Rainey: Short History of Manufacturing

A Short History of Industry and Manufacturing in
Thurston County, Washington
by Thomas Rainey

Mirror of page  http://www.wa.gov/esd/lmea/labrmrkt/eco/thureco.htm

The following history is largely excerpted from “A Short History of Industry and Manufacturing in Thurston County, Washington,” by Thomas Rainey, Ph.D. Additional commentary has been included by LMEA staff.

The native inhabitants of what is now Thurston County were engaged in commerce long before the first Europeans and Americans sailed into Puget Sound. The Nisqually and Squaxin were cedar and salmon people. Their split cedar longhouses were places of dwelling and ceremony during the long rainy winter as well as factories and storehouses. Wooden canoes fashioned from cedar carried the natives and their cargo to war, trade, and visit. Sustanence was provided by salmon, roots and bulbs gathered during the spring and summer.

In the late eighteenth century, Europeans and white Americans entered the Sound. In 1792, a surveying team under Lieutenant Peter Puget of the Vancouver expedition put its longboats ashore in south Puget Sound. White explorers did not return, however, until the 1820s when scouts of the Hudson’s Bay Company searched the area for beaver and a possible location for a fort to serve as their Puget Sound base of operation.

In the spring of 1833, Dr. John McLoughlin, Chief Factor of the Hudson’s Bay Company, sent agents to establish a trading post at Nisqually in what is now Thurston County. Fort Nisqually was the hub of fur-trading activity on Puget Sound. The company also established a large cattle and sheep operation on the Nisqually plains. The British fur-trading and agricultural companies were thus well-established on southern Puget Sound when American settlers began arriving. The United States, though, gained full sovereignty over the region by the mid-1840s.

Colonel Michael T. Simmons led the first party of Americans to settle on Puget Sound. In 1846, he staked a claim around the waterfalls of the Deschutes River near where it empties into Budd Inlet, the southernmost part of the Sound, and harnessed the Deschutes Falls to power a sawmill and grist mill. He named the settlement New Market, later Tumwater.

Levi Lathrop Smith and Edmond Sylvester laid claim to a small peninsula jutting into Budd Inlet two miles north of Tumwater. Their claim became Smithfield, later renamed Olympia. Olympia became the seat of the new county of Thurston. It was there that Isaac Ingalls Stevens, the first governor of Washington Territory, established the capital in 1853. Shortly after the foundings of Tumwater and Olympia, Isaac Wood founded a small village east of Olympia named Woodland (renamed Lacey in 1891 so as not to confuse it with the more prominent town of Woodland located on the Columbia River).

The first American settlers in Thurston County had high hopes for its rapid economic development. Except for pockets of prairie land which lured the first farmers, the county was blanketed by marketable timber. Coal was also discovered in the south county. The founders of Olympia and Tumwater envisioned their towns as centers of commerce that would eventually rival San Francisco.

The mid-1850s found the new settlements on south Puget Sound prosperous. Olympia had a small newpaper, the first on Puget Sound, which championed immigration and rapid development in its first issue. The vast forests surrounding the Sound beckoned the woodman’s axe. An infant shellfish industry was blooming and new lumber mills were springing up around the inlet. Olympia had an established merchantile trade. Though growth was impeded by the Indian War of 1855-56 and the tendency of the men to rush off to California’s gold fields, the founding generation had established Olympia as a significant port and trading center on south Puget Sound by the 1860s.

Still, a prosperous and stable economy proved elusive for the remainder of the century. For example, in the late nineteenth century, Thurston County experienced all of the usual problems of a frontier area – and a few special ones of its own. Puget Sound was essentially an enormous virgin wilderness of fir trees. The topography therefore dictated that timber would be a major industry. But nature wasn’t so kind. Olympia, the county’s only feasible port, provided a link for local exports, but at low tide was separated from open water by a massive  mudflat. Since dense forests made overland travel extremely difficult, water transport was vital to economic growth (at least until the railroads arrived).

Tacoma and Seattle, until the 1870s much smaller than Olympia, possessed deeper and more accessible ports which accounted in large part for their phenomenal growth in the late nineteenth century. By the time Olympia dredged its way to deep water at the turn of the century, the cities to its north had eclipsed it in population and industry. Another setback came in 1873 when the Northern Pacific Railroad chose Tacoma instead of Olympia as its major western terminus because of the former’s spacious and deeper waters of Commencement Bay. Transportation problems decreed in part by nature proved a major impediment to early industrial growth in Thurston County.

By 1893, Thurston County was dependent on outside markets in the sense that its economy tied directly to its most important resource – timber. As new technology made it possible for lumber companies to cut, process and ship timber out of the county, wood products became the major export and primary driver of the local economy.

