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…
Even in the summer, twilight comes early to the tall woods near the Louisiana border in deep East Texas. By the time the two men finished a late lunch and went out for an afternoon ride in the Sabine National Forest, shadows had already reclaimed the narrow clearing that contained the roadway. Their route was lined by unbroken walls of trees, green cliffs thick with oak and gum and hickory among the loblolly pine. This—not the neatly manicured, cut-over strips along the highways leading north out of Houston—was the real Piney Woods: old, tall, dark, deep.
For two hours the men drove through the forest, talking. They were father and son, and they were having the sort of talk fathers and sons have when the father is 52 and trying to decide what to do with the family business. In their case the family business was trees. The father’s grandfather had started it back in 1893, just one family lumber company among hundreds in East Texas. It had grown into an empire and outlasted them all, the last holdout against the big national timber companies. Now it was the son’s turn. But he had followed other ambitions, and the father was thinking about a merger, and so the moment of decision had come: did the son really want the company? Four generations of family, uncountable generations of trees, all coming down to two men and one afternoon in the forest. On a back road near the tiny sawmill town of Pineland, the son made his decision: no.
That drive in the woods took place ten years ago, but the results have a long tail. As conversations go, it deserves a place in Texas history alongside the deal H.L. Hunt made with Dad Joiner for the best leases in the East Texas oil field. The direct outcome of the decisions made in that car was the formation of Texas’ largest land empire, more than one million acres of land, easily surpassing the King Ranch. Eventually, the fate of one of the nation’s richest and most influential companies would rest with one of the men in the car. The other would become a prominent figure in Texas politics. And fifty years from now the forest itself will look very different as a consequence of that afternoon.
A little over an hour’s drive beyond the last of Houston’s northern suburbs, a road sign on U.S. 59 directs motorists to Camden. As late as the sixties, Camden was the seat of the vast Carter timber empire. Once there was a saying in East Texas that if the Carters began cutting their timber at the Trinity river, it would take them so long to reach the Sabine that the trees on the Trinity would be tall enough to cut again. Now Camden is gone—its houses bulldozed, its people moved, its leading family dispersed—and all that remains is a highway intersection, a sawmill, and a plywood plant.
Another 45 minutes down the road, a state highway leads off through Lufkin toward what was once the unchallenged domain of the Kurth family. The sawmill of the Angelina County Lumber Company was surrounded by a community called Keltys, where Kurth rule was so absolute that a preacher is said to have been fired just for mentioning Labor Day from the pulpit. Today Keltys too is gone, absorbed into Lufkin. All that is left of the sawmill is the old foundation.
Roughly midway between Camden and Keltys is Diboll, the headquarters of the Temples, the third of Texas’ three leading timber families. But Diboll’s thriving. Its sawmill still cuts logs into lumber. The mill is ringed by satellite plants using every part of the tree, from sap to sawdust, that escapes the blade. New housing projects abut the highway, and back among the pines sits a sprawling, odd-angled building of the sort that major corporations build for themselves as headquarters and monuments.
The survival of Diboll has a lot to do with the father and son’s drive through the Sabine National Forest, for the father was Arthur Temple, Jr., and the son was Arthur III, better known as Buddy, unsuccessful candidate for the Democratic nomination for governor earlier this year. The family company whose fate they settled in the woods now occupies the modern headquarters building in Diboll under the name of Temple-Eastex. When Buddy said he didn’t want to join the business, Arthur Temple went out and merged his company with the timber subsidiary of Time Inc.
Arthur Temple is patriarch of a family that holds about 15 per cent of Time’s stock, making the Temples the largest bloc of shareholders of a company that ranks 125th on the Fortune 500. He is vice chairman of Time Inc. The representative he sent from Diboll to corporate headquarters in New York is in position to be the next head man at Time. As chairman of Temple-Eastex, Arthur Temple rules an empire of 80 million trees with 4 billion board feet of timber—enough to stretch from Diboll to the moon and back, with enough left over for ten earth orbits. Beyond a doubt he is the most powerful man in East Texas and one of the most powerful in the entire state.
In many ways he is made for the role in a timber baron. He stands over six feet, but the more lasting impression is that of a bulky sturdiness, with a low center of gravity like a bear standing upright. His dominant physical feature is a deep vice furrow etched into a high forehead, which, regardless of what the rest of his body is ding, creates the impression that his mind is permanently in deep thought. He prefers shirt sleeves to suits, Diboll to New York, and Aggie engineers to Wall Street analysts. He likes hunting and golf and the woods—he once shocked a national timber industry meeting by suggesting, half in jest, that the great Western fir forests were too beautiful to cut. He uses country boy aphorisms to make points, offering a disagreement by saying, “That’s worth litigatin’ over,” or turning down a deal by saying, “A man can eat only so many beans.”
But the most important thing about Arthur Temple is the way he does not fit the timber baron mold. Behind the folksy exterior is a man who by background (his father and great-grandfather graduated from old-line East Coast colleges; his mother’s father was a prominent Wall Street lawyer) and by the sheer force of his ambition in business has always been far more aware of the world outside the Piney Woods than have his rivals in the timber business. He has always had a sense of how times change and how, even in deep East Texas, the tide of events can’t be denied. The other timber barons, isolated in their backwoods empires, thought they could thwart history; but Arthur Temple brought about vast social changes in East Texas, in effect ushering in the postwar era. He did so not so much out of altruism or reformist zeal, but because he sees himself above all as a modern man running a modern business.
The combination of worldly sophistication and backwoods ways is the mix of fuels that has propelled Arthur Temple all his life. He is a man of both hungry ambition and deep sentiment, and his entire professional career has been an attempt to resolve these two essentially incompatible drives. As a young man in 1947, he constantly threatened to leave the family business to make more money (he insisted to his father that he could be making $50,000 a year, a stunning amount for small-town East Texas at that time): years later, he twice turned down offers to head national timber companies because he could not bring himself to leave the family business. He could break into tears while contemplating an offer to merge, but he knew which offer to pick and how to get the best deal. The surprise is not that sentiment, in the end, lost but that for so long it put up such a good fight.
