Kid Carolina

by Heidi Schnakenberg

  Katharine decided it was time to send Dick to Greenbriar Summer Camp in West Virginia. When she and Ed returned from their honeymoon, they visited Dick there, in an attempt to heal the tensions between them. Dick tried hard to be understanding, but they still felt the strain. It didn’t help that Dick wasn’t feeling well either. He’d already developed breathing problems and a bad cough, and a Winston-Salem doctor told Katharine that both Dick and Smith might have genetic lung problems. The doctor advised her to send Dick to a better climate—perhaps a boarding school in Arizona instead of a school in the East, but for unknown reasons, that never did happen. Katharine seemed to believe that Dick’s problem was a sinus condition, and eventually Dick had surgery on his nose and sinuses. But the operation only seemed to exacerbate Dick’s breathing problems. The older he got, the worse his breathing problems would become.

  At Reynolda, the three younger children were usually in the care of Miss van den Berg, while Katharine moved out of the house and enjoyed her new husband in one of the estate’s smaller cottages. Katharine and Ed were gone a lot. Katharine traveled to New York, Washington, and Baltimore regularly, often tending to business and sometimes just to get away from the prying eyes of Winston-Salem society. However, even Mary and Nancy, who were happy for Katharine and Ed, had grown weary of their increasingly absentee mother. Dick found fewer and fewer reasons to go home, and his resentment toward his stepfather and mother grew once again. He felt Katharine had coldly abandoned them all when she moved out, and that feeling would only intensify as her relationship with Johnston deepened.

  At the same time, Katharine’s heart condition and circulatory problems had continued to ail her, and she was often in and out of doctor’s offices. From time to time, Dick emphatically reminded Ed that his mother had a serious heart problem and to see to it that she didn’t get pregnant. Ed promised Dick that wouldn’t happen.

  In 1922, Ed and Katharine bought an apartment in New York and brought the younger children with them, and Mary, Nancy, and Smith were placed in private school there. The move happened because Katharine had found out that she was pregnant, and she knew she would require the care of the best doctors. In spite of the huge health risks, she was thrilled by the pregnancy. Dick, on the other hand, was terribly worried when he heard the news.

  By the spring of 1922, the whole family, minus Dick, moved to the Plaza hotel where Katharine rested in comfort before her delivery. On May 1, 1922, with Miss van den Berg attending, Katharine gave birth to a premature baby girl who died shortly thereafter. Again, doctors warned Katharine not to get pregnant. It wasn’t safe for her or her unborn child. Katharine was disappointed. Dick was furious. Once more, he berated Ed for letting her get pregnant. Ed swore he understood, but told Dick it was Katharine who wanted another child, not he.

  Katharine moved the entire family back to Reynolda. Dick joined them there for the summer and continued to work in the tobacco factory. By August, he agreed to go on a vacation with Katharine and Ed, mainly to please his mother. Dick was worried about her health and wanted to see her happy, so he tried yet again to be supportive.

  Escape to Sea

  In the summer of 1923, Dick again returned to Winston-Salem. But his summer vacation plans were sidetracked when he caught his mother and Ed in an intimate moment. Still worried about his mother’s health, Dick became enraged. This time he punched Ed in the face. His tolerance of his mother’s reckless relationship with Ed had worn thin, and he would no longer stick around anymore to watch it. In a move that would become his lifelong motif, he fled.

  Dick caught a train to New York and jumped on a freighter, the Finland, which was set to sail to Hamburg, Germany. He hid his identity from the captain and crew, who hired the able-bodied boy as a grunt. The rowdy crew dubbed him “Kid Carolina.” He was seventeen years old when he first tasted the freedom of the open sea.

  When she finally tracked him down, Katharine let him stay with the proviso that the captain keep an eye on him. Dick fell in love with the ocean and stayed onboard for three months working as a seaman, cleaning the toilets and in general doing whatever remedial tasks the crew asked of him. The crewmen didn’t have the faintest idea who was living in their midst, and Dick was delighted by the dirtiest language he’d ever heard in his life and the most unrefined table manners he’d ever seen.

