The Company Town

by Hardy Green

  Timber-mill towns were more permanent affairs. The first such community was likely Port Gamble, established in 1853 by the Puget Mill Co. on Washington Territory’s Kitsap Peninsula. With a second mill constructed five years later, the town had a workforce of 175. Like many of the mill men who built the Northwest’s timber industry, Port Gamble’s founders were transplants from the Northeast, primarily from Maine. With its growing number of small frame houses, the town looked every bit a New England village. To be sure, not all the workers were considered members of the family: Port Gamble employed many American Indians whom it segregated into a separate outpost, a town called Little Boston on the other side of Gamble Bay from Port Gamble.

  Operations in Port Gamble continued into the twentieth century, as did production at such places as Valsetz, Oregon; Sappho, Washington; and McCloud and Samoa, California. But many mill towns were short-lived. Wanton cutting was followed by abandonment of the settlements. The Manley-Moore Lumber Co. town of Montezuma, Washington, for instance, was left deserted after that company shuttered its mill in the early twentieth century. As giant corporations took over other companies and their towns, owners showed little interest in maintaining the towns or in maintaining family-like relations with workers. 28

  The clearest example to the contrary—and, perhaps, of utopian promise on the West Coast—was Scotia, California, the Pacific Lumber town in the Northern California redwood forests that was established in 1882 as Forestville.

  Up to that time, the prospect of harvesting the mammoth redwood forests had seemed daunting. Some redwoods were as much as a thousand years old, hundreds of feet tall, and fifteen feet in diameter. Moreover, in pre-automobile days, it was difficult simply to get access to such trees. But with America’s eastern forests and their stands of smaller trees increasingly logged out, there were few alternatives.

  By the late 1880s, Pacific Lumber founders A. W. McPherson and Henry Wetherbee had three hundred employees living in Forestville. The settlement contained little more than a church, post office, and telegraph station. Reflecting the presence of many emigrants from Canada’s eastern coast, the town’s name was changed to Scotia. Pacific Lumber had become the largest producer of lumber in Humboldt County.

  In the early 1890s, the company was purchased by Simon Jones Murphy, who’d made a fortune lumbering in Maine and in Michigan real estate, mining, and timber. It was the beginning of a long Murphy family association with Pacific Lumber. Although an 1895 fire destroyed the town and all of the company’s facilities, Pacific Lumber quickly rebuilt and expanded. By 1920, the company had 1,500 workers and owned 65,000 acres of forest.

  If left to its own devices, Pacific Lumber might not have become an environmentally progressive company. Both tax benefits and pressure from San Francisco conservationists encouraged the tendency. But for whatever reason, Pacific Lumber became a trailblazer in forest conservation: In the 1920s, it sold the largest remaining contiguous holding of old-growth redwoods—over 9,000 acres—to the Save the Redwoods League, becoming part of Humboldt Redwoods State Park. Moreover, in the following decade the company announced it was abandoning the industry standard of clear-cutting—or taking down everything in a given area—in favor of “selective cutting.” No more than 70 percent of the mature trees in a stand would be felled, with younger trees left to hold the soil and reseed. Finally, the company began harvesting on what it called a “perpetual sustained-yield basis”: Never would it cut more trees than its forests could regrow in a year. Hiring some of the industry’s first foresters, Pacific Lumber began its own nursery that would plant up to a million seedlings a year.29

  More to the point, Pacific Lumber became renowned for its humane employment practices. “We’re a paternalistic company,” president Stanwood Murphy told a journalist in 1971. “I know that’s a dirty word,” continued the red-haired, craggy-featured executive, “but it’s accurate.” Tiny, picturesque Scotia included attractive wood-frame bungalows, with low rent, free water and garbage removal, and regular maintenance by the company. The town also included a range of stores, a school, a forty-bed hospital, a skating rink, a Catholic and a Protestant church, an administration building, a fancy directors’ cottage (for overnight use by corporate directors), and the ornate, all-redwood Winema Theater. Pacific Lumber gave its workers pensions, free life insurance, and bonuses, and their children got college scholarships. Every Labor Day, everyone in town gathered at the bank of the Eel River for a holiday blowout.

