The King of the Forest
If you inherited a family tradition, a million-acre forest, and a business, how would you decide which one to preserve? Meet Arthur Temple…
(Page 4 of 8)
Had Henry Temple not died suddenly later that month, the East Texas lumber industry might have taken a very different turn during the ensuing three decades. But his death left vacant the position of general manager at Diboll, and on the way to the funeral Arthur was offered the job by his father. A few weeks earlier, Arthur Senior had written him that he viewed the departure as not a resignation but a leave of absence: “Temple Lumber Company needs you: it holds big possibilities for you, and I am confident that someday you will come back into the fold.” On the Monday after the funeral, Arthur Temple, Jr., reported to work at Diboll at a salary of $10,000 a year.
Just thirteen years had passed since Arthur Senior had saved the company; now it had to be saved again. Only this time the crisis wasn’t so obvious. Indeed, that was the crisis—no one in charge could see that the country was changing and that sooner or later those changes would penetrate even that isolated corner of the forest. America was enjoying the greatest industrial boom in the history of the world, but the Temple companies were hoarding cash, guarding against the next depression. Automation was transforming American industry, but Pineland still used mules to haul trees out of the woods.
The generation in command of the Temple interests in 1948 understood little of these things. The cardinal experience in their lives had been the Depression. They knew almost nothing about the latest technological advances in their industry, nor did they care. Arthur Junior was eager to tour European mills, particularly in Sweden and Finland, where operators were reputed to have found uses for parts of the tree that couldn’t be converted to lumber, but his father squelched the idea: “I doubt if they have much, if anything, over there that is better than what we have in this country.”
The company was also hampered by the distance between the main offices and the mills. Tom Temple had located the headquarters in Texarkana, which in those days was a railhead for Midwestern markets. But at least he spent winters in Diboll and also took spontaneous trips to the mill at other times of the year, getting off the train at a station three miles north of town and walking in unannounced. Arthur Senior was much less a presence in town. A very formal man, he wrote eloquent letters and was most at ease with that form of communication. As long as the monthly financial reports were good, he was inclined to let things go on as they were, as it must have seemed they would go on forever.
Indeed, the Diboll that Arthur Junior saw on his first day of work was not much different from the Diboll that federal investigators had seen in 1912. All the houses were painted either red or white and were surrounded by rotting fences. Not a street in town was paved except for the highway to Lufkin. The town had no curbs or gutters. Cows and goats and chickens ran loose in the streets. At the sawmill the incinerator burned day and night, getting rid of wood waste—bark, sawdust, tips, the outer part of the trunk, anything that couldn’t be made into lumber: half the tree, half the company’s assets, going up in smoke. Even the people were the same: many of the employees had inherited their jobs from their fathers and grandfathers. But what everyone else interpreted as continuity, Arthur Temple, Jr., saw as conceit—a society built on the vain hope that the modern world could be permanently shut out.
Two weeks after taking over, Arthur told his father that wages had to go up; they were 15 per cent below the scale at Keltys, and the Kurths were not exactly noted for their generosity. He also said prices were too high in the company store and recommended setting them 5 per cent below those of independent merchants in nearby towns. He wanted to build an ice plant (many employees still used iceboxes instead of refrigerators) so that ice wouldn’t have to be trucked in from Lufkin, which almost doubled the cost. “This is a thorn in the side of the poor people and hurts the very class that needs help the most,” he wrote.
By summer the company was paving the streets of Diboll and Arthur was talking to Texas Power & Light about taking over the town’s electrical system. He wanted to buy nine thousand acres of timberland. Southern Pine’s first major timber purchase since 1938; he hired young engineers like Joe Denman, who today is president of the company, and set out on an overhaul and improvement project at the mill. One can imagine Arthur Senior sitting in his office in Texarkana, opening the day’s mail, wondering what new way his son would find to spend money that day.
No politician ever sold a program with more adroitness than Arthur used on his father. He never directly confronted the oft-stated concerns about debt and overexpansion but instead wrote back that “we’re in exact agreement” or “my thinking conforms with yours 100 per cent,” always citing an example of how he was saving money here while spending it there. He had, for example, eliminated radios in company cars. Of course, he was spending millions and saving pennies, and of course, Arthur Senior, who after all had started as a bookkeeper, knew that. But the words and gestures were important; they persuaded the father that his son had a sense of self-restraint and that Ernest Kurth and the other lumbermen who chortled about the spending going on in Diboll were wrong. Besides, before starting the modernization program in 1949, Arthur had very carefully laid out for his father how much the plant renovations would save in labor costs—they would pay for themselves in five years.
