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Chapter 21

1 . Berkshire Hathaway chairman’s letter，1988.

2 . The tax code exemption applied to LIFO inventory liquidations. For tax purposes Rockwood used LIFO accounting，which let it calculate profits using the most recent cocoa-bean prices，which minimized taxes. Correspondingly，cocoa beans were carried in inventory at old prices. A large taxable profit would therefore occur if it sold the inventory.

3 . Pritzker created a business conglomerate through his investing activities，but is best known as founder of the Hyatt hotel chain.

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4 . At the onset of the exchange period，Accra cocoa beans，which made up half of Rockwood’s 13million-pound pile，were trading at $0.52 a pound. The price dropped to $0.44 per pound by the conclusion of the exchange period. The price of these beans had hit a high of $0.73 per pound in August 1954，causing candy companies to shrink the size of their 5 candy bars. George Auerbach，“Nickel Candy Bar Wins a Reprieve，”New York Times，March 26，1955; “Commodity Cash Prices，”New York Times，October 4 and 20，1954.

5 . Letter to Stockholders of Rockwood & Co.，September 28，1954.

6 . From the 1988 chairman’s letter in the Berkshire annual report to shareholders，which contains a brief description of the Rockwood transaction.

7 . The speculator’s return on the contract also reflects his funding cost. For example，if the speculator broke even on a three-month contract——net of his fee——the contract would actually be unprofitable，considering the speculator’s funding cost.

8 . In the futures market，the difference between a speculator and a hedger (or“insured”) is essentially whether an underlying position in the commodity exists to be hedged.

9 . Interviews with Tom Knapp and Walter Schloss，as well as Buffett.

10 . Warren Buffett letter to David Elliott，February 5，1955.

11 . Based on its profile in Moody’s Industrial Manual，Rockwood traded between $14.75 and $85 in 1954 and between $76 and $105 in 1955. Buffett held on to the shares through 1956. Profit on the trade is estimated. Rockwood traded above $80 a share during early 1956，based on the Graham-Newman annual report.

12 . In the letter to David Elliott noted above (February 5，1955)，Buffett explains that Rockwood is his second-largest position (after Philadelphia & Reading，which he did not disclose) and writes that Pritzker“has operated quite fast in the past. He bought the Colson Corp. a couple years ago and after selling the bicycle division to Evans Products sold the balance to E L. Jacobs. He bought Hiller & Hart about a year ago and immediately discontinued the pork-slaughtering business and changed it into a more or less real estate company.”Pritzker，he writes，“has about half the stock of Rockwood，which represents about $3 million in cocoa value. I am quite sure he is not happy about sitting with this kind of money in inventory of this type and will be looking for a merger of some sort promptly.”He had studied not just the numbers but Jay Pritzker.

13 . Initially he had bought the stock from Graham-Newman when he was a stockbroker，after a minor mistake on an order from them caused them to DK (“don’t know，”or repudiate) the order. Warren kept the stock.

14 . Before 2000，investors and analysts routinely sought and received nonpublic information that would be an advantage to them in trading stocks. This gradual flow of information，which benefited some investors at the expense of others，was considered part of the efficient workings of the capital markets and a reward for diligent research. Warren Buffett and his network of investor friends profited significantly from the old state of affairs. Ben Graham was questioned extensively about this practice before Congress in 1955. He commented that “a good deal of information from day to day and month to month naturally comes to the attention of directors and officers. It is not at all feasible to publish every day a report on the progress of the company... on the other hand，as a practical matter，there is no oath of secrecy imposed upon the officers or directors so that they cannot say anything about information that may come to their attention from week to week. The basic point involved is that where there is a matter of major importance it is generally felt that prompt disclosure should be made to all the stockholders so that nobody would get a substantial advantage in knowing that. But there are all degrees of importance，and it is very difficult to determine exactly what kind of information should or must be published and what kind should just go the usual grapevine route.”He added that all investors may not be aware of the grapevine，but，“I think that the average experienced person would assume that some people are bound to know more about the company [whose stock they are trading] than he would，and possibly trade on the additional knowledge.”Until 2000 that was，in effect，the state of the law.

While a full discussion of insider trading is beyond the scope of this book，the theory of insider trading was promulgated with SEC Rule 10b-5 in 1942，but “so firmly entrenched was the Wall Street tradition of taking advantage of the investing public，”as John Brooks puts it in The Go-Go Years，that the rule was not enforced until 1959，and it was not until the 1980s that anyone seriously questioned the duties of people other than insiders under insider-trading laws. Even then，the Supreme Court affirmed，in Dirks v. SEC，463 U.S. 646 (1983)，analysts could legitimately tell their clients this type of information，and the Supreme Court also noted in Chiarella v. United States，445 U.S. 222 (1980)，that “informational disparity is inevitable in the securities markets.”To some extent，there was understood to be some benefit to the market of a gradual leakage of inside information; in fact，how else was the information to get out? The practice of business public relations and conference calls had not developed.

In these 1980s cases，however，the Supreme Court defined a new“misappropriation”theory of insider trading，in which inside information that was misappropriated by a fiduciary could lead to liability if acted upon. Then，largely in response to the Bubble-era proliferation of “meeting and beating consensus”earnings and the “whisper numbers”that companies began to suggest to favored analysts that they were going to earn，in 2000，through Regulation FD (Fair Disclosure)，the SEC broadened the misappropriation theory to include analysts who selectively receive and disseminate material nonpublic information from a company’s management. With the advent of Reg. FD，the “grapevine”largely ended，and a new era of carefully orchestrated disclosure practices began.

15 . At the end of 1956，after the dividend was paid，Warren owned 576 shares trading at $20，worth $11, 520.

16 . He registered the securities in his own name，rather than his brokers’，so the checks came straight to his home.

17 . Interviews with George Gillespie，Elizabeth Trumble，who heard this story from Madeline. Warren heard it for the first time at his fiftieth birthday party，from Gillespie. Apparently Susie had never mentioned it to him.

18 . More than five decades later，Howie recalls this as his first memory. While that may seem improbable，in “Origins of Autobiographical Memory，”Harley and Reese (University of Chicago，Developmental Psychology，Vol. 35，No. 5，1999) study theories of how childhood memories are recalled from the earliest months of life and conclude that this phenomenon does occur. One of the explanations is parents who repeat stories to their children. A gift from Ben Graham——probably significant to Warren–might plausibly be recalled by Howie from infancy because at least one parent helped him imprint it solidly in memory by discussing it so much.

19 . Interview with Bernie and Rhoda Sarnat.

20 . This story also is cited in Janet Lowe’s Benjamin Graham on Value Investing: Lessons from the Dean of Wall Street. Chicago: Dearborn Financial Publishing，1994.

21 . Interview with Walter Schloss.

22 . Warren Buffett letter to the Hilton Head Group，February 3，1976.

23 . Schloss was starting the partnership with $5, 000 of his own capital，a risky arrangement that left him nothing on which to live. Buffett got him help with housing from Dan Cowin. Ben Graham put in $10，000 and had some of his friends do so too; eight of Schloss’s friends put in $5, 000 each. Schloss charged 25% of profits，“but that’s it. If the market went down，we would have to make up the loss until my partners were whole.”

24 . Knapp was a security analyst at Van Cleef，Jordan & Wood，an investment adviser.

25 . Interview with Tom Knapp.

26 . Interview with Ed Anderson.

27 . Ibid.

28 . Graham was born May 9，1894. He decided to shut down Graham-Newman when he was sixty-one，but the last Graham-Newman shareholder meeting was held on August 20，1956.

29 . Jason Zweig says in a July 2003 Money article，“Lessons from the Greatest Investor Ever，”that “From 1936 to 1956，at his Graham-Newman mutual fund，he produced an average annual gain of more than 14.7% vs. 12.2% for the overall market——one of the longest and widest margins of outperformance in Wall Street history.”This record does not reflect the impressive performance of GEICO，which was distributed to the shareholders in 1948.

Chapter 22

1 . At times he had said he wanted to be a millionaire by age thirty.

2 . Interview with Ed Anderson.

3 . “Newman and Graham predated A. W. Jones，which everybody thinks is the first hedge fund，”Buffett says. A. W. Jones is best known as the first promoter of the concept of hedging the risk in stocks with short sales. However，its fee structure，partnership arrangement，and flexible investing approach——that is，the classic hedge fund as the term is technically defined——were pioneered much earlier，by Graham if not others as well.

4 . Interview with Chuck Peterson.

5 . The first partnership agreement provided: “Each limited partner shall be paid interest at the rate of 4% per annum on the balance of his capital account as of December 31 of the immediately preceding year as shown by the Federal Income Tax Return filed by the partnership applicable to said year’s business，said interest payments to be charged as expenses of the partnership business. In lieu of a separate computation of interest for the period ending December 31，1956，each limited partner shall be paid 2% of his original capital contribution，said payments to be charged as expense of the partnership business for said period. In addition each of the limited partners shall share in the overall net profits of the partnership，that is，the net profits of the partnership from the date of its formation to any given point of time in the proportions set opposite their respective names.”The total interest of the partners added up to 23/42 or 50% of the total interest in the earnings (Certificate of Limited Partnership，Buffett Associates，Ltd.，May 1，1956). The agreement to share in the losses was an amendment to the partnership agreement on April 1，1958.

6 . According to Joyce Cowin，both Buffett and her own husband，Dan Cowin，who had been introduced to Buffett by Fred Kuhlken，ran money separately for Gottschaldt and Elberfeld.

7 . Interview with Chuck Peterson.

8 . Some of these remarks were made at the 2003 speech to Georgia Tech students，the rest in interviews with the author.

9 . Hartman L. Butler Jr.，“An Hour with Mr. Graham，”March 6，1976，interview included in Irving Kahn and Robert Milne，Benjamin Graham: The Father of Financial Analysis. Occasional Paper No. 5，The Financial Analysts Research Foundation，1977.

10 . Interview with Tom Knapp.

11 . “Tourist Killed Abroad，Portugal-Spain Highway Crash Fatal to Long Island Man”New York Times，June 23，1956. Kuhlken had been on a yearlong trip. The other passenger，Paul Kelting，was listed in critical condition.

12 . Sloan Wilson，The Man in the Gray Flannel Suit. New York: Simon & Schuster，1955.

13 . Interview with Susie Buffett Jr.

14 . From Headliners & Legends，MSNBC，February 10，2001.

15 . Interview with Charlie Munger.

16 . Or thereabouts.

17 . Interview with Ed Anderson.

18 . According to Tom Knapp，one thing Dodge and Buffett had in common was their tightfistedness. Even when he later became one of Buffett’s richest partners，Homer Dodge would angle for a free canoe from a canoe maker. He knew every route into New York City from both La Guardia and JFK airports，and took convoluted trips by bus and subway and on foot rather than hire a cab.

19 . The Dodges chose a slightly different deal. Buffett’s share of the profits would be only 25%，but the amount he could lose was limited to his capital，initially only $100. Certificate of Limited Partnership，Buffett Fund，Ltd.，September 1，1956.

20 . Cleary split profits over 4%，while Buffett was exposed to the extent of any arrears. Certificate of Limited Partnership，B-C Ltd.，October 1，1956. In 1961，B-C Ltd. was folded into Underwood Partnership，Ltd.

21 . Buffett Partnership files，“Miscellaneous Expense”and “Postage and Insurance Expense，”1956 and 1957.

22 . Warren Buffett’s first letter to partners，December 27，1956.

23 . During the war，people bought Liberty Bonds，which paid low interest rates，as a patriotic duty. When rates subsequently rose，the bonds traded “below par”——face value. Stock promoters offered shares to Liberty Bond owners in exchange for the par value of the bonds. Thus bondholders thought they were getting $100 worth of stock for a bond selling in the market for，say，$85，when in fact the stock was worth little if anything. Salesmen also promised some buyers board seats，according to Hayden Ahmanson，who told Buffett this.

24 . From 1928 to 1954，the manual was published in five volumes annually as Moody5 Manual of Investments，one volume each for government securities; banks，insurance companies，investment trusts，real estate，finance and credit companies; industrial securities; railroad securities; and public-utility securities. In 1955，Moody’s began publishing Moody’s Bank and Finance Manual separately.

25 . Buffett says Hayden Ahmanson gave him this version of events.

26 . Buffett: “He was my partner in National American insurance. Dan didn’t have a lot of money，so he was using his money that he had originally planned to put in the partnership，and borrowed some money too.”

27 . Under the Williams Act，passed in 1968，you could not do this today，nor could Howard Ahmanson buy back the stock piecemeal. The act requires buyers to make a “tender offer”that puts all sellers on a level playing field under the same price and terms.

28 . According to Fred Stanback，when Buffett had“bought all he could pay for，”he also let Stanback start buying.

29 . A year later，Buffett sold the National American stock for around $125 (to the best of his memory) to J. M. Kaplan，a New York businessman who had reorganized and headed Welch’s Grape Juice in the 1940s and ’50s and was later known for his philanthropy. Kaplan eventually sold the stock back to Howard Ahmanson.

30 . See，for example，Bill Brown，“The Collecting Mania，”University of Chicago Magazine，Vol. 94，No. 1.，October 2001.

31 . Interview with Chuck Peterson. This was insurance proceeds from her husband’s estate. By then，Buffett had decided to offer his partners several choices of risk versus reward. Mrs. Peterson chose a fee structure that shifted more of both to Warren. He had to beat the market by 6%，not 4%，before earning anything. But he got one third of everything he made above that. Under this structure，only Warren’s capital was at risk for the 25% payback-of-losses provision. Certificate of Limited Partnership，Underwood Partnership，Ltd.，June 12，1957.

32 . Arthur Wiesenberger，Investment Companies. New York: Arthur W. Wiesenberger & Co.，released annually from 1941.

33 . United States & International Securities Corp. was formed amid much fanfare in October 1928 by Dillon，Read & Co. and promptly sank into ignominy，becoming a cigar butt by 1950. Clarence Dillon，the founder of Dillon，Read，was called before the Pecora hearings in 1933 to explain how Dillon，Read obtained control of US&FS and US&FS，which were capitalized at $90 million，for $5 million.

34 . Quote is from Lee Seeman. Buffett confirms the substance of the statement. The intriguing question is who or what prompted Wiesenberger to make the phone call.

