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Merger of Winston, Salem allowed seeds of industry to sprout

Merger of Winston, Salem allowed seeds of industry to sprout

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Centennial: Second in an occasional series.

It just didn’t make sense for J.L. Ludlow, a local official wearing two prominent hats — former Winston city engineer and current Board of Trade president — that Salem and Winston remained separated legally even as the communities were intertwined socially and economically.

That’s why Ludlow felt compelled to address the invisible fence dividing the cities in December 1912 in what became known as the “walled city” speech.

In a Winston-Salem Journal article on Ludlow’s talk in support of merger to more than 200 businessmen and civic leaders, he conveyed that the communities “have grown up and into each other. Our interests have become identical. Our aims and purposes are the same.”

Ludlow wasn’t just speaking wistfully.

In 1899, federal officials merged the post offices of the towns with the official postmark designation of Winston-Salem. Railroads began to refer to Winston-Salem in their schedules, and manufacturers and business leaders announced themselves as from Winston-Salem.

Those realities didn’t necessarily make it easy to accept for some Salem officials and residents, who were afraid that nearly 250 years of Moravian heritage and influence eventually could slide into history’s dustbin by a merger with Winston’s budding manufacturing muscle. Winston, after gaining access to the state railroad system in 1872, was saturated by the sticky-sweet smell of more than 40 tobacco factories.

It also didn’t sit well with some Winston officials and residents, who were concerned that their town, founded in 1859, would lose its identity if the two towns merged and Salem was the name of the new entity. That’s even though the younger community had grown to more than double Salem’s population.

Those concerns led merger votes in 1873 and 1879 to fail — both cities had to approve — with other attempts fizzling out in subsequent years.

Ludlow acknowledged those concerns, saying “a great fence seems to have been erected between the two communities, and has persisted in staying erected, without apparent reason except to the outside world, which interrupts it to mean either that Salem must be awfully cranky or Winston awfully contrary, or perhaps both.”

However, the economic realities of merging the communities were compelling.

It would make the combined city one of the largest in the state, giving it greater economic and political clout to support homegrown companies in R.J. Reynolds Tobacco Co., Hanes Hosiery Co. and Wachovia Bank and Trust Co. In return, those companies helped attract more residents to both communities, more so in Winston.

The merger of Salem and Winston also would simplify regulatory obligations for merchants. It also would put the combined city in a better position for receiving state and federal funding.

“It didn’t make much sense for communities that contiguous to have two of everything,” said Frank Elliott, writer, producer and director of the “Merger: Making the Twin City” documentary that premieres at 9:30 p.m. Thursday at A/perture Cinema, 311 W. Fourth St. It will begin appearing on WSTV on May 16.

“When you are bigger, you have more power, and thus more influence. It was an example where united-we-stand was the better course for the communities’ future,” Elliott said.

Key ingredients were there

The year represented the climax of what local historian James Howell Smith called “the preparation time” of 1896 to 1913 for the local economy.

Smith wrote in his “Winston-Salem in History” book that those years saw Salem and Winston “transfer from a pleasant, gentle agrarian community in which the seeds of industry were well planted, but hardly sprouting, into one of the leading manufacturing centers of the South.”

The key ingredients in the transformation, Smith wrote, should be very familiar to those promoting economic growth these days: capital for investment; a transportation network (railroad); technology advancements and adaptable labor skills; an abundant workforce; “and a supply of leaders whose personal and cultural experience committed them to the building of enterprises.”

Getting the transformation accomplished required a symbiotic relationship between the financial and manufacturing industries, namely the formation of a bank large and strong enough to finance the industrial build-out of the textile and tobacco sectors, as well as help pay for road and railroad construction.

As the competition for tobacco manufacturing primacy in the state grew to a head, Reynolds bought out P.H. Hanes Tobacco Co. — then the largest tobacco employer and plant — for about $1 million in 1900, or about $27.2 million in 2012 dollars.

