The Risks of the Doll Business

Part two of the story of the Lincoln, Nebraska-based Terri Lee Company, an innovative doll manufacturer in the 1940s and ’50s. Part one is here. The full story (of which this is a summary) is told in a richly-illustrated article in Nebraska History. An exhibit, The Best Dressed Doll in the World: Nebraska’s Own Terri Lee, is open through September 1, 2013 at the Nebraska History Museum.

In part one we looked at the advances the Lincoln, Nebraska-based Terri Lee Company made in the toy world both socially and commercially. But for all the company’s success it also had plenty of controversy. Family tensions, financial risks, and the occasional tragedy contribute to making the story of Terri Lee interesting as well as historically significant.

Terri Lee dolls dressed in winter outfits. NSHS 13244-18, 37

While Maxine Runci had created the idea for the dolls, after a few months she found herself left out of company decisions. Her assertive aunt Violet Gradwohl was receiving credit for the creation of the dolls, and Maxine felt betrayed. It was too late to copyright her idea. The disagreement led to a rift that divided family members for many years.

Although Maxine did not enjoy the benefits of her invention, it may have been a small comfort that she was also left out of the stress of the business. When the Terri Lee factory caught fire in 1951 and burned down, the company reportedly suffered more than $75,000 worth of damage. Violet had a nervous breakdown and was sent to the hospital.

The Terri Lee factory fire, December 15, 1951, would lead to the company's relocation from Lincoln, Nebraska, to Apple Valley, California. Photo courtesy of Lincoln Fire and Rescue.

After the fire, the Terri Lee Company had the opportunity for a bit of a fresh start. Violet decided to relocate the manufacturing to Apple Valley, California. Though the business grew in California, Violet had to fight through several  legal troubles that took up time and money. For example, a new Californian employee left the company and began producing Terri Lee look-alikes that were cheaper. Violet had to fight through a lawsuit to get the copied dolls removed from production.

Violet Gradwohl before the grand opening of the new Terri Lee factory in Apple Valley, California, in 1952. Photo courtesy Terri Lee Doll Company. NSHS RG5812-53

In 1957, Violet took out a $230,000 loan to help cover the cost of a new type of doll and an addition to the factory to make them. The huge loan later proved detrimental to finances. The company began to accumulate serious debt. Violet hired a financial advisor named Marvin James Miller, who had a criminal past that she may or may not have been aware of.

On November 12, 1958, Violet had her insurance coverage increased by nearly $30,000. Two days later, the Terri Lee factory caught fire and suffered significant damage. After an investigation, it became clear that Miller had started the fire. He was arrested, and the prosecution argued that he and Violet worked together on the arson because of the company’s many debts. Miller was sent to prison, and while Violet was not indicted, she received no money from the insurance company.

With a destroyed factory and hundreds of thousands of dollars in debt, the Terri Lee Company was essentially bankrupt. Violet tried to start reproduction of the dolls through other companies with little to no success.

The 1980s saw a renewed interest in the Terri Lee dolls. Today they are popular among collectors. Thanks to the combined  efforts of Violet’s family and a donor, the Nebraska History Museum is currently housing an exhibit called The Best Dressed Doll in the World: Nebraska’s Own Terri Lee. The exhibit will be open through September 1, 2013, and features more than 100 collectible dolls and doll items. The full article about Terri Lee appears in the Winter 2012 issue of Nebraska History. To order a copy of just this issue visit the Landmark Store, or to order a subscription click here.

- Joy Carey, Editorial Assistant

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