The Tweed Jungle

When The Economist's revered editor Rupert Pennant-Rea announced that he was stepping down to become deputy governor of the Bank of England, a bitter power struggle echoed through the once chummy corridors of the world's most prestigious financial weekly. JACOB WEISBERG reports on the uncivil war that cracked the 150-year-old ivory tower

JACOB WEISBERG

Throughout its distinguished 150year history, The Economist has been as lofty and collegial a place as anyone in journalism would ever care to work, the kind of Olympian establishment to which the inkstained wretches of Fleet Street dream about retiring. The magazine is probably read by more presidents, prime ministers, and chief executives around the world than any other. It has long been a breeding ground for members of Parliament and a powerful influence on No. 10 Downing Street. The positions it takes, on issues from the Gulf War to GATT to the legalization of drugs, change the minds that matter. People take the intellectual leadership of such an organ seriously, perhaps too seriously for its own good. Maybe it was naive to think that such a prominent publication could remain an ivory tower forever.

In the last four months, the magazine's genteel, glass-enclosed aerie overlooking Buckingham Palace has been shattered by an explosion of backbiting, gossip, and rivalrous animosity. The unseemly behavior was triggered by the sudden resignation of the editor, Rupert Pennant-Rea. For seven years, the universally revered Pennant-Rea commanded a talented group of young writers and editors who were content to beaver away behind a gray facade of authoritative anonymity, writing sharp editorials and dropping incisive comments at staff meetings, where they sit on the floor of the editor's office, literally at his feet. But rather like the death of Tito, the great leader's departure lifted the lid off a caldron, revealing hostilities no one knew were bubbling underneath. An unexpected and unexpectedly nasty succession struggle has subjected the quintessentially English institution to an extremely un-English kind of catfight, turning a place staffers have fondly compared to an Oxford common room into a kind of Euro trading pit—Barbarians at the Gate in Tweeds.

The melodrama began when Sarah Hogg, an ex-Economist staffer who is John Major's closest adviser, reportedly prevailed upon the prime minister to name—or, technically, prevailed upon Major to prevail upon the Queen to name—her old protege and officemate Pennant-Rea as deputy governor of the troubled Bank of England. On Friday, January 22, Norman Lamont, the chancellor of the Exchequer, called the editor into his office at No. 11 Downing Street and offered him the job. Lamont did not have to mention that the position had an added promise: at 45, Pennant-Rea would in all probability be made number one once the chainsmoking 54-year-old governor, Eddie George, departed.

Pennant-Rea asked for time to think; the 10 years he had said he would spend at the magazine wouldn't be up until 1996, and he thought being editor of The Economist was "the nicest job in the world." But Lamont told him that he needed an immediate decision. "I was not planning to leave at all in the near term, certainly not in the middle of our 150th anniversary," says PennantRea. "But doors like that don't open very often."

There was barely time to report the news to The Economist's tiny staff of about 50 writers and editors before the government press conference scheduled for later in the day. "It came as a total shock to me," says Mike Elliott, the Washington bureau chief.

The appointment of a journalist to the Bank of England was deemed an insult to the institution by several other magazines. Worse, it was speculated that it was a reward for Pennant-Rea's aggressive advocacy of John Major's policy of entering the European system of fixed exchange rates—a disastrous move that resulted in an estimated loss of $ 18 billion to the British Exchequer in a single day last September.

But whether or not Pennant-Rea redeems himself in politics, no one would dispute his brilliance as editor of The Economist. Most staffers credit him with the magazine's enormous success in the 1980s. Between 1978 and 1992, its circulation skyrocketed from under 150,000, weighted heavily toward Britain, to 510,000 in 170 countries, the largest being the U.S., where it sells 200,000 copies a week. Profits zoomed from nil in 1981 to about $16 million last year, and the North American edition now sells more ad pages than Time, Newsweek, or US. News & World Report. Much credit for the boom in the States goes to the magazine's new chief executive, Marjorie Scardino, the eagleeyed head of North American operations for the past eight years.

Intellectually, The Economist's boom was linked to the era of Thatcher and Reagan—a period marked by the emergence of an international English-speaking business elite, and by the ascendancy of the magazine's belief in "free minds, free markets" throughout the world. But journalistically its success was bound up with the editorship of the man everyone calls Rupert, whose nasal drawl some might mistake for uppercrust British, but which is actually infused with notes of Rhodesia, where he was bom, and Dublin, where he was educated.

