Barbarians at the Gate: The Fall of RJR Nabisco

“That bit of hardball brought Johnson command of a New York Stock Exchange company. Afterward he and the Merry Men toasted their victory with martinis late into the night. It had, they agreed, been a splendid coup. It wouldn’t be their last.”

The personalities and biographies of key players define the narrative of this book. In the authors’ view, individual character traits, relationships, and rivalries between key players served as important drivers for multibillion-dollar deals on Wall Street, impacting entire economies. It is for this reason that the authors spend time on the biographies of key participants, offering a close look at the personal and emotional factors that drive their decisions. The use of the word coup here—short for coup d’état, meaning a military takeover of civilian government—further emphasizes the theme of The RJR Nabisco Buyout as War.

“Part of his disaffection was due to the fact that Johnson, now moving into his late forties, was no longer the boy wonder of the mid-seventies. The idea of becoming a sedate corporate elder made him shiver. He wasn’t interested in growing older; he longed to be the enfant terrible, the eternal shit-stirring youth. Everything about him, from the still-shaggy hair to his twenty-six-year-old second wife, suggested a corporate Peter Pan. What was needed, it was clear, was a new adventure.”

The authors convincingly demonstrate that Ross Johnson’s approach to business, including major deals, was often motivated by excitement and adventure rather than business concerns. This approach was in line with his taste for luxury and corporate excess, a trait some of his colleagues considered problematic, especially as Johnson was at the center of major deals.

“But during the next decade the population was forced to question whether it wanted to smoke any cigarette. Ever since tobacco was first rolled into cigarettes, there have been people opposed to smoking. King James I of Great Britain called it ‘the lively image and pattern of hell’ and slapped an import tax on tobacco. Louis XIII of France and Czar Michael I of Russia decreed penalties for smoking ranging from death to castration. Pope Urban VIII threatened excommunication for anyone found smoking in church or on church premises. But America’s love affair with tobacco went largely unopposed until 1964, when surgeon general Luther Terry issued his landmark report linking cigarette smoke with cancer. Cigarette sales, which had risen an average of 5 percent a year, fell sharply.”

RJ Reynolds Tobacco Company was one of the key companies in the US industry in the first half of the 20th century. However, increasing concerns about the health effects of smoking negatively affected tobacco sales and forced some producers to innovate by expanding into other industries, exploring foreign markets, or creating new products such as Tyree Wilson’s “smokeless” cigarettes.