  After hearing from Katharine Reynolds, the captain asked the crew to be more mindful of the young man, and they toned down the crudeness of their conversations. Dick was disappointed at their sudden civilized behavior. He didn’t realize until he was much older that his mother had communicated with them, and he simply thought all the life had gone out of the crew.

  Dick couldn’t have been happier living the simple, ordinary life, which was more entertaining to him than a million social dinners. Still a teenager, Dick had already found a way to run from his life and the pressure of being a Reynolds. Young Dick, aka Kid Carolina, had found his perfect escape.

  Punishing Katharine

  At RJR Tobacco, Uncle Will oversaw a 20 percent growth spurt as a result of wartime sales. For several years afterward, the company would grow by 20 percent annually, massively increasing the value of the estate R.J. left behind.

  If R.J. Sr. had had his wishes, Katharine would have been a much bigger part of the company than she was. R.J. trusted Katharine with his business and wanted her to be involved in the board’s decisions. She tried to appoint finance officers that R.J. wanted on the board right after he died, and she faced stiff resistance from Bowman Gray before her wishes were finally granted.

  Uncle Will tried to be more respectful and kept Katharine involved in the goings-on at RJR Tobacco. But when Katharine met Ed, she knew she had to keep the affair a secret from Will or his willingness to work with her would end. Katharine quietly increased her holdings in 1920, valued at $500 per share, not only to ensure her own financial security but to ensure her influence in the company. Still keeping the affair a secret, Katharine managed to persuade Will to offer Ed a job at a tobacco factory outside Winston-Salem. Once he had a job, Katharine bought Ed a block of controlling shares in the company. Only after she had completed these steps did she make the announcement that she and Ed were getting married.

  Will was unimpressed with Ed, and his presence at the factory became awkward and uncomfortable after Katherine announced the engagement. Bowman Gray didn’t like Ed either and had no respect for what he felt was his lack of business sense. When Ed announced that he would leave the company, they were happy to let him go.

  But Katharine still hadn’t given up on staying involved, and she even asked Will if Ed could join the board of directors. Will refused. The goodwill between Katharine and Uncle Will was waning.

  Since R.J.’s death, federal taxes had also soared in order to pay for the war, and once R.J.’s will was domiciled, there was little cash left to pay the taxes that Katharine owed on the estate. Will suggested that Katharine sell her controlling tobacco shares to pay the taxes, which would effectively shut her out of the business for good. But Katharine was smarter than that, and instead she went to the Baltimore Bank and Trust Company and obtained a loan. Then she used her accumulated capital and income from her stock dividends and interest to repay the note. The estate had almost no debt just a few years after R.J.’s death, and Katharine had wisely retained her financial influence on the company.

  Meanwhile, Richard S. Reynolds came back into the picture. His cleanser company failed when his products were deemed unnecessary during the war, and since his uncle’s death he considered the advice he had given him years earlier. He decided he would get into the tinfoil business as he had been trained. Just a year after R.J.’s death, R.S. opened up U.S. Foil in Louisville, Kentucky. He went to Uncle Will to obtain the loan that R.J. had once promised him. Uncle Will honored the request and agreed to buy all the foil for RJR’s tobacco packaging from R.S.

  Although Will proved to be a less willing and savvy partner to R.S. than R.J. and they eventually ce
ased doing business together, R.S. had mastered aluminum production. He eventually expanded U.S. Foil, renamed it Reynolds Metals Company, and moved his headquarters to Richmond, Virginia—which would later be the home of Reynolds Wrap.

  Orphans

  In the winter of 1924, when Dick returned from school for a week in February, he learned that his mother was pregnant again. He also heard the distressing news that his mother said she wanted to have a baby with Ed “even if it killed her.” In Dick’s mind, Ed wasn’t off the hook. He said that if Ed really loved her, he would have abstained from intimacy with her entirely.