Rangy, goofy-looking, with a deadpan demeanor, pre-fashionable sideburns, and a greasy comb-over, all of which bring to mind John Cleese, Pennant-Rea left a junior position at the Bank of England in 1977 to join The Economist as a writer on international economics. His handwritten test piece on public borrowing, which was his first work of journalism, went into the magazine unedited. By 1981, when he succeeded Sarah Hogg as economics editor, he had evolved from a Labourite into an anti-govemment, antiinflation zealot. When editor Andrew Knight resigned in 1986 to become chief executive of the daily and Sunday Telegraph (he is now head of Rupert Murdoch's News International), PennantRea won the much gentler succession contest over Hogg, political editor Simon Jenkins, who later became editor of the London Times, and Nico Colchester, the foreign editor of the Financial Times, whom Pennant-Rea later made his deputy.

The same year, Pennant-Rea solidified his new prominence by marrying his third wife, Helen Jay, a famous 60s beauty renowned for once wearing go-go boots to Buckingham Palace. But Rupert is no radical-chic socialite. Often at work by five A.M., he has been known to fall asleep at dinner parties, and once made it to a reception in Moscow for the opening of the magazine's bureau only to leave after talking to his deputy for 20 minutes. In person, he conveys a sense of seriousness, strong opinion, and wry humor, which are all hallmarks of the newspaper, as it still fastidiously calls itself.

Several top staffers resigned following Pennant-Rea's promotion, not so much out of any antipathy—though some find him forbiddingly aloof—but because of the then boom in British journalism. The Economist's, most talented writers and editors were aggressively wooed by other magazines and newspapers, including The Independent, which was just starting up. Pennant-Rea promptly hired younger replacements, expanded the journal's coverage of finance, and started an Asia section. He also added new features, including the three-page "specials" that follow the "leaders" (Brit-speak for editorials), the Bagehot column about British politics (pronounced "Badjit," and named for sainted editor Walter Bagehot, 1860-77), and the Lexington column, which casts an anthropological eye on America.

Even those who find Pennant-Rea a cold fish personally stand in awe of his achievement in building The Economist's international stature and influence. Everyone found it difficult to imagine the magazine without him.

Pennant-Rea probably could have handpicked his successor, but when he resigned he announced that the competition would be open, and that he would stay out of it. "People leaving jobs may have strange and deeply irrelevant motives," he explains. Some read Pennant-Rea's recusal as a pointed nonendorsement of his deputy, Nico Colchester, who thought he was heir to the throne. "I suppose suspicious minds interpret abdication in many different ways," Pennant-Rea says with a hint of mischief.

On the following Tuesday, January 26, the directors met in the 14th-floor boardroom, lined with decaying leather-bound volumes of The Economist, and settled on the selection process, Applicants were to submit a "manifesto," a 250-word essay on what they would do as editor. Nonapplicants were invited to write the board, stating their opinions on the candidates. A three-man committee would then interview the top contenders and make a recommendation to the full board, which would choose the winner. Sir John Harvey-Jones, a flamboyant 69-year-old management guru who is the chairman of The Economist's board, was named head of the selection committee. Favoring florid ties and salty language, Sir John resembles an ennobled Captain Kangaroo. After retiring as chairman of Imperial Chemical Industries, he became Britain's best-known entrepreneur through his BBC television show, Troubleshooter, on which he bluntly analyzes various British businesses.

By the end of the succession battle. The Economist reached "a fever pitch of anxiety and neurosis."

Harvey-Jones was reported to favor a name candidate from outside the magazine—perhaps Sarah Hogg, or Peter Jay, a former ambassador to the U.S. who happens to be PennantRea's brother-in-law. But when they declined to show interest, HarveyJones was persuaded that a magazine as successful as The Economist should make its choice intramural ly. The views of the two others—Sir Adrian Cadbury, the hereditary chocolate magnate, and Frank Barlow, the selfmade director of Pearson P.L.C., the company that owns the Financial Times and half of The Economist— were unknown, though Barlow was thought by some to favor Colchester, with whom he had worked on the F.T.

Members of the selection committee decline to say how many hopefuls applied, but out of some 50 full-time staffers, 10 acknowledge tossing their bowlers in the ring. "The process had to be fairly open and fairly public," says David Gordon, the paper's former chief executive, who assisted the committee. "There was no way to disguise the fact that a lot of people were interested."