  Labor at Pacific Lumber was difficult, sometimes dirty, and frequently deafening. Out in the woods, loggers felled the huge trees, then trucked them into Scotia and either stacked them at the “cold deck” or plunked them into the ten-acre millpond. In Scotia’s three huge mills, men operated cranes, conveyor belts, rollers, and a variety of saws. Seventy-ton logs would be stripped of their bark, then sliced into a variety of lengths and widths. Then the lumber was sorted by grade and size, stored in warehouses for a lengthy drying period, and perhaps even kiln-dried.

  Generation after generation of workers found the package to be a good deal. There were trade-offs, of course. Although Pacific Lumber paid better benefits and higher wages than rivals, it fought hard to keep unions out. Up until World War I, Scotia featured a “safety valve” called the Green Goose—a combination brothel, saloon, and gambling parlor. But with Prohibition, Scotia became a dry town—and it stayed that way. Afterward, social life in town centered on the volunteer fire department and a little-used, YMCA-like Scotia Men’s Club, where card-playing was allowed but no gambling. (To be sure, gambling and drinking continued in establishments right across the Eel River, in the town originally known as Wildwood and later as Rio Dell.)30 All in all, life in Scotia was pretty calm—at least until the 1980s.

  In that decade, with Scotia seemingly frozen in time and Pacific Lumber holding 70 percent of the remaining privately owned old-growth redwoods, corporate raider Charles Hurwitz moved to take over the company. The company’s physical property—including a new headquarters building in downtown San Francisco—its cash position, and its absence of debt made it an appealing target. Hurwitz’s Maxxam Inc. quietly obtained just under 5 percent of company stock. Then in October 1985, after an initial offer of $797 million, or $38.50 per share, Maxxam persuaded initially resistant Murphy family members to give in. The final purchase price was $868 million.

  But the buyout, organized by Wall Street takeover specialists Drexel Burnham Lambert, meant taking on lots of debt. To pay this down, Pacific Lumber’s new owners announced they would be ending the company’s pension plan, absorbing $60 million in “overfunding,” and selling off the company’s non-forest assets. They also announced a doubling of their redwood harvest. For a short time, Scotia’s workers were raking in the overtime pay, and its mills were running extra shifts. But the aggressive new tree-cutting inflamed California’s environmental activists, prompting almost two decades of struggle that featured protest marches, confrontations with pepper-spray-brandishing police, “tree sits”—in which protesters actually lived for months in the high branches of threatened redwoods—and a car bombing that nearly killed two activists from the Earth First! organization.

  Moreover, within three years of the buyout, the insider trading scandal broke, in which it came out that Drexel junk-bond kingpin Michael Milken and trader Ivan Boesky had engaged in a series of bets on corporate takeovers based on inside information. Among the deals on which they wagered and Milken helped finance: Maxxam’s buyout of Pacific Lumber. The Milken-Boesky activities violated federal law, and when their shenanigans were revealed, both men were sentenced to prison terms. Boesky was fined $100 million and barred from the securities industry. Moreover, Los Angeles stockbroker Boyd Jefferies was accused of having “parked,” or clandestinely purchased, 539,600 shares of Pacific Lumber stock on Hurwitz’s behalf. The shares were key to Maxxam’s Pacific Lumber takeover effort.

  What had happened to the idealistic company, its sheltered workers, and the model town? Bu
youts such as Maxxam’s were then—and are today—justified on the grounds that new owners streamline operations and maximize a company’s value. But in the case of Pacific Lumber, to all appearances the new owners brought little other than a fresh rapaciousness, and their very aggressive pursuit of profit, not to mention the Drexel scandals, damaged Pacific Lumber’s reputation. Despite a 1988 announcement of a voluntary moratorium on clear-cutting of virgin redwood forests, Pacific Lumber regularly fell afoul of California forestry regulations and faced court injunctions issued to stop its logging. As if in divine judgment against the turn of events, in April 1992, three major earthquakes struck the Scotia area within eighteen hours. Sawmills and homes were badly damaged, and the local shopping center was destroyed.31

