Chapter 1, Part 2

By Frank Tursi, Susan E. White and Steve McQuilkin
JOURNAL REPORTERS
© Winston-Salem Journal

Life as an RJR salesman may not have been all Bowman Gray Jr. had thought it would be. When he took his first sales job with the company in 1930 in Boston, Gray knew better than to expect any favors from his father, who was then RJR's president. He would have to make it on his own and would be treated like all the other salesmen. So when the orders came from Winston-Salem, Gray raised no protests. To save money, the company wanted Gray to book a room in Boston's YMCA. He even took to pressing his suits by putting them between the bed's box springs and mattress.

Gray could live with that, but getting his butt kicked every day by those salesman from American Tobacco was humiliating. Camel had carried RJR past American as the country's largest tobacco company in 1922, but American had charged back to the top again under the inspired, if autocratic, leadership of George Washington Hill.

Reynolds downtown factories were busy through World War II.

A true huckster in the mold of founder Buck Duke, Hill took over as president of American in 1926 and his flair for flimflammery quickly turned the company into a real threat to RJR.

What Hill understood perhaps better than anybody else in the industry at the time was that when it came to selling cigarettes image was everything. It had to be. The product was nothing more than tobacco, flavoring and paper, and there was little difference between competing brands.

The sales numbers that came in from Boston that May day in 1954 confirmed what his gut was telling him: The gamble was paying off. Though it had been on the market in New England for less than two months, R.J. Reynolds Tobacco Co.'s first filtered cigarette was already outselling the other, more established filter brands. Some of the old-timers at Reynolds said they hadn't seen such demand since Mr. R.J. introduced Camels more than 40 years earlier.

Gray was just a kid then, but he remembered the old man visiting his house on Sunday afternoons to talk business with his father, who, as head of the company's sales department at the time, orchestrated the rise of Camels. The men would sit on the porch for hours, near a convenient set of bushes that would be on the receiving end of the steady stream of tobacco juice produced by Reynolds' ever-present chew. Sometimes, Reynolds' brother Will -- known as ''Uncle Will'' to every kid on that block of West Fifth Street -- would join them.

The R.J. Reynolds Tobacco Co. was once the largest cigarette company in the United States with a powerhouse of best-selling brands: Winston, Salem and Camel. But times changed, and as the case against smoking became more pronounced in the 1960s, RJR failed to adapt to the marketplace. Its rivals would eventually rush past it, and RJR's efforts to catch up would have a profound impact on the company and the cigarette industry.

Though he and his brother remained at a respectful distance, young Bo Gray could overhear the men talk excitedly about the prospects of Camel, the company's first cigarette.

This one could be bigger, Gray thought, as he took another drag and let the smoke linger in his mouth. It certainly tasted better and was easier to draw than the other filter brands. Smoking them was like sucking air through a mattress. This cigarette would not only allay the health fears some smokers were beginning to have, but with the right advertising campaign and slogan it might propel the company to the top of the industry again. Gray's father had directed the company's first rise to the top in the 1920s, but Reynolds had not occupied that spot for the past 14 years. Like his father, then, Gray could lead RJR to the top again.

Certainly Buck Duke knew it back in 1881 when he introduced his first brand of cigarettes, Duke of Durham. They were so cheap to make that, even at a nickel for a pack of 10, Duke could turn a 100 percent profit. But people had to be convinced thatthey needed something as nonessential as a cigarette and that the American brandwas somehow better than the others. Duke added brands with snappy names and bright packages. He offered coupons that could be redeemed for Oriental rugs or cheap college pennants. Dealers who were especially adept at pushing Duke brands were given clocks and chairs. By advertising his cigarette brands on a scale then unheard of, Duke ushered in the era of mass marketing.

Selling cigarettes became much easier after World War I. Hundreds of thousands of nonsmoking doughboys went off to the trenches of Europe and came home with a pack of cigarettes in their uniform pockets. After the United States entered the war in 1917, representatives of the tobacco companies were summoned to Washington and given what, at first glance, must have seemed like a Hobson's choice: either sell cigarettes to the armed services, even if it meant cutting back on civilian production, or have the plants commandeered by the government. The companies realized the potential of such an arrangement and were happy to cooperate. Dick Reynolds was particularly pleased because the allotments were determined by market share, and Camels commanded a third of the domestic market.