That purchase eventually enabled Reynolds to become the state’s largest employer for several years in the early part of the 20th century.

The P.H. Hanes family used its share of the sale to help form the P.H. Hanes Knitting Co. in 1902 to make men’s and boys’ underwear. John Wesley Hanes used his proceeds to open Shamrock Hosiery Mills in 1901, which became Hanes Hosiery Mills Co. in 1914.

Those firms combined in 1965 to form Hanes Corp., the world’s largest textile manufacturer at that time, with mills dotting the Triad and North Carolina almost like dandelions.

‘One great community’

With First Street serving as an invisible dividing line, Ludlow urged the business and civic leaders to make a stand on whether the Board of Trade should lead the effort to “tear down the fence and henceforth have one great community.”

“In many respects, we are already one in fact, and the great fence has been gradually fading away. But there remains a very seriously obstructive shadow of it, and we still have as governmental subdivisions the town of Salem and the city of Winston.”

If the leaders, as well as residents of both communities, would vote in favor of merger this time, Ludlow said it would create a “better, bigger and greater Winston-Salem in fact as well as in name.”

The recommendation was approved and a petition with more than 1,700 signatures was sent to the General Assembly requesting charter legislation. Most of the signers were Winston residents. The bill was approved Jan. 27, 1913, and a vote was set for March 18.

An intense lobbying effort for and against the merger ensued, with business and political lines blurring in the process. R.J. Reynolds spoke in favor of consolidation.

Salem residents wondered whether hog-raising would be permitted in the new city (Winston said no). Moravians said the merger would be the forerunner of making a “liquor town” out of Salem.

Winston residents voted 800-260 for consolidation, while Salem residents voted 385-224. Consolidation officially took place May 9, 1913.

The combined Winston-Salem covered 5.4 square miles and had an estimated population of 22,700 in 1913. By 1920, Winston-Salem had a population of 48,395, with many residents lured by opportunities of working in the tobacco and textiles mills that grew in part through financing provided by Wachovia and Piedmont Federal Savings and Loan.

Wachovia grew up, too

The year 1913 was pivotal for Reynolds in another way.

It was preparing to launch a brand of cigarette — Camel — that would revolutionize the tobacco industry in sales and popularity.

Camel was Reynolds’ way of taking advantage of new manufacturing technology that enabled the company to sell pre-made “cigarettes” as an option other than roll-your-own.

Within a year, Camel cigarettes became a sweep-the-nation brand with an initial rollout nearly duplicated in popularity by another iconic Winston-Salem product, Krispy Kreme doughnuts, from 2000-03.

In 1914, Reynolds sold 425 million Camel cigarette sticks. By 1921, it was at more than 18 billion, and more than half of all American smokers used Camel. The production exceeded 30 billion in the mid-1920s.

By the time 1913 rolled around, Wachovia had grown from a small community bank to a financial institution large enough to handle the increasingly complicated and international demands of Reynolds and the Hanes textile companies.

Elliott said Wachovia grew in part because business officials in Winston-Salem, and across North Carolina, had grown weary of having to travel to Richmond or Atlanta to secure a large business loan.

Wachovia also has gone through its own consolidation, with the January 1911 combining of Wachovia National Bank and Wachovia Loan and Trust Co. making it one of the stronger banks in the Southeast and the strongest in the Carolinas. It also was the largest trust company between Baltimore and New Orleans.

Col. Francis Henry Fries, who has operated several textile mills, became president of Wachovia Loan and Trust in 1893, then ran the combined bank for 20 years until his death in 1931.

The bank’s prowess was seen publicly through the building of a seven-story skyscraper — the state’s largest building at that time — that opened in 1911.

“The Moravians did not want to see their heritage get lost in a merged city,” Elliott said. “But they were not monolithic, either. They had businessmen, such as the Fries family, who were financial supporters of the industrialization of Winston.

“By 1913, the timing was right to take that step.”

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