The dynamics changed one hundred percent when my father died,” says Doris. “Everything went flying into space. My father was the linchpin of our family. The center was gone.”
Leila had endured multiple losses over recent years. Her mother, Stella, had died in 1960 in Norfolk State Hospital, and her sister Bernice had died a year later of bone cancer. Without Howard, she became dependent on Warren and Susie and their family. The grandchildren went to her house on Sundays, where she gave them bags of candy to eat during church, then took them to lunch afterward and gave them money if they could add up the bill correctly. In the afternoons, she took them to Woolworth’s to buy a toy to play with at her house. Like Howard, who had once paid his children to go to church, she found a Buffettesque solution to the problem of her loneliness—making deals with the grandchildren so that they would stay with her as long as possible.
Howard’s presence was what had always made being with Leila tolerable to Doris and Warren. Without him, both found visits with their mother unbearable. Warren trembled when forced to be in proximity to her. At Thanksgiving, he took a plate upstairs and ate dinner by himself. Leila continued to erupt in occasional fits of rage. For decades, her bizarre behavior had been aimed mainly at family members, though once she leaped out of the car in a parking lot and spent an hour screaming at an acquaintance over some trivial matter, as Big Susie and Howie looked on in astonishment. But Doris, who had idolized her father even more than her brother had, was still her main victim. Doris had always felt she had let the whole family down with her divorce from Truman. The contrast between Warren and Susie’s successes and her own life as a divorcée at a time when divorce was still rare only reinforced her lingering feelings of worthlessness. Shortly before his death, Howard had told her that she must remarry to provide a father for her children. So she did.1 But even though her husband was a lovable man, Doris felt coerced into remarrying, which augured poorly for the union’s prospects.
Bertie, always the least troubled by her mother’s behavior and the least dependent on her father, now found her life the least changed by Howard’s death. Like Warren, however, her relationship with money both triggered her anxieties and gave her a sense of control. She kept records of every dollar she spent, and when she felt stressed, she paid bills to relax.
All of the Buffetts had “issues” with money that ran so deep none of them really noticed what an unusual family they were. After Howard’s death, Warren and Susie naturally assumed leadership of the family—partly because of their money, but also through the force of their personalities. Perhaps it was not surprising, therefore, that Warren’s aunt Alice, his favorite relative since childhood, had grown to trust Susie more than anyone else in the family except him.
So it was Susie, not Leila, whom Alice tracked down one Monday in late 1965. Susie was at the beauty parlor with Doris when the call came. She got out from under the dryer to go to the phone at the front desk; Alice explained that she was concerned about Leila’s sister Edie, who had called her on Sunday to say she was feeling extremely depressed. Alice, a fellow teacher, had taken Edie for a drive and talked to her, and they had stopped for ice cream. Edie idolized Warren and Susie and Alice, indeed all the Buffetts; she confided that she felt she had disgraced the perfect family with her imperfect life.2 Her impulsive, high-spirited marriage had not worked out; the husband she had followed to Brazil had turned out to be a philandering embezzler who left her there for someone else. Since returning from Brazil, she had found it hard adjusting to life as a divorced single mother of two daughters in Omaha.
Alice told Susie that today Edie hadn’t shown up at Technical High School to teach her home economics classes. Worried, Alice had gone over to Edie’s apartment. Nobody answered when she rang and knocked. Alice told Susie that she feared that something had happened.
So Susie raced out the door to her gold Cadillac convertible, with her rollers still in her hair, drove over to the garage apartment where Edie lived, and started knocking and ringing herself. When nobody answered, she got inside somehow and began to search. She found no sign of anybody; the place was immaculate. There were no notes or messages and Edie’s car was there. Susie continued searching until she reached the basement of the house, and there she found Edie. She had slit her wrists, and was already dead.3
Susie called an ambulance, then had to break the news to the family. Nobody had known Edie was this depressed, and nobody had seriously considered her a possible victim of the Stahl family’s history of mental instability until now. There is no telling what Leila, sixty-two years old, felt at her sister’s death. At the very least, Edie’s death meant that Leila was the last remaining member of her immediate family. And yet another of the Stahls had embarrassed the Buffetts, this time by stigmatizing the family with suicide. Whatever Leila did feel, less than a month later she abruptly married Roy Ralph, a pleasant man twenty years her senior who had been pursuing her since Howard’s death. Until now she had refused his proposals. Her relatives had listened with numb boredom throughout her widowhood as she ceaselessly invoked the past and the 38½ wonderful years with Howard. Thus she stunned them all when she remarried—and changed her name to Leila Ralph.
Susie, meanwhile, was taking on more obligations than ever, not just in the family but in the community. She began to press Warren to call a halt to his continuing obsession. The Buffett Partnership was stuffed like a Thanksgiving turkey by American Express. It ended 1965 with assets of $37 million, including more than $3.5 million in profit on this one stock, bringing Warren and Susie’s stake in the partnership to $6.8 million. He was thirty-five years old. The Buffetts were among the very rich by the standards of 1966. How much money did they need? Now that they were so rich, Susie thought they should do more for Omaha.