35 . Lee Seeman’s recollection in an interview is that Dorothy Davis made the comparison.

36 . Buffett，recalling a conversation with Eddie Davis.

37 . Dacee resembled the Buffett Fund. Buffett was credited 25% of any profits over a 4% hurdle rate. Certificate of Limited Partnership，Dacee Ltd.，August 9，1957.

38 . Congressional records note a Washington，D.C.，furniture store was giving away shares of uranium stock with any purchase for a Washington’s Birthday sale. (Stock Market Study，Hearings before the Committee on Banking and Currency of the United States Senate，March 1955.)

39 . Monen had also invested in a small real estate partnership with Warren and Chuck Peterson. The money from this，a profit from National American，and likely some personal savings had，in short order，made him one of Buffett’s largest partners.

40 . Above a 4% to 6% “bogey.”He benchmarked himself against the rate of long-term government bonds，telling his partners that if he could not do better than that，he should not get paid. The wide range of profit-sharing reflected the varying level of risk Warren was taking. In the partnerships that paid him the most，he also had unlimited liability to pay back losses.

41 . Buffett was charging 25% of the partnership’s appreciation in excess of 6%.

42 . Meg Mueller，in an interview，recalls its size relative to other houses on the street at the time.

43 . Reynolds was a city councilman.“Sam Reynolds Home Sold to Warren Buffett，”Omaha World-Herald，February 9，1958.“Buffett’s Folly”was referred to in a letter to Jerry Orans，March 12，1958，cited in Roger Lowenstein，Buffett: The Making of an American Capitalist. New York: Doubleday，1996.

44 . Interview with Susie Buffett Jr.

45 . Interview with Howie Buffett.

46 . Pyelonephritis，sometimes associated with pregnancy.

47 . As quoted in Lowenstein，Buffett. Billig is now deceased.

48 . Interview with Charlie Munger.

49 . In interviews，Dr. Marcia Angle recalls the TV being acquired in the late 1950s and how much it impressed her father. Kelsey Flower and Meg Mueller recall its impact on the neighborhood.

50 . Interviews with Howie Buffett，Peter Buffett，Susie Buffett Jr.

51 . Interview with Thama Friedman. Laurette Eves was the third partner.

52 . Interview with Howie Buffett.

53 . Kuhlken had introduced Cowin to Buffett in 1951 on one of Buffett’s trips back to New York after his graduation from Columbia.

54 . From Buffett’s eulogy for Cowin.

55 . From Joyce Cowin’s eulogy for Cowin.

56 . Marshall Weinberg，Tom Knapp，Ed Anderson，Sandy Gottesman，Buffett，and others contributed to this portrait of Cowin.

57 . “He lent me unsecured. A dollar of short-term loss offset two dollars of long-term gain for tax purposes，and you could buy a mutual fund that was going to pay a long-term capital-gains dividend and redeem it immediately thereafter to offset a long-term gain going into the end of the year. I bought a combination of long-term gain and short-term loss，which，though equal in amount，had different effects on your tax return. It was all legit then; you can’t do it anymore. It probably saved me a thousand dollars. Boy，it was huge，”says Buffett.

58 . Interview with Joyce Cowin.

59 . This was an experimental town built to house 1, 800 families in low-cost units. Numerous government properties were auctioned off after World War II.“House Passes Bill to Speed Greenbelt Sale”Washington Post，April 14，1949; “U.S. Sells Ohio Town It Built in Depression，”New York Times，December 7，1949; “Greenbelt，Md.，Sale Extended for 30 Days，”Washington Post，May 31，1952.

60 . Chuck Peterson paraphrased this quote from the version of the story he heard. It is probably correct in substance，but，as with all quotes recalled from memory，the exact wording is in doubt.

Chapter 23

1 . “A. C. Munger，Lawyer，Dies”Omaha World-Herald，July 1，1959.

2 . The obituary of Henry A. Homan，son of George W. Homan，in the Omaha World-Herald，March 22，1907，mentions that Homan，who was twelve years older than Judge Munger，was a close friend of the judge. The Homan and Buffett sides of the families，however，were not close.

3 . “33 Years a Federal Judge，”Omaha World-Herald，March 12，1939.

4 . Charles Munger letter to Katharine Graham，November 13，1974. When Judge Munger died，this same aunt Ufie (Ruth) reportedly made the bizarre claim that he must have been taken by God’s grace because of a mistake he’d made recently in arithmetic. She said she knew “he couldn’t stay on after that.”

5 . Lowe，Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger. New York: John Wiley & Sons，2000. Lowe’s biography，which is based on extensive family interviews，was the author’s principal source for the Munger family history.

6 . Said approvingly in Lowe，Damn Right!

7 . Interview with Lee Seeman.

8 . Interview with Mary McArthur Holland.

9 . Interview with Howard Jessen，a friend of the Buffetts’.

10 . His grandfather，a prominent Omaha lawyer，was a friend of Dean Roscoe Pound，the dean of Harvard Law School.

11 . Munger made no effort to burnish a résumé by，for example，joining the Law Review. In an interview，he described himself as relatively aloof.

12 . His father also gave him this advice.

13 . Lowe，Damn Right!

14 . As quoted in Lowe，Damn Right!

15 . Munger，as told to Janet Lowe in Damn Right!

16 . In Damn Right!，Munger compared getting married to investing. Nancy said he was “uptight”about showing emotions. His son Charles Jr. said，“There are some things my dad could deal with better if he faced them more”but “he just walks away.”

17 . Munger，as quoted in Lowe，Damn Right!

18 . Ibid.

19 . In Damn Right!，Nancy says that Charlie “was not much of a helpmate around the house.”For her seventieth birthday，Buffett says he went to a pawn shop and got her a Purple Heart.

20 . Roger Lowenstein，Buffett: The Making of an American Capitalist. New York: Doubleday，1996.

21 . Lowe，Damn Right!

22 . Interview with Charlie Munger.

23 . Interview with Lee Seeman.

24 . In a year when the Dow was up 38.5%，Warren had managed to beat it，taking minimal risk.

25 . In addition to his $100 stake in Buffett Associates，Buffett had later put $100 into each of his other partnerships: Buffett Fund，B-C，Underwood，Dacee，Mo-Buff，and Glenoff.

26 . Interview with Lee Seeman.

27 . This version differs from some others that have been published. For example，Susie Buffett has said that she was present. Several writers have set the meeting at a dinner at Johnny’s Café. Roger Lowenstein，however，also set the meeting at the Omaha Club. Most likely，other versions are confiations of later events. To the author，Seeman’s version is the most detailed yet has the least embellished air.

28 . Interview with Charlie Munger. The dinner is reconstructed from interviews with Buffett and Munger，whose memories are hazy. Nancy Munger doesn’t remember. The wives were introduced soon after the first meeting，and Johnny’s is the most likely location. Buffett recalls Munger’s self-intoxication clearly.

Chapter 24

1 . Estimated. Buffett was managing $878，211 at the end of 1958 in six partnerships. The $50, 000 Glenoff Partnership was formed in February 1959. By the end of 1959，the partnerships’ market value had grown to $1, 311，884. His personal funds and Buffett & Buffett increased this total.

2 . Sanborn sent its customers paste-over revisions each year showing new construction，changed occupancy，new fire-protection facilities，and changed structural materials. A new map was published every few decades. Buffett took note of the company，as far as he recalls，when a large block of stock came up for sale. The widow of the deceased president was reportedly selling 15, 000 shares because her son was leaving the company. Phil Carret owned 12, 000 shares.

3 . Five or ten shares apiece，forty-six shares in total.

4 . Buffett had become friendly with the company’s CEO，Parker Herbell，whom he said the rest of the board treated as an “errand boy.”Herbell supported the plan to separate the investments from the map business，and had facilitated some of its underpinnings，such as this study.

5 . “It does not make sense to have management，consultants，and major stockholders in complete agreement regarding a course of action but unable to proceed because of directors owning an insignificant amount of stock.”Warren Buffett letter to C. P. Herbell，September 25，1959.

6 . In those days，appreciated shares could be exchanged for a company’s own shares. So a company could get rid of the capital-gains tax that was inherent in an operation if it just sold stock from time to time.

7 . As part of the deal，the Buffett partnerships agreed to tender their stock.

8 . Interview with Doris Buffett.

9 . Interview with Kelsey Flower，a childhood friend of Susie Jr.’s.

10 . Interview with Dick and Mary Holland.

11 . Interview with Peter Buffett.

12 . Interview with Howie Buffett.

13 . Ibid.

14 . Gateway，May 26，1961.

15 . “Paul Revere’s Ride，”Henry Wadsworth Longfellow. Listen my children，and you shall hear of the multitudes rescued by Susan Buffett.

16 . From remarks made by Eisenberg at Susie’s funeral.

17 . According to his autobiography，Stranger to the Game (written with Lonnie Wheeler，New York: Penguin，1994)，Bob Gibson lived in Omaha in the off season. He talks about playing basketball in Omaha with a white team in 1964，traveling to Iowa for games，and hanging out at a bar on North 30th Street. The bartender wouldn’t serve him.

18 . Howard Buffett quoted in Paul Williams，“Buffett Tells Why He Joined Birch Society，”Benson Sun，April 6，1961. Leila Buffett letter to Dr. Hills，December 10，1958.

19 . The Christian Anti-Communist Crusade was founded in 1953 by “a crisp，energetic，selfconfident Austrian，”Fred Schwarz，who was a physician，psychiatrist，and lay preacher. It used media to spread its anti-Communist philosophy. Cabell Phillips，“Physician Leads Anti-Red Drive with ‘Poor Man’s Birch Society，’”New York Times，April 30，1961. See the CACC website，http://www. schwarzreport. org/.Leila Buffett to Mrs. Kray，May 23，1960.

20 . Interview with Susie Buffett Jr. and Howie Buffett. They recall their father’s behavior during this period as routine and，with hindsight，as a form of denial.

21 . Interview with Howie Buffett.

22 . Interview with Chuck Peterson.

23 . According to Chuck Peterson，Carol Angle “did not hear well.”This is a example of Buffett’s raconteuring. She says she had progressive hearing loss.

24 . Interview with Lee Seeman.

25 . Interview with Dick Holland.

26 . Interviews with Frank Matthews Jr. and Walter Schloss，who agree that Schloss introduced them on the street corner.

27 . This is how hedge funds are commonly managed to stay within the legal investor limit today.

28 . George Payne was also a founding member of this partnership. By then，B-C had been folded into Underwood. Along with the ten partnerships，Warren and his father were still operating Buffett & Buffett.

29 . The Dow’s results include dividends received. Note that this was the performance for the partnership before Warren’s fees.

30 . Interview with Chuck Peterson.

31 . Interviews with Kelsey Flower，Meg Mueller.

32 . Interview with Stan Lipsey.

33 . Buffett was 31 on January 1，1962，but his personal investments and gains in the partnership had taken him past the million-dollar mark months earlier，when he was still 30.

34 . Interview with Bill Scott.

35 . Buffett waived his fee for Scott，one of the two most lucrative arrangements he ever made with an employee. (See Henry Brandt in “Haystacks of Gold”and “Folly”for the other.)

36 . He put in everything except his investment in Data Documents，a personal investment in a private company.

37 . Letter to partners，July 6，1962. In the second quarter of 1962，the Dow fell from 723.5 to 561.3，or 23%. In the first half of that year，the partnership saw a loss before payments to partners of 7.5%，compared with a loss of 21.7% including dividends for the Dow—— the partners had a 14.2% outperformance.

38 . Buffett’s phrase is a clever reworking of Graham’s original. In The Intelligent Investor: “The sovereign virtue of all formula plans lies in the compulsion they bring upon the investor to sell when the crowd is buying and to buy when the crowd lacks confidence”(Intelligent Investor，Part I: General Approaches to Investment VI: Portfolio Policy for the Enterprising Investor: The Positive Side，1949 edition). And in Security Analysis: “It would require bond investors to act with especial caution when things are booming and with greater confidence when times are hard”(Security Analysis，Part II: Fixed-Value Investments，Xl: Specific Standards for Bond Investment，1940 edition).

Chapter 25

1 . Warren Buffett typewritten file memo，undated.

2 . Warren Buffett letter to Bob Dunn，June 27，1958.

3 . Note from Jack Thomsen to Warren Buffett，March 8，1958: “I think we have to be realistic and reorganize on a basis that has a reasonable chance of working... the only thing that Clyde is concerned about is prestige....Hale received a letter from Clyde yesterday to notify him that he was being removed as trustee of his estate. I am certain the same rancor is and will be held for all of us who have dared to oppose him....I do feel sorry for him in his present predicament but I do not think we can correct our problems with sympathy.”

4 . Interview with Verne McKenzie，who says Buffett explained this to him when he hired him. Without a public exit strategy，this is one of only two ways to realize the value of the assets.Buffett had not yet figured out the other one，as the reader will see.

5 . Interview with Walter Schloss.

6 . Warren Buffett letter to Clyde Dempster，April 11，1960.

7 . Warren Buffett note to Bob Dunn，June 27，1958: “...has become increasingly less active in the business and it appeared the company was just drifting with him not interested and no one else having the authority to do anything....We finally got the job accomplished by letting Clyde stay as president.”He gave Jack Thomsen，executive vice president，temporary operating authority.

8 . Interview with Walter Schloss.

9 . At $30.25 per share. Warren Buffett letter to Dempster shareholders，September 7，1961.

10 . Warren Buffett letter to partners，July 22，1961.

11 . “Dempster had earned good money in the past，but was currently only breaking even. “We continued to buy the stock in small quantities for five years. During most of this period I was a director and was becoming consistently less impressed with the earnings prospects under existing management. However，I also became more familiar with the assets and operations and my evaluation of the quantitative factors remained very favorable”thus leading him to continue buying stock. Letter to partners，January 24，1962.

12 . And water-system parts——as the demand for windmills was waning.

13 . “We had parts for windmills and certain farm equipment”says Scott，“where we had a lock on the business and by repricing it could stop losing money down there. And we were successful to some degree.”

14 . January 18，1963.

15 . Interview with Bill Scott.

16 . “Still a Chance City Can Keep Dempster，”Beatrice Daily Sun，September 1，1963; “Drive to Keep Dempster Rolls，”Omaha World-Herald，September 30，1963.

