Maxwell, The Outsider

by Tom Bower

  Maxwell claimed that he paid £13,000 for all the shares. In February 1969, at a graduate seminar on business studies held at the London School of Economics, he said that he paid 'a relatively small sum of money'. Pertinently, the self-made millionaire also outlined to the students how he raised the money to buy Rosbaud's infant publishing house in 1951: 'As I had no other capital other than my gratuity [i.e. on demobilisation from the army in 1947], the capital was provided from three sources. First a loan from Hambros Bank; secondly, a contribution by some of my relatives and friends in America; thirdly, a contract with Her Majesty's Stationery Office to supply them with out-of-print wartime German scientific material for which they paid in advance.'

  Rosbaud and his three staff joined Maxwell in Neal Street without celebration. They were given a small office and were instantly forgotten. The only formality was to produce a name for the new company. Orton toyed at first with Athena Press after the goddess of wisdom, but discovered that the name was already registered. He then suggested Pergamon, the Greek town in Asia Minor where stood the Altar of Pergamon, dedicated to Athena. Maxwell summarily approved the suggestion and soon after received from Heinz Gotz, a friend, a reproduction of the Pergamon coin found at Herakleia which shows the head of Athena. He gave it to Rosbaud, commenting that it could be the company's symbol. That settled, Pergamon barely featured in Maxwell's thoughts for the next four years. He had embarked on an adventurous scheme which would win him the fame which he desired.

  3

  The members of the Garrick Club in London are predominantly men of letters - actors, writers and publishers - and lawyers. It was the natural rendezvous in early 1951 for Arthur Coleridge, the great-grandson of England's Lord Chief Justice and a relative of the nineteenth-century poet, to meet an acquaintance for an early-evening drink. Coleridge, who during the war had worked in the Cabinet Office, was the managing director of an ailing book-wholesaler called Simpkin Marshall which was owned by Pitmans, then one of Britain's major publishers. His host at the Garrick was Count Vanden Heuvel, Charles Hambro's business scout, whose elegant, foreign appearance impressed Coleridge as it did everyone else. Heuvel had suggested that he might have a buyer for Simpkins called Robert Maxwell.

  Simpkin Marshall was a unique British institution, acting as the wholesale intermediary between publishers and the retail bookshops. The book trade was, then as now, fragmented, and the cost of ordering and distributing single copies of books to every shop in the country was high. Simpkin Marshall, like their only competitor W.H. Smith, offered bookshops a central warehouse from which to obtain books from every publisher. In the trade it was known as the 'single copy wholesale'. Simpkins' pride was that it stocked nearly every book in print and many books which had been long forgotten, and that any telephone order could be delivered by the following day. Since the bookshop paid the same price buying from Simpkins as it paid buying direct from the publisher, Simpkins earned its profits by obtaining the books from the publisher at a lower price than the shop. With an annual turnover of over £1 million, Simpkins' profits before the war were quite acceptable. That state of affairs came to an abrupt end on 29 December 1940, during one of the worst nights of the Blitz, when Simpkins' warehouse in the City of London was hit and four million books were destroyed. Demoralised, Simpkins' owners decided voluntarily to liquidate their business.

  A group of leading publishers were anxious to maintain the institution. They bought Simpkins' goodwill and urged the publisher James Pitman to lease part of a new warehouse which he had built out of speculative philanthropy in Neasden, north London, called the Book Centre. Initially, the publishers and Pitman hoped that the new venture could be run as a co-operative for the book trade but they found little support. Most publishers, before the war, had become unhappy with the narrower profit margin received on the sales which went through Simpkins rather than direct from their own warehouses.

  Nevertheless, Pitman, committed to the notion of a central warehouse, tried to rebuild the business at his own risk. A new, more centrally located warehouse was rented in 1944 at Rossmore Court in Marylebone and stocks were gradually rebuilt. Yet by 1947 the new company's modest annual profits had turned to huge losses and the prospects were grim. The warehouse was too small, too much of its stock was printed on poor-quality wartime paper, and its labour costs were rocketing. Moreover, in the new era, the civilised cohesion which had cemented the industry for generations was disintegrating. While the book trade unanimously and piously paid tribute to the importance of Simpkin Marshall, individually most publishers in the face of growing competition took a selfish view of their interests. Increasingly they were unwilling to give Simpkins special discounts and preferred to deliver direct to shops. Even those who sat on Simpkins' board were undermining the business by squeezing its profit margins. By 1951, when Simpkins' debts to Pitmans amounted to more than £250,000, James decided to dispose of the institution. It fell to Coleridge to make the first contact with a prospective purchaser, Maxwell.

