(FORTUNE Magazine) – In the weathered redbrick mills of Crane & Co. in Dalton, Massachusetts, cotton pulp flows like watery scrambled eggs through tiled vats on its way to becoming fine stationery and paper so durable the currency of the U.S. is printed on it. Since 1801, Crane's 100% cotton rag paper has offered a combination of strength, durability, and surface texture that is unsurpassed by other mass-produced papers. Crane letterhead is used in the White House, and supplied to Tiffany & Co. where it is sold as their stationery. The company makes and sells tracing paper for engineers and architects, the paper for passports, and the high-tech glass-fiber paper used in materials such as formica. Crane is also the U.S. Mint's sole supplier of currency paper. Last year the privately owned firm had revenues just over $100 million. The company has had some advantages in its effort to preserve the competitiveness of its products over its long history. Seven generations of Crane family ownership have provided a consistent management philosophy -- one that vigorously pursues quality. A strong work ethic endures in the western part of Massachusetts, and Crane reinforces it with a generous profit-sharing program that distributes 25% of pretax profits to the employees. Many of the 730 workers are third- or fourth-generation employees of the company. Excellence takes effort. Unlike most makers of rag paper, Crane controls the manufacturing process from the purchase of raw materials to the final engraving. The company buys two kinds of cotton: raw cotton from Texas and California, where the best is grown, and cutting scraps from men's underwear, also among the softest and finest weavable cotton. Why cotton? Says Wayne Cronnell, director of quality control: ''It is a long, clean, stable fiber that produces an extremely durable sheet of paper.'' The papermaking machinery is imported from West Germany or made by two local companies, Sandy Hill and the Jones division of Beloit. ''We buy the Mercedes of the industry when we buy equipment,'' says Tom Sedgwick, superintendent of the stationery division. Only the finest water-soluble pigments are used for the inks and dyes. Finishing touches are done by hand. When it comes to painting the borders of the cards and stationery, 12 women workers gently spread out a stack of papers, making sure an even width of border shows on all the sheets before sponging on the ink. Says Sedgwick: ''You try and find me a machine to do this. Nothing can match the accuracy of the human hand and eye.''