DALTON, GA. -- Back in the 1950s, Shaheen Shaheen had the choice of opening an Edsel dealership or following his Palestinian father into the carpet business. He made the right call.

Today, Shaheen has turned over the reins of his thriving company, World Carpets, to his 33-year-old son John, who runs it from a modern office high atop a hill near downtown Dalton.

Smith Foster, a lanky 54-year-old who grew up on a farm on the east side of town and now owns a number of carpet operations, is probably one of the richest men in a town with a disproportionate share of millionaires. Two sons and a daughter have followed him into the business.

Sitting recently in the Holiday Inn dining room in Dalton, where he frequently has predawn business breakfasts, he talked about his first carpet job -- "weighing up goods" for 75 cents an hour. "Give me your dirtiest job," he told a supervisor. "It'll still seem like a vacation compared to the farm."

The Shaheens and the Fosters are what makes Dalton tick: families that learn and pass the business down through generations and succeed by dint of a determined entrepreneurial spirit. In Dalton, few attributes seem more highly prized than innovation and hard work.

To be sure, Dalton also has its share of small-town social ills and problems. {See related story, Page H5.}

"It's a town of haves and have-nots," said Mary Thelma Norris, director of a day care center in a rundown part of Dalton. Noted Jeffery H. White, a former resident of Riverside, Calif., who is Dalton's only black physician: "You're dealing with a unique situation. The carpet industry ... is a big, nonunionized industry that results in a stratification of society into either very rich or very poor."

Tom Deaton, a Dalton Junior College professor who is writing a history of the business, calls the bootstrap entrepreneurs and the carpet industry itself "the modern personification of the Horatio Alger story -- literally rags to riches."

As the story goes, seeds for their industry were planted in 1895 when a 12-year-old named Catherine Evans copied an old, tufted pre-Civil War bedspread that she had seen at a cousin's house. She used a long, big-eyed needle to pull yarn through material in a pattern, then cut each stitch in the middle, leaving the spread covered with small tufts.

She then boiled the fabric, causing it to shrink and bind the yarn, and hung it on the line. The breeze caused the yarn to fluff up.

A few years later, she made another spread as a wedding gift for her sister-in-law. A woman who saw and admired the gift asked her to make one, and Evans thus sold her first bedspread -- for $2.50.

Soon orders were solicited from Midwest and East Coast department stores, and Evans and her neighbors developed a thriving business in what came to be known as "chenille" -- French for "caterpillar" -- spreads.

By the 1920s, increased demand had prompted expansion. "Haulers" would fill their Model T Fords with sheeting and yarn and drive through the area to find people to do the stitching, often for as little as a nickel a spread. The haulers brought completed spreads back to Dalton, where they were laundered, packed and shipped from "spread houses."

Particularly popular were spreads with a peacock motif that were sold along old Highway 41 in Dalton. The route came to be known as Peacock Alley, and tourists can still see an occasional peacock spread for sale and billowing in the warm Georgia breeze outside a store.

During the Depression, President Franklin Delano Roosevelt's New Deal spelled change for this "cabin craft." Under the National Recovery Act, workers had to be paid by the hour, so bedspread makers had to figure out how to bring workers under one roof and mechanize the operation to make it more economical.

Tufting machines -- first with one needle, then two, then four and more -- gave rise to spread factories, which also produced bath mats and robes. During World War II, these operations were converted to make parachute covers and knapsacks.

When peace returned, the multineedle machines were put to use making carpeting. As the business boomed in the 1960s, even old chicken houses were converted into carpet plants.

Today's sophisticated machines have as many as 2,000 needles, and a big facility like WestPoint Pepperell's Springdale plant can produce 300,000 square yards of carpeting a day, according to William C. "Chelsea" Bartenfeld, 67, senior vice president of the company's carpet and rug division.

Bartenfeld has nearly 48 years with WestPoint, and his position today is a far cry from his first job -- rubbing grease spots out of bedspreads for 39 cents an hour, back before carpets put Dalton on the map.