James Buchanan Duke

American industrialist

• Born: December 23, 1856
• Birthplace: Durham, North Carolina
• Died: October 10, 1925
• Place of death: New York, New York

From modest beginnings, Duke organized and built up the largest conglomerate of tobacco companies in the United States, founded power and textile companies, and established an endowment in support of Duke University—which was named after him—as well as other educational and charitable institutions.

Early Life

Born in a six-room farmhouse in North Carolina, James Buchanan Duke was the youngest in his family, which had two half brothers from his father’s first marriage, and a brother and a sister had also preceded James. In 1858, his mother, Artelia Roney Duke, died from typhoid fever, which also claimed his older half brother. His father, Washington Duke, owned about three hundred acres of land, on which he grew corn, wheat, oats, and some tobacco.

During the Civil War, Duke served for two years with the Confederate artillery; in 1865, Union soldiers looted his farm and left behind little but leaf tobacco. Immediately thereafter, however, demand for tobacco mounted, and prices rose; between 1866 and 1872, the Duke family’s production increased from 15,000 to 125,000 pounds. James took part in the planting and preparation of their crop. His early education took place in local schools. Evidently he learned quickly, but preferred mathematics to the humanities. In 1872, he enrolled in the New Garden Academy, near Greensboro, North Carolina; quite abruptly, he gave up his courses there and left for the Eastman Business College in Poughkeepsie, New York, where he studied bookkeeping and accounting.

By 1874, Washington Duke felt sufficiently confident in the industry’s future that he sold his farm and bought a tobacco factory in downtown Durham. Although he originally intended to go into business on his own, James Duke accepted with alacrity his father’s offer that made him, and his brother Benjamin Duke, one-third partners in the new concern. Leaving correspondence and other official functions to the others, James Buchanan Duke kept their financial records and devised numerous means by which to economize on the operations of their tobacco firm.

Somewhat daunting in bearing if not precisely handsome, as he entered manhood Duke gave an impression of strength and energy. He was six feet, two inches tall and powerfully built; his features were distinguished by a broad brow, a straight, thick nose, and piercing blue eyes. His lank red hair, parted at the side, showed a tendency to thinness in his later photographs. He spoke in a gentle drawl; often among others he would remain silent for protracted periods, and then hold forth at some length on matters of concern to him.

Life’s Work

Although the Dukes seemed overwhelmed by their competitors, notably the massive Durham Bull Company in their native city, they began to advertise on local billboards. They also began to promote cigarettes, which hitherto had not sold well but were peculiarly suited to the bright tobacco leaf that was grown in abundance across parts of North Carolina and Virginia. They launched promotional campaigns in many states; they obtained permission from a touring French actress to use her picture in the company’s cigarette advertisements. The Dukes also readily adopted another innovation: In 1884, they had the newly invented Bonsack cigarette-rolling machine installed in their plant. While it was sometimes inclined to clog during use, this device could produce more than two hundred cigarettes a minute, or about fifty times as many as an expert artisan working by hand.

Sensing that a national market might exist for the company’s cigarettes, in 1884 Duke moved to a small apartment in were chosen and opened an office there. After two years, this branch was also turning a profit, in part because of Duke’s meticulous familiarity with all aspects of the tobacco trade, and in part as a result of his flamboyant innovations in advertising. The company offered complimentary cigarette packs to immigrants coming into New York harbor; it sponsored sporting events; it issued coupons, enclosed in its cigarette cartons, which could be redeemed for cash. Billboards, posters, and advertisements in newspapers and magazines promoted the various brands the company offered. By 1889, of some 2.1 billion cigarettes produced in the United States, about 940 million had come from the factories of W. Duke and Sons. Its sales were well over $4 million, of which $400,000 was profit.

After prolonged and tortuous negotiations, Duke persuaded the presidents of four other leading tobacco concerns to form the American Tobacco Company ; to win over his erstwhile rivals, Duke obtained a contract with the Bonsack company restricting sales of their rolling machines to the new trust. As president, Duke expanded upon his promotional methods: New coupon schemes were devised, and pictures of attractive women in tights were issued in packs of some of the company’s brands. Moreover, the trust’s vast resources allowed it to absorb smaller concerns, many of which were bought up outright or controlled through subsidiaries or holding companies. Duke also turned on the few powerful corporations that had remained independent.

