R. J. REYNOLDS FAMILY CHAPTER 1: RJR’S EARLY YEARS

Richard Joshua Reynolds

July 20, 1850 - July 29, 1918

Richard Joshua Reynolds was born into a wealthy tobacco-planter family at Critz, Virginia, near the North Carolina border. His mother gave birth to sixteen children, but only eight survived to adulthood. RJR struggled in school due to undiagnosed dyslexia, which was mistaken for poor eyesight. Despite academic difficulties, he was ambitious and resourceful. Leveraging his hands-on experience as a tobacco peddler and his mathematical training at Emory and Henry College, he developed critical business skills.

The American tobacco industry transformed dramatically during and after the Civil War. Traditional labor structures collapsed, and Virginia, once dominant in tobacco manufacturing, never regained its prewar status. Bright-leaf tobacco gained popularity, particularly in North Carolina’s Piedmont region. It drew ambitious young men southward. RJR moved to Winston, North Carolina, in 1874, attracted by the town’s thriving tobacco market and its railway connected to national distribution channels.

In 1875, he founded his chewing tobacco business, focusing on high-quality production and aggressive expansion. His investments in infrastructure strengthened his company but also contributed to Winston’s rapid development. By 1896, the town boasted a growing number of tobacco factories and electric streetlights, partially funded by Reynolds' ventures. His tireless work ethic and commitment to progress cemented his reputation as a major force in the region’s economic growth.

However, rapid expansion came at a cost. As RJR ramped up production in the mid-1890s, his debt soared. Despite quadrupling his output, the debt multiplied ninefold. His investments in facilities, sales strategies, marketing, and research and development left him in a difficult financial position. He needed more capital. Meanwhile, 80 miles down Tobacco Road in Durham, another tobacco empire was rising—one that would challenge Reynolds directly.

In 1863, 43-year-old farmer George Washington Duke, feared being drafted into the Confederate Army. He sold his farm equipment and enlisted in the Confederate Navy. Captured late in the war, he was released in New Bern in 1865. In that terrible spring with the war ended, he walked 134 miles to his home near Durham. His oldest son, 19-year-old Bode Duke, had served in the Confederate Army, and soon rejoined the family. Left on the farm during the war were his 12-year-old daughter, Mary Elizabeth, and his younger sons, 10-year-old Benjamin and 9-year-old James Buchanan "Buck" Duke.

Washington Duke returned to devastation. General Sherman’s army had stripped his farm of nearly everything, leaving only two blind mules, a wagon, and a small pile of cured tobacco. Faced with limited options, Duke converted a corn crib into a “factory” and began making hand-rolled smoking tobacco. With his sons, he traveled the countryside selling tobacco from their wagon. The family’s small operation proved profitable, and they had expanded significantly.

From these humble beginnings, Washington Duke laid the foundation for what would become one of the most powerful industrial enterprises in America. The driver behind its expansion was son, Buck Duke, a shrewd businessman.

By 1870, North Carolina had 111 tobacco factories employing 1,465 workers and producing 11.2 million pounds of tobacco annually. Recognizing the growing demand for tobacco products, Washington Duke and his sons relocated their business, W. Duke & Sons, to Durham in 1874, closer to major tobacco warehouses and trading centers.

Buck Duke understood that success in the tobacco industry quality and scale, efficiency, and aggressive marketing. In 1890, he consolidated his four biggest competitors into, the American Tobacco Company. This monopoly gave him control over more than 90% of the U.S. cigarette market. This eliminated competition and allowed him to dictate prices.

While Buck Duke dominated the cigarette market, Reynolds was fighting to keep his company afloat. Despite significant profits, his debts made his business increasingly risky. RJR 's time for head-to-head battle with Buck Duke was coming,

And in 1898 it did come. The battle between Reynolds and Duke escalated when Duke decided to expand beyond cigarettes and aggressively enter the plug chewing tobacco market. There were twice as many chewers as smokers in the country.

At the time, the leading plug tobacco producers—Liggett & Myers, Lorillard, and Drummond—collectively produced 61 million pounds per year, while Duke’s National Tobacco Works produced only 9 million. However, Duke’s company had nearly doubled its output in three years under the American Tobacco Trust. In contrast, R.J. Reynolds was producing only 1 million pounds annually—less than 1% of the market.

The federal government imposed higher taxes on tobacco products squeezing profit margins., This added more pressure on independent manufacturers like Reynolds. Duke responded by acquiring Drummond, cutting the price of its leading brand in half, and setting his sights on the second-largest competitor, Lorillard. In a bold move, Duke offered Pierre Lorillard a deal previously unheard-of in the industry: he could continue to operate under his own brand while American Tobacco controlled the company behind the scenes. This strategy enticed several midsized plug tobacco firms to merge under a new holding company, Continental Tobacco, which maintained the illusion of independent competition while expanding Duke’s empire.

Now, RJR faced a giant threat. Duke’s companies could produce a staggering 84 million pounds of plug tobacco annually—enough to crush RJR in every market. With mounting debt and dwindling options, RJR realized he had to act. In a secret 1898 meeting at Duke’s Fifth Avenue headquarters in New York, the two titans of the North Carolina tobacco industry came face to face. After some haggling, Reynolds reached a deal: Buck Duke agreed to purchase two-thirds of R.J. Reynolds Tobacco for $3 million (C$113 million).