Supplied with free smokes, soldiers made cigarettes an essential part of Army life. Pipes and cigars were impractical in the trenches and chewing tobacco was unsanitary. Tobacco eased the nerves of poor kids about to charge across no man's land and increased the vigilance of sentries fighting boredom and sleep. When asked, Gen. John ''Black Jack'' Pershing, who commanded U.S. troops in Europe, explained the importance of cigarettes to the war effort: ''You ask me what we need to win this war? I answer tobacco as much as bullets.''

The men who headed up the sales departments of the country's tobacco companies couldn't have paid for a better endorsement. Cigarette sales soared after the war. By 1919, more people smoked cigarettes than pipes, and cigarettes surpassed cigars the next year as the country's favorite form of smoking. Smokers consumed enough cigarettes that year to allow each man, woman and child in the country to smoke 419 a year. That was almost five times the consumption rate of cigars. Within a year, four of 10 smokers in America were Camel customers.

Camel's success didn't come cheaply. Before the brand was introduced, RJR spent less than $500,000 on advertising annually. During the brand's first full year of production in 1914, the company's ad budget rose to $1.5 million. By 1921, RJR spent $8.7 million to advertise Camels and its other products. (Tilley footnote; Gray's career.)

Some of the money that year was spent on a new slogan.

Martin Francis Reddington, who managed RJR's outdoor advertising, was on the golf course in 1919 when his foursome ran out of Camels and sent the caddy to the clubhouse to buy more. While waiting for the caddy to return, one of the golfers remarked, ''I'd walk a mile for a Camel.''

Reddington recognized a good slogan when he heard one, and he hired a fireman from New Haven, Conn., as a model for the first billboard, which appeared in January 1921. The slogan began showing up in newspaper and magazine ads five months later. RJR's sales that year topped $200 million for the first time.

Back in New York, George Washington Hill fumed as he watched American Tobacco lose its lead to upstart RJR. After becoming president, he vowed to regain the top spot. Not many people liked Hill. He had few friends, even within the company. Many of his subordinates cowered in fear of the paranoid dictator with the explosive temper who paraded around the office in a variety of hats. His underlings joked that they were the boss's crowns.

What he did have was an absolute flair for advertising, which he used to resuscitate American's flagging fortunes. Like all the other tobacco companies, American had rushed to find a competitor to Camel. Company executives searched through their stable of brands and found a pipe tobacco that had been introduced in 1871 when memories of the Gold Rush were still fresh. They copied Camel's blend as closely as they could, designed a cool-green wrapper and reintroduced Lucky Strike in 1916. ''It's Toasted,'' the motto on the pack read. That all other cigarette brands were similarly ''toasted'' didn't dissuade American executives. Luckies, though, were still in third place when Hill became American's president. They lagged far behind Camel, the leading cigarette in the country, and even well back of Liggett & Myers' Chesterfield. Hill called Albert D. Lasker for help. An advertising legend from Chicago, Lasker had turned Quaker Oats and Kleenex into household names. He and Hill agreed that the best course was to exploit an advertising trend then in vogue among the tobacco companies that emphasized a brand's ''mildness.'' Though no one yet was charging that cigarettes were harmful, tobacco executives apparently realized that inhaling tobacco smoke hundreds of times a day could, at least, be irritating. (Kluger footnote; account of early cigarette advertising campaigns.)

The ad campaigns of most companies at the time delicately attacked that notion, but Lorillard brazenly got to the point when it introduced its Old Gold brand in 1926. Its motto ''Not a cough in the carload'' openly implied, of course, that using the competition could lead to what commonly became known as smoker's cough.

Lasker and Hill went a step further. They gave scientific validity to the ''toasted'' motto by claiming that tests showed that the secret process used to toast Luckies reduced ammonia and nicotine to produce a ''milder'' smoke. To further bolster this baseless claim, Hill and Lasker recruited singer Al Jolson, movie star Helen Hayes, flying hero Amelia Earhart and top businessmen to certify that Luckies didn't irritate their throats. Lasker even promised five free cartons to any doctor who agreed that Luckies were the mildest brand on the market. That led to Lasker and Hill's most outrageous claim: ''20,679 Physicians Say Luckies Are Less Irritating. . . .''

By using women to endorse Luckies, American was continuing down a path it had blazed in 1917 when it unleashed the first cigarette ads aimed at women. At the time, a woman who smoked wasn't the type of girl a young man brought home to meet his mother. But that was changing. The women's suffrage movement and the ratification of the 19th amendment in 1920 loosened social mores across a broad spectrum of issues, and the tobacco companies rushed in to claim new customers.

