Jazz-Age Diamond

In 1921, while William Samuel Paley was still a student at the University of Pennsylvania, Author Francis Scott Fitzgerald wrote a story called "The Diamond as Big as the Ritz," published it in his Tales of the Jazz Age. Buried on his remote estate a man found a massive diamond; he could buy anything he wanted by merely chipping off a sliver. He lived in super-Oriental luxury, owned hundreds of shirts, hundreds of neckties, socks, shoes. His house was fitted with every kind of comfort-giving device: buttons that brought soft music from an unseen orchestra, beds that tilted and slid a sleeper gently into a warm, perfumed bath, while violins played. . . . Critics agreed that Author Fitzgerald had imagination; many a college youth dreamed of finding a huge diamond. Last week Bill Paley sailed for the Bahamas with a $10,000,000 diamond in his pocket.

Pennsylvania's Wharton School graduated William Samuel Paley with a B. S. in economics in 1922. His father took him into the family cigar business. Bill Paley knew something about Congress Cigar Co. and about cigars. As a boy he had watched girls on high stools rolling rough tobacco into Java wrappers, shaping them, cutting off the ends. At 18, just out of the University of Chicago, where he spent one year, he had gone into his father's Philadelphia factory, had broken up a strike by taking these girls out to lunch. Still, he did not think much of the cigar business. Nevertheless, he set out to advertise La Palina cigars, traveled all over the U. S. and Europe introducing Java wrappers into respectable society. His campaign was successful and he supplemented newspaper advertising with radio. In 1928, partly with La Palina's profits, he bought Columbia Broadcasting System for $400,000.

Columbia had been founded by Publisher H. M. Newman of the Fourth Estate, was affiliated with Columbia Phonograph Co. and the Arthur Judson Concert Bureau. Broadcaster Newman got time on WOR and WABC. Then he sold control to a Philadelphia contractor, Jerome Louchheim. When Contractor Louchheim turned Columbia Broadcasting System over to young William Paley it consisted of WABC and 15 affiliated stations bound under loose contracts, and it was costing him more money every day.

Shrewd William Paley knew he had a diamond, but he did not know whether it was as big as the Ritz or just an ordinary diamond. He took three months off from the cigar business to find out. He tightened the contracts so that Columbia had an option on certain hours of its affiliates. In addition to cash, he gave the affiliates Columbia's sustaining programs free (National Broadcasting Co. charges for its unsponsored programs). He gathered 22 more stations into his network. Then he refused an offer of $1,500,000 by Paramount Publix Corp. for his company. He was out of cigars for good. Nine months after he had bought Columbia he sold Paramount Publix a half interest for $5,000,000. Paramount Publix paid $500,000 in cash and 58,000 shares of its stock, then worth $65, with an agreement to repurchase the stock at $85 March i, 1932. Last week Paramount Publix stock was quoted at $9 per share. Columbia, meanwhile, had sold 10,000 shares, leaving 48,000 shares for Paramount to repurchase. Four million dollars was a large debt last week for Paramount which, like all cinema companies, had been sweating financial blood. But a half-interest in Columbia was worth more than four millions to William Paley. He offered to buy Paramount's half-interest for $5,200,000. Paramount hastened to accept, bought back its 48,000 shares, had more than $1,000,000 left over. Bill Paley had his whole diamond, now grown to Ritzian proportions. He put it in his pocket, sailed for Nassau and a rest.

That Columbia Broadcasting System was worth more than ten million last week nobody seemed to doubt. At first competitive bidders but finally fellow stock-holders with President Paley were Brown Brothers, Harriman & Co., Lehman Corp., Field, Glore & Co. and Herbert Bayard Swope. Columbia's gross business in 1931 was $11,000,000. It owns five stations outright, has 91 affiliates, is the world's largest radio broadcasting system.

Jazz has made radio broadcasting, and young William Samuel Paley has kept step with the jazz age. Long ago he set himself up in the world like a Fitzgerald hero. Two years ago he moved into a three-story penthouse on svelte Park Avenue, from which he could look down on a building called the Ritz Tower. The apartment was decorated by Theatrical Designer Lee Simonson. It had a dressing room with racks for 100 shirts, 100 neckties, a fancy barroom reached by an aluminum staircase. His modernistic bedroom held a big bed equipped with push buttons for books, chromatic lights, music from one of his eight radios. Bill Paley lived there a while, then moved into a conventional bedroom. He was too active, too aggressive to enjoy lying in fancy beds. But he has a radio in his Hispano-Suiza, always keeps one going at home.

He was able to buy back his half-interest in Columbia within three years because he never lost touch with the jazz age. He discovered Crooner Morton Downey, used him to entice Camel Cigaret advertising from N. B. C. He has been radio impresario for Kate Smith, Bing Crosby, the Boswell Sisters, the Mills Brothers, Ben Bernie and many another crooner, hummer, lullaby singer. Yet his chief interest has been in better music for the radio. He signed the Philharmonic Symphony Orchestra for one of Columbia's sustaining programs. Conductor Toscanini embarrassed him acutely by kissing him on both cheeks. Other Paley innovations: Columbia's "American School of the Air," its "Church of the Air," the world's first regular network broadcasting television station W2XAB.

Columbia's executive offices are elegant, many of its announcers have elegant Oxford accents. President Paley does not object: it is good showmanship. His own office is almost like Hollywood. In a smartly swiveling chair he sits, barking orders, telephoning California, London, Berlin. His subordinates seldom carry out his orders when he first gives them. He often changes his mind. His habits are extravagant, jazz-age habits: he borrows and lends with no thought of repayment, seldom has a cigaret in his pocket, has seen his cook only once in two years. Spending-money slips through his fingers, but he brags about the time he lived on $25 a week. He does not brag of the fact that Congress Cigar Co. which he put on its feet was recently sold for $12,000,000. He talks in extravagant metaphor, sometimes mixed. A favorite expression: "Not a red dime!" He keeps young men around him (average Columbia age: 27). But it has been two years since he sent friends a ten-foot banner with the legend: "A Very, Very Merry Christmas from Bill Paley."

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