COLUMN ONE : A Tribe That Means Business : The Passamaquoddies built a land settlement into a conglomerate that is a university case study. Once Maine’s poorest people, their success has earned respect from whites.

PERRY, Me. —  They were, for generations, the poorest and most despised people in Maine, a tribe of perceived losers dismissed by whites as slothful and devious. Alcohol had stolen their souls, and squalid living conditions, their dignity, and what the Passamaquoddy Indians had come to understand over many years was that only by failing could they hope to survive.

Failure was what the government rewarded. If you were poor and stayed poor, if you were diseased, drug-ridden and shamefully housed, the governments in Washington and Augusta, Me., provided your needs, from food to firewood. Escape these bonds of poverty and you were on your own, and in a state where American Indians couldn’t sit in a white man’s barber chair or vote in a congressional election until 1957, though they had served in every war since the American Revolution, that was an unnerving notion.

There were a good many in the tribe who did well, of course--men such as Ralph Dana, who set up a successful trucking company; Joe Nicholas, who received an honorary doctorate from the University of Maine for his efforts to save the Passamaquoddy culture; Francis Nicholas, who served in the Korean and Vietnam wars and came home with a chest full of medals. But exceptions were not the standard against which the whole was judged, and those who called themselves “the people of the dawn” were reminded time and again that they dwelled in a darkening twilight, foreigners on their own shore.

“The day I reported to Ft. Campbell, Ky., in 1950, for paratroop training,” Francis Nicholas recalled, “the sergeant comes out and says: ‘OK, I want two lines. Whites over here. Coloreds over there.’ I didn’t move and pretty soon it’s just me, standing in a group of one. The sergeant looks at me and yells: ‘What the hell are you?’ I said: ‘Indian. Passamaquoddy.’ ”

The sergeant gave him a blank stare and put him with the whites.

For Nicholas, who is now 64 and the manager of a profitable blueberry farm owned by tribe members, the sting is gone from such indignities because so much has changed in the past decade.

Suddenly his tribe is a conglomerate, one of Maine’s largest. It has money to invest. It creates jobs. It secures multimillion-dollar bank loans. And as the Indians’ economic clout grows, the discrimination they encounter diminishes. No longer do passing whites seem to look through them, rather than at them, as though the Indians were but transparencies. Now the whites come courting.

When Passamaquoddy leaders toured a cement factory in Thomaston, Me., that the tribe had purchased after winning $40 million in a land-claim suit against Maine, John Stevens was dumbfounded at the social implications. “So many people working for us, calling us ‘sir,’ ” he said. “It was overwhelming.”

Wall Street investment firms solicited Passamaquoddy business, wining and dining tribal officials at elegant restaurants in New York. “They kept feeding me caviar, and I hate caviar,” Tim Love remembered.

The Passamaquoddy tribe numbers only 2,700 people, most of whom live on two reservations: Pleasant Point, here on Maine’s northeastern coast, near the Canadian border, and Indian Township, 40 miles north. In Francis Nicholas’ youth, the communities would have been thought shocking even by Third World standards.

The shacks, lit by kerosene lamps and insulated with bark, shook in the winter winds, and almost everyone knew of a neighbor who had died of frostbite. The residents’ life expectancy was 47 years, employment was an oddity and almost no one completed high school, let alone went on to college.

Then in 1972, the Passamaquoddies and another small tribe, the Penobscots, sued Maine, seeking $25 billion in damages and the return of 12.5 million acres--two-thirds of the state--that, they said, had been taken from them in violation of a 1790 treaty. Eight years later, after intervention by the Jimmy Carter Administration, a settlement was reached with each tribe receiving just over $40 million. What the Passamaquoddies did with their share is now a case study at the Harvard Business School.

“Our basic philosophy has been to find things that work, rather than taking the risk of starting up new businesses,” said Tom Tureen, the (non-Indian) Portland, Me., attorney who represented the tribes in their lawsuit and oversees the Passamaquoddy investments. “One of the notions we developed in terms of approach was that for the Indians to break the cycle of dependency and create meaningful employment, on a significant scale, they had to have two things: first, enough of a presence so they’d hear about opportunities, in other words, be part of the deal flow. Second, access to capital, which means having credibility with financial institutions so they can finance good opportunities.

