_FINANCING THE MILLS (Continued)_
An eminently successful mill president in Augusta was full of pessimism
toward all the problems broached to him, but three characteristic
sentences as to the capacity of Southern cotton manufacturers for
financial administration fit the case of too many mill officials,
undoubtedly:
"The people of the South have got no business sense; I am a Southern man,
and I say that. Back yonder before the war what money they had was in land
and niggers. They knew nothing about financial management on close
make-or-lose propositions." This judgment is borne out by that of one of
the foremost newspaper editors of the South, who is also a large investor
in cotton factories, who said: "The history of the industry abundantly
vindicated what Edward Atkinson said about the South not knowing the
difference between a penny and a nickel. None of the projectors, with the
exception of H. P. Hammett and a few like him, could carry to the mills
more than a general business and executive capacity." Because of
prosperous conditions, he said, most of them made money in their ventures,
despite their lack of business experience, but he added "... when
depression came, when it was necessary to discriminate between a penny and
a nickel, the mill went to blazes. It was the exceptional man who could
endure the test of the penny rather than the nickel."
Similarly, a Charlestonian who had just returned to the city after
attending the reorganization of one of the most famous mills in the South,
in which he is a heavy investor, was moved to declare: "Mismanagement and
incompetency (the Southern people are the poorest business men in the
world with a few exceptions) ... are responsible for most failures."
Mr. August Kohn, in Columbia, who is himself a broker and the historian of
the South Carolina mills, while recognizing the fact of these shortcomings
in Southerners, as obtaining in the past and yet not overcome, held out a
more hopeful view for the future: "Lack of capital and lack of trained
management have been the great difficulties where mills have failed. We
are developing management of the trained sort in experience and in the
improvement in the business tone of our people."[343]
With this introduction, it is convenient under the general topic of
financial administration, to dispose of several random points at the
outset of the chapter.
Until the outbreak of the European war, two great cotton mill combinations
in North and South Carolina, were those controlled by Mr. James W. Cannon,
and centering about Concord and Kannapolis, North Carolina, and that of
the late Mr. Lewis W. Parker, with principal offices at Greenville, South
Carolina. The former consists of thirteen plants, and the latter, which is
no longer in existence, once numbered as many as sixteen mills. These
combinations were financed on opposite plans. A gentleman trained by Mr.
Parker, and at one time in a leading position in the management of the
mills in the Parker Merger, so called, explained that "... Lewis Parker in
his merger thought that amalgamation would reduce over-head expense; that
he could get cheaper money and cheaper supplies by buying in quantities."
He "... was offered immense sums of money at 3 per cent. when his merger
went together, although before he had never gotten money at least than 5
per cent. for the individual mills."
In distinction from this plan, the Cannon mills have not been constituted
into a merger in the same sense, though they are all under the presidency
of Mr. Cannon, who said: "The management of each of the ... mills is
distinct, though there are practically the same stockholders in all the
mills. Lewis Parker had a merger, and tried to run it all from one office.
my view is that each mill must have its own management and separate
attention to secure success." He admitted that "There is not much saving
on concentration where each corporation is a separate organization. Each
mill has its own directors. Each mill must stand on its own financial
strength. In many instances where the quantity is large, supplies are
purchased for all the mills together, but where the quantity is less,
this is not done."[344]
These two plans are brought nearer together, however, by Dr. Beattie's
opinion that in practice Dr. Parker's idea of the saving to be derived
from the merger would not work out, from the fact that all officers and
higher employees of the combination would want increased pay for
additional work, and not in proportion to the extra labor and
responsibility imposed.[345] To this is to be added the caution that Mr.
Cannon probably does, in borrowing and in administration generally,
accomplish many economies not indicated in his statement.
An editor said that there was no "graft" particularly in the promoting of
the mills; that the minutest details of an enterprise were watched by the
people of the community. This tends to be a confirmation of the view the
writer brought to take of the development of the industry in the South,
that it was to a larger extent the child of the public initiative and
concern than most economic movements.
Mr. Thompson says that "The North Carolina mills have been almost
invariably managed honestly in the interest of all the
stockholders."[347] This is true of the entire South. There have, however,
been two instances of fraud, one chargeable to Northern selling agents,
but the other, unhappily, though also inexplicably, the result of
wrong-doing on the part of a Southern man who had drawn together a number
of mills. The former case was one in which a New York commission firm
which had taken the president of a successful plant under its patronage,
and placed him at the head of a mill in which the firm was sinking large
sums, was angered at his effective attempts to free the second mill from
the influence of the selling agents, and sought vengeance by ruining the
original mill of which he was president. In the second instance, it is
said, the president of the merger, during years in which his associates
and the general public had every confidence in him, had been owing,
unknown to a soul, $400,000 to the holding company and to the constituent
mills. When there was a directors' meeting of the holding company, the
constituent mills would appear to be the ones involved, and when the
several companies met, the sum seemed due to the general company. One of
his intimate co-workers stated that "His failure shook this whole section,
not only in a business way, but in a moral way."[348] And of both
incidents, it was believed by another that to them was attributable a loss
of interest by the Southern communities in mill building.
The depression following the panic of 1873 gave trouble to most of the
cotton mills established in the years before the period of the industrial
revival. During the hard times, for instance, some of those who had gone
into Colonel Hammett's enterprise for the Piedmont Factory declined to pay
their subscriptions. For the three months during which the machinery was
being installed, the only pay the workmen got was credit for groceries at
a small store in Greenville, two officers of the company giving their
individual note of $500 as guarantee.[349] Colonel Hammett drew upon every
resource of business and personal friendship to tide the venture over from
1873 to 1876.[350] He went so far as to mortgage his horses and carriage
to buy the belting for the plant.[351]
In some of the mills, the treasurer has the largest part in financial
administration. In such cases he is frequently a younger man, a product of
the newer South, who has pushed his way up in the enterprise to the
position of real power, leaving the president, who is perhaps a man better
equipped in community esteem than in specific training, as nominal head of
the concern. This has happened at Gastonia, North Carolina, a particularly
progressive spinning place. But in most of the companies, especially the
smaller concerns, the president is in chief control of financial affairs.
He often stamps his personality deeply on every department of the business
of the mill and village and region even. A case in point is that of Mr.
Charles Estes, when interviewed 98 years old, and for twenty years before
his retirement in 1901, president of the John P. King Manufacturing
Company, Augusta. With some show of pride, he related how during his
active career the manager of the R. G. Dunn commercial agency in Augusta
one day called him into the office and let him see the report of the King
Mill. It read: "John P. King Mfg. Co. Capital Stock $1,000,000. 3 per
cent. semi-annual dividends. President calls directors together once in
six months and tells them what he has done." "And that was the way I ran
the mill," he declared.[352]
The Salisbury, N.C., Mill has a singular plan. Financial administration is
concentrated in the hands of a finance committee composed of the
president, treasurer and agent, or manager. The directors do about as the
finance committee indicates; they hold a less important place because of
the ill health of several of their number. Though nominally the whole
finance committee passes on questions, the president does not attend
regularly, and one of the directors not on the committee always agrees in
the action of the smaller group.[353]
The effect of strong personality in a promoter and of the business
reputation of his enterprise upon impressionable Southern communities has
been mentioned in a previous report. This came out clearly in the ease
with which money could be borrowed. It was said by an old gentleman who
knew Colonel Hammett in South Carolina very well that "The few capitalists
we had then (we didn't have many) just came to his assistance whenever he
asked them."[354] With respect to certain wholesale merchants of New
York, Philadelphia and Boston, the writer was made to believe that they
have so much confidence in a particular North Carolina manufacturer, that
they give him any amount of capital he needs.[355] Mention has already
been made in another connection, of the fact that Mr. Parker was offered
large sums of money at 3 instead of 5 per cent. when he broached his
merger successfully. The recent depression of the famous Graniteville
mill, one of the first in the South, was accounted for by the statement
that everybody was ready to lend money to Graniteville as an old and
reliable mill, and never thought of requiring it back, until all at once
all the lenders wanted their money, and this fortuitous trend made
reorganization necessary.[356]
During the war the old Augusta Factory was sold into new hands at,
ostensibly, $200,000. The new company capitalized the plant at $600,000,
about what it was worth. It must have been a device to lend financial
prestige to the mill that Governor Jenkins of Georgia was given $100,000
stock for his influence as a director. He did nothing to earn this, was
the writer's assurance.[357]
Perhaps it was to facilitate financial management of his mill that William
C. Sibley preferred New York and Cincinnati subscriptions to large blocks
of stock, to local subscriptions in smaller amounts, when soliciting
backing for the Sibley Mill at Augusta.[358]
Turning now from the subject of financial administration of the mills to
that of profits; it is not clear that gratifying earnings were usually due
to good management; it is, however, true that poor profits or no profits
were due oftener than otherwise to faulty executive control. It is meant
by this to indicate that the industry in the South has shown itself, on
the side of profitableness, singularly responsive to the material
condition of the section, and to the state and trend of public opinion.