On February 5, a rather lengthy shortlist of nine candidates was posted by the elevators, and the horse race was on. The five strongest contenders were Nico Colchester; Bill Emmott, the Sphinxlike business-affairs editor; Clive Crook, the magazine's economics editor and intellectual boy wonder; Matt Ridley, who left the magazine last year to oversee his family estate and write a book about the evolution of sex; and Mike Elliott, the gregarious Washington bureau chief. (Four lesser prospects included an American, Jim Rohwer, the magazine's Hong Kong chief; Frances Cairncross, the environment editor; Daniel Franklin, the Britain editor; and John Grimond, the foreign editor. The only known internal candidate who didn't make the cut was David Lipsey, a writer for the Britain section.)

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The Economist's tower on St. James's Street and the British press began buzzing with speculation about the contest and its implications for the soul of the magazine. There were various ways to make sense of the shortlist, which was laced with overlapping loyalties, friendships, and past connections. The most obvious interpretation to those on the inside was that it represented an upstairs-downstairs power struggle between the 13th and 12th floors. Though many of the nine semifinalists have worked on both levels, the two floors are quite distinct. The 13th is where the foreign and domestic political staff resides, as well as the editor, Pennant-Rea, and his deputy, Colchester. The 12th, which houses the business writers and editors, is an independent duchy run by Emmott. The 13th is more British. The 12th is more American.

The 12s view the 13s as woolly-headed liberal academics who don't understand economics. The 13s stereotype the 12s as bloodless techno-heads and libertarian ideologues. This is not entirely surprising, since the 12th is intellectually and stylistically dominated by the brilliant, impish Clive Crook. Crook is 38, but looks more like a teenager in the gray flannel slacks, white oxford-cloth shirt, and blue pullover sweater that are his only known costume. This utilitarian consistency, which is often mocked on the 13th floor, is admired by Crook's disciples, who are younger, more energetic, and intellectually cockier than their colleagues upstairs. The Crook set generates the hard-line editorials on economics and trade. Crook himself is famous for calling points made by 13 "ludicrous." One 13 says, "When he starts using the word 'ludicrous' you know you're getting him rattled."

Some say there is no rivalry, only paranoia; others say there is intense and mutual rivalry; still others contend that the 12s resent the 13s, but not the other way around. In any case, almost everyone rooted for his own floor. Almost every 12 wrote in on behalf of Crook and/or Emmott. But "there was no group solidarity on the 13th," Mike Elliott says. "There were too many 13th-floor candidates in the game for Nico to be the favorite."

Another way to analyze the race was through class. Though The Economist is an informal place, relatively free of the more egregious forms of British snobbery, the selection committee was an unknown quantity. Perhaps they might look to the top of the social tree, occupied by Matt Ridley, the debonair son of Viscount Ridley and nephew of the recently deceased former secretary for trade and industry, Nicholas Ridley. The 35-year-old Etonian, who is due to become a lord himself, ran for editor from his 9,000-acre estate in Northumberland. Other pedigreed choices included Johnny Grimond, also an Etonian and son of a peer, and Frances Caimcross, daughter of Sir Alec Caimcross, a former head of the government economic service. None of the rest was so well-bred, though Colchester is regarded as a bit of a toff. Elliott and Crook, whose father is an engineer, speak with the least plummy accents, with Elliott's regarded by some as intentionally downmarket. Almost all, however, are Oxonians— and four of the top candidates are, coincidentally, alumni of Magdalen College.

Some thought age would be decisive. The list broke down into the fortysomethings (Colchester, Caimcross, Grimond, Rohwer, and Elliott) and the thirtysomethings (Franklin, Crook, Emmott, and Ridley). Past example and the culture of the place recommended the young ones. The last editor hired who was older than 40 was Donald Tyerman, chosen more than 30 years ago and not remembered as one of the magazine's brighter lights.

All these factors were in play when Lipsey, the 10th man, started taking bets on the outcome. Nico Colchester was the favorite at 13 to 8, followed by Emmott at 15 to 8. In descending order the rest followed: Crook 9 to 2; Grimond 10 to 1; Franklin 12 to 1; Ridley 14 to 1; and Elliott, the dark horse, at 20 to 1. No bets were laid on Rohwer and Caimcross.

