Authors: Richard Kluger
There were two bonuses in the Ryan encounter for Duke. Out of it he obtained the services of Percival Smith Hill, a Harvard man who had been slated to assume the presidency of the Bull Durham operations when Ryan took them over. A solid and imperturbable manager, Hill would soon prove second to nobody in his reverence for Buck Duke, who brought him to New York as his most trusted lieutenant; Hill’s son, George W. (for Washington), was to become still more important to the company.
II
AMONG
the detractors of Buck Duke, no one took a back seat to Richard Joshua Reynolds. From his provincial outpost at Winston, center of the Bright plug industry (if nothing else), Dick Reynolds looked north with grudging admiration for the seemingly insatiable monster Duke had nurtured into being. Yet he lamented over the creature Buck himself had become: a highfalutin Yankee big shot who had shaken the Carolina soil from his boots and embraced the gospel of Mammon and lucre-loving Republicanism.
Not that Reynolds was in the tobacco business for philanthropic reasons. But he did not stomp on people to get ahead, the way Buck Duke did, especially on the struggling farmers whose leaf prices were now being virtually dictated out of the fancy New York offices of American Tobacco. And the prickly Reynolds, proud of his own steadily growing company, did not hesitate to speak out publicly against Duke, though the latter’s leaf-buying policies surely saved him considerable money as well. The difference between them was that Dick Reynolds did not care to advance on the backs of others, and if that meant playing the tortoise to Duke’s hare, so be it.
As American Tobacco grabbed up the “navy” plug business, the sweet chewing tobacco made from Burley that was the staple west of the Appalachians, the R. J. Reynolds Tobacco Company persistently extended its lead in the crowded Bright plug category. There was no magic in his method, just a lot of small innovations that added up, like the Schnapps Kicking Machine, a little item of homespun humor that was the company’s hottest promotional gimmick. Named for one of its top-selling brands, the gadget consisted of a metal foot attached to a pulley device with a string to activate it for use by any plug customer foolish enough to prefer a rival brand—and sorry, only one Schnapps kicker per store. Reynolds achieved a comparably nice folksiness in the advertising he now began to place in the trade journals. One of the first ads, quietly extolling the goodness of his products, was headlined “How the Bottom Rail gets on Top and all be Benefited by the Shuffle,” and cast the proprietors as country fellas purveying their honest goods. But not so honest as to cavil at describing Reynolds products as consisting of “Naturally Sweet Tobaccos” when every hundred pounds of chew had mixed into it ten pounds of licorice root paste and five pounds of sugar.
By now he was no longer dependent on jobbers to do his selling. A cadre of young Reynolds salesmen roamed throughout the Southeast, at $5.75 a week, ever exhorted by the boss’s letters from Winston to push the new brands, stick to the listed prices, and send back daily—or weekly, at the very least—sales reports so that production at the factory might be better geared to the realities
of the marketplace. Between 1892 and 1898, Reynolds’s output grew fourfold, reaching 6 million pounds for the latter year. Even so, he was dwarfed by the 84 million pounds of plug manufactured that year by Duke’s new Continental Tobacco combine. But Reynolds’s operations were all his, and though he was constantly strapped for capital to build the business, he would not trade control of it for outsiders’ cash input. But the threat from Duke was growing. By the early part of 1899, he had taken control of both Liggett and Lorillard, the national leaders in the navy plug trade, and when Duke picked up the Hanes plug works in Winston, the second largest in town, Dick Reynolds knew his days of independence were numbered if the New Yorker tried to bring him to heel with his usual price-slashing terrorism.
Accounts of the Duke-Reynolds negotiations vary, but it can be safely ventured that Reynolds went to Duke’s office at 111 Fifth Avenue not hat in hand but in order to ask if the tycoon was interested in investing personally in the best plug business in the South. He did not want to surrender his company to the American Tobacco leviathan but wouldn’t mind having Buck buy in if the alternative was likely to be a protracted pissing contest. No, said Duke, he was not interested in a personal stake, but his company might buy two-thirds of Reynolds’s business if the latter would take a fair price for it and agree to continue running it. Duke knew that Reynolds ran a tight ship and sold a lot of chew of the type Continental Tobacco was missing from its lineup. More resigned than resentful, Reynolds apparently stated his reluctance to deal on bended knee with any master, and Duke must have assured him that it was Reynolds’s knowledge and drive he was willing to invest in, not a lot of machines. The price was set at $3 million, a slight premium for two-thirds of a business with a book value of about $4 million, and the deal was done.