The giant Temple sawmill at Diboll is a fearsome sight. The images of death are inescapable. As the logs move single file along the chain that will carry them into the mill, toothed drums strip them of their bark, preparing them for execution. The sawmill is elevated, so that the condemned logs seem to be climbing to the scaffold. As the victims disappear through a portal into the mill itself, the moment is reminiscent of an excerpt from The Perils of Pauline, lacking only the heroine strapped to the log.
Inside, the dimension of sound adds to the sense of doom. It is a mechanical opera; the shrill singing of the band saw, its pitch falling as it bites into wood, then rising in triumph like a soprano concluding an aria; the hydraulic hissing of the machinery; the deep whirr of fans fighting a losing battle against the heat; the rattle of chains and belts forming a chorus; and all throughout, the rumble of lumber falling off the saw, as though the entire structure were coming apart.
A log’s last moments are spent on a huge carriage that swings violently back and forth, drawing the log against the vertical blade until there is nothing left but slices of board. The dismemberment of the log takes only seconds and is so swift and certain that the sense of mortal danger is as present in the air as sawdust. The fear is not unwarranted: men have died on that blade.
The sawmill is an instrument of death, but it is also an instrument of life, for its purpose is to provide shelter. The same forests that supply the sawmill also supply the raw material for paper, which is the basis of all written knowledge. Few industries are more essential to civilization as we know it; yet timber remains Texas’ forgotten industry.
In the popular mythology of Texas, timber has been left out. Think of the Texas of legend: it is the West, it is dryness and dust, it is wide-open spaces, it is rugged individuals—all images of the cattle industry. Timber is the South, both in geography and in spirit. Its climate is moist and its soil sandy—the necessary conditions for growing pine trees. It covers a vast territory in Texas, almost everything east of a line from Houston to Tyler, but in the forest the sense of vastness is absent, because the trees close everything in. Timber’s dimensions are not heroic and neither are its people. They migrated west from the Southern woods until the forest ran out. There is no timber equivalent of the cowboy, not in Texas. Loggers were called flatheads, not lumberjacks, and instead of being the independent Paul Bunyan sort, they lived in virtual peonage.
Even the words we use to describe the two industries are different. We speak of cutting down trees but of raising cattle. The instant mental picture of the timber industry is the sawmill and the ax; of the cattle industry, it’s the roundup. No one thinks of the slaughterhouse. The killing of cattle has been mythologized; the killing of trees has not. We could all get along quite well if we never ate another T-bone, but the sawmill is indispensable.
One of Arthur Temple’s favorite stories is about an early lumberman named Buchanan who went around East Texas buying timberland. Farmers hated the trees and wanted only to see them cut and burned to cinders. One farmer who had sold some woodland to Buchanan chortled to another about how he’d outsmarted his victim: “Damn fool paid two dollars an acre and it wasn’t even cleared.”
No doubt some farmer somewhere said much the same thing about Thomas Lewis Latané Temple, who bought 7000 acres of pineland from a man named J.C. Diboll in 1893 and spent much of the rest of his life amassing more than 200,000 acres of land in East Texas. The prevailing wisdom was that uncleared land was good only for paying taxes. One farmer thought so little of it that he traded a square mile of pine forest to a traveling salesman for a sewing machine.
That was in the era before large-scale commercial lumbering in the Piney Woods, before the farmer’s son, John Henry Kirby, grew up to become the biggest of the Texas timber barons until the Depression wiped him out. As late as 1880 East Texas was mostly virgin forest. No railroads penetrated the green wilderness. The largest sawmills were at Beaumont, where loggers cut their way north and floated the felled trees down the Neches River to the mills. In the interior the mills were small, serving just the nearby farmers, and often primitive—a few were powered by steam, but the rest used water, horses, or just two men.
The coming of the railroad was the turning point, the beginning of the modern Texas lumber industry. The tracks reached Lufkin in 1882. In the 1890s John Henry Kirby built a line north out of Beaumont. At the same time the big national companies were abandoning the ruined Great Lakes forests. They arrived with the railroads and the boom was on.
The newcomers didn’t want to own pineland any more than the farmers did. It was cheaper to buy only the right to cut trees, known as a stumpage contract. The philosophy among the early Texas lumbermen was “Cut and cut out.” When it became too expensive to haul timber from deep in the woods, the mills cannibalized themselves, sawing up their own beams and rafters as their final act.
It was not easy in the Texas lumber industry to take the long-range view. It takes 18 years for a pine seedling to grow to the size of pulpwood, the raw material for a paper mill—but pulpwood didn’t become a major factor in the Piney Woods until the forties. For sawtimber—a tree tall and thick enough to justify the cost of converting it to lumber—the wait is even longer: 35 years minimum. Three and a half decades of paying for land, paying taxes on land, paying for more careful logging to protect the seedlings, paying for thinning the hardwoods so the pines won’t lose the competition for sunlight—money spent with no return and no assurance that the person setting the policy will ever live to see the trees turned into profit. It is no wonder that the vast majority of lumbermen bought stumpage instead of land and it is equally no surprise that those who bought land—Tom Temple, W.C. Carter, Joseph Kurth—built family dynasties that lasted for three generations. The economics of the pine tree inevitably forced one or the other.
When Tom Temple opened his sawmill in 1894, at the site he named after the man who sold him the land, the two-man crosscut saw had just replaced the less efficient ax. But the invaders from the North had a far more potent tool, an artless device known as the skidder, that had devastated the Great Lakes woods. The skidder was a flat railway car with long-necked cranes using thick cables that could reach a thousand feet into the forest. After felling a tree, logging crews fastened tongs at the tip of the cable lines to each end of the log. Back on the rail car, the cable operator would bring the log in, winding the cables around huge steam-driven drums. The log became an immense battering ram, alternately skidding along the ground and swinging through the air, leveling everything in its path.
By 1904 it was already evident to some that the Piney Woods could not survive the skidder’s onslaught. A U.S. forester warned that at the rate of lumbering then going on, the virgin pine would last only twenty years. The Great Lakes companies plundered the woods and cut out for the West Coast; the Long-Bell, one of the industry giants, was gone by the early twenties, and its president predicted that any lumber company desiring to continue in business would have to head west within a few years. Only a few family companies stayed behind, buying up cut-over land and waiting for the second forest to grow. By 1932 timber production had declined almost to the pre-industrial 1880 level. Most of East Texas had been reduced to scrub oak thickets and fields of stumps.