Liggett & Myers was much more artful in its inducement to women. A Chesterfield ad featured a fashionably dressed woman sitting on a rocky crag next to an elegant man. Smoke curled up from his lit Chesterfield. ''Blow some my way,'' she cooed.

Hill preferred the sledgehammer approach. He and Lasker devised an ad that capitalized on a woman's vanity by implying, without a shred of evidence, that smoking would keep her thin. ''Reach for a Lucky instead of a sweet,'' the ad suggested. After the candy industry protested, Hill modified the slogan to: ''When tempted to over-indulge, reach for a Lucky instead.''

While the big boys battled for dominance, executives at Philip Morris were just hoping to catch a break. They headed the smallest domestic tobacco company, and in 1925 their sputtering brands accounted for less than half of one percent of the cigarettes sold in the United States. That year Philip Morris introduced its own cigarette targeted to female smokers. Ads claimed that the smoke was ''mild as May'' and tried to ease any guilt a woman might have in lighting one up. ''. . . Has smoking any more to do with a woman's morals than has the color of her hair?'' They called the cheeky brand Marlboro after the street in London where the company's namesake opened his first tobacco shop. The cigarette didn't catch on _ at least not right away.

George Hill's sleight of hand worked, however. In 1930, American reclaimed the industry's top spot. Bowman Gray Sr. tried to blunt the charge, but Camel ads were bland and uninspiring. For too many of the thousands of new smokers lighting up, Old Joe's walk-a-mile come-on didn't work. It was a humbling lesson to the executives at RJR about the power of imagery. And it wouldn't be the last time the company's leaders would be schooled in this manner.

Second place wasn't bad, though. RJR's sales topped $266 million in 1930 and would approach $300 million 10 years later. As a fitting demonstration of its financial might, RJR completed its opulent 22-story headquarters building in 1929. The marble for its lobby was quarried in Belgium, and the exterior limestone came from France. Its doors were framed in brass and engraved with tobacco leaves. The building's architect, Shreve & Lamb of New York, used the design to win the contract for the Empire State Building.

That the Reynolds Building rose from the site of Winston's first town hall on the corner of Fourth and Main streets seemed fitting for a company that was beginning to dominate the city's psyche. Such symbolism wasn't lost on a historian who visited Winston-Salem in the 1930s for a book on the tobacco industry.

''Granted the right topography and the right orientation, Winston-Salem folks, whether factory hands in East Winston or executives in Buena Vista, go to sleep with its floodlighted tower in their bedroom windows and awake to see it shining in the morning sun,'' he wrote. (Hutton footnote; analysis of success of RJR during the Depression.)

The glare could be seen all the way to Wall Street. E.F. Hutton told investors in 1932 that they could do worse than buying Reynolds' ''premier depression-proof'' stock. An investor who bought $740 in company stock in 1913 would have stock worth $10,500 and would have received $3,137 in dividends.

''While many corporations are unable to show any profits, and when all but a selected few favored companies are measuring their progress by the smallness of their earnings decline,'' the brokerage firm said, ''R.J. Reynolds registers its eleventh consecutive earnings peak, the strongest financial position in its history and is earning and maintaining dividends at the highest level since its formation.''

World War II had the same effect on sales as the previous war. Though the tobacco companies sent millions of free cigarettes to GIs, it wasn't enough. Gen. Douglas MacArthur, who made the corncob pipe famous, wrote to the employees of Wright Aeronautical about how to spend the $10,000 they had raised for his troops: ''The entire amount should be used to purchase American cigarettes which, of all personal comforts, are the most difficult to obtain here.''

By war's end, almost half of American men and a third of the women smoked. Cigarettes were as much a part of American culture as John Wayne and Joe DiMaggio, who were smokers themselves and, like many movie stars and athletes, pitched cigarettes in advertisements.

Nowhere was the cigarette's conquest of America better symbolized than high above the heart of the country's entertainment capital in New York. It was there that RJR departed from its usual boring advertising and put up in 1942 what became America's most famous billboard. Two stories high and stretching a half block on the east side of Broadway in midtown Manhattan, a serviceman smoked his Camel and blew huge smoke rings across Times Square.

Probably half of the people who gawked at the giant smoke rings sucked on the real thing, never really considering that they might be killing themselves.

That news would take them and the tobacco barons by surprise.