Reynolds was hardly grateful, though he cannot be said to have sold under duress, and felt it essential to tell the world that the transaction was not what it seemed. Soon afterward, he told his friend Josephus Daniels, North Carolina’s leading newspaper editor and a populist Democrat who had railed in print against Duke’s autocratic ways, “Sometimes you have to join hands with a fellow to keep him from ruining you and to get the under hold yourself. … I don’t intend to be swallowed. Buck Duke will find out he has met his equal. … I am fighting him now from the inside.” Such public posturing by the defiant underdog skirted the truth—by a goodly margin—but it suited Reynolds, who knew full well the growing hatred that Duke’s tobacco trust had engendered among farmers, jobbers, shopkeepers, and certain segments of the consuming masses. He was now skillfully playing the fox to the wolfish Duke. He took Duke’s capital, raised his own salary to $16,000 a year from one-quarter of that, paid off his debts, built a new processing plant, and set out to dominate the Bright plug business in North Carolina and Virginia in a miniaturized replication of Duke’s stratagems.
In short order, Reynolds Tobacco absorbed some fifteen smaller competitors and became the largest employer in his state. And the devil he had leagued with did his best to keep distance between them, not setting foot in Reynolds’s office until four years after their deal was sealed. But Duke’s auditors were regular visitors in Winston, and from time to time Reynolds would appear at 111 Fifth Avenue for business discussions. Duke had little reason to disabuse the world regarding Reynolds’s noisy protestations that he was an untethered proprietor; after all, the Winston brawler was ringing up profits for him, and Buck now controlled two-thirds of the plug trade.
III
NOT
content with domination of the cigarette and chewing tobacco business, Duke devoted the opening years of the twentieth century to rounding out his tobacco trust. He was set upon both horizontal and vertical integration of the industry; his targets for takeover included the snuff business, cigars,” and stogies; the sectors of the tinfoil, wooden-box, and cotton-sacking industries devoted to the packaging of tobacco goods; the licorice paste business, dealing in the chief flavoring ingredient for many forms of tobacco; and the tobacco retailing trade. Only cigars eluded his throttling grasp.
For one thing, the cigar business was enjoying boom times while cigarettes were lagging. By the late ’Nineties, each was selling about 4.5 billion units; but while cigarettes slipped to 3.5 billion annually during the first few years of the new century, cigar sales had risen to 6 billion by 1901 and added another billion in the next three years, at which point they represented 60 percent of the total value of all manufactured tobacco products. Yet the very nature of the product did not lend itself to monopolization. Cigars came in a wondrously varied array of sizes, forms, and strengths, and their bunching, shaping, binding, wrapping, and boxing—particularly for the more luxurious styles—had to be done by hand. Because economies of scale were hard to realize and profit margins per unit were attractive, many small cigar factories were able to thrive by catering to a regional clientele. Duke sank tens of millions into cigars, buying up major producers in Florida and Cuba, but never controlled more than one-sixth of the total U.S. business.
Why the cigar and cigarette businesses had gone in opposite directions was not a mystery. The great burst of prosperity that showered the country promoted sales of the cigar, costliest of tobacco products and symbol of financial well-being. At the other end of the economic spectrum, the plug war, for which Duke was responsible, had made chewing tobacco a better buy than cigarettes. A heavy contributor as well to the cigarette slump was the social stigma that had become attached to it as to no other tobacco product.
The assault on smoking in antebellum America did not differentiate as to the delivery system; the leaf was simply an unmitigated evil. Among the most ardent of the antitobacco reformers was the Reverend George Trask, whose
Thoughts and Stories for American Lads
of 1859 was subtitled “Uncle Toby’s Anti-Tobacco Advice to His Nephew Billy Bruce” and counseled that smoking did away with some 20,000 souls a year, a statistic unsupported by even remotely credible data. A more temperate view was expressed by Ralph Waldo Emerson, who, without pretense of scientific specificity, took note of the debate over whether smoking was medically harmful, but concluded only that “the habit once established gives rise to more or less craving for this form of indulgence.” He was not dwelling, though, on the lure of the cigarette, which was hardly more than a novelty item until the mid-1870s. Nor were the few scientists who reported serious data in Europe, where the cigarette was better established. A French physician, for example, studied sixty-eight patients with cancer of the mouth and lips and noted in 1859 that all the victims were tobacco users and all but two of them preferred a short-stem clay pipe, suggesting that the heat from it, not the specific ingredients of the bowl, was causative. In England, Langley and Dickinson had by 1889 published their landmark studies on the effects of nicotine on the ganglia and hypothesized that there were receptors and transmitters on these bunched nerve cells that responded functionally to stimulation by specific chemicals. Their concern, though, was with the properties of nicotine without regard to the form of smoking or chewing by which it was absorbed. Near the end of the century, a German investigator found a high proportion of lung cancer among the tobacco-manufacturing workers of Leipzig, but when animal studies failed to replicate the phenomenon, little more was said of the cause-and-effect hypothesis.
