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The area was known as Long Branch because it lay in the fork of two creeks, one called Long Branch, which drained into Salem Creek. It began as a mostly residential neighborhood for people who worked in the tobacco factories along the railroad tracks. It was not a pleasant place to live because of the noise and smoke from the factories and the trains. The housing was terrible…the Sanborn Insurance maps identify most of the buildings as “tenements” or “shanties”. Water came from a few shallow wells, so there was more than enough disease to go around. Here and there a single outhouse served multiple households. But the landlords could get away with murder because the people worked 60-70 hour weeks for pennies per hour and because they had zero political power. The population was mostly black, but there were whites interspersed throughout. Vine Street, at the heart of the area, was almost exactly 50-50 black and white.

Now that Vine Street is becoming the new center of the Winston-Salem universe, we need to know about its past. Although it is one of the shorter streets in the city, extending only three blocks, it has seen more drama and change than any other. Thus this four part series. Part I, “Cocaine Alley”, covering roughly the period from the late 1870s to the early 1920s, will deal with the ongoing war between the city and law abiding citizens on one hand and a small group of criminal entrepreneurs, headed by Cora Smart and Watty Grier, on the other. Part II, “Camel Revolution”, will show how the stupendous success of a cigarette was able to accomplish what the city fathers could not by simply building over the drug and gambling and prostitution dens…in an unprecedented frenzy the R.J. Reynolds Tobacco Company bought or built nearly 100 buildings in the area between 1912 and the early 1930s. Part III, “Human Rights”, is about the workers who were left behind by the Camel wealth machine, and particularly, it is about a group of women who worked as stemmers in plant 60, women who were fed up with peeping tom foremen and being paid ten cents an hour less than the men for doing the same work, who one day walked off the job and thus changed the city forever. Of course, Bailey Brothers, whose complex is a crucial part of the future of the Innovation Quarter, played an important roll in much of this, but their story is so complicated and dramatic that I have decided to deal with them separately, thus the Prelude, “Who killed (Bill) Bailey Brothers?”

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In the end, Bailey Brothers was the oldest tobacco manufacturer left standing in Winston-Salem. For over 50 years they were one of the most successful. But in the spring of 1923, the walls came tumbling down. Were they the victims of a conspiracy? Almost certainly. Was Buck Duke involved? Maybe. Or was it someone much closer to home? We shall see.

From day one of European North America, tobacco was king. The survival of the Jamestown colony depended upon it. And during the American Revolution, in one of his appeals for money, George Washington said “If you cannot send money, send tobacco.” He wasn’t going to smoke it or chew it…he was going to trade it for arms and ammunition.

Before 1870, tobacco manufacturing was little more than a cottage industry in the USA. In the late 18th century, Matthew Miksch began a small operation in Salem, NC. In 1840, Miflin Marsh started the Marsh Wheeling Cigar Company in his West Virginia home. That same year, following a disastrous fire, the city of Boston banned all smoking within the city limits. The 1860 Census for Virginia and North Carolina listed 348 tobacco factories, all of them tiny. Only six made smoking tobacco, as a byproduct of chew. Around that same time, John R. Green began making “Best Flavored Spanish Smoking Tobacco” near Durham. The package had a picture of a bull on it. After being acquired by the W.T. Blackwell Company, this became the famous “Bull Durham” smoking tobacco. Both the Union and Confederate armies issued tobacco products as rations and the first federal tobacco tax was enacted to help pay for the war. It raised about $3 million. As they were passing near Durham at the end of the war, Union troops looted supplies of Blackwell’s product. Soon, orders began arriving from the North for that Durham tobacco with the bull on it.

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During and after the Civil War,  Mary Vance Roberson manufactured cigars in her home near Kernersville. After the war, Washington Duke began manufacturing in a cabin at his home outside Durham. Around that same time, the Ogburn family had a small operation near the current Smith Reynolds airport and Hardin Reynolds had a similar operation at his home on No Business Mountain in Patrick County, Virginia.

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Bailey Brothers moved into the former Winstead Tobacco factory in 1879. In 1883-84 they built a new 4 1/2 story brick plant next door. They leased the old plant to R.J. Reynolds brother Hardin. When Hardin moved into his new plant in December 1885, the Baileys reclaimed the old building for storage.

 

The Twin City got its first serious tobacco factory in 1870 when Hamilton Scales opened his plant in Winston. That same year, two brothers, Mumford and Philip Bailey, joined another local man to create the firm Baileys and Dulin in Statesville. By 1874, they had bought Dulin out and the firm of Bailey Brothers was born. But by then, the tobacco action was already focusing on Winston, so in 1879, the Baileys leased the former Winstead tobacco factory at the end of the rail line between Fourth and Fifth Streets in Winston. They would remain there to the bitter end.

