Hi Julie,

Gosh, they switched articles on me!

However, I've put a copy below.... :)

From the New Yorker magazine http://www.newyorker.com/

- Dien



THE FINANCIAL PAGE

LET THE BAD TIMES ROLL

Issue of 2001-09-03
Posted 2001-08-27

Near the end of one of the biggest economic booms of the twentieth century, a new weekly business magazine appeared on newsstands across America. Its editors promised readers a "clear, critical, realistic, and rational" look at a business world in which "new industries rise like rockets, and old ones grow tired and die." Though they were thrilled by the changes wrought by the boom, they were skeptical of its excesses—"the apocalyptic, holy-rolling exaltation over the unparalleled prosperity of the 'new era.' " But that prosperity dried up rather sooner than the editors had expected. The stock market crashed, and the magazine grew thin. So much for the "new era."

Sounds a bit like the story of The Industry Standard, the weekly New Economy bellwether that recently shut down and announced plans to declare bankruptcy. But it's actually the story of Business Week—or The Business Week, as it was called when it was founded, in September, 1929, six weeks before the Great Crash. Business Week was supposed to be to the Jazz Age what The Standard would be to the Information Age: a weekly filter that would give the busy young executive all the news he needed. But, while The Standard had two boom-time years in which to feast on the ad budgets of cash-flush startups, Business Week had about a month. At the time, this must have seemed like terrible luck. Yet the magazine did just fine. Though it didn't enjoy early fat years, as The Standard did, four years after its founding it had become required reading for corporate vice-presidents from Omaha to Oneida.

The same went for Fortune, which made its début in February of 1930, four months after the Crash. If Business Week was the magazine for the harried middle manager, Fortune was the one for the man at the top. Its slogan was "For Those Whose Stake in This Industrial Civilization Is Greatest." It cost a dollar an issue, when magazines cost a quarter, and initially was available only by subscription. In many ways, Fortune was a high-end life-style magazine—the W of its time—filled with ads for jackal-hunting trips to India and features like "A Note on the Servant Problem." But it was also a real business magazine. Hog farming, auto manufacturing, liquor smuggling, J. Pierpont Morgan: whether the subject was glamorous or mundane, Fortune was lavish with its attention, essentially inventing business feature journalism as we know it. With full-page highcontrast photographs (many by Margaret Bourke-White), it was also the first magazine to capture the visual poetry of industrial civilization, much as Wired did for digital culture sixty years later. Despite the Depression, Fortune's issues in 1933 were thick with ads. The following year, it turned profitable, and by the end of the decade its circulation was nine times as great as it had been in 1930.

Fortune's success in the face of the worst economy in American history has been called "one of the miracles of American publishing." But there was nothing unusual about it—or about Business Week's success, either. One of the first great general-interest magazines, McClure's, was founded in 1893, just as the U.S. economy was plunging into a severe depression. Newsweek, Life, and Esquire made their débuts in the nineteen-thirties. Playboy and Sports Illustrated hit the stands during the first Eisenhower recession, and People arrived during the stagflation days of 1974. There are exceptions, including The New Yorker.But history suggests that for new magazines hard times are good times.

And not just for magazines. Despite all the bellyaching that accompanies a capital crunch, lean years are good for new companies, too. Procter & Gamble opened its doors, back in 1837, during a major financial panic, and American stalwarts like 3M, General Motors, Chase, Bell Telephone, I.B.M., Texas Instruments, General Electric, Microsoft, and Sun Microsystems all got their starts during times of recession. In Japan, Sony and Honda were founded amid the rubble of the Second World War.

On the face of it, this makes little sense. During a boom, it's easier to raise money and easier to sell products. You'd think that would be a good thing if you were trying to start a business. The problem is that everyone else thinks so, too; when the economy is hot, everyone's an entrepreneur. The more companies there are, the less likely it is that one of them will be able to sustain a lasting competitive advantage, no matter how flush the marketplace is. Starting a business is like investing in stock: you want to buy low and sell high. Launching a company in the middle of a boom is the equivalent of buying JDS Uniphase at a hundred and fifty dollars a share. It could go higher, but the smart bet says it won't.

What's more, the easier it is for start-ups to raise and make money, the harder they find it to manage that money wisely. Companies need discipline—an ingrained sense of the relationship between effort and reward, product and profit. That's where a nice, brutal slowdown can come in handy. You might say that Fortune and Business Week succeeded because of the Depression, not in spite of it. It prevented them from overexpanding and overreaching, as The Industry Standard did.

Companies are like human beings: hardscrabble beginnings beget hard-minded men. Consider little Andrew Carnegie, toiling as a bobbin boy in a cotton factory, or the young John D. Rockefeller, tending turkeys and salting away copper coins. Or think of any number of today's moguls whose humble upbringing you can read about in the pages of Business Week and Fortune—but not, alas, in the pages of The Industry Standard.

— James Surowiecki