Financial Foibles in the Sapphire Country
In 1905, when businessman J.C. Burrowes signed a 10-year agreement to lease the Toxaway Company properties in the Sapphire Country, he could not have realized quite what he was undertaking.
Road repairs were frequent, especially after rain…
Some estimates claim that at the height of the summer season, the Toxaway Inn alone often cleared more than $2000 a day (approximately $52,000 in today’s dollars).[1] So Burrowes should have been sitting on a pile of money, right? Well, yes and no.
Despite expensive additions paid for by the Toxaway Company, such as heat and steam systems to entice winter guests to stay in colder weather, these resorts were mainly still a seasonal enterprise – which limited opportunities for profit to a set timeframe.
Also, each of the properties and estate involved a lot of moving parts, all of which cost money.
First, there was the matter of rent – to the tune of $30,000 annually. Then there was the considerable upkeep and supplies to keep each resort presentable, well-staffed, and well-stocked. The large estate surrounding the resorts, and the roads and rails bringing guests, also needed regular maintenance.
Add to that the very real costs of promoting the area, particularly in expensive Northern markets, and it becomes clear that without strict oversight, expenses could easily outdistance profits.
No surprise, then, that just two years into the agreement, Burrowes was forced by financial difficulty — not to mention vocal, angry local suppliers calling for bankruptcy proceedings — to surrender all of the resort management leases back to the Toxaway Company, as his own business entity (the Toxaway Hotel Company) slid into receivership.
As these legal issues began in spring, the Toxaway Company was able to quickly negotiate leases for the season to come with other entities. The Toxaway Inn and the Franklin Inn were each leased to J.L. Alexander, formerly with the Battery Park Inn of Asheville and other regional hotels. The Fairfield Inn was leased to Richard Jennings, son of E.H. Jennings, the largest stockholder of the Toxaway Company. Mrs. Crisp maintained the management of the Lodge at Mt. Toxaway and the Sapphire cottages.
Lady and gentlemen hikers of the era (can you imagine getting out in rocky terrain in those getups today?!). Photos courtesy of NC State Archives, Frank W. Bicknell Photograph Collection.
Fortunately for the Toxaway Company, the 1907 season went off without a hitch, including plans for a particularly remarked-upon Independence Day celebration at the Toxaway Inn, at right. [2]
Meanwhile, Burrowes and the Toxaway Hotel Company endured a blast of legal summons and warrants throughout the summer. There were numerous outstanding claims from local entities for work performed, as well as goods received, without payment.
It was noted that “the tangible assets of the company consisted of stores at both Lake Toxaway and Sapphire, as well as a considerable number of cattle and open accounts.”[3]
Some repayment efforts came from asset sales such as four mules and three two-horse wagons, as reported in the auction notice below.[4]
However, by August, in a complicated contest where the Toxaway Hotel Company argued that it could not be forced into involuntary bankruptcy due to its status as a “hotel keeper,” a judge ruled that the company’s engagement in other activities such as the sale of merchandise, saloon keeping, boat hiring, and blacksmithing, did, in fact, prevent its protection from bankruptcy filings. [5] (The company appealed, with deliberations continuing in court for several more years; the decision was eventually overturned in 1910, releasing Burrowes from indemnification.)
Meanwhile, with the Toxaway Company back in control, and despite some leases changing hands year to year, the usual activity went on for the next several seasons at the resorts, including an array of social events and an increasingly large number of weddings and honeymoons.
Wedding reception circa early 1900s.
Excursion trips and conventions continued as well, among them the North Carolina Pharmaceutical Association, the American Library Association, the Associated Press’ southern division of reporters, and the South Carolina Cotton Manufacturers Association.
It wasn’t until the spring of 1910 that the first hint of potential new financial unrest surfaced, through a seemingly-innocuous report that Benjamin Duke (brother to J.B. Duke, president of the American Tobacco Company) was building a summer home in the Toxaway area.
But soon after a visit to the area by the brothers, a rumor began floating that the Dukes were “buying Toxaway.” [6] It was said that the brothers were interested in developing waterpower for electrical development to complement their existing investments in the Piedmont; the Sapphire Country resorts would be part of the deal but continue to operate as before.
While it seemed to be generally known that these ‘option to sell’ discussions were underway, apparently the two entities could not come to an agreement prior to the expiration of the option. In May, the Toxaway Company—owing some $272,000 in bond debt ($7.3M in today’s dollars), much of it to the Dukes—went into receivership. At that point, it was widely assumed that when the details were finalized, the Dukes would end up owning the Toxaway property.
Instead, in a surprise move, E.H. Jennings and several other Toxaway Company stockholders agreed to “deposit with the court the full amount due on the principal of the bonds, together with interest on the same, insisting that such action on their part will put the complainant [the Dukes] in a position where he would be without interest in the subject matter of the litigation.” [7]
A few legal skirmishes remained ongoing between the two groups, but eventually the Dukes were removed from the ownership equation.
So it seemed that the Sapphire Country resorts would be on solid operational ground again for the foreseeable future – and for the next five years, this was mostly the case. But then came something entirely unforeseeable: a series of heavy rains in the summer of 1916, and the great flooding that followed.