The degree of success of the mills has displayed the fundamental fact that
the South has in the past forty years been above all else in a process of
growth, and has given fresh proof of the intimate connection between the
fortunes of the companies and the changes in the whole section--economic,
mental and spiritual. The profits of the mills have constituted a good
barometer to the evolution of the South since Reconstruction. Graphically
represented, the earnings of the plants would exhibit a curve of decided
aspect. It is sought by specific references to make this curve appear, and
afterwards to sum up the results with several reasons therefore.
Tompkins, by many believed to have been the best authority on cotton
manufacturing in the South, wrote: "It has been abundantly proved by
experience in the Carolinas that cotton mills on every class of goods
manufactured there, can make a profit of 10 to 30 per cent. This has been
done by the smallest as well as the largest mills on the coarsest and the
finest yarns, single as well as twisted; and on the heaviest as well as
the lightest weight cloths; and on dyed and undyed yarns and cloths. The
variation in profit between 10 and 30 per cent. is caused by variation in
prices of cotton and of manufactured goods, and also by variation in
management."
In another passage he has said: "From the experience of the best mills
that have been running in the South for twenty years and over, and which
have always been kept well up to date, it would appear that about 15 per
cent. is the average annual profit in clear money for the whole
time."[359]
The writer was given the opinion by Mr. Thackston of Greenville, South
Carolina, in whose knowledge and judgment great reliance is put, that for
the last ten years the average earnings for well-managed Southern mills
have been $2.50 per spindle, which, reckoning the average cost of the
plants at $20 to the spindle (leaving aside other capital invested) is a
profit of 12.25 per cent.[360]
A banker of Winston-Salem, which is an industrial community, could not
understand how the Southern mills succeeded "as well as they have." When
there were mentioned to him several mills which have been consistently
profitable, he found special advantages accountable for their favorable
showing. In one case it was tidewater freight rates, in another skilful
cotton buying by a manager of long experience. It was his belief that the
average profits of Southern mills from 1880 to 1914 (omitting, that is,
the years since the outbreak of the war) were not as much as 10 per
cent.[361]
So much for the gains over the whole period. The earnings at several
points in the development of the industry show a wider range.
A nephew of Mr. Tompkins, quoted above, who has succeeded in considerable
measure to his uncle's manufacturing interests, and who is of too
practical a turn of mind to be affected by the enchantment of distance,
speaking of the success of mills right at the opening of the era, said
that some made from 30 to 70 per cent. profit.[362] In a previous chapter,
it has been seen how many mills at this juncture increased their plants
from earnings. A Utopian tinge may be suspected in an article appearing in
The Daily Constitution, Atlanta, in March of 1880, which, in urging upon
Southern communities the establishment of spinning mills, stated: "At
prevailing prices there is nearly or quite six cents per pound profit over
all expenses in spinning No. 14 yarn, or three cents per spindle per day;
this would give $9 per spindle per year, and as spinning mills can be
built for less than $18 per spindle, no other figures are required to
demonstrate the statement that the spinning mills in the South bid fair to
realize this year fifty per cent. on the capital invested. Nearly all of
these mills are running night and day, and every one of them is realizing
handsome profits. These are facts."[363] The goods of the Wesson Cotton
Mills, Mississippi, took a premium at the Centennial Exhibition in
Philadelphia in 1876. The company started with one mill and a capital of
$300,000. This plant made 30 per cent. profits, so another was built and
the stock increased to $1,000,000.[364] A North Carolina newspaper trying
to encourage cotton manufacturing in that State, stated in 1880 that upon
the $2,288,000 invested in the mills in South Carolina, the profits ranged
from 18 to 25 per cent.[365] The Boston Journal of Commerce in 1881 gave
the opinion of an Englishman visiting the Eagle and Phoenix Mills,
Columbus, Georgia, that the No. 3 Mill, then new, was the best equipped in
the world, and said that "The profit of these mills last year was 20 per
cent. on a capital of $1,250,000 or $5.76 per spindle."[366]
Saffold Berney, in his Handbook of Alabama, published in 1878, made a
rather elaborate computation of the earning capacity of a 4,000-spindle,
125-loom mill, making 6,000 yards of cloth per day.[367] It may not be
uninteresting to see how he worked out a considerable rate of profit for a
small plant. His calculations are:
3,000 yds. 7-8 shirting at 6 cents $ 180.00
3,000 yds. 4-4 sheeting " 7 " 210.00
--------
Total gross income $ 390.00
Cotton on a basis of 10 1-2 cents,
15 per cent. waste $220.94
Labor and mill expenses 63.44
Office and general expenses 9.62
Coal, gas, oil, starch & supplies 19.00
Insurance 3.11
Charges in selling goods, 2 1/2 per
cent 9.75
Wear and tear machinery 5 per cent 13.69 339.55
------ -------
Leaving a net profit per day of $ 50.45
Or for 300 working days or one year of $15,135.00
Figuring the cost of this mill at $20 per spindle, and leaving aside, as
before, money otherwise invested about the business, there is a capital of
$80,000, upon which a profit of $15,135.00 is 18.8 per cent.
"Profits in the past," says Mr. Thompson, "have been so large that often
before the last payment on the stock is due, a sum sufficient to pay all
obligations has been accumulated." He cites as a particularly favorable
instance, that of a mill which required no further instalments on
subscriptions after a little more than one-third of the instalment-payment
period had run out.[368]
A little incident is interesting as involving two of the most important
and picturesque personalities and one of the chief mills connected with
the rise of cotton manufacturing in the South, and it bears directly on
the topic now being considered. It seems that the founding of the Piedmont
Factory by Colonel H. P. Hammett in South Carolina inspired a notice from
Mr. Edward Atkinson, of Boston, in which he reasoned that cotton
manufacturing in the South could never pay. This came under the eye of
Colonel Hammett. To the article he pinned his annual balance sheet,
showing a profit of 20 per cent., and sent the two to Mr. Atkinson.[369]
In regard to these first years of the large establishment of cotton mills
in the South, it is common to hear the opinion that the big profits made
attracted the energies of the people to mill building.[370] Going a little
further back, the mills in operation just before the textile era, though
few in number, showed gains that bore a part in the boom about 1880.[371]
Twelve years after taking charge of the plant, Colonel Hickman had earned
by the old Graniteville mill sufficient surplus to build the Vaucluse Mill
at a cost of $361,513.24 without calling for assessments upon
stockholders, and five years later had accumulated a cash surplus of
$220,831.86. He had doubled the production of the original Graniteville
Mill. The statement of the affairs of the two plants in 1804 showed:
_Gross Profits:_
Graniteville $82,724.69
Vaucluse 37,131.31
-----------
Total profits $120,856.00
Net profits 80,701.71
This net profit amount represented 13.5 per cent. profit on $600,000
capital.[372]
Coming down, now, a decade later in the period. There is shown a degree
of success pretty much uniform for the various mills.