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Mumford was in charge of the office and finances and did most of the leaf buying. Philip ran the factory. By 1885, they were approaching a million pounds of manufactured product per year while employing 125 hands. They made all types of chewing tobacco, the main brands being Nantahala, Old Bob, Ellen Fisher, Planter’s Choice, O.K. and, of course, after the song became a big hit in 1902, Bill Bailey. They were a perfect complement as business partners. Mumford was outgoing and effusive, Philip was quieter and focused. Both assumed leadership roles in the community, but Philip tended to stay behind the scenes, whether at First Presbyterian Church or in civic affairs, while Mumford always seemed to be running for something, in the church, in the Masons and in the community.

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In 1892, the Forsyth County grand jury indicted the county commissioners and magistrates for contempt of court for failing to take steps to improve the courthouse. See: Commissioners indicted, 1892

Mumford ran for county commissioner and won, then got himself appointed chairman. He set to work to fix the matter. In 1897, Forsyth County’s grand new courthouse, designed by famous southern architect Franklin Pierce Milburn, opened for business on the original courthouse lot. That being done and having served three two year terms as chairman of the commission, Mumford stepped down and looked for something else to do.

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It didn’t take long. There was significant corruption on the Winston town commission. Mumford became chairman of the local Democratic Party, then went to a town commissioners’ meeting and began attacking members of his own party, who he alleged had used city funds to build water mains and sewage lines to serve property that they owned. And that was just the beginning. He continued sniping at the town commissioners for some years, eventually losing his party chairmanship.

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Through 1907, the mayor, who chaired the commissioners’ meetings, was elected by vote of the commissioners. But in 1909, the rules changed and the mayor was to be elected by popular vote. The Democratic Party decided that there should be a primary in all races, to be held on April 26 in advance of the general election on May 4. Mumford announced that he would oppose the popular Democratic mayor Oscar B. Eaton, but that he would not participate in the primary. Then he said that he would participate, then again that he would not.

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He published a number of statements in the press accusing the mayor and the commissioners of financial irresponsibility. There was frequent mention of a missing $350,000, which the mayor and commissioners denied was missing. Mumford did not come close to winning on May 4, but as quickly became apparent, his real target had been the town commissioners, only one of whom had been reelected.

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Mayor Eaton was outraged, claiming that Mumford had used underhanded tactics, so announced that he would serve his term as mayor, but would never again run for office in the Twin City.

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That did not last long. Two years later, the towns of Winston and Salem were formally joined as a single city. Cooler heads prevailed and Eaton, who’s eleven years in office had been some of the best in Winston history, was persuaded to run for mayor of the combined city, a race which he easily won.

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Meanwhile, Bailey Brothers was one of the top four tobacco manufacturers in the city that dominated the tobacco business. But James Buchanan “Buck” Duke, using his Durham and New York based AmericanTobacco Company, was determined to corner the world tobacco market. In self defense, R.J. Reynolds and P.H. Hanes, the two local giants, began absorbing the smaller local companies. Even that was not enough. In 1900, Hanes sold out to Reynolds and went off to explore the textile business. And soon, Reynolds secretly became a part of Duke’s combine, leaving a tiny handful of local manufacturers, led by Bailey Brothers and Taylor Brothers, who were determined to remain independent. Philip died in 1905, leaving a large, somewhat messy estate. That inspired Mumford to incorporate. Several second generation Bailey’s joined the firm.

They used superior leadership and better efficiency to avoid the combine. And they were always looking for innovative ways to get an edge on the competition. The Baileys began taking advantage of major public events to publicize their products. A description of their float in a huge parade in Charlotte in 1906 gives us an idea of how important they thought such matters were: “The float…was nine feet wide and 22 feet long…drawn by six black horses…the body and canopy of the float were made of tobacco…” Several banners proclaimed “Bailey Brothers”, “Not in a trust” and “Independent”.

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They also enthusiastically participated in the independent manufacturers association and its many expositions in major cities. One national magazine described one of their exposition booths as being the largest and best designed present and mentioned that their brochure was printed, with  many illustrations, on the finest paper in rich, full color, with gold highlights. Later, when they were on the verge of producing cigarettes for the first time, they sent President Taft 120 cigarettes of six different blends in a box designed by Tiffany.

They showed their first interest in self-generated electric power in 1912 when they installed a modern Westinghouse multipolar generator and switchboard in their main plant. And they expanded their plant capacity in 1908, 1915 and 1920. In 1921, they reported a 33 1/3% increase in business over 1920. That same year, the directors approved the manufacture of Bailey’s first cigarette and an increase in capital to $3 million. Mumford hired Tom G. Taylor to oversee the sale of new stock.

