Posts Tagged ‘newspaper’

The Newspaper Hoax that Shook the World

08 Aug

The following is an article from Uncle John’s Giant 10th Anniversary Bathroom Reader.

The media’s power to “create” news has become a hot topic in recent years. But it’s nothing new. This true story, from a book called The Fabulous Rogues, by Alexander Klein, is an example of what’s been going on for at least a century. It was sent to us by BRI reader Jim Morton.

Most journalistic hoaxes, no matter how ingenious, create only temporary excitement. But in 1899 four reporters in Denver, Colorado, concocted a fake story that, within a relatively short time, made news history -violent history at that. Here’s how it happened.


One Saturday night the four reporters -from Denver’s four newspaper, the Times, Post, Republican, and Rocky Mountain News- met by chance in the railroad station where they had each come hoping to spot an arriving celebrity around whom they could write a feature. Disgustedly, they confessed to one another that they hadn’t picked up a newsworthy item all evening.

“I hate to go back to the city desk without something,” one of the reporters, Jack Toumay, said.

“Me, too,” agreed Al Stevens. “I don’t know what you guys are going to do, but I’m going to fake. It won’t hurt anybody, so what the devil.”

They other three fell in with the idea and they all walked up Seventeenth Street to the Oxford Hotel, where, over beers, they began to cast about for four possible fabrications. John Lewis, who was known as “King” because of his tall, dignified bearing, interrupted one of the preliminary gambits for a point of strategy. Why dream up four lukewarm fakes, he asked. Why not concoct a sizzler which they would all use, and make it stick better by their solidarity.

The strategy was adopted by unanimous vote, and a reporter named Hal Wiltshire acme up with the first suggestion: Maybe they could invent some stiff competition for the Colorado Fuel and Iron Company by reporting the arrival of several steel men, backed by an independent Wall Street combine, come to buy a large site on which they planned to erect a new steel mill. The steel mill died a quick death; it could be checked too easily and it would be difficult to dispose of later.

Stevens suggested something more dramatic: Several detectives just in from New York on the trail of two desperados who had kidnapped a rich heiress. But this story was too hot; the editors might check the wire services or even the New York City police directly.

Thereupon Toumay and Lewis both came up with the obvious answer. What they needed was a story with a foreign angle that would be difficult to verify. Russia? No, none of them knew enough about Russia to make up an acceptable story. Germany was a possibility or perhaps, a bull-ring story from Madrid? Toumay didn’t think bull-fighting was of sufficient interest to Denverites. How about Holland, one of the reporters offered, something with dikes or windmills in it, maybe a romance of some sort.


By this time the reporters had had several beers. The romance angle seemed attractive. But one of the men thought Japan would be a more intriguing locale for it. Anther preferred China; why, the country was so antiquated and unprogressive, hiding behind its Great Wall, they’d be doing the Chinese a favor by bringing some news about their country to the outside world.

At this point, Lewis broke in excitedly. “That’s it!” he cried, “The Great Wall of China! Must be fifty years since that old pile’s been in the news. Let’s build out story around it. Let’s do the Chinese a real favor, let’s tear the old pile down!”

Tear down the Great Wall of China! The notion fascinated the four reporters. It would certainly make the front page. One of them objected that there might be repercussions, but the others voted him down. They did, however, decide to temper the story somewhat.

A group of American engineers had stopped over in Denver en route to China, where they were being sent at the request of the ruling powers of China, to make plans for demolishing the Great Wall at minimum cost. The Chinese had decided to raze the ancient boundary as a gesture of international goodwill. From now on China would welcome foreign trade.

By the time they had agreed on the details it was after eleven. They rushed over to the best hotel in town, and talked the night clerk into cooperating. Then they signed four fictitious names to the hotel register. The clerk agreed to tell anyone who checked that the hotel had played host to four New Yorkers, that they had been interviewed by the reporters, and then had left early the next morning for California. Before heading for their respective city desks, the four reporters had a last beer over which they swore to stick to their story and not to reveal the true facts so long as any of the others were alive. (Only years later did the last survivor, Hal Wiltshire, let out the secret.)