Lobbying was, for the most part, English, which means one couldn't be seen to push too hard, or even to desire the prize. "I did not feel I was being intensively lobbied," says David Gordon, whom some viewed as a possible kingmaker. "It was all done with great decorum." But there were hints of what is known as "canvassing." Ridley set his book project aside long enough to make appearances at the office. "Put me in your letter," he told one correspondent, "and I'll make you deputy editor. Of course, I've told that to 10 others."

Emmott says he encouraged people to write to the board, though not necessarily on his behalf. "I never said vote for me." Most of the other candidates take the same line, though many in the bureaus felt their petitions were a bit more pointed. Elliott says he told his ideas for the magazine to about 10 people.

The 40 nonapplicants took their role as advisers to the board seriously. In fact, the letters seem to have been more of an emotional outlet to make staff members feel influential, and perhaps a reverse vetting process to avoid "appointing a megalomaniac or tyrant," as one board member puts it. "I didn't really pay any attention to the letters," admits Barlow, one of only three people who ever saw them. "It's a dangerous mechanism."

What followed was an excruciating waiting period. Applicants prepared as best they could. Mike Elliott, on leave from the magazine to write a book about America, staged a mock interview at his home in Bethesda, Maryland. Nico Colchester went over sample questions based on his manifesto, and tried to schmooze the committee members, which was permitted under the rules. Barlow met with him and listened to his case; Cadbury told Colchester he didn't know any of the candidates, and preferred to keep it that way; Harvey-Jones didn't respond. During the height of the suspense, Pennant-Rea vanished to Zimbabwe for several days to negotiate The Economist's adoption of a black rhino, part of a project intended to prove the efficacy of free-market wildlife conservation.

It was a good moment to be away from the building. By the end of February, after the candidates had been hanging on tenterhooks for more than a month, the offices reached what Elliott said at the time was "a fever pitch of anxiety and neurosis. None of those involved is doing terrifically good work. No one is in a good state of mental health." Elliott ran into Harvey-Jones by chance at a conference in Palm Springs, California, a few days before the semifinals. Harvey-Jones quickly scurried away after a polite word.

For many of the applicants, March 4 recalled nothing so much as an Oxford viva voce, a stem academic examination by gray eminences in black robes. The nine candidates were summoned, one at a time, to the boardroom upstairs. They made their presentations, and answered questions from the triumvirate. Ridley alone says he was grilled—on why he had left the magazine. Colchester stressed the need to make The Economist more accessible to nonbusiness readers. Emmott, who focused his manifesto on himself, talked about expanding the magazine's coverage of the emerging capitalist world, especially Asia and Latin America. Elliott said the magazine's brightest prospects for circulation growth were still in the U.S. "We should think of selling 350,000 in North America,'' he said. "Then we should scratch our heads and see if we can't sell half a million.''

"The day I leave job I ever wanted was to be editor of The Economist"

At the end of the day, the short shortlist was posted. Two names were left: Emmott and Colchester.

The unmagnificent seven were crestfallen. "Clive [Crook], Jim [Rohwer], and Mike [Elliott] are pissed about it being a setup,'' according to one of the others. "The rest of us were there for decoration. They had two favorites in mind."

Elliott felt that the interviews were perfunctory, that the minds of the board had already been made up. "It was a kind of nothing interview," he says. "There was a great deal of suspicion that the fix was in. And it will take a lot to shake that belief. I still don't know how I fucked up—if I did."

Here are the best guesses about why the other top contenders were knocked out: Ridley had demonstrated insufficient commitment to the magazine by leaving. Crook seemed more an independent spirit than a manager. Elliott was too outwardly brash and American in style; his boasts about lunch at the White House don't go down well in London, where some sneer that he has gone native in the Colonies. Rohwer, who talked himself into thinking he was a serious candidate, never really was.

Pennant-Rea is adamant that the board had no preconceptions. "That is quite wrong," he says. "The people picking didn't know the candidates. Going into the process, they were quite open-minded."

"The seven who were disappointed may feel it was obvious it was going to be Nico and Bill," says David Gordon. "Well, it was not obvious to the directors."

The final showdown was described by the London Evening Standard as "The Demon and the Don." The goateed Emmott does bear an amazing resemblance to V. I. Lenin, and his long march through the institution is regarded by some as having been inspired by him. "He's an apparatchik who worked his way up the Communist Party ladder," says one of his unhappy rivals.

