December 06, 1982 12:00 PM

It was a wild and woolly beginning. They were young and married and living in Iceland. He was a former U.S. Navy lieutenant commander, she a 20th-generation Icelander. Together Tom and Hanna Holton decided to start their own hand-knit sweater company. They set up shop in their tiny apartment in Reykjavik. “There was wool everywhere,” recalls Hanna, 49. “It suffocated us. It was in the coffee, in the tea, in the milk. It even floated on top of the food. We had to work in the dining room, and the cash register was a drawer in our bedroom.”

Today Hilda Ltd. (named after an aunt of Tom’s) has blossomed into a highly sophisticated cottage industry that brings in close to $7 million a year. Converts to their toasty wool jackets, coats, ponchos and traditional handmade sweaters can be found in 25 countries around the world. In the U.S., Jack Lemmon and Jack Nicklaus have sported Hilda’s woollies. Recently the ample director of the Opera Company of Boston, Sarah Caldwell, had a sweater hand-knit for herself. And on a trip to Bermuda earlier this year, Marie Osmond stocked up on nearly $1,500 worth of Hilda-wear.

Holton pitched his promising naval career overboard after a trip to Reykjavik in 1962. On a short spin into the countryside, he spotted a herd of sheep scattered across the bumpy lunar landscape. “I saw those goofy-looking sheep with long, long hair in all those earth colors,” relates Holton, 49. “And I saw everyone—farmers, fishermen, children—wearing beautiful hand-knit sweaters. I put two and two together and said, ‘Hey, this is what I want to do.’ ”

Easier said than done. At first the natives were doubtful that the rest of the world would wear their sweaters. “It is an island mentality,” Tom explains. “Icelanders are terribly proud, self-sufficient and a little leery about outsiders.” The Holtons also encountered stiff resistance from more established companies exporting mainly raw wool. A further problem was training the knitters recruited from remote villages. “Sizing was terrible,” remembers Hanna. “We had to try on every sweater for fit, and Tom ended up with a raw stripe on his forehead from pulling so many on and off.” Holton adds, “Those were tough, tough times with terrible disappointments. We talked about quitting. But Hanna always said, ‘Let’s give it one more try.’ ”

Reykjavik is a long way from Holton’s hometown, Yuba City, Calif. During the Korean War, when he was a college freshman, Holton joined the Naval Reserve program. He graduated from San Jose State three years later with a degree in business administration and was quickly appointed chief engineer of the U.S.S. Hamilton County. Holton met Hanna Johannsdottir on the slopes of Lake Tahoe, Nev. in 1956. “I was going with three other girls,” he reports, “but when I met Hanna that finished the whole thing.” The daughter of a master netmaker, Hanna had dreamed of living in America, and in 1954 went to work as a nanny for a San Francisco family. “My mother never thought she would see me again,” says Hanna. “I was 20, and I wanted to go. To her it was as if I was lost.” She and Tom married in 1957 and were based in California and Maryland until they moved to Iceland five years later.

In Reykjavik, the Holtons put in long days at their 11-room company headquarters, which looks out over the city’s red, green and blue roofs toward the harbor. To relax, they play golf or swim in the city’s gigantic outdoor pool, which is fed by thermal hot springs.

Although he speaks the native tongue fluently, a little bit of California still creeps into Holton’s voice. Now he spells his name Tomas, not Thomas, and is at peace with his decision to become an Icelandic citizen. “People think this is a big iceberg up here,” he observes, “but it’s really one of the best-kept secrets of the world.” Thanks to Hilda Ltd., the secret is a little less safe than it used to be.

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