CHAPTER IV. _capital_

CAPITAL

In the chapter on the conditions precedent to the erection of cotton mills in the South the attempt was made to show how the stage was set for the actual building of factories. The impulse for manufactures, and especially cotton mills was traced through its several more or less definite periods of development. The first of these was the recoil from the Hancock-Garfield election; the failure of the South's determined hopes for the success of the Democratic candidate, which would mean, it was thought, freedom from political insult and economic servitude, and an opportunity to wreak vengeance for the wrongs of radical rule, virtually marked the death struggle of the old exclusive social philosophy as the animating force in the South. This had been bred by the ante-bellum regime, called into concrete trial by the civil war, and intensified in character through each year of Reconstruction, and through each year proven more untenable. The questioned election of 1876, when Tilden was thrown out under circumstances peculiarly galling to the South, set the section as a unit and unalterable for the next four years in a passionate and dogged resolution against all odds to make a Democrat president in 1880. When Hancock was beaten in a fair fight by Garfield, the South was thrown prostrate; devastated by the war, pillaged and ridden in Reconstruction, to gather all her forces for a final defiant stand and have her last poor hope dashed was tragic. But this very extreme of bitterness was the South's salvation.

The leaders, with remarkable accord and almost simultaneously in all quarters, after recovery from the first inescapable shock, rallied to the situation like heroes, and called their less valiant brethren after them in a new resolution to build up another South founded on democracy and a purpose to employ every material resource for the building of a foundation which would bear the weight of the different structure that had to be erected.

Words unfamiliar in the South were heard on every hand; in this proposal of "real reconstruction" notions as novel as they were salutary were involved. Communication between States and parts of the same State, by railroads, telegraph and telephone; schools, churches, diversification of crops, deepening of harbors and rivers, municipal pride and civic reform were urged; it was demanded that politics and political wrangles be dropped forthwith, and that the section set about the course of material advancement as the only method of asserting rights against the North, and the only means of bearing her share of the national burden.

In the canvas of resources which this impulse brought, cotton mills were pounced upon as affording the readiest and most permanent instruments of success. It has been seen how platform and press and people concentrated their interest and attention upon the "cotton mill campaign", every new factory being hailed as another banner lifted in the fight. Two great impelling motives were patriotism--either local, state, sectional or national--and humanitarian considerations. These were held up in the plainest view of all, and impressed unceasingly. It was as a means to an end that cotton mills were argued for; their advocacy was grounded in the most splendidly fundamental beliefs and aspirations.

Descending from these lofty ideals, the practical inducements to the building of cotton mills as they were brought before the South and the country at large have been pointed out. It was shown that over and above all others stood out prominent and unquestioned the fact of the presence of the raw cotton. Proximity to the material of manufacture was felt to constitute the chief invitation to go into the textile business in a systematic way. But there were other arguments used, running out to great length--of these the leading one was an abundance of cheap and intelligent if untrained labor crying for employment, and this has been dwelt upon in its phases. A store of unused water powers, favorable freight rates, low cost of living, suitable climate, the supply of inexpensive fuel, and the innumerable gains to the community were made the grounds of advocacy of cotton mills. Estimates of the expenses of erection, maintenance and operation of hypothetical factories of all sizes were worked out in elaborate detail, the saving over manufacture of cotton in New England or in Old England being remarked at every juncture.

It is a nice problem to determine how far these advantages possessed or thought to be possessed by the South were aired as a result of deep-lying motives of patriotism and philanthropy, and to what extent they were themselves the exciting forces behind the crystallization of these motives. Did these superiorities of the South come to light mainly because the South had made up its mind to remake the section, or did the South enter upon a course of development because it possessed certain outstanding advantages? To strike a balance here would be an interesting speculative venture. But, however, this may be, it is reasonably clear, as has been previously pointed out, that when it came to putting their money into cotton mills, capitalists, North and South, acted usually upon the assurance given them in the physical assets obtaining. To the extent that general impulses placed in public view definite, concrete and tangible reasons why cotton mills could be made to pay dividends, the undercurrent was indirectly responsible for the erection of the factories.