  On March 14, Katharine moved to New York’s Harbor Hospital to stay on bed rest until the baby was due. She must have known that her life was at serious risk because she rewrote her will at the time to include Ed and her unborn baby, and she bought more shares of RJR Tobacco, increasing her controlling interest.

  At the age of forty-four, Katharine gave birth to a boy on May 20, 1924. Surprisingly, the baby, J. Edward Johnston Jr., was healthy, and Ed and Katharine were overjoyed. However, Katharine remained bedridden, and Miss van den Berg joined her in New York to care for her.

  About three days after the delivery, a blood clot burst in Katharine’s brain, killing her instantly.

  Dick was at Reynolda when he heard the news. He was overcome with heartbreak, fury, and a sense of powerlessness. By the time he saw Ed, all he felt was rage. It was all he could do to refrain from lunging at him. Dick had predicted this would happen if his mother got pregnant, and he held Johnston responsible for her death. He entertained thoughts that Ed deliberately let his mother die so he could get his hands on her fortune. Dick was convinced that Ed never sincerely loved his mother. He couldn’t bear to look at him.

  Dick was now an orphan at age eighteen.

  After Katharine

  Katharine’s funeral procession was one of the largest Winston-Salem had ever seen. Even more stunning than the outpouring of grief was the vision of the Reynolds children burying yet another parent in a span of only six years. Now the children had no parents and no one they could count on, except for each other, and the overflowing treasure chest at the Baltimore Bank and Trust Company.

  Before Katharine had died, she set up a trust for the children at the bank, which would also serve as the children’s financial guardian. Upon her death, Katharine’s assets, including the very lucrative RJR stock, were to be placed in a trust and divided among all the children, Ed Johnston, and her unborn baby. They would gradually receive yearly allowances worth hundreds of thousands of dollars, and then come into the rest of their inheritances as they turned twenty-eight. The trust would administer the children’s inheritances.

  When R.J. died, his will stated that his estate, which comprised about $11 million in RJR stock as well as all his real estate and investment holdings, should be divided in five equal parts for each of the children and Katharine. Although R.J. had been dead for only six years, the value of his estate had grown to $35 million and produced dividends of $300,000 annually.

  Ten years later, when Dick would inherit his portion of these funds, Katharine and R.J.’s estate was worth over $150 million. The soaring dollar amount of their future inheritance made the Reynolds kids the equivalent of billionaires at the time. Katharine’s investments ensured Dick’s coronation as a quintessential filthy-rich heir to his father’s massive fortune—a benefactor of circumstance.

  In Winston-Salem, Ed found himself facing hostility and quiet disdain over Katharine’s death, and there were few congratulations for his new baby boy. Not even Nancy’s and Mary’s adoration of Ed could withstand the pain of the loss of their mother. Katharine was beloved for her philanthropy, and as tributes to her were paid all over town Ed found that Katharine’s children weren’t the only ones who blamed him and his newborn for Katharine’s death. Ed wanted to take his son and leave for his hometown of Baltimore, but Uncle Will, who assisted with the administration of Katharine’s estate, demanded that Ed stay long enough so the town wouldn’t suspect any discontent within the family. Johnston did as he was told and followed Will’s orders until the estate was settled.

  Years later, Johnston eventually transferred the responsibilities of the children to their cousin-in-law, Robert E. Lassiter, who was a longtime friend of R.J.’s and an executive at the tobacco company, and left town. He later remarried, fulfilled his wish to move back to Baltimore in 1928, and lived off Katharine’s money for the rest of his life. He never managed to escape Katharine’s shadow.

  At first, Dick wouldn’t acknowledge the baby, J. Edward Johnston, as his brother, and tried to forget the whole thing happened. Instead, he ran away from home again—this time hopping on a cruise headed for South America with his cousins for a few weeks.