The man who founded one of Texas’ enduring family empires left his own roots at the age of seventeen to head west. Thomas Lewis Latané Temple was born in 1859, the son of an Episcopal minister in Essex County, Virginia. In 1876 he struck out for southwestern Arkansas, where his mother’s family owned some land. Young Temple tried farming, didn’t like it, and soon went to work for a sawmill, eventually saving enough money to open his own lumber company. It failed. There were debts. So Temple crossed the Red River—another debt-ridden Arkansan “gone to Texas,” in the phrase of the day. He made some money from a sawmill investment, sold his interest, and took a train south to Lufkin, near prime timber country along the Neches River. He was 34, sharing a bed in a rooming house, when he heard about J.C. Diboll’s land.
Tom Temple was a different sort of lumberman from most who operated in the Piney Woods. He was neither the biggest nor the most successful nor the most innovative, but he brought to the business something that was lacking at the turn of the century, when the Texas forest was being ravaged without restraint: a sense of permanence. Perhaps the crucial difference between him and the others, as it would be later for Arthur Temple, was his awareness that the world was bigger than the Piney Woods. His father had graduated from Harvard, his son would graduate from Williams, and he himself took annual summer vacations on Long Island. He knew the fate of the cut-over Eastern forest, and he knew too of Gifford Pinchot and the forest conservation movement that had caught the imagination of the East. He bought land in addition to stumpage, amassing 124,000 acres by 1908. Until hard times hit in the thirties, late in his life, each year his company bought more timber than it cut. He had his logging crews bend down and saw close to the ground, rather than at chest height as was the usual practice: if he could get more lumber from each tree, he wouldn’t have to cut as many.
His towns, even the logging settlements in the woods, were built to endure. Other companies had portable camps for men only (it was common practice for companies occasionally to send trainloads of prostitutes into the camps), but Temple’s camps were built for families. One, at Fastrill, northwest of Diboll, lasted nineteen years.
Diboll itself was an improvement over the typical sawmill town, though that wasn’t saying much. Like Camden and Keltys and other East Texas lumber communities, Diboll was a company town. The company owned the houses, the only store (which supplied everything from haircuts to caskets), the churches, the schools, even the electricity that lit the employees’ homes—at least until it was cut off at ten o’clock in the evening. The workers were paid weekly in company scrip, redeemable in full only at the company store, and then only for goods, not cash. Once a month a train arrived in Diboll with real money from the Lufkin National Bank; workers who had managed to save some chits could turn them in for cash—at a loss. The absence of cash and private property made it almost impossible for workers to escape their dependence on the company.
The sawmill towns were the worst places in Texas, no doubt about it. The air reeked from round-the-clock burning of wood waste, not to mention other smells: sanitation was so primitive that many towns, Diboll included, didn’t even have pit toilets. Conditions in the company towns were so notorious that a federal commission sent investigators to East Texas in 1912. But at least Diboll had the trappings of a permanent town. To help civilize the town, Temple brought in a social director whose specific instructions were to improve the ladies’ clubs and start civic organizations. He donated a five-thousand-volume library. The company let workers buy cattle on credit ($1 a month), and it bought a bull so the cows could have calves.
In 1908 the boom in the Piney Woods was at it zenith; the previous year still ranks as Texas’ all-time best lumber-producing period. In addition to Diboll, Temple had acquired a one-third interest in a sawmill at Pineland. He wanted to buy out his partners, but he didn’t have the capital, and so he conceived a clever scheme. He commissioned a national trade publication to write a long story about his business, known as Southern Pine Lumber Company. Temple wanted an article that would give him credibility with the Eastern investors he hoped to woo, and he got what he paid for.
The main selling point was the company’s land ownership. It dictated a policy of leaving some trees standing to regenerate the forest. The article never mentioned Gifford Pinchot by name, but it did make a point of citing Temple’s summer vacations “in the vicinity of Manhattan,” and it was full of allusions to the Pinchot philosophy of the perpetual forest. The strategy worked: in 1910 Tom Temple bought out his partners in the Pineland mill and changed its name to the Temple Lumber Company. It operated separately from Southern Pine until 1956.
Temple was in his fifties when he acquired Pineland and embarked on building an empire. He wanted his oldest son to succeed him, but Tom Junior was a gambler and womanizer. The only other son among five children, Arthur, reluctantly came back from the East to join the business in 1916 as the bookkeeper. The second generation was in place. Arthur Temple, Jr., was born in 1920. By that time timber companies were cutting out all over the Piney Woods. But in the twenties the Temple companies expanded even more rapidly, purchasing another sawmill, opening retail lumberyards in dozens of small towns across East Texas, and almost doubling in acreage. Tom Temple had to borrow heavily to finance the expansion—at a time when lumber production was declining in Texas every year—and some members of the family, including the bookkeeper, weren’t sure it was the right thing to do. “What does it profit a man to own the whole world if he has no money?” Arthur Senior asked L.D. Gilbert, Tom Temple’s general manager.
“We’re not building for this generation,” Gilbert said. “It’s not even for your generation. It’s for Little Arthur.”
Little Arthur almost didn’t get the chance. The Depression dealt the lumber industry—always among the first to suffer in an economic crisis because of its dependence on homebuilding—a devastating blow. Production in Texas dropped 70 per cent in three years. John Henry Kirby defaulted on a debt he owed the Santa Fe railroad, declared bankruptcy, and lost his company. Things were so bad that the fledgling state forestry nursery had to shut down because no company could afford to buy the seedlings.
Tom Temple was seventy years old and millions of dollars in debt when the crash came. To make matters worse, the obligations were short term. Within a year, as Gilbert put it in a letter to a family stockholder, “the sheriff was stepping on our coattails.” Tom Junior’s estranged wife asked a Baltimore bank to investigate the company, it reported that the timberland had a negative value: it was worth less than the taxes owed. Tom Temple went to the First National Bank in Dallas to plead for an extension; he sat in a waiting room all day, an old man with his hat literally in his hand, but no one in the bank would even talk to him.
