Okay the owner of the website I manage now had a website with the same content started in 2001. Because he split with the partners, he let the website lapse. Now it has no owner.
However, it is a juicy PR 2 with lots of lovely back links that are relevant to the new site, because it was the exact same industry. It is our material, how can I harvest this beautiful domain's background and integrate it with our newer one. Is it a 301 redirect? Or is there a more effective method? My current website PR is 0 and is 3 years old.
Yes, the 301 redirect is the right approach. However, grab that domain name NOW - the longer it lies without an owner the more likely it is that Google will not send any value at all through a 301.
If you own the rights to the previous content, then I would suggest serving that content again for a while. Also set up a WMT account for the domain to verify your company as the official owner.
Then, after a few months, you can do the redirect. Also, check for internal backlinks and when you do redirect in the future, send those internal pages to the most appropriate internal page on your current site.