Wall Street Journal Has Feet of Clay, Author Says

IN recent years, Wall Street Journal editors, reporters, or ex-staffers have written several highly popular, readable books on various financial scandals. And the newspaper's editorials, though sometimes intellectually brilliant, often come across as especially one-sided and harsh. Thus, perhaps it is a form of rough justice that the newspaper itself has become the victim of an "expose" type of book.

Reading the Journal daily for a few decades, this reviewer has long been an admirer of its enormous competence in business reporting and its lively feature stories. These have won the paper more Pulitzer Prizes than any except the New York Times.

So it was of some interest to read in Francis X. Dealy Jr.'s latest book, "The Power and the Money: Inside the Wall Street Journal," that this journalistic giant has feet of clay - that it has suffered from office politics, personal foibles, and managerial mistakes, that it inadequately covered some major financial scandals of the 1980s, that advertisers have wielded enough power to have reporters removed from their beats for writing critical stories, and so on.

All this may be true. Dealy was a vice president of Dow Jones, parent company of the newspaper. That, the book's press information says, gave him "unprecedented access to the paper's reporters and editors, many of whom went on the record to criticize the paper's moral and financial drift under the leadership of former CEO Warren Phillips, former managing editor Norman Pearlstine, and present Dow Jones chairman Peter Kann." Dealy is most certainly not a fan of Messrs. Kann and Pearlstine.

Nonetheless, one wonders whether the author is "stretching it." The book makes such a relentless effort to turn up every scandal. It employs a technique of "reconstructing" conversations that has become increasingly popular among book authors, but certainly would not be allowed by most newspaper editors. Usual journalistic standards require a quote to be accurate. Many key conversations in this book were not taped, but are written as if Dealy had been a fly on the wall writing notes furiously. Presumably

Dealy talked to the people involved in these conversations, but that was often years later. (The Journal itself would not allow reconstructed conversations in its news columns, but it occasionally has picked up excerpts from books by writers using this technique.)

Though the technique does make "The Power and the Money" more entertaining, it also raises suspicions about whether the author's motive was more to make himself rich by selling a lot of books than to reveal the whole truth about the Journal.

The book's thesis is spelled out in the first chapter: "With its more recent, permissive, go-go journalism, the Journal has been too busy pandering to hostile-takeover artists to reveal the excesses of the last decade. Most sinful of all, the Milken and savings-and-loan scandals occurred right under the Journal's nose without so much as a mention. The slowest news medium of all, the book, was the first to tell the story of Michael Milken and the $500 billion savings-and-loan collapse."

Dealy also accuses Dow Jones of having "a fat, smug bureaucracy" with a 600-person news staff, including 200 editors refining reporters' drafts. A Page 1 "leader" article, he writes, must "like a salmon fighting upstream," push through five layers of editors before the associate managing editor approves it for publication. The Journal is an editor's, not a bureau chief's or a reporter's, newspaper, he says.

Unlike the days when Barney Kilgore (who died in 1966) ran the Journal, "Dow Jones has been victimized by a singular management ineptness resulting from choosing the wrong man to lead the company," Dealy writes. And certainly Dow Jones has made some costly mistakes - the creation of the weekly National Observer, now gone; the purchase of Book Digest, sold at a huge loss; and other less-than-successful ventures and lost opportunities.

Putting aside the smarter-than-thou attitude of the author, the book does provide useful insights into one of the nation's most powerful journalistic institutions, with its 5 million readers daily. It tells a story of how Robert Bartley, the Journal's editorial page editor, persuaded President Reagan to adopt a supply-side economic policy that, by cutting taxes massively, created the present huge budget deficits which the nation is still struggling to overcome.

Recently, Bartley has had to defend himself from an accusation that the Journal's editors "lie without consequence." It was made in a note written by Vincent Foster Jr., a White House aide whose death last month was, according to the police, a suicide. The Journal had published several highly critical editorials on the White House counsel's office, naming Foster.

For all this, the nation has an extraordinary asset in the Journal with its expert and voluminous daily chronicle of business, financial, and economic events.