17 . As Buffett’s successor，Dempster’s chairman W. B. McCarthy，put it，“We understand，as I am sure you do，that a number of the people in Beatrice do not recognize the fine，necessary job that you and Harry accomplished with Dempster.”W. B. McCarthy letter to Warren Buffett，November 19，1963.

18 . Of the $2.8 million total financing，$1.75 million went to pay the sellers and the remainder to expand the operation.“Launch 1 1th Hour Effort to Keep Dempster Plant Here，”Beatrice Daily Sun，August 29，1963.

19 . “Beatrice Raises $500, 000，”Lincoln Evening Journal，September 3，1963; “Fire Sirens Hail Victory，Beatrice Gets Funds to Keep Dempster，” Omaha World-Herald，September 4，1963; “Contracts for Dempster Sale Get Signatures，”Beatrice Daily Sun，September 12，1963.

20 . The partnership made $2.3 million，almost three times its investment. Buffett changed the name of the holding company to First Beatrice Corp. and moved its headquarters to Kiewit Plaza.

Chapter 26

1 . The speakers appeared as individuals who happened to belong to different groups rather than “representatives”of their races and faiths. All went well，except once，says Doris Buffett，when a Protestant panelist started telling the Catholic and the Jew that they were going to hell.

2 . The black workers were squeezed out of jobs as Omaha’s packinghouse industry shrank. Marginalized into a ghetto north of downtown called the Near North Side，they lived in dilapidated，aging tenements for which unscrupulous landlords charged high rents. In 1957，the Omaha Plan，a communitywide study，proposed redevelopment of the Near North Side，but bond issues were defeated. A budding civil-rights movement led by college students at Creighton University，the Urban League，and other civic groups had worked to improve black employment and end segregation of teachers in the public schools since 1959.

3 . Interview with Susie Buffett Jr.，who wondered what good the police whistle was going to do.

4 . Interview with Peter Buffett.

5 . Interview with Doris Buffett. Viktor E. Frankl，Man’s Search for Meaning. Boston: Beacon Press，1962.

6 . Interview with Sue James Stewart.

7 . Alton Eltiste，“Miss Khafagy Gives Views on Homeland，”Gateway，October 5，1962.

8 . This image of the crossing guard may surprise modern readers，but in the United States until the latter part of the twentieth century，children were traditionally given significant freedom and responsibility.

9 . Interview with Howie Buffett.

10 . Howie and Susie Jr. describe themselves and their relationship this way in interviews.

11 . This composite picture of the Buffett household is based on interviews with Susie Buffett Jr.，Howie Buffett，and Peter Buffett.

12 . Interview with Meg Mueller.“My mom has commented on that several times over the years，”she says.

13 . Interview with Bill Ruane.

14 . Interview with Dick Espenshade. One of the founding lawyers，Jamie Wood，joined from another firm.

15 . Interview with Ed Anderson.

16 . The example has been simplified for ease of understanding the concept of leverage. Obviously the exact return on capital depends on how long it took to make the profit，and on the funding rate.

17 . Interview with Rick Guerin in Janet Lowe，Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger. New York: John Wiley & Sons，2000.

18 . This description is from Ed Anderson.

19 . Interview with Ed Anderson.

20 . Interview with Charlie Munger. Guerin’s seamstress mother died when he was a teenager.

21 . Interviews with Rick Guerin，Ed Anderson.

22 . Janet Lowe，Damn Right!

23 . Interview with Ed Anderson. Guerin doesn’t remember this specific incident but says it sounds likely.

24 . Anderson takes the blame for being too obtuse to read Munger’s mind，rather than blaming Munger for not explaining things to him.

25 . Interview with Ed Anderson.

26 . Along with Munger，Ed Anderson recalls this extraordinary trade. Munger says the story is true in substance. Buffett also recalled the reasoning.

27 . Interview with Ed Anderson，who suggested the word“pretender”because，as he put it，“Charlie would never feel like he was an ‘apprentice.’”

28 . Ira Marshall relates Munger’s confusion with names in Damn Right!

29 . Interview with Ed Anderson. This term was commonly used among Buffett’s friends. He referred to “coattail riding”in his partnership letter of January 18，1963.

30 . Buffett also recalls Munger hyperventilating at his own jokes.

31 . Charles T. Munger letter to Katharine Graham，December 9，1974.

32 . Ibid.

33 . In 1953，Buffett sold copies of this report for $5.

34 . Buffett had also let Brandt in on one lucrative private investment，the Mid-Continental Tab Card Company. While Buffett gave up his override on Brandt’s money，the deal was a win/win.

35 . “There’s got to be a warehouse full of these somewhere，”said Bill Ruane in an interview，but the author never saw it.

36 . Bill Ruane introduced Buffett to Fisher’s ideas. Philip A. Fisher，Common Stocks and Uncommon Profits. New York，Evanston，and London: Harper & Row，1958. (“Scuttlebutt”is a nautical term for a barrel with a hole in it used to hold the sailors’ drinking water.)

37 . The market for soybean oil was not large，a key element in the scheme. It would be impossible for a single individual to amass enough capital to corner the market for，say，oil or treasury bills.

38 . Most accounts published about the scandal incorrectly refer to oil floating on top of water in the tanks.

39 . Mark I. Weinstein，“Don’t Leave Home Without It: Limited Liability and American Express，”Working paper，American Law & Economics Association Annual Meetings，Paper 17，Berkeley Electronic Press，2005，p. 14–15，is the source that American Express was certifying more warehouse receipts than the Department of Agriculture said existed in salad oil.

40 . Haupt was a securities dealer who traded both stocks and commodities and was a member of the NYSE; thus，he was required to meet the exchange’s net capital rules (which state that capital must be 1/20 of its total liabilities). SEC Rule 15c3–1 regulates broker-dealer net capital. Under the Aggregate Indebtedness Standard，2% of net capital is required today，compared to 5% in the 1960s. The New York Stock Exchange paid $10 million to cover its customers’ losses. H. J. Maidenberg，“Lost Soybean Oil Puzzles Wall St.，”Wall Street Journal，November 20，1963.

41 . Equivalent to 2.9% of its value.

42 . The Stock Exchange had closed mid-session on August 4，1933，due to a tear-gas prank. Some consider the Kennedy assassination closing to be the first“real”closing of the market.

43 . John M. Lee，“Financial and Commodities Markets Shaken; Federal Reserve Acts to Avert Panic”New York Times，November 23，1963.

44 . H. J. Maidenberg，“Big Board Ends Ban on Williston，Walston and Merrill Lynch Are Instrumental in the Broker’s Reinstatement，Haupt Remains Shut，Effect of Move Is Swept Aside by Assassination of President Kennedy，”November 24，1963. The soybean-oil drama，including the American Express role，peaked during a period of about a week following the assassination.

45 . American Express at the time was the only major U.S. public company to be capitalized as a joint stock company rather than a limited liability corporation. This meant its shareholders could be assessed for deficiencies in capital.“So every trust department in the United States panicked，”recalls Buffett.“I remember the Continental Bank held over 5 percent of the company，and all of a sudden not only do they see that the trust accounts were going to have stock worth zero，but they could get assessed. The stock just poured out，of course，and the market got slightly inefficient for a short period of time.”

46 . The Travelers Cheque was American Express’s main product. The company introduced the card defensively when banks developed credit cards as a countermeasure to the Travelers Cheque.

47 . Warren Buffett letter to Howard L. Clark，American Express Company，June 16，1964. Brandt sent Buffett a foot-high stack of material，according to Jim Robinson，former CEO of American Express，who saw it.“I remember seeing Henry’s stuff on American Express，just reams of it，”said Bill Ruane in an interview.

48 . At the end of it all，De Angelis pleaded guilty to four federal counts of fraud and conspiracy，and was sentenced to ten years in prison.“The Man Who Fooled Everybody”Time，June 4，1965.

49 . Howard Buffett，August 6，1953，last will and testament.

50 . Interviews with Patricia Dunn，Susie Buffett Jr.，Warren Buffett.

51 . In Grand Old Party (New York: Random House，2003)，Lewis L. Gould describes the way being a Republican became identified with racism in the minds of many people who changed parties during the civil-rights era.

52 . Buffett cannot recall whether he initially registered as an independent or a Democrat. His preference would have been to register as an independent，but that would have precluded him from voting in primaries. Either immediately or within a few years，he did register as a Democrat.

53 . Interview with Susie Buffett Jr.

54 . Susan Goodwillie Stedman，recalling personal interview with Susan T. Buffett conducted November 2001，courtesy of Susan Goodwillie Stedman and Elizabeth Wheeler.

55 . Dan Monen as quoted in Roger Lowenstein，Buffett: The Making of an American Capitalist. New York: Doubleday，1996. Monen is now deceased.

56 . Warren’s inability to deal with Howard’s death is the incident most widely cited by family members as indicative of his inner state during this period.

Chapter 27

1 . Warren Buffett letter to Howard L. Clark，American Express Company，June 16，1964.

2 . L.J. Davis，“Buffett Takes Stock，”New York Times，April 1，1990.

3 . “I’m not a hundred percent sure of that. I’ve been told that by other people，so it’s hard to remember. But I’m pretty sure it was Howard Clark.”

4 . In July 1964，Buffett’s letter to partners said，“...our General category now includes three companies where B.P.L. is the largest single stockholder.”Readers could infer from this a fairly concentrated portfolio.

5 . Letter from Warren Buffett to partners，November 1，1965.

6 . Letter from Warren Buffett to partners，October 9，1967.

7 . Letter from Warren Buffett to partners，January 20，1966.

8 . The author studied Buffett’s written work and interview material in reaching this conclusion. Charlie Munger，on the other hand，often uses the terms “dishonor”and“disgrace”(referring to others and not himself).

9 . Interview with John Harding.

10 . In 1962，according to an interview with Joyce Cowin.

11 . Per capita. According to Everett Allen in Children of the Light: The Rise and Fall of New Bedford Whaling and the Death of the Arctic Fleet (Boston: Little，Brown，1983)，yearly ificome from whaling amounted to $12 million by 1854，making New Bedford probably the richest city per capita in the world before the Civil War.

12 . More than thirty ships were lost in the disaster of 1871，most from New Bedford. The devastating cost of 1871 in financial and human terms laid waste to the industry. Whalers began building metal boats that could break through the ice in a futile quest to save what remained of the whaling industry.

13 . Baleen is the “teeth”through which whales sieve plankton. The use of spring steel also reduced baleen demand.

14 . Horatio Hathaway，A New Bedford Merchant. Boston: D.B.Updike，the Merrymount Press，1930.

15 . Partnership agreement，Hathaway Manufacturing Company，1888. Among the other partners was William W. Crapo，a longtime New Bedford associate of Hetty Green’s，who also invested $25, 000. The total initial capital was $400, 000.

16 . With a fortune estimated at $100 million.

17 . Eric Rauchway，Murdering McKinley: The Making of Theodore Roosevelt’s America. New York: Hill and Wang，2003.

18 . The North was no workers’ paradise，but in the South there were virtually no laws against child labor，excessive work hours，or unsafe work conditions. The mills owned the workers’ houses and the stores where they shopped，controlled their water supply，owned their churches，and effectively controlled the state governments and the courts. Machine-gun-bearing state militia prevented strikes. The workers were more like sharecroppers. Nearly ten thousand Northern workers had lost their jobs when the textile industry marched southward to the Carolinas in search of cheaper labor when air-conditioned plants were constructed after World War II.

19 . Seabury Stanton，Berkshire Hathaway Inc.，A Saga of Courage. New York: Newcomen Society of North America，1962. Stanton made this address to the Newcomen Society in Boston on November 29，1961.

20 . Ibid.

21 . In A Saga of Courage，Seabury says he conceived of the Stantons as forming part of an “unbroken thread of ownership”that stretched back to Oliver Chace，who had founded New England’s textile industry and created Berkshire Fine Spinning’s oldest predecessor company in 1806. Chace was a former apprentice of Samuel Slater，who first brought Sir Richard Arkwright’s innovative spinning-frame technology to the United States at the end of the eighteenth century.

22 . Hathaway Manufacturing Corporation Open House tour brochure，September 1953. Courtesy of Mary Stanton Plowden-Wardlaw.

23 . If the goal had been to save jobs，the money to modernize need not have been spent. Roger Lowenstein，in Buffett: The Making of an American Capitalist (New York: Doubleday，1996)，quotes Ken Chace (now deceased) as saying that Seabury hadn’t the slightest idea of return on investment.

24 . Stanton (now deceased) is stated as having these opinions in “Berkshire Hathaway’s Brave New World，”by Jerome Campbell，Modern Textiles，December 1957.

25 . Berkshire Hathaway 1994 chairman’s letter.

26 . Interviews with David S. Gottesman，Marshall Weinberg.

27 . Letter to Warren Buffett on May 4，1990，from James M. Clark Jr. at Tweedy，Browne Co.，noting that “Howard Browne gave various accounts code initials.”

28 . Interview with Ed Anderson.

29 . Interviews with Chris Browne，Ed Anderson.

30 . According to Ed Anderson，this is how Buffett traded. The author is well acquainted with BuffeRing in other contexts.

31 . The commission sounds tiny，but at ten cents a share，Buffett later said，it was by far the highest commission he ever paid on a stock.

32 . Interviews with Mary Stanton Plowden-Wardlaw，Verne McKenzie.

33 . He also felt that Seabury’s strategy of trying to bypass the New York“converters”——who turned the company’s “gray goods”into finished dyed goods and sold them to customers——was a serious misjudgment.

34 . “If you’re in a business that can’t take a long strike，you’re basically playing a game of chicken with your labor unions because they’re going to lose their jobs，too，if you close down....And there’s a lot of game theory involved. To some extent，the weaker you are，the better your bargaining position is——because if you’re extremely weak，even a very short strike will put you out of business; and the people on the other side of the negotiating table understand that. On the other hand，if you have a fair amount of strength，they can push you harder. But it is no fun being in a business where you can’t take a strike.”Berkshire Hathaway’s Warren Buffer and Charlie Munger，“The Incentives in Hedge Funds Are Awesome，But Don’t Expect the Returns to Be Too Swift，”Outstanding Investor Digest，Vol. XVI，No. 4 & 5，Year End 2001 Edition.