The timber industry generated most jobs, with camps and mills springing up all over the county. Several small towns in the south county – like Bordeaux – were no more than lumber camps. Olympia merchants supplied camps and mills in several western counties, while mills in Tumwater and along Budd Inlet turned logs into  finished wood products. Logging and milling operations around Yelm, Tenino, and Bucoda boosted those small towns during good years when national demand for lumber was high.

The forest products market during these years was notoriously unstable. With many competitors, lumber prices were low even in the best of times. Small logging and milling firms struggled along with razor-thin profit margins.  Owners frequently cut wages, operated outdated machinery, or went out of business when market gluts cut demand. The lumber practice of the day was to cut as fast, as much, and as cheaply as you could and then abandon the property.

The county’s agriculture sector experienced similar market fluctuations. Here again, nature wielded a stern hand. Glacial activity left a path of rocky rubble in its wake. Sandy loam in some prairie areas was all that remained to attract farmers. Even the prairies had highly acidic soil. At the end of the nineteenth century, farmers were barely meeting the needs of the local market and eventually lost it altogether. They turned to dairy farming to survive market shocks.

Other industries began to brighten the county’s economic horizon in the last quarter of the nineteenth century.  Most notable were coal mining and stone quarrying in the southeast county and the Olympia Brewery in Tumwater. Coal was discovered early in the county’s history and mined sporadically well into the twentieth century. An even greater boom to the economy of the south county were the sandstone quarries near Tenino. Craftsmen came from all over Europe and America to get Tenino Sandstone. The quarries lifted the local economy and, from the late 1880s until the first World War, boosted Tenino’s population several times over. But growth in this industry was cyclical, reflecting the availability of disposable income and municipal expenditures, both of which tended to decline in times of economic downturn. The market for sandstone faded after World War I as architectural tastes changed and less expensive cement replaced it as a major building material.

The Olympia Brewing Company proved to be a more enduring aspect of the county’s economy. It was founded in 1894 as the Capital Brewing Company by Leopold F. Schmidt. After establishing itself in the Far West, the company expanded to the booming gold rush towns of Alaska. In 1901, it effected facility expansions in Washington and Oregon – and was renamed the Olympia Brewing Company. The company was nearly wrecked by state prohibition in 1916, pushing the economies of Tumwater and Olympia into a minor depression. However, it sprang from Prohibition in 1933 with a new, thoroughly modern brewing plant.

The Olympia Brewing Company may have led Thurston County out of the hard times of the 1890s but other sectors prospered as well. As before, the basic economic health of the county depended upon timber. In 1900, a corporate giant emerged when the railroad tycoon James Hill sold 900,000 acres of timberland owned by his Northern Pacific Railroad to Frederick Weyerhaeuser. Over the next 20 years, Weyerhaeuser moved his operations to western Washington and bought additional land, including the last old growth stands on the southeastern slopes of Thurston County. Meanwhile, a regional outfit, Simpson Timber Company, expanded into Thurston County from neighboring Mason County. Simpson purchased part interest in two local companies, Mud Bay Logging and Mason Logging, and was soon logging timber high on the slopes of the Black Hills.

By 1906, the sawmills along Budd Inlet and in other parts of the county were humming with activity. Olympia was expanding north into the Inlet, as new land was formed with dredge material from the mud flats. Olympia as creating a deepwater port, though still relatively small compared to Seattle and Tacoma. The Union Pacific Railroad was surveying a new line to Budd Inlet. The population of the county and real estate values were rising.  The San Francisco earthquake ushered in local economic recovery as mills in Thurston County could not keep up with the demand for lumber created as the city began to rebuild. The Banker’s Panic of 1907 caused a slight downturn, but one that hardly affected the county.

While the timber industry sustained Thurston County through nearly three decades of prosperity, state government – which would eventually replace it as the dominant local industry – began to emerge. It would not fully replace timber as the major industry until the post-World War II period, but it made a good start in the 1920s. In the process, Thurston County began to reap the economic benefits that accrued directly and indirectly from state government. For example, when the legislature was in session local businesses saw a healthy pickup, this despite the fact that state government did not grow substantially until after World War I. A  rising state government meant growth in the county economy (though the economic boom in the 1890s was itself responsible for state government growth).

One sign of government-fueled prosperity was the building spree in and around Olympia during the 1920s.  Finished in 1927, the State Capitol Campus, anchored by the domed Capitol Building, was the very symbol of what would become the county’s preeminent industry. State employment, bolstered by federal funds, buffered Olympia and the surrounding area from the worst effects of the Great Depression after the Stock Market Crash of 1929.