The reporters told their stories with straight faces to their various city editors. Next day all four Denver newspapers featured the story on the front page. Typical of the headlines was this one from the Times:




Within a few day Denver had forgotten all about the Great Wall. So far, so good. But other places soon began to hear about it. Two weeks later Lewis was startled to find the coming destruction of the Great Wall spread across the Sunday supplement of a large eastern newspaper, complete with illustrations, an analysis of the Chinese government’s historic decision -and quotes from a Chinese mandarin visiting in New York, who confirmed the report.

The story was carried by many other newspapers, both in America and in Europe. By the time it reached China it had gone through many transformations. The version published there- and the only one that probably made sense in view of the absence of any information on the subject from the Chinese government -was that the Americans were planning to send an expedition to tear down the Chinese national monument, the Great Wall.

Such a report would have infuriated any nation. It led to particularly violent repercussions in China at that time. The Chinese were already stirred up about the issue of foreign intervention -Europeans powers were parceling out and occupying the whole country. Russia had recently gotten permission to run the Siberian Railway through Manchuria. A year previously, German marines had seized the port town of Kiachow, and set up a military and naval base there. France followed by taking Kwangchowan. England had sent a fleet to the gulf of Chihli and bullied China into leasing Weihaiwei, midway between the recent acquisitions of France and Germany.

Faced with this danger of occidental exploitation, possibly even partition, the Chinese government under Emperor Kwang-Hsu began to institute radical reforms, to remodel the army along more modern lines, and to send students to foreign universities to obtain vital technical training.

An important segment of Chinese society bitterly resented not only foreign intervention, but all foreign cultural influences, as well as the new governmental reforms. In 1889 Empress Tsu Hsi made herself regent and officially encouraged all possible opposition to Western ideas. A secret society known as the Boxers, but whose full name was “The Order of Literary Patriotic Harmonious Fists,” took the lead in verbal attacks on missionaries and Western businessmen in China by openly displaying banners that read “Exterminate the foreigners and save the dynasty.”


Into this charged atmosphere came the news of America’s plan to force the demolition of the Great Wall. It proved the spark that is credited with setting off the Boxer Rebellion. A missionary later reported: “The story was published with shouting headlines and violent editorial comment. Denials did no good. The Boxers, already incensed, believed the yarn and now there was no stopping them.”

By June 1900, the whole country was overrun with bands of Boxers. Christian villages were destroyed and hundreds of native converts massacred near Peking. The city itself was in turmoil, with murder and pillage daily occurrences and the foreign embassies under siege.

Finally, in August, an international army of 12,000 French, British, American, Russian, German, and Japanese troops invaded China and fought its way to Peking. There, the troops not only brought relief to their imperiled countrymen, but also looted the Emperor’s palace and slaughtered innumerable Chinese without inquiring too closely whether they belonged to the “Harmonious Fists” or just happened to be passing by. The invading nations also forced China to pay an indemnity of $320 million and to grant further economic concessions. All this actually spurred the reform movement, which culminated with the Sun Yat-Sen revolution in 1911.

Thus did a journalistic hoax make history. Of course, the Boxers might have been sparked into violence in some other fashion, or built up to it of their own accord. But can we be sure? The fake story may have well been the final necessary ingredient. A case could even be made that the subsequent history of China, right up to the present, might have been entirely different if those four reporters had been less inventive that Saturday night in the Hotel Oxford bar.

See also: The Great Moon Hoax, Human Oil (and Other Hoaxes), and Joey Skaggs, The Ultimate Hoax Meister.


Reprinted with permission from Uncle John’s Giant 10th Anniversary Bathroom Reader, which comes packed with 504 pages of great stories.

Since 1988, the Bathroom Reader Institute had published a series of popular books containing irresistible bits of trivia and obscure yet fascinating facts.