35 . Several of the Grahamites swear they saw the room. Buffett swears this story is not true. A former Plaza Hotel employee confirms that the seventeenth floor did have a few exceptionally small rooms，with bad views，and that it was possible to haggle the room prices down，especially later in the evening.

36 . Interview with Ken Chace Jr.

37 . According to Roger Lowenstein’s Buffett，Ken Chace was the source. Warren does not recall any of the details，including talking to Jack Stanton，but he says Ken Chace’s account is most likely correct.

38 . Mary Stanton Plowden-Wardlaw，letter to Warren Buffett，June 3，1991. Stanley Rubin set it up.

39 . Interview with Mary Stanton Plowden-Wardlaw.

40 . The detailed version of this story was related in Roger Lowenstein’s Buffett，with Ken Chace as the source. Buffett recalls sitting on a bench near the Plaza with Chace，eating ice cream.

41 . “The Junior League is an organization of women committed to promoting voluntarism，developing the potential of women and improving the community through the effective action and leadership of trained volunteers. Its purpose is exclusively educational and charitable，”according to its mission statement. (The author is a member.)

42 . He replaced the elderly Abram Berkowitz，who worked for the company’s law firm，Ropes & Gray，and had cooperatively decided to step down.

43 . Stanton said he“hastened [his] retirement due to a disagreement with regard to policy with certain outside interests which have purchased sufficient stock to control the company.”“Seabury Stanton Resigns at Berkshire，”New Bedford Standard-Times，May 10，1965.

44 . Berkshire Hathaway Board of Directors’ minutes，May 10，1965.

45 . “Buffett Means Business，”Daily News Record，May 20，1965.

46 . Adapted in part from the documentary Vintage Buffett: Warren Buffett Shares His Wealth (June 2004) and in part from interviews.

Chapter 28

1 . Interview with Doris Buffett.

2 . Ibid.

3 . November 10，1965.

4 . Report of the National Advisory Commission on Civil Disorders. New York: Bantam Books，1968.

5 .“Riot Duty Troops Gather in Omaha，”New York Times，July 5，1966. The governor said the problem was unemployment，which ran triple that of whites. 30% of blacks were unemployed in Omaha.

6 . Bertrand Russell，Has Man a Future? New York: Simon & Schuster，1962. This powerful，absolutist book argued that unless something“radical”happened，mankind was eventually doomed by weapons of mass destruction，and predicted the development of mass chemical and biological weapons in the not-distant future.

7 . The 1955 Russell-Einstein Manifesto. Russell was president of the Campaign for Nuclear Disarmament in 1958，and was cofounder with Einstein of the Pugwash Conference，a group of scientists concerned about nuclear proliferation.

8 . Interview with Dick Holland.

9 . Buffett and his chief administrative officer John Harding chose a set of representative large-cap stocks，in effect creating a market index. Buffett did not want to execute the trade through a brokerage firm because the broker kept the proceeds from the sale and paid no interest to him. Harding contacted university endowment funds. Buffett went personally to Chicago to get shares. The idea of lending directly to a short-seller was so novel at the time that most universities passed. However，Harding was able to borrow about $4.6 million of stock.

10 . Buffett put $500, 000 into treasury bills in the first quarter of 1966.

11 . Interview with Susie Buffett Jr.，Meg Mueller，Mayrean McDonough.

12 . Interview with Kelsey Flower.

13 . Interview with Susie Buffett Jr.

14 . Interview with Marshall Weinberg.

Chapter 29

1 . “The Raggedy Man，”by James Whitcomb Riley，a children’s poem about a handyman.

2 . Interview with Chuck Peterson.

3 . Buffett tells the story，which Charlie Heider recalls and found unforgettable. Parsow doesn’t recall it.

4 . Both Byer-Rolnick and Oxxford were acquired by Koret in 1967.

5 . Interview with Sol Parsow.

6 . Gottesman worked for Corvine and Company，which，he says，was going out of business. He founded his own firm，First Manhattan Co.，in 1964.

7 . Interview with Sandy Gottesman.

8 . “That’s not negotiating，”claims Munger.“It’s just using pithy examples to steer people to what they should be doing. Sure，it’s persuasion，but it’s legitimate persuasion.”

9 . The Kohns were planning to sell for a quarter less than the tangible net assets of the business. Gottesman had done a private placement of debentures for Hochschild-Kohn with Equitable Life that year and was familiar with its financial statements. His mother-in-law，her brother Martin Kohn，and another sister were equal stockholders who owned a class of preferred stock in the company. The preferred stock was in arrears，not having paid a dividend in some time. In effect，therefore，they could have controlled the business. They had not exercised this privilege，however. The common stock was owned largely by their relative Louis Kohn，from another branch of the family and second in command after Martin Kohn.

10 . DRC Offering documents for 8% debentures，December 18，1967.

11 . He gave them the money anyway，partnered with National City to provide $9 million in shortterm financing for the deal. Diversified Retailing Company，Inc.，Prospectus，December 18，1967. According to Gottesman and Moody’s Bank & Finance Manual，Martin Kohn was on the board of Maryland National Bank.

12 . Charles T. Munger testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HQ-784. Thursday，March 20，1975，page 187.

13 . Buffett mentioned the problem to the partners in his mid–1966 letter but stressed the more important question of buying a company rather than a stock. Another factor was the banks，which had also started issuing credit cards，cutting further into Hochschild-Kohn’s edge.

14 . Interview with Charlie Munger. The company was purchased in April 1967.

15 . Diversified Retailing Company，Inc.，Prospectus，December 18，1967.

16 . Buffett says Rosner told him he got Aye Simon’s consent to sell the business by saying something along the following lines: “And to hell with you. If you’re going to second-guess it，you come down and run the store.”The relationship was irretrievably broken.

Chapter 30

1 . Including Buffett’s stock in Data Documents，a separate investment，the Buffetts’ net worth was somewhere between $9.5 and $10 million.

2 . Buffett’s description，in Patricia E. Bauer’s “The Convictions of a Long-Distance Investor，”Channels，November 1986，was，“One time we had a dog on the roof，and my son called to him and he jumped. It was so awful——the dog that loves you so much that he jumps off the roof...”——leaving the reader to wonder how the dog got on the roof.

3 . Interview with Hallie Smith.

4 . “Haight-Ashbury: The Birth of Hip，”CBC Television，March 24，1968.

5 . In 1967，over 2.5 billion shares traded，topping the previous 1966 record by one third. Thomas Mullaney，“Week in Finance: Washington Bullish”New York Times，December 31，1967.

6 . But insurers looked undervalued and he thought they would get taken over. He bought Home Insurance and Employers Group Associates.

7 . Sun Valley Conference，2001.

8 . At high rates of return，and paying no tax. If a shareholder had taken $0.06 a share——after paying a tax on the $0.10 dividend——and put it in the market earning 5% on average，he would have about $0.42. If Buffett had kept that $0.10，and compounded it at the 21% he earned over the past forty years，a shareholder，who would have been slightly diluted over the years，would be $135 richer. Looking at it on a larger scale，the tiny dividend “cost”Berkshire shareholders over $200 million as of 2007.

9 . Interview with Verne McKenzie.

10 . Letter to partners，July 12，1967.

11 . Interview with Verne McKenzie.

12 . “Requiem for an Industry: Industry Comes Full Circle，”Providence Sunday Journal，March 3，1968.

13 . Letter to partners，January 25，1967.

14 . By September 30，1967，the partnership had $14.2 million in treasuries and short-term debt out of a total $83.7 million invested.

15 . Alice was a friend of Ringwalt’s; the family believed she may have once had some sort of“under-standing”that might have led to marriage until Ernest put a stop to it. Ringwalt had a reputation as a ladies’ man，but Alice also kept house for her father，and “no one was good enough for her，”Buffett says.

16 . Interview with Bill Scott.

17 . Interview with Charlie Heider.

18 . Robert Dorr，“‘Unusual Risk’ Ringwalt Specialty，”Omaha World-Herald，March 12，1967，and Ringwalt’s Tales of National Indemnity and Its Founder (Omaha: National Indemnity Co.，1990) recount stories of lion tamers，circus performers，and hole-in-one contests. Buffett heard of the burlesque stars from Ringwalt.

19 . Berkshire paid Heider a $140, 000 fee for the transaction.

20 . Interview with Bill Scott.

21 . With the company closely held，it took only a week to round up the necessary 80% shareholder approvals.

22 . In his book，Ringwalt says he was only driving around looking for a metered place on the street because he refused to pay a parking garage.

23 . This was a reason why National Indemnity would not need reinsurance，or protection from other insurers，which was both expensive and would make it a dependent.

24 . Ringwalt also was included in the shareholder register of Diversified Retailing in 1976 (he actually sold 3, 032 shares back to the company in its tender offer).

Chapter 31

1 . As quoted in an interview with Jose Yglesias as Dr. King prepared for the Poor People’s Campaign. Jose Yglesias，“Dr. King’s March on Washington，Part II，”New York Times，March 31，1968.

2 . Wead，who declined to be interviewed，was the director of Wesley House，a community improvement organization of the Methodist Church.

3 . Interview with Racquel Newman and her son，Tom Newman. A number of other people recalled Susie and Rackie’s activities.

4 . Interview with Chuck Peterson.

5 . Buffett had met Rosenfield through a connection to Hochschild-Kohn.

6 . Grinnell’s founder，Congregational minister Josiah Grinnell，pastor of the First Congregational church in Washington，D.C.，bolted from its doors in 1852 when his Southern congregation took exception to his abolitionist views. It was Grinnell who sought advice from the famous New York Herald editor Horace Greeley and who heard the words that every schoolchild in America would subsequently learn without knowing their source: “Go West，young man，go West!”The phrase was originally written by John Soule in the Terre Haute Express in 1851.

7 . Interview with Waldo “Wally”Walker，Dean of Administration at the time.

8 . The luckless George Champion，chairman of the board of Chase Manhattan Bank，followed King on the program，speaking on “Our Obsolete Welfare State.”

9 . This common paraphrase of Lowell was more eloquent than Lowell’s actual words: “Though her portion be the scaffold，And upon the throne be wrong.”James Russell Lowell (1819~1891)，“The Present Crisis”1844.

10 . Interview with Hallie Smith.

11 . From King’s 1963 speech at Western Michigan University. King may have said something like this at the October 1967 Grinnell Convocation，but no transcript exists.

12 . King first said this in Cleveland in 1963 and used variations of it in most major speeches thereafter. He called the idea that you can’t legislate morality a “half-truth.”“It may be true that the law cannot make a man love me，”he said，“but it can keep him from lynching me，and I think that is pretty important.”

13 . Despite flirting briefly with the magic 1, 000，it had ended down more than 15%.

14 . Letter to partners，January 25，1967.

15 . Letter to partners，January 24，1968.

16 . Galbraith in an interview by Israel Shenker，“Galbraith: ’29 Repeats Itself Today，”published in the New York Times on May 3，1970.“The explosion in the mutual funds is the counterpart of the old investment trusts. The public has shown extraordinary willingness to believe there are financial geniuses in the hundreds. Financial genius is a rising stock market. Financial chicanery is a falling stock market.”Galbraith reiterates this in “The Commitment to Innocent Fraud”Challenge，Sept.~Oct. 1999: “In the world of finance，genius is a rising market.”

17 . Grinnell forgave Noyce after intervention from his physics professor Grant Gale and，according to Buffett，from Rosenfield.

18 . Wallace sought signatures in order to be placed on the Nebraska ballot as a candidate for the American Party.

19 . Wallace hired an ex-Klansman as a speechwriter and made a number of inflammatory statements at different times，such as “I reject President Kennedy’s statement [that] the people of Birmingham have inflicted abuses on the Negroes...the President wants us to surrender this state to Martin Luther King and his group of Communists.”Yet his famous stand，blocking the University of Alabama’s Foster Auditorium to prevent the enrollment of two black students until forced by federal marshals and the National Guard to step aside，was a compromise apparently engineered with the White House to appease white supremacists and avoid violence while allowing the blacks to enroll. Wallace later apologized to the black community for his role.

20 . Associated Press，“Disorder，Shooting Trail Wallace Visit，”Hartford Courant，March 6，1968; Homer Bigart，“Omaha Negro Leader Asks U.S. Inquiry，”New York Times，March 7，1968.

21 . “Race Violence Flares in Omaha After Negro Teen-Ager Is Slain，”New York Times，March 6，1968; Bigart，“Omaha Negro Leader Asks U.S. Inquiry.”

22 . Associated Press，“Disorder，Shooting Trail Wallace Visit.”

23 . UPI，“1 Wounded，16 Held in Omaha Strike，”July 8，1968.

24 . He recovered after a lengthy hospital stay. Part of this account is from The Gate City: A History of Omaha (Lincoln: The University of Nebraska Press，1997).

25 . In a December 1981 Playboy interview，Henry Fonda，an Omaha native，recounts witnessing the same event: “It was an experience I will never forget...My dad’s office looked down on the courthouse square and we went up and watched from the window...It was so horrifying. When it was all over，we went home. My dad never talked about it，never lectured. He just knew the impression it would have on me.”

26 . April 4，1968.

27 . Interview with Racquel Newman.

28 . The club was renamed Ironwood in 1999.

29 . By coincidence，at the time，Chuck Peterson had also been put up for the Highland. Peterson was eating there a lot with fellow flying enthusiast Bob Levine and thought he ought to join instead of freeloading.

30 . Stan Lipsey，another friend of Buffett’s，weighed in on behalf of Chuck Peterson.“I got so highprofile because of that，”says Lipsey，“that they made me serve on the board next year. No good deed goes unpunished. A golf buddy named Buck Friedman was the chairman. He was very serious，and I’d be trying to crack them up. He didn’t like that I’d call him Buckets.”

Chapter 32

1 . Warren Buffett letter to Ben Graham，January 16，1968.

2 . Ibid.

3 . Armon Flenn，“Run for Your Money，”New York Times，June 3，1968; “Mutual Interest”Time，January 19，1968; Robert D. Hershey Jr.，“Mutual Funds Reaching Further for Investment;”New York Times，September 29，1968.

4 . In 1929，only about 3% of the population owned stock. In 1968，about 12.5% of the population owned stock or equity mutual funds.

5 . Letter to partners，July 11，1968.

