The R. J. Reynolds Tobacco Company

Nannie M. Tilley

• Publisher: The University of North Carolina Press
• Year: 2018
• Print ISBN: 9780807857663, 9780807816424
• eBook ISBN: 9781469648941
• Topic: Business
• Subtopic: Business History
• Index: Business

In this corporate history of the R. J. Reynolds Tobacco Company, Nannie M. Tilley recounts the story of Richard Joshua Reynolds and the vast R. J. Reynolds tobacco complex with precision and drama.

Reynolds's rise in the tobacco industry began in 1891 when he introduced saccharin as an ingredient in chewing tobacco. Forced into James B. Duke's American Tobacco Company in 1899, the Reynolds company became the agency for consolidating the flat plug industry. In 1907, as the government began its antitrust suit against Duke, Reynolds himself bucked the trust and introduced another bestseller: Prince Albert smoking tobacco. The government won its suit in 1911; Duke's Tobacco Combination was dissolved, and Reynolds, left with a free and independent company, a much larger plant, and improved machinery, immediately began an expansion program.

In 1913 Reynolds introduced Camels, a blend of Burley and flue-cured tobacco with some Turkish leaf. Perhaps the best-known cigarette ever produced, Camels swept the market and generally led the way until the development of filter-tipped cigarettes in the 1950s.

Other important Reynolds advances include the systematic purchase and storage of leaf tobacco, the development of a stemming machine, the adoption of cellophane for wrapping cigarettes, and the production of cigarette paper. For its employees, the company established a medical department, introduced lunch rooms and day nurseries, and installed group life insurance. Perhaps more important than any of these items was the development of reconstituted leaf, a method of combining scrap tobacco and stems into a fine elastic leaf entirely suitable for use in any tobacco product. This achievement represented a savings of 25 percent in the cost of leaf and was followed by the development of the filter-tipped Winstons and Salems.

The R. J. Reynolds Tobacco Company includes absorbing accounts of the company's steady technological progress, its labor problems and advances, and its influential role in North Carolina and in the industry through 1962.

PART ONE

Foundation, 1875–1899

CHAPTER 1

Background and Training
of R. J. Reynolds

The R. J. Reynolds Tobacco Company lives under the shadow of its founder from his bright-eyed portrait in the boardroom to his initials on posters in factory Number 8, warning lovers of the quid to restrain the functioning of their salivary glands. So great an influence has been exerted over the company by the vigorous and remarkable talents of its founder that his painting dominated the boardroom for forty-one years before any of his successors could summon the courage to hang the portraits of others on the same walls. In the expansion of the company his reputation has grown, taking “stature from the corporation” as it has grown in importance to overshadow the men who now manage it.¹ He was the expert who passed on formulas, planned buildings, influenced the location of railroads, set production figures, borrowed capital, and supervised the company’s activities, all without the aid of engineering experts, survey makers, cost accountants, market analysts, personnel officers, public relations experts, or any other of the management specialists so commonly used in modern corporations.

Yet in many ways he did not resemble the typical nineteenth century industrial leader who relied chiefly on his own judgment. He readily accepted expert advice on such practical matters as advertising, traffic problems, new methods and machinery for manufacture, the erection of improved buildings, and even the feeble beginnings of a research department. Certainly he evidenced many characteristics of the modern corporate statesman and showed little or no interest in building up family dynastic power. Rather, he freely used his own funds to help many who wished to better themselves financially It is, therefore, not an idle speculation to assume that he would have accepted the aid of other specialists in various areas had opportunities presented themselves. Just before his death, he believed that his company as it then existed could make progress for at least twenty years.² As it turned out, his prophecy held good for almost forty years, or until his successors discarded his uniquely administered profit-sharing plan and developed new products for ensuring the continued growth of the company. Scarcely any phase of his company’s career from his death in 1918 to the marketing of the Winston filter-tipped cigarette in 1954 had not been carried into effect or anticipated by Reynolds, the founder of the company that bears his name.