He did not live to see the company he had founded return to solvency. Toward the end, when he was very sick, the old man saw Arthur Senior entering the room and said, “Tom, is it really you?” He died in 1934, still hoping that the wayward Tom Junior would renounce wine, women, and song to come back to the business. But the rest of the family entertained no such illusions; they elected Arthur as the new president. He inherited $2 million in debts.
Arthur Temple, Sr., had little of his father’s entrepreneurial drive. He had no interest in new ventures, and in future years he would try to dissuade Arthur Junior from them—in one letter to his son, he wrote, using a favorite phrase, “What does it profit a man to gain the whole world if he deprive himself of the full enjoyment of his family and friends and have no time for the higher things?” He loved opera, especially Verdi, and spent hours listening to Rigoletto and Aida on an old Victrola. But he had an almost aristocratic sense of family, and to save his family he had to save his company.
Southern Pine and Temple Lumber had assets galore, but they were cash poor. With other lumber companies in trouble as well, the federal government, responding to a plea from the Texas Legislature, agreed to purchase cut-over lands in East Texas. Shortly after Arthur Senior took over the company, the government acquired 629,000 acres from eleven lumber companies; that land became the four national forests in Texas. But it was hardly a Chrysler-type bailout. Government negotiators played hardball, knowing that the companies were desperate and that there was no other market for the land. Temple Lumber sought $3 an acre for 80,000 acres around Pineland, but the government held out for $2.75—the lowest price paid any of the eleven companies—and finally the Temples capitulated. There was no alternative: even the commissary’s flour supplier would no longer do business without money in hand.
The low purchase price meant the company had no money left over to pay its major creditors: First National and Republic National banks in Dallas, South Texas National (a forerunner of Texas Commerce) in Houston, and Boatmen’s in St. Louis. The creditors met in St. Louis to decide what to do about the Temples. First National and especially the Boatmen’s wanted to foreclose; Arthur Senior wanted more time. Finally, Fred Florence, who was in the process of building Republic National into the largest bank in the Southwest, got up to speak. He pointed his finger at the man from Boatmen’s. “Do you know how to run a sawmill?” Florence asked. Silence. He pointed at First National. “Do you?” At South Texas. “Do you?” More silence. “If we foreclose, we don’t know a thing about their business. I know this family. They’re good people, and if the country comes out of this, they’ll pay their debts.” Arthur Senior got his extension, and in two years the company was out of debt.
Two decades later, Arthur Temple, Jr., went to Fred Florence to borrow money to complete the first fiberboard plant to use southern pine. The two men had met only once, at a social gathering several years before, when Temple had introduced himself and told the banker, “I just want you to know that I remember what you did for us. We’re not the kind of people who forget a favor.” At the bank Temple laid out his plans, and after the presentation Florence turned to a loan officer and said, “You let this boy”—Temple was then 36—“have the money, and you let him have it at the prime rate, or below if he wants it. This boy is going to be important to this bank.”
The first time Arthur Junior went to a bank to borrow money, he was not so successful. He was only nineteen at the time, but the episode is a landmark because it was his first clash with the Kurth interests—a clash that in time would become a battle of philosophies, old against new, past against future. He was working as a bookkeeper in the Temple retail lumberyard in Lufkin. From the beginning he was on the lookout for his own deals, and when he heard there was money to be made by wrecking an old sawmill shed, he went to the Kurth bank, Lufkin National, where his family had always done business, to borrow $3000. Arthur was still a minor and not liable for his debts; the bank wanted his father to guarantee the loan. Arthur said that wasn’t what he had in mind, but the banker contacted Arthur Senior anyway. When Arthur Junior found out, he promptly went to the other bank in Lufkin, a small institution called First State Bank and Trust. He didn’t go into any long explanation; he just asked the president if he’d lend him $3000. “You can sign your name, can’t you?” was the reply, and First State was on its way to becoming the Temple bank.
The sawmill shed venture made money, and soon—even though his father promoted Arthur to head of the Lufkin yard—there were more deals: developing a filling station, a locker plant, a grocery store. Arthur Senior wasn’t very happy about the sidelines, expressing frequent fears that they took time and thought away from the job at the lumberyard, and he might have been unhappier still except that under Arthur Junior Lufkin grew into the most profitable yard in the company, performing on a par with Houston. “I realize that I am conservative by nature and haven’t much of the venturesome spirit,” he wrote his son, but “I do not want you to get overextended, or too much involved, and my ambition for you is to have you develop in the retail division until you are at the top.”
It is an old generational story: the father wanting the son to go slowly and follow the path laid out for him, the son chafing at the restraint, wanting to run the show. At 18, Arthur was so impatient to get on with business that he stayed less than a week at Williams College in Massachusetts, his father’s alma mater; he walked eight miles through a fierce hurricane to catch a train home. As a youth, Arthur Senior had wanted to go his own way too, but as he pointedly wrote his son, “I felt an obligation, however, to return to Texas to engage in the business my father had built up.” He had chosen family over fortune, and he was finding it hard to understand why his son didn’t feel the same way.
Instead, Arthur’s projects became even more ambitious. When a federal program was changed to let developers get low-interest loans to build rent houses, he applied for—and got—the money even before the regulations were written. The 142 units he built at Texarkana, where a new munitions plant was going in, constituted the first FHA housing project in the country. By the time Arthur was 22, he had already built close to 500 houses.
The father was fighting a losing battle, and he knew it. He was, he told his son, “proud of what you have done, proud of the initiative, aggressiveness, and good business sense you have shown.” But he also knew that these very qualities would inevitably lead Arthur away from the company. The responsible jobs were few—Arthur Senior’s, his cousin Henry Temple’s position as general manager at Diboll, the same position at Pineland, and the top job in the retail division—and were held by family or old and loyal friends. For the time being, there was nowhere to go. “I’ve felt on a dead end,” Arthur Junior told his father in 1946, and Arthur Senior confided to a close friend in the company, “Arthur is too hard to hold down.”
Later that year Arthur told his father that he was determined to branch out and do things that would make or break him. “It is only a short time before it will be necessary for me to sever my contact with the company,” Arthur wrote his father. “I simply cannot afford to pay about $50,000 a year for the privilege of working with Temple Lumber Company.” On February 6, 1948, he mailed in his resignation to the head of the retail division, saying that he had to oversee $1 million worth of work he had under construction.
