The waters of strife: paper profits have polluted the Pigeon River and sparked a war between the states.

• Author: Nelson, Luann
• Position: Tennessee and North Carolina; Champion International paper plant

In the winter sunlight, the waters of Big Creek sparkle like jewels: clear as diamonds where they hurry over smooth, clean stones, blue as aquamarines in deeper, calmer pools. Where the creek swirls around large rocks, there is a touch of white water and an eddy of pale emerald. The air smells of pine and forest soil, and there is no sound but the hush of wind in the trees and the endless rush of the water as it hastens down the mountain to meet the Pigeon River.

The journey is not far. just a few minutes' drive along a narrow road brings you out of the Great Smoky Mountains National Park to the North Carolina/Tennessee state line. Here, at CP&L's Waterville power plant, Big Creek and clean, placid Sterling Creek empty into the river.

It's an ignominious end for these two streams. The Pigeon emerges from three arched tunnels beneath the old power plant black, foamy and reeking. Where Big Creek angles into the river, the contrast is shocking: The creek is as clear as glass - until, a few feet away, it meets a river of darkness.

To the people of Canton, 35 miles upriver, this coffee-toned water is the color of money, and its heavy odor is its scent. But the people of Cocke County, Tenn., see in it the gloom of rural poverty and smell in it the stench of economic stagnation.

Standing on the Waterville bridge, west of Newport, Tenn., Gay Webb looks down at the Pigeon River and up at the forested mountains. "What you don't see is so terrible - no houses, no businesses," he says. "This is the garden spot of the world. The businesses used to be here. ... Pollution has killed the whole valley.

"I'd like to plead with business people to come and look. They cannot grasp that their peers would do something like this."

In Haywood County, where Connecticut-based Champion International employs about 1,900, people see that the river is polluted - but they believe the $250 million modernization under way at the mill will take care of it.

"I've lived here all my life," says Buck Smith, president of Local 507 of the United Paperworkers International. Two of his brothers work for Champion, as did his grandparents, father and uncles. "Up to about 15, 20 years ago, Champion didn't do nothing to help that river. Since, the company's had a different look at that river. They're trying to do something about it."

Smith himself has seen the painful impact of pollution on the Pigeon River and the people who live near it. "When I was a kid, the river got up over our cornfield, and it was dead ground. It would not grow anything for three, four years." But, he says confidently, "In the next 10 or 15 years, that river is going to be clear, I believe."

On the other side of the state line, the people of Newport view Champion's modernization with a jaundiced eye. They've had most of the century to become disenchanted. "In 1912, the year the Titanic was sunk, Champion was saying, 'Give us three years.' They were lying then, and I don't believe them now," says Webb, 56, a lifelong resident and owner of the Wilton Springs Market and Hardware.

But Champion and its regulators say that new technologies and improved efficiency will allow the company to make the river cleaner - and, indeed, that it is already cleaner than Newport residents realize.

"Our modernization program answers the age-old debate between nature and jobs," Public Affairs Director David Craft says. "We hope to illustrate that we can have both, with small sacrifices on both sides."

Champion, the state's largest private employer west of Charlotte, produces 1,600 tons a day of bleached paper and paperboard - a quarter of the nation's envelope paper and a third of the board used nationally in milk and juice cartons. Canton's 1,650-worker mill feeds other Champion plants: Its board goes to a 240-worker Waynesville plant to be coated with polyethylene. The board then goes to one of six DairyPak plants to be made into cartons and microwave trays. The subsidiary-employs some 850 and produces more than 163 million tons a year. Champion had 1989 sales of $5 billion, $4...