Distrust of Big Government, Big Business Has Deep Roots

FORTUNA, Calif.--Corky Cornwell is the picture of small-town prosperity, with his ample belly, ruddy cheeks and the service-club pin neatly fixed to the lapel of his tweed sport jacket.

His chain of six cell phone stores is thriving, even as much of the North Coast struggles economically. As Cornwell says, the little gadgets are as much a staple these days as bread or milk.

But his hail-fellow disposition melted at the mention of WorldCom, one of the blackest hats in the recent parade of corporate villains. “Terrible, terrible,” Cornwell sputtered. “I wish I had that CEO standing right here. I’d punch him right in the nose.”

But Cornwell doesn’t want or expect the government to start storming the boardrooms of America to haul off its wayward chieftains. “We have enough government control,” he said.

Bob Platt isn’t counting on much of a corporate crackdown either. The rangy 24-year-old, who makes a living as a glass blower in the woods around the Trinity River, was on a weekly grocery run to one of Eureka’s natural-food stores. “That’s kind of how things go in America,” he said, shrugging off the growing litany of blue-chip malfeasance. “Corporations run the world.”

For more than a decade, California’s North Coast was one of the country’s most polarized places. Loggers and environmentalists occasionally waged literal hand-to-hand combat over the region’s primeval forests, part of a bigger fight between hard-pressed locals and a hard-charging Texas businessman. The result left few satisfied; the only consensus here seems to be a shared skepticism about big business and big government alike.

The fight started in the mid-1980s, after a Houston financier, Charles Hurwitz, seized control of the family-run Pacific Lumber Co., siphoned $60 million from the employees’ pension fund, then dramatically stepped up timber production to service his massive load of debt.

But the battle was much larger than a struggle over logging; it was a fight over culture and values and change and who controlled the region’s destiny. It was a battle, too, involving junk bonds, hostile takeovers and a community’s fealty to far-off Wall Street. It was fought long before talk of business ethics and good corporate citizenship came into their recent vogue.

After years of confrontation, many here are angry and mistrustful, fatigued from the skirmishing and perhaps more wary than most about the nature of unbridled capitalism and whether government has the ability to rein in capitalism’s excesses--or should even try.

Debby Williams was sticking small American flags into the green flower boxes outside the Antique Depot on Fortuna’s main drag as she lamented how “big CEOs are getting rich dumping companies, and the little guys are taking the fall.” Hurwitz did the same thing, she went on, “except he did it with logs. He left the timber industry hanging here.”

But it wasn’t just corporate exploitation that ravaged the industry, she said. All around, luxuriant, tree-covered slopes stretch as far as a human eye could behold--much of it now off-limits to logging. “A lot has to do with environmentalists and all the rules you have to go through,” Williams went on, with a frown. “You have to file too many reports. You can’t do anything if there’s a bird in the forest.”

Irv Parlato, 59, shared that seeming ambivalence. His family restaurant, famous for its red sauce, has operated in Fortuna for 46 years, and he plies the tidy streets on his mountain bike like a roving goodwill ambassador.

Back in the 1950s, when the local timber industry was at its peak, one in two Humboldt County residents worked in the wood-products business or a related industry. Today that figure is about 8%. Parlato blames the decline on overly stringent environmental regulations, which “protect this bird and that salamander” at the expense of hundreds of workers.

But at the same time, he said, “there has to be more regulation” of big corporations to prevent the kind of misdeeds that took place at Enron, the Arthur Andersen accounting firm and, apparently, at many other major companies. “Some government agency maybe overlooked those issues,” he said.

Decades of accumulated tension peaked here in the 12-year battle over the Headwaters Forest, which stood as the last unprotected grove of ancient redwoods on earth.

After taking control of Pacific Lumber, Hurwitz made clear his intention to cut down the biggest of the trees, some of which date to the first millennium. Years of lawsuits, bloodshed, mass demonstrations, thousands of arrests and a widely publicized tree-perching by environmental activist Julia Butterfly Hill finally culminated in a government-brokered deal.

Under the 1999 settlement, Pacific Lumber received $480 million from the state and federal treasuries to permanently set aside roughly 10,000 acres of North Coast forest. The agreement also established strict new guidelines for protecting water quality and wildlife habitat on another 200,000 acres.