6 . The SEC prepared a study stating that the new system，NASDAQ，was “on the horizon”in 1963. NASDAQ went live on February 8，1971，and traded as much volume as the American Stock Exchange in its first year. Eric J. Weiner，What Goes Up: The Uncensored History of Modern Wall Street，New York: Little，Brown，2005.

7 . Warren Buffett letter to the Graham Group，January 16，1968.

8 . Warren Buffett letter to the Graham Group，September 21，1971.

9 . DRC earnings were down overall $400, 000，or 17%，in 1968. Associated Cotton Shops earned about 20% on the money employed in the business——an outstanding performance in any year but especially in difficult 1968.

10 . Letter to partners，January 24，1968.

11 . Buffett lost money in stocks at times and was quick to cut his losses. The margin of safety didn’t prevent losses but shifted the odds away from large losses.

12 . The Youth International Party (Yippees)，a prankster group of anarchist activists，nominated Pigasus the Pig as their party candidate. Leader Jerry Rubin said，“Why vote for half-pigs like Nixon，Wallace，and Humphrey，when you can have the whole hog?”at a speech to the University of British Columbia Faculty Club (October 24，1968).

13 . Interview with Verne McKenzie，who says that Chace was upset but did not show it. He did what he had to do.

14 . The impact of credit cards and a radical change in consumer thinking about consumption is hard to overstate. Savings and layaway——once commonplace in purchasing even items such as clothing——were replaced by debt. Although economists debate measures of household wealth over time，the result has been a world of renters who tithe to financial institutions. The “earthquake risk”is a catastrophic mass deleveraging. (See 2008 credit crisis.)

15 . Retailers paid，on average，2 for every dollar of sales for the stamps they gave out and tacked this onto the price of their goods.

16 . They priced Blue Chip cheaper，at 1.5.

17 . Blue Chip had 71% of the trading-stamp business in California at the time.“Safe on Its Own Turf，”Forbes，July 15，1968.

18 . Sperry & Hutchinson sued Blue Chip when the Alpha Beta and Arden-Mayfair food chains dropped S&H stamps in favor of Blue Chip stamps. Blue Chip paid $6 million to settle this case.

19 . Each “package”priced at $101，consisted of $100 face amount of 6.5% ten-year debt plus three shares of $0.333 par common stock. A total of 621, 600 Blue Chip shares were included in the offering. Nine retailers who were big Blue Chip customers split another 45%，which went into trusts for ten years. The remaining 10% went to company management (as reported in the Wall Street Journal，September 23，1968).

20 . A couple of gas-station chains were still suing，as were a group of small trading-stamp companies in Northern California. Blue Chip Stamps annual report to shareholders，1969.

21 . One of the Graham Group members recalls this.

22 . Letter to partners，January 24，1968.

23 . Leslie Berlin，The Man Behind the Microchip. New York: Oxford University Press，2005.

24 . Buffett shorted 10，000 shares of Control Data in the third quarter of 1965 in the low $30s——at this point he had over $7 million of his portfolio in shorts. He eventually bought some Control Data for the partnership in 1968，as a “workout，” meaning an arbitrage.

25 . Interview with Katie Buffett，who said Fred wanted to put in $300 and she “snitched a little”to add another hundred. She thought she would have been better off putting more money in the partnership.

26 . In the form of a convertible debenture.

27 . Leslie Berlin，The Man Behind the Microchip.

28 . Buffett told his partners about the “particularly outstanding performances”of Associated Cotton Shops and National Indemnity Company. But the controlled companies had only a “decent”performance overall; Berkshire and Hochschild-Kohn were dragging down the results.

Chapter 33

1 . A former Kelly girl temporary office worker，Kaiser came to work in January 1967 and stayed until her retirement in 1993.

2 . Interview with Donna Walters. Buffett shared Walters with Sol Parsow，the men’s haberdasher in the building’s lobby.

3 . Blue Chip stamps were the closest equivalent.

4 . Beginning with “Love Only Thing That Stops Guard，” Omaha World-Herald，April 20，1952，continuing to a cute feature picture of Susie and the kids packing a picnic Thermos，and a story about him buying Sam Reynolds’s house.

5 . Loomis’s recollections are from her memoir in Fortune，“My 51 Years (and Counting) at Fortune，”Fortune，September 19，2005.

6 . Loomis wrote an admiring profile of hedge-fund manager A. W. Jones，“The Jones Nobody Keeps Up With，”Fortune，April 1966，around the time or shortly before she met Buffett. In this article she mentions Buffett in passing. She did not begin to profile him in her writing until “Hard Times Come to the Hedge Funds，” Fortune，January 1970.

7 . Buffett says that he never actually overslept his paper route. This seems to be his version of the common “test-anxiety dream.”

8 . Interview with Geoffrey Cowan.

9 . Interview with Tom Murphy.

10 . Warren Buffett letter to Jay Rockefeller，October 3，1969. Buffett added，“It tends to be a very poor business unless you have a life-size fold-out of a girl in the middle. I have frequently told my partners that I would rather lose money logically than make money for the wrong reasons. Hopefully，I will come up with some similar aphorism to rationalize this deal.”

11 . Buffett put in $32, 000 to start.

12 . Interview with Charles Peters，with additional condensed comments adapted from Peters’s memoir，Tilting at Windmills. New York: Addison-Wesley，1988.

13 . Buffett put in another $50, 000.

14 . After being told that he couldn’t donate his investment in the Washington Monthly to charity，“I finally let them give the stock to one of the people who worked there，just to get rid of it，”says Stanback.“It was worthless.”

15 . Letter to partners，May 29，1969.

16 . Ibid.

17 . Ibid.

18 . The Buffetts hired teachers as babysitters，but Howie co-opted the teachers’ husbands into becoming his confederates，doubling the degree of lawlessness.

19 . Al Pagel，“Susie Sings for More Than Her Supper，”Omaha World-Herald，April 17，1977.

20 . Interview with Milton Brown.

21 . Berkshire Hathaway annual meeting，2004.

22 . Letter to partners，October 9，1969.

23 . John Brooks，The Go-Go Years. New York: Ballantine Books，1973.

24 . The stock had “split”so that each share became five，then promptly rose to $25 per share.

25 . Blue Chip had called a shareholders’ meeting to vote on a secondary offering in which shareholders could offer blocks of existing stock to the public.

26 . Interview with Wyndham Robertson，who says she could barely understand the code when she first joined the Graham Group two years later in Carmel.

27 . Letter to Graham Group，September 21，1971.

28 . Interviews with Marshall Weinberg，Tom Knapp，Fred Stanback，Ruth Scott.

29 . Interview with Ed Anderson.

30 . Letter from Warren Buffett to Graham Group，September 21，1971.

31 . Interview with Fred Stanback.

32 . Interview with Sandy Gottesman，who notes that they basically broke even on the deal; he says that a bit of mythology has arisen around the Hochschild-Kohn deal.“It goes down in history as an enormous mistake，”he says.“And I don’t think it was as big a mistake as represented... it’s grown way out of proportion.”

33 . Supermarkets General bought Hochschild-Kohn in 1969 for $5.05 million cash plus $6.54 million in non-interest-bearing notes with a present value of about $6 million. Effectively，DRC received about $11 million.

34 . From the 1969 Diversified Retailing annual report. But if Buffett had been hit by the proverbial bus，under the terms of the debenture，the obligation for mandatory redemption would have ceased. So he was taking the element of random chance out of it.

35 . Wilder was not the only doubter.“Danny [Cowin] thought I was crazy to do it，”says Buffett.

36 . Cited in the 1989 letter to shareholders.

37 . “How Omaha Beats Wall Street，”Forbes，November 1，1969.

38 . The article stated that Buffett had lived in the house since his marriage in 1952，an error later repeated by other writers. The Farnam house was far from the “starter home”that is implied. Articles often refer to the house as “modest”or some similar term and rarely mention its extensive remodeling. Buffett bought the house in 1958.

39 . Evelyn Simpson，“Looking Back: Swivel Neck Needed for Focus Change Today，”Omaha World-Herald，October 5，1969.

Chapter 34

1 . Carol Loomis，“Hard Times Come to the Hedge Funds，”Fortune，January 1970，the first of a series of Loomis articles that showcase Buffett’s opinions.

2 . Book value. Tangible book value was $43. Warren Buffett letter to partners，October 9，1969.

3 . Ibid.

4 . The more inquisitive partners may have discovered that Berkshire Hathaway owned Sun Newspapers by reading its 1968 annual report.

5 . Letter to partners，October 9，1969. Buffett explained that he expected stocks to yield about 6.5% after tax for the next ten years，roughly the same as a“purely passive investment in tax-free bonds.”Even the best managers，he said，were unlikely to do better than 9.5% after tax. Compare this to the 17% return he had projected to partners in the early years of the partnership and the 30% average he had actually achieved.

6 . Letter to partners，December 5，1969.

7 . According to Buffett，a couple of them never were able to find anyone they trusted to manage their money，and one ended up working as a fortune-teller in San Diego.

8 . Letter to partners，December 26，1969.

9 . This statement is intriguing since Buffett had just named Dow Jones as the stock he would like to own on a desert island. However，the Sun was not a good investment.

10 . Emphasis added by author. By then，a small cult of Buffett-stalkers monitored his holdings，and curiosity about Buffett’s intentions was rife among many partners. The importance of a clear statement of his intentions——after more than a decade of obsessive secrecy——should have been unmistakable (at least with hindsight).

11 . Buffett indulged in a bit of score-settling with the underwriters in his letter to partners of December 26，1969，saying that the deal was pitched “with a heavy weight”placed on a comparison to Sperry & Hutchinson，the nearest competitor，but shortly “before the stock was to be offered，with the Dow Jones Industrials much lower but S&H virtually unchanged，they indicated a price far below their former range.”(Blue Chip at the time had declined significantly.) “We reluctantly agreed and felt we had a deal but，on the next business day，they stated that our agreed price was not feasible.”

12 . It was a little unclear what the filling stations’ actual beef was. They had given out Blue Chip stamps and made money doing it. If there were five stamp companies in California，they might have given out stamps that cost more，and it isn’t clear that they would have made more money——they might have made less.

13 . This takes into account the approximately 90, 000 shares of Blue Chip Stamps that were still tied up in BPL because of the delay in the sale.

14 . DRC’s 1971 annual report discloses $841, 042 of notes issued“in exchange for common stock of an affiliated company”due on varying dates，or within twelve months of the death of Warren E. Buffett. DRC continued to issue these notes until 1978，for a total of $1.527 million. During the first year the notes were also payable at the payee’s demand. Apparently the notes were reissued with this term eliminated in 1972 (according to the 1972 DRC financial statements).

15 . 1970 Annual Statement for Reinsurance Corporation of Nebraska，Berkshire Hathaway，Diversified，and Blue Chip，Forms 10-K and annual reports to shareholders.

16 . Interview with Verne McKenzie.

17 . Interview with Rhoda and Bernie Sarnat.

18 . Interview with Charlie Munger.

19 . Through chunks of stock large enough to almost certainly block an unfriendly takeover.

20 . Blue Chip sales peaked in 1970 at $132 million.

21 . A&P’s discounting program，Where Economy Originates，prompted other supermarket chains to adopt discounting in 1972.“The Green Stamp Sings the Blues，”Forbes，September 1，1973.

22 . From the files of Berkshire Hathaway.

23 . Interview with Bill Ramsey. The sale occurred because Laurence A. See，son of Mary See and a founder of the firm，had died，and Charles See，his brother and executor of his estate，mentioned to an attorney acquaintance while on vacation in Hawaii that he might want to sell. The attorney told Bob Flaherty，who worked for Scudder，Stevens，and Clark，and Flaherty talked to Ramsey，who was also a client of the firm.

24 . From Margaret Moos Pick，See’s Famous Old Time Candies，A Sweet Story. San Francisco: Chronicle Books，2005.

25 . Interview with Ed Anderson.

26 . Buffett and Munger paid 11.4x trailing twelve months earnings for See’s (i.e.，a price equal to over eleven years’ worth of the company’s earnings——at the past twelve months’ earnings rate). This was a remarkably high price/earnings ratio for Buffett，who rarely paid more than ten times earnings. Paying more than book value was also unprecedented. Susie told at least one friend that he “bought it for her，”because of her chocolate obsession，which sounds like something he might have said as an endearment.

27 . Since 1960.

28 . Letter from John W. Watling to Harry W. Moore，December 3，1971. Buffett was particularly involved in tax aspects of the deal. He wrote a detailed memorandum outlining a proposed structure for the company’s trademarks in order to obtain a tax basis equal to the effective purchase price without incurring the tax costs that a sale would entail under tax law at the time，such as depreciation recapture and investment tax-credit recapture. Price Waterhouse，the accountants for See’s，apparently were pleased that Buffett had done their job and wrote a memo concurring with his proposal and explaining how it would be executed (letter from Price Waterhouse & Co. to William F. Ramsey，January 18，1972).

29 . This account is an amalgamation of interviews with Munger and remarks at the Berkshire Hathaway 2003 annual meeting. Warren Buffett and Charlie Munger，“What Makes the Investment Game Great Is You Don’t Have to Be Right on Everything，” Outstanding Investor Digest，Vol. XVIII，Nos. 3 and 4，Year End 2003 Edition.

30 . Interviews with Ed Anderson and Chris Browne. Buffett’s reasoning in situations like this and Berkshire was that he needed the stock to get control. However，his allies could have kept their stock and voted with him. Indeed，in his younger days when he had less capital，Buffett had arranged such voting blocks.

31 . Warren Buffett letter to Chuck Huggins，December 28，1971.

32 . During the early 1970s，the price of sugar increased sixfold. Although most news stories focused on the price of meat，sugar and cocoa were the commodities that experienced the most wrenching price increases.

33 . At the time a cult product that people carried home on airplanes after encounters on vacation in Colorado.

34 . Narrative is based on correspondence among Warren Buffett，Stanley Krum，and Chuck Huggins，1972. In a letter dated later in 1972，Buffett the teetotaler also says，“Maybe grapes from one little eighty-acre vineyard in France are really the best in the whole world，but I have always had a suspicion that about 99% of it is in the telling and about 1% is in the drinking.”

35 . This is the lament of a number of the managers.

36 . Warren Buffett letter to Chuck Huggins，September 25，1972.

37 . Interviews with Tom Newman，Raquel Newman.