  It took seven more years to negotiate, but in 1999 Pacific Lumber sold to the U.S. Interior Department what remained of the old-growth-rich Headwaters Forest—about 7,500 acres—for $480 million in federal and state funds. Then in 2007 Maxxam filed for bankruptcy. Pacific Lumber was taken over in June 2008 by yet another group of outsiders, the Donald Fisher family, owners of The Gap, Banana Republic, and the Mendocino Redwood Co. They reorganized Pacific Lumber’s mill-and-forest holdings as Humboldt Redwood Co. Mendocino partner and former PALCO creditor the Marathon Structured Finance Fund now owned the town and all of its buildings. Pacific Lumber—the company and the all-embracing way of life—ceased to exist.

  Humboldt’s owners have pledged to take a conservative approach to logging, letting the forest regenerate at twice the rate it harvests. Environmentalists, who point to Mendocino Redwood’s Forest Stewardship Council-awarded green seal, say the new owners are credible.

  Scotia is now home to what the company calls a “state-of-the-art sawmill,” where computers position logs for cuts that command the best prices and that match consumer demand. The cut lumber is also graded and sorted by computer. Some of Pacific Lumber’s paternalistic policies, including its college scholarships, are still in place. But as of 2009, there are only a few hundred workers—more than one round of layoffs has hit the workforce—and Marathon’s attempts to sell parts of the town are a source of unease. The grand Scotia Inn, with its wood-relief carvings and twenty-two cozy rooms, has been assigned a price tag of $2.5 million. A major obstacle to the sale of Scotia real estate: The entire four hundred- acre town exists as one tax parcel and must undergo various zoning and environmental hurdles before it can be subdivided.

  With all of that, many locals are relieved to see the back of Maxxam and are hopeful about the future. The company’s new owners “may put the town back to where it used to be, honoring its roots,” butcher Mel Berti told the Santa Rosa Press Democrat. “People here are concerned about the roots.”32

  In Pullman, the defining characteristic proved to be its restrictions. For Hershey, it was a benevolent one-man rule joined with an increasingly quaint philanthropy. And at Scotia, a paternalistic legacy gave way to a ruthless late-twentieth-century capitalism defined on Wall Street. All three—and Lowell, for that matter—shared one thing: an initial vision and daily existence articulated and elaborated by a capitalist father figure. Each place outgrew that plan. Today, Pullman is a down-at-the-heels urban area, Hershey features a diverse service economy that includes a Disneyland-like theme park, and Scotia is an isolated but lovely town in the woods struggling to maintain its legacy.

  No discussion of ideal company towns would be complete if it failed to include a singular type: the domicile of the high-tech company. Such places include Schenectady, New York, long associated with General Electric; Redmond, Washington, home to Microsoft—and Corning, New York, home base for Corning Inc. Neither a purpose-built model town like Pullman and Hershey nor a single-enterprise village like Scotia, Corning developed as a country crossroads and railroad town, with a growing concentration of glassmaking enterprises. As Corning Inc. became the area’s preeminent glass concern, it emerged as the town’s benefactor—and savior. Its philosophy was also different from those of the three other enterprises in this chapter—a modern “corporate welfarism” that, executives said, in no way conflicted with the company’s primary goal of making money.

  Like most high-tech outfits, Corning Inc. came of age in the 1940s and 1950s. The specialty-glass maker has experienced an unsteady, boom-and-bust-prone life ever since. Perhaps its happiest period began in 1959, with the release of Corning Ware, the Sputnik-age cooking products made from a material also used in rocket nose cones. The decade that followed would be an unusual period of prosperity and self-assurance for Corning Glass Works, as it was known until 1989, since the company enjoyed near-monopoly control of the highly lucrative television-tube market. Further high-tech glass products such as fiber-optic cable would follow. During the 1960s and 1970s, the company made its most pronounced commitment to the town of Corning, New York.

