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…
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He has been an influential figure at Time Inc. but not in the way that was predicted. In 1973 the New York Times said the merger made Arthur Temple “a force to be reckoned with in the United States communication industry.” In fact, he has never gotten involved in that side of the company and doesn’t much care for the communications industry as a whole. Speaking to the 1982 meeting of the Texas Forestry Association in Nacogdoches, he was unhappy to see television cameras filming his speech and interrupted his remarks to say, “What this country needs, and I refer mainly to the networks, is freedom from the press.”
“Arthur Temple doesn’t want to run Time Inc. and isn’t going to,” and unnamed Time source told the Wall Street Journal when Temple became vice chairman. “He is happy in a senior avuncular advisory role.” Yet he has done much to shape the company. Along with then-president James Shepley, he is credited with saving the video division from the scrap heap when the rest of the board wanted to junk it. In 1978 Temple put together Time’s biggest acquisition in recent years—the $270 million purchase of Inland Container Corporation, a major manufacturer of corrugated shipping boxes with headquarters in Indianapolis. Within a year after the acquisition, Inland’s earnings doubled and its sales rose by 25 per cent. It has outperformed Temple-Eastex in both categories every year. But the analysts didn’t like the Inland deal either: Time’s stock dropped 3 ¼ points within forty minutes after the agreement.
Time provided the capital Temple Industries never had been able to get before. As a company Temple had been important far beyond its size, but in financial terms it was small-time. During the mid-sixties the total dividends paid by Temple to all shareholders were $818,000 a year. In 1981 alone Arthur Temple received $672,000 in dividends for his 708,191 shares of Time stock (it had split twice since the merger.) In the last year of Temple Industries, his salary was $77,000; in 1981 his compensation from Time was $406,000. His Time stock, worth $5 million at the time of the merger, is worth $20 million today. Arthur Temple’s wealth has finally drawn even with his influence and power. With the addition of Inland, he has forests, lumber, building materials, pulp, paper, paperboard, linerboard—the complete timber company he has always wanted. Only it isn’t his anymore.
In the long run the impact of Arthur Temple on Time Inc. will be insignificant compared to the impact of Time on East Texas. It begins in the forest. On the road east out of Diboll the old forest comes first, a thicket so dense that the forest canopy shuts out the sky. By the side of the road is a billboard. THIS IS A TEMPLE-EASTEX PERPETUAL FOREST, it reads. SELECTIVELY HARVESTED SINCE 1924.
The billboard is a reminder that the sylvan tranquility of this forest is only an illusion. Inside the woods a war is being fought. It is not man’s war, although he has been a late entrant on behalf of one of the combatants. It is a war between pines and hardwoods, a struggle that has been going on as long as there has been an East Texas. Pine trees must have ample sunlight to flourish. To regenerate, they must drop their seeds on exposed soil. Hardwoods are their natural adversary. They block off the sunlight from the young pine seedlings, and every year they lose their leaves, blanketing the forest floor with their litter. Hardwoods have the advantage, but nature provided pines with an ally-fire. Pines resist fire better than hardwood, and for a geologic age the Piney Woods endured because of natural fires, triggered by lightning, that killed hardwoods and cleared the forest floor of brush and leaves. But then man put an end to the fires, and other means had to be found to assist the pines if they- and the timber companies that cut them- were to survive.
Selective harvesting, the method announced on the Temple billboard, involves the removal of individual trees. The mature pines are cut and taken to the sawmill, leaving open spaces in the forest that admit life-giving sunlight to the smaller trees. Hardwoods that interfere with the young pines are killed, either by burning or by spraying, but otherwise the forest develops naturally. Selective harvesting produces big trees, year after year, which is precisely what a timber company running a sawmill wants to do.
But a paper mill uses smaller logs in much larger numbers than a sawmill. That is why, a few miles beyond the perpetual forest, there is a knee-high sign that is almost hidden in the roadside growth. TEMPLE-EASTEX EXPERIMENTAL FOREST, it says. But this is not a forest: the land beyond the sign looks more like cropland. Not a single pine rises above head level. Hardwood sprouts are evident in places, but the ground cover is mostly weeds. Looking closely, one notices that the pine seedlings are in rows. This is a tree plantation, and for East Texas it is the look of the future.