38 . Buffett also would have gone on the board of his favorite company，GEICO，had the SEC not concluded that it would be a conflict because Berkshire Hathaway already owned an insurance company，National Indemnity.

39 . Interview with Peter Buffett.

40 . Each of the advisory-board members invested about $7, 000. Control of the bank was retained within the African-American community. Some blacks did not want white investors.“They just thought we were trying to put something over on them，I guess，” Buffett says.

41 . Interview with John Harding.

42 . Interview with Larry Myers. According to Myers，Buffett continued this level of involvement for seventeen years. An advisory board is different from a regular board position and normally requires less time commitment.

43 . Roger Lowenstein，Buffett: The Making of an American Capitalist. NewYork: Doubleday，1996.

44 . Interview with Hallie Smith.

45 . Interview with Rhoda and Bernie Sarnat. Buffett recalls the story as well.

46 . At an anniversary party for the Thompsons a few weeks earlier，the Buffetts’ cook served what came to be known throughout Omaha as the “poisoned chicken.”Except for a rabbi and his wife，who ate tuna，everyone present came down with salmonella. By then，Buffett was so wellknown that the episode made the Omaha World-Herald. Interview with Rabbi Meyer Kripke.

47 . Interview with Ron Parks.

48 . As Buffett tells this story he lost the game，but according to Roxanne and Jon Brandt，he was determined not to lose to a six-year-old——and won.

49 . According to a friend，Susie began to verbalize this attitude around the late 1960s. She later said these words，as quoted，to Charlie Rose in an interview.

50 . Interview with Milton Brown. Several sources confirm that Susie was frequently in contact with Brown during this period.

51 . Interviews with Racquel Newman，Tom Newman.

52 . His mortgage was $109, 000 in 1973.

Chapter 35

1 . “Warming Up for the Big Time: Can John Tunney Make It as a Heavyweight?”Charles T.Powers，West magazine (Los Angeles Times)，December 12，1971.

2 . A letter from Senator Ed Muskie to Buffett，September 23，1971，said that Muskie was “especially intrigued by this concept，”which Hughes and Rosenfield had passed along to him. Later，the same notion，with the more memorable and attention-grabbing name “misery index，”played a role in President Jimmy Carter’s failure to win a second term.

3 . James Doyle，“A Secret Meeting: Hughes Rejects Presidential Bid，”Washington Evening Star，July 15，1971.

4 . John H. Averill，“Hughes Drops Out as Democratic Contender，”Los Angeles Times，July 16，1971.

5 . Without naming the interviewer，this incident is cited by James Risser in “‘Personal’ Religion of Senator Hughes，”Des Moines Sunday Register，July 11，1971. Hughes appeared on Meet the Press on April 4，1971.

6 . James Risser and George Anthan，“‘Personal’ Religion of Senator Hughes.”Hughes said he “believes in the ability of certain people to foretell the future.”

7 . The way Hughes told this story (with Dick Schneider) in his autobiography，The Man from Ida Grove (Lincoln，Va.: Chosen Books，1979)，differed slightly from the press account. Hughes freely discusses his reputation as a “mystic”and mentions Rosenfield’s backing. He does not mention Buffett but recalls the meeting as taking place in a California motel room instead of Washington，as reported. On the plane on the way home，he saw“a vision of a red button”that would launch “an awesome nuclear attack”and says he realized that，as President，he could not press the button. After asking God’s guidance，he decided not to run for President.

8 . John H. Averill，“Hughes Drops Out as Democratic Contender.”Most likely，the media would have unearthed the story at some point anyway，and Hughes was saved from greater embarrassment later. Hughes’s advisers subsequently denied in the Los Angeles Times that disclosing his beliefs in spiritualism and his communication with his dead brother through a medium had influenced his decision not to run.

9 . Interview with Tom Murphy.

10 . This version of the story is an amalgamation of Murphy’s and Buffett’s versions. The stories are identical except for trivial differences in their recollection of the dialogue.

11 . The announcement of the sale of the Fort Worth Star-Telegram and the area’s AM and FM radio stations to Cap Cities for $80 million was on January 6，1973. However，the closing of the deal was delayed until November 1974.

12 . “I Should have done it，” Buffett says.“That was really dumb. We would have made a lot of money with that.”

13 . According to Boys Town (now renamed Girls and Boys Town)，the home opened on December 12，1917，with about six boys and grew to twenty-five within three weeks. The approximate date and number (“between twenty and thirty”) are cited in Omaha’s Own Magazine and Trade Review，December 1928.

14 . Howard Buffett “helped us greatly in securing our own post office for which we were deeply grateful，because he came to us to assist us when we were badly in need of a friend.”Patrick J. Norton letter to Warren Buffett，April 24，1972. The post office was established in 1934 and the village became incorporated in 1936，according to the Irish Independent，August 25，1971. The post office was a key element in the charm of Boys Town’s fund-raising appeals.

15 . The average contribution at the time of the Sun’s story was $1.62. Transcript，Mick Rood interview with Msgr. Nicholas Wegner.

16 . Ibid. Robert Dorr，“Hard-Core Delinquent Rarity at Boys Town，”Omaha World-Herald，April 16，1972.

17 . Paul Williams，Investigative Reporting and Editing，Englewood Cliffs，N.J.: Prentice-Hall，1978. Williams was the editor during the Boys Town investigation.

18 . Michael Casey，new director of special projects brought in after the Sun story，described the atmosphere as a “minimum-security prison，”based on his experience working in prisons and mental hospitals，in “Midlands News”of the Omaha World-Herald，March 10，1974. According to Casey’s account，he was forced to resign from Boys Town six months later and stated that reforms were window dressing. Father Hupp says Casey left because his job was done——but Casey was an outspoken ex-convict，which may have made him “too hot.”

19 . Paul N. Williams，“Boys Town，An Exposé Without Bad Guys，”Columbia Journalism Review，January/February 1975.

20 . The Sun had a “four-way”staff that reported stories that would appear in seven editions of the paper. These were the reporters working on the Boys Town story.

21 . According to Paul Williams，in Investigative Reporting and Editing，Boys Town got school-aid funds and state welfare and gasoline tax funds. While these were “relatively small change”in the context of the overall budget，about $200, 000 a year，the discrepancy was real and pointed to other possible problems.

22 . Transcript，Mick Rood interview with Msgr. Nicholas Wegner. Wegner speaks of“this gal down there in the Lincoln welfare department [who] tried to make a big thing，a big blow out of this...”which，he thought，was personal rather than institutional. Nevertheless，he implied that Boys Town might move out of state if the regulators pestered it too much because “our bylaws say WE’RE NOT OBLIGED TO STAY HERE.”

23 . Paul Williams，Investigative Reporting and Editing.

24 . Interview with Mick Rood. According to several sources，the “Deep Throat”of Boys Town，a role that required courage in insular Omaha，was Dr. Claude Organ.

25 . Jeannie Lipsey Rosenblum described his appearance at that time in an interview.

26 . As a religiously affiliated organization，Boys Town was entitled to an exemption for the first two years and could have filed with the archdiocese of Omaha. But it had filed separately anyway.

27 . According to Paul Williams，the footwork in Philadelphia was done by Melinda Upp，a Washington reporter whom he previously had tried to hire. Finally，the call came: Are you sure you want this? she asked. The IRS charged a dollar a page and it was 94 pages long. The answer was，Hell，yes.

28 . Interview with Randy Brown.

29 . In his follow-up columns in the Sun.

30 . The $25 million is combined fund-raising and investment income.

31 . Interviews with Mick Rood，Warren Buffett.

32 . The Sun published on Thursdays and worked around its own production schedule while trying to cut off the opportunity for a preemptive response through the Omaha World-Herald.

33 . Paul Williams，Investigative Reporting and Editing，and Craig Tomkinson，“The Weekly Editor: Boys Town Finances Revealed”Editor & Publisher，April 15，1972.

34 . Transcript，Mick Rood interview with Msgr. Nicholas Wegner.

35 . The reporters interviewed thirteen of the seventeen board members. Two were too old or ill to be interviewed.

36 . Monsignor Schmitt，speaking at a press conference on May 22，1972. Press conference transcript.

37 . Interview with Randy Brown.

38 . Paul N. Williams，“Boys Town，An Exposé Without Bad Guys.”

39 . Michael D. LaMontia，director of the State Department of Public Institutions，which oversaw Boys Town，called the Sun’s criticisms those of a “vocal minority”that should be ignored in a letter to Wegner，May 25，1972. The Sun，he said，speaks“from a very low profile and is really not heard by many people. The person being attacked can let it die a natural death....”He referred to the reporters as “scavengers”and “professional losers.”Possibly Mr. LaMontia was merely being empathetic，but his tone seemed a little more charged-up than that.

40 . Paul N. Williams，“Boys Town，An Exposé Without Bad Guys.”

41 . “Boys Town Bonanza，”Time，April 10，1972; “Boys Town’s Worth Put at $209 Million，”Los Angeles Times，March 31，1972; “Money Machine，”Newsweek，April 10，1972; Tomkinson，“The Weekly Editor.”

42 . “Other Boys Homes Affected by Boys Town Story，”Omaha Sun，December 14，1972.

43 . Undated two-page letter from Francis P. Schmitt to Boys Town supporters printed on Boys Town stationery; “Boys Town May Take Legal Steps to Initiate New Programs，Policies，”Omaha Sun，December 14，1972; correspondence between Paul Williams and the“Irreverent Reverend”Lester Kinsolving of the National Newspaper Syndicate Inc. of America，a muckraking religious columnist widely syndicated through the San Francisco Chronicle. Schmitt was angry because，among other things，Boys Town’s marketing domicile had backfired: Kinsolving wrote a followup story in the Washington Evening Star，“Boys Town Money Machine”(November 4，1972)，and datelined it Boys Town，Nebraska. Schmitt (incorrectly) felt that he had no right to do so.

44 . Paul Critchlow，“Boys Town Money Isn’t Buying Happiness，”Philadelphia Inquirer，July 20，1973.

45 . The Reverend Monsignor Wegner，letter to a man who said he was an employee of the San Francisco Examiner and worked in the composing room，June 1，1973. The man wrote Lester Kinsolving at the San Francisco Chronicle and asked that his name not be used in a story，probably because he was offering it to a competing paper. Kinsolving apparently forwarded this material to Buffett.

46 . Used with permission of the Omaha Press Club Foundation.

47 . Warren Buffett letter to Edward Morrow，April 21，1972.

48 . Memo from Paul Williams to Buffett，October 13，1972，including Buffett’s comments.

49 . Mick Rood note to personal files，January 19，1973. Transcript，Mick Rood interview with Msgr. Nicholas Wegner.

50 . The award was to “The Sun Newspapers of Omaha，of The Sun Newspapers of Omaha: For uncovering the large financial resources of Boys Town，Nebraska，leading to reforms in this charitable organization’s solicitation and use of funds contributed by the public.”It was the first time a weekly paper won for Local Investigative Specialized Reporting (although according to Pulitzer Center staff，weeklies had won before in categories other than investigative reporting).

51 . However，Monsignor Wegner was described as “frail”and had had several recent surgeries. See Paul Critchlow，“Boys Town Money Isn’t Buying Happiness.”

52 . Among the consultants’ findings was that the Boys Town staff morale was now low，with many long-tenured employees having worked for years on church-mouse wages on the impression that Boys Town was barely getting by. In 1973，Boys Town actually raised more money than in 1972 (over $6 million)，according to the Omaha World-Herald (March 21，1973). The main result of the exposé and reforms was increased transparency and accountability over how the money was spent.

53 . George Jerome Goodman (writing as “Adam Smith”)，Supermoney. New York: Random House，1972. Goodman (known as Jerry) chose his pen name after Adam Smith，the father of market economics.

54 . John Brooks，“A Wealth of Notions，”Washington Post，October 22，1972.

Chapter 36

1 . Interview with Stan Lipsey. Scripps Howard owned 60% of the paper but had been ordered by the Department of Justice in 1968 to divest it on antitrust grounds because it also owned the Cincinnati Post &. Times-Star，a competing paper. Blue Chip bought 10% of the Enquirer’s stock and tried to get the rest for $29.2 million in February 1971.

2 . Scripps would have been interested in selling because it was looking at buying Journal Publishing and Albuquerque Publishing and could not own all three.

3 . Graham thought that the only alternative to going public was to sell one of the company’s TV stations，which she did not want to do. To protect the business from an unfriendly bidder，Beebe and family lawyer George Gillespie structured the stock sale in two tiers，with class A shares in the family’s hands and class B stock，which carried diluted voting privileges，sold to the public. Katharine Graham，Personal History. New York: Alfred A. Knopf，1997.

4 . Graham told this story to Buffett.

5 . Katharine Graham，Personal History.

6 . Katharine Graham letter to Charlie Munger，December 23，1974.

7 . Katharine Graham，Personal History.

8 . Katharine Graham interview with Charlie Rose，February 5，1997.

9 . Some of the nonvoting B shares went to Kay’s brother，Bill，in exchange for an investment in the company. Kay’s sisters were not investors in the Post. At the time，the unprofitable newspaper was less a financial asset than a public responsibility and a source of prestige.

10 . Buffett’s former golf coach Bob Dwyer was the office boy who performed this task，in between running copy for the Post’s editorial department.

11 . Katharine Graham，Personal History.

12 . These anecdotes are from Personal History.

13 . C. David Heymann’s The Georgetown Ladies’ Social Club (New York: Atria Books，2003)a well-researched account of the most influential Washington hostesses and the private power they wielded——gave examples，such as a black eye，that indicated that on at least some occasions Phil Graham physically abused her.

14 . Stories of the women with whom Phil Graham was involved and the allegation that he swapped girlfriends with Kennedy，including the actress-model Noel-Noel，are contained in The Georgetown Ladies’ Social Club.

15 . In her memoir，Graham attributed this partly to the subservience of women in her time and partly to her emotionally abusive upbringing. She seems to have had at least a partial grasp of her own role in enabling Phil’s behavior.

16 . Katharine Graham interview with Charlie Rose，February 5，1997.

17 . Ibid.

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 House-inspired 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 André 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 seltingfor 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. 61~63.

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. 188~194.

45 . Byyear-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

1 . From peak to trough in the Depression (September 3，1929，to July 8，1932)，the Dow fell 89%. From peak to trough in the early 1970s (January 11，1974，to December 6，1974)，the Dow fell 45%——the two worst bear markets of the century.

