An old Harvard economics thesis foreshadowed
the River Park Square controversy
IN THE SPRING OF 1977 my wife and I, recent transplants from San Diego, were about to launch a new magazine in Spokane.*
“Have you seen the Fancher Report?” people would ask in hushed tones when they heard our plans.
Its formal title was “The Cowles Empire: A Report Relating to the Effects of Cowles Common Ownership of Media and Real Estate in Spokane, Washington.”
And, yes, I had seen it. A prominent Spokane businessman had given it to me. I found it very disturbing. Although it was an economics thesis published by Harvard student and Spokane native son Terrence E. Fancher, it read more like a fable of corrupt riches.
Against the backdrop of Cowles wealth, Fancher painted a riveting picture of how the family actually runs Spokane. The picture was made even starker by his sources’ terror of the family — to a person, they were too fearful to let their names be used.
Fancher said he interviewed more than 200 “past or present” business and professional people and public officials. Many interviews were tape-recorded. His sources resided both in Spokane and around the country, he said. None would be named for fear of Cowles retaliation.
“Most of the people we interviewed requested, and some insisted on written guarantees, that we protect the confidentiality of their names, identities and remarks,” wrote Fancher.
Some sources he contacted wouldn’t talk to him at all and hung up when they learned the reason for his call.
“Although we would prefer to release the names of all those interviewed, we must protect our sources of information in return for their candor. A large number of people interviewed expressed great fear of adverse repercussions against themselves or their livelihoods if we publicly released their names in connection with specific passages quoted in this study, or even linking them to this study.”
Voices from the Shadows
DECADES BEFORE THE CONTROVERSIAL River Park Square public/private partnership, Fancher described how the Cowles family helped orchestrate an elaborate scheme to use public money—federal and local—to redevelop downtown in a way that enhanced the value of the family’s real estate. Simultaneously, Fancher’s sources told him, the family was instrumental in changing local government to make it more responsive to Cowles business interests.
Fancher’s thesis might have been portraying garden variety, old-fashioned American graft, something right out of Lincoln Steffens’s 1904 muckraking classic, Shame of the Cities, except for one thing. At the heart of the graft was the very institution that was supposed to be the watchdog guarding against corruption—a newspaper.
“This is a newspaper monopoly town,” said one source. “That’s the power structure.”
Said another: “There is not a man or woman on the City Council and probably not one in the entire City Hall that has any concern about their political career or future that is not scared to death of what the newspapers are going to say about him. And I say scared in the sense of their political career... If they are not they have to be absolutely insensitive because if one would be imprudent enough to evoke the wrath of the editorial policies of the newspaper, you would have a short-lived political career in the City of Spokane.”
Fancher cited a U.S. Department of Justice study finding that the Cowleses controlled 80 percent of Spokane’s media. That, said the agency, was “repugnant to antitrust principles, inconsistent with the Communications Act’s goal of providing for the expression of diverse views, and, therefore, inimical to rather than promotive of the public interest.” Despite this view, Justice ultimately took no action to limit Cowles cross-ownership of media or revoke their license to KHQ-TV. In a sense, the Cowleses outgunned the nation’s top law enforcement agency.
Fancher’s sources described how Spokane’s mayors, city council members, city managers, and city staffers were little more than Cowles puppets. They explained how Cowles-led downtown property owners, via compliant city hall staff, were effectively able to tax the entire community—Washington’s second largest city—for their private benefit.
Fancher’s sources explained that the family handpicked candidates for public offices, supported them with favorable media coverage, and editorially attacked those who opposed the Cowles agenda. (Read about present-day editorial policies in “The Stench that Won't Go Away.”) From their shadows of anonymity, Fancher’s sources described how an insiders’ club perpetuated the Cowles machine. Cowles-supported elected officials often would resign before their last term of office expired, and a replacement acceptable to the Cowleses would be appointed to step in. When the next election rolled around, the newcomer enjoyed the incumbent’s advantage — as well as Cowles editorial support.