The rejuvenation of the plant reduced the man-hours necessary to produce a thousand board feet of lumber from 25 to 8. It included a machine that automatically sorted lumber according to length and thickness—the first one in any sawmill anywhere. In 1950 alone, using mainly employees whose old jobs had been taken over by machines, Southern Pine opened six new ventures, from a retail yard to a box factory. In the middle of all this activity, a sawmill operator from Alabama came to Diboll to see for himself the changes at Southern Pine that people in the industry had started to talk about—especially the remodeled sawmill. It was made out of steel. No one built sawmills out of steel, not when there was all that wood. That was crazy. And the yard was not bare dirt but freshly planted grass. Who ever heard of grass at a sawmill? Joe Denman was assigned to show him around, and at the end of the tour the visitor offered some advice. “Let me tell you something, young man. You’d better start looking for a job, because Arthur Temple is going to break this company.”
Sitting in his immense white colonial mansion, as much a statement of its time as any castle on the Rhine, Ernest Kurth said the same thing. “Little Arthur’s going to break that company,” he’d say, croaking out the words with his stomach muscles (he had lost his larynx to throat cancer in 1943). The gravelly voice only served to heighten the Kurth mystique, which was awesome enough as it was. For Ernest Kurth gave life to the appellation of timber baron: few feudal lords ever exercised more power. In Lufkin his economic and political power was close to plenary. He owned or controlled not only the Angelina County Lumber Company but also the leading bank, the only savings and loan, the newspaper, the foundry (which was the town’s biggest employer), the radio station and later the television station (whose call letters were KTRE; locals would say that stood for “Kurth and Temple run everything”), even the insurance company that handled injured workers’ claims against his businesses and consequently was notorious for its parsimony. But the backbone of his empire was Southland Paper Mills—and that is where the conflict with Arthur Temple, Jr., started.
Before Southland, the universal assumption in the lumber industry had been that southern pines couldn’t be made into newsprint because the resin content was too high. Kurth proved the assumption wrong, with the help of a $3.5 million federal loan—thanks to Jesse Jones, head of the Reconstruction Finance Corporation and, not coincidentally, publisher of the Houston Chronicle. The mill opened in 1940 to huzzahs from Texas publishers and politicians. That is the official history as it was repeated in many testimonials to Kurth over the years. But Arthur Temple has a different version. The crucial factor in establishing Southland was land—timberland that secured the RFC loan. And the biggest chunk of land, 40,000 acres, was put up by Arthur Temple, Sr., in exchange for Southland stock. Kurth made him vice president of Southland—and promptly cut him out. He diluted Temple’s stock by giving out shares to organizers—that meant himself—as well as contributors. He packed the board with customers and financial allies. Arthur Senior had the biggest single bloc of Southland stock, but he couldn’t even buy sawlogs from the land he had contributed; any trees the paper mill didn’t want were reserved for Kurth’s Angelina County Lumber Company.
Even without Southland for a catalyst, however, the rivalry between Ernest Kurth and Arthur Temple, Jr., would doubtless have developed. The two men’s individual styles and views of the world were just too different. Kurth was ruthless. If he saw a builder trading at the Temples’ retail yard in Lufkin instead of at Angelina County Lumber, the poor fellow would find himself unable to get a loan from the Kurth bank. Once he acquired timberland and a lumber company in Trinity by promising the late owner’s widow that he’d keep the sawmill open as long as it was economically feasible. The day after the deal closed, so did the sawmill. Kurth demanded absolute control of everything, right down to who got the lowliest job at the paper mill. Outside entrepreneurs were not welcome in Lufkin; if any money was to be made, Kurth and his partners would make it.
Arthur Temple understood the postwar world in a way that Ernest Kurth did not. He knew that people were becoming mobile and would not stay bound to a sawmill town forever. In 1950, when houses in Keltys had no indoor plumbing or hot water, Arthur replaced all 675 of his tenant houses. Instead of keeping other businesses out of town, he shut down the commissary and invited them in.
My Library