“All of which is to say that the Indians need the same things everyone else needs to develop on a self-sustaining basis.”

Rather than investing on the reservation or dispensing the windfall, as have some tribes, the Passamaquoddies put $13 million in a U.S. government-managed trust fund, then went looking for long-term opportunities throughout Maine.

Their first major acquisition, in 1981, was the blueberry farm in Columbia Falls that Francis Nicholas manages. They made back their $2.2-million investment in three years. In 1983, they bought New England’s largest cement factory, a money-losing facility in Thomaston. They trimmed the staff, repaired the facility, started making a profit and sold the plant five years later for a $60-million gain.

In Calais, just across the St. Croix River from Canada, the tribe has proposed a casino that is now awaiting final City Council approval. It would employ more than 200 people. In many of their ventures, the Passamaquoddies have employed as many non-Indians as Indians.

“You can’t legislate love, but I think the influence our money generates has done a lot to lessen discrimination,” said Ralph Dana, 69, whose trucking firm is the largest privately owned Indian business in Maine. “My children intermingle with non-Indians much more easily than my generation did. You get the feeling that people who used to ignore us are now saying: ‘Maybe we ought to be talking to these Indians. They have jobs.’ ”

By investing throughout Maine, the Passamaquoddies have earned a reputation as smart deal-makers whose impact on the economically depressed state is significant. In the process, they have gained the access and credibility in state financial circles that Tureen had deemed essential--and the effects of their most promising venture have yet to be felt.

The tribe owns the rights to a potentially revolutionary technology developed at the cement plant in Thomaston. The “recovery scrubber,” as it is known, combines and recycles waste material and gases from a manufacturing plant so they can be used again. It also cuts waste emissions of sulfur dioxide--one of the gases that causes acid rain--by as much as 90%. Conventional scrubbing systems are less effective because they require the purchase and introduction of a scrubbing agent and release a sludge that has to go to landfill.

The pollution-control scrubber, which a senior U.S. Department of Energy official has called “creative and innovative,” would cost more than $15 million for most installations and could be lucrative for the owners, who have founded a company, Passamaquoddy Technology, to commercialize it. Tureen describes the process--scrubbing for a profit and cleaner air--as a mixture of Indian environmentalism and Yankee frugality.

From all this, one might assume that the tribe has had an easy time moving into the state’s economic and social mainstream. They haven’t.

Some businesses have failed--including one that was to have built foam-insulated homes--and, although 77 Passamaquoddy youths now attend college, the scourges of unemployment, alcoholism and generational welfare still grip many on this reservation of tidy homes and clean streets. Additionally, large sums have been misspent by the Indians’ tribal council.

“I don’t think it’s been stolen,” said Pleasant Point’s new governor, Cliv Dore. “It’s just that it’s been spent without purpose, funding runaway government.” In many conversations one hears the expectation of inevitable defeat, as though 150 years of dependence had drained from people the ability to celebrate the successes of the past decade.

“There’s still a real problem with self-esteem,” said Chris Altvater, the counselor at the reservation grade school. “You ask students what they think of themselves and they’ll tell you: ‘I’m not very good.’ Not a lot say that, but enough to make you concerned. We have kids drop out of school, and you can see them going right back into the cycle of welfare and alcoholism.

“On the other hand, more and more kids I talk to are thinking long term, talking about careers or what they want to do with their lives. Some want to go into medicine. I had a student the other day tell me he wanted to be an actor. That’s basically unheard of. No one ever thought of professions like that being open to them.”

Perhaps the biggest change wrought by the tribe’s transition into the capitalistic system is that the Passamaquoddies and the general population are no longer adversaries. The tribe’s vested interest in remaining poor has been challenged.

James Sapiel, assistant manager of the reservation supermarket, puts it this way: “You feel better about yourself when you’re making it on your own. You work, you cash a paycheck, no matter how small. That’s a good feeling.”

Tribe Takes Control

The Passamaquoddy tribe of Maine has turned its share of a government settlement into a conglomerate. Among the ventures: a blueberry farm in Columbia Falls and a casino in Calais.