The Real Tragedy:
A paradigmatic example is Pacific Lumber, a California company that in the 1980s owned most of the old-growth redwoods still in private hands. Pacific Lumber was unusual. Its chief executive was a lifelong timberman named A. S. Murphy who believed in harvesting no more than the forests could replace. “Their approach,” wrote David Harris in The Last Stand, “was to treat the forest as capital and try to live off the interest.”Jonathan Rowe/Guernica
This virtue did not go unpunished. Pacific’s self-discipline meant its forests were ripe for less conscientious plucking. Its clean balance sheet—Murphy believed in pay-as-you-go—left plenty of room for a raider to load up the company with debt. And this is exactly what happened.
During the leveraged buyout boom of the 1980s, a corporate chief by the name of Charles Hurwitz teamed up with Michael Milken and Ivan Boesky, two of the more infamous financiers of the era, to take over Pacific Lumber. They mortgaged the company to the hilt to finance the purchase. Then, in order to pay off the debt, Hurwitz began liquidating the forests Murphy had conserved. Finance trumped husbandry
Financiers.