It is not the purpose of the present paper to set out in any detail the unique resources of the South, either as they constituted the magnet for capital directly, or reacted through the general cotton mill campaign to swell the tide making toward a new character for the section. They deserve separate treatment, especially since they occupy so central a position and have such sensitive contact with the other forces present. Whether, however, physical advantages existing at the South crystallized out of an original philosophical impulse, or operated, more or less unconsciously in the Southern mind, to induce that impulse, it is perfectly clear that the movement for the building of cotton mills in the South originated with the South, and that at least contemporary with the attraction of capital, went an advocacy of the establishment of cotton factories that was consistent, permanent and practically universal.

From the very nature of the movement, Southern and in most cases strictly local capital was first appealed to, both by the actual projectors of the mills and the public organs which interested themselves in the enterprises, and local capital was the first offered. It might be questioned whether outside capitalists, perceiving in the Southern manufacture of cotton a favorable field of investment, did not come in as a result of the publicity of the cotton mill campaign, without waiting for either solicitation from the South or proof of the success of the new plants erecting in that section, but it will be shown that, as a matter of fact, this was not the case. At the time the South felt herself to be isolated, cut off from the national life, discriminated against by Congress and the country at large. In the beginning and in essence continuing to the end, the building of cotton mills was a sectional matter. It is not to be said that outside capital was an afterthought with the promoters of the Southern cotton mills, but every circumstance surrounding the movement, and every instinct of the hour, argued for the exhaustion of native resources before help should be sought from without.

The story of how capital was secured for the cotton mills of the South may be commenced with a sentence from a North Carolina newspaper which strikes the key-note: "All questions of domestic economy, and especially those involving the capital of our people, whether in the shape of labor or dollars, will necessarily be canvassed and scrutinized very closely in their bearings on our material progress."

The nature of the appeals made to local capital will best appear by looking at some of them individually.

Patriotism, a consciousness of unity, and appreciation of the dynamic character of manufactures in the South, appear in a solicitation printed on the editorial page of the Charleston News and Courier for capital for a scheme for the development of water power and cotton mills at Columbia. The enterprise had a peculiarly appealing history, which will be recounted in considering the response of domestic capital. After a summary of these facts, the article concludes: "The work--is one of great magnitude and involves expenditure beyond the ability of this community (Columbia). Nor is the interest merely local, but reaches out to every part of the State. We call, therefore, upon all, from the mountains to the seaboard, to take part in this great central development, involving not only the prosperity of our capital, but, in its ramifications, affecting the prosperity of the entire State."

A week earlier, in a Columbia dispatch to the same paper, Charleston was advised that books of subscription to the stock of the company would soon be opened there, and the argument for investment was placed on more practical grounds: "If the recent subscriptions to factories have left any money in the pockets of the people there (Charleston), it had better be saved for this purpose--a franchise like this is not obtained every decade."

Implying that when the South should make a start in cotton manufacture, outside capital would flow in, but impressing particularly the need for the entrance of domestic interests into the field, a statement of H. T. Inman, capitalist, relative to the plan to purchase Oglethorpe Park, the site of the Atlanta Exposition, from the city authorities and use the buildings for cotton factories, is striking: "We must demonstrate what we have been saying, that there is money in manufacturing in the South. If we wait for others to come here and do it, it will never be done." The argument that the South had faith in her ability to manufacture cotton profitably, as proved by putting her money into the projected mills, was frequently used in soliciting subscriptions at the North, and more frequently Southerners were urged, as here, to go into the ventures, with the specific reason that by so doing Northern capital would be induced to join in.

Money accumulating in bank at low rates of interest was often made the basis of observations on the great gain from manufactures, and was pounced upon as evidence of lack of sympathy with the spirit of the time, which was grounded in the deepest needs of the people. In such cases the cotton mill campaign and the gathering of capital as a matter of practical concern usually overlap. An instance quoted in another place is typical: "But with all its (North Carolina's) varied and splendid capabilities it is idle to talk of home independence so long as we go to the North for everything from a tooth pick to a President.... We may look in vain for the dawn of an era of enterprise, progress and development, so long as thousands and millions of money are deposited in our banks at four per cent. interest when its judicious investment in manufactures would more than quadruple that rate...." Several months later the same paper instanced the success of Edward Richardson, of the firm of Richardson & May, cotton factors of New Orleans, in running, in addition to ten or twelve plantations producing 15,000 to 18,000 bales of cotton a year, a nest of factories with 18,000 spindles, 400 looms and 800 hands in the town of Cresson, which he built. He was said to be worth more than $15,000,000--"all accumulated in the South, the poor South." The closing remark is significant: "His ... accumulations are but the results of forethought, enterprise and nerve. He has no heavy deposits in bank at four per cent."