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.
There was also, of course, the king-of-the-mountain element. Buddy Temple recalls growing up in Lufkin in the late forties and regarding the Kurths with awe, just as everybody else in town did. Arthur Senior had been content to play second fiddle; Arthur Junior was not. Not long after he arrived in Diboll, he took a small hardwood contract away from Kurth. He lost the skirmish—Kurth lured him into a compromise, then ignored his half of the bargain—but the challenge had been delivered.
Their conflict soon moved from the timber industry to the larger theater of East Texas. In the early fifties the U.S. Army Corps of Engineers wanted to build a large flood control reservoir on the Angelina River east of Lufkin. The reservoir would inundate 114,000 acres of private timberland, and Ernest Kurth was against it. No matter that his paper mill had been built with low-interest government loan—he couldn’t tolerate the idea of government interference in his industry.
Ernest Kurth didn’t understand that the lake would break the monotony of the forest; that they day was coming when working people would have leisure time; that one day real estate development would be a more profitable use of some land than timber; that the lake would bring outsiders with money to the Piney Woods; and, most of all, that all this could be turned to the benefit of everyone, especially the richest and most powerful man in town. Unlike Arthur Temple, he was afraid of the expanding pie. So he organized the timber industry against the lake—including Southern Pine, which he signed up by talking not to Arthur but to Arthur’s uncle, Temple Webber, who was then chairman of the Temple board.
If Kurth thought he’d tied Arthur Temple’s hands, he was wrong. Arthur supported the reservoir through an organization formed by business leaders in the eight-county area to lobby for the lake. The ensuing battle culminated in one of East Texas’ memorable confrontations, when Jack Brooks of Beaumont—no slouch as a tough guy himself—told Kurth during his first congressional campaign, “We’re going to build that lake if we have to back water up in your living room.” Arthur Temple’s defection neutralized Kurth, and in 1955 the Corps condemned the area that is now Sam Rayburn reservoir. Among the lands it took were seven thousand acres belonging to the Temples.
The rematch came five years later. Kurth had the only television station in Lufkin, and the city council decided to award a cable television franchise to bring in more stations from Houston. That was fine with Kurth—as long as he got the franchise. Temple had the lower bid, but this time Kurth was playing on his home court. Recalcitrant councilmen were told that friends or relatives would lose their jobs. Arthur made an impassioned speech about how much television would mean to the poor, how it would one day penetrate every creek bottom and redneck cabin, how it would change the world—all true, all good reasons for taking the low bid, all irrelevant because Kurth had the votes. After the council handed the contract to Kurth, Arthur walked up to him, put his hand on Kurth’s shoulder, and began to offer congratulations, but Kurth cut him off with “Get your hands off me, you goddam demagogue.”
Ernest Kurth died in 1960. He lived long enough to know that if any umber company went out of business, it would be Angelina County and not Southern Pine. He saw more lakes take more timberland in East Texas. And since he knew everything that went on in Keltys, he probably knew that the wife of one of his partners had lamented to a group of young people, “I wish Keltys had an Arthur Temple.”
Late in the summer of 1951 Arthur had done all he could in his subordinate role. The automation of the plant was complete. Diboll had been cleaned up. A quantum leap in growth was impossible as long as his father clung to prewar notions about debt. Arthur Senior had already vetoed a paper mill. Arthur Junior began to hint that he might be getting restless, or so his father feared. “I have built a strong organization and therefore, to a large extent, have served my usefulness in my present position,” Arthur wrote his father. They talked about Arthur Senior’s moving to Diboll to take over, but then, just as in 1948, death mooted the issue: on November 28, at the age of 57, Arthur Senior was stricken by a fatal heart attack. His legacy was that of a conservator rather than an innovator, but in the end he did what mattered most to him, what Ernest Kurth could not: perpetuate the company through the next generation.
Arthur became president of the company and immediately embarked on more improvements. The first stage had been automation; now the object was to get more products out of the tree. Only 42 per cent of every log actually became lumber; the rest was lost in the conversion process. An astonishing amount—about one fourth—turned into sawdust (at the mill) and wood shavings (at the planer). Another fourth disappeared because the outside of the log had to be cut away in the sawmill to get the necessary ninety-degree angles for lumber. Some of the waste was burned to produce steam for the mill, but the rest was a drain: the company had to pay workers to gather and burn it before it piled up and swamped the plant.
In 1952 Arthur Temple finally took his long-delayed trip to Europe. In Sweden he bought a debarking machine that rubbed the bark off the pine; back home, the removed bark went into a new product—a soil mulch similar to peat moss. Without the bark, the slabs that the sawmill cut away from the outside of the tree could be processed into paper chips. The company bought a chipper and began selling the chips to the Champion International paper plant in Pasadena. And there was a bonus: the sawmill ran better. The bark had collected so much dirt that it eventually gummed up the saw. Now there would be no bark, no stoppages.
The Europeans turned out to be two decades ahead of the American lumber industry. They were already making extensive use of lumber substitutes like fiberboard and particle board, which were still in their infancy in the United States. To make fiberboard, the European mills took chips similar to the ones Temple sold to Champion and boiled them until the fibers softened. The pulp emerged from the vats in huge sheets, the water was pressed out, and the sheets went into ovens for baking. Particle board was produced by baking a mixture of sawdust, shavings, and glue. Plywood, produced by “peeling” a spinning log, much like unrolling toilet paper, was not made from the waste, but it too was a more efficient use of the forest: because the outside of the log did not have to be cut away, one tree provided twice as much plywood as lumber.
The Diboll fiberboard plant opened in 1958, financed with the loan from Fred Florence’s bank and the sale of the Southland Paper Mills stock that had rankled Arthur for years. The plant made the black insulation used in construction underneath exterior walls. In the first year alone, material that had previously been worthless produced 140 million feet of fiberboard. In the early sixties Temple Industries added one of the first particle board plants in the country, which manufactured shelves and counter tops; it also had—depending on which story you believe—the first plywood plant made for southern pine. (A Georgia-Pacific plant in Arkansas started up a few weeks earlier, but Arthur Temple has always insisted that G-P’s mill shouldn’t count—it was a West Coast transplant that almost immediately had to be retooled for pine.)