  CHAPTER 4

  Crashing with the Stock Market

  1924–1929

  After Katharine’s death, there was the small matter of raising the four orphans. Uncle Will, along with Ed Johnston as a figurehead, was named their guardian in Katharine’s will. With respect to R.J. Sr.’s wishes, they administered the Baltimore Bank and Trust Company funds to the children slowly and gradually. The children would initially receive $10,000 to $15,000 per year in allowance. When they went off to college, they would receive $50,000. At twenty-one they would receive $100,000, and at twenty-eight they would receive their full inheritance. R.J. added another provision to encourage them to work—for each dollar they earned on their own, the estate would give them two dollars more.

  Instead of moving into Reynolda himself with the children or taking them back to his enormous Tanglewood estate, the childless Will left them in Reynolda and hired distant cousins and would-be guardians, Robert Lassiter and his wife, to move into Reynolda and look after the children. Will was a good man, but his decision not to take in the children himself left many perplexed. His wife, Kate, was the daughter of a prominent banking family in Winston-Salem and had been married to Will since 1884. She was a generous woman who often worked with Katharine on their numerous philanthropic projects and was well respected in town, but she wasn’t keen on raising the young family herself. All four of them, ages eleven to eighteen, were basically on their own.

  Dick was grateful to the Lassiters for offering to help, but it was clear from the beginning that Dick would be the head of the household and the only father figure his younger siblings would have from that time forward. And it was obvious to Will, the Lassiters, and Ed Johnston that it would be best to let Dick do what he wanted.

  After returning home from the cruise in South America, Dick toured Europe for the first time with his sisters for the rest of the summer. What would be Dick’s lifelong affection for Europe was sparked on that trip. He traveled France and Spain on a bicycle and stayed in youth hostels like any other normal kid. He memorized many of the country roads and was endlessly curious about each landmark he visited.

  College Adventures

  When Dick came back in the fall, he registered at North Carolina State University at Raleigh, enrolling in mechanical engineering classes and joining the football team. He apparently never told his family where he went.

  About four months into the semester, and after the family finally figured out where he was, his Aunt Kate decided to pay him a visit. Unsure of where he was staying, she spoke to the dean and asked where her nephew R. J. Reynolds Jr. was living. Dick had escaped the attention of the dean, who didn’t even know he was in school there. The dean politely said to Kate, “Ma’am, you must be mistaken. Surely if R. J. Reynolds Jr. was here, I would know about it.” She insisted that her nephew had been attending for quite some time already and asked to look through the list of Reynoldses. She found Dick’s name and pointed it out to the dean—he was living right there on campus.

  The dean excitedly spread word of this when he found out, telling everyone that the R. J. Reynolds Jr. was attending his school. Newspapers picked it up and soon the whole town knew about Dick’s enrollment. Before, Dick hadn’t been asked to
join any fraternities; now they were knocking at his door. He got distracted by all the attention and eventually dropped out of school after only two semesters. Although he never did graduate from college, Dick later became a generous donor to NC State and joined the board of trustees of the University of North Carolina.

  Armed with his healthy yearly allowance of thousands of dollars, Dick moved to New York in 1925 and shuttled back and forth between the city and Winston-Salem over the summer. He dated a beautiful local girl named Ella Cannon (of Cannon Towels fame), in Winston, and used his generous allowance to indulge in his next great curiosity: aviation. For Dick, this would mean nothing less than flying with the world’s best pioneer aviators and building his own airline.

  The Aviator

  In 1925, Dick took flying lessons from Lewis McGinnis at Curtiss Flying School in Long Island. With his new skills, he practiced stunt flying and would fly to Winston-Salem and land right on the lawn of Reynolda, taxi to the front of the house, and offer his sisters a ride. Back in New York, he would obtain one of the first official pilot’s licenses in the United States. Orville Wright had just become the newly elected chairman of the Aero Club of America and the Fédération Aéronautique Internationale, and Dick applied for a license at the same time. Many of the official pilot’s licenses in the early 1920s would bear Wright’s signature, and Dick was lucky enough to be a part of that exclusive list of recipients. The license was so precious to Dick that rather than show it off, he kept it locked in a safe.