Agitation against the cigarette per se began in earnest with the mass production of the cheap little smokes and was surely abetted by cigar makers and plug manufacturers who feared the competition and spared no hyperbole in painting the product as debased and degrading. The heart of the stated moral argument against cigarettes was that their low price and mild taste made them uniquely tempting to boys, whose use of them arrested their mental and physical development and led inexorably to a life of depravity. The outcry was most righteously raised by an indefatigable spinster schoolteacher from Illinois, Lucy Gaston, whose parents had been active in both the abolitionist and temperance movements and whose own strident rectitude and physical ungainliness—she bore a beardless resemblance to Abraham Lincoln—made her an easy butt of ridicule. But she was a formidable crusader.
Gaston’s fervent opposition to the cigarette was empirically based, she said: her worst students had invariably been the boys who stole off for a clandestine smoke and then fell prey to the habit. She concluded that the most damaging ingredient in cigarettes was not nicotine but a compound called furfural, which
was formed in the combustion process from glycerine, long used as a moistening agent in tobacco products. The wasting effects of furfural led to an affliction Miss Gaston termed “cigarette face,” with its telltale dissipation evident to any trained observer. A still greater cause for alarm was the widespread testimonial evidence she avidly collected of immoral and heinously criminal behavior by cigarette users, from little fiends to adult murderers. There was, of course, nothing approaching a careful study of any sizable population sample that remotely suggested an objective statistical basis for this stated proneness to depravity. But she ladled out this stew of pseudo-science and evangelism at church and school meetings across the land, and soon her legions grew. They began besieging city halls and state legislatures, the National Anti-Cigarette League was established with state affiliates, and Lucy published a monthly broadside called
The Boy
, urging young fellows who suffered cigarette face and related afflictions to use a mouthwash with a weak solution of silver nitrate after every meal for three days running, eat a bland diet, and, least welcome of all, take plenty of warm baths.
In 1898, Congress pushed up taxes on the sinful cigarette 200 percent as a source of badly needed revenue to pay for the Spanish-American War; the effect was to raise the cost of a ten-for-a-nickel pack of cigarettes by 20 percent—a considerable disincentive to the poorest buyers. By the end of the century, Iowa, Tennessee, and North Dakota had outlawed the sale of cigarettes in response to lobbying by the Gastonites and their allies, and by 1901 a dozen more states were weighing a ban on the sale of cigarettes, already in serious decline.
Before 1900, then, the pillorying of the cigarette was almost entirely lacking a rational basis. But in the opening years of the twentieth century, advances in chemical analysis brought the earliest glimmers of scientific insight into the peculiarities of cigarette smoking.
Harper’s Weekly
, for example, could report in a May 1906 issue that due to imperfect combustion, the “little furnace” each smoker carried in his mouth produced smoke that on laboratory analysis revealed a measurable amount of oxide of carbon and 2 percent nicotine and that cigarette filters made from cotton or wool and impregnated with salts of iron succeeded in retaining “the greater part of the toxic qualities of tobacco as freed by combustion.” This finding seemed to imply that it was the burning process itself rather than the form of the tobacco that might cause problems. A clearer understanding was offered by
Education
magazine in early 1909 in an article on boys and smoking. The cigarette was a much more insidious smoke than the cigar, it contended, even though it was smaller and milder, because these two advantages were “more than offset by the early age at which [cigarettes] are used and the practice of inhaling the smoke.” Cigarette smoke entered the mouth with “less purification and filtration than from either a pipe or a cigar”—an effect often compounded by the great numbers in which they
were consumed. Still more telling was the quoted comment of a professor from the New York School of Clinical Medicine, noting that precisely because cigarettes were taken in such small doses, “no form of tobacco is so cumulative in its action. … The absorption is more rapid and the resistance by nature is less active. The cigarette smoker is slowly and surely poisoning himself, and is largely unconscious of it.” By mid-1912,
Harper’s
was telling its readers that pipe smoke was less dangerous than cigarette smoke because the former was not inhaled and reporting methods then under study to modify the suspected hazards of cigarette smoking, including filters made from porous cellulose and steeping tobacco leaves in water for several hours to dilute their nicotine content. Continuing concern was voiced in many quarters over the effects of burned cigarette paper and traces of arsenic and other compounds found in smoke that in sufficient quantity were undeniably deadly.