Emmott, now 37, was in fact recommended to the magazine at age 24 by R. W. Johnson, a left-wing Magdalen don. Ironically, Emmott, like other of Johnson's proteges at the magazine, soon became a rabid free-marketer. He is, in fact, a quintessential^ Thatcherite figure, legendary for his eagerness to practice social Darwinism on the staff. Emmott's big break was a posting to Tokyo in the 1980s. After his return in 1986, when Pennant-Rea made him financial editor, he wrote The Sun Also Sets, which forecast Japan's economic decline and was a great success in a country obsessed with what foreigners think about it. In 1989 he became business-affairs editor, a job at which he excelled. Then, in 1992 he went on leave to whip into shape a subsidiary called Business International, a New Yorkbased financial-information service purchased by The Economist which had become bloated and wasteful. As editorial director, Emmott streamlined its publishing operations, demonstrating an Attila the Hun style of management in the process. Not coincidentally, this troubleshooting stint ingratiated him with HarveyJones. "It probably brought him some Brownie points with the executive directors," says Barlow.

Colchester, by contrast, is 10 years older, less clever, and less scheming. If Emmott is a Thatcherite, Colchester brings to mind the less frenetic, less money-mad days of the Labour 70s. Though not exactly donnish in demeanor, the balding, affable Londoner is much more laid-back than many of his younger colleagues, and provides a certain ballast to the ship. Colchester is often outwitted by Crook and his disciples in meetings. One colleague calls him "too willing to express views on subjects about which he is not fully informed. ' ' But he is better liked personally, if less respected professionally, than Emmott.

His conventional instincts are the result of a more typical career in British journalism. Colchester was Bonn bureau chief of the F.T., then its foreign editor. PennantRea recruited him as deputy; the appeal for Colchester was that he would be designated successor. "It was a bit of a gamble, actually," he says.

In the final round Crook rooted for Emmott, while Elliott and Ridley boosted Colchester. It was impossible, however, for them to have any influence. Lipsey's odds had the two even on March 9, when Colchester and Emmott made their final presentations to the full board.

Colchester talked again about the need to make the magazine more accessible. "The diet is very concentrated and daunting," he said. "I'm aware of too many people saying, 'Wonderful paper, but I haven't got time to read it, really.' " He has suggested executive summaries, digests, and other devices to allow people to "see what they don't have to read." These sounded like a case for dumbing down the magazine, which no one favored. But for the most part, he argued that the magazine was doing quite well and should be left alone. The board viewed him as the candidate of continuity.

Emmott stuck to his themes about the emerging market for The Economist and the need to change with the times. The board viewed him as the more radical candidate. "Emmott saw the need for considerable change," says Barlow. "Nico was steady as she goes."

After the interviews, there were no final questions, and the candidates left the room. "The chairman asked everyone to give his view," Barlow recalls over a breakfast of kippers at the Savoy. "It was by no means unanimous." Barlow won't say whom he voted for, but others believe he was for Colchester. "Bill Emmott suffers fools less gladly than Rupert," Barlow says. "And Rupert wasn't particularly patient with the staff."

But the two most important votes, Gordon's and Harvey-Jones's, were for Emmott. Pennant-Rea was silent. But "had Rupert felt we were making a ridiculous mistake," Barlow notes, "he would have said so."

At 4:30, smoke issued from the chimney, and the conclave dissolved into a press conference. Harvey-Jones told reporters it was "a close contest." He gave away little more about the decision. "Our editors tend to last a long time," he added. "We tried to take a fairly long view." Perhaps age had made the difference after all.

The second, and surely final, failed shot at the job he has always wanted was devastating to Colchester. A colleague who talked to him afterward describes him as "bereaved, crushed."

"The poor bugger's very upset," another candidate says. Indeed, three days later Colchester was still unable to discuss the selection without choking up. "It was brutal, brutal," he stammered, biting his lip.

Pennant-Rea's recusal, Colchester tells me, "of course is reflected in the board's attitude—'Curious this chap didn't strike the editor as being convincingly superior. ' The board might conclude that, even if it wasn't what Rupert meant.

"The opinions of younger staff, who aren't involved in the process, can be freely canvassed, freely expressed," he complains, "whereas the arguably more important opinions of the people at a high level in the organization couldn't be canvassed and couldn't be freely expressed, because they were competing, or had close friendships at that level which colored their judgments." Intermittently, he tries to be magnanimous in defeat. "I still think I should be editor," Colchester says. "Therefore, the process took the wrong decision. But it took the wrong decision for the right reasons.