  Since the Garrick was not appropriate for a business meeting, Coleridge and Heuvel took a taxi to the Savoy Hotel and met Maxwell in the bar. Coleridge, the only Englishman of the three, was immediately impressed. Maxwell, wearing fine-cut tweed, looked and sounded the proverbial English gentleman. The dark, handsome young man with clipped moustache and huge bushy eyebrows gave out a hypnotic quality which 'magnetised' Coleridge. Even compared to Heuvel, dressed in a Savile Row suit, Maxwell shone. The only flaw which Coleridge noticed on that first day was a slight imperfection in the Captain's English: he used plural nouns when singular were required.

  Heuvel had judged Maxwell's interest in Simpkins perfectly. Several Jewish refugees had recently established themselves in London as successful publishers because they had spotted the deficiences of the crusty, arch-conservative scions of the British trade. For Maxwell, Simpkin Marshall was a typical example of a good idea which, because of bad management, had turned sour. He recognised that whatever notable qualities the British possessed, they were not blessed with an aggressive sense of business and viewed money-making with distaste. For the refugee, the British disdain for ruthless negotiations and trading reflected an ineptitude which he could exploit. Buoyed with immeasurable self-confidence, he was certain that his energy and talent could revive any bankrupt businesses. In Simpkins' case, he needed only to persuade the publishers not to be shortsighted: after all, German publishers had long supported a central warehouse for book distribution. As he explained to Coleridge in the Savoy bar, he hoped to create the same institution in Britain. His only question to Coleridge was: would he help? Coleridge agreed and without any further questions Maxwell began negotiating the purchase of the bankrupt company from Pitmans. It was a decision which would never cease to haunt him.

  One indicator seemed to be favourable. Over the previous financial year Pitman had turned a £23,000 loss into a £17,000 profit. On balance, the deal which was struck seemed advantageous to Maxwell - although, according to one accountant's investigation four years later, Simpkins had actually lost £34,261 that year.

  Maxwell paid Pitmans £160,000 for the total ownership of Simpkins, whose assets Pitmans had valued at £250,000. But Maxwell was required to pay only £50,000 (part of which he borrowed from Hambros Bank) immediately. The remaining £110,000 was due in nine half yearly instalments over the following years. Significantly, the whole £160,000 was immediately entered in Simpkins' accounts as a debt owed by the company to Maxwell although he had paid only £50,000. Until its eventual collapse, Simpkins' accounts would always show a debt owing to its managing director. That accounting procedure was commented upon adversely a few years later. Pitmans was also owed about £108,000 by Simpkins; this debt was dealt with by Pitmans agreeing to write off £35,637 of its losses completely and account for the remaining £72,590 of the money by using the services of the Book Centre in Neasden. In theory, Maxwell had negotiated a bargain which, if properly managed, would secure for him respectability and a voice among
the power-brokers.

  Soon after the transfer was finalised, Maxwell issued his very first press statement to the trade magazine, the Bookseller. Like thousands of other statements over the next decades, his first was characterised by its optimism, ambition and promises: ‘I am determined that this will prove to be a long and successful chapter, founded on an even greater improvement in services to both booksellers and publishers. . . . Nothing will be spared to promote the completeness and efficiency of this service in every way.' After explaining how Simpkins would be expanded, especially by export sales, Maxwell pledged 'all my energies' to develop goodwill. Two weeks later his confidence was rewarded by the trade. Under the headline 'Man of the Hour', the Bookseller sought to dispel the fears of those who were evidently 'a trifle startled' about 'the burning question in the book trade just now: Who is Robert Maxwell?'

