked on doors trying to get customers to subscribe to the Evening American. Moe enjoyed the effort it took to be successful and had finally found a business he truly enjoyed.
Due to his drive and success, when Hearst began the Examiner, a new morning edition, Moe was made circulation chief, the same position Max held with the Evening American. As the competition in the circulation business got tougher and more violent, Moe taught himself how to shoot a gun in the basement of the Early American building. He once had to use it to chase off a man who was threatening to kill Max during an argument.
Both Moe and Max were highly competitive. Moe, for his part, could not stand the implication that he had achieved his position by riding his older brother’s coattails. When this became too much for Moe to bear, he sold his wife’s jewelry, borrowed money, and moved to Milwaukee to handle distribution of the Chicago papers there. Moe’s timing was good because Hearst’s newspapers soon got into a bloody circulation war with Colonel Robert McCormick’s Chicago Tribune. By the time the battles were over in 1913, 27 news dealers had been murdered and many others injured. Before the bloodshed began, Max had left Hearst to return to the Tribune, a move that placed him at the center of the mayhem that took place. Although Max would be indicted for wounding a man, the sharp lawyers under McCormick’s command argued a successful self-defense plea for him. The brutality associated with Max’s actions would stain the Annenberg name for years to come and follow Moe wherever he went.
The Milwaukee News Agency became very profitable for Moe and he quickly invested his money in local businesses such as liquor stores, dry cleaners, and bowling alleys. He later bought into a taxicab partnership with his mentor, millionaire Frank L. Mulkern.
In 1917, Moe’s career went from newspaper circulation manager to newspaper publisher when he took control of the Wisconsin News owned by Arthur Brisbane. Annenberg soon was credited with increasing the News circulation from 25,000 to 80,000. Brisbane then sold the newspaper to Hearst and introduced him to Moe. When he realized that Hearst was called "W. R." he dropped the name "Moe" and began calling himself "M. L." Hearst quickly came to admire M. L. and Annenberg was soon on his way to New York City to oversee the circulation of all of Hearst’s newspaper and magazine publications. Despite the business empire M.L. had built in Milwaukee, just three days after the offer was made, M.L., his family, and all their belongings were on their way to New York. M.L. moved into a plush Manhattan apartment as well as a "palatial estate" on King’s Point, Long Island formerly owned by George M. Cohan.
Soon M.L. was asked to take on the additional responsibility of publisher of Hearst’s newest paper, the New York Daily Mirror. It was a responsibility that M.L. eagerly accepted. One reason was that the paper was in direct competition with the New York Daily News, a strong morning paper that had a circulation manager by the name of Max Annenberg.
In the early 1920s M.L. hired young turks Charles "Lucky" Luciano and Meyer Lansky to help oversee the circulation of the fledgling Mirror. Years later, Luciano would claim, "I used to think of the Mirror as my paper. I always thought of Annenberg as my kind of guy."
In 1922 Brisbane would again have a profound effect on M.L.’s life when he introduced him to a special-interest publication devoted to horse racing – the Daily Racing Form. The small publication listed the names of the horses that were racing that day along with information about their previous performances. Frank Bruenell, a former sports editor of the Chicago Tribune, started the publication in Chicago in 1894. M.L. approached Bruenell about buying his publication. Bruenell wanted $400,000 in cash. M.L. delivered it. He then hired Joseph Bannon and Hugh Murray to run it.
Gambling fever seemed to be sweeping the country like no time previously. With the popularity of horseracing on the increase since a "wartime slump," there were now 29 racetracks operating throughout the country and millions of people eager to bet. Annenberg felt that he could do a "razzle-dazzle" promotional campaign and then increase the information being offered.
Annenberg quickly imparted the shrewd negotiating methods he developed over the years and used his position as circulation manager for the Hearst Corporation to promote his new interest. He forced retailers to purchase the new Racing Form by threatening to cut off other Hearst publications if they refused. Since the Hearst distributed magazines and newspapers were a large part of their sales, few retailers refused. His next step in dominating the race information service was to buy out other publications coast to coast. When money didn’t work, his army of tough circulation men helped change the minds of would-be holdouts. In 1926, with his Racing Form taking up more of his time, Annenberg left Hearst.
Like Hearst during the newspaper circulation wars, Annenberg worked hard to distance himself from the violence which accompanied his business endeavors. He cared little for the violence and the strong-armed tactics his men resorted to on occasion. Few of Annenberg’s rivals, however, fought back.
In 1927, Annenberg was faced with a business decision that would be the most lucrative he would ever be involved in. He was looking at purchasing controlling interest in Mont Tennes General News Bureau, known as the race wire service. Tennes was being squeezed by the Capone mob in Chicago to relinquish control. With the potential profits that Annenberg envisioned could be achieved under careful management of the service, he made his bid.
Although many considered the race wire service illegal and a menace to society, Annenberg once told his son Walter, according to Cooney, "it was a source for social good.". He claimed, "people who led humdrum lives of poverty or held grinding jobs that had them working five and a half or six days a week needed something to look forward to, a chance, no matter how slight, that good fortune could come their way." He defended his position to his son by saying, "If people wager at a racetrack why should they be deprived of the right to do so away from a track? How many people can take time off from their jobs to go to a racetrack?"
Annenberg purchased 48 percent of the shares of the General News Bureau. John J. "Jack" Lynch, a former partner of Tennes and a Chicago gambler with a tough reputation, purchased 40 percent. The remainder was bought by Tennes’ nephews. Annenberg quickly hired his old "Patch" buddy, James Ragen, to run the operation. He then hired his nephew, Ivan, Max’s son.
