18. Interview with Don Graham.

19. Beebe had been a partner at Cravath, Swaine & Moore in New York and, under the direction of Don Swatland, in 1948 was instrumental in designing the structure that protected the Post from a sale outside the family.

20. Katharine Graham, Personal History.

21. McNamara later said he commissioned the "History of the United States Decision-Making Process on Vietnam Policy" to "bequeath to scholars the raw material from which they could reexamine the events of the time." Sanford J. Ungar, The Papers and the Papers: An Account of the Legal and Political Battle over the Pentagon Papers 23-27. New York: E. P. Dutton, 1972.

22. Dialogue between Graham and Bradlee has been condensed and edited for clarity from Personal History and her interview with Charlie Rose. Description of the scene is from Personal History.

23. Bob Woodward, "Hands Off, Mind On," Washington Post, July 23, 2001.

Chapter 37.

1. Nixon made explicit threats about the licenses, but a paper trail did not surface to document this until May 1974 (Katharine Graham, Personal History. New York: Alfred A. Knopf, 1997). Graham filed an affidavit with the FCC on June 21, 1974, saying the challenge was "part of a White Houseinspired effort to injure...the company in retaliation for its Watergate coverage." Morton Mintz, "Mrs. Graham Links White House, TV Fights," Washington Post, June 27, 1974; David E. Rosenbaum, "Threats by Nixon Reported on Tape Heard by Inquiry," New York Times, May 16, 1974.

2. Katharine Graham, Personal History.

3. Ibid.

4. All quotes on Meyer are from Cary Reich, Financier: The Biography of Andre Meyer: A Story of Money, Power, and the Reshaping of American Business. New York: William Morrow, 1983.

5. Cary Reich, Financier.

6. "The whole company at one point got down to where it was selling for eighty million," Buffett says. "We spent a little less than ten million bucks when all was said and done and paid a price that valued the company on average at a hundred million."

7. Graham's memoir, which downplays her relationship with Meyer, credits Gillespie and Beebe for the idea of the two-class stock. Meyer's biographer, Cary Reich, credits Meyer for the idea. Given Meyer's talents as a banker, it seems unlikely he had no involvement.

8. Warren Buffett letter to Katharine Graham, May 1973.

9. Jim Hoagland, "A Journalist First," Washington Post, July 18, 2001.

10. Robert Kaiser, "The Storied Mrs. Graham," Washington Post, July 18, 2001.

11. Cary Reich used the term "irate" in Financier.

12. Interview with Arjay Miller.

13. Katharine Graham, Personal History.

14. "A Sure Thing? What Is Inside Information? Forget the black-and-white definitions. The real world often comes in gray, like at the San Jose Water Works," Forbes, September 1, 1973.

15. The company had disclosed in 1971 that the city was interested in buying it.

16. Interview with Bill Ruane.

17. Warren Buffett letter to Malcolm Forbes, August 31, 1973.

18. Interview with Bill Ruane.

19. Katharine Graham, Personal History.

20. Patrick Brogan, The Short Life and Death of the National News Council: A Twentieth Century Fund Paper. New York: Priority Press Publications, 1985. The Council survived for eleven years before giving up-a decade before the Internet became available-for lack of a viable outlet through which its findings could reach the public.

21. Interview with George Gillespie.

22. Interview with Don Graham.

23. Katharine Graham, Personal History.

24. October 20, 1973.

25. Graham's foreword to Meg Greenfield's Washington. New York: Public Affairs, 2001.

26. Graham more tactfully called him a "delightful and mischievous goad" in Personal History.

27. In her book, Graham recalls that "someone" mentioned the amortization of intangibles and that Howard Simons, unprompted, then challenged her to define it. Possibly Graham did not perceive herself as "showing off" when writing what was, after all, her own memoir.

28. Interview with Don Graham.

29. Interview with Liz Hylton.

30. The Dumbarton Oaks Conference; the Dumbarton Oaks Research Library and Collection.

31. Wisner was the widow of Frank Wisner, and married columnist Clayton Fritchey in 1975, becoming Polly Fritchey.

Chapter 38.

1. Wattles, confusingly, bore the same name as Gurdon W. Wattles, the "streetcar king" of Omaha, who was no relation.

2. Interviews with Ed Anderson, Marshall Weinberg.

3. Buffett bought American Manufacturing at 40% of what he thought it was worth. "How Omaha Beats Wall Street," Forbes, November 1, 1969.

4. A couple of other people did what Wattles did-Thomas Mellon Evans and Jean Paul Getty. Buffett followed Evans, too, while another Columbia friend, Jack Alexander, and his partner, Buddy Fox, followed Getty, who pyramided oil companies and wrote a book, How to Be Rich (not how to get rich). Evans, a Pittsburgh businessman, discussed in "Heirloom Collector," Time, May 11, 1959, operated through H. K. Porter and Crane Co. Wattles, who is virtually unknown today, was a director of Crane.

5. It didn't make you huge money unless you picked the shareholders' pockets, as some had done. An unscrupulous operator could milk the subsidiaries for money while saddling the shareholders of the parent company with an unsustainable amount of debt. John S. Tompkins, "Pyramid Devices of 20's Revived," New York Times, November 16, 1958.

6. "If I have seen further it is by standing on ye shoulders of giants." Letter from Isaac Newton to Robert Hooke, February 5, 1676.

7. "Fighting the Tape," Forbes, April 1, 1973. "I trust this man [Wattles] to do intelligent things," Ruane said. Shareholders had sued over the values in the merger, however, illustrating the conflicts created by the Wattles model.

8. Interview with Charlie Munger.

9. Blue Chip made two purchases totaling 137,700 shares, or 6%, of Wesco on July 11 and July 14, 1972. Between July 1972 and January 1973, Blue Chip bought another 51,300 shares, or 2% of the stock, through open market purchases on twenty different days.

10. "Not Disappointed, Says Analyst As Wesco, FSB Call Off Merger," California Business, March 15, 1973.

11. Wesco's equivalent book value per share at the exchange ratio offered was $23, compared to Santa Barbara's $8. Santa Barbara had zero unrestricted capital, whereas Wesco had $7 per equivalent share free net worth. Santa Barbara's earnings per equivalent share after bad debt accruals and deferred taxes were 28.7% lower than Wesco's.

12. This is Betty Casper Peters's recollection of how Buffett related the story to her.

13. A letter from Charlie Munger to Louis Vincenti, February 8, 1973, makes the case that Home Savings' (a California banking giant) cost structure was so low "because it is run like Wesco."

14. Interview with Betty Casper Peters.

15. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Wednesday, March 19, 1975, p. 53. Warren E. Buffett testimony, March 21, 1975, pp. 6163.

16. Interview with Charlie Munger.

17. "It is awkward," he wrote, "when we want to talk to you about alternatives to be provided by us for Wesco shareholders, to have you sort of prevented from considering anything unless and until released by FSB [Santa Barbara] or actions of ours.... I guess all we can do is have everyone act as best he can as the matter unfolds to an outcome now not entirely clear to us." Charles T. Munger letter to Louis R. Vincenti, February 8, 1973.

18. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Wednesday, March 19, 1975, page 84.

19. Interview with Betty Casper Peters.

20. Minutes of the Special Meeting of Board of Directors of Wesco Financial Corporation, February 13, 1973.

21. Interview with Betty Casper Peters.

22. All analyst commentary from "Not Disappointed, Says Analyst As Wesco, FSB Call Off Merger," California Business.

23. Peters was grateful to them, writing to Don Koeppel two months later that the decision to kill the deal looked "heroic" because Santa Barbara's stock price had fallen from over $33 to $15.50.

24. Interview with Charlie Munger.

25. Blue Chip applied to the Federal Savings and Loan Insurance Corporation to buy 50% of Wesco, thereby turning Blue Chip, and potentially its affiliates Berkshire, Diversified, and others, into a savings-and-loan holding company. In the application, the companies said that Diversified had never considered Blue Chip a subsidiary but Diversified and its affiliates might be deemed to control Blue Chip by view of Buffett's ownership of the stocks of both as well as of Berkshire, which owned 17.1% of Blue Chip at the time.

26. Munger started looking at other California bank stocks and suggested that Wesco might buy a large block of Crocker National Bank.

27. "I have a personal, pronounced prejudice in favor of buying at a material discount from book value stock in extremely entrenched institutions which have earned between 11% and 13% on book value for a decade or more with a history of substantial and ever-increasing dividends. Moreover, I like the idea of diversifying the economic base at Wesco with something like a zero increase in overhead. I also like becoming the largest shareholder in substantial enterprises-on the theory that this adds a possible plus factor to investment performance." Charles T. Munger letter to Lou Vincenti, April 3, 1973.

28. Buffett's trading style that year suggested he might be pessimistic about the economy and was preparing for a downturn. He wrote straight covered-call options on Kennecott Copper and down-and-out options, a more sophisticated type of covered call that limits the downside and upside within a specified range, on several stocks such as Ford Motors, General Motors, and Black & Decker. Selling calls on the latter three economically sensitive stocks was not a market call, but does suggest that he was more pessimistic than optimistic about the economy. Letter from Warren Buffett to Jack Ringwalt, March 9, 1972.

29. At December 31, 1973, his Post stock was worth $7.9 million.

30. Catherine Elberfeld letter to Warren Buffett, May 1974.

31. Ben Graham wrote about this Eau Claire, Wisconsin, company in The Intelligent Investor.

32. "I'd have made a hell of a lot more money if I hadn't sold it. I would have made a fortune out of the stock," Buffett says. He says he got off quickly when he learned the CEO had different deals with every director about pay. Vornado was under different management and owned discount stores. Today it is a real estate investment trust managed by Steven Roth.

33. Interview with Bob Malott.

34. Buffett says he immediately told Malott that FMC should buy back its own stock, which was cheap. Although FMC considered the idea, it didn't follow through.

35. Black enrollment had risen to one third and was projected to rise to nearly half in the fall. A desegregation suit was pending and the building did not conform to fire codes. Some white students had already transferred out of fears that Central and Tech High, the city's toughest school, would be merged. Dana Parsons, "Central Parents Express Fears, Seek Changes," Omaha World-Herald, May 9, 1974. The committee proposed changes that in effect created a magnet school oriented to college prep.

36. Mark Trustin, a neighbor, gave Hamilton to the Buffetts.

37. Interview with Susie Buffett Jr., who says she wasn't planning to become a police officer.

38. Interview with Peter Buffett.

39. Interview with Dave Stryker.

40. In the Temptations' world, men are the Daisy Maes: "Since I Lost My Baby," "The Way You Do the Things You Do," "(I Know) I'm Losing You," "I Can't Get Next to You," "Just My Imagination," "Treat Her like a Lady," and, of course, "Ain't Too Proud to Beg."

41. From several sources both close to Susie at the time and who knew her later.

42. Interview with Peter Buffett.

43. His dividends from Blue Chip were also about $160,000 per year before taxes.

44. By having Diversified buy insurance from ("reinsure") National Indemnity through its new subsidiary. The cash was transferred by paying a premium to Diversified. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Thursday, March 20, 1975, pp. 188194.

45. By year-end 1973, Reinsurance Corp. of Nebraska (renamed Columbia Insurance) had amassed investments of $9 million, which is indicative of its cash flows.

46. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Wednesday, March 19, 1975. Both had previously owned some stock. Munger had bought a block and Gottesman bought stock his partners sold.

47. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Thursday, March 20, 1975, p. 193.

48. Charles T. Munger testimony, In the Matter of Blue Chip Stamps, Berkshire Hathaway Incorporated, HO-784, Thursday, March 20, 1975, p. 190.

49. They were reported at the end of the year in DRC's annual report, but few people read it, and it took legwork and initiative to get more timely information from SEC Form 3s and 4s. DRC's 11.2% position was disclosed in BRK's 1973 annual report, as well as the fact that Warren and Susie owned 43% of DRC at the time too.

50. For $1.9 million.

51. Don Koeppel letter to Warren Buffett, June 15, 1973.

Chapter 39.