The Durham Bull Company was taken over, and the trust acquired a controlling interest in the Liggett and Myers Company and the R. J. Reynolds Company. By 1900, the American Tobacco Company accounted for 92.7 percent of American cigarette production and 59.2 percent of the nation’s output of pipe tobacco. By 1901, James B. Duke added the American Cigar Company to this business empire, and became its president; with this stroke, one-sixth of the country’s cigar trade came under his control.

With annual sales of about $125 million, the American Tobacco Company was in a position to determine prices and wages as it saw fit. During the Spanish-American War of 1898, Congress had imposed a surtax on tobacco, and repealed it three years later; Duke’s trust held their cigarette prices at the previous levels and kept the balance as profits. Competitive bidding for tobacco was curtailed; prices to farmers were held as low as three cents per pound, spawning organized violent outbreaks by “night riders” operating in Kentucky and Tennessee. Foreign markets were also exploited. The trust acquired subsidiaries in Australia and New Zealand; in 1895, it obtained several Canadian firms. In 1901, a two-thirds interest was obtained in one of the leading German cigarette dealers. It also opened offices in Japan and built factories in China to accommodate the demand for its products.

Seeking to reduce competition in international markets, in 1902 the American Tobacco Company reached agreement with representatives of the Imperial Tobacco Company, which delimited the areas where each company could do business. The British-American Tobacco Company was formed, with assets of about thirty million dollars and an established network in the British Empire; Duke became its president.

In the course of his work, Duke had occasionally seen Mrs. Lillian McCredy, a divorced woman with a dubious reputation. In 1904, after some years of intermittent and rather surreptitious courtship, they were married in a small private ceremony. It was a troubled and tempestuous union; after ten months, Duke claimed that his wife had been unfaithful and sued for divorce. In a sensational trial, he offered the evidence of company detectives and intercepted messages from his wife’s paramour. In 1906, the court found in Duke’s favor. He was later introduced to Mrs. Nanaline Holt Inman, the widow of a cotton merchant from Atlanta. Duke was captivated by her expressive, classical features. She responded to his attentions, and in 1907 they were married in a small church in Brooklyn. Their daughter and only child, Doris, was born in 1912; during his later years, Duke displayed a pronounced fondness for her.

Shortly before his second marriage, Duke was confronted with the most serious challenge of his business career. The American Tobacco Company, which was estimated to control 80 percent of all tobacco production in the United States, was brought to court in antitrust litigation by the Department of Justice. In 1908, Duke himself was required to testify. A federal court found that the American Tobacco Company had indeed operated in restraint of trade. The Supreme Court upheld this ruling, and in 1911 the defendants were ordered to dissolve the trust. Accordingly, snuff and cigar companies were cut loose. R. J. Reynolds and Liggett and Myers were severed from the American Tobacco Company, which after reorganization held perhaps two-fifths of its previous assets.

Already Duke had diversified his business interests, and after the antitrust suits he turned with redoubled attention to concerns in his native region. In 1905 he had provided support for hydroelectric works along the Catawba River, which flows through the western portions of North and South Carolina. Between 1907 and 1925, eleven plants were built for the Southern Power Company, which in 1924 was rechristened the Duke Power Company. In short order, Duke also came to own textile mills that used the electricity his plants supplied. Against the advice of others in the business, Duke also underwrote the construction of a hydroelectric complex along the Saguenay River in Upper Quebec, and in time this venture became profitable.

Over the years, the Duke family contributed in increasing amounts to Trinity College, a small Methodist institution in North Carolina; in 1892 a subvention from Washington Duke supported work on a campus in Durham. James Buchanan Duke, though possessing only a limited formal education, increasingly had come to believe that institutions of higher learning held out the best hopes for widespread social progress. In 1918, he became one of Trinity’s trustees. In collaboration with the college’s president, William P. Few, plans were devised for a series of gothic buildings, including a magnificent chapel and tower. Duke personally supervised the selection of the local stone that was used; he took great interest in plans for a new medical center. In all, Duke contributed nineteen million dollars to the college, of which eight million dollars were offered when Few agreed to change its name to Duke University . (There is no substance to stories that previously Duke had made similar, unsuccessful, offers to Princeton, Yale, or other universities.)

During the year before he died, Duke composed a will establishing the Duke endowment, which in all comprised about eighty million dollars in securities and at that time was the largest permanent foundation of its sort in the nation. In addition to providing continuing support for Duke University, it also left substantial sums for other colleges, hospitals, orphanages, and Methodist churches in North Carolina. Much of the remainder of his estate was left to Duke’s wife Nanaline and their daughter Doris. Duke himself suffered from pernicious anemia; after his health declined for several months he died, rather suddenly, on October 10, 1925, at his home in New York. Ultimately, he was buried in the chapel of the university to which he had given his name.