  The magazine's answer to its own question was glowing. After mentioning Maxwell's courageous war record, it described how 'he was asked by a number of prominent German publishers to help them restart their exports' and how the business had expanded ever since although 'there was nothing to prevent them, had they so wished, from thanking Maxwell for his services and then politely bidding him good-day. The fact that no German publisher has chosen to exert this independence is itself eloquent testimony to the efficiency of Lange, Maxwell and Springer as a selling agency.' Trusted by the Germans, Maxwell was also said to be dynamic, having travelled 800,000 miles since 1947 to speak to his customers in any of his nine languages. All that and more, said the Bookseller, would be placed at Simpkins' disposal; in particular the remarkable publicity machine which he has built up at Lange, Maxwell and Springer, and which regularly and continuously feeds up-to-the-minute information to the 480,000 people in all parts of the world who have reported their specialised book requirements to L.M. & S., will be placed fully at Simpkins' service.' Maxwell now had to match his promises with performance.

  Maxwell's first weeks at Rossmore Court are remembered by Coleridge and others as enjoyable. For those accustomed to the pace of traditional managers, Maxwell's dynamism and especially his speed of calculation - 'always on the back of an envelope' - was inspiring. After two weeks he announced a survival plan which involved selling all of Simpkins' stock, negotiating bigger discounts and persuading publishers to deposit books at Simpkins on sale or return. Everything depended upon overcoming the publishers' prejudice and shortsightedness.

  Coleridge was appointed as Maxwell's 'ambassador' to arrange the blitz of introductions. The clubbable heir of a judge and the ambitious offspring of a peasant attended many meetings but won few converts. 'They were a severe, tight community who lived in the Garrick,' recalls Coleridge, 'and couldn't stand the sight of an upstart, especially someone who was so brash.' Nevertheless, Simpkins' turnover did begin to increase and that year's profits headed towards £50,000, but Maxwell was impatient. At the beginning of 1952, he decided that the cause of Simpkins' shortcomings was the division of the warehouses between Rossmore Court, which was too small, and Neasden, which was badly located. His recipe was to bring all his businesses, including LMS, under one roof by procuring bigger and more impressive premises.

  The site chosen as the headquarters of the whole Maxwell empire was a former bottling plant, abandoned by the brewers Fullers, situated on the Marylebone Road in central London which was later rebuilt as the headquarters of Woolworths. Maxwell overlooked its obvious deficiencies - it was old, was built of wood, had few telephones and as a former bottling plant was totally unsuited for a book warehouse which needed vast shelving. He also ignored Simpkins' insolvency. He was impressed by its major advantage which was that it was very big and matched his ambitions. Soon after the purchase, he renamed the warehouse 'Maxwell House', brushing aside those who tried to dissuade him because of the comical comparisons with the brand of instant coffee. But he was unable to ignore the loud demands by the local authorities who threatened to close the site immediately as a fire hazard. He had bought the lease without estimating the price of the necessary extensive rebuilding, which he would later claim had cost £63,000 although Orton confided to Tonjes Lange that the real cost was £140,000.

  Those who moved the tens of thousands of books into Maxwell House in summer 1952 have one predominant recollection: 'Maxwell was always shouting, "I want it done yesterday.'" Impatiently he strode through the new warehouse tipping up boxes of carefully packed books, cursing about the loss of a day's business. The newly appointed manager of the warehouse, who is today still fond of his former boss, was amazed: 'His personality was like a sledgehammer. He could not adjust it to match his partners.' Within days, Simpkin Marshall was back in business with a lot of goodwill from the staff. 'He represented Simpkins' only hope for salvation,' recalls another manager, who initially wished him well. Another decided after two and a half days that he would prefer another job and went to Maxwell to submit his resignation. 'Resign? After two and a half days,' shouted the employer. 'Never! You're fired.'

  Maxwell House was a pot-pourri of nationalities. On the first three floors were four hundred partially unionised Simpkin Marshall employees who worked amid stacking shelves which were strung between old bottling machines. Above them were the staff and stock of LMS. Most of those storemen were former Czech and Polish soldiers who regularly fought among themselves but were convinced that their boss had arrived in Britain with 'pips in his pocket'. On the top floor, across gangplanks laid over the open roofs, was an office set aside for Rosbaud and Pergamon, while over another roof was an office housing Lassen and Hickey, who were deeply immersed in barter deals. Maxwell House would have been better named 'Maxwell's Bazaar': under one roof, deals were being struck in German scientific journals, Argentinian pork bellies and practically every book currently published in Britain. Gunther Heyden, working for LMS, can remember 'a mad combination of refugees speaking Yiddish, cockneys and English aristocrats from Oxbridge. A lot of suspicion between everyone. There were cliques and factions and everyone was convinced that Anne Dove was keeping them out.' Heyden's awareness is substantiated by the confessions of Simpkins' sales manager, who worked on the next floor down and deliberately behaved 'more British than the British' to avoid any taint of the 'Mitteleuropa above us'. Maxwell, of course, was oblivious to any tensions or to the notion that Maxwell House was a high-risk social experiment. Bringing all his businesses under one roof made, he believed, good commercial sense. The rambling building might create confusion but that was ideal for maintaining rigid compartmentalisation and protecting his secrecy. 'He would never want his right hand to know what his left hand was doing,' says Anne Dove. 'Sometimes I'm not quite sure that he knew himself. But it was part of his success which was built by making all his instincts work for him.' Ensconced in a huge office, Maxwell presented himself to the outside world as a tycoon - late-night dinners were often delivered from the Savoy - and ordered Coleridge to relaunch Simpkins with a lavish party.