In 1912, Reynolds had test marketed four brands before choosing Camel. Bailey developed more blends than Reynolds had, but did no test marketing, selecting the final blend internally. They had contracted with P. A. Raftes of New York, who had been Philip Morris’s blending guru, to work with their own expert, Reginald Bailey, to produce the final product. Through Raftes, they also gained access to a network  of warehouses in Greece and Turkey to ensure a steady supply of quality Turkish tobacco.

A new power plant, containing a 100 horsepower Erie City Steam Boiler was built. The new cigarette machinery was installed in their original wood framed factory on Chestnut Street. It would have a temporary capacity of one million cigarettes per day. A much larger and more modern factory, to be located to the rear of the old plant, was in the planning stages. Mumford gave a tentative date for beginning production as April 1, 1922. He said that the name of the cigarette would be revealed on the day that it went on sale.

Of course, the name had already been selected and was being mentioned in the tobacco journals, so enterprising reporters could have discovered the new name well in advance. On June 1, 1922, Bailey Brothers began delivering the first cartons of Carolina Royal cigarettes to jobbers in the local area. The first day order was the largest in cigarette history. Carolina Royal was an immediate success. The Bailey factory operated around the clock. By early 1923, Carolina Royal had blanketed the South and was becoming a popular item as far north as New York. The first year’s sales were roughly the same as Camel had achieved.

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Meanwhile, Mumford had hired the Charlotte architectural engineering firm of Lockwood, Green & Company to design and oversee the building of his new five and one-half story, $100,000 factory. In the summer of 1922, they put the job out for bids from contractors. In consultation with several builders, they decided that there was not enough room for the new factory and its ancillary buildings on the existing site. So the project was paused as the search began for more land. Thanks to booming sales of Camels, the area was already quite crowded, but in the spring of 1923 Mumford purchased the former Vaughn & Company refrigerated storage building on East Fourth Street between Depot and Vine Streets and preparations began. But that did not last long.

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In October, 1922, Mumford Bailey had accepted the organization of his workforce by the International Tobacco Workers Union. In fact, he began featuring a “union made” tagline in most of his ads. That did not sit well with his fellow tobacco manufacturers, especially R.J. Reynolds., whose workers were still doing 12 hour days, 60-70 hour weeks compared to Bailey’s 8 hour day, 48 hour week and time and one-half for overtime. To add insult to injury, in April, 1923, he announced an across the board raise of 20% for all his employees. For some months, there had been unsourced rumors circulating, targeting Bailey brothers stock sales, saying that the company was insolvent and unable to pay its debts. To finance its cigarette startup until stock sales could catch it up, the company had borrowed $400,000 from Wachovia Bank & Trust. In later testimony, Wachovia vice -president Robert Hanes would say that Wachovia had farmed out $300,000 of that to other institutions and kept $100,000 in house. Suddenly, about the time that Bailey announced the raises for their employees, all of the loans, none of them yet mature, were called.

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In May, unable to extract explanations for the calling of the loans and unable to pay their day to day operating costs, Bailey Brothers was placed in the hands of a creditors committee, with the stated hope of avoiding bankruptcy. But on December 15, the trustees filed a voluntary bankruptcy petition, listing liabilities of $711,000 and assets of about $2.6 million.

On June 3, 1924, a Federal grand jury in Greensboro indicted Mumford Bailey and several dozen of his employees for mail fraud, alleging that they had lied about the finances of the company during their stock selling campaign. Charges were filed against 49 men and Federal marshalls began arresting the accused. Bond was set at $10,000 each for the top officers, $5,000 each for most of the rest, a total of $285,000, about $4 million in today’s dollars.

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The Bailey property had been put up for sale at auction in May, but Mitchell S. Lyon, the trustee, had turned down an upset bid. A second auction had brought a top bid of $275,000, but just a few days after the indictments were handed down, George T. Penny, a High Point banker and investor, representing a syndicate of northern buyers, placed an upset bid of $288,750. The syndicate also offered to assume a mortgage of $37,500 on the Vaughn & Company property which had been purchased as the site of the new cigarette factory, bringing the total price to $326,250.

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Penny told reporters that the group planned to reopen the plant under a new name, with a new, reformulated cigarette plus the old Bailey chewing and smoking tobacco brands. But a number of experts complained that the bid was less than half the true value of the property. It is unclear whether that had any effect, but Lyons again “turned the ticket”.