2 . Robert Redford interview，cited by Graham in Personal History. New York: Alfred A. Knopf，1997.

3 . Katharine Graham，Personal History.

4 . The television stations owned by both would have created a conflict.

5 . Katharine Graham，PersonalHistory.

6 . Al Pagel，“What Makes Susie Sing?” Omaha WorM-Herald，April 17，1977.

7 . Interview with Gladys Kaiser.

8 . From a letter that Graham wrote Buffett，reprinted in Personal History. Don Graham recalls his mother telling him that Susie cooked eggs for her，and Susie and Warren watched Kay eat them and did not eat any themselves.

9 . Measured from its peak.

10 . Interview with Chafiie Munger.

11 . “Fighting the Tape;” Forbes，April 1，1973.

12 . The seat would have sold for a quarter of what Ruane，Cunniff had paid for it.

13 . The record was 1970: Sequoia 12.11% vs. S&P 20.6%; 1971: Sequoia 13.64% vs. S&P 14.29%; 1972: Sequoia 3.61% vs. S&P 18.98%; 1973: Sequoia (24.8%) vs. S&P (14.72%).

14 . Marshall Weinberg as well as Buffett confirmed this in interviews. Malott says he does not recall it.

15 . Loomis joined Sandy Gottesman at First Manhattan; Brandt went to work at Abraham & Co.

16 . “Look at All Those Beautiful，Scantily Clad Girls Out There!” Forbes，November 1，1974.

17 . “Forbes didn’t use what I considered to be the most significant line，” said Buffett in a letter to Pat Ellebracht on October 24，1974，repeating this quote.

18 . Interview with Rod Rathbun; Omni arbitration files of the National Indemnity Company.

19 . Compounded over thirty years at 20%，this was perhaps a $2.4 billion investment return forgone. Buffett and Munger have referred to it as the greatest missed opportunity in the history of Berkshire Hathaway. The details are arcane but the essence of the story is as portrayed here.

20 . “Why the SEC’s Enforcer Is in Over His Head，” BusinessWeek，October 11，1976.

21 . Interview with Verne McKenzie.

22 . Letter from Charlie Munger to Chuck Rickershauser “re: Diversified Retailing——Berkshire Hathaway Proposed Merger，” October 22，1974.

23 . Interview with Betty Casper Peters.

24 . Interview with Verne McKenzie.

25 . Robin Rickershauser，who has often heard this clever trope from her husband，did not realize he originated it until contacted by the author.

26 . If true，investors would have been selling without required information about the buyer and his reasons.

27 . Charles T. Munger testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HO-784，Thursday，March 20，1975，p.112.

28 . The increase in Santa Barbara’s price if the deal collapsed would only partially hedge this risk.

29 . Charles T. Munger testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HO-784，Thursday，March 20，1975，pp.112~113.

30 . Interview with Judge Stanley Sporkin.

31 . Ibid. This lawyer was so particularly ferocious that the author was asked not to mention his name.

32 . A thick file of documents produced in response to the SEC’s February 1975 subpoena illustrates several points: 1) it contained no evidence that Buffett bought on inside information or expecting a takeover; 2) Buffett had become expert on water company regulation and ratemaking，and his interest and expertise in this narrow subject was prodigious; 3) this aspect of the investigation must have been intrusive and an embarrassing form of déjvù，as it included production of his correspondence with Forbes that attempted to dear his name.

33 . Partly because of state restrictions on how much stock any one insurance company could hold，the diagram was more complicated than it would have been otherwise. The version shown on pages 412~413 was created by Verne McKenzie and updated through 1977 (i.e.，includes the Buffalo News). Berkshire was still negotiating with the SEC as late as 1978.

34 . During Buffett’s testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HO-784，Friday，March 21，1975，p.125，he acknowledged that he and Munger had been buying shares of Wesco in the open market during a tender offer and Rickershauser had advised him to stop，saying that they should use only tender offers to accumulate further shares (which they did). Rickershauser interjected，“I want the record to be clear that I did not tell them it was illegal to do what was done. I told them it would be hard to convince somebody that in hindsight they may not have intended to do what they did. You can swear me in if you want to on that one. I didn’t want to be right.”

35 . Said to a colleague.

36 . The SEC apparently considered Buffett，Munger，and Guerin’s interests and the companies a controlled group for purposes of tender offers. The combination of Warren (11%)，Susie (2%)，Munger and his partners (10%)，Berkshire Hathaway (26%)，and Diversified (16%) controlled 65% of Blue Chip’s stock. Warren and Susie owned 36% of Berkshire and 44% of DRC. Munger owned 10% of DRC. DRC owned 15% of BRK and 16% of BC. BC owned 64% of Wesco.

37 . The “harm principle” was articulated by scholars such as John Locke，Wilhelm von Humboldt，and John Stuart Mill，who argued that the sole purpose of law was to prevent harm，and the individual’s liberty should not be encroached otherwise. The harm principle is the basis for certain portions of the U.S. Constitution.

38 . Chuck Rickershauser Jr. letter to Stanley Sporkin，November 19，1975.

39 . Chuck Rickershauser Jr. letter to Stanley Sporkin，December 1，1975.

40 . Warren E. Buffett testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HO-784，Friday，March 21，1975，p. 157.

41 . Charles T. Munger testimony，In the Matter of Blue Chip Stamps，Berkshire Hathaway Incorporated，HO-784，Thursday，March 20，1975，p. 197.

42 . Interview with Judge Stanley Sporkin. Sporkin served as general counsel to the CIA after leaving the SEC in 1981. He became Judge of the U.S. District Court for the District of Columbia in 1985 and served till his retirement in 2000.

43 . Ibid. For more on Sporkin see Jack Willoughby，“Strictly Accountable，” Barron’s，April 7，2003; Peter Brimelow，“Judge Stanley Sporkin? The Former SEC Activist Is Unfit for the Federal Branch，” Barron’s，November 4，1985; Robert M. Bleiberg，“Sporkin’s Swan Song?” Barron’s，February 2，1981; “Why the SEC’s Enforcer Is in Over His Head，” BusinessWeek，October 11，1976.

44 . “I bet on a good horse，” says Sporkin，“and the horse came in.”

45 . After the deregulation of the S&L industry，Santa Barbara lost $80.9 million during fifteen straight quarters in the early 1980s. In June of 1984，Ivan Boesky was close to buying it and infusing it with a desperately needed $34 million，but that fell through. In 1990 it was seized by federal regulators，placed in conservatorship，and operated by the Resolution Trust Corp. until Bank of America bought it in 1991 for $41 million.

46 . The company also paid a $115，000 fine.“Consent to Judgment for Permanent Injunction and Other Relief”“Final Judgment for Permanent Injunction and for Other Relief and Mandatory Order and Consent with Respect Thereto” and “Complaint for a Permanent Injunction and Other Relief，” In the Matter of Securities and Exchange Commission vs. Blue Chip Stamps，June 9，1976.

47 . The SEC Advisory Committee on Corporate Disclosure，July 30，1976.

Chapter 40

1 . Doug Smith，“Solid Buffer Voice Melts Debut Jitters，” Omaha World-Herald，May 9，1975.

2 . Interview with Charlie Munger.

3 . Charles Munger letter to Katharine Graham，December 9，1974. Munger wrote “dilly” when he apparently meant “silly.” For clarity，“silly” has been used in the text.

4 . Interview with Fred Stanback.

5 . Interviews with Roxanne Brandt，Walter Schloss. Brandt later jokingly admitted this was grounds for divorce.

6 . New York Daily News，October 30，1975.

7 . As of December 2007，these shares would be worth $747 million.

8 . That Buffett，who had never borrowed a significant amount of money in his life，thought it made sense for his sisters to buy Berkshire stock using borrowed money，with only 5% down，speaks volumes about how cheap he thought the stock was and how good its prospects were at the time.

9 . Berkshire owned so much Washington Post stock and Buffett’s position on the board was such that，if it bought a TV station，its ownership would be attributed to the Washington Post，pushing it over the limit of five stations that it could own.

10 . Howard E. Stark letter to Warren Buffett，June 18，1975. Also see Lee Smith，“A Small College Scores Big in the Investment Game” Fortune，December 18，1978.

11 . Katharine Graham，Personal History. New York: Alfred A. Knopf，1997.

12 . The new printing-press technology that owners had installed made management hostage to the skilled employees who knew how to run the complex equipment.

13 . Katharine Graham，Personal History.

14 . Ibid.

15 . Interview with George Gillespie.

16 . According to Personal History，this contract would have given the pressmen the highest wages in the nation and security from layoffs. Negotiations broke down in part because the Post refused to hire back the workers who had damaged the presses.

17 . According to Personal History，fifteen former Post pressmen pleaded guilty to various misde- meanor charges. Six who had damaged presses and committed more serious crimes were jailed.

18 . They sold their interest in Source Capital to its managers.

19 . With the press strikes and Watergate affair behind her，Katharine Graham began to focus on growth at the Washington Post in the mid-1970s. Up until then，the company didn’t have sufficient profits and there was “little more than a hit-or-miss strategy” for growth (Personal History). Sales and earnings started to take off in 1976，around the time that they started buying back company stock. Earnings per share were $1.36 in 1976 vs. $0.36 in 1970. Return on equity was 20% compared to 13%. Profit margin grew to 6.5% from 3.2%. And it kept improving from there (Value Line report，March 23，1979).

20 . Charles Munger letter to Katharine Graham，November 13，1974.

21 . Interview with Don Graham.

22 . C. David Heymann，The Georgetown Ladies’ Social Club. New York: Atria Books，2003.

23 . Interview with Don Graham.

24 . Interview with Susie Buffett Jr.，who credits her parents for not interfering.

25 . Interview with Susie Buffett Jr.

26 . Interview with Dick and Mary Holland.

27 . Interview with Susie Buffett Jr.

28 . Ibid.

29 . Interview with Howie Buffett.

30 . In an interview Peter Buffett described his routine at this time.

31 . According to friends of Susie’s who say she blamed Graham for the relationship.

32 . Al Pagel，“What Makes Susie Sing?” Omaha World-Herald，April 17，1977.

33 . Ibid.

34 . This is Jack Byrne’s recollection of Davidson’s remonstration in an interview. Jack being a colorful guy，it is possible that his recollection is a bit more colorful than what Davidson actually said.

35 . Interview with Tony Nicely.

36 . Warren Buffett memo to Carol Loomis，July 6，1988.

37 . By 1974，the whole insurance industry was producing what rating agency A. M. Best called “unbearable” losses of $2.5 billion from a vicious price war and inflation of everything from car repairs to lawsuits. (A.M. Best Company Comment on the State of and Prospects for the Property/Liability Insurance Industry，June 1975.) The states were also passing “no-fault” insurance legislation，which meant that insurers had to pay for an accident regardless of who caused it. The federal government also slapped price controls on the industry during the Middle East war. Meanwhile，the devastating stock market of 1973~1974 had wiped so much value from GEICO’s stock portfolio that for every share of stock，investments that had once been worth $3.90 were now worth a dime a share (Leonard Curry，“Policy Renewed: How GEICO Came Back from the Dead;” Regardie’s，October/November 1982).

38 . GEICO had $500 million in premiums and would have needed capital of $125 million to meet regulatory and rating agency standards for leverage.

39 . Interview with Sam Butler.

40 . Interview with Jack Byrne.“The bastards at Travelers had passed me over for president for Ed Budd，” recalls Byrne (who likes to tell this story and tells it often).“A million dollars invested with me is now worth a billion，and a million dollars invested with Ed Budd is now worth $750, 000. And I used to be pissed，but obviously I’m more mature about it now. Well，I’m still pissed” This story is also recounted in William K. Klingaman，GEICO，The First Forty Years. Washington，D.C.: GEICO Corporation，1994.

41 . Interview with Jack Byrne.

42 . “GEICO’s Plans to Stay in the Black，” BusinessWeek，June 20，1977. It is Byrne’s impression that Wallach did not like him.

43 . GEICO had too little capital under regulatory standards to ensure its ability to pay claims on all its policies. By transferring some of its business to competitors，the company would relieve the strain on capital.

44 . Interview with Rhoda and Bernie Sarnat.

45 . Interview with Lou Simpson.

46 . “Leo Goodwin Jr. Is Dead at 63; Headed GEICO Insurance Concern，” New York Times，January 18，1978; “Leo Goodwin，Financier，Son of Founder of GEICO，” Washington Post，January 18，1978.

47 . Interview with Don Graham.

48 . Leonard Curry，“Policy Renewed.”

49 . Warren Buffett memo to Carol Loomis，July 6，1988.

50 . Blue Chip bought 14% of Pinkerton’s in March 1976 and Buffett went on the board，a thrill to the erstwhile boy detective who had also busted open Boys Town’s hidden war chest.

51 . Interview with Bill Scott.

52 . Wallach had invited big insurers to buy up 40% of GEICO’s reinsurance treaties，giving them until June 22 to make their decision to participate. Not enough insurers signed up. Wallach was supposed to decide by Friday，June 25，whether to shut GEICO down. He extended the deadline and，in mid-July，revised his rescue plan——requiring only 25% of GEICO’s premiums to be taken up by the insurance pool and lowering the amount of capital they needed to raise by yearend to $50 million. Reginald Stuart，“Bankruptcy Threat Fails to Change Status of GEICO，” New York Times，June 26，1976; Reginald Stuart，“The GEICO Case Has Landed in His Lap，” New York Times，July 4，1976; Matthew L. Wald，“GEICO Plan Is Revised by Wallach;” New York Times，July 16，1976.

53 . National Indemnity was a specialty company，not yet so large or well-known that it would cause too much push-back on the grounds of helping a competitor. Buffett’s other insurers，as will be seen，were struggling.

54 . Who knows what General McDermott actually wrote，but any endorsement at all from him would have carried weight among insurers.

55 . Some of the people instrumental in making it happen were former GEICO employees，according to Byrne.

56 . Interview with Jack Byrne.

57 . John Gutfreund quoting Frinquelli in an interview. Frinquelli did not return calls requesting an interview.

58 . Interview with Sam Butler.

59 . Leonard Curry，“Policy Renewed” According to some sources，Butler also had an instrumental role in convincing Gutfreund to underwrite the deal.

