Extracting portions of one vector to create others

To do exactly what you asked for,
CLASS1 <- rep('0', len=length(Beth$CLASS))
because there is NO element in Beth$CLASS that is '1'.
Assuming that you did not mean ANY of the single quotes to be taken seriously,
CLASS1 <- as.integer(Beth$CLASS == 1)
Beth$CLASS == 1 will give you TRUE where Beth$CLASS has 1, FALSE elsewhere.
as.integer(Beth$CLASS == 1) will convert TRUE to 1 and FALSE to 0.
If you really want those 1s and 0x to be '1's and '0's,
as.character(as.integer(Beth$CLASS == 1))
will do the trick.  What you might find to be clearer is
CLASS2 <- ifelse(Beth$CLASS == 2, '1', '0')

For linear modelling, you are probably interested in factors rather
than strings.
To avoid confusion, you might want to avoid using '0' and '1'

Extracting portions of one vector to create others

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