Ragen soon mapped out a plan to make General News Bureau the only race wire service in the country. The plan called for strong-arm tactics and bribes. Annenberg’s Racing Form service initially consisted of seven publications and as the layers of corporations increased, they were arranged to keep a buffer between him and the violence that sometimes took place beneath him. In addition, like Capone, he contributed heavily to political campaigns, especially those of the Democratic machine that ran Chicago. A special fund was set up, referred to as the "widows and orphans" fund, which fed at least $150,000 a year in bribes to police and politicians, according to the Chicago Tribute. The General News Bureau continued to grow in size as smaller operations fell by the wayside. Those that couldn’t be bought out were threatened out of business, or had their operations destroyed by the goons employed by Annenberg and Ragen.
In May 1929, organized crime figures from around the country gathered in Atlantic City for a conference organized by Meyer Lansky, Frank Costello and Johnny Torrio. At the meeting, syndicate gambling genius Frank Erickson urged the attendees to consider owning a national wire service. What happened next is unclear. Several writers and crime historians claim that Annenberg was invited to the meeting by Capone and a plan was worked out for the syndicate to get involved in running the wire service. Annenberg biographer John Cooney does not mention that M.L. attended the meeting, but states that Capone went to Annenberg with a proposition that he flatly rejected. However, within a few years, Annenberg’s vision of a national wire service was accomplished and stretched across the United States and into Canada, Cuba, and Mexico.
One of the people who helped Annenberg with the wire service distribution in Chicago was the infamous Alfred "Jake" Lingle, the crime reporter of the Chicago Tribune. Lingle was known as a "fixer" who "sold influence with police and politicians to gamblers and bootleggers." Working for "The Trust," as the General News Bureau was referred to by the Chicago underworld, Lingle helped convince two independent wire services that they would be better off by joining the Annenberg organization. On June 9, 1930, Lingle was murdered in an underpass while on his way to Washington Park racetrack. Clutched in his hand was a copy of the Racing Form. There were many theories behind the murder. One was that Lingle had not been able to secure an interest in the General News Bureau for the Capone mob.
By 1932, Annenberg had squeezed out all of the significant competition. He then turned his attention to squeezing out his partners. The first to go were Bannon and Murray who had been running the Daily Race Form since Annenberg had purchased it. Annenberg began a successful campaign against the two by cutting the newsstand price of the Telegraph, a racing information publication he had purchased on his own in 1929, from 25 cents to 10 cents. He went into direct competition with himself. His network of distributors made sure that the Racing Form made it to the stands late, or not at all. When Bannon and Murray realized what was happening they sold out to Annenberg for $2.25 million.
Annenberg then created the Universal Publishing Company, which printed "wall sheets" and "hard cards." The wall sheets listed races, horses, jockeys, morning odds, and other information that bettors used in deciding how to place their money. The wall sheets were posted on walls of horse parlors for both customers and clerks. Hard cards were a smaller version of the same information and could be carried in the bettor’s pocket. Annenberg now undercut his competition, the General News Bureau, and quickly became the leading supplier. To further his gains, he had the wall sheet and hard card information printed using the identical codes used by his wire service. This guaranteed that customers buying his printed material also used his wire service and only the bookies who purchased both services were given the key to the codes.
His last move was to force his partners in the General News Bureau out of business completely. Annenberg accomplished this by establishing the Nationwide News Service in Chicago on August 27, 1934. When General News Bureau suppliers around the country heard a rumor about the new wire service they called James Ragen to report it. Ragen’s response was that he was now employed by Nationwide News and if they were smart they would take the new service. This deceit enraged Lynch who took Annenberg to court and lost. Lynch’s next move was to contact the Capone organization through Illinois State Senator Dan Serritella. The Capone syndicate lined up its support behind Lynch. The newspapers were reporting a gang war was imminent. Frank Nitti approached James Ragen in an attempt to get him to change sides. "If you come along with us, we will kill him (Annenberg) in 24 hours," Ragen was told.
Annenberg was a marked man. He hired bodyguards to protect him around the clock and quickly decided it was best for him to get out of Chicago. He headed for Miami where he would at least enjoy the protection of old friend Meyer Lansky.
While in Miami, Annenberg purchased the Miami Tribune and soon battled both the Miami News and the Miami Herald for circulation supremacy. Lansky, who had helped Annenberg bring his wire service to southern Florida, was getting a piece of the action in return for keeping Annenberg from getting shot. In 1936, Annenberg reached an agreement with Lynch and the Capone Syndicate. He paid one million dollars a year for protection and was free to pursue other interests without being stalked by paid gunmen.
With the race wire service problem cleared up, Annenberg purchased a newspaper that he felt had the "prestige and class" his other ventures had lacked – the Philadelphia Inquirer. Annenberg achieved great success in increasing the overall circulation of the Inquirer and saw it become a successful tool and model for Republican Party politics. The contacts his son Walter made with the Republicans would one day result in his being named Ambassador to Great Britain by President Richard Nixon.
M.L.’s happiness would be short lived as he and his son were charged with income tax evasion in August 1939. Annenberg made an agreement with the government to drop the charges against Walter in return for a guilty plea. While he was working at the details, Annenberg ended his association with Nationwide News Service on Nov. 15, 1939, by simply walking away from it in an effort to improve his image to the court.
In June 1940, Annenberg agreed to pay $9.5 million in taxes, penalties and interest, and he was sentenced to three years in the Lewisburg Federal prison. When he was released on June 11, 1942, Annenberg was a sick man. At the Mayo Clinic in Rochester, Minn., doctors diagnosed a brain tumor. He died a little over a month later, on July 20, 1942.
After Annenberg walked away from Nationwide News Service, it went out of business. Five days later the Continental Press came into being under new leadership.
Next, Part Three: James M. Ragen and Mickey McBride