The first plant of the Gaffney Manufacturing Company which was paid for
when operation commenced, in three years earned enough to build an
additional plant of two stories.[373] This mill indicates very well a fact
brought out in the preceding chapter, that many additions to plant, which
were being made after the mills had been a few years in operation, were
accomplished from earnings. The Salisbury Mill is a case in point. Its
inception and that of the Gaffney Mill the two being projected at about
the same time had many things in common (as did the towns in which they
were built). Increases in plant of the Salisbury Mill have been greater
proportionally than the increases in capitalization.[374]
From manufacturers, from investors, and from persons acquainted with the
public economy, have been had statements, each reflecting an individual
bias, but each showing unmistakably that there was a general and marked
decline in profits in the second decade of the development. A retired mill
president, whose decision to leave the field was perhaps affected by the
condition she described, regretted that the companies are still laboring
under decreased profits as a result of the fact that mills were built
more rapidly than the market for goods expanded to meet the
development.[375] Another mill president thought that no more mills are
likely to be built in his section too many years. "They went it too rank,
you know," he declared with some feeling. "Once in a while you hear of a
new mill starting up, but its not as common as it was ten or fifteen years
ago." He put the date of the fall-off in profits at about 1900.[376] The
son of Colonel Hammett, several times mentioned, who is a successful
manufacturer, deplored the building of too many mills in a short period,
and said that profits fell away abruptly.[377]
A bank president whose institution has played a leading part in the
textile prominence of Columbia, South Carolina, said that "1890 to 1900
was the heaviest borrowing period, as this was the greatest period of
development. Profits were poor, especially from 1895 to 1903."[378]
Though he does not believe selling agents have taken much stock in North
Carolina mills, Mr. Thompson attributes many failures of mills to "slavery
to commission houses through which they sell their product." He implies
that it was the grip which the agents got on the mill by the loan of
running capital that brought the ill effects. At any rate, the commission
houses became more deeply interested in the mills as the plants increased
in numbers, and profits were hurt by this fact, he believes.[379] This
influence continues, thinks a former president of the great Graniteville
Mill, who said: "The commission merchants take the very heart out of the
mills. The commission houses of New York, Philadelphia and Boston get more
out of the mills than the stockholders in the South."[380]
While it is true that "most of the mills of the South have
succeeded,"[381] there have been, besides some concerns which have stood
still, neither making nor losing, a few notable failures. It is the common
opinion that failures have been due almost entirely to lack of capital and
bad management. Probably these faults and a good many others contributed
to the ill success of the old Charleston Manufacturing Company, which
began life with such high hopes at the outset of the cotton mill era. If
any enterprise was an expression of the motive forces in the South in
1880, this one was. It supplied a potent example to communities all over
the South contemplating cotton factories. The property of the Charleston
Manufacturing Company was sold under the hammer to the Vesta Cotton Mill
Company, which was not more successful with the plant. After standing a
year idle, the attempt was made to operate the mill with colored help, and
a reorganization of the Vesta Company was had for this purpose. A large
proportion of the subscribers to the original company remained in the two
reorganizations that followed.[382] In the experiment of negro operatives
the old factory was again opening up a vista to the South, for, as it was
vainly pointed out to the negro population of Charleston, if the trial of
colored operatives in the Vesta Mill had succeeded, plants all over the
section would offer employment to negroes.[383] When this third effort to
use the plant for a cotton mill came to nought, the machinery was moved to
Gainesville, Georgia, and though the top of the new mill was carried away
by a cyclone almost as soon as completed, the company is now doing well in
its new location.[384] The great, gloomy pile that thrice held so much of
the confidence of the South and the best hopes of Charleston still flanks
the railway tracks and rears itself above the depot, and seems all very
silent in spite of the fact that it is now occupied by tobacco
manufacturers.
The grandfather mill, as it might be called, of the Southern textile
industry, is that of Graniteville, established by William Gregg in 1846.
The factory nearly failed in 1867, but was saved by the genius of H. H.
Hickman, a merchant of Augusta, who became its president at the critical
juncture. He died in 1898, and his son came in as president. At his
retirement and the reorganization of the mill, a business man of Augusta
has been elected the new president, but it will require, it is said, from
seven to ten years for him to build up the organization again.[385]
The Royal Mills, the only cotton factory now operating in Charleston, was
built eighteen or twenty years ago, in the period of stress just noticed.
George Wagener, the original manager, left the mill at his death with a
surplus of $90,000. It went into slovenly hands, and failed. It has been
remodelled, however, and is now making money.[386]
The small mills' success inspired the belief that large plants would
succeed. The Olympia, until recently the largest mill in the world, was
built at Columbia, and the Loray Mill, with more than half as many
spindles, was founded at Gastonia. It is the general opinion, whether
colored too largely by the unsatisfactory history of these two
conspicuous factories or not it cannot be told, that there have been more
failures among the large than among the small mills.[387] It has been said
of the North Carolina manufacturers as opposed to those of South Carolina
that they "are not so ambitious for big places, (at the head of large
companies) and a lot of those little fellows are getting rich." The North
Carolina mind seems to run on smaller things. I am not sure but what the
North Carolina mills have been more successful than the South Carolina
mills.
A committee representing New England manufacturers has stated in spite of
an advantage over the Eastern mills of 25 per cent. in labor, and 50 per
cent. in respect to taxes, the Southern mills have made less profits than
their older competitors because of poor financing. However this may be,
the total losses on $100,000,000 invested in cotton manufacturing in the
South in thirty years does not represent more than 20 per cent., is the
belief of Mr. Thackston, of Greenville.[388]
To go to a lyceum lecture on a sultry summer night and be whisked away by
picture and description to the snowy peaks and green glaciers of the
Canadian Rockies is not a more complete or refreshing transition than
that experienced by the traveler who lumbers along the Southern Railway
for weary, slow miles of sodden country and ill-kept settlement, all at
once to alight at the neat station and view the trim town of Gastonia,
North Carolina. It is not attempted here to account for the New England
psychology that animates this nonetheless Southern place, but it is
deserving of better praise than its harsh name gives it. Neither is it
proper in this place to seek to account for the success of its score and a
half of cotton mills. The recital of the profits they have made since the
European War is astounding, but there is every cause to believe in the
accuracy of the information given.
In the first place, while the big Loray Mill, as has been seen, has not
reflected much credit upon the community of factories at Gastonia, and is
spoken of not very warmly there, no mill in Gastonia has ever had a
receivership.[389]
The mills at Belmont right near Gastonia are making on the average 25 per
cent profits. The Treanton Mill at Gastonia, paid 100% in cash during the
first five years of its operation. The Majestic Mill, at Belmont, was
expected to make in 1916-1917, 100 per cent., or the price of the plant in
a single year.[390]
In cataloguing the notes from a summer trip to the mill towns, the writer
feared he had made some mistake in setting down the results of an
interview with the vice-president and cashier of the First National Bank,
Gastonia, which is most largely interested in the mills of the place, as
to the earnings. He therefore wrote for a restatement on doubtful points,
and found himself confirmed. To quote the case of one mill from Mr.
Robinson's reply. "We have a mill here that had $150,000 capital paid in,
and after a short time issued a stock dividend of 20 per cent. which gave
them (it) a capital of $180,000, and this mill made $155,000 net profits
for the year 1915. I am satisfied that this same mill will make 125 per
cent. profit this year (1916) on their (its) $180,000 capital, or around
$225,000 net profit."[391]
From the interview, there is the instance of a 12,000 spindle mill; not
one of the most successful in Gastonia, which made $2,500 the week
previous.
While the mill expected to make 125 per cent. net profits for 1916 is said
to be exceptional, a number of mills were, as near the end of the old year
as November 28th, expected to show from 75 to 100 per cent. net profits
for 1916, the writer was told that it would be a pretty poorly managed
plant that did not clear the lower percentages.[392]
A burly, forceful man in middle life, who has risen from foot pedlar to
mill president, said with frankness: "I am making more money than I know
what to do with. I am ashamed to take it!" He showed me the statements of
the orders for product with which his four mills would be kept busy for
the next four or five months. He expected to clear $60,000 on the output
of each plant for this period.[393] Mr. Robinson, previously quoted,
recognizes that the cotton mills at Gastonia are more prosperous than
those of any other section of which he knows.[394] Not even early in the
period, when mills were first building, did they make such profits as now,
is the opinion of an old manufacturer at Gastonia.[395]
The foregoing citation of the earnings of various mills at various points
of time in the period since their establishment has served to exhibit the
general movement of profits. At the outset, most conditions were favorable
to large gains--there was little competition, labor was most plentiful and
cheap, the lack of advantageous marketing facilities was to some degree
offset by purely local demand for the product, and the deficiencies of
management tended to be neutralized by the presence of physical advantages
which disappeared when a more advanced development increased the size of
plants, widened the area from which raw cotton was drawn, and extended the
market for product. It is said repeatedly that in those days any fool
could make money in cotton manufacture in the South.[396]
With the closing years of the second decade of the mill growth, most of
these advantaging circumstances were fading before the increase of
competition. Their very success was proving fatal to the mills. They had
ceased to be local affairs. When outside influences came in--commission
and machinery men--new and difficult problems had to be faced. The
factories were assuming the physical proportions which they were bound to
assume, and which it was right they should assume, but they ran ahead of
the development in the textile industry, and in the South of expertness of
management, business resourcefulness and economic outlook. The spirit
could not keep up with the flesh, and the mind lagged behind the body.