60 . Without a doubt it had not. Among other things，GEICO had failed to disclose a change in method of calculating loss reserves，which had enabled it to boost profits by $25 million during the second and third quarters of 1975.“In the Matter of GEICO et. al.，” October 27，1976.

61 . Leonard Curry，“Policy Renewed.”

62 . Interview with John Gutfreund.

63 . An indication of “aftermarket support” was a principal component in underwriters’ assessments of how a stock might trade once it was listed. The presence of aftermarket support helped prevent a “busted deal” in which the underwriter had to buy back the offering with the firm’s own capital.

64 . Byrne’s recollection is that Tom Harnett，the New York superintendent，helped rally the industry to get behind the reinsurance. Harnett，he believes，had an incentive because the New York guaranty fund was prefunded and had invested in Big Mac New York City bonds，which were selling at a fraction of their par value. The insolvency funds in effect had evaporated in the wake of New York City’s financial crisis.

65 . Byrne has told this story more vividly in times past. In Roger Lowenstein’s Buffett: The Making of a American Capitalist (New York: Doubleday，1996)，he supposedly said to Sheeran，“Here’s your fucking license. We are no longer a citizen of the state of New Jersey.” He calls Sheeran“the worst insurance commissioner ever.”

66 . Disgruntled employees，hearing the news about their jobs，started throwing policies out the top-story window.“Files were floating all around North Jersey in the air，” says Byrne. Nobody knew this until GEICO moved the claims office to Philadelphia，“when we went to move the files and they weren’t there.” Byrne estimates the lost data cost the company as much as $30million~40 million in excess claims. GEICO also gave up its license in Massachusetts. It stopped writing business in many other states without surrendering the right to do so in the future. In total，the company nonrenewed 400，000 out of its 2.2 million policyholders.

67 . Interview with Jack Byrne. The author first heard this story from a secretary who formerly worked for Byrne.

68 . Interview with Tony Nicely. The length of these meetings sounds incredible，but Byrne seemed to have an almost superhuman energy.

69 . Interview with Jack Byrne.

70 . James L. Rowe Jr.，“Fireman’s Fund Picks Byrne” Washington Post，July 24，1985; Sarah Oates，“Byrne Pulled GEICO Back from Edge of Bankruptcy” Washington Post，July 24，1985.

71 . Graham Group members，Buffett friends，and Berkshire employees such as Marshall Weinberg，Wyndham Robertson，Verne McKenzie，Gladys Kaiser，Bob Goldfarb，Tom Bolt，Hallie Smith，Howie Buffett，and Peter Buffett all remember Grossman fondly.

Chapter 41

1 . Christopher Ogden，Legacy，A Biography of Moses and Walter Annenberg. Boston: Little，Brown，1999; John Cooney，The Annenbergs: The Salvaging of a Tainted Dynasty. New York: Simon & Schuster，1982.

2 . Ogden，in Legacy，cites Annenberg as saying he &dined to buy the Washington Times-Herald from Colonel McCormick and convinced McCormick to sell to the Grahams despite their reservations about Phil Graham’s drinking and mental stability. Thus，he felt responsible for putting together the newspaper marriage that made the Washington Post what it had become. He felt slighted because the Grahams had never credited him. Buffett says that Annenberg was exaggerating his role and that Graham viewed this notion as ridiculous.

3 . Drew Pearson，“Washington Merry-Go-Round: Annenberg Lifts Some British Brows;” Washington Post，February 24，1969.

4 . Buffett’s recollection of Annenberg’s perspective on Nixon.

5 . Description of the Annenbergs’ reactions is from Legacy. Drew Pearson，“Senators Wary on Choice of Annenberg” Washington Post，March 5，1969.

6 . The comparison with Nixon was made byAnnenberg’s biographers.

7 . In fact，the Annenbergs’ investment of time，personal funds，and good judgment in a thoughtful restoration of Winfield House，the ambassadorial residence，played a key role in their acceptance in Britain.

8 . C. David Heymann，The Georgetown Ladies’ Social Club (New York: Atria Books，2003) and Legacy. This is Walter Annenberg’s account，and there is no telling what was really said. But，by all accounts，he was offended.

9 . In the end，he gave most of his money to the Annenberg Foundation and his art collection to the Metropolitan Museum of Art.

10 . Lally Weymouth，“Foundation Woes: The Saga of Henry Ford II，Part 1I;” New York Times Magazine，March 12，1978.

11 . Walter Annenberg letter to Warren Buffett，October 1，1992.

12 . Donner was not entirely obliterated. In 1960，seven years after he died at age eighty-nine，the $44 million in assets in his foundation was divided equally——between a newly formed Donner Foundation and the original foundation，which changed its name to the Independence Foundation (www. independencefoundation.org).

13 . Walter Annenberg letter to Warren Buffett，October 1，1992.

14 . Said to the author in an interview in 2003——an indicator of the direction of his thoughts at the time.

15 . While most mergers are done for stock (if only for tax reasons)，this subtle underlying psychology gives the seller a slight advantage. The willingness to issue stock implies，by its nature，that the buyer prefers the seller’s business to his own. The exception is using an overpriced stock to buy an underpriced company from a naive seller，which aggressive buyers sometimes do，although not nearly as often as they think.

16 . Graham’s term，from her autobiography. Liz Smith called Graham Buffett’s “frequent hostess” and Diana McLellan said，“All the way up in New York，they’re talking about Kay Graham and Warren Buffet [sic]... but oh，so discreetly.” Diana McLellan，“The Ear，” Washington Star，March 12，1977; Liz Smith，“Mystery Entwined in Cassidy Tragedy，” Chicago Tribune，March 6，1977.

17 . Heymann，The Georgetown Ladies’ Social Club.

18 . See，for example，her relationships with Jean Monnet，Adlai Stevenson.

19 . The letter was described this way in Lowenstein，Buffett.

20 . Graham showed Dan Grossman a copy of this letter. Susan Buffett also showed Doris Buffett a copy of this letter. Graham’s papers currently are under seal.

21 . Roger Lowenstein，Buffett.

22 . “Interview with Susan Buffett;” Gateway，March 5，1976.

23 . Peter Citron，“Seasoning Susie;” Omaha World-Herald，April 7，1976.

24 . “Buffett Serious，” Omaha World-Herald，September 14，1976.

25 . Buffett considered buying Alfred Knopf’s apartment at 24 West 55th Street，later one of two landmarked Rockefeller apartments.

26 . Interview with Susie Buffett Jr.

27 . Interview with Al“Bud” Pagel.

28 . Denenberg declined to be interviewed.

29 . Al Pagel，“What Makes Susie Sing?” Omaha World-Herald，April 17，1977.

30 . Ibid.

31 . Interview with A1 “Bud” Pagel.

32 . Ibid.

33 . Peter Citron，“Seasoning Susie.”

34 . Interview with Stan Lipsey. See Leo Litwak，“Joy Is the Prize: A Trip to Esalen Institute，” New York Times Magazine，December 31，1967.

35 . Steve Millburg，“Williams’ Songs Outshine Voice;” Omaha World-Herald，September 5，1977.

36 . Interview with Astrid Menks Buffett. The sleeping Warren famously did not notice whether Susie was there. In one story related by Racquel Newman，she decided to drive to Dottie’s to play music at around ten or eleven at night，ran out of gas in a snowstorm at midnight on her way home，and instead of waking Warren，called a friend and went on an all-night obstacle-filled expedition to a gas station on the interstate，delayed by a tractor-trailer jackknifed on the free- way. She finally got home shortly before dawn. Warren never knew she was gone.

37 . Said to a friend of the couple’s who believes that Susie was probably sincere，both because she believed Warren really was that dependent on her and because of his preoccupation with suicide，linked to the many suicides among the Stahl family and the Buffetts’ friends.

38 . Warren Buffett，“How Inflation Swindles the Equity Investor，” Fortune，May 1977. In a letter to the Graham Group，September 27，1977，Bill Ruane describes how“This article can well serve as a basis for a discussion of so many things which are central to our economic concerns today. The article not only deals with the central theme of inflation but also with the effects of taxes，rate of return，dividend paying capacity and other elements which are crucial to the appraisal of aggregate values in our economic system.”

39 . The Buffett Group would take this problem up again and again. Its members were pessimistic about whether the problem could be solved，for they doubted，with good reason，that Congress had the necessary resolve to control the federal budget over the long term.

40 . Interview with MarshallWeinberg.

41 . The $72 million includes his holdings in BRK，DRC，and Blue Chip Stamps at year-end 1977. Susie added another $6.5 million to this total. This does not include his indirect holdings through the three companies’ cross-holdings of each other.

42 . Interview with Peter Buffett.

43 . Interview with Tom Newman.

44 . Two sources have confirmed this.

45 . Interview with Astrid Buffett.

46 . Ibid.

47 . Interview with Michael Adams.

48 . Interview with Astrid Buffett.

49 . The 1977 letter contains significantly more “teaching” content than its predecessor. Although Buffett had control of Berkshire for twelve years previously，the 1977 letter was the first to be collected in a bound collection of letters he used to hand out to friends and is the first year featured on Berkshire’s website.

Chapter 42

1 . Interview with Astrid Buffett.

2 . Interview with Michael Adams.

3 . Interview with Kelly Muchemore.

4 . From a close friend of the family.

5 . Buffett explained in conversation and a letter to the author how he felt，separating his life into two stages with age forty-seven as the turning point.

6 . To the end of her life，Estey wrote letters with “Mrs. Benjamin Graham” embossed on her stationery.

7 . Interview with the author，2003.

8 . Katharine Graham，Personal History. New York: Alfred A. Knopf，1997.

9 . Interview with Stan Lipsey.

10 . Interview with Sharon Osberg.

11 . Astrid Buffett recalled the VCR conversation in an interview.

12 . Jeannie Lipsey Rosenblum and others recall the details in interviews.

13 . Interview with Peter Buffett.

14 . Bryant campaigned to make it illegal for gays to teach in public schools in Dade County，Florida，and succeeded in passing a civil-rights ordinance against gays.

15 . The price included $1.5 million in pension liabilities. Blue Chip Stamps Annual Report，1977. Blue Chip borrowed $30 million from a bank in April 1977 to finance the purchase.

16 . Berkshire had assets of $379 million，Blue Chip had $200 million，DRC had $67.5 million at year-end 1977.

17 . Warren and Susie personally owned 46% of Berkshire (both directly and indirectly，through their ownership of Blue Chip and Diversified，which owned Berkshire stock)，and 35% of Blue Chip (both directly and indirectly).

18 . Murray Light，From Butler to Buffett: The Story Behind the Buffalo News (Amherst，NY: Prometheus Books，2004)，who notes that only in the face of an inquiry from the Human Rights Commission in the early 1970s did Butler begin publishing wedding photos of African Americans.

19 . Interview with Stan Lipsey.

20 . The Evening News put out a Saturday edition，but its weak ad lineage demonstrated the power of the Sunday edition of the Courier-Express.

21 . If the trend had continued without the Evening News starting a Sunday paper，the logical outcome would have been either a joint operating agreement or outright acquisition of the Courier-Express to combine the papers——both expensive alternatives.

22 . Buffalo Courier-Express，Inc.，v. Buffalo Evening News，Inc.，Complaint for Damages and Injunctive Relief for Violation of the Federal Antitrust Laws (October 28，1977).

23 . Former Courier-Express reporter Michael A. Hiltzik posted on June 20，2000，on Jim Romenesko’s “Media News Extra，” a recollection of the staff writing puff pieces on every local state judge in order to flatter whichever one was chosen. It was a “misguided strategy，” he said，as the trial took place in federal court under Brieant. One of the profiles supposedly was titled “Judge Loses Firmness When He Doffs His Robe.”

24 . Interview with Ron Olson.

25 . Jonathan R. Laing，“The Collector: Investor Who Piled Up $100 Million in the ’60s Piles Up Firms Today” Wall Street Journal，March 31，1977.

26 . Testimony of Buffett，Buffalo Courier-Express，Inc.，v. Buffalo Evening News，Inc.，November 4，1977.

27 . In Roger Lowenstein’s Buffett: The Making of an American Capitalist，Bob Russell cited Warren as a boy wanting to charge money to people driving by the Russells’ house. Buffett does not remember the incident，but if it occurred，most likely he was influenced by the city’s efforts to convert the Douglas Street toll bridge——the only passageway over the Missouri River——to a free bridge，one of the most widely reported local news stories during his early youth.

28 . The bridge was sold to Marty Maroun in 1979 for $30 million，30% less than the inflation adjusted cost of building it thirty years earlier. Maroun parlayed the bridge into an enormous fortune.

29 . Findings and Conclusions，Motion for Preliminary Injunction，Buffalo Courier-Express，Inc.，v. Buffalo Evening News，Inc.，November 9，1977.

30 . Dick Hirsch，“Read All About It，”“Bflo Tales” in Business First，Winter 1978.

31 . In its first full year under Buffett. Murray Light，From Butler to Buffett.

32 . Interview with Stan Lipsey.

33 . Ibid.

34 . Buffalo-Courier Express，Inc.，v. Buffalo Evening News，Inc.，United States Court of Appeals，Second Circuit，601 E2d 48，April 16，1979.

35 . Warren Buffett，“You Pay a Very High Price in the Stock Market for a Cheery Consensus，” Forbes，August 6，1979.

36 . Interview with Wally Walker. Jobs did not respond to repeated requests for comment.

37 . Warren Buffett，“You Pay a Very High Price in the Stock Market...”

38 . Interview with Stan Lipsey.

39 . Blue Chip Stamps 1980 annual report to shareholders.

40 . Janet Lowe，Damn Right.t: Behind the Scenes with Berkshire Hathaway’s Charlie Munger，New York: John，Wiley & Sons，2000.

41 . Ibid.

42 . Warren Buffett menlo to employees，December 2，1980.

43 . At first，management and the unions tried to publish without the drivers (Buuffalo Evening News，December 2，1980). The striking union walked out over a pay difference of $41 a week.

44 . It was selling 195，000 papers on Sundays，about 2/3 of its rivals. From Lowenstein，Buffett，Audit Bureau of Circulations figures as of March 1982.

45 . The Blue Chip Stamps 1980 annual report to shareholders notes the litigation became “less active and cosily” that year.

46 . Interview with Ron Olson.