If you like Neatorama, you’ll love the Bathroom Reader Institute’s books – check ‘em out!


Over The Past 4 Years News Corp Generated $10.4 Billion In Profits And Received $4.8 Billion In “Taxes” From The IRS

12 Jul

Call it the gift that keeps on giving (if one is a corporation that is): the US Tax system, so effective at extracting income tax from America's working class, is just as "effective" at redistributing said income tax at the corporate level. Case in point: News Corp, which after generating $10.4 billion in profits over the past 4 years, and which would have been expected to pay the IRS $3.6 billion at the statutory corporate tax rate, instead received $4.6 billion back from Uncle Sam. Bottom line: Murdoch's corporation had a cash paid tax rate of -46% between 2007 and 2010. The culrpit: two little somethings called Deferred Tax Assets and Net Operating Loss Carry-forwards.

The chart below shows News Corp's profits and annual cash tax receipts.

Is it all just such IRS tax loopholes as deferred tax assets and NOL carryforward? Not entirely. Reuters explains:

How does Murdoch make money off the tax system? There are three basic elements, disclosure statements show.

One is the aggressive use of intra-company transactions that globally allocate costs to locations that impose taxes -- and profits to areas where profits can be earned tax-free.

For that Murdoch can thank laws and treaties that treat multinational corporations much more generously than working stiffs, such as those who make up the audience for his New York Post and for his British tabloids with bare-breasted women. Working stiffs have their taxes taken out of their pay before they get it, while Murdoch gets to profit now and pay taxes by-and-by.

News Corp. has 152 subsidiaries in tax havens, including 62 in the British Virgin Islands and 33 in the Caymans. Among the hundred largest U.S. companies, only Citigroup and Morgan Stanley have more tax haven subsidiaries than News Corp., a 2009 U.S. Government Accountability Office study found.

News Corp. had nearly $7 billion permanently invested offshore in 2009, money on which it does not have to pay taxes unless it brings the money back to the United States. Meanwhile, it can use that money as collateral for loans in the United States, where interest paid is a tax-deductible expense.

Granted, this practice accounts for a very modest portion of the total tax receipts. The two far greater culprits are acquired NOLs...

Buying companies with tax losses is a second way Murdoch can pocket, rather than pay, taxes. In three deals to acquire American television stations -- in 1985, 1990 and 2001 -- questions were raised about whether Murdoch entities were in compliance with American rules limiting the ownership stakes of foreign investors.

A memo, turned over to the Federal Communications Commission during one of these inquiries, showed that in 1990 Murdoch's advisers were, in the words of Michael Gardner, an outside counsel to News Corp., "in agreement that it is paramount to avoid any corporate restructuring which would potentially invite reexamination of Fox TV's ownership structure" by the FCC.

In 1995, the FCC general counsel, William Kennard, said that a two-year investigation requested by rival NBC and the National Association for the Advancement of Colored People (NAACP) found that "Fox did not clearly or explicitly disclose" News Corp.'s ownership stake in American television stations as required. However, Kennard said this lack of candor was insufficient to require a hearing into whether Fox had intended to deceive the commission.

... and, yes, deferred tax assets:

Murdoch's tax lawyers are expert at maximizing the benefits of deferrals. Incurring a tax today, but paying it by-and-by can be profitable. A dollar of tax deferred for 30 years, and invested at 8 percent real growth while inflation runs 3 percent, is worth more than $10 at the end of the period, while the real value of the tax when it is ultimately paid is just 40 cents.

Last year News Corp. had net future tax assets of $3.3 billion. In the past four years News Corp. has either used up a lot of its tax benefits or had them expire. In 2007 its net tax assets were $5.7 billion.

At this point Reuters takes a rare departure from its dry factual reporting to poke some fun at the billionaire, whose empire, and reputation, is suddenly crumbling before his eyes:

Fox News, the editorial pages of his Wall Street Journal and other Murdoch outlets often rail against taxes. Their attacks on government benefits for the elderly, the sick, the jobless and children focus attention on the uses of tax dollars and away from his aggressive efforts to enjoy the benefits of civilization without paying for them.