This same galling fact of bank deposits lying relatively idle when they might be used to further the plans held so much at heart was lamented in cases where it hindered the cotton mill campaign, or the taking of initial steps toward realizing a desire for a mill; but it was made more galling where a venture, properly launched, stood still because the moneyed people held themselves aloof. In distinction to the position of Newberry, South Carolina, where there were "numbers of people ready to aid in the enterprise, convinced as they are that it will be a profitable investment, but ... nobody to take the lead," was Chester another town in the same State, of about the same size. In February of 1881, after the cotton mill campaign had gotten a fair start, the Chester Bulletin commented: "Just now there is a widespread and deep feeling amongst our people throughout the State to foster the manufacturing interests of the country. More than a year has elapsed since our people felt beat a pulse of enthusiasm for the home industries. (Reference was here had to the chartering by the Legislature of two mill corporations which attracted almost no subscriptions.) There is money enough in the county to start the hum of three thousand spindles. The large amount of personal deposits in bank indicate too truly the lack of confidence in home industrial enterprises."

It may be well to consider a typical comprehensive appeal for domestic capital. For this purpose a leading editorial in The News and Courier asking support for the Charleston Manufacturing Company is particularly useful. In the first place, this company marked the entry of Charleston into the field of regular cotton manufacture, and the enterprise took firm hold on the interest of the city from this cause. Also, South Carolina experienced the cotton mill campaign as a movement more highly conscious than in any other State; Charleston was the center of the campaign, as spiritual leader no less by reason of her sufferings than her heroism, and the News and Courier was the mouthpiece of Charleston.

To begin with, the editorial, headed "Everybody's Opportunity", sets forth clearly the division of arguments: "The Charleston Manufacturing Company addresses itself to the citizens of Charleston in a double capacity: First, as a means of making money for the stockholders. Second, as a means of enlarging the common income, stimulating the growth and increasing the prosperity of the city."

Proceeding under the first of these heads, it is pointed out that the mill will succeed because the management, in the hands of men known for their business sagacity and activity, will be both economical and progressive. There is no doubt that, along with other appeals to local resources, confidence in the projectors of a cotton mill, as personal acquaintances and men whose whole lives were familiar knowledge in a small community, had a powerful influence. Next it is shown that the profits of the South Carolina mills for the year 1879, probably the last available for citation, warranted a belief that the Charleston mill would succeed, having at least as good a chance as county plants. These profits had ranged from 18 to 25-1/2 per cent. It is explained that steam power will be used, but that it is used in England, and that the trend of the better opinion is toward steam power rather than water power, as being more reliable and capable of better control. The approval of steam by the superintendent of the Camperdown Mills at Greenville in the same State, on these grounds and also because he knew that the Northern mills using steam made larger profits than those using water, is instanced. It is evident that the necessity of employing steam power, instead of being able to use the water power of the interior, was a hard obstacle to get over, for recurrence is several times had to it in the course of the argument, and the great advantages of coastal location are stressed as a counterbalancing consideration.

The favorable facts that the Charleston mill will be able to buy cotton all the year round, and so avoid carrying a heavy stock, that samples and tops may be utilized, that the rates of insurance will be low and water freights nominal, and lastly that no cottages or schools or churches will have to be built, city location avoiding this source of expense to a provincial establishment are recited, and the prospective stockholders are reminded that by State law the whole of the capital invested in manufactures is exempted from taxation for ten years.

