Monday, June 20, 2011

The Duke of North Carolina

(Today's entry is a piece I wrote for a newsletter back in 2003.)

Many long-time collectors like to remind us of the days when collecting wasn't about money; collectors weren't very likely to keep their cards hermetically sealed or pore through price guides in search of "investment" advice. Hard as it is to say, baseball cards were a business long before Jeff Burdick ever owned his first card. They were first issued to the public as advertising items, and promoted a number of companies.  Much credit for the hobby belongs to a man who probably never had a collection of cards. Instead, Buck Duke was a collector of greenbacks, and a prolific one at that.

Duke was largely responsible for ending the first era of tobacco cards in the early 1890s, as well as opening the floodgates for the 1909-1912 issues. Though despised by many as one of the notorious "robber barons" of the Gilded Age, his story begins as a great example of how a man can make a great fortune with a little vision and a lot of hard work. 

The Civil War brought about a tremendous change across the United States. During encampments, Union soldiers often teamed up and played baseball. After the war ended in 1865, many of those soldiers took the game home with them, and by 1869 professional ball clubs were popping up. Eventually, those clubs formed into leagues, and the National League was formed in 1876. Many of baseball's early players, managers and fans were veterans of the War Between the States. The sport's association with the Northern states was so firm, no major league team existed in a southern city until the Houston club was formed in 1962. Some Confederate soldiers learned the game while in prisoner-of-war camps, and they helped form the large system of minor leagues that quickly spread across the South by the end of the century.

The former soldiers of the Confederate army also returned home, but many found that the years of war had changed the South. Through Reconstruction and the years following it, they went about picking up the pieces from those years and forging ahead to make their lives better. One of those discharged Confederate soldiers was George Washington Duke of North Carolina. As the war broke out, Washington Duke had been opposed to his state's succession and tried to stay away from the fighting until conscription forced him into the army in late 1863. At the end of the war, he was rounded up in Virginia by Union troops and released in New Bern, North Carolina. The railroads had been demolished by the Union soldiers, and Duke had no money. He had to walk the entire 135 miles home.

Upon his return, he found his family's tobacco farm nearly barren. Though a sizable crop had been stored away before Duke went into the army, much of the stash had been pilfered by soldiers from both sides. What was left, however, was easily made into smoking tobacco, a highly-valued product of the postwar South.long with his sons, he set out to raise some money to replenish the crops and support his family.

Duke and his sons peddled the tobacco around eastern North Carolina. They started out with two blind mules and a cart that was badly in need of repair, but were very successful in selling to small-town merchants. They were able to buy some badly needed essentials and returned to the farm hoping to grow a new crop.

Another effect of the Civil War was the spread of the tobacco industry. While driving across the South, some of the passing soldiers were able to get acquire tobacco by many different means. Many of those soldiers sent some of that tobacco home or carried it back with them after the war, and inadvertently created a national market for it. It was soon realized that some of the best-tasting tobacco was grown in eastern North Carolina, and the Duke homestead -- near Durham -- was setting itself up to meet the demand. In 1866, Duke's product had a name ("Pro Bono Publico"), and his farm was beginning to expand. By the end of the 1860s, the tobacco business had grown to the point where Duke was able to do it full-time.

In 1874, Duke moved the business into the city limits of Durham, which was quickly becoming a major tobacco center. He purchased a tract of land convenient to one of the largest railroad centers of North Carolina. By then, Duke's business had grown to the point where its customers were increasingly from outside of North Carolina.  He formed Washington Duke and Sons, and made his three sons partners. Soon, Washington Duke was involving himself in local politics and many of the day-to-day operations of W. Duke & Sons was left to Brodie, Benjamin and Buck Duke. Of the three brothers, it was Buck Duke who began to see the potential of the tobacco industry. The Dukes began shifting their product away from raw tobacco and focused more on the burgeoning cigarette market.

George Washington "Buck" Duke

At that time, cigarettes were rolled by hand and experienced rollers could only produce about four per minute. Many tobacco companies tried to import European immigrants who were skilled at cigarette rolling (and willing accept lower pay), but the expense in labor was almost not worth the expense to meet a growing demand. As a result, Buck Duke was willing to find a way to produce cigarettes by machine. Allen & Ginter had tested a machine invented by James Bonsack in 1880, but had given up when it fell short of expectations.  In 1884, Buck Duke decided to give the machine a chance. He sent for a technician from the Bonsack company and together they worked to make the machine more efficient. The refined machine did the work of more than eighty people and cut the cost of manufacturing cigarettes by more than half. Buck Duke realized that the refined Bonsack machine might revolutionize the industry by making cigarettes more efficiently than humans would. He immediately set up a new office in New York City, the national center of trade and commerce.