The prosperity which the mills are now enjoying they very well understand
to be hectic, the result of the European War. They were having a hard time
enough until the war came and put them all on velvet, as someone expressed
it; 25% of the Southern Mills were in bad shape, defaulting an interest,
etc.[397]
There are in the industrial community of Gastonia, however, and in certain
individual mills and managers, particularly in North Carolina, signs, that
point to a catching up of internal capacities with external maturity.
There is being developed--not yet clearly seen by any means, and in not a
few points apparently contradicted[398]--a manufacturing spirit in the
South, an industrial faculty that is able to cope with difficult
conditions, the results of economic progress. This promises that the South
is learning after forty years what Edward Atkinson said it did not know,
the difference between a penny and a nickel. It indicates that the South
will be meeting narrow margins of profit with close figuring of the costs
of production.
It is natural to turn from the subject of profits to that of dividends.
There is in the history of the mills a general parallel between the two,
with, however, certain variations arising from the fact that the industry
has been and is now in constant process of growth. With the exception of
perhaps a few years, earnings could always be profitably invested in the
business,[399] particularly in expansions of plant.[400] As will be seen
in more detail later, the peculiar conditions under which the mills took
their rise involved indebtedness for plant and for running capital, and
earnings had to go to pay interest and principal of this.
The Augusta Factory was founded in 1847,[401] and, with Graniteville
nearby, though in South Carolina, resembled in its earlier years, and to a
diminished extent still does, the English and Continental textile
manufactories.[402] They have both fallen upon evil days more recently.
The Augusta Factory made 5 per cent. quarterly dividends for eight years
and nine months from its founding.[403] In 1858, eleven years after
establishment, the plant was sold to a company with Wm. H. Jackson at its
head, for the sum of $140,000. Though the stockholders in the Jackson
Company paid $60,000 for repairs to the property, the purchase price,
payable in instalments for ten years, was made up from profits. The mill
at the close of the war was the wealthiest in the South. It was said in
1884 that it had had an uninterrupted course of prosperity since the war.
From 1865 to 1880 the company paid average annual dividends of 14 21/32
per cent.[404]
In 1880 the stock of the mills at Augusta, Georgia, paid about 8 per cent.
interest per annum, in semi-annual and quarterly dividends.[405]
Under Col. H. H. Hickman's management of Graniteville there were regular
dividends of 10 per cent.[406] The son of this former president, and until
recently himself president of the mill as his father's successor, said:
"Graniteville was so successful it had a large influence. It never ceased
operation, and to my certain knowledge it had a fifty-year record of
dividends."[407]
Perhaps some indication of the widespread popularity of cotton mills as an
investment from a purely dividend-seeking point of view is contained in a
newspaper notice of 1881 setting forth that a large mill at Nashville,
Tennessee, had declared a dividend of 14 per cent. and another was built.
In 1881 the Enterprise Factory, in Georgia, declared a 10 per cent.
dividend, and decided to increase its capacity by 125 per cent. or
more--from 13,890 spindles to over 33,000, and from 264 looms to more
than 600.[408] Mills as Pulaski, in the same State, were anxious to double
their capacity; $50,000 was subscribed for a mill at Jackson, West
Tennessee; Dallas, Texas, was starting a $200,000 spindle plant, and the
town of Sherman wanted a $75,000 factory.[409] The following year, the
same paper printed an item showing further that dividends were being paid
to stockholders in factories all over the South: "The cotton mills in
Mississippi have proved bonanzas for the owners. The one at Wesson (it has
been seen that this company made 30 per cent. profit from the plant) pays
26 per cent. dividends...."[410] The mill established by Mayor Courtenay,
of Charleston, at Newry, South Carolina, paid no dividends for the first
seven years of its life; this distinction from the earlier mills in regard
to dividends, bears out what was said of profits in the period in which
this plant was built (1892-3). Over the whole twenty-four years of its
history, however, the company has paid an average of 6 per cent. to its
shareholders.[411]
The building of the Salisbury Mill was completed December 1, 1888. The
first cloth was turned out February 9, 1889. The first dividend of 5 per
cent. was declared January 11, 1890. The mill has missed only one dividend
payment, a quarterly one, since this time.[412] It is true that for the
first three or four years of its life, the concern was in an uncertain
way, the panic of 1893 proving embarrassing to it, though not as seriously
so as in the case of the Newry Mill, just cited. For a long time the
investment paid 8 per cent. dividends, then for several years of late 10
per cent. On July 10, 1916, the directors declared an extra dividend of 5
per cent., paid August 1. A part of the profits has for years and years
gone back into the business, enabling it now to earn good sums.[413]
In the first ten years of its operation, the Laurens Mills were very
profitable. Borrowing money to bring its spindleage up to thirty thousand,
it expanded to 43,000 spindles on earnings. At the end of the ten-year
period there was the plant worth about $800,000; the company owed no
money, and the only liability against it was $350,000 of common stock.
There was a cash surplus, probably small. For six years it had been paying
12 per cent. annual dividends. The mill was incorporated in 1895.[414] It
is not certain that dividend payments were made by this company while it
was carrying its debt, but the Anderson Mill, Anderson, South Carolina,
paid interest on its indebtedness and 8 per cent. dividends as well.[415]
Reference has been made to Mr. Thompson's statement that large profits
have frequently enabled mill companies to discharge all obligations before
the last subscription-payment was due. He cites the case of an enterprise
of $100,000 capitalization, with shares payable in weekly instalments of
50 cents, which after 70 weeks, with only $35 on the share paid up,
declared a dividend of 4 per cent. on the capitalization. This plant,
which he says is by no means universal, has, besides building large
additions from profits always paid 4 or 5 per cent. in dividends each
half-year. This is probably the Cabarrus, one of the Cannon mills, at
Concord.[416]
From Mr. August Kohn was had a valuable estimate of the whole matter of
Southern cotton manufactories as investments, assuming, that is, that the
mills of his State have been typical in this respect of those of the rest
of the section. He said: "If the people of South Carolina had put their
money into farm loans at 7 per cent.--the same people and the same
money--they would have been better off personally than they are after
having invested in cotton mills. There are no failures in real estate
mortgages at 7 per cent., but in cotton mill investments, principal and
interest has frequently been lost."[417]
If this opinion is to be believed, had Mr. Goldsmith taken all the
factories of the State, and not "the fifty more important cotton mills of
South Carolina," he would have found an annual average dividend for 1905,
1906 and 1907, not of 7.56 per cent., but something below 7 per cent.[418]
It is well to conclude this random review of the dividends paid by the
textile enterprises of the South with a thoughtful caution from Mr.
Thackston, of Greenville, who has been of chief assistance to the writer
in the financial aspects of the problem: "When it is said that the mills
(have) made such and such dividends, it is to be remembered that in many
cases the plant had cost more than the capitalization would show. Twelve
or 10 per cent. on a $50,000 investment is very different from 12 or 10
per cent. on $30,000 paid up. The mills made so much money that they could
pay off their indebtedness frequently in a few years, but the returns on
capital paid up were not so great as might appear in some statements.
"Piedmont is capitalized at $800,000. The plant probably cost $1,500,000.
When they pay 10 per cent. on the investment, it is because they are
neglecting to reduce the debt on the plant. They are really paying about 6
per cent. on the investment, considering the total liabilities of the
stockholders."
Tompkins has placed a useful modification upon the nominal showing of
dividends which finds place here, and has application to what was earlier
said of profits as well: "The tables ... showing range of profits, are
made up from exhibits as usually made in annual reports. This is exclusive
of depreciation, or wear and tear. Even in cases where an item of
depreciation is carried in the accounts, it is often simply a matter of
bookkeeping, and not a sum set aside for replacing of machinery.... Where
large profits are reported, and large dividends paid, it is always a
question whether the vitality of the mill is not suffering. There is a
number of cases where mills have paid several large dividends at the
start, but, on account of making no provision for depreciation, have
finally collapsed."[419]
Some mills to continue Mr. Thackston's statement, cost in plant, he said
four times their total capital. A man would build a 10,000-spindle mill
and add to it greatly, not increasing the capital at all; he trusted to
earnings to care for the debt, and delayed payments on common stock.