The company that had once used less than half of the tree found ways to use almost all of it. The liquid that the fiberboard chips cooked in was routed through a still and the sap extracted to yield wood molasses, used in cattle feed; the remaining water was recycled to cook more chips. At the plywood plant the cores that were left after the logs were peeled became fence posts and construction studs. Not even the fine dust at the particle board plant was allowed to escape; it was burned to produce the gas that heated the ovens. At every plant, conveyors clanked along below the level of the primary machinery, salvaging the falling crumbs. Pneumatic tubes the size of gas pipelines crisscrossed the entire Diboll plant site, blowing the residues to towering stockpiles.
Southern Pine Lumber Company had left its old rivals in Keltys and Camden far behind. Known as Temple Industries after 1963, it was no longer just a sawmill; it had become what Wall Street calls a forest products company. In the decade starting with the fiberboard plant’s first full year of production, 1959 to 1969, the new technology had enabled the company’s earnings to quintuple. But in Camden, where the Carters once refused to put in a laborsaving machine “because it wouldn’t trade at the commissary,” the family sold out to Champion in 1968. And in Lufkin, St. Regis bought into Southland in 1966—the same year Angelina County Lumber Company was liquidated.
Arthur Temple had transformed the entire timber industry in the southern pine forest. It is easy to forget, from our perspective of the current Sunbelt boom, how far the South lagged behind the rest of the country in industrial development only thirty years ago, particularly in the backwoods where the lumber companies were. In an article about the Southern timber industry in 1964, the Dallas Morning News described it as something people were used to seeing “in a state of decline, with old men left to run many of the businesses and with its future apparently behind it.” Pine was supposed to be different from West Coast fir; it wasn’t supposed to be able to support lasting industrial empires. The trees were smaller, the mills were smaller, the minds were smaller, the resin caused too many problems. Arthur Temple beat the myth.
Arthur Temple had moved away from the rest of the Texas timber industry in his business and civic practices; now he would follow the same course in politics. It didn’t happen right away; like other lumbermen, he supported conservative Allan Shivers over liberal Ralph Yarborough in the bitter 1954 governor’s race. He even raised money for the Republican party. In the 1960 Democratic primary he voted against a young liberal candidate for state representative named Charlie Wilson, and in the fall he wrote the Diboll paper that a pro-Kennedy column written by his cousin Latané Temple did not represent his own views. But on election night he told Latané that he’d voted for Kennedy after all. And when a former mayor of Houston named Neal Pickett walked into his office in 1962, Arthur Temple was ready to listen.
Pickett was the head of the Houston regional office at the Federal Housing Administration, a Kennedy appointee. He’d been all over East Texas trying to sell cities on low-cost housing. No luck. East Texans regarded federal money as a carrot to lessen their resistance to the stick of integration. But Arthur Temple was immediately enthusiastic. “He knew the minute I went in there the first time what he wanted,” Pickett recalls.
What Temple wanted was to get out of the landlord business. He’d tried to sell company houses to employees on a rental-purchase plan, but the employees had been taken care of by the company for so long that many were afraid to give up their security. Some workers did buy their homes; the rest Neal Pickett built houses for. By 1964 federal dollars had underwritten the construction of 210 new housing units in a town that had started with around 800. The remaining shacks from the old days were razed. Fifteen years earlier Diboll hadn’t had a paved street; suddenly it didn’t have an old house.
In 1967 Neal Pickett left the FHA to become executive director of the Deep East Texas Development Council. It was an Arthur Temple show all the way. He had decided that federal largess could transform East Texas the way it had changed Diboll, and he told Pickett that it was time for East Texas to “join the twentieth century.” After the example set by Diboll, the stigma attached to taking federal funds was disappearing. The purpose of the new organization was to hustle the money. (It didn’t hurt that Pickett was married to the sister of Ralph Yarborough, then a U.S. senator able to pour cash into Texas.) Temple Industries gave the fledgling organization an office, a telephone, utilities, the use of an airplane, its first president (Charlie Wilson, by then a state senator and a Temple employee), and the help of Arthur Temple if some public official in another county needed persuading or if a project got in trouble. In five years Pickett brought $130 million into a thirteen-county rural area—more money than some of the counties were used to seeing in a decade.
If the federal grants indeed helped East Texas join the twentieth century, not everyone welcomed the affiliation. Temple’s politics had long been suspect in Lufkin. He had integrated the Diboll schools in 1948—six years before the Supreme Court’s Brown decision. He did the same for public accommodations before the Civil Rights Act of 1964. One day he got a telephone call in his office from the proprietor of the Pine Bough, a local café the company had established so there would be a nice place in town to eat. Black freedom riders were blitzing East Texas, she said, going into segregated restaurants and staging sit-ins after they were refused service. What should she do if they came to Diboll? “Serve ‘em,” he said. If the staff wasn’t comfortable about it, he added, he’d come over and work the cash register and bring his wife to wait tables. When the riders showed up, the staff handled it alone.
His Lufkin foes viewed Arthur Temple’s involvement with federal funds as motivated by something more than benign idealism. He was, they said, letting the taxpayers of the United States finance the growth of his business. Pineland got a new water system that, according to the grant announcement, enabled Temple Industries to expand three divisions. In Diboll, lack of housing had held back the company’s growth, but after a final total of $4 million and 404 new public housing units by 1972, there was no problem filling the jobs created by expanding the fiberboard and particle board plants.
The rancor over federal funds led to one final confrontation between Arthur Temple and the old Kurth camp. Temple made an offer to the Lufkin Country Club: if it would trade him its land and nine-hole golf course, he’d build its members a luxury club and eighteen-hole golf course. The Southland crowd charged that Temple wanted the country club land so he could build public housing in Lufkin. They also resented that Temple planned to sell lots around the new golf course; they weren’t about to let Arthur Temple make money off them. The membership turned down Temple’s offer by a single vote. Battle won…but war lost. The day after the balloting, the leaders of the opposition lost the prize hunting lease on Temple lands that they had enjoyed since Arthur Senior had run the company—it was one of the few times Arthur Temple used his power purely for personal satisfaction. And when Temple built the club, which he called Crown Colony, anyway, it was too nice to resist: his old opponents left the Lufkin Country Club to join Crown Colony, and they paid a lot more money to do it.