Fancher’s sources also told him that the Cowleses’s media wasn’t the family’s only political cudgel. The family used its real estate holdings in the same way.
How? asked Fancher.
“Well, for example, you can look at a store downtown and you think it’s Macy’s, let’s say, just to use a name. Well, sure, it’s Macy’s, but Cowles own the property and the building,” explained a faceless source. “And you do not know that, but it’s a fact, and there are miles and miles, for example, of riverbank. You think some farmer owns this plot of ground. Well, he doesn’t — Cowles own it.”
“How does that have a controlling influence, in your judgment?” Fancher wanted to know. “I mean, what sort of control does that…”
“Suppose you were asked to take a position on something,” the source cut him off, “and before you do it you stop and think, ‘Wait a minute, Cowles is my landlord. I wonder what he thinks about this. I wonder what they think about it.’ And as a result, you usually do not say anything or do not take any position.”
Another source, camouflaged by Fancher as “an appointed city official or former city official,” said: “I am certainly aware of the Cowles’s holdings. The Cowles’s interests have been a pretty powerful influence in what has happened in the development of downtown over the past twenty-five years...”
One source also noted that the Cowleses had one other weapon in their arsenal: the threat of litigation. They could sue into oblivion anyone who opposed them.
Cowles Wealth
IT WAS ALMOST incomprehensible to me that a modern American city could exist in the condition Fancher described. His thesis reminded me of a particularly fanciful piece of fiction, F. Scott Fitzgerald’s novella, The Diamond as Big as the Ritz. Vintage Fitzgerald, it tells of a family named Washington whose vast wealth and ruthlessness give it de facto control over a remote tract of the American West.
“This is where the United States ends,” young Percy Washington informs the unsuspecting narrator. On summer holiday from their private school, the boys are traveling to Percy’s rusticated empire. Percy continues, “…you are now on the only five square miles of land in the country that’s never been surveyed.”
As described by Fancher, Cowles media control seems to put Spokane and its environs similarly outside the frontier of the American experience.
Fancher’s report commenced with a summary of the Cowles family’s storybook wealth, which reached far beyond the so-called Inland Empire of the Pacific Northwest. Provincially, wrote Fancher, Cowles holdings included 50,000 acres of timberland, over 4,000 acres along the banks of the Spokane River, stretching more than 18 miles through the fertile Spokane Valley toward Idaho, the core of downtown Spokane’s retail district, an entire neighborhood in the city’s most affluent residential area, the mountain on which many of Spokane’s broadcasters keep their signal towers, and hundreds of acres of land adjacent to the Kaiser Aluminum plant, then Spokane’s largest manufacturer.
From there, the family’s holdings stretched into numerous media outlets, from the town’s two daily newspapers (the evening Chronicle is now defunct), to the NBC-affiliate KHQ-TV and radio stations, to farm publications in five Western states and a farm insurance business. But that was just the beginning.
The Cowles family was also the second largest stockholder in the behemoth Tribune Company of Chicago, wrote Fancher. The Tribune Company owned newspapers and radio and TV stations all over the nation and was an awesome force behind America’s understanding of itself. Fancher noted that the company’s media stature was buttressed by other businesses, including “newsprint manufacturing, shipping, trucking, insurance, mining, electric power production and various media company support services… throughout the United States, in Canada and Bermuda.” Also, like the Cowles family, the company owned its own timberlands. Enough, wrote Fancher, “to supply the Chicago Tribune and New York Daily News, both of which are themselves owned by Tribune Company, with their complete newsprint paper requirements for the next 150 years.”
The Cowleses also endowed seminal research into the workings of the U.S. economy. When the family lost “substantial sums of money” in the Great Depression of the 1930s, Fancher wrote, it created the Cowles Commission to improve the science of financial forecasting. The Cowles Commission migrated from Colorado Springs to the University of Chicago, finally landing in the 1950s at Yale University as the Cowles Foundation, where it still continues to operate.