A remark of Mr. Goldsmith, though he unfortunately does not give the
source of his information, confirms this calculation. He says: "The
average South Carolina weaving mill costs about $20 to $21 per spindle; it
is capitalized at about $12 per spindle, and earns from $2 to $4 per annum
per spindle."[420]
A statement covering five years for average well-managed mill properties
in and around Greenville, South Carolina, shows, he said:
Average earnings on plant cost 13.47 per cent.
" " per spindle $ 2.94
" cost " " 21.08
Capitalized at " " 12.72
His conclusion was that "In general, the dividends on the actual cost of
the plants have not been over 12 per cent."[421]
As to the development, nature and persistence of a market in the South for
cotton mill securities, the principal partner in a firm dealing in stocks,
bonds, real estate loans, and fire insurance, who has besides long been
identified with the cotton manufacturing industry in the Piedmont region,
said: "... as far as I am able to recall, the stock market began to
develop in this section about 1898 to 1901; and referring to some old
records, as of March, 1901, I find such entries as this:
"5 Monaghan at 95
3 Brandon at 90"
with other entries of the same kind.
"About this date, in the up-country there were several young men who began
trading in these stocks largely on a brokerage proposition. I recall the
names of:
A. M. Law & Co Spartanburg, S.C.
W. D. Glenn Spartanburg, S.C.
F. C. Abbott & Co Charlotte, N.C.
George E. Gibbon Charleston, S.C.
and a few others whose names I do not recall just now.
"In Greenville, there was Mr. A. G. Furman.... All these men are still in
the same line of business, and from small beginnings, have developed
satisfactory business in the buying and selling of these securities.
"One element that lends itself to this business was the fact that in a
number of instances builders of machinery would take part of their bill in
stock, and later dispose of these holdings at concessions. I recall in one
year that I disposed of about $2,000,000.00 worth of such stocks."[422]
An investor with considerable cotton mill holdings, in his replies, threw
a little different light on the matter in some particulars: "A market for
cotton mill securities developed between 1890 and 1900. There is less sale
for them now, but in those ten years they used to go like hot cakes. All
these brokers take a whack at them, but any man would starve that tried to
deal in them exclusively. I had a friend that tried to make his living
from dealing in them, but he didn't make his office rent, I deal in them a
little, more than anything else for accommodation to friends. There is
practically nothing in it for me."[423]
Mr. Buist has here placed the commencement of this market as far back as
1890. But in the early months of 1881 M. J. Verdery & Co., brokers of
Augusta, were negotiating for the entire issue of $350,000 extra capital
stock to be made in connection with enlargements to the Enterprise
Factory. It was said that one man and his friends would take $140,000 of
the stock.[424] This was, however, an underwriting transaction, such as
those of which the first quotation speaks as being conducted on a
brokerage proposition, rather than the regular marketing of stocks
indicated by Mr. Buist.
Another said: "Nobody deals exclusively in cotton mill securities, and
they are not quoted on the big exchanges either."[425] There is no doubt
about either of these points, judging from all the information received.
And further: "At the opening of the period, the sale for cotton mill
stocks was very local, and each mill took charge of its own sales."[426]
A mill president of Augusta said that he frequently has inquiries for
stock; he refers these applicants to brokers in the city.[427]
It has been seen that the curve of dividends of the mills shows a rough
correspondence to that of profits; it may be observed in the paragraphs
that follow that the third curve of market values of mill stocks follows
more or less the other two curves. There will be mentioned first the cases
in which the securities sold, for one reason and another, at low figures,
and second the instances of more advantageous quotation, with some
comments on the occasion for the high and low prices.
The cotton manufacturing business in the South has been a precarious one;
it has proved quixotic, and there have been intervals of sterility.[428]
This may be taken as accountable for the fact that "mill stocks usually
sell below their book value."[429] This consideration has not, however,
as will appear more clearly a little later, prevented great variation in
the selling price of securities of mills in different sections of the
South, at the same point of time.
"Mill shares have been a drug on the market and confidence in them has
been lost to a large degree."[430] In conformity with this, an
ex-manufacturer, now a cotton factor, of Augusta, Georgia, explained that:
"Stocks of mills in Augusta haven't sold at par in twenty years. You can
buy preferred stock of mills in Augusta at less than par. You can buy the
stock of the Augusta and Enterprise mills at 20 or so. The Augusta Factory
hasn't paid a dividend in twenty years." He could not understand why this
was true of the local manufacturing community, which is one of the most
notable in the entire South.[431]
These considerations are in contrast to the statement of Mr. Goldsmith:
"The market value of the stock is almost always above par, increasing in
proportion to the age of the mill." The writer inclined to doubt this
accuracy of Mr. Goldsmith's information.[432]
Referring now to the sale of stock at less than its book value, it may be
noticed again that during the war the Augusta Factory was sold into new
hands at, ostensibly, $200,000. The new company capitalized it at $600,000
about what it was worth.[433] F. W. Wagener and Julius Koester bought in
the property which is now the Royal Mills, at Charleston, at about 20
cents on the dollar.[434] An indication of the prevalence of this
condition is seen in the fact that the people of Charleston, who
previously had been generous subscribers to cotton mill stock, every
promoter going to Charleston for the placement of a large block, "about
1905 or 6 ... got canny, and quit subscribing to the stock of new mills,
for they found they could wait and buy the stock at less than par. For
twelve or fourteen years Charleston has not contributed to new
mills."[435] The reason for the general drop in the value of mill
securities twelve or fourteen years ago lies in the depression in the
industry caused by the ill-considered boom in mill building, already dwelt
upon; a cause which had its rise earlier, but which no doubt continued to
operate through this later period, was set forth plainly by a banker of
Columbia. He said:
"Suppose a Southerner was promoting a mill that was to cost $1,000,000. In
contracting for $600,000 worth of machinery, the machinery people would
take half of the amount in stock. Machinery was in great demand, and high
in price. The machinery manufacturers could throw their stock on the
market quickly at 50 cents on the dollar, and make money. But in doing
this they hurt the price of the stock of the mill."[436]
There seems to be pretty clear cause for the sensational drop that once
occurred in the selling price of the stock of Pacolet, one of the greatest
of the Southern mills. The factory had been making heavy goods for the
Chinese market; this market was so unfavorably affected by the exclusion
act that the goods became unprofitable to the mill. It cost money to
change the machinery. So much preferred stock was issued that the common
stock of the mill fell from 300 to a point below par.[437]
It has been seen that for the last six years of the first decade of the
operation of the Laurens Mills, 12 per cent. annual dividends were paid.
Within two years after the fight between local shareholders and Northern
selling agents, the dividends got down to 5 per cent. and the stock fell
from 175 to par.[438] A similar decline has been very apparent in the
stock of Pelzer, in the same State, which ten years ago was selling at 175
or 180, and which now may be bought at a little above par.
T. C. Duncan built the Union Mills, and these succeeded. The stock went to
$150 a share in 1900 or 1902. Then he built the Buffalo Mills. The
projector of these mills was, however, a cotton speculator, it is said,
and the market went against him. The town of Union, South Carolina,
"busted with Tom Duncan", as it was expressed.
At the opening of the cotton mill period, it was said of the Rock Bill
Cotton Factory that "The best evidence of its success is that not one
dollar of its stock can be bought."[439] In the same month of the same
year it was published that of the successful Mississippi mills, "The one
at Wesson pays 26 per cent. dividends, and the stock is worth over
300."[440] Pacolet was built in 1880. The architect suggested a certain
firm as selling agents for the mill, and Captain John H. Montgomery, the
projector of the company, was introduced to a member of this firm. In
consideration of receiving the account of the factory, this official
subscribed for the commission firm to fifty or a hundred shares of
Pacolet's stock. He told a friend shortly afterwards that he did not know
why he bought the stock, and offered to sell it at $50 on the share. It
happened that he held the stock, and he afterwards sold the stock at $300
per share.[441]
This buoyant success of the early mills, previously remarked with
reference to profits and dividends, and here seen in the advance in the
price of stock, is further illustrated by the history of some plants now
having large capitalization. These sold additional stock to the original
subscribers at a reduction--say at 75 or 80 when the par was 100. The
ventures were so profitable that the stock remained at par value.[442] The
same observation comes out, as applicable to a still earlier time, in the
circumstance of the issue, in 1865, when the Augusta Factory was paying
more than 14 per cent. dividends of three shares for one, bringing up the
capitalization to $600,000.[443]
Fifteen years later it was said: "Augusta is becoming prominent in the
South as a manufacturing city, there being eight cotton factories running
here successfully.... These factories aggregate about 2,500 looms and
10,000 spindles; they consume about 50,000 bales of cotton annually,
manufacture about 50,000,000 yarns (yards) of cloths, (this besides yarn
mills) and employ 2,000 operatives. The capital stock of nearly all these
factories is at a high premium."[444]
If the success of the Augusta Factory in 1865 was sufficient to maintain
at par issues of extra stock, as just noted, the reverse was true of
Graniteville two years later, when the elder Hickman took charge. Twenty
years earlier, the plant had cost to build $375,000. By 1867 the stock had
increased to $716,000, and the shares had fallen to $62.50 in value. The
mill was $50,000 in debt. Colonel Hickman cancelled $116,000 capital
shares, bringing the interest-bearing stock of the company down to
$600,000. He restored the depreciated stock to its proper value.[445]
Reference has been made to a stock dividend of 20 per cent. issued by a
mill of Gastonia within the last few years.
