THE LAST STAND
The War Between Wall Street and Main Street Over California's Ancient Redwoods
By David Harris Times -- 373pp -- $25.00
To walk through the few surviving stands of Northern California coast redwoods is like taking a journey into the primordial past. For aeons before humans came onto the scene, the trees existed in mist-shrouded obscurity, serving as home to an extraordinary array of wildlife. But all of this is secondary to Texas financier Charles Hurwitz, to whom the ancient forests' only value is economic. A single old-growth tree equals about $30,000 worth of lumber.
Even by the rapacious standards of the 1980s, Hurwitz' 1985 hostile takeover of Pacific Lumber Co. stands out, largely because it precipitated an assault on the 183,000 acres of redwoods acquired in the deal. But according to the Darwinian rules of 1980s' dealmaking, Hurwitz had little choice. Financed with more than $800 million in junk bonds, the Pacific Lumber deal only worked if Hurwitz serviced the debt by doubling, then tripling, the rate of lumbering. And if he could clear all of the old-growth trees, Hurwitz figured that he would end up $1 billion ahead.
In the frenzy to cut trees, Hurwitz also managed to overturn a well-run family business and to bring chaos to Scotia, Calif., the small company town where Pacific Lumber's mills had provided steady jobs and strong community bonds for more than five decades. And he aroused the rage of a small band of militant environmentalists who fought the financier every step of the way.
This sad story is told in all its gritty detail in The Last Stand, David Harris' riveting book, in which almost no one comes out looking good. Harris, a former contributing editor to The New York Times Magazine and Rolling Stone, has produced a work that reads more like a Raymond Chandler novel than a piece of journalism. Moving seamlessly from the action on the high-yield trading desks in New York and Beverly Hills to small-town gossip sessions at the local Scotia diner to meetings of the disheveled Earth First! protesters, Harris weaves a tapestry of mounting intrigue and impending danger.
Along the way, the author provides a nostalgia trip through the wild days of junk-bond dealmaking. Assisting Hurwitz is a Who's Who of 1980s operators. Drexel Burnham Lambert, Hurwitz' investment banker, conducts a surreptitious aerial survey of Pacific Lumber's timber holdings. Then, Harris writes, Drexel's Michael Milken, with a wave of the hand, agrees to peddle the junk bonds to his network of customers, while Ivan Boesky and Boyd Jefferies quietly park big chunks of Pacific Lumber shares until Hurwitz is ready to pounce. Later, it is Milken's buddy, Fred Carr, who helps Hurwitz tap the "overfunded" employee pension fund through his insurance company, First Executive Corp.
Harris excels in describing the transformation of Pacific Lumber and the town of Scotia following the takeover. For decades, the company's founders ran it like a big extended family. Despite legendary boom-and-bust cycles in the lumber industry, the townsfolk in Scotia enjoyed steady work. The reason: Since the 1930s, Pacific Lumber fiercely adhered to a conservative harvesting program, each year selectively cutting just the amount of board feet that it figured would grow back.
And Pacific Lumber supplied more than steady jobs. Unlike at other mills, Harris says, workers enjoyed pensions, health benefits, and an employee stock plan, while every kid who won admission to college got a scholarship. PL provided cradle-to-grave corporate welfare.
Into this Frank Capraesque scene burst Charles Hurwitz. At first, Hurwitz brought a nice windfall. Round-the-clock operations produced extra cash for new pickup trucks and washing machines. But soon, the town seemed to lose its bearings, injuries mounted at the mill, and, when Hurwitz siphoned cash from the pension fund, workers mounted their own buyout plan, which eventually proved unsuccessful.
Ultimately, though, it was the confrontation between Pacific Lumber and Earth First that laid waste both to Hurwitz' plans and Scotia's well-being. Clear-cutting of entire old-growth stands--"monster trees that yielded the best softwood in existence"--sparked a series of tumultuous protest marches and a string of lawsuits that have to this day suspended logging in the ancient grove known as Headwaters Forest. Hurwitz, it seems, badly underestimated the power of the environmentalists. With production down, layoffs have soared. But years of clear-cutting destroyed irreplaceable forests.
As compelling as The Last Stand is, the book could use some cutting of its own. As the action shifts from the boardroom to the backwoods of Garberville, the enclave where the Earth First organizers hold their meetings, the pace slows to a crawl. And while most of the writing is straightforward, at times Harris tries too hard. "Night had fallen like a cast-iron safe down an elevator shaft," he writes.
But these are minor faults. The Last Stand is provocative, and it's good entertainment. In an age when "maximizing shareholder value" has become a corporate mantra, Harris' account challenges us to hold corporations to a higher standard. Shareholders count for a lot. But so should workers and the environment.