The lumber business, Arthur Senior had frequently lamented to his son, is either feast or famine. Everything about the company had changed in the years since his death, and yet nothing had changed. Every time the housing industry hit a slump, so did Temple Industries.
The solutions were complicated and, for Arthur Temple, as much a matter of emotion as dollars and cents. On the one hand, he could build a paper mill. Short of a general economic collapse, paper was recession-proof. But there was a problem. A paper mill required an immense land base, and the price of timberland had shot up since Ernest Kurth started. Southland with $7 million in 1938. By the early fifties, when he first got interested in paper, the price tag was up to $40 million. Another decade and there was another zero to contend with: $200 million by the mid-sixties.
That was big money for a family-held corporation to raise—too big. A short-term bank loan would imperil its financial position. A long-term bond issue was out of the question for a family business: no investor would touch thirty-year paper of an enterprise that depended on one man. Another choice was selling stock, but to raise enough for a paper mill, the family would have to surrender so many shares to outside investors that it might lose control of the company.
Another possible solution was a merger. That meant an even greater chance of losing control of the company, but at least there were compensations. If Arthur picked the right partner, the family’s security (and his own) would be guaranteed. For him, a merger offered the possibilities every successful entrepreneur thinks about: new boardrooms, new deals, new businesses, the big leagues. For three generations the Temples had always thought of the family and the family company as identical, but now Arthur Temple could not protect the future of one without risking the future of the other.
It was not the sort of decision that could be put off. The largest stockholders in the company were from his father’s generation. When they died, their estates would be required to pay taxes on their holdings. Some of the stock would have to be sold over the counter to raise the money. If the family didn’t buy it, an outsider would. So even if Arthur Temple didn’t build a paper mill, he needed capital to keep the company in the family.
But keep it for whom? By 1967 there were no other Temples of his generation left in the business. Latané, who had been a director and one of three members of the executive committee, departed after his retail division collapsed in 1963 because of poor credit practices. Carrol Allen, married to Arthur’s sister, quit in a huff when Joe Denman got Latané’s old title of executive vice president.
That left Buddy. It had always been—and for that matter still is—Arthur’s hope that Buddy would take over the business someday. Buddy had trained to be a Temple. He went to board meetings while still a child. He went to the office on Saturday mornings, when the townspeople dropped by and told Arthur their troubles. Afterward, when the workers had gone, he saw his father cry. He went along on the Sunday tours of the plant when his father, dry-eyed, carried a notebook, making lists of anything out of place, even a stray Coke bottle. He grew up, he says, always assuming he’d take over.
Starting at the company in sales in 1964, he peddled lumber to railroads for boxcar linings and later handled special projects such as monitoring costs at the fiberboard plant. But like his father before him, he quickly grew restless and wanted to make his own money. He still hoped to follow his forebears into the business, but, he says, “I felt I’d be accepted more if I made it on my own.”
So he left the business to do his own deals. He got a bank loan and, with two partners, developed a string of Holiday Inns in East Texas. Two ventures in Diboll were successful. In the meantime, his father wanted to expand his own outside business deals. He had started a family company he called Exeter Investment, offering friends the chance to invest (“as long as you understand there aren’t going to be any stockholders’ meetings,” he told them); then he put Buddy in charge. Exeter invested successfully in banks and shopping centers. But with Buddy out of the timber business and making no move to get back in, the company was down to its last Temple.
Arthur Temple was discovering a fundamental truth about modern American business: it is almost impossible for a successful family company to stay that way. To stand still is to die, to play Ernest Kurth to someone else’s Arthur Temple. To grow defies the realities of capital markets, tax laws, and family diversity. A few companies, very few, have beaten the odds (Bechtel, the construction giant, being a notable example), but the list is far longer of those that have passed into the hands of professional management. Only an enormous amount of sentiment, drive, vision, and commitment to an idea, all on the part of an entire family, can compensate for the inexorable logic of economics. For the first time, Arthur Temple began to think seriously about a merger.
Most mergers involve the swapping of stock between partners-to-be, so the first step was to get the company’s stock listed for public trading to establish its market value. Going public would also give the older generation a way to sell its holdings, and it would bring in some cash. Arthur hired Clifford Grum away from Republic-Bank to handle the details (Grum would eventually become his ambassador to Time Inc.), and in September 1969 Temple Industries was listed on the New York Stock Exchange. The public bought 800,000 shares at $25 per share, but the family retained 80 per cent of the stock.
The first serious suitor was Champion International, which had recently merged with U.S. Plywood. But the union never materialized Joe Dennan and other Temple officers went to the West Coast for three weeks and looked over their potential partners. They didn’t like what they saw. The prospective mates also started to squabble over money. When Denman returned home the merger was called off, and Arthur Temple turned his attention to Eastex, the paper manufacturing subsidiary started by Time Inc., in 1954.
The merger had a certain business logic—Temple shipped paper chips to Eastex, which in turn shipped sawlogs to Temple—but it was hard to imagine an emotional tie unless opposites could be said to attract. Arthur Temple’s target was the toughest, meanest, most hated timber company in all of East Texas. Eastex boss Mike Buckley, says Charlie Wilson, was “the most right-wing person I’ve known in my life, and I’m sure he would consider that a compliment.” His hatchet man, Ollie Crawford, was one of Austin’s most prominent and flamboyant lobbyists. As a company Eastex lived high and loved to fight. It brawled with local governments over taxes and with environmentalists over the proposed big Thicket National Preserve. Eastex lands were not only closed to hunters (always a point of contention between East Texans and the timber companies) but also fenced and patrolled by armed guards with dogs.