On the second account, of increasing the prosperity and welfare of the community, it is shown how every $228 invested in cotton manufactures in South Carolina the year before supported one person, and how when people earn they have something to spend; house rents will go up as a result of the new demand. Besides, the State at large benefits from a new means of support for the people. The very potent argument of the addition to value which manufacturing brings about is next employed. "At a low estimate the value of cotton is doubled by the conversion into yarns." If the Charleston Manufacturing Company uses 10,000 bales of 400 pounds a bale, at 10 cents per pound, $400,000 will be returned to the growers of the raw cotton. When made into yarns the cotton will be worth $800,000. Every dollar of this $400,000 difference, except what will be spent for materials not to be precured locally, will be disbursed in Charleston in wages and dividends. "It is evident that the building of half-a-dozen cotton factories could revolutionize Charleston. Two or three million dollars additional poured annually into the pockets of the shop-keepers and tradespeople would make them think that the commercial millenium had come." The appeal concludes: "In a two-fold sense, then, the Charleston Manufacturing Company is entitled to support. For the stockholders it will earn money. To the city it will give the life and vigor which nothing short of manufactures will assure us."

An editorial in the same paper the next spring encouraging subscriptions to the capital stock of the Columbia and Lexington Water Power Company, the enterprise already mentioned, which was opening books in Charleston, urged the two benefits already noticed, profit flowing from physical and economic advantages, and a social gain resulting from the indirect bearings of the plant. The value of the franchise, the offer by the State of more than 146,000 days of convict labor at a low wage, the rebate of taxation on plant and improvements for ten years, and estimated earnings of 17 per cent, on a total outlay of $431,607, or running as high as 25 per cent. on an outlay of $725,000, were held up on the side of material things; in dealing with the gain expected to result to the State at large, the influx of immigrants and the employment of thousands of idle women and girls, already present, for whom it was so hard to find profitable work, were pointed out.

Not unusually, in place of the larger social sense, local pride as such furnished the point of departure in the proclamation of an enterpriser to his fellow-citizens. It is to be feared that sometimes this was made the means of demegoguery, the appeal to local spirit being linked with a disparagement of Northern assistance merely for effect. Instances of this will appear when the attitude toward outside capital is considered.

The case of Mr. Winn's scheme for Sumter illustrates the personal appeal to local pride. It is to be noticed that he reduced everything to an individual and immediate basis. He spoke through the paper of the town, the Sumter Southron: "I am now engaged in getting up a mill of 2,500 spindles at this place. I do not expect to seek a dollar of foreign subscription, but I want our own citizens throughout the county to be interested in it and to help me build and operate it." There follows a description of his findings at several nearby mills which he visited. One is inclined to believe that he paraded the facts to impress his audience in a general way, rather than to appeal to strict business sense. He cites the earnings of the mill at Charlotte, North Carolina, owned by the Oates Brothers. With running expenses of $60, "we have the neat little profit of $155 per day". The Sumter mill could save haulage, and use one-third of its cotton not packed, thus saving in bagging and ties. A concluding sentence indicates his frame of mind: "Will a mill pay in Sumter? Why not?"

A statement of the advantages possessed by a mill already in operation as contrasted with those which would contribute to the success of a proposed mill was a favorite method of argument. Thus the Kershaw Gazette said: "Let us realize that what is good for Charleston in this respect is better for us. (Reference was had to the Charleston Manufacturing Company.) She has to use steam as a motive power, which, in the form of coal, has to be brought long distances and at great cost. We have but to harness the magnificent water-powers which are slipping idly by us, and the thing is done. In Charleston, it is the investment of capital on hand, seeking profitable employment. With us, it will be the creation of capital itself; for we venture the assertion that one hundred thousand dollars invested in a cotton factory at Camden would develop interests to more than double that amount." The saving of three-fourths of a cent per pound in the freight between Camden and Charleston would in itself bring a fair dividend upon the capital invested, it was said. "And yet Charleston expects to, and will, make money by what she is about to do. Let the people of Camden and of Kershaw County be up and doing in this matter."

These, then, were the grounds upon which domestic and more strictly local capital were solicited. It is proper now to notice with what success the appeals were made.