A very present instance of this same quality, reflected this time in the
recuperative power of a mill, is contained in a prediction made by the
gentleman who knows most about the Graniteville Mill, that the stock which
then, at reorganization, sold for $60 the share will in a year, if all
goes well, sell at par.[446]
It has been said that the stock of the Rock Hill Cotton Factory could not
be bought, and that the stock of several mills sold for $300 per share.
That of the Tucapau Mills, in South Carolina, is not to be had today, or
it can be had only at 3 or 5 for one. This is by some regarded as the
most successful mill in the State.
It would seem that absolutely no stock of the Salisbury Mills is on the
market. Recently an energetic young man anxious to buy stock of the mill
for principals, went to the treasurer of the company and to shareholders
individually, without success. The treasurer said that by looking long
enough, and waiting for his chance, he might induce some stockholder to
sell at 200.[447] This comparatively low figure in his prognostication is
perhaps accounted for by the conservative character of the company from
the start, and the uniformly satisfactory, though not brilliant dividends
of the enterprise, together with the fact, maybe most potent of all, that
sixty of the one hundred and five shareholders in the Salisbury Mills are
ladies, the majority of whom have received their holdings through
inheritance.[448]
The Majestic Mill, Gaston County, North Carolina, which in 1916 after nine
months' operation declared a dividend of 10 per cent., sold three shares
of stock which in some way had not been marketed, at 150 each.[449]
In mentioning the contrast between the market price at this time of the
stock of mills in various localities. Thought was particularly of the
facts as to the Augusta mills' securities and those of the plants in and
about Gastonia. The latter are as optimistic as the former are the
reverse. Mills in Gastonia making in 1916 from 75 to 100 per cent. net
profits, are represented by stock selling at figures ranging from $150 to
$250 the share.[450]
VITA
Broadus Mitchell was born at Georgetown, Kentucky, December 27, 1892; he
attended a primary school in Richmond, Virginia, and then, for four years
until 1908, Richmond Academy; for one session, 1908-1909, attended the
Hope Street High School, Providence, Rhode Island; in 1909 entered the
University of South Carolina; in the summer of 1911 was a member of the
reportorial staff of The Daily Record, Columbia, South Carolina; graduated
from the University of South Carolina with A.B. degree in 1913; from June,
1913, until October, 1914, was a member of the reportorial staff of the
Richmond Evening Journal; entered The Johns Hopkins University in 1914;
was a Hopkins Scholar during this and the succeeding session; was Fellow
in Political Economy, 1916-1917; in July, 1917, became special staff
writer The New Leader, Richmond, Virginia, and was given furlough from
this position to return to the University in the fall of 1917; Fellow by
Courtesy and instructor in Courses in Business Economics, 1917-1918.
FOOTNOTES:
[1] P. H. Goldsmith, The Cotton Mill South, p. 4.
[2] D. A. Tompkins, in The South in the Building of the Nation, Vol. II,
p. 58. A more summary statement by the same author is the following; after
speaking of the prominence in the South of manufactures in the early years
of the nineteenth century: "The profit of cotton raising with slave labor
drew people away from manufactures to cotton planting. On the abolition of
slavery, the capabilities of the people to organize and conduct
manufactures showed itself again.... The re-establishment was not
commenced immediately after the civil war, because of the chaotic disorder
brought about by the abolition of slavery and the enfranchisement of the
negro." But now (1899) "every obstacle to the development of manufactures
has been removed. In many parts of the South the development is already
well advanced and in others it will undoubtedly grow rapidly." (Ibid.,
Cotton Mill, Commercial Features, pp. 108-109.)
[3] The South's Position in American Affairs, p. 1. Cf. "Upon the whole,
the last half of the Eighteenth Century, before the influence of the
cotton gin and Arkwright's inventions were fully felt in the South, was a
period when agriculture yielded some ground in primary manufactures and
household industries." (V. S. Clark, in South in Building of Nation, Vol.
V, p. 308.)
[4] Holland Thompson, From the Cotton Field to the Cotton Mill, p. 25.
"Except in the East, the feeling against slavery was strong during the
first quarter of the nineteenth century", and there is remarked the
foundation in 1816 of the Manumission Society, which had thirty-six
branches in 1825 and 1600 active members in 1826. (Ibid., pp. 26-27.)
[5] August Kohn, The Cotton Mills of South Carolina, pp. 10-11.
[6] Kohn, Cotton Mills of South Carolina, pp. 9-10.
[7] Kohn, Cotton Mills of South Carolina, pp. 10-11. In 1809 the
legislative committee on incorporations reported unfavorably a request of
John Johnson, Jr., President of the Homespun Company of South Carolina,
for a loan on account of a patent, but it was recommended that he be
allowed until the next meeting of the legislature "to report on the
utility of the machine called the Columbia Spinster, so as to entitle, in
case the same be approved, the inventor of the same to the sum provided by
law for his benefit." (Ibid., pp. 11) Cf. Ibid., pp. 11-13.
[8] For these facts the writer is indebted to an unpublished manuscript of
M. R. Pleasants, "Manufacturing in North Carolina before 1860", to which
reference will frequently be had.
[9] Clark, in South in Building of Nation, Vol. V, p. 310.
[10] Kohn, Cotton Mills of South Carolina, p. 7.
[11] Kohn, Cotton Mills of South Carolina, p. 7.
[12] Ibid.
[13] Ibid.
[14] Kohn, Cotton Mills of South Carolina, p. 7. His citation is of the
South Carolina and American General Gazette, Jan. 30, 1777. Cf. Ibid., pp.
6-7.
[15] Ibid., p. 8. Reference is particularly to the City Gazette and Daily
Advertiser, of Charleston, January 24, 1779.
[16] Kohn, Cotton Mills of South Carolina. Citation is of the American
Museum, VIII, Appendix IV, part II, July 1, 1790. The question mark is Mr.
Kohn's.
[17] Kohn, Cotton Mills of South Carolina, pp. 8-9.
[18] W. W. Sellers, A History of Marion County, p. 26.
[19] Clark, in South in Building of Nation, Vol. V, p. 312. Cf. Ibid., pp.
328-9. Referring to the manufactories near Charleston and Statesburg, and
to carding and spinning machinery set up in eastern Tennessee in 1791, he
concludes, "However the industrial progress of these years was irregular
and local rather than general and permanent." Ibid., p. 310.
[20] Clark, History of Manufactures in the United States, 1607-1860, p.
537. As indicating further the lack of causation in these earliest
ventures, it is said: "Maryland is hardly typical industrially of the
Southern States. Its factories date from the Revolution...." (Ibid., in
South in Building of Nation, Vol. V, pp. 328-9.)
[21] "In this country, as well as in England, the germ of the textile
industry existed in the fulling and carding mills; the former, dating
earlier, being the mills for finishing the coarse cloths woven by hand in
the looms of our ancestors; and in the latter, the carding mill, the wool
was prepared for the hand-wheel. At the close of the Revolution the
domestic system of manufactures prevailed throughout the states" (Carroll
D. Wright, "The Factory System of the U.S." p. 6, in U.S. Census of
manufactures, 1880.)
[22] The Bolton Factory was built in 1811 on Upton Creek, nine miles
southwest of Washington, Wilkes County, Ga., in 1794, on this site had
been erected one of Whitney's first cotton gins, propelled by the water
power that later ran the cotton mill. It is said that here Lyon conceived
important improvements on the Whitney invention, making a saw gin.
