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A Gun Deal’s Fatal Wound
As a landmark pact to control gun sales falls apart, Smith & Wesson takes the hit

Newsweek - Feb. 5 issue —  For more than 50 years, George Romanoff’s family has been selling Smith & Wesson products.  .357 revolvers with hardwood handles, sleek pistols forged from blue and stainless steel.

SMITH’S VAUNTED HANDGUN line was easily the biggest seller at Romanoff’s Pittsburgh-area store, Ace Sporting Goods—until last March. That’s when the 149-year-old gunmaker signed a stunning agreement with the Feds to get out from under lawsuits, promising to impose strict new rules on all its dealers. Now those who wanted to keep selling Smith guns would have to keep computerized records of every sale and store all their guns—not just Smiths—in some kind of vault. And they’d have to limit their customers to one gun every two weeks.  

Under the gun: the Smith & Wesson Model 686

“If Smith & Wesson goes under, it will be an extremely sad day for our industry.

“It’s like a nail in our coffin.”  

     GEORGE ROMANOFF - Gun Dealer

Romanoff was about to kick off a weekend sale—up to $50 off on Smith & Wesson - but he had to cancel it because his customers were furious over Smith’s surrender to the enemy. To them, the new recordkeeping alone sounded like a first step toward a police state, and Smith was the government stooge. Since then, sales of the company’s pistols have been so slow that Romanoff has slashed his inventory by a third. Now Smith & Wesson, reeling from a consumer boycott, wants him and other dealers to go along with a scaled-back version of the agreement. 

But Romanoff says there’s no way he can keep selling Smiths if he has to accept the company’s terms. Like his customers, he feels betrayed by Smith & Wesson’s sellout; at the same time, it’s as if he’s turning his back on an old friend. “If Smith & Wesson goes under, it will be an extremely sad day for our industry,” he says. “It’s like a nail in our coffin.”

The government’s celebrated pact with Smith & Wesson was supposed to bring the secretive gunmakers to their knees, much like the assault on Big Tobacco. But a year later, the deal is all but dead—and the nation’s largest handgun maker faces real questions about its survival. Analysts say its sales lag behind the rest of the struggling industry by at least 20 percent. “This is a critical time for us,” says Ken Jorgensen, Smith’s spokesman. “We need the dealers to sign this in order to go on and do business.” 

How the deal became a disaster says a lot about power in the gun world—power that the people who buy guns wield over the people who make them. The Feds were sure that other gunmakers would follow Smith’s lead, but the rest of the industry ran for cover instead. Smith & Wesson, meanwhile, ran face first into a gun lobby at the height of its power, and a gun culture hostile to change. “They entered into an agreement that was silly,” says the NRA’s Bill Powers. “Sooner or later you’ve got to pay for the mistakes of the past, and they’re paying for them.”

A shifting political landscape didn’t help. When Smith & Wesson signed the deal, the Clinton administration was threatening its own suit to force gunmakers to change their ways, and there were cries for new gun laws on Capitol Hill. It didn’t last. The gun lobby played a key role in electing George W. Bush, and its leaders expect him to oppose more restrictions. The gunmakers, meanwhile, are hoping Bush will do what he did in Texas: sign a law blocking any city from suing the industry. The gun war remains hard fought, but the momentum has shifted. 

Smith & Wesson’s nightmare began in a Hartford, Conn., hotel room with a handshake between two uncommonly tenacious men: Andrew Cuomo, Bill Clinton’s Housing secretary, and Ed Shultz, then Smith & Wesson’s CEO. More than 30 cities had sued the gun industry for the costs of violence on their streets. Cuomo had brashly stepped into the legal swamp, hoping he could be the guy to force concessions from an obstinate industry. Most gunmakers refused to negotiate. But Shultz, a plain-spoken farmer and onetime Army sergeant, figured Smith’s legal bills would soon surpass its income. His British parent company, Tomkins PLC, wanted to get Smith out of the courts so it could sell the company.

Shultz and Cuomo talked in personal terms. “I have two 5-year-olds and a 3-year-old, and I have a gun in my home,” Cuomo told Shultz. “If you can make me a safer gun, I’ll buy it.” Shultz agreed to do that—and more. The 25-page pact was so sweeping that lawyers for the cities feared until the last minute that Shultz would back out. Once Smith signed, the assumption was that other gunmakers would inevitably follow the leader. Cuomo had no plans to take the Smith deal to a judge to enforce it immediately; he’d wait for other gunmakers to sign on first.

It would prove to be a long wait. In the gun world, where any small step toward new restrictions is seen as a giant leap toward tyranny, the deal exploded like buckshot. Shultz had expected a backlash, but nothing so visceral. The NRA immediately faxed ferocious alerts to its 3 million-plus members, calling Smith a British-owned traitor to the Bill of Rights. It was an election year, and Smith & Wesson had just given the gun lobby its rallying cry. Irate customers overwhelmed the switchboard at Smith’s Springfield, Mass., headquarters and deluged Shultz with venomous e-mail.

Soon Smith was getting pounded from all sides. In a business where Smith controlled more than a quarter of an ever-shrinking handgun market, competitors couldn’t resist piling on. Brazilian-owned Taurus started giving away an NRA membership with every new gun, just to underscore its commitment to gun rights. Meanwhile, two new cities brought lawsuits against Smith & Wesson, despite pleas from the administration to leave Smith alone.

Those who tried to help Smith made matters worse. Two states, New York and Connecticut, launched antitrust investigations against the other gunmakers, accusing them of trying to run Smith out of business. Their lawyers sprayed subpoenas up and down New England’s Gun Valley, which only served to make Smith & Wesson look like a government witness in a mob case. By midsummer, Shultz had to close his plant for an extra two weeks and was planning to lay off 120 workers.

Shultz told Cuomo he’d have to kill the deal if another gunmaker didn’t sign on soon. Desperate for another ally, Cuomo set his sights on Glock, the nation’s leading supplier of cop guns. Glock’s general counsel, Paul Jannuzzo, had been in on the original negotiations but had passed on the deal at the last minute.

Now Cuomo took the extraordinary step of leaning on Glock’s foreign owner instead. He had one of his aides call the U.S. ambassador in Vienna, Kathryn Walt Hall, who’d been a major contributor to the Democratic Party. She then took a message to 72-year-old Gaston Glock—Europe’s answer to Samuel Colt. Hall told the wealthy gun baron that Cuomo wanted to see him alone: no lawyers. Glock was “polite but noncommittal,” Hall recalls. He was willing to see Cuomo, perhaps, but not until his next trip to the United States in November. For Cuomo, that was too late.

The deal came undone, and, in a sense, so did the men who negotiated it. Cuomo and the Democrats were turned out of office, in part because gun owners felt deeply threatened. Shultz, meanwhile, left Smith & Wesson in September. 

Smith still hasn’t given up on settling the lawsuits, however. With the federal deal officially abandoned by both sides, Smith has reached what it calls a “less onerous” version of the agreement, this time with the city of Boston. It’s expected to become binding in February, which means that other cities can join if they want to, and any dealer nationwide who wants to sell Smith guns will have to abide by the new terms. 

But most large dealers say they can afford to drop Smith & Wesson; the name has lost its aura in the gun world, and customers aren’t clamoring for its revolvers the way they used to. Smith & Wesson may yet reclaim its place as a proud symbol of the Old West. For now, it remains the unforgiven.

© 2001 Newsweek, Inc.



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