The Cowles Foundation invented econometrics, the famous “statistical method of forecasting major changes in America’s economy,” wrote Fancher.
It’s difficult to even estimate Cowles wealth today. As Fancher pointed out, “The Cowles have maintained confidentiality around much of their business activity…” by various methods. As an example, he notes that their real estate holdings in downtown Spokane are divided among four family-owned corporations. “The corporate names of these property holding firms bear no resemblance to the Cowles family name. These corporations are: Citizens Realty Company; Lincoln Investment Company; Washington State Realty Company; Publisher’s Building Company.”
He goes on to describe how Cowles wealth and power will likely hold Spokane in thrall for generations. “Legal control and the assets of these corporations have passed undisclosed to the public from one generation of the Cowles family to the next through thirteen trusts, established in the 1940s for the benefit of the grandchildren of William Hutchinson Cowles, Sr. As explained earlier, these trusts will continue to control the Cowles’ holdings for a full 21 years after the death of the last grandchild of the elder W.H. Cowles, Sr. Thus, unified family control of Cowles-owned companies by the trustees of the elder Mr. Cowles Sr.’s estate can reasonably be expected to continue for at least another 70 or 80 years, and possibly longer.”
Just as great mountains create their own weather, great wealth has a tendency to alter the social climate. Fancher’s description of Cowles wealth and media holdings clearly put them in the league of such riches, the miniscule elite that media critic Noam Chomsky calls “the owners of society.”
The Associated Press Connection
A COWLES PATRIARCH had served on the board of directors of the Associated Press, which bills itself as “the backbone of the world’s information system,” almost continuously since 1911, noted Fancher.
Newspapers that own the AP franchise in their markets enjoy a formidable advantage over competitors, because, at little cost, they can spice their local coverage with news of the world. This arrangement, it goes without saying, makes AP a potent global arbiter of the news.
Fancher was especially interested in the way AP awards its precious franchises. In 1942, the courts ruled that AP’s franchise practices violated antitrust laws. Fancher pointed out that W.H. Cowles, Sr. (great-grandfather to the current newspaper publishers, Stacey and Betsy Cowles) was among the AP directors who voted to appeal that ruling to the U.S. Supreme Court. Fancher noted that the high court “ultimately affirmed the judgment against the Associated Press,” and he pointed out that the senior Cowles had also been a stockholder in the Chicago Tribune when it vetoed a grant of the AP franchise to its rival Chicago Sun. That was the veto that triggered the successful antitrust case against AP.
Nevertheless, Cowles influence at AP remained unchanged. The picture that emerged from Fancher’s thesis was of a family able to dictate not only what Spokane residents were able to learn about the life of their city, but what news giant AP let the rest of the world know about goings on in Spokane, too.
Why Are Sources Afraid?
BEFORE COMING TO SPOKANE, as a young stringer for Newsweek I had reported on Mafia executions. For People magazine, I had an exclusive interview with former JFK mistress Judith Campbell Exner. She talked to me immediately after testifying before a U.S. Senate committee investigating Mafia/CIA assassination plots against Fidel Castro. Exner was convinced she was being hunted by the mafia and was hiding out in a motor home, parking at a different Southern California location every night.
Her fears were justified. Mafioso Sam Giancana had been murdered while under FBI protection before he could testify before the same committee. (Giancana had also been one of Exner’s boyfriends, as had Frank Sinatra.)
A year after giving testimony to the same committee, “Handsome Johnny” Roselli was found in a 55-gallon drum in a Florida bay, his partially dismembered body in an advanced state of decomposition. Handsome Johnny paid the penalty, so went the theory, for violating omerta, the Mafia code of silence.
In any case, I was used to having sources talk to me. At first I found Spokane’s terror hard to understand. What kind of fear, I wondered, must it take to silence an entire community?
And then I reflected on a Time magazine excerpt Fancher included in his paper. Time’s January 7, 1952 issue reported that the Cowles-commissioned book News for an Empire, “unintentionally presents a case history of how a well-run newspaper can monopolize a city and dominate a sprawling region.”
That’s when it hit me. Judith Exner talked to me because she wanted to use me as a conduit between her and jackals employed by the mob and—who knows?—maybe the CIA, too. She was just a girlfriend, she wanted the world to believe. She didn’t know anything about whatever JFK, the CIA or the Mafia might have been up to.
But what if Exner hadn’t been able to trust me as an independent reporter whose only concern was the public’s right to know? What if I had been on the payroll of the jackals? I tried to imagine what such vulnerability would feel like. It sent a chill through my spine.
In a way, the Fancher Report foreshadowed the River Park Square fiasco. Still, outsiders who grappled with the financial scandal of the Cowles mall were shocked by the conditions they found in Spokane. “In thirty years of practicing securities law, I’ve never seen another city like Spokane,” said Gary Ceriani of Denver, lead bondholder attorney. “I especially don’t understand Betsy Cowles. In Denver, we have people who make a living [suing] people like her. In Spokane, everyone defers to her.”
“Spokane is the last company town in America,” said former Prudential Securities investment banker Mark Schwartz of Philadelphia. Schwartz, an attorney, filed complaints with both the IRS and SEC over River Park Square.
When retired state supreme court chief justice Richard Guy came to Spokane in 2001 to try to get the city council to mediate the River Park Square meltdown, he told Cherie Rodgers, “This is my hometown. I’m not going to live here. I’ve always considered this a company town, like a coal-mining town.”
The Underground Document
PHOTOCOPIED VERSIONS OF Fancher’s thesis have been circulating in Spokane since its 1977 publication. All of the ones I have seen — like the one that mysteriously appeared on former councilwoman Cherie Rodgers’s desk — have been reproduced so many times as to be partially illegible, like wind-eroded sandstone. I had long since misplaced the first version I received.
But shortly after Camas magazine began publishing in 2000, one of Spokane’s largest real estate developers rang my doorbell and presented me with another copy.
“I thought you should see this,” he said.
He made me promise never to use his name.
True to form, the shopworn document was missing a few central pages, missing all of the references (100 pages), and was nearly illegible in places.
I hunted for a more complete copy. Harvard no longer maintains a copy. Fancher, now a real estate developer in California, told me he had misplaced his.
Recently, I was able to obtain a copy from the estate of a prominent Spokanite. Complete with references, it is in beautiful condition, all 325 pages. Because I consider it such a valuable historical artifact, and because the ethic of university theses is to permanently contribute to scholarship, I contacted Terry Fancher and requested permission to post it on this website. After confirming the document’s authenticity, Fancher graciously approved its publication here. —L.S. (July 14, 2006)
—END—
To download a copy of The Fancher Report, click here.
* We published Spokane Magazine between 1977 and 1982. Despite winning 10,000 loyal paid subscribers, the magazine went out of business for the least colorful of reasons: our expenses always exceeded our revenues.
RELATED STORIES
Death by Parking
Were poor maintenance and improper inspection
of the Cowles garage fatal?
‘The Stench That Won’t Go Away’
How The Spokesman-Review’s credibility crisis turned deadly
REFERENCES AND LINKS
The Fancher Report
CAMAS MAGAZINE
Independent reporting on the River Park Square controversy.
Especially, see the following:
“Judge Guy Meets Cherie Rodgers” Oct. 5, 2001
Washington state’s former chief supreme court justice opined Spokane is “like a coal-mining town.”
“Cowles Conflict of Interest Draws Censure,” May 15, 2003
In a U.S. Senate hearing, Seattle Times publisher criticizes Spokane family
Former Prudential investment banker Mark Schwartz blasts the River Park Square public/private partnership in a May 3, 2001 letter to the editor to Camas magazine: “Critic Charges Cowleses Jeopardize Future Generations.”
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