(Southern Cotton Spinners' Association proceedings seventh annual
convention, pp. 41 ff.) Here is a rather striking indication of the fact
that the South was on the right road--a gin, so far from diverting
attention entirely to the cultivation of the staple, gave way to a cotton
mill which was located on the same site and operated by the same water
power.
[23] H. R. Helper, The Impending Crisis of the South, (ed. of 1860) pp.
161-162.
[24] W. F. Marshall, interview, Raleigh, N.C., September 16, 1916.
[25] "The first cotton mill built in North Carolina was built at
Lincolnton in 1813 by Michael Schenck.... This mill was the forerunner of
that remarkable industrial development which has taken place in North
Carolina since that time." (Pleasants, ibid.)
[26] John Nichols, interview, Raleigh, N.C., Sept. 16, 1916. A. A.
Thompson, President of the Raleigh Cotton Mill, expressed about the same
view in an interview at Raleigh on the same day.
[27] J. L. Hartsell, interview, Concord, N.C., September 2nd 1916.
[28] Kohn, Cotton Mills of South Carolina, p. 15. Cf. Charlotte News,
(N.C.) Textile Industrial Edition, Feb., 1917, with reference to the Rocky
Mount Mill.
[29] Though their father had been prominent for his conduct of the mill
and had displayed in his personality a generous disposition toward the
community, the sons were said to be wild and reckless, and when they fell
heir to the plant alienated the sympathies of the people of the vicinity.
Any possible public character for the business was thus destroyed.
[30] Charles E. Johnson, interview, Raleigh, N.C., Sept. 16, 1916.
[31] C. D. Wright, "Factory System of the U.S.", p. 6, in U.S. Census of
Manufactures, 1880. Cf. Clark, in South in Building of Nation, Vol. V., p.
319.
[32] For a careful narrative of the establishments of the settlers who
moved into South Carolina from New England about 1816, with details of the
mills of the Hills, Shelden, Clark, Bates, Hutchings, Stack, the Weavers,
McBee, Bivings, etc., consult Kohn, Cotton Mills of S.C., and The Water
Powers of South Carolina; for those in North Carolina H. Thompson is
useful. Cf. also Southern Cotton Spinners' Association proceedings seventh
annual convention, pp. 41 ff. and Tompkins, Cotton Mill, Commercial
Features, pp. 301-302.
[33] Wood for the boiler of the Mount Hecla Mills, growing scarce, the
machinery was taken to Mountain Island, and there run by water. (H.
Thompson, pp. 48-9.)
[34] Cf. Kohn, Cotton Mills of South Carolina, p. 14.
[35] Kohn, Cotton Mills of South Carolina, p. 14. Cf. Charlotte News,
Ibid., with reference to the Rocky Mount Mill.
[36] H. Thompson, pp. 45 ff.
[37] Ibid.
[38] J. B. Cleveland, interview, Spartanburg, S.C., Sept. 8, 1916.
[39] H. Thompson, pp. 42-43. Cf. p. 12.
[40] Theckston, interview, Greenville, S.C., Sept. 12, 1916.
[41] Theckston, interview, Greenville, S.C., Sept. 12, 1916.
[42] Clark, in South in Building of Nation, Vol. V., p. 321. Cf. Kohn,
Cotton Mills of South Carolina, giving quotation from Columbia Telescope.
[43] Charlotte News, Ibid. The McDonald Mill at Concord during the Civil
War dealt in barter. A gentleman in a nearby town told the writer that he
remembered as a boy trading a load of corn for yarn to be woven by the
women at home. (Theodore Klutz, interview, Salisbury, N.C., Sept. 1,
1916.) In 1862 the Confederate government commandered the Batesville
factory in South Carolina, and took nearly all of the product. That
portion which was allowed to private purchasers was always sold by ten
o'clock in the morning. (Thackston, interview, Greenville, S.C., Sept. 12,
1916.)
[44] Thompson, pp. 48-9.
[45] Tompkins, Cotton Mill, Commercial Features, pp. 183-4.
[46] Walter Montgomery, interview, Spartanburg, S.C., Sept. 5th, 1916.
[47] Thackston, interview, Greenville, S.C., Sept. 12th, 1916.
[48] John W. Fries, interview, Winston-Salem, N.C., Aug. 31, 1916.
Another with a broad view of the history of the industry in the South was
willing to include in a similar statement the Graniteville mill about
which a good deal of controversy has clustered: "The cotton mills in the
South before the war were third-rate affairs. I speak of Graniteville and
Batesville and such plants as these. I remember my mother's telling me
that the warp ... used to be supplied by the mills for use in the homes of
the housewives. They were not regular cotton mills as the plants of later
establishment have come to be." (W. W. Ball, interview, Columbia, S.C.,
Jan. 1, 1917.)
[49] Figures of Thompson give 700 ______ and 7000 bales of cotton
consumed. (Thompson, pp. 49 ff.)
[50] U.S. Census of Manufactures, 1900. Cotton Manufactures, pp. 54 ff. A
map showing the distribution of cotton spindles in 1839 indicates a good
representation for all the Southern States, except Mississippi, Louisiana,
Arkansas and Florida, as to mills of small size, but the localization both
as to plants and spindles in New England is marked. (Clark, History of
Manufactures in the U.S., section on cotton manufactures, pp. 533-560. See
the whole section for a masterful discussion of both historical and
economic phases.)
[51] Cf. Thompson, pp. 49 ff.
[52] Clark, in South in Building of Nation, Vol. V, pp. 319-320. "Few
mills south of Virginia had power looms prior to 1840." (Ibid., p. 321.)
Cf. omission of looms for Southern States in the census figures quoted
above.
[53] Clark, South in Building of Nation, Vol. V. p. 322.
[54] William E. Dodd, in South in Building of Nation, Vol. V. pp. 566-7.
[55] Quoted in Pleasants.
[56] Quoted in Pleasants.
[57] Quoted from Niles' Register, May 10, 1828, in Pleasants. Mr.
Pleasants remarks that not until the late twenties did the leaders of
thought awaken to the disintegrating process that had set in two decades
before, and he notices the striking fact that in a report to the
legislature in 1828 it was said: "Nothing but a change of system can
restore health and prosperity at large. With all the material and elements
for manufacturing, we annually expend millions for the purchase of
articles manufactured in Europe and in the North out of our own raw
material. At this rate the state is on the road to bankruptcy. There must
be a change. But how is this important revolution to be accomplished? We
unhesitatingly answer--by introducing the manufacturing system into our
own state and fabricating at least to the extent of our wants.... Our
habits and prejudices are against manufacturing, but we must yield to the
force of things and profit by the indications of nature. The policy that
resists the change is unwise and suicidal. Nothing else can restore us."
[58] Tompkins, History of Mecklenburg County, Vol. I, p. 124. Cf. Ibid.,
pp. 126-7.
[59] Kohn, Cotton Mills of South Carolina, pp. 18-19.
[60] Clark, History of Manufactures in U.S., pp. 553 ff. Cf. Ibid., in
South in Building of Nation, Vol. V, pp. 213-214, and pp. 316 ff.
[61] Kohn, Cotton Mills of South Carolina, p. 16.
[62] "Cheapness of cotton, abundance of water-power, the resources of the
coal-fields, when steam began to supplant the dam, the other mineral
resources, and the wealth of forests of pine, live oak, cypress, and other
woods in which the South abounded, did not even attract from other parts
sufficient capital to develop the section to anything like its full
extent. No artificial expedients were necessary there. But capital did not
come." (Ingle, Southern Sidelights, p. 73.)
[63] Quoted in A. B. Hart, The Southern South, pp. 231-232.
[64] Helper, p. 25.
[65] Tompkins, History of Mecklenburg, Vol. I, p. 100.
[66] Ibid., Vol. II, pp. 200-201.
[67] Tompkins, History of Mecklenburg, Vol. I, pp. 98-99. This statement
is strongly influenced by Tench Coxe. Cf. Ibid., Cotton Growing, pp. 3-4.
It has been said of the Irish people by Lord Dufferin that "the entire
nation flung itself back upon the land, with as fatal an impulse as when a
river, whose current is suddenly impeded, rolls back and drowns the valley
which it once fertilized", and Sir Horace Plunkett comments, "The
energies, the hopes, nay, the very existence of the race, became thus
intimately bound up with agriculture." (Sir Horace Plunkett, Ireland in
the New Century, p. 20.)
