Abandoned Iron Ore Diggings Became Gold Mine for Savvy Developer : Entrepreneur: Old hole in the ground has generated fortunes as mushroom farm, bomb shelter, records vault and top-secret think tank.

A little knob of a hill called Iron Mountain on the fringes of New York’s Catskill Mountains is a testament to 19th-Century industrialism, Depression-era entrepreneurship and Cold War anxieties.

It has undergone incarnations as an iron mine, mushroom farm, monster bomb shelter with motel-like accommodations, home of underground wine and cheese parties and a top-secret think tank.

Today, Iron Mountain, 100 miles north of New York City, is stuffed with paper, microfilm and computer records. It’s part of the country’s largest records storage company, also called Iron Mountain.

The name promises solidity and security. But the name also has been a stigma, a holdover from the days it was home to Iron Mountain Atomic Storage Corp., when it was advertised as a place to keep your valuables safe during the coming nuclear war.

Sheltered by 200-foot iron deposits, the mountain’s interior was billed as a safe haven where companies could continue operating through the atomic blasts and radioactive fallout. In the early atomic age, some companies hoped to burrow underground, emerging like Rip van Winkles after the radiation cleared to take up business as usual.

“I don’t know how this place would stand up under a nuclear attack,” says Donald Hughes, who heads Iron Mountain’s New York operations. “I don’t know and I don’t care. We’ve been trying to push away from that image.”

The mountain was a bustling iron mine in the 19th Century, when Troy, N.Y., 40 miles up the Hudson River, rivaled Pittsburgh’s steel mills. Troy’s steel industry died, and the mines closed in 1901.

In 1936, a savvy businessman named Herman Knaust bought the mountain and began using the dank caverns carved out by the miners to grow mushrooms. Knaust grew rich from his mushrooms, producing 300,000 pounds a year--one-fifth of the nation’s supply.

As the first mushroom clouds of atomic blasts appeared on the horizon in the 1940s, Knaust dreamed up another use for his mountain. Capitalizing on nuclear fears, Knaust turned his mushroom mine into a maze of vaults where companies could store records and even set up emergency headquarters in case of nuclear war.

Some of Knaust’s mushroom employees were refugees from Europe after World War II. Their stories of the rubble left by bombing--treasures ruined, industries destroyed--gave him the idea.

“If an atom bomb burst right on top of us, it wouldn’t even make a Geiger counter flicker here in the vaults,” Knaust said in 1951, when he opened Iron Mountain Atomic Storage.

Was Knaust naive or just overly optimistic?

“I don’t know if I would call it naive,” says Wayne Blanchard of the Federal Emergency Management Agency. “I would call it unrealistic. It strikes me that they were trying to make the best of a bad situation, as opposed to doing nothing. Certainly, the attitude in the ‘50s was not a fatalistic one.”

The facility resembles a classic catacomb. The 4 miles of tunnels snaking through the mountain were lined with cinder blocks. The tunnels twist up, down and sideways at odd angles, following the veins of ore mined a century ago.

The air circulation system keeps the tunnels cool and drafty. Heavy steel doors with combination locks guard each vault. One door leads from the tunnels into a section of the old mines, where rusty water drizzles from bare rock walls.

Such companies as General Electric, IBM and Metropolitan Life rented storage space for records. Companies such as Standard Oil, Shell Oil and Manufacturers Hanover Trust built emergency quarters with offices, dormitories, showers and kitchens--”atomic cafes,” of sorts.

“They had motels there, really,” says Mary Howell, a teacher and historian who lives on the former Iron Mountain mining property. “Some had food stored there for months, if not years. One company had their setup on seven different levels so people would get exercise going up and down” while trapped there during a nuclear holocaust.

The companies taking space at Iron Mountain generally had operations in New York City. Executives figured that they were near enough to transfer key employees to their mountain hideaway quickly if the bombs fell.

Even in the 1950s, critics poked holes in their optimism.

“The problem of getting to one of the centers after a bomb hit on New York has yet to be satisfactorily solved,” one reporter wrote. Another reporter quoted an executive who said, “If the bombs come, there won’t be anything left to administer.”

Still, Iron Mountain did brisk business. Its vaults were quickly filled with emergency offices, records and even personal mementos. Some people rented vault space to store such things as baptism shrouds and stamp collections.

An eccentric woman known to Iron Mountain employees as “Madame X” stored paintings and other valuables in her vault, Hughes says. When she came to inspect her goods, she would invite employees into the steel-doored vault for wine and cheese, he says.

Gradually, realism took the place of nuclear neurosis. Companies realized that business conditions in a post-holocaust world would be more along the lines of bartering for skins than balancing bottom lines. The last of Iron Mountain’s emergency facilities were converted to conventional storage space by the late 1970s.

As the bunk beds and chandeliers left, Iron Mountain mutated from a series of bunkers into a straightforward records storage business.

Behind Iron Mountain’s 28-ton vault door--bought from an old bank for $1--lay 200 vaults ranging from 200 to 43,000 cubic feet.

Another records-storage company bought Iron Mountain in 1975 and adopted the facility’s name for its entire operation. The company, based in Boston, has evolved into a nationwide records-management firm handling storage for 13,000 companies. Iron Mountain has 47 storage sites, housed in everything from abandoned paper mills to a limestone cave just south of Iron Mountain, in Rosendale, N.Y.

The facility is operated by Iron Mountain Records Management Inc., which in turn is owned by the Schooner Capital Corp. of Boston.

In the 1950s and 1960s, the corporations that set up shop inside Iron Mountain “were probably as worried as the rest of us about the threat of an atomic attack,” historian Howell says. “They eventually left because they just felt the need wasn’t there anymore.”