In the most respectable trade summary published by any newspaper in the South, it was stated in September of 1881: "The industrial feature of the year is the rapid extension of cotton manufacturing in South Carolina in common with other Southern States (naming the plants and the capital invested in or subscribed to each.) A most gratifying feature connected with the establishment of cotton mills in the South is that the great bulk of the capital employed in their operation has been furnished by Southern people. Southern capitalists are putting their shoulders to the wheel.... More than three-fourths of the capital invested in the cotton mills since the war has been subscribed by our own people...."

The conclusion of Mr. Thompson after a review of the rise of cotton mills in North Carolina is interesting: He says that capital for almost 200 mills that grew up in twenty years "has come chiefly from a multitude of small investors within the State"; again, "The development of the cotton industry in North Carolina is a striking instance of the manner by (in) which a people in poor or moderate circumstances can establish manufactures." He gives credence to estimates by those he considers best informed that 90 per cent. of the capital for mills in North Carolina has come from residents of the State. "The industry is distinctly a home enterprise, founded and fostered by natives of the State."

The Rock Hill Cotton Factory was spoken of as the "pet" of the town. Its $100,000 of capital stock was owned in Rock Hill, with the exception of $15,000 held in Charleston.

Most of the stock of the Belmont Manufacturing Company, the enterprise projected by Mr. Winn in Sumter, already noticed, was taken in the town, and the few thousand dollars needed to increase the capacity above 2,000 spindles would come from Charleston, where President Winn was soliciting support.

The experience of Yorkville, another little town in South Carolina, is interesting, especially for the naive way in which it was related. "... the 'Cotton Mill Campaign' is progressing satisfactorily in Yorkville. We heard an old citizen remark some days ago that he had never seen the town so thoroughly aroused and united.... Yorkville to all appearances is moving forward with a determined purpose to put into successful operation a cotton mill.... The shares have been placed at $500 each, and up to this writing about $25,000 have been subscribed. I would state that this amount has been raised within the limits of the town. A prospectus will be forthcoming this week and the doors will be thrown open to citizens generally of the county who may be able and disposed to assist in carrying forward the project."

A similar instance is that of Walhalla, South Carolina, a very small place indeed. The people began to talk about a cotton manufactory, and at an informal meeting of a few of those interested nearly $10,000 was subscribed. "It is believed that as much as $25,000 will be subscribed in that neighborhood, and if the people of the county will join in the enterprise as much as $50,000 might be made available."

A typical notice is this one: "The enterprising citizens of the new town of Gaffney City have subscribed $40,000 towards building a cotton factory at that place."

Columbus, Georgia, was held up to praise for her loyal support of the cotton manufacturing industry. Before the war she was a little Lowell, it was said. The Federal army captured the place in 1865 and burned 60,000 bales of cotton and all the mills. "The very heart of the city was burned out, but nothing could extinguish its indomitable spirit." In fifteen years the mills had been rebuilt until they were taking annually nearly 17,000 bales of raw cotton, which was almost trebled in value by manufacture. "But the proudest boast of Columbus is that she rebuilt her mills by her own aid and money."

The statement of a railroad man in the New York Herald is valuable: "Mills for the weaving of the coarser cotton fabrics are now in successful operation in Tennessee, Georgia, Kentucky and several of the Atlantic Coast States, all of which have been built by native labor, mostly with local capital and are managed by Southern men."

The Clifton Mill near Spartanburg, furnishes a fair example of the distribution of holdings of the capital stock of a larger enterprise. The joint stock company owning the mill operated under a special act of incorporation of the Legislature, exempting the property from taxation for a period of years, and relieving the stockholders of personal liability. The shares were of a par value of $100. and aggregated $500,000 of which $250,000 was paid in. The stock was held mostly in Spartanburg, Charleston, Boston and Baltimore. Spartanburg capitalists owned $200,000 worth of the stock, Charlestonians $150,000, and $50,000 was held in Boston. To make the capital stock $500,000 most of the original stockholders had doubled their subscriptions.

For a factory near Gaffneys, South Carolina, which would need $500,000 capital stock to the amount of $200,000 would be subscribed for in Chester County, it was thought, and for the remaining $300,000 the North would be looked to.