"At moments like this," he adds, "the phone starts ringing, and other people start offering things. I'd be an idiot if I didn't consider these offers." The signal was clear for Emmott to ask him to remain as deputy. "I'm here until he decides to ask me to leave. Indications are that he won't want me to. But we haven't talked it through yet."

Downstairs, Emmott was celebrating his departure from the 12th floor with champagne and a round of toasts. But even amidst the empty bottles and plastic cups, he remained profoundly cautious, sounding as schematic and distant as an Economist leader. "In general, the changes will be driven by two basic points. One is that competition for The Economist is essentially its own relevance or irrelevance. ' ' The second point is "that big areas of the world that have shut themselves off politically and, most particularly, economically from the market economy of the U.S., Western Europe, and Japan are now rushing to rejoin that market economy."

One departure has already been announced: Mike Elliott is leaving to become diplomatic editor at Newsweek. He had been staying at The Economist largely in hopes of succeeding Pennant-Rea. "The day I leave I will be brokenhearted, ' ' Elliott says. "There will be floods of tears. The only job I ever wanted in the world was to be editor of The Economist. ' '

If Colchester leaves, as many think likely, the smart money says his replacement will be Crook, though a 12th-floor dynasty might spook the rest of the 13th. The only other resignation so far was not one of the jilted suitors. On March 31, chief executive David Gordon announced he was leaving to head ITN, the news division of Britain's Independent Television network. He had been headhunted while he was helping The Economist pick a new editor.

Gordon is succeeded by his protegee, Marjorie Scardino, the magazine's North American business chief. She was chosen over two other internal candidates in a competition she calls "more humane" than the editorial free-for-all; it took five days instead of seven weeks. "I think we learned something from the editors," she says. The Texarkana-bred Scardino, who is the first woman as well as the first American to head the company, is married to Albert Scardino, former press secretary to New York mayor David Dinkins. The two founded the critically acclaimed (but commercially unsuccessful) Georgia Gazette in Savannah. Others at The Economist expect her to go global with her ideas on expansion. Scardino has masterminded the company's investment in several American publications, including Capitol Hill's newspaper Roll Call, which she wants to clone with a Brussels-based European Community version.

The editorial staff is still waiting to find out what Emmott plans to do. As one editor put it, "He keeps his cards incredibly close to his chest. We have no idea what he thinks." Publicly, all Emmott has said is that he will keep the magazine "resolutely upmarket at a time when other publications are tending to move downmarket."

But the civility of the place has, at least temporarily, evaporated. Crook recently wrote a long farewell letter to his mentor, Pennant-Rea, which discussed how unhappy he and other senior members of the staff remain. "There is a fair amount of bitterness that the process was a farce," says one staffer, "which meant six weeks of unnecessary anguish."

"It is imperative," says Pennant-Rea, "that we renew the unbureaucratic, unhierarchical debate that is a hallmark of working here." His valedictory address, with a rare byline and even rarer author's photo, finished with a flourish: "I pass The Economist on into excellent hands, knowing that the value of its history has seldom been more relevant. In 1843, we were founded to campaign for free trade and against the folly of the Com Laws. In 1993 the struggle goes on."

At the first editorial meeting after the selection, there is a display of business as usual. Thirty-five London-based editors and writers, young men in opennecked shirts and women without makeup, for the most part, crowd into the editor's office, with its spectacular, panoramic view across the heart of London, and find places on the radiators and floor.

Crook, as usual, is perverse and pointed, attacking the week's conventional wisdom about the sins of the head of the BBC. Colchester stares at the floor, nervously running his fingers across his scalp and saying little. Emmott wears a Cheshire-cat smirk and says nothing at all. PennantRea, two weeks away from leaving for his new post, lets the debate go on for a while before declaring there will be no leader on the BBC. Everything is the same as ever, only completely different.

Emmott's Economist will not change much outwardly, or very rapidly. But the new editor inherits a weekly that despite its financial success has real editorial problems, and some looming commercial ones as well. The reality is that it will be hard to expand further without becoming more like other competitive, profitable magazines and less the eccentric ivory tower that generations of serious-minded British journalists have cherished. A bigger staff won't fit in the editor's office.