Duke realized the value of advertising and was the first in his business to make use of elaborate and colorful packaging. His aggressive advertising campaigns baffled most of his competitors, conservative businessmen who didn't see any value in spending a such a large chunk of profits on advertising. In addition to the flashy ads, he was very generous with free samples and kickbacks for tobacco sellers and even hired people to visit stores and ask for the product. These actions built his company's business up so quickly that by the late 1880s, Duke had bought out many of those competitors (or drove them out of business).

Despite his advertising expenditures, Duke looked for ways to save money as well. One of the first cost-cutting changes involved doing away with the tins that had housed tobacco for generations, and packaging cigarettes in paper. When it was discovered that the paper packages often crushed easily while being shipped, Duke came up with the idea for placing a cardboard insert to help support the pack. His shrewd advertising sense led him to place an advertisement on that insert, as well as a picture. Duke's theory was that the inserts could attract more potential customers who would not have otherwise been tempted to buy his product. The idea was an immediate hit, with non-smokers pressing family members to buy more packages so they could have the cards inside.

The first cards issued by Duke featured actors and actresses, and the idea was quickly adopted by the same competitors who had previously panned Duke's advertising costs. Duke didn't issue the first baseball cards, though; Goodwin and Co. put out its first "Old Judge" cards in 1886 and Allen and Ginter (the same company that lost out on the Bonsack machine) included ten baseball players among its 50-card "World Champions" set the next year.  By 1890, dozens of baseball card sets had been issued in cigarette and tobacco packages, most from the four companies that dominated the market before Duke's rise: Goodwin & Co., Allen & Ginter, Kimball, and Kinney.

(Three cards from the N88 Duke Terrors set)

By that point, Duke's rise to prominence in the industry had been so certain that he was able to get those other four companies to join his and form the American Tobacco Company. The ATC held a virtual monopoly over cigarette manufacturers, and Buck Duke joined John D. Rockefeller and Andrew Carnegie as a man who controlled an entire industry. While trusts and monopolies were nothing new to American business in 1890, they would soon become an endangered species; the U.S. Federal government was beginning to abandon its lasseiz-faire attitude toward private business and had been readying the Sherman Antitrust Act at the same time the ATC was founded. The Sherman Act would specifically target trusts like the one Duke controlled, and was certain to be a thorn in his side before long.

Once the monopoly was in place, Duke began to slash expenses in order to raise profits. Inserts were among the first casualties. Despite Duke's penchant for healthy spending on advertising, there was no need for such an expense once the competition had been removed. Thus ended the first era of baseball cards, and only a small handful of sets would be issued in the 18 years that followed.

After establishing a cigarette trust, Duke began to branch out to other areas of tobacco. In 1898, he formed the Continental Tobacco Company, bringing together most of the nation's major makers of cut plug and chewing tobacco. One of the companies in this new trust was H.P. Mayo & Brother, known to collectors for one of the few card sets of the era (the 1895 N300 set). By 1901, he also founded the American Cigar Company, giving Duke the upper hand in all three major areas of tobacco. Meanwhile, Duke tried to swallow up the few minor holdouts from the ATC. The most significant independent maker was R.J. Reynolds, who enjoyed being a thorn in Duke's side but eventually sold two-thirds of the company to him in 1899. Duke appreciated Reynolds' business sense and allowed him to keep a large role in the company.

(1889 Advertisement)

During the early years of the new century, U.S. President Theodore Roosevelt was forging his progressive vision forward and one of his self-appointed tasks was that of "trustbuster." The public had grown tired of the monopolies because they set their own prices too high and had become very effective at keeping out new competition. Realizing that the free market would be a better arbiter of prices and that competition was beneficial to the consumer, Roosevelt was quite aggressive in using the provisions of the Sherman Antitrust act to end the largest monopolies. By 1907, the Duke empire was targeted.

Until then, Buck Duke had set up his organization to try and avoid the government's notice. He made his empire into a very complex network structure. Many of the companies under his control were advised to go about doing business as if they were independent (as R.J. Reynolds had done), and allowed to keep their brand names and management intact. When the government sued to break up the trust, they slowly began to realize that Duke's organization was far too cumbersome to easily dismantle. Having set up a bureaucracy that baffles even regulators from the United States government is quite a feat, but Duke had done it.

By the end of 1908, it had become apparent that the government was going to be incredibly aggressive about breaking up the tobacco monopoly, so Duke pulled an old idea out of his bag of tricks to get the illusion of competition going, and cards were once again inserted into packs. A second era of card manufacturing was ushered in in 1909, with cards showing up in packages of dozens of brands of cigarettes. This era was important to the hobby because most of the important early collectors began their collections with these cards; some, like Jefferson Burdick and Charles Bray, were still young boys and were forced to collect the cards they could get from older relatives who smoked. 