  Throughout his life in Britain, Maxwell was fond of hosting big receptions. Gauging their success is not easy or even fair because so much depends upon the attitude of those invited. As unashamed snobs, some of those who arrived at Maxwell's parties in the early 1950s might have been reluctant to make a pretence of enjoyment, but even fewer attempted the civil gesture when they were invited to the launch of Simpkins which was 'the biggest party the book trade had probably ever seen'. A huge marquee was erected inside the warehouse and, though the atmosphere was stuffy, there was ample to eat and drink. Suddenly a booming voice was heard from hitherto undetected tannoys introducing 'the managing director of Simpkin Marshall, Captain Ian Robert Maxwell MC, and Maxwell began to address his guests from another room. At great length, in a deep cavernous voice, he extolled the virtues of using Simpkins' services. He wanted publishers to change the basis of their relationship with Simpkins and urged them to deposit their books on sale or return. At the end, most of his audience were fidgeting in the foetid atmosphere and beginning to conclude that their prejud
ice was justified. 'The general attitude was, "We don't have to trust this man, so why should we?'" recalls one publisher. Maxwell returned to the marquee, ebullient and convinced that his guests had been impressed. 'It did him more harm than good' was the reaction of one staid guest. But John Brown, one of the younger publishers who would later become Publisher of Oxford University Press, was enthusiastic: ‘I was making my way as well and I admired his courage for taking on the impossible.'

  Maxwell won some successes but the turnover of books was stubbornly stuck. Simpkins' recovery was slower than he had anticipated while his labour costs were mounting. The bloated workforce with its rigid twice-daily tea break and regular strikes was, he decided, an easy target for savings.

  For someone of Maxwell's background, the British unions' inflexible habits and the absence of a recognisable work ethic was, to say the least, frustrating. Simpkins' four hundred employees had little sympathy for the financial plight of their employer and reacted accordingly when Maxwell informed their shop steward that he wanted, immediately, 150 redundancies. The shop steward, Bill Pescott, summoned his local SOGAT official, Bill Keyes, then a young trade unionist, whose career over the following thirty years would be peppered by bitter and emotional fights against Maxwell's bulldog resolve.

  Unlike most other union leaders whom Maxwell would physically confront in his career, Keyes has something more in common with him than just a stubborn ambition to succeed. Both are tall, forceful men who possess an ability to control their naturally volatile tempers to suit the occasion. Both enjoy their battles and detest contemplating defeat. Like all whose public image is aggressive and uncompromising, both believe themselves to be at heart soft, emotional and caring. As a left-wing trade unionist, Keyes has spent a lifetime fighting on his members' behalf the inaptly named press barons of Fleet Street. Fortunately for Keyes, over most of that era the battle was tilted in his favour because the barons routinely succumbed to union demands. By deploying ruthlessness, brinkmanship and a saving dose of reality, Keyes succeeded in frustrating most of the management's attempts to demolish the print workers' restrictive practices. Accordingly, when Keyes was telephoned late one Friday night in 1952 and told that a certain Robert Maxwell, the new managing director of Simpkin Marshall, not only was threatening 150 dismissals but had selected for redundancy exclusively trade union members, Keyes warmed to the prospect of teaching the newcomer the facts of life. What followed was the curtain raiser to a long and respectful relationship; Maxwell himself once said, 'Look, we both come from the same sort of background' - to which the unionist replied, 'Yes, but I haven't forgotten mine.'