  Corning Inc. traces its existence back to the mid-nineteenth century, and especially to 1868, when the proprietor of the Brooklyn Flint Glass Works, Amory Houghton Sr., arranged to relocate his operation to Corning, an agricultural town of 7,000 souls on the Chemung River in upstate New York. He moved his furnaces, pots, molds, and other equipment up the Hudson River and on to Corning via canal. Two years later, the company came close to folding, but a bank bailout led to its revival. Thereafter, focusing on such items as railroad signal lenses, thermometer tubes, and lamp chimneys, the glassware company grew slowly along with the town whose name it adopted. It also long maintained a dynastic organizational structure: Except for a few intervals, a member of the Houghton family was at the company’s helm through the late twentieth century. Common stock was not sold to the public until 1945.

  A signal event was the decision by Thomas Alva Edison to purchase glass globes for his lightbulbs from Corning Glass Works, beginning in 1880 and continuing with the organization of General Electric Co. in 1892, ensuring the ongoing health of the glassworks. The development also indicated the company’s future course—electronics and scientific applications of glass, as opposed to, say, the making of bottles or window glass.

  During this period, the town of Corning was evolving from an agricultural trading center into a manufacturing burg that included glassmaking operations, several foundries, stove makers, farm-implements factories, and more. Companies such as T. G. Hawkes & Co. and J. Hoare & Co. produced intricate and popular cut-glass wares. Even more significant, the town was becoming a railroad hub through which passed the Erie Railroad; the Blossburg, Corning, and Tioga Railroad; and the Delaware, Lackawanna, and Western Railroad. In 1891, 12,000 trains passed through Corning. Hundreds of local men worked on these railroad lines, while Corning Glass Works employed between 270 and 780 workers, variously. With a population approaching 10,000 in 1890—the year in which Corning, New York, was incorporated—the town supported seven churches, fourteen hotels, thirty-four saloons, eighteen barbers, fifteen boardinghouses, twenty-seven dress-makers, ten tailors, and an opera house that hosted touring theater companies, meetings, and minstrel shows. The village was also home to two daily newspapers of opposing political viewpoints, the Corning Democrat and the Corning Journal.33

  In 1908, the town built a large park with pavilions, a wading pool for children, a bronze fountain, and a ball field. It was named Denison Park for the businessman who contributed most of the land. Only several years later, in 1916, did the glassworks contribute to public facilities, when the Houghton family conveyed to the town a plot of land north of the Chemung River, which became Pyrex Park, named for the company’s popular glassware.34

  However, Corning Glass Works was becoming an ever more important employer and physical presence. By 1913, it had three large plants in town, arrayed along the river and marked by what would become a town landmark: a 187-foot tower in which molten glass was stretched for thermometer tubing. Stenciled on the outside of the tower was the blue-on-white silhouette of “Little Joe” the lightbulb blower.

  The company’s two notable products after the turn of the twentieth century
included the clear glass kitchenware Pyrex—adapted from battery jars—and lightbulbs. (Corning was also responsible for the art-glass productions of Steuben, an independent company it absorbed in 1918.) A round of department-store demonstrations in 1915 kicked off a Pyrex marketing campaign, and by 1917, the product had annual sales of $460,000. Lightbulbs were hand-blown, as if they were art glass, into the twentieth century: Corning demonstrated no urgency about developing a mechanical electric-bulb-making machine, but by 1913 it operated five such devices. During World War I, Corning increased its production of scientific glassware, a product once supplied largely by Germany. Although mechanization led to some layoffs and deskilling of workers, the glassworks had 2,000 workers by 1916, a year in which bulb sales reached $1.7 million. The area’s second-largest employer, compressor-maker Ingersoll Rand, employed around 800.

  Like many other corporations, Corning Glass Works adopted a number of so-called corporate welfare programs in the 1920s, intended to build loyalty among employees and to enhance the company reputation among the general public. Innovations included a company hospital and clinic, health and accident insurance for all workers, and a factory upgrade to reduce chemical hazards, which had killed four workers in 1910. There was also a Corning band, a baseball club, and service awards handed out to longtime employees. At the same time, the glassworks was openly antiunion: In the 1910s, when the American Flint Glass Workers Union attempted to organize a local, the company dismissed two hundred of its five hundred glassblowers.35