The Improbable First Century of Cosmopolitan Magazine

1. Creation

 May 1888, Rochester, New York At noon on a Tuesday late in the month, twenty-eight men met for a hastily scheduled conference at the downtown Powers Hotel. They sat at tables in an ornate reception room adorned with candlesticks and chandeliers for festive occasions, but these local businessmen had convened to learn the extent of their financial loss from the sudden bankruptcy of Schlicht & Field Company . A manufacturer and international distributor of office equipment based in Rochester, Schlicht & Field somehow owed banks and creditors $301,400 it could not pay.1 Reaction among the businessmen to details about the reasons for the bankruptcy varied from astonishment to anxiety to outrage. Many men in the room owned stock in Schlicht & Field, their certificates now worthless—and because the men had pledged their company stock as surety for tens of thousands of dollars in bank loans they were liable personally for much of the debt. Several men at the meeting held promissory notes from the company, their value now zero.Some creditors attended,too,their bills for services and supplies now worth pennies on the dollar. Seven bankers also were in the room, their role to tally company assets consisting of warehouse inventory and ownership of numerous patents for various desk drawer and desktop devices essential to filing and recordkeeping for nineteenth-century businesses. Everyone knew the assets would not cover much of the debt.2 How had this happened? The only man with an answer was absent. Paul Schlicht, at age twenty-nine the president of the company, had refused to attend . His absence dismayed some at the conference; they “thought it strange,” while others there might “draw their own inferences” why Schlicht had stayed away, according to a newspaper article published the same day. So, instead of an explanation from Schlicht, whose deception and mismanagement had bankrupted the company, a bookkeeper from the nearby corporate office told C r e a t i o n 1  The Improbable First Century of Cosmopolitan Magazine stockholders, creditors, and bankers what had happened. His blunt explanation was that a subsidiary venture of Schlicht & Field—a monthly magazine, The Cosmopolitan—had bled the company dry.“The magazine had been a failure ,” the newspaper reported.“It had lost $130,000.” Not only had the magazine failed, taking with it the direct expenditure of a sizable sum, but Schlicht had given away thousands of items from the company ’s inventory to induce people to subscribe. Then he had stopped paying providers of services and supplies to Schlicht & Field because Cosmopolitan needed the money to survive. However, the most stunning revelation at the May conference was that Schlicht & Field had not owned Cosmopolitan for months. A secret transaction by Schlicht in late January had transferred ownership of the magazine—without any payment to the Rochester company— to a new publisher located in Manhattan, and Schlicht had become one of the partners. Since the debut of Cosmopolitan two years earlier as a literary magazine for the family, Schlicht & Field had supported its creation and publication of twenty-five issues. The disastrous venture began with $95,000 borrowed from banks. Stockholders authorized the bank loans for the magazine upon review of a plan submitted by Schlicht, who anointed himself publisher. According to the plan presented to stockholders, revenue from subscribers and advertisers eventually would enable Cosmopolitan to operate independently. The banks accepted surety notes signed by stockholders, the majority of them proprietors of Rochester businesses.3 All of them soon would learn that magazine publishing was more unpredictable than selling office supplies. Schlicht encountered the harsh reality of the intensely competitive magazine marketplace of the Gilded Age. Cosmopolitan’s startup proved costlier than predicted. Door-to-door canvassing for potential subscribers in cities from New England through the Midwest was expensive to organize and coordinate, fees to illustrators and writers exceeded budget, and occasional color for frontispieces inflated the original printing estimate. Despite a substantial amount of capital for its creation, Cosmopolitan required more money just months after its appearance. Schlicht persuaded several company stockholders to provide an additional sum in return for promissory notes. This supplemental investment of $67,000 did not last long either.4 Schlicht & Field was in a bind. Revenue derived from its core business of manufacturing and selling clipboards, desk-drawer organizers, desktop file boxes, file dividers, file holders, paper hole-punchers, and typewriters to office customers across the nation simultaneously financed the company’s operations and the magazine’s persistent deficit. Bills for services and supplies went unpaid.5 The...