In 1966 she glowed with the fire of a woman who had found her cause in life. She had become close to leaders of the black community and was all over Omaha, brainstorming, coordinating, cajoling, publicizing, working on behind-the-scenes relationships in a town where racial tensions were reaching the point of violence. Every summer now in the nation’s major cities, race riots flared after minor incidents involving the police. During a fifteen-day heat wave in July 1966, riots erupted in Omaha; the governor called out the National Guard, blaming the riots on “an environment unfit for human habitation.”4 Susie now made the elimination of segregated housing in Omaha—an idea that terrified many whites—her central cause. She tried to involve Warren in some of her community and civil-rights work, and he complied, but he was not much for committees.
Committee meetings gave Warren a “splitting headache,” according to Munger; his way, therefore, was to let other people sit on the committees while he fed them ideas. Warren was far from indifferent to social and political causes, however. He had become deeply concerned about the potential for nuclear warfare—a vivid and seemingly imminent threat after the Cuban missile crisis of 1962, when the standoff between Kennedy and Khrushchev over the removal of Soviet missiles from Cuba had nearly resulted in nuclear war. When Buffett discovered philosopher Bertrand Russell’s 1962 antinuclear treatise, Has Man a Future?, it affected him powerfully.5 He identified with Russell, admired his philosophical rigor, and frequently cited his opinions and aphorisms. He even kept a small plaque on his desk quoting a phrase from an influential antinuclear “manifesto” on which Russell had collaborated with Albert Einstein: “Remember your humanity, and forget the rest.”6
The antiwar movement took on more urgency in Buffett’s mind after Congress passed the Gulf of Tonkin Resolution in 1964, authorizing President Johnson to use military force in Southeast Asia without formally declaring war. He started asking speakers over to the house to talk to his friends about it. Once he brought an antiwar speaker from as far away as Pennsylvania.7 He himself, however, was not going to march against the war.
Warren had strong views about specialization; he defined his special skills as thinking and making money. When asked to donate, his first choice, always, was to donate ideas, including ideas that would get other people to give money. But he would also give money himself—not a lot, but some—to politicians and to Susie’s causes. He never labored in the trenches stuffing envelopes; volunteering directly for causes, no matter how urgent and important, would consume time he felt was more efficiently spent thinking of ideas and making more money to write bigger checks.
Many people in the 1960s felt a burning desire to tear down the Establishment that had created the war and operated the “military-industrial complex”—a desire to avoid “selling out” to “The Man.” For some, therefore, social consciousness clashed with the need to make a living. Warren, however, saw himself as working for his partners, not for “The Man,” and as someone whose business acumen and money helped the civil-rights and antiwar causes. So he could focus on his business with a sense of dual purpose, and felt no inner conflict about how he spent his time.
The conflict he was beginning to feel was a struggle to find investments for the partnership. He had managed to find some of the few undervalued stocks that still paraded through the Standard & Poor’s weekly report: Employers Reinsurance, F. W. Woolworth, and First Lincoln Financial. He’d also bought some stock in Disney after meeting Walt Disney and seeing the entertainment showman’s singular focus, his love of his work, and the way these had translated into a priceless catalog of entertainment. But the concept of “great businesses” had not entirely sunk in, and he didn’t load up. Instead, he bought more Berkshire, and built a $7 million “short” position in stocks like Alcoa, Montgomery Ward, Travelers Insurance, and Caterpillar Tractor—borrowing the shares and selling them against the risk that the market would plunge.8
In January 1966, another $6.8 million had rolled in from his partners; Buffett found himself with a $44 million partnership and too few cigar butts to light with his cash. Thus, for the first time, he had set aside some money and left it unused—an extraordinary decision.9 Ever since the day he left Columbia Business School, his problem had always been getting his hands on enough money to pump into a seemingly endless supply of investment ideas.
Then, on February 9, 1966, the Dow had briefly streaked across the mythical one thousand mark before closing just a few points below. The chant began: Dow one thousand! Dow one thousand! The market would not break through the barrier again that year, but the euphoria carried on anyway.
Buffett had been worrying all year about disappointing his partners. Although he started his latest letter to them cheerily with the news about the huge profits on American Express—“Our War on Poverty was successful in 1965,” he wrote, alluding to President Johnson’s program to bring about a “Great Society” through a vast array of new social-welfare programs—he then delivered the real news in what would be the first of many similar warnings: “I now feel that we are much closer to the point where increased size may prove disadvantageous.” And with that he announced that he would be shutting the door to the partnership, locking it, and putting away the key.
There would be no more new partners. He made a joke of it. Susie couldn’t have any more kids, he wrote, because they wouldn’t be allowed in. This joke was not particularly apt, since none of their children had ever actually been partners—or would be. He was determined to manage their expectations about money, in order to ensure that they would find their own way in life. From an early age, each of the kids knew not to expect financial help from him except to pay for their education. He could have brought the children into the partnership as a learning exercise—to teach them about money, about investing, and about how he spent his time. Certainly he used it that way with those who were members of the partnership. But Warren rarely—if ever—“taught” those he saw day to day. For him, teaching was a performance, a conscious act that took place before an audience. His kids got no lessons.
