Buck the Robber Baron

There are many mixed feelings towards so-called “robber barons”. Some say they were selfish, money hungry scumbags that only looked out for number one. Others say they were simply great entrepreneurs that managed to crack the system and exercise capitalism to the fullest. The man this writer has chosen is one of the lesser known “robber barons”, at least when compared to the likes of Rockefeller, Vanderbilt, Morgan, or Carnegie, but this man impacted not only our economic system, but Great Britain’s as well.

James Buchanan Duke, better known to his friends and family as “Buck”, was the youngest son of Carolina businessman Washington Duke. Buck was more ambitious than his brother, Benjamin, and when the brothers took over Washington’s tobacco company in the 1880’s, Buck was the one who obtained a license to use James Bonsack’s automated cigarette machine. He also agreed to exclusive use Bonsack’s machines, so Bonsack would reduce the royalties by $.10, and in a stroke of genius, Buck hired one of Bonsack’s mechanics, which caused far fewer breakdowns than his competitors. Because of these innovations, the W. Duke, Sons & Co. tobacco company supplied about 40% of America’s “pre-rolled tobacco” cigarette market within ten years.

Benjamin Duke had branched off into the textile industry by this time, but to power both brothers’ industries, they founded Southern Power Company, a hydroelectric power company we will look at shortly. Later known as Duke Power, this venture into the energy business was supplying the power for over 300 cotton mills, factories, cities and towns in the region of Peidmont, covering areas in both Carolinas. (King, 2002)

Then, in 1890, Duke bought out his top 4 competitors, creating the American Tobacco Company, an essential monopoly on the America cigarette market for 11 years, until being ordered to disband by the Supreme Court, citing the Sherman Antitrust Act. However, instead of disbanding, Duke moved his massive company and formed a coalition with the Imperial Tobacco of Great Britain and Ireland, Ltd., otherwise known as just Imperial Tobacco. The end result of this was the British American Tobacco Company (BAT), one that is still a powerhouse in today’s market. (“Early Years”, 2011) Even though the government came after Duke again to try and disband BAT, the British side came in and bought its former parent company out, reuniting the American Tobacco Company and British American Tobacco. In fact, due to a deal in 1994, BAT now owns some of our most recognized brands of cigarettes, including Pall Mall and Lucky Strike.

After his spats with the government regulators, and after his first marriage ended in divorce, Duke turned his attention to energy, and using the Southern Power Company, began his venture into hydroelectric technology with his new bride: a widow from Atlanta, Nanaline Holt Inman. Southern Power was actually the brainchild of Dr. W. Gill Wylie, a gynecologist by trade, but was an innovator when it came to electric power. Funded by the fortune amassed by Buck’s cigarette business, Southern Power bought the rights to build a dam on the Catawba River, and that dam ran a number of the nearby textile mills, many of which were owned by Buck’s brother, Benjamin. Up until roughly 1920, residential power consumption was minimal at best, and Buck founded Southern Power without any residential power ambitions. But when his brother’s factory chiefs began coming to him, asking to supply power for their worker’s nearby homes, he consented. Soon, hydroelectric power was being offered to anyone living near the lines, regardless of profession, and within a matter of years, Buck was forced to create a new division within Southern Power, to deal solely with residential customers in both North and South Carolina, called the Southern Public Utilities Company. (Murray, 2011)

After this revolutionary move, Buck renamed the corporation Duke Power in 1924, and it continued to expand after his death in 1925. However, during the Great Depression, Duke Power became one of the many targets of the anti-private business politicians. If you stood up for Duke or other successful companies like that, you were ridiculed, despised, or in the case of one Senator Cameron Morrison, even voted out of office. The federal government tried to eliminate Duke Power by using the Tennessee Valley Authority and Public Works Administration to construct and maintain taxpayer-funded hydroelectric facilities, and Duke Power’s executives tried to block these. Sometimes they failed, but they also succeeded, and managed to survive throughout the Depression years. (Murray, 2011)

Buck Duke’s innovative legacy was carried on through World War II and the Cold War years, with Duke Power opening and still operating nuclear power plants, and after a 2006 merger with Cinergy Corporation, dove into the natural gas arena.

Buck also established a large endowment to the Methodist college his father helped relocate to the Carolinas: Trinity College. The Duke brothers’ had a lifelong commitment to the school, and to helping many of the downtrodden throughout their successful lives – often without regard to skin color. So when a full-fledged university was to be added on to the college because of Buck’s endowment, Trinity President William Preston Few insisted the school be rechartered as Duke University, in honor of Washington, Benjamin, and James “Buck” Duke. (King, 2002) All three men are interred in the Memorial Chapel at their beloved university.

Overall, Buck Duke was a shrewd businessman, one who knew how to get things done, and how to do them well. Yes, he drove his entire national and almost all his international competition out of business, but he did so by dropping his prices, and keeping them there even after he monopolized the tobacco industry. He was a philanthropist in more than a superficial sense, perhaps because of his religious background, and was, at least in this writer’s opinion, one of the more noble “robber barons”. Ruthlessness tempered by charity, an iron fist with a soft touch, Buck was an anomaly in business, and one that we here in modern America could use once again.

References

King, William E. (2002). James Buchanan Duke. The Duke University Libraries: University Archives. Retrieved October 15, 2011, from http://library.duke.edu/uarchives/history/histnotes/james_b_duke.html

Murray, Jonathan. (2011). Duke Power Company. North Carolina History Project. Retrieved October 16, 2011, from http://www.northcarolinahistory.org/commentary/279/entry

British American Tobacco: Early Years: 1902-1932. (2011) Retrieved October 15, 2011, from http://www.bat.com/group/sites/uk__3mnfen.nsf/vwPagesWebLive/DO5DTGBV?opendocument&SKN=1#ow_top