Together with large subscription to the stock of the Atlanta Exposition from the North and East, went an early subscription of $20,000 in Atlanta.

While it might be considered under the heading of the cotton mill campaign, or denominated "Southern enterprise", I believe it will be most interesting to relate at this point briefly the facts in the Columbia canal scheme, as illustrating how domestic capital threw itself into the situation in which the South found herself in 1880, and the years immediately following. It is especially instructive to notice how Northern enterprise, while, so far superior to Southern initiative at all times before, after 1880 failed where in the South sometimes native energy succeeded.

Columbia, the capital of South Carolina, is located at the falls of the Congaree River. Today there is a canal of about three miles in length, 60 or 75 feet in breadth, terminating at the lower part of the city. At the end of the canal is a duck mill. In 1868 the Messrs. Sprague, manufacturers of Rhode Island, took up a plan of developing this water power at Columbia, but "in consequence of their misfortunes, failed", and the whole matter of the canal passed to the hands of the State Canal Commission. Some prominent Columbians, hoping to revive the project, contributed money to the employment of one Mr. Holly, a first-rate hydraulic engineer of Rochester, New York. Mr. Holly was making surveys and progressing satisfactorily when, after three months, his engagement was discontinued. The reason for this was that Thompson and Nagle, engineers of Providence, on a tour of inspection through the South, were attracted to the water power at Columbia, and Mr. Thompson appealed to the State for franchises, in which appeal he was supported by the citizens of Columbia who had helped promote the modest work under Mr. Holly. On February 10, 1880, the final contract between Thompson and Nagle and the State Canal Commission was entered into; by its terms the engineers were to have the use of 200 convicts for three years, and at the expiration of this time they were to have developed at Gervais Street 15,000 horse power of water power, and have in operation a cotton mill of at least 16,000 spindles.

Thompson and Nagle thought the necessary capital could be had at the North. They failed to secure it, and attributed their failure to the turmoil of the presidential campaign which was raging. Though this was probably a valid basis for the appeal to the Legislature for an extension of the rights granted them, the application for extension was denied. At this juncture, modifying the scope of the plans somewhat, the foremost citizens of Columbia took up the matter themselves, and organized the Columbia and Lexington Water Power Company to bring about the development.

Nightly meetings were held of those interested in the purchase of Mr. Thompson's charter. In one hour eleven subscribers gave $5,000 each--$55,000--toward the amount. A few days later the subscriptions in Columbia had reached $117,600, and the expectation was that the sum set to be raised in Columbia--$125,000--would be exceeded.

Mention has been made several times of the Charleston Manufacturing Company. At the end of the first day $120,000 of its capital stock had been taken. A little later the subscriptions to the stock had become $200,000 and more, mostly "for small amounts, which is what is desired. At the present rate the whole capital required will soon be subscribed." On July 6, the News and Courier had these two editorial paragraphs, the justifiable satisfaction pervading which is not to be mistaken: "We are authorized and requested to say that the whole of the stock of the Charleston Manufacturing Company, being half a million dollars, has been subscribed, and that the books are closed. It is useless, therefore, to continue to send in subscriptions.

"We believe that more than three-fifths of the whole capital stock are held in Charleston, so that right here will come the bulk of the direct profit by the working of the company...."

But before the Charleston Manufacturing Company had completed its organization another corporation had come into existence. This was a mill company promoted and most largely subscribed to by the Germans of Charleston, headed by Captain Tecklenburg. Not much was said about the concern in the papers, but of its $100,000 of capital stock, $75,000 were subscribed between January and May of 1881. This Palmetto Manufacturing Company, as it was called, was apparently, the most restricted in its stockholders of any mill that had been projected in the South to this time.

Little towns, villages almost, did not fail of local enthusiasm and capital in small amounts. In January of 1882 Fort Mill, in York County, was agitating the building of a cotton mill there, and $50,000 was set as the amount of stock to be secured. Chester, a little earlier concluded her size would compel her to produce $300,000 for a mill within her borders. A gentleman of Griffin, Georgia, offered to subscribe one fourth of the capital necessary to start a mill there.