Many other companies may follow similar practices but most of corporate America doesn't own one of the country's most powerful newspaper editorial pages.
Murdoch assiduously courts the powers-that-be for favorable laws and regulatory rulings. Contrast that with the rough and sometimes relentless attacks on politicians and government programs of his newspapers and his Fox News Channel.

Murdoch's news outlets can prove enormously helpful to politicians. His support boosted Hillary Clinton's 2000 campaign for the U.S. Senate from New York, helping her to beat Republican Rick Lazio. Murdoch even hosted a Clinton re-election campaign fundraiser in 2006, while restraining New York Post gossip mongers who looked on her husband as red meat in the White House.

Murdoch gets invited to weddings and celebrations of top American, British and Chinese officials. He flew Tony Blair halfway around the world to a company event in Australia when the future British prime minister was opposition leader.

Imagine how well Jesus might have done if he had put a corporate jet at Caesar's disposal. Or if he had a tabloid like the News of the World to put Caesar in fear of him.

However, in the interest of objectivity, News Corp. is merely one of many corporate transgressors who take full advantage of the massive loopholes in America's tax code. From Bloomberg.

American International Group Inc. (AIG), Citigroup Inc. (C) and General Motors Co. (GM), once the largest insurer, bank and automaker, hold a new distinction after losses forced them to take bailouts. The firms accumulated some of the biggest deferred tax assets that may lower obligations to the government that rescued them.

Losses at New York-based AIG and its subsidiaries helped rack up more than $25 billion in the assets. That’s worth more to AIG’s share price than its plane-leasing business with 933 aircraft, according to Bank of America Corp.

“They’re in the same class of GM and Citigroup in terms of the largest I’ve ever seen,” Robert Willens, an independent tax consultant in New York, said of AIG. “Any one of them is in the hall of fame of large deferred tax assets.”

Citigroup’s $23.2 billion of carry-forwards as of Dec. 31 include benefits from net operating losses and foreign tax credits. The New York-based bank expects to use its entire U.S. federal net operating loss carry-forward this year, according to a regulatory filing. The company valued that asset at about $3.9 billion at the end of last year. Jon Diat, a spokesman for Citigroup, declined to comment.

GM reported $20.1 billion in tax carry-forwards. The automaker amassed tax assets as it posted losses from 2005 to its bankruptcy in 2009, and in some regions outside the U.S. last year. GM is poised to become the No. 1 automaker by sales this year after being passed in 2008 by Toyota Motor Corp.

The sum means the company may not pay taxes to the U.S. until 2018, Adam Jonas, a Morgan Stanley analyst, said in a July 6 research note. Jonas, who swapped GM for Ford Motor Co. as his top U.S. auto pick in the report, said the assets are worth about $9 per share, more than the value of the company’s joint ventures in China. Jim Cain, a spokesman for GM, declined to comment.

As a reminder...

AIG was rescued in 2008 in a bailout that swelled to $182.3 billion. Citigroup received $45 billion from the Treasury’s Troubled Asset Relief Program and $301 billion in guarantees on its riskiest assets. The government sold its remaining stake in the bank in December.

GM was bailed out with $49.5 billion in taxpayer funds as the government backed its bankruptcy in 2009. The Treasury reduced its stake to 33 percent last year in a share sale.

It is probably only fitting that companies that have received massive taxpayer generosity to remain in business continue their tax evasive ways and pay absolutely nothing in cash taxes (and probably, quite the inverse) for years and years. After all, who needs corporate cash: there is always the Fed's printing press to make up for any shortfalls. And non-sheltered, middle-class income tax of course.


M thru F: Well This is Career-Changing News

03 Jul

job fails - Society

White collar crime will be on the rise thanks to M Thru F and legal loopholes.