Today, neither side is happy with the arrangement. Mary A. Bulwinkle, a Pacific Lumber spokeswoman, said the company has “given up a lot over the years. We’ve gotten more and more restrictions and are able to harvest less and less.” Last year, Pacific Lumber--the fourth-largest employer in Humboldt County--shuttered two of its huge redwood processing mills. Its payroll under Hurwitz has shrunk to 900 employees, from a high of 1,500 in the mid-1990s.

Meanwhile, anti-logging demonstrations and guerrilla acts of sabotage continue, though on a much smaller scale than the “Redwood Summer” protests that drew thousands to the mountainous forests 250 miles north of San Francisco more than a decade ago.

Bill Bertain, a Eureka lawyer who grew up in the company town of Scotia, where his family ran Pacific Lumber’s laundry operation, said Hurwitz “destroyed the local economy” with “the complicity of [a lot] of elected officials and regulators. It’s like Edmund Burke said, all that’s necessary for evil to triumph is for good men to do nothing.”

The resentment on both sides has taken myths and hardened them into truths, which are lobbed as ammunition in the timber wars. People talk of the famous Avenue of the Giants stripped bare of its majestic redwoods, or of Hill’s having been seen on a bar stool during the time she was supposedly spending two years in a tree.

The divide is as simple and complex as the question of whether the forest is half full or half empty. State Sen. Wes Chesbro, an Arcata Democrat, joked, “All of my constituents love trees. Half love them standing up, the other half lying down.” The line is an old one, passed from one generation of North Coast politicians to the next, like a kind of hard-luck heirloom.

The decade’s relentless economic and social turmoil made the region’s 1st Congressional District one of the most tumultuous in the country. The congressional seat turned over four times in the 1990s, back and forth between Democrats and Republicans on either side of the timber industry/environmentalist split. But things have settled down; the incumbent Democrat, Mike Thompson, is a popular centrist overwhelmingly elected in 1998 and expected to win a third term easily in November. Chesbro is also considered a shoo-in for reelection, and Democrats, who enjoy a huge registration advantage, are likely to hang onto the area’s open Assembly seat.

The race for governor, to the extent anyone here pays attention, is viewed pretty much as it is elsewhere. While incumbent Democrat Gray Davis and Republican rival Bill Simon have their partisans, there is nothing approaching enthusiasm for either man.

“The devil we know versus the devil we don’t know,” was how J. Warren Hockaday, head of the Eureka Chamber of Commerce, summed up the choice.

Simon, an investment banker and political newcomer, is mostly a mystery. But given the atmosphere, his high-finance background gives at least some people pause. “I’d definitely want to know more about how his businesses operated, how ethical they’ve been and how successful,” said Duncan Thomas, 44, a grocery store maintenance manager. “Did he make all his money by farming jobs overseas, or did he pay his employees a decent wage?”

There is a strong sense of isolation here, a separation both physical and psychological. While most of California was sweltering last week, the North Coast was swaddled in a blanket of fog. Even in July, the hillsides are bursting green and carpeted with purple and yellow wildflowers.

The region accounted for less than 2% of the vote in California’s last statewide election, barely enough for a candidate to bother with the long trek from Los Angeles or Sacramento. Even though people understand that, many still feel overlooked and irrelevant. “What we say doesn’t matter,” said Greg Siler, 41, who had just gotten off the graveyard shift fixing heavy machinery at the pulp mill in nearby Samoa. “You people down there have all the money, so you have all the clout.”

But in some ways, the rest of the country may be just catching up with the North Coast.

Long before Enron, Tyco and WorldCom gained their notoriety, and matters like stock fraud and executive excesses became the stuff of kitchen-table conversation, there was the Headwaters fight and all that it came to symbolize.

Marilyn, a 55-year-old government worker, laughed--a dry, mordant chuckle--as she considered the ticker tape of corporate misdeeds. She would not give her last name because, she said, feelings here are still too raw. “It seems workers invest huge amounts of time and money, just to have the rug pulled out from under them,” she said, offering Pacific Lumber as a case in point.

But she’s not counting on any politician to fix things. “The way I feel,” she said, with another little laugh, “the politicians are probably responsible for most of the bad stuff that happens.”