[68] Tompkins, Building and Loan Associations, p. 43. Cf. Ibid., The
Cultivation, Picking, Baling and Manufacturing of Cotton from Southern
Handpoint, pp. 5-6.
[69] Tompkins, Cotton Mill, Commercial Features, pp. 109-110. It is
interesting that this occurs in a book by a practical manufacturer
intended to point the way to technical success in mill management. It is
perhaps an indication of how social the South is in even its most
distinctly industrial aspects.
[70] Another has used the expression that "the South was throttled by an
out grown Economic System." (F. T. Carlton, History and Problems of
Organized Labor, pp. 19-20.)
[71] Tompkins, Cultivation, Picking, Baling and Manufacturing of Cotton,
pp. 5-6. "Agricultural Methods were 'stereotyped'." This writer did more
than any other in showing the character of the equipment for cotton
cultivation and the alterations made therein after the war.
[72] W. H. Gannon, The Landowners of the South, and the Industrial Classes
of the North, pp. 7 ff.
[73] William Gregg, Essays on Domestic Industry, pp. 18-19.
[74] Tompkins, History of Mecklenburg, Vol. I, p. 194. "The price which
America paid for the introduction and use of cotton was sectionalism,
slavery, and war." (James A. B. Scherer, Cotton as a World Power, p. 243.)
For a careful description of the circumstances surrounding the invention
of the cotton gin, and the legal documents in the dispute over the rights
to it, cf. ibid., Cotton and Cotton Oil, pp. 19 to 31, inclusive, and
appendix. "We abandoned a once leading factory system; we imported slaves;
we let all public highways become quagmires; we destroyed every
possibility for the farmer except cotton and by cut-throat competition
amongst ourselves we reduced the price to where there was not a living in
it for the cotton producer. We made cotton in a quantity and at a price to
clothe all the world excepting ourselves." (Ibid., Road Building and
Repairs, p. 24.)
[75] Ingle, Southern Sidelights, p. 49.
[76] Scherer, p. 253.
[77] Scherer, pp. 168 ff. Cf. Walter H. Page, The Rebuilding of Old
Commonwealths, p. 139.
[78] A. D. Mayo, In The Social Economist, Oct., 1893, pp. 203-204.
[79] F. L. Olmsted, The Seaboard Slave States, pp. 140-141. Cf. Ibid., p.
185, pp. 213-214.
[80] Olmsted, Seaboard Slave States, pp. 298-299. Cf. "The amount of it,
then, is this: Improvement and progress in South Carolina is forbidden by
its present system." (Ibid., pp. 522-523. And for his general philosophy
on the subject, Ibid., pp. 490-491.)
[81] Olmsted, Seaboard Slave States, pp. 179-180.
[82] Ibid., pp. 288 ff.
[83] Plunkett, p. 147.
[84] Ingle, Southern Sidelights, pp. 68-69.
[85] Ingle, Southern Sidelights, p. 11.
[86] Clark, in South in Building of Nation, Vol. V, pp. 213-214. Not only
did slavery deter from coming to the South immigrants opposed to the
institution, but the Southern whites were indisposed to welcome those who
refused to grow into the system. A Southern Newspaper of the fifties
betrayed this: "A large proportion of the mechanical force that migrate to
the South, are a curse instead of a blessing; they are generally a
worthless, unprincipled class--enemies to our peculiar institutions, and
formidable barriers to the success of our native mechanics. Not so,
however, with another class who migrate southward--we mean that class
known as merchants; they are generally intelligent and trustworthy, and
they seldom fail to discover their true interests. They become
slaveholders and landed proprietors; and, in ninety-nine cases out of a
hundred, they are better qualified to become constituents of our
institution, than even a certain class of our native born.... The
intelligent mercantile class ... are generally valuable acquisitions to
society, and every way qualified to sustain 'our institution'; but the
mechanics, most of them, are pests to society, dangerous among the slave
population, and ever ready to form combinations against the interest of
the slave-holder, against the laws of the country, and against the peace
of the Commonwealth." (Quoted in Olmsted, Seaboard Slave States, p. 511.)
[87] Tompkins, History of Mecklenburg, Vol. II, p. 204.
[88] Cf. Ibid., Vol. I, p. 153.
[89] Olmsted, Seaboard Slave States, p. 511.
[90] Sidney Andrews, The South Since the War, pp. 342-343.
[91] Olmsted, Seaboard Slave States, p. 543.
[92] Olmsted, Seaboard Slave States, p. 210.
[93] Gregg, Essays on Domestic Industry, p. 10.
[94] Gregg, Essays on Domestic Industry, pp. 9-10. "He who has possessed
himself of the notion that we have the industry, and are wronged out of
our hard earnings by a lazy set of scheming Yankees, to get rid of this
delusion, needs only seat himself on the Charleston wharves for a few
days, and behold ship after ship arrive laden down with the various
articles produced by Yankee industry." (Ibid.)
[95] Gregg, Essays on Domestic Industry, pp. 9-10. "He who has possessed
himself of the notion that we have the industry, and are wronged out of
our hard earnings by a lazy set of scheming Yankees, to get rid of this
delusion, needs only seat himself on the Charleston wharves for a few
days, and behold ship after ship arrive laden down with the various
articles produced by Yankee industry." (Ibid., p. 11.)
[96] Helper, pp. 21 and 23. See these pages also for interesting
illustrations of dependence upon the North, some of which plainly
influenced Henry W. Grady.
[97] William Gregg, Essays on Domestic Industry, p. 8. Nothing is more
frequently remarked as indicative of the exclusive attention to the
cultivation of cotton than the large reliance of an almost purely
agricultural country upon other sections for many articles of food. And
not only subsistance for the people, but subsistence for the plantation as
such often had to be imported. Missing nothing, Olmsted said, in a
description of a rail journey in North Carolina, "The principal other
freight of the train was one hundred and twenty bales of Northern hay. It
belonged ... to a planter who lived some twenty miles beyond here, and who
had bought it in Wilmington at a dollar and a half a hundred weight, to
feed to his mules. Including the steam-boat and railroad freight, and all
the labor of getting it to his stables, its entire cost to him would not
be much less than two dollars a hundred. This would be at least four times
as much as it would have cost to raise and make it in the interior of New
York or New England.... He had preferred to employ his slaves at other
business." (Olmsted, Seaboard Slave States, pp. 376-379.)
But Gregg gave encouragement in any brighter aspects that he found, as
when he said, "Limited as our manufactures are in South Carolina, we can
now, more than supply the State with Coarse Cotton Fabrics. Many of the
fabrics now manufactured here are exported to New York, and for aught I
know, find their way to the East Indies." (Ibid., pp. 11) And he held out
to his State the prospect of the results that might reasonably be expected
from adoption of his proposals: "Were all our hopes ... consumated, South
Carolina would present a delightful picture. Every son and daughter would
find healthful and lucrative employment; our roads, which are now a
disgrace to us, would be improved; we would no longer be under the
necessity of sending to the North for half made wagons and carriages, to
break our necks; we would have, if not as handsome, at least as honestly
and faithfully made ones.... Workshops would take the place of the throngs
of clothing, hat, and shoe stores, and the watch-word would be, from the
seaboard to the mountains, success to domestic industry." (Ibid., p. 17.)
When Southern resources were exploited, the total benefit might not come
to the locality; "The great abundance of the best lumber for the purpose,
in the United States, growing in the vicinity of the town, has lately
induced some persons to attempt ship-building at Mobile. The mechanics
employed are mainly from the North." (Olmsted, Seaboard Slave States, p.
567.)
[98] Olmsted, Seaboard Slave States, p. 544.
[99] Quoted in Olmsted, Seaboard Slave States, p. 175.
[100] Olmsted, Seaboard Slave States, p. 363.
[101] Olmsted, Seaboard Slave States, p. 166.
[102] Tompkins, Cotton Mill, Commercial Features, preface to appendix.
This is one of a thousand incidents which bring to mind the similarity
between Irish temperament and that of the people of the South--how prone
both have been to obscure to themselves real issues in public affairs for
a joke's sake. And the reflection would be dismal for both peoples but for
the finer discernment of which each, at other times, has shown itself
capable. Cf. Plunkett.
[103] Gregg, Essays on Domestic Industry, p. 18.
[104] Ingle, Southern Sidelights, p. 47. Cf. Burkett and Poe, Cotton, pp.
312 and 313, and E. C. Brooks, The Story of Cotton, p. 157.
[105] Olmsted, Seaboard Slave States, p. 169.