The mobilization of resources at the onset of World War II marked a new heyday for the county’s timber industry, pulling it out of the downturn experienced in the years immediately following the Depression. Wartime demand did, however, reveal a growing problem – overcutting.

The main problem for the county’s timber industry was exhaustion of the resource base. Weyerhaeuser felled the last major stands of old-growth Douglas fir in southeast Thurston County, while the Mudd Bay and Mason Logging Companies cleared the Black Hills in the west county. However, Weyerhaeuser, with the help of federal conservation agencies, initiated replanting and other means of stewarding forest resources. Companies in the Black Hills, though, were of the old “cut and run” school. By 1941, the area was logged out, and with the timber went the town of Bordeaux. The Department of Natural Resources took over the land and established a tree farm now known as Capital Forest.

Olympia emerged in the post-war era as a major service center for lumber communities west of Thurston County while the Port of Olympia remained a major transportation center for shipping logs and finished lumber.  But the glory days of the local timber industry were over. With the decline of the timber industry went many of the associated milling and secondary operations. Local mills boomed briefly in the post-World War II period, but began to close after the building orgy of the 1940s and 1950s.

War – both hot and cold – has been good for counties along Puget Sound. During the war, operations at nearby Fort Lewis increased several fold, forcing soldiers and their families into Lacey and Olympia for housing and other services. Later, a good many discharged and retired military personnel and their families settled on Thurston and Pierce counties as permanent homes. Lacey, a sleepy town before the war, expanded almost geometrically and by the late 1950s surpassed Tumwater as the county’s second largest city. It was also in the 1950s that Olympia assumed its present form as a capital city with a small mill or two on the shores of Budd Inlet and a flourishing, profitable seaport.

By the 1970s, Olympia, Tumwater, and Lacey had blended into an extended capital community. The cities epresented an urban fixture on the new interstate corridor between Seattle and Portland, while continuing to expand as a center of offices and homes for state employees, military personnel, and their respective families.  This further diminished the county’s already modest farm sector as housing development pushed into the remaining fertile prairies. Dairy and truck (mostly berry) farming continued in the south county, interspersed with small hobby farms.

The Washington Public Power Supply System plant at Satsop in neighboring Grays Harbor County had a marked impact on Thurston County since half of the 4,000 construction laborers not only lived in Thurston, but usually spent their paychecks there as well. The Satsop nuclear plant benefits came to an abrupt end in the early 1980s as the project was terminated. Unfortunately, that coincided with a severe national economic recession that further hobbled the county’s manufacturing sector. Even seemingly invinsible state government was hit by layoffs.

Thurston County emerged from the recession and by the late 1980s was in the midst of a commercial, office, nd residential building boom. The Olympia waterfront and downtown were revitalized, Black Hills Hospital (now Capital Medical Center) was built, and Lacey and Tumwater began a residential and office boom. As population  followed this development, public schools were built to accommodate the influx.

In recent years, Thurston County has become an educational and retail center, serving counties to the west and south. In the late 1960s and early 1970s, the state legislature approved and financed construction of The Evergreen State College on a peninsula between Budd and Eld Inlets. The four-year public institution became an economic and cultural fixture in Thurston County with faculty, staff, and students contributing to the local housing and retail sectors. The same can be said for South Puget Sound Community College and Saint Martin’s College, though on a somewhat smaller scale. The county also benefitted from the trained and skilled labor graduated by these institutions.

As with other cities across the nation, the retail business has migrated from historic downtown Olympia to shopping centers and other significant retail outlets on its periphery (the trend has abated somewhat, however, as downtown Olympia has mounted something of a retail rebound with niche stores). The county’s first mall was South Sound Center in Lacey, built in the mid-1960s. It was followed in the late 1970s by Capitol Mall and its surrounding retail corridor. More recently, Martin Village in Lacey and other smaller-scale retail centers have  further boosted the county’s retail core. In addition to capping the retail “leakage” to Pierce and King counties, Thurston County’s retail core has “exported” its goods to much of southwest Washington by attracting customers from rural parts of Thurston and nearby Lewis, Mason, and Grays Harbor counties. Thurston County’s metropolitan area has of late experienced the arrival of large retailers that market in a specific product category (e.g., electronics, home furnishings, hardware and garden, office supplies, books, etc).

After all is said and done, there remains state government. Though it is not the growth sector it was only a few years ago, it remains a vital stabilizing factor for the local economy. Notable employment growth in the county, though, has recently been driven by population migration as residential development moves south from the central Puget Sound region.

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