Having seen the character of the arguments used in attracting native capital to the Southern cotton mill projects, and the extent of the response to these appeals, it is next necessary to turn to the other source of assistance--outside capital. Practically this may be termed Northern capital, although Englishmen interested themselves in the Southern ventures, and much money came from what were strictly termed, the Eastern States. In the minds of the people of South Carolina, North Carolina, Georgia, Alabama and those States, capital stock of a Southern mill held in Baltimore would be classed as appertaining to the North.

It is proper first to consider the attitude of the South toward Northern capital; second, the appeals made to Northern capital; and third, the effect of these appeals or the response of them.

In many aspects the rise of cotton mills in the South was less an industrial development than a subtle drama, powerful in its great motives. As William Garratt Brown has said of the history of the Southern States in their struggle upward after the war, it is not only to be studied with diligence of research, but is to be viewed with passion. The story of the cotton mills is filled with elemental emotions; the moving characters are splendid, clear-cut dramatic types; there are the villain, the hero, the schemer, the lover of his fellow men. The vices and virtues take their part--self-sacrifice, jealousy, hate, charity, revenge, bravery, honor, patriotism.

The first act of the drama is constituted in the defeat of Hancock and the magnificent refusal of the South to be baffled--the oath to rebuild her shattered fortunes. The actors leave the stage with hope filling the future. The curtain rises on the second act to discover the chief spirits of the South setting systematically about "the cotton mill campaign"; their brethren converted to a belief that manufacturing the staple would transform the South, they turn in entreaty to their fellows for support, and the answer is loyal and gallant.

The third act opens with a situation which tests the greatness of the players' faith in what they profess. Domestic resources exhausted or exhausting, or slow in response to the need, should the object for which they were striving be lessened in its meaning, importance and desirability? Should the cotton mills which were to mean so much be restricted to the means of the South, urged to the front by a splendid pride and devotion? Should the esprit de corps which animated the Southerners, and the cheerfulness of their co-operation, with all that inspired these, when they failed of further effect, be considered to set the natural and proper limits to expansion?

Was this to close the action? Or was the South, remembering her vows, to cling to her ambition undiminished? In spite of wounds yet fresh and burning, which in the name of pity and honor and self-esteem cried out to be nursed and comforted at home, could the South face again her enemies, and this time not just to challenge, which was hard, but to entreat, which was hardest? Would the South rise superior to pride, and be content with nothing short of the fullest heroism? Would she go to the North for capital for her young cotton mills?

It was a silent struggle with herself. Little was uttered, but fundamental emotions were at play. When she decided to appeal for assistance in a work which she knew to be right, the climax of the drama had been reached. The crucial test had been endured, and the South had emerged triumphant.

As has been said, few lines are there to indicate the feeling. It is largely dumb show. But we may look at the expressions that did occur to show the attitude of the South toward the question of Northern capital.

The following manifesto is significant, involving as it does recognition of the necessity for a modification of political views if capital to be invested in the South, in the eyes of the North, was to be made safe: "In this state (South Carolina) we need capital and less party and politics.... Such men as Gould, Vanderbilt and Plant have invested millions of dollars in our railroads, manufactories and other enterprises, and have been remunerated in the face of a 'Solid South and a Solid North'. It is useless to say that millions have been driven off from like investments on account of personal whims and jealousies among prominent politicians in both parties. Can the South afford to remain solid? This is the great question of the day, and it can be answered in the negative.... We want all the capital possible to develop our hidden and inexhaustible resources...." And again: "So long as we have section unity in politics in the South its material prosperity will be checked and an absolute injury will be sustained through its entire commercial and agricultural dealings by exciting distrust of capital.... So taking the past and the present as indices for the future, it is plain to see that a dissolution of the solid South will cut at the very roots of all these wrangles between the North and the South in which sectionalism is involved."

The News and Courier wished to accord to every dollar of Northern capital invested in the South the same credit as was felt to be due home capital likewise contributed to the building up of the section. "Outside capital ... is beginning to seek this Southern field to aid in a more rapid and thorough work of restoration of dead or dormant enterprises. This movement needs a wise encouragement by public and private approval. Some of that credit which was accorded to the man who caused an additional blade of grass to grow should be given to everyone who affords facilities to manufacture an additional boll of cotton, or to carry it and other produce to market."