Perhaps the greatest problem, however, is the gap between the strength of opinion and the depth of knowledge it is based upon. The Economist's breezy, decisive style is easily digestible and often a pleasant read as well. The official byword is "simplify, then exaggerate," as Geoffrey Crowther, editor from 1938 to 1956, used to say.

But when the topic is something that one knows anything about, it becomes clear that the magazine often strays disturbingly far afield, and the imperious tone becomes hollow. Take a recent leader arguing against special legislation to protect gay rights in America. This is fine, except the premise is that gay rights are covered by the 14th Amendment, and the Supreme Court has never ruled that the 14th Amendment protects homosexuals' rights. The reason for gaffes like this is that the foreign leaders tend to be written in London by editors who think of reporting as a grubby business, and with no input from the field. A recent survey of the Japanese economy by Crook is characteristically lucid but betrays no hint of the author's having been there.

The reporting in the international section is often extremely weak, partly because of a heavy reliance on stringers— The Economist still has no bureau in the Middle East or Latin America. As a result, it almost never breaks news. And the writing often sags as well, under the weight of The Economist's own bag of hack tricks, like ending a piece with the phrase "Words to remember.'' It sometimes reads as if the same person wrote the whole magazine.

Anonymity, to which all swear fealty, encourages this—no one is ever ashamed to have his name on anything. The lack of credit may breed collegiality, but it drives many of the cleverest away. The roster of writers who have left recently to pursue greater glory under a byline includes Andrew Marr, the previous Bagehot, who is now Britain's top political columnist at The Independent, and Anne Applebaum, who recently left to become foreign editor of The Spectator. "Anonymity is a drawback for everybody,'' says one writer, who prefers to remain anonymous.

The magazine also remains visually stunted, its covers often ugly, undecipherable cartoons, like a recent Helmut Kohl in a broken-down Mercedes, his head looking nauseatingly like a swollen peanut. Perhaps its largest problem, however, is one of nationality. Increasingly, its readers are not Brits but Americans who like the magazine's elevated British tone.

The harshest version of this was argued by James Fallows in the Washington Post "Outlook'' section. "There are certain English products whose quaintness is put on mainly for export purposes—they're the equivalent of Ye Olde Tea Shoppestyle tourist traps, which the locals avoid," he wrote. "Something similar is going on with The Economist.... It is disdained by the very Englishmen whom many American readers would most love to emulate, the secure upper and upper-middle classes."

Indeed, in London, The Spectator is the in magazine with the chattering classes, and The Economist is regarded as a tedious, Americanized hybrid. "I am not a dedicated reader of the Economist," Roy Jenkins, who was offered the editorship in the 1960s, wrote in his memoirs, "regarding it as essentially a journal for foreigners."

These foreigners are lured by The Economist's snob-appeal direct mail, which makes a subscription sound like membership in a London club. But they don't want the ins and outs of British politics; there is a recognition, at least on the part of its senior staff, that it indulges in parochial issues at its peril.

But to fold the Britain section into Europe, something Emmott will have to consider, would make it even more irrelevant at home. Already, Andrew Neil, editor of The Sunday Times and former Britain editor of The Economist, publicly calls its domestic coverage "poor." And giving up on Britain would be risky: though the U.K. is responsible for less than 20 percent of its circulation, it generates nearly a third of its advertising revenue.

The editors dodge this bullet by arguing that what matters is not The Economist's Britishness but its foreignness. "Any paper has to have a personality," says PennantRea. "We are British in ours, but international in subject matter and approach. There's nothing particularly virtuous about Britishness. If it was based in Australia, it would be produced as it is now."

The Economist in Australia, however, is still unthinkable. The magazine has always been one of the great bastions of what critic Dwight Macdonald called ' 'amateur journalism," which is produced only in London. Macdonald meant amateur not in the pejorative sense of being secondrate but rather in the sense of writing that was spontaneous, sophisticated, and ironic, produced more for love than money.

Nobody at The Economist knows whether the magazine will continue in this tradition, and again become a journalistic oasis where one can opine at leisure on the issues of the day. The power struggle has cast a long shadow, which will hang over the magazine's sesquicentennial, a luminary-laden bash that will be held at the Reform Club in September, and linger long afterward. One irony may be noted by Mrs. Thatcher, Alan Greenspan, and the other invited guests: the stiff dose of competition The Economist always prescribes for others didn't do it any good.