But it was the Big Thicket National Preserve that best illustrated the dissimilarity between the companies. Although he once called the Big Thicket “a varmint-infested swamp,” Arthur Temple was for it, for the same social reasons he had championed the Sam Rayburn Reservoir against Ernest Kurth. In 1967 he had persuaded the other timber companies, Eastex included, to observe a voluntary moratorium on cutting in the Thicket until the area to be set aside could be agreed upon. But Buckley and Crawford wanted the park limited to, as Charlie Wilson describes it, “thirty-five thousand of the worst acres in Texas.” The park’s backers wanted 100,000. Eastex threw all its corporate resources into the fight against the larger park, stirring up area civic clubs with lunchtime speeches warning of lost jobs. Finally Arthur Temple was able to persuade Buckley to agree to an 84,550-acre compromise that preserved the prize hardwood areas for the public and the best pine areas for the timber companies. It was engineered in Washington by Charlie Wilson, who had moved up to Congress in 1972, out of Arthur Temple’s employ but not out of his confidence.
When he wasn’t involved in politics or public relations, though, Mike Buckley knew how to run a paper mill. He had increased production at the mill in Evadale, north of Beaumont, fivefold in eleven years. Eastex was a well-conceived company, with 585,000 acres of timberland, the largest industrial nursery west of the Mississippi, and a line of consumer products that included stock for paper plates, paper cups, bakery boxes, and folding cartons. It made nothing for Time except money: 18 per cent of the total corporate revenues in 1972.
All that impressed Arthur Temple. So did the fact that Time was a diverse corporate creature, with divisions for magazines (Time, Sports Illustrated, Fortune, and subsequently People, Money, Discover, and a revitalized Life), video (local cable television systems and the Home Box Office cable network), book publishing, and forest products. If the merger could be brought off, he would have a piece of not only the long-sought paper mill but also of enterprises that didn’t depend on pine trees at all.
That summer Arthur and Buddy went for their drive in the woods. The father outlined his thoughts: the company and the family had reached a point of maturity…it was no longer a family company and for it to remain family owned didn’t make much sense…it was in postentrepreneurial stage…was the family ready to confront the issue? Buddy was certain that his father felt a merger was the right business decision and was looking for reinforcement. But then there were three generations of sentiment, and Arthur had to ask the decisive question: was Buddy ever going to want to come back into the business? To remain an independent company, Arthur said, it had to have a Temple.
Buddy knew his answer. “If I could have gone into the company at the time my dad did, I would have done it,” he says now. “He had a great time—inventing, designing, and building things. But by my time it was more structured, less entrepreneurial. Everything had to go through vice presidents. It wasn’t fun anymore. It wasn’t the right business decision either.”
Soon after their conversation Arthur Temple flew to the Bahamas to see a vacationing Mike Buckley. They had breakfast on a yacht, and Arthur raised the question of a merger, pointing out that the companies had been trading chips and trees for years. Buckley, approaching 65, knew that Time was worried about the future of Eastex after his retirement. Temple could take over and run it. “We’ve been sleeping together for years,” he said. “We might as well get married.”
MERGER WILL GIVE TEXANS 15% OF STOCK IN TIME INC. read the headline in the New York Times. The operative word was “Texans.” The Temple family was described as having “corralled” Time’s stock. Readers learned little about Arthur Temple’s business background, but a great deal about his Texan-like qualities: sunburned, six-foot outdoorsman…sometimes wears his golf cap when he works in his office…avid freshwater fisherman, deer hunter, and University of Texas football fan…college dropout. Other publications picked up the same theme. Dun’s Review, a business journal, described him as showing up for work wearing overalls. (It was a jump suit, says a still-miffed Arthur Temple, and besides, it was Saturday.)
Judging from the reaction, it almost seemed as if Temple Industries had bought Time instead of the other way around. The idea did have a quaint appeal: the owner of the Diboll Free Press (circulation: 4200) takes over Time magazine (circulation: 6 million); the largest stockholder changes from Henry Luce’s longtime crony Roy Larsen to Arthur Temple’s 84-year-old aunt, Mrs. Georgie Munz; the headquarters moves from New York City (population: 8 million) to Diboll (population: 5000).
In retrospect, it is clear that the merger came at Time’s nadir—Life had just folded—and Temple’s peak. In 1973 Time had just launched Money and was still testing People. Video was reporting nothing but losses then; now it outperforms all the company’s magazines combined. The company’s profits weren’t dazzling, but its sales totaled more than half a billion dollars, while Temple’s had never reached $100 million. Time had turned the corner without the financial community’s realizing it; when Dun’s asked in its headline, CAN ARTHR TEMPLE FINALLY BRING A BIG WINNER TO TIME? The right answer was that the winners were already there. And when the New York Times wondered “just how much power the Temple people will wield, or try to wield,” the right answer was…as a rebel faction, none.
But the financial community was convinced otherwise. When the merger was announced in February 1973, Time’s stock was trading at 52 ¾. By the time the agreement (giving Temple shareholders one-half share of Time for each full share of Temple) was officially approved in August, the price had tumbled to 30 ½. Institutional investors in particular were dismayed by the union; an analyst from one of the big Wall Street firms told the Times, “It’s hard to figure out if Time wants to be a forest products company or a communications company.” Because the analysts knew nothing about the forest or Mike Buckley or trading sawlogs for paper chips, they did not understand why Time wanted Temple; thus they misinterpreted the merger as Temple’s going after Time. The nose dive of Time’s stock was an unmistakable message to the Texans: try to make Time into a forest products company and this is what will happen to your holdings.
As part of the merger agreement, Temple shareholders received 2 of the 17 slots on Time’s board of directors—one for Arthur, the other for Temple Webber. (Today, they have 3 of 24). Arthur became chairman of the board’s planning and policy committee. After Georgie Munz and Roy Larsen, the third-and fourth-largest shareholders were Temple Webber and Arthur Temple. Clifford Grum went to New York to become the treasurer of Time Inc. He has stayed on the fast track and currently is executive vice president, a job that in effect makes him chief operating officer, although Time does not use that description.
In East Texas, Arthur Temple was president and chief executive officer of Temple-Eastex, while Mike Buckley was chairman of the board. Temple was the boss; one of his first acts was to transfer Ollie Crawford to Diboll and render him harmless. Arthur stayed on until 1977, by which time most of the details of merging the two timber operations had been worked out. The presidency passed out of the Temple family forever that year, to Joe Denman, with Arthur keeping the chairmanship he had assumed when Buckley retired in 1975. In 1978 Arthur Temple was named vice chairman of Time Inc. , his current title.
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.