A gentleman connected with the International Cotton Exposition said: "We people of the South should embrace every opportunity which, like the opportunity afforded by this Exposition, will bring among us intelligent and interested observers of our industrial condition, resources and aptitudes. We have in the midst of us the raw material, so to speak, of a magnificent prosperity. We lack knowledge, population and capital. These may be slowly accumulated in the course of years, or they may be rapidly by well directed efforts to obtain them from beyond our own borders. We advocate the latter plan." This is as business-like as anyone could desire.

In an interview with the Atlanta Constitution, Francis Cogin reviewed the cotton manufacturing situation in Augusta, reciting the profits and asserting that the Southern mills had an advantage over those of the North such as would allow the former to earn dividends at a time when the latter would not be making a dollar. He concluded: "The future of cotton manufacture in the South will be limited simply by the good sense and courtesy of our own people. If we invite capital, make it safe here, and welcome those who bring it, we will get all we want." The element of safety, here remarked, meant frequently safety to be brought about by political arrangements which would violate the established creed of the South; but sometimes ordinary business balance was pleaded for, as when a North Carolina paper quoted with approval from the Financial Chronicle: "Why cannot the South understand ... that the worst hindrance to her needed influx of industry and capital is uncertainty?"

In another chapter the degrees of intensity with which the cotton mill campaign was urged were seen to vary, roughly, with the distance from Columbia, South Carolina, say, as a center. There is a casual note in the little that found its way into the Richmond papers. This is to be remarked in Richmond's attitude toward Northern capital. It was not a stirring, vital thing in Virginia. For instance: "When we consider that the takings of the Continent from Lancashire are not piece goods, but yarns, why cannot we in the South make these yarns for the Continent ourselves and save to ourselves the profit of conversion now enjoyed by the English buyer of the raw material? Why not have a large and successful cotton manufacturing industry?

"We are persuaded that once the folks in New England, who have surplus money awaiting employment, thoroughly investigate the points Richmond presents for a safe lodgment of that capital in manufacturing, the flow will start this way."

The attitude of W. H. Gannon was peculiar, but serves as an introduction to the mention of a phase of the subject which is important. Mr. Gannon, referred to in other connections, believed that Northern capital ought to be welcomed at the South as helping to develop an industry in which the South could stand without a rival. He favored inducing Northern manufacturers to set up plants bodily in the South. But, being the agent of a society which sought to colonize New England consumptive operatives in co-operative mill villages in the South, the settlement to be financially backed by a Northern capitalist or manufacturer, Mr. Gannon wished to place a modification upon the influx of capital to the Southern States. He asked whether the South should encourage an economic system with "large stock companies with hundreds of thousands of dollars, in which the operatives have no pecuniary interest in the plant, and from the active management of which we ourselves would be virtually excluded? (It is to be borne in mind that, as at present organized, the treasurer and selling agents in those great concerns necessarily control their direction); or is it better that we aid small co-operative concerns wherein the plant is owned in great part by the operatives, and in which we might familiarize ourselves with manufacturing in all its details?"

To contend for small mills, whether as above for the co-operative features suitable to them, or as a means of insuring proper caution in the development of the industry, frequently with entire sincerity, was nonetheless, I think, one evidence of dislike and distrust of Northern capital. H. P. Hammett, an old cotton mill man in South Carolina, said: "I do not share in the opinion commonly expressed that we must procure capital from the North to manufacture the cotton at the South. I would by no means exclude it, but gladly welcome it." But he worked around gradually to this concluding statement, relative to the report that English and Northern capitalists were seeking to locate mills on the water powers of the South: "--it would be unfortunate if most of the best powers should pass from the control of our own people before they knew it."

One more characteristic quotation, and the point is clear: Objection had been raised to the legislation forbidding the pooling of railroads, producing corners in freights with rising rates--the Sherman Act was probably meant. This was too much for the Winnsboro, South Carolina, News, the reaction of which resulted in these words: "Well enough is it to talk about repelling Northern capital by discriminating legislation, