News in the Age of Money

By Diana B. Henriques

Financial Writer at the New York Times

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In 1980, I was working in New Jersey as an investigative reporter at The Trenton Times, trying to unravel the local angles of the FBI's wacky "Abscam" sting, in which members of Congress were secretly filmed accepting bribes from undercover agents posing as aides to an Arab sheik. By the end of 1982, I was a business reporter, covering the Latin American debt crisis for The Philadelphia Inquirer. The media monitor Dean Rotbart estimates there were only a few thousand business journalists in 1980. When his newsletter, TJFR Business News Reporter, first counted noses in 1988, there were about 4,200 of us in the top fifty newspaper markets and at national business publications in the United States.

Trained on political news beats, we were utterly unprepared to cover the economic legacy of the 1970s. Before we had memorized all the members of OPEC, the next "war" was upon us -- Federal Reserve Chairman Paul Volcker's campaign to curb inflation. This demanded something new: a vocabulary capable of explaining the deadly mismatch between the borrowing and lending rates at banks and savings and loans (S&L's), a grasp of the relationship between risk and reward, and at least a rudimentary idea of who regulated banks, S&L's, money market funds, and insurance annuities. It was not our finest hour, to say the least.

The bright side of this frantic, learn-on-the-fly journey has been that each working day brought a new opportunity to stretch and grow. A less satisfying consequence of our odyssey is that we have been constantly climbing the steep slope of the learning curve. Our early ignorance made skepticism and independent analysis difficult. And too often, before we could get around to producing the lucid, profoundly informed pieces that are the joy of the learning curve's summit, we were once again in unfamiliar territory.

Technology, most of all, is rocking the boat from which we are trying to cover it. No longer mere journalists, some of us are now "multi-media content providers." In 1980, searching the archives meant leafing through fat envelopes of fragile clippings; today, everybody's old stories are a double-click away. Back then, the only way I could file a story from outside the newsroom was to dictate it over a public telephone to some rewrite person. Today, I dictate my stories to the voice-recognition software installed on my laptop computer and file them by e-mail, checking in on my cellular phone later to see if the copy desk has questions.

On good days, I believe that this remarkable twenty-year boom in business news has produced a financial press corps of unparalleled depth and breadth, and that today's technology is simply empowering us to do more, better, faster. But if today's best and brightest are far more savvy about the modern machinery of business journalism, they seem far more naïve about its age-old temptations. Those covering the "new economy" for the "new media" seem especially mystified about why it's such a big deal if they invest directly in industries they cover, or accept cheap insider stock in some industry pal's IPO (initial public offering), or do consulting work on the side for technology companies.

Janelle Brown, writing thoughtfully in Salon in mid-1999, suggested that we need fresh ethical rules "flexible enough to anticipate new issues that will surely arise in this fast-paced industry, where the lives of journalists are increasingly entwined with the people whom they write about and companies that they cover. Or must all technology journalists simply accept that by joining the writer corps they are taking an oath to disavow the temptations of technology riches?"

Well, yes. At least those riches that raise questions about the independence and credibility of their reporting. A technology journalist can avoid unseemly conflicts simply by investing only in broad-based mutual funds. (Of course, those funds may own some technology stocks, silly. But somebody besides you will be deciding which stocks to own and for how long. And yes, those who work for Internet news organizations have a personal stake in the sector whether they own shares or not ­ but it's fully disclosed on your business card, for heaven's sake.)

These are not, after all, "new economy" issues. Selling out has been a temptation for journalists since the Republic was a pup. The Congressional investigation of the 1929 stock market crash turned up evidence that market manipulators had paid New York newspaper reporters to tout stocks on demand. Ronald Steel noted, in his magnificent biography of Walter Lippmann, that the legendary pre-war journalist Arthur Krock, while at the New York World Telegram, actually moonlighted as a public relations adviser to the Wall Street firm of Dillon, Read. Maintaining an undisclosed personal stake in any arena that you are supposed to be covering independently and objectively -- whether it's a political movement, a Broadway play, or an Internet stock -- violates pre-Cambrian concepts of journalistic ethics. And in every generation, there have been sincere but misguided journalists who believed that, in their case, it was different.

One of them was, like me, an émigré from local journalism in Trenton. In 1981, he went to work at the Dow Jones News Service and in July 1982, he was hired by The Wall Street Journal to help write the paper's influential "Heard on the Street" column.

His name was R. Foster Winans.

Like today's young technology journalists, Winans found that his life soon became "entwined" with the rich, clever people he covered. He, too, was disgruntled over the stinginess of journalism paychecks. He, likewise, was certain he could invest on the side without "letting my investment alter my judgment at work in any way." Soon after he arrived at the Journal, Winans secretly bought 400 shares in a small, illiquid company, American Surgery Centers, and then wrote positively about the company in his column.

"I knew what I was doing was technically unethical for a journalist," he wrote in his memoir, Trading Secrets: Seduction and Scandal at The Wall Street Journal, published by St. Martin's Press in 1986. But he somehow reasoned that "the ethical question was purely one of appearances .... If no one ever found out, no one would perceive a potential conflict and, therefore, I would not have done anything unethical. It was slightly circular reasoning but it got me past the big hurdle."

Soon, Winans had agreed to tip a broker in advance about stocks that would be mentioned in his "Heard on the Street" columns, in exchange for a share of the profits. He made about $30,000 on the deal, more than he made in a year at the Journal. The outraged Journal reported on March 29, 1984, that regulators were investigating the scheme. In June 1985, Winans was convicted of various federal mail and wire fraud charges; he was later sentenced to eighteen months in jail. In 1987 the U.S. Supreme Court upheld his conviction.

Although Winans insisted to the end that he had not violated any laws, he knew what he had done to his fellow journalists. He had "confirmed the suspicions of many investors about stock market writers -- that they take personal advantage of the information they gather. Realizing this hit me pretty hard."

Looking back after 16 years, I still feel that the Winans affair put all the fearsome temptations of modern business journalism into razor-sharp relief for me. How could anyone mistake these for fuzzy-edged issues? But Matt Welch, a trenchant young media critic for the Online Journalism Review, told me recently that he is convinced that Winans's sins, if committed today, would not provoke one-tenth the media outrage expressed in 1984. When a Silicon Valley gossip columnist accepted cheap pre-IPO shares from a local technology mogul, he noted, many supposedly sensible professionals wondered aloud whether she had done anything wrong. "Journalists see all these people getting rich -- including other journalists, back when online content was worth something," Welch says. "And a lot have really lost their bearings."

I can only hope that he is wrong. If he isn't, no matter how rich today's young journalists become in this great business-news bazaar, journalism itself will be poorer beyond measure.

But let's assume, under the influence of some persuasive Chardonnay, that most of us will attain the rocky promontory of intelligent skepticism and dig in there for the duration, regularly producing lucid, hard-headed business coverage. And let's further predict -- yes, please, just another splash of that wine -- that most of us will do so with our honor and reputations intact. We would still just be talking about what kind of people we are. And ultimately, this boom in business journalism is not really about us. Rather, it is about our relationship with those we're trying to reach -- whether we call them readers, viewers, or (heaven help us!) "eyeballs."

Most new business writers back in 1980 instinctively and perhaps wrong-headedly approached local business news from the perspective of the workers involved -- after all, we were workers ourselves, with a healthy mistrust of what passed for management in the newspaper business. As the 1980s rocketed along, our "readers" became "consumers." As the 1990s unfolded, those "consumers" morphed into "investors." And today, some of us are speaking only to investors who also own computer modems.

A sad thing has happened along the way: as our intended audience has gotten narrower, so have we. Business news today rarely sounds the sonorous chords or heart-lifting themes of great journalism. Most of it simply buzzes and squeaks, a reedy clarinet against a rhythm section of cash registers and ticker tape. The men and women who scrambled to explain the economic turmoil of the 1970s -- the gas lines and the shuttered factories and the apparent erosion of American competence -- were not writing for consumers or investors. They were writing for citizens, for people who cared deeply about how this nation turned out. They assumed an audience whose concerns stretched far beyond the performance of their 401(k) and the leasing arrangements on their Jeep Grand Cherokee.

I don't know about you, but I'd rather be writing for those people again. I suspect that nothing we achieve in terms of competence and integrity as business journalists in the years to come will matter very much, unless we do.