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 showfrom 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 lackof 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 verywell 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 fewyears, 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 ofprosperity since the war. From 1865 to 1880 the company paid average annual dividends of 1421⁄32per 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. ormore—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. Thefirst 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 notcertain 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—theywould 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 thedebt, 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:
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 thissection about 1898 to 1901; and referring to some old records, as of March, 1901, I find such entries as this:
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:
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, inhis 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 AugustaFactory 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, andwhich 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 factoriesis 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 5for 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]
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 700and 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.
[106]Gregg, Essays on Domestic Industry, p. 20. "Lamentable, indeed is it to see so wise and so pure a man as Langdon Cheves, putting forth the doctrine, to South Carolina, that manufactures should be the last resort of a country. With the greatest possible respect for the opinions of this truly great man, and the humblest pretensions on my part, I will venture the assertion, that a greater error was never committed by a statesman." (Ibid., p. 14) For a very fine passage, omitted here only because of its length, showing the fallacy of Cheves' position, and defining what Gregg meant by "domestic manufactures"—not household industry, but the erection of steam mills in Charleston, of cotton factories there and throughout the State; "I mean, that, at every village and cross-road in the State, we should have a tannery, a shoe-maker, a clothier, a hatter, a blacksmith ... a wagon maker ... this is the kind of manufactures I speak of, as being necessary to bring forth the energies of a country, and give healthful and vigorous action to agriculture, commerce and every department of industry"—See Ibid., pp. 14-15-16. The Southern Quarterly Review in 1845 quoted Cheves: "'Manufacturing should be the last resort of industry in every country, for one forced as with us, they serve no interests but those of the capitalists who set them in motion, and their immediate localities'." And Mr. Kohn remarks, "This expression was not peculiar to any one class of leaders in South Carolina at that time," and he instances other examples. (Kohn, Cotton Mill of S.C., p. 13.) Cf. also references to Burkett and Poe and to Brooks.