A third auction was held on July 16 at the courthouse in Winston-Salem. Lyons ruled that the Vaughn & Company mortgage had nothing to do with the property and that the bidding would begin at $288,750, the amount of Penny’s previous upset bid. Someone bid $292,000, then Penny bid $300,000 and the hammer fell. This time there were no upset bids. Penny told reporters that his group’s plans for the property were unchanged. This time he mentioned that cigarette manufacturing would be scaled back.

The sale was confirmed by bankruptcy referee L.C. McKaughan on August 19. The next day, Penny announced that he had sold the property to the R.J. Reynolds Tobacco Company. His story was that his group was insistent on moving the Bailey plant to another city, and that since much of the value was in the real estate, that made no sense to him, so after being rebuffed by other unnamed potential buyers, he had accepted Reynolds offer. The official history of the R.J. Reynolds Tobacco Company is a bit vague on this subject. It implies that Reynolds bought the property at auction for $337, 754.14, which it did not. If the price quoted by Reynolds is correct, Penny’s group made a tidy little profit on the deal and Reynolds got a great bargain. They took possession of the property on September 4, 1924.

Meanwhile, preparations were underway to try the Bailey group for mail fraud. Just before Christmas, 1924, W.L. Ashly, a Greensboro insurance adjuster who owned eleven shares of Bailey Brothers stock, filed suit against the R.J. Reynolds Tobacco Company, Wachovia and other banks and several individuals charging that they had conspired to destroy Bailey Brothers. He asked $1,100 in personal compensation for his shares and over $2.1 million on behalf of other stockholders.

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The complaint entailed 26 pages of allegations, focusing on the interlocking directorates of Reynolds and Wachovia and the calling, without reason, of immature loans by Wachovia, Bank of America and other institutions. He went on to charge that the creditor’s committee set up the previous May had been controlled by Reynolds and Wachovia and had badly mismanaged the company for the preceding eight months. Reynolds and Wachovia executives rushed to deny Ashly’s charges in the press, but on New Years eve Federal marshals began serving papers on the defendants.

The mail fraud trial opened at the Federal courthouse in Greensboro on January 26, 1925. There were 49 defendants at the start. One died before trial. The prosecutors decided to nol pros three more before trial began. On February 4, when the prosecution finished presenting its evidence, Judge Webb directed not guilty verdicts against five more. On February 11, the judge sent eleven more home. At that point, one other was in the hospital and two had not appeared as ordered, so the judge sent 26 men to the jury. The next morning, after some legal maneuvering, six more were eliminated, and twenty cases were handed over to the jury. That happened just at the noon recess. Moments after court resumed in the afternoon, the door to the jury room opened. The judge anticipated questions, but the jurors said that they had a verdict. Not guilty on all counts. Most newspaper accounts say that the jury spent 45 minutes on the case, which is highly misleading. Due to the lunch break, most of their time was spent getting into and out of the jury room. It is doubtful that they spent more than five minutes on the case itself.

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The prosecution had focused on Tom G. Taylor, the director of the Bailey Brothers stock sales campaign. They presented numerous allegations against him, but Taylor was able to explain every one, and most importantly, he had documentation to back him up. When his testimony ended, legal experts agreed that he had been a “good witness” for the defense. The truth is that the case had mostly been lost when the prosecution called their own witness, Robert M. Hanes, a vice-president of the Wachovia Bank & Trust Company, one of the defendants in the lawsuit. Via the carefully worded questions of the Federal prosecutor, Hanes testimony was predictable. Then the defense began its cross examination. Perhaps the prosecutor had hoped for an incompetent defense attorney. But the first questions dashed that hope. Desperate to avoid what was coming, the prosecutor objected to virtually every question. But the judge was having none of it. Instead of confirming the prosecutors charges, Hanes admitted that during the entirety of the Bailey Brothers stock sales campaign, they had told the truth about the value of the company. Once that was on the record, the rest was merely going through the motions.

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There is a typo in this article. “The defense stubbornly fought every effort of the defense…” should, of course, read “The prosecution stubbornly fought every effort of the defense…”
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Mumford Bailey wrote a letter to the editors of major newspapers about the case:

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His letter might be a bit partisan, but the facts are essentially as stated. You can decide for yourself what happened. The fact is that Bailey Brothers was gone forever.

In June, W.L. Ashly came back to court and asked for a voluntary nonsuit, which the judge granted. The Bailey Brothers saga was over.

By then, Reynolds had decided to make the Bailey property into a power plant. In 1925-26 they built what came to be known as the “Old Powerhouse”. Over the next half century, Reynolds expanded the capacity of the Bailey power plant a number of times until it was capable of providing most of the needed power for all the downtown Reynolds facilities.

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