The years between 1890 and 1908 were marked by some major changes that affected the cards as well. First, the smoking public was beginning to acquire a taste for Turkish tobacco. Duke was quick to react to this change by importing tobacco from the Turks and selling it under brands that sounded exotic; baseball card collectors will recognize such names as Hassan, Mecca, Fez, Fatima and Turkey Red. The second significant change was a revolution in technology which saw new innovations that weren't possible in 1890, including the airplane and automobile. Cars, planes and motorcycles were featured on the new cards, along with the actors, political leaders, athletes and birds familiar to collectors of the earlier era.

This time around, the baseball players appeared on cards that were more colorful and ornate than those of the 1887-90 era. Color lithography was more common than studio photographs, and some cards featured gold color in their designs. Mecca inserted cards that were designed to flip over so that two players appeared on the same card. Hassan distributed cards that featured two different player cards attached to an action photo that could then be folded over in a gatefold style that protected the images. 

Of all the tobacco issues of the era, the best known is the "white border" set issued between 1909 and 1911 with more than a dozen different brands: Sweet Caporal, Piedmont, Sovereign, American Beauty, Broad Leaf, Cycle, Drum, Carolina Brights, Hindu, El Principe de Gales, Lenox, Old Mill, Polar Bear, Tolstoi, and Uzit. There was even a Ty Cobb brand name that showed up on the back of one of the four different designs of Cobb found in the set.  Despite the wide disparity of cigarette brands, all were under the ATC umbrella. Since Jefferson Burdick assigned the name T206 to that set in his American Card Catalog, it has been known by that designation. It featured a simple but elegant design that was widely copied by other card manufacturers but never improved upon.

In 1911, the final T206 cards were being pulled from their packages and the government finally ended its four-year quest to break the tobacco trust. Since Duke had built such a complex hierarchy of companies, he was given the task of dismantling the trust himself. In typical fashion, he did a masterful job of it, splitting the trust into four large companies. He was forced to relinquish control but kept a large amount of stock in each company and set up a structure that gave the new owners a great deal of incentive to be successful. Within five years, the four companies would report a higher sales volume than the entire monopoly did prior to the breakup.

Once the dust settled after the split, it was R.J. Reynolds that emerged as the industry leader. After joining the Duke empire, Reynolds -- a stubbornly independent type who refused to be subordinate to Buck Duke -- weathered the years well with its Prince Albert brand and readied a newer, high-quality cigarette for the market in 1913. The new brand was called Camel and had a rich blend of domestic and imported Turkish tobacco. In a move that may seem like a mirror of card maker Upper Deck's arrival in 1989, Camel was touted as a fine product of incredibly high quality and added value because it was composed of the finest material. A message on the back of each package stated plainly: "Don't look for premiums or coupons, as the cost of the tobacco blended in CAMEL prohibits the use of them." In other words, Reynolds was saying that they were going to try and keep costs down for their top-of-the-line brand by reducing the overhead expense of such promotional materials as insert cards and coupons. After that opening salvo, its competitors didn't want to appear to be peddling inferior cigarettes and discontinued their own insert cards. With that move, the second tobacco era ended as abruptly as the first, with a masterful move that could have otherwise come from Duke's own playbook.

During the era, candy makers noticed the response that cigarette cards had generated from their primary customers: school-age children. Realizing that the same kids who were so persuasive in convincing their elders to buy a certain brand of cigarette so they could obtain the card inside, candy makers began to insert cards with their own products. As the T206 cards were still in wide distribution, the American Caramel Company -- later known as Hershey -- issued a similarly-designed set. As the sun set on the tobacco sets, candy makers (and later, gum companies) would become the main sellers of baseball cards.

As for Buck Duke, his role in breaking up the trust left him a wealthy man, but he wasn't yet ready to retire. He was able to keep his overseas tobacco holdings and turned his interest to hydroelectric power. Always a forward-thinking opportunist, he calculated that he was looking at another industry that would only get larger once neighborhoods became connected. Duke built a second fortune with the Southern Power Company and watching it grow as people began to realize the value of electricity. The company was later called Duke Power.

Duke also decided to donate some of his fortune to education. Following the lead of his father and older brother, he invested in a small college in Durham. He donated generously to Trinity College in 1924, making them the main beneficiary of a $40 million endowment. On December 29 of that year, Trinity College was renamed Duke University in honor of Washington Duke, Buck's father. James Buchanan Duke died the following year at the age of 68.

Although he probably never owned a baseball card, Buck Duke was one of the most important people in the hobby's history. He was the one who was credited with starting the inserts that quickly evolved into the cards we know today. Though responsible for stopping the first tobacco card era, he should be credited for opening the second era in 1909. His unique vision and forward-thinking organizational skills affected the baseball card hobby as well as his chosen industries. After making his fortune, he contributed to education and local charities, which benefited the people in his area. No history of the hobby could be complete without his name.

1 comment:

  1. Excellent work, Chris. I appreciate how you detailed the first and second card eras; without knowing the business angle, you'd think baseball just faded from public view in-between.