Significance

Duke was an accomplished businessperson; it was said that for years he would work twelve hours a day in his office, and then visit tobacco stores to learn more about the retail trade. He was able to capitalize upon three major developments: He realized early the potential popularity of cigarettes; he utilized advertising nearly to the limit of its effectiveness; in an age in which manifold business combinations became possible, he proved to be a shrewd, hard-bitten bargainer able to form and direct massive industrial organizations to his own advantage. Even when antitrust proceedings compelled its reorganization, Duke was able to retain control of more parts of his original company than his opponents had thought possible.

Duke’s persistent exploitation of the opportunities that existed in his day, in the tobacco industry and in power and textiles, indicated the combination of business sense and ruthlessness that accompanied his rise. His philanthropic endeavors, which have left lasting monuments to the Duke family fortune in his native state, were inspired by his own notions of social betterment. Although he owned several magnificent houses, and in his later years enjoyed the pleasures his wealth could buy, Duke seemed intent on achieving recognition that, as he expressed it to the university’s president, would last for a thousand years. Driven by personal imperatives to achieve business supremacy, and then to provide philanthropic support for an institution and an endowment bearing his name, Duke left an enduring legacy that attests the curious and complementary duality of his ambitions.

Bibliography

Cunningham, Bill. On Bended Knees: The Night Rider Story. Nashville, Tenn.: McClanahan, 1983. Vivid though awkwardly written history of the armed bands that arose to resist farmers’ collaboration with the American Tobacco Company. Despite its somewhat melodramatic tone, this work reflects extensive research.

Durden, Robert F. Bold Entrepreneur: A Life of James B. Duke. Durham, N.C.: Carolina Academic Press, 2003. Durden has written several books about the Duke family and its business activities. This book is a meticulously researched scholarly biography of James Buchanan Duke, describing the full range of his life and activities, including his tobacco business, electric company, philanthropy, and interest in horticulture.

‗‗‗‗‗‗‗. The Dukes of Durham: 1865-1929. Durham, N.C.: Duke University Press, 1975. Sound scholarly study that uses a number of manuscript collections at Duke University. Avoiding extremes of adulation or debunking, this work considers both the business activities and the philanthropic concerns of the family; particular attention is paid to their support for educational institutions.

‗‗‗‗‗‗‗. Electrifying the Piedmont Carolinas: The Duke Power Company, 1904-1997. Durham, N.C.: Carolina Academic Press, 2001. A history of the Duke Power Company from its inception until 1997. Durden describes how the Company’s hydroelectric power transformed the Piedmont Carolinas from a rural to an industrialized region and changed the life of the area’s residents.

Kluger, Richard. Ashes to Ashes: America’s Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris. New York: Vintage Books, 1997. Pulitzer Prize-winning, exhaustively researched examination of the American tobacco industry. Includes information about Duke’s tobacco business, setting it within the context of the industry’s history.

Kroll, Harry Harrison. Rider in the Night. Philadelphia: University of Pennsylvania Press, 1965. Although brisk and informal, this work on conflict in the tobacco-growing regions of Kentucky and Tennessee is well informed and steeped in local color. While evoking the plight of the farmers, the author does not explicitly take sides in the confrontations he discusses.

Massell, David. Amassing Power: J. B. Duke and the Saguenay River, 1897-1927. Montreal, Que.: McGill-Queen’s University Press, 2000. Describes the Duke Power Company’s operations on the river, and how these operations set off a battle between the Company and Quebec officials over the use of river water.

Porter, Earl W. Trinity and Duke, 1892-1924: Foundations of Duke University. Durham, N.C.: Duke University Press, 1964. Comprehensive work on the creation of Duke University. The book traces the university’s formative years as Trinity College and considers the involvement of educators and administrators in securing support from the Duke family.

Tilley, Nannie May. The Bright-Tobacco Industry: 1860-1929. Chapel Hill: University of North Carolina Press, 1948. Massive treatment of the subject that is important for the general context of Duke’s business activities. Both the technical and the economic aspects of tobacco marketing during this period are discussed in great detail.

Winkler, John K. Tobacco Tycoon: The Story of James Buchanan Duke. New York: Random House, 1942. Detailed biography that is somewhat derogatory in tone, and that relies heavily upon earlier works, such as that of Jenkins (see above). Provocative in its treatment of the more scandalous periods of Duke’s life, such as his divorce and his reaction to antitrust litigation.