Plantations produce the most pulpwood, and paper is more important than lumber in the timber industry these days. Between 1974 and 1980, Temple-Eastex coverted 200,000 acres from selective harvesting to plantations-amounting to almost half of the old Temple lands. This was accomplished by clear-cutting the old forests and burning the stumps and waste that remained. The clear-cut area was replanted with pine seedlings that, because there are no older trees to block out the sun, will reach maturity in less time than young pines in a selectively harvested forest. Most will never last that long, however. Eighteen years after planting, Temple-Eastex will cut about a quarter of the piones, which by then will be 35 to 40 feet tall. These will go to the paper mill. There will be subsequent thinnings, also for the paper mill, at five-year intervals. In the meantime, controlled fires, starting in the tenth year, will kill off the hardwood sprouts. After 35 years, only a few of the eight hundred trees originally planted per acre will remain. They will be clear-cut for lumber and the process will start anew. The company divided its forestland into two thousand parcels in 1977, and all of them, more than a million acres of East Texas, will be on this 35-year cycle by the year 2012.
The road goes on, through the Angelina National Forest, into Jasper and Newton, then south along the Sabine River to the old Eastex land, where the company has been clear cutting since 1957. Again there is no forest, only trees. The thicket is gone. It is possible to see all the way through the woods to the clearings on the other side. These are not even woods, really, but groves, and this is how most of East Texas will look one day. The hardwoods will still be found in the river bottoms, where pines don’t find the moist soil to their liking, but on the uplands the days of the perpetual forest are running out.
The changing forest is the most dramatic result of the merger between Time and Temple, but East Texas will be affected in other, less obvious ways. Already the signs are showing up in Diboll. The Pine Bough, where Arthur Temple could be found most days drinking coffee and talking with townspeople, is gone now, closed by the company following the death of a woman who ran it. Now he eats lunch at Crown Colony in Lufkin. The company offices, once right outside the plant in the old commissary building, have moved to the new headquarters on the other side of town. Now there is almost no contact between management and the work force, a fact much lamented by longtime employees. (It could have been worse: some people at Time favored moving to Jasper, but Arthur Temple would have none of that.) Most significant of all, Diboll has become even more of a blue-collar town. Joe Denman still lives there, and so does Arthur Temple (when he’s not in New York, Acapulco, or his retreat on the Same Rayburn Reservoir,) but the new managers all live in subdivisions around Crown Colony.
Even the future of the great Temple sawmill itself is in some jeopardy. Lumber is still tied to housing, and housing has been in trouble for three years. The Diboll operations lost money in 1980 and 1981, and Arthur Temple is so pessimistic about the future of solid wood products—this spring he told a trade publication that a recovery is at least three years away—that he has urged Time to consider spinning off or selling the old Temple operations. Several Wall Street analysts who follow Time believe (or perhaps just hope) that the company will be out of timber altogether within ten years.
If Time does stay in the business, it faces the problem of how much capital to divert to forest products, for it can’t stand still, any more than Arthur Temple could ten years ago. Last year Georgia Pacific spent $675 million on capital projects, and Weyerhaeuser spent $768 million. But video is also capital intensive, and it is the part of Time that earns the highest return on sales (20 per cent) and has the greatest potential for growth. Clifford Grum says Time should build another paper mill in East Texas to achieve full utilization of its forest, but the $500 million it would cost equals videos entire capital budget this year.
For the near future, Arthur Temple will have a large say in those coporate decisions. All three Temple directors (himself, his cousin Robert Keller, and his protégé Joe Denman) are on the finance committee; so is Clifford Grum. Although Roy Larsen stayed on as vice chairman into his eighties, Arthur Temple doesn’t intend to do so. But the historical lesson of the timber industry is that it pays to take the long-range view and the long-range view is that the day is coming when the Temples will no longer have influence at Time. Even if Clifford Grum becomes President or chairman, he will hold office for only a few years. The next generation of the family has not produced any potential candidate’s for director of Time other than Buddy, and he is a politician with an uncertain future, as yet unable to translate his Temple sense of noblesse oblige into constituency and charisma or to transcend the constant press references to “son of timber baron.” Most of the other Temples of his generation are professional inheritors and don’t even work. The Temple influence in East Texas in East Texas in the future is likely to come through the T.L.L. Temple Foundation, to which Georgie Munz gave her fortune of 600,000 shares of Time stock before she died this past spring: philanthropy, not productivity.
And so the Texas timber industry has come full circle. It started a century ago with the outside companies coming in from the Great Lakes. Now the outside companies—St. Regis, Santa Fe, Champion, Time—have control again. Only this time there won’t be any E.L. Kurths or Arthur Temples to outlast them and shape the destiny of a region. The last family timber fortune has been made in the Piney Woods. The decisions that determine the future of East Texas will be made not in Keltys or Diboll or Camden, but in boardrooms thousands of miles from Texas. The last paternalistic empire is gone, and, for better or worse, the fate of East Texas no longer belongs to its own.
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