Instead, he bought them stock in the benighted Berkshire Hathaway. As trustee of the trust left to his children by his father, he sold the farm that Howard had bought as a refuge for the family and used the money to buy the stock. Given that Warren didn’t approve of unearned wealth—which was how he viewed inheritance—he might have left the farm alone. A small farm in Nebraska would never be worth much, and the kids would never become rich from their grandfather’s inheritance. But by investing the proceeds in his floundering textile business, he increased his hold on Berkshire by another two thousand shares. Why he cared so much about it was a mystery to observers, but ever since Buffetting his way to control of Berkshire, he seemed obsessed by it.
The Buffett kids were not expecting to get rich. They did not even really know that their family was rich.10 Their parents wanted them to be raised unspoiled, and they were. Like children everywhere, they had to do chores to get their allowances. But when it came to money, their family’s odd disconnection meant that Susie and Warren tussled over her allowance as if the Buffetts were broke; then she got the money anyway and used it to give them an upper-middle-class life. The children went on nice vacations, enjoyed themselves at the country club, wore good clothes, and saw their mother’s Cadillac and fur coats. But they never got to take money for granted. Their father niggled over small amounts of money all the time and surprised them by denying little requests. If he took them to a movie, he might not pay for popcorn. If one of the kids asked for something, his answer might well be no: If I did it for you, I’d have to do it for everyone.
Whatever message he and Susie were trying to give the children about money, one unvarying theme came through: Money was important. They were growing up in a household where it was routinely used as a tool of control. Warren would take Big Susie to a store for her birthday and give her ninety minutes to race through and buy whatever she could grab. The Buffett side of the family had always been about making deals. Although Susie felt that Warren’s obsession with making money was unworthy, she still angled to get more of it from him. Now she was struggling with her weight and this too became a money deal. Warren’s childhood obsession with weighing machines—he would have weighed himself fifty times a day—had been no passing phase; he was obsessed with his family’s weight and preoccupied with keeping them all thin.
The family’s eating habits helped neither his cause nor their health. Susie, who had suffered from a mysterious and excruciating abdominal adhesion two years before, cooked unenthusiastically. She and Warren both willingly ate the same thing day after day: mostly meat and potatoes.
Finally, Susie asked him to make a deal to pay her to keep her weight at 118 pounds. Since she cared less about money than her husband did, however, motivation was a problem for her. All month long she picked and snacked; but then, as the weigh-in date approached, she would get on the scale. If the news was bad and she had to take the pounds off fast, “Uh-oh,” she’d say to one of Susie Jr.’s friends: “Kelsey, I’ve got to call your mom for her diuretic pills.”11
Warren disciplined himself to maintain his own weight by dangling money in front of his kids. When they were younger, he made out unsigned checks to them for $10,000 and said that if he didn’t weigh 173 pounds on such-and-such a date, he would sign the checks. Little Susie and Howie went crazy trying to tempt him with ice cream and chocolate cake. But the prospect of giving up money pained Warren far more than giving up a treat. He made out those checks over and over, but he never had to sign a single one.12
Instead of his children, one of the last new partners Warren allowed to join his partnership was Marshall Weinberg, a stockbroker friend of Walter Schloss who had taken Graham’s seminar twice. A cultivated man with a bent for the arts and philosophy, Weinberg had met Buffett at one of Graham’s lectures at the New School in New York. Lunching together a few times and talking of stocks, they had become friends. Weinberg soon gave up on interesting Buffett in music, art, philosophy, or travel, but Buffett traded through him at times and Weinberg became interested in joining the partnership. So on one of the Buffetts’ frequent trips to New York, Warren agreed to meet with him to discuss it.
Loping downstairs from his room at the Plaza, Warren met Weinberg in the lobby. Then Susie glided in, and Warren lit up. She sidled over to him and gave him a hug, then put her hand behind him as if he were a child and gazed at Weinberg with her large brown eyes. “How are you?” she asked, beaming at him. She wanted to know everything about him. He felt he was being welcomed into a family and went away thinking that he had made a new friend in Susie. He also intuited that he had just met Buffett’s most powerful asset.13
Weinberg had squeaked through the door just in time. Through 1966, the urban riots continued, the war in Vietnam escalated, and antiwar protesters rallied in New York, Boston, Philadelphia, Chicago, Washington, and San Francisco. The stock market began to decline, down ten percent from the beginning of the year. Buffett had never stopped looking for things to buy, no matter how uphill the climb, but despite the market’s easing, the days of cigar butts scattered everywhere were gone. He became seriously worried about how to keep up his performance. He thought more often of buying entire businesses now. In fact, he had gotten started on an entirely new venture, one that consumed large amounts of his time.