American News Company

American News Company
Distributor, wholesaler
IndustryNewspapers, Books, Comics, Magazines
Founded1864 (1864)
FounderSinclair Tousey
Defunct1957 (1957)
HeadquartersNew Jersey, New York City
Key people
Henry Garfinkle, Myron Garfinkle
DivisionsUnion News Company

American News Company was a magazine, newspaper, book, and comic book distribution company founded in 1864[1] by Sinclair Tousey,[2][3] which dominated the distribution market in the last quarter of the 19th century and the first half of the 20th century. The company's abrupt 1957 demise caused a huge shakeup in the publishing industry, forcing many magazine, comic book, and paperback publishers out of business.

Early years

The American News Company had its roots in two New York City newspaper and periodical wholesaling firms: Sinclair Tousey's company on Nassau St., and the firm Dexter, Hamilton & Co. at 22 Ann St. These were the two largest news and periodical wholesalers in New York City at the time of their merger on Feb. 1, 1864, when American News Company was formed. The seven original partners were Sinclair Tousey, John E. Tousey, Harry Dexter, George Dexter, John Hamilton, Patrick Farrelly, and Solomon W. Johnson. These partners formed the core of the company's management until the death of the last surviving partner, Solomon Johnson, in 1913.[4] Sinclair Tousey was the company's first president, followed after his death by Harry Dexter, who was succeeded by Solomon Johnson.

The company's Boston branch was formed by taking over the wholesale periodical business of Boston bookseller Alexander Williams. In 1854, Williams had bought out the business of Fetridge & Co., which operated on the corner of State St. and Washington a large magazine store known as the Periodical Depot or the Periodical Arcade.[5] Williams worked up an extensive trade as a jobber of newspapers and periodicals to out of town dealers all over the East Coast, and by the time ANC was organized the wholesale side of the business had grown too large for Williams to handle alone. Along with two smaller competing firms, Dyer & Co. and Federhen & Co.,[6] the Boston trade was reorganized as a subsidiary of American News under the name New England News Company, with Williams as one of the principal shareholders. Initially an officer of the new corporation, Williams was a bookstore proprietor at heart and left soon afterward in 1869 to take over the famous "Old Corner Bookstore".[7]

Two years after the company formed it added to its newspaper and magazine business a book jobbing department, under the supervision of a Mr. Dunham; this grew to be one of the largest in the country.

With the end of the Civil War, the firm grew rapidly along the expanding railroads as they opened up the West, with the commencement of coast-to-coast continental rail service in 1869. Legislation passed by Congress required the railroads to transport newspapers and periodicals as second class bulk mail at a special low subsidized rate—one cent per pound for any distance between news agencies, so that a bundle of New York newspapers could be sent across the continent to Los Angeles for the same price that it could be shipped across the river to Newark—and ANC exploited the availability of cheap rail transport to expand their distribution network across the continent, so far ahead of the competition that they effectively shut any possible rivals out of the market, establishing their periodical depots by the hundreds in every city and large town on the rail system. At the same time, the number of periodicals being published in America was exploding: Frank Mott, in A History of American Magazines, estimates that the number of titles being published boomed from 700 at the end of the Civil War to 3300 in 1885.[8]

In 1893, an article in The American Newsman summed up the company's success: "It is as the keeper of a thousand secrets involving the fortunes of publishers and authors that the American News Company surrounds its vast and intricate system with an atmosphere of mystery, so that few persons have any idea of its really astounding proportions. It has gradually absorbed the smaller organizations until it now embraces thirty-two powerful news companies, with an annual operating expense of $2,488,000 and an annual business of something like $18,000,000. This organization handles the bulk of the reading matter of the United States and supplies nearly nineteen thousand dealers."[9]

On any given day, a hundred new issues of the thousands of titles ANC handled would typically be fed into the ANC distribution system. In New York City alone (at that time consisting solely of Manhattan and the Bronx) 125 wagons and drivers crisscrossed the city every day making deliveries, with 14 local neighborhood substations.

ANC employed directly in 1893 1,154 people, with a weekly payroll of $16,255; with $1 million in real estate holdings and $1.4 million in merchandise on hand. It extended extensive credit to the firms it did business with and $800,000 was due at any given time in accounts receivable from dealers around the country. It owned outright 18 buildings around the country and rented 39 more, and had $200,000 invested in horses and wagons. The branches of the company at this time were located in Albany, Baltimore, Boston, Brooklyn, Buffalo, Chicago, Cincinnati, Cleveland, Denver, Detroit, Kansas City, Montreal, Newark, New Orleans, Omaha, Philadelphia, Pittsburgh, Providence, San Francisco, Springfield (Mass.), St. Louis, St. Paul, Toronto, Troy, and Washington D.C. These branches were organized as subsidiaries under different names, for example the Chicago branch was the Great Western News Company, founded in 1866. The International News Company, on Duane Street in New York, was the branch handling the company's extensive overseas business. A branch called the Union News Company existed solely to sell newspapers and magazines on the railroads, with 300 newsstands in railroad stations which by 1893 covered 40% of the entire US railroad system, paying $1000 a day for exclusive rights. Under this system, Union News could keep the Chicago Tribune out of the Chicago area train stations until the Tribune agreed to their terms. In 1958, the FTC found that Union News was operating nearly a thousand newsstands around the country (the next largest operator had 57), putting Union News in a position to dictate terms and demand rebates from publishers.

Typically, in the post-Civil War era, ANC in its position as the middleman between publishers and newsstand dealers would allow the newsstand dealers to keep between 5 and 10 cents on the sale of a 35-cent magazine like the monthly Harper's, and three cents on a 10-cent magazine like Harper's Weekly. Unsold copies of most titles were fully returnable, although some titles were sold to the dealers as non-returnable at a steeper discount, similar to today's "direct sale" comic book market.

American News's monopoly position in the market was virtually unchallenged until Frank Munsey, frustrated by ANC's refusal to handle his cheap 10 cent pulp magazines, was forced to set up his own distribution, Red Star News.[10] This was the first of the so-called ID or independent distributors. Munsey balked when ANC informed him that 4 cents was the most they would pay wholesale for a magazine that sold for 10 cents retail, and Munsey retaliated by cutting out the middleman and setting up his own distributor to sell directly to newsdealers for 7 cents a copy.[11] Munsey was followed in time by Hearst, Fawcett, Curtis, Annenberg and Donenfeld, all constrained by various factors into setting up their own independent distribution networks outside the ANC monopoly; nonetheless ANC remained by far the dominant firm up until its collapse.

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