Richard Joshua Reynolds, unlike other successful manufacturers of tobacco in the postbellum South, achieved a leading position in three areas. First, he rightly became known as the plug tobacco king, an acknowledgment of his outstanding ability in the manufacture of chewing tobacco. Second, while he was still in firm control of that position, his agile mind busied itself with experimentation for a superior smoking tobacco. This he accomplished in 1907, although he produced other brands before combining different grades and ages of Burley leaf to produce his successful brand of Prince Albert. Third, when he was sixty-three, still vigorous and aggressive, he made the first modern cigarette, a blend of flue-cured, Burley, and Turkish tobaccos,³ which revolutionized the cigarette industry.

Reynolds was in his prime as a manufacturer of a type of chewing tobacco known as southern flat plug when his firm became affiliated with the American Tobacco Company either by his design or by the force of James Buchanan Duke (23 December 1856-10 October 1925). Certainly Duke failed in his attempt to restrict Reynolds’s operations to the manufacture of southern flat plug when the latter dared to produce and sell smoking tobacco on a national scale. Reynolds, wide-awake and enthusiastic, emerged from the trust with his business intact and quite certainly with wider vistas before his eyes. what was in the environment, training, and education to produce such a successful individual as Richard Joshua Reynolds, whose life spanned the years of the South when there was little economic opportunity?

The Reynolds family settled early in Patrick County, Virginia, in the area between the North and South Mayo rivers. Bordering the North Carolina line on the south and the Blue Ridge Mountains on the west, Patrick County is a mountainous area with an elevation ranging from 800 to 3,212 feet, the latter the summit of Richwood Knob, a peak of the Blue Ridge. The easternmost area lies approximately forty-five miles west of Danville, Virginia. The actual mountains of the county consist of a long arm of the Blue Ridge in the west, Poor Mountain in the north, Bull and Carter mountains, which lie northeast and southwest virtually dividing the county into two areas, and Nobusiness Mountain, which occupies a broad area in southeastern Patrick County between the North and South Mayo rivers. Patrick’s chief agricultural resource consists of a strip of relatively good tobacco land in the southern part of the county next to the North Carolina line. The county seat, first known as Patrick Court House but later renamed Taylorsville, has, since soon after the Civil War, been called Stuart in honor of its illustrious son, James Ewell Brown Stuart.⁴

By authentic legal record Abraham (often called Abram) Reynolds, the grandfather of Richard Joshua, purchased fifty acres of land “on… nobusiness fork of Mayo river” on 15 February 1814.⁵ No doubt, however, the Reynolds family had lived in this same area much earlier. Walter R. Reynolds, writing to an interested individual shortly after the death of his brother, Richard Joshua, declared that his “ancestors as far back as great grandfather were born and lived in the southern part of Virginia…” Although the family was often declared to be Scotch-Irish in origin, Walter Reynolds’s strong impression was that it came from English stock. He conceded, however, that there was no absolute proof to back his impression.⁶ To another the same writer stated that his grandfather, Abraham Reynolds, had several brothers who went west but that nothing had been heard of them since. Furthermore, Walter declared that his father, Hardin W. Reynolds, had only one brother and that he had died at the age of twenty-six.⁷ These facts undoubtedly lend credence to R. J. Reynolds’s frequent statement that Zachary Taylor Smith (19 February 1847—13 June 1938), R. J.’s first cousin on his mother’s side, was his only close relative outside his own immediate family.⁸

The earliest of the family who can be definitely identified is Abraham Reynolds, who lived from 1 March 1781 to 3 May 1838. It was he who purchased land on the waters of Nobusiness fork of North Mayo Fiver in 1814. In 1813 he had paid personal taxes.⁹ By 1831 he owned 1,038 acres in the same general area, and in 1839 his estate included 1,080 acres and part ownership with Hardin W. Reynolds in an additional 376 acres on the waters of North Mayo Biver.¹⁰ On 10 May 1809 Abraham Reynolds married Mary Harbour (7 March 1784-30 August 1853), the daughter of David Harbour.¹¹ They became the parents of two sons, Hardin William (20 April 1810-30 May 1882), the father of Bichard Joshua Reynolds, and David Harbour (15 June 1811-20 September 1836), who died unmarried.

In addition to being a landholder of considerably more than the average acreage for his area, Abraham Reynolds engaged in other pursuits and became a man of means whose sons followed his example. Judging from a reference in 1865 to “Shucks in old Factory,” Abraham operated some type of tobacco factory, which years later was used as a storage house. Similar reference in 1866 to “the old Store,” then used as a tenant house, indicates that he also carried on mercantile operations. In addition, there is some proof that he may have engaged in amateur banking operations.¹² Not surprising, therefore, was his ability to advance substantial sums of money to his son David, who died only two years before his father’s death, thus leaving Hardin W. Reynolds to inherit the property of both. In connection with a prolonged suit over David H. Reynolds’s estate,¹³ Joseph W. Varner declared in a deposition that Abraham Reynolds on one occasion handed his son David a thousand dollars or more, saying to him, “Do the best with this you can, my son.” Testifying further, Varner stated that Abraham had but two children, that he could command money when he pleased, and “generally had money by him.” These statements were based on twenty years of acquaintance with the Reynolds family. In view of the period and the nature of Abraham’s activities, he was undoubtedly a very successful man.

The suit involving David Reynolds’s estate also reveals much about his brief career that exemplifies the venturesome spirit and drive to succeed in business characteristic of many members of the family. According to the briefs and depositions connected with the settlement of his estate, David Reynolds, at the age of twenty-one in 1832, began peddling a stock of goods and made a considerable amount of money. On 26 December 1834 he formed a partnership with James M. Redd for speculating “in money, tobacco, and other things” at Ward’s Gap in Patrick County. Some time in 1835 young Reynolds and Redd moved their business headquarters to Patrick Court House. There they continued to manufacture tobacco, which David peddled as far south as Georgia, often returning with loads of sugar, rice, coffee, molasses, and cotton domestics. They also sold apple brandy, French brandy, Madeira wine, and various staples. On one occasion David returned with three yards of petersham, a rough knotted woolen cloth used chiefly for men’s overcoats, which he sold at five dollars per yard. Selling trips were also made to Danville, Richmond, and Lynchburg, all in Virginia. Such a trip to Georgia required ten weeks and no doubt great physical stamina. Varner further declared in his deposition that David Reynolds was very industrious, of good character, and prosperous in anything he undertook. Also in a deposition, Henry Aistrop stated that James M. Redd called David a “skinner” who made a handsomer profit on the goods he sold than did the other merchants of Patrick Court House.

David Reynolds had been on a selling trip to Georgia with 3,410 pounds of chewing tobacco shortly before his untimely death. According to the testimony of Abram Staples, David returned with twelve hundred dollars in cash in addition to several hundred dollars worth of groceries. This evidence definitely ties the uncle of R. J. Reynolds to the manufacture and sale of chewing tobacco in the 1830s. Furthermore, at the death of David Reynolds, according to the sworn word of Henry Aistrop, the firm of Reynolds and Redd had on hand 8,000 to 9,000 pounds of tobacco stems that had been accumulated from their manufacture of chewing tobacco. Abraham Reynolds died two years after the death of his son David, thus leaving Hardin W. Reynolds as the only heir to land and money far beyond the holdings of most inhabitants of Patrick County.

Quite possibly David Reynolds received his motivation to manufacture chewing tobacco from his father and his brother Hardin. As early as 1828, Hardin W. Reynolds saw greater possibilities in the manufacture and sale of tobacco than in total reliance on its cultivation. In that year his father sent him through the mountainous country rolling a watertight hogshead of tobacco for sale in Lynchburg—approximately a ten-day trip. Discouraged at the low price received, Hardin persuaded his father to let him make a crude press for manufacturing tobacco into twists, which he peddled into South Carolina. Certainly no record indicates any noteworthy prosperity on the part of the elder Reynolds until soon after 1828. At that time he and his sons apparendy began growing more tobacco in addition to buying small lots from neighbors, all of which was crudely manufactured and peddled.¹⁴ In view of the general conditions prevailing in Patrick County in 1835, it is entirely probable that Hardin W. Reynolds did indeed influence his father and brother to begin the manufacture of chewing tobacco in 1828. Joseph A. Martin, in describing Patrick County seven years later, wrote:

The staple article of produce, on the south side of the Bull mountain is tobacco.… The principal portion of the slave population is on the south side of the county, which may in some measure account for the article of tobacco being more raised on...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Illustrations
• Preface
• Part One: Foundation, 1875–1899
• Part Two: Under the Tobacco Combination, 1899–1911
• Part Three: Expansion of the Company, 1912–1940
• Part Four: Challenges in a Modem World, 1941–1963
• Appendixes
• Abbreviations
• Notes
• Index