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The Honest Graft of Lady Bird JohnsonHow she and Lyndon came by their millions.

By Jack Shafer
Posted Monday, July 16, 2007, at 5:06 PM ET
Lady Bird Johnson. Click image to expand.

The perturbed spirit of Lady Bird Johnson will rest until somebody writes a more complete article about how she and her husband became millionaires. Of the top dailies, only the New York Times and the Washington Post obituaries slow to savor the political skulduggery she and her husband, Rep. Lyndon Baines Johnson, relied on to pour the foundation of her business empire. Some of the clips find her scheme to "beautify" America more interesting than her blatant exercise in political graft. (See the deficient obituaries in the Los Angeles Times, the Boston Globe, and USA Today. See the relevant passages here.)

Robert A. Caro examines the roots of the Johnson broadcasting fortune in the second volume of his biography of LBJ, The Years of Lyndon Johnson: Means of Ascent. Although Lyndon Johnson always protested that Lady Bird bought the station on her own and that he applied no political pressure to help her, Caro easily proves him a liar.

In 1943, the year Lady Bird Johnson purchased KTBC, the Federal Communications Commission, which reviewed all broadcast-license transfers, was close to being abolished, Caro writes. Lyndon Johnson used his political influence in both Congress and the White House to prevent that from happening. The FCC was among the most politicized agencies in the government, Caro asserts, and it knew who its friends were.

Johnson socialized with FCC Commissioner Clifford Durr at the time, "sometimes at Durr's home, sometimes at his own," although Durr says Johnson never mentioned Lady Bird's application for KTBC's license. Lady Bird, however, directly approached Durr about the station, and Lyndon phoned James Barr of the FCC's Standard Broadcast Division. "He wanted to get a radio station, and what I remember is, he wouldn't take no for an answer," Caro quotes Barr.

Legendary Democratic fixer Tommy "The Cork" Corcoran also helped with the KTBC application—"all up and down the line," is how Corcoran put it. Asked in an interview whether Johnson's status as a member of Congress helped his wife's application, Corcoran said, "How do you think these things work? These guys [FCC staffers] have been around. You don't have to spell things out for them."

The Los Angeles Times and USA Today obituaries make it sound as if KTBC were a congenitally unprofitable station at the time of Lady Bird's bid and give the impression that she was the lone suitor for the property. That was not the case, as Caro documents the identities of the other interested bidders.

Once Lady Bird completed her purchase of KTBC, the "five years of delays and red tape, or delays and unfavorable rules" from the FCC that had stymied the previous owners "vanished … and slowness was replaced by speed," according to Caro. In short order she got permission to broadcast 24 hours a day (KTBC had been a sunrise-to-sunset station) and move it to 590 on the dial—"an uncluttered, end of the dial" where it could be heard in 38 surrounding Texas counties. It was no coincidence. Lyndon and Lady Bird recruited a new station manager, promising 10 percent of the profits, and Lyndon told him that the changes in the license restrictions that would make KTBC a moneymaker were "all set." In 1945, the FCC OK'd KTBC's request to quintuple its power, which cast its signal over 63 counties.

When Lyndon visited William S. Paley, president of CBS radio, and asked if KTBC could become a CBS affiliate and carry its lucrative programming, he didn't have to spell out why the request should be granted. The radio networks feared the regulators in Washington as well as the members of Congress who regulated the regulators. KNOW in Austin had been repeatedly denied the affiliation because a San Antonio "affiliate could be heard in Austin." CBS Director of Research Frank Stanton approved Johnson's request.

Johnson shook down powerful companies to advertise on the station. Local businesses that wanted Army camps to remain located in Austin knew one way to secure Lyndon's help was to advertise on KTBC. Caro writes:

… Mrs. Johnson's ability as a business woman was not the crucial factor in the acquisition of the station or, once it was acquired, in its early growth. ... Lyndon Johnson had worked at politics for years to achieve power; now he was working at politics to make money.

Under Texas law, the station belonged solely to Lady Bird because she purchased it with her inheritance. But as her spouse, Lyndon owned half of all the profits. He was ultra-active in recruiting staff and running the operation, and by 1948, Caro writes, he was telling his friends that he was a millionaire.

The Johnsons earned thousands from their radio station but millions from their TV stations, writes former FCC official William B. Ray in his book, FCC: The Ups and Downs of Radio Regulation. The commission allocated one commercial station to Austin in the early 1950s, and the Johnsons were its sole applicant. "Filing a competing application would have been a waste of money," Ray writes, because of the Johnsons' political clout. "Whenever there was a business matter to be discussed between CBS and the LBJ stations, Johnson would summon the appropriate CBS personnel to the White House to discuss it," he continues.

Was it graft? The crooks of Tammany Hall distinguished between honest graft—which they considered respectable—and dishonest graft. Honest grafters used political connections, such as tips as to where a new bridge was going to be built, to make surefire investments. Dishonest grafters stole directly from the treasury.

You can rest in peace now, Lady Bird. Your honest-grafting days are over.

******

The Johnsons' hometown newspaper, the Austin American-Statesman, acquits itself on the subject of the family fortune in its Lady Bird obit. Send your spare millions via PayPal to . (E-mail may be quoted by name in "The Fray," Slate's readers' forum, in a future article, or elsewhere unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)

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Jack Shafer is Slate's editor at large.
Photograph of Lady Bird Johnson by Getty Images.
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Remarks from the Fray:

Now that the K Street Project is in full effect, the small scale of the Johnsons' radio station dealings and misdealings is almost laughable. The hundreds of billions of dollars in tax breaks now traded for millions in campaign contributions make the Johnsons look like small-time hicks. The funny thing is, what they did was probably considered a pretty slick deal in its day.

--Arlington

(To reply, click here.)

The word around Austintatious in the 1940s was that because the previous owner couldn't get his license renewed, she bought it for about ten cents on the dollar. $17,000 was one figure I heard.

It gets more interesting when TV came along. She got Channel 7, a VHF channel. Coke Stevenson--who lost to LBJ in the famous landslide election--wanted into the TV bidness. He couldn't get an FCC license because of "too small a market for more than one channel". Waco, half the size of Austin, had two channels. 'Scuse me?

The "10th and Brazos" corporation got into the real estate development business up on Granite Shoals reservoir (now named "Lake LBJ"). The ranchers along the west side of the lake didn't really want to sell. The story is that they were promised unending visits from the IRS folks if they didn't sell.

--Desertrat

(To reply, click here.)

Come on! Sensationalist headlines do not a story make. However Lady Bird acquired her millions via the FCC was purely relative to the times she lived in. Radio was a new medium then, just as the internet is relatively new now - what would be illegal now ("graft" as you call it) wasn't illegal then.

Obviously a brilliant woman for her times, not a candidate for canonization. I for one, applaud her brains and foresight in recognizing the potential and seizing the opportunity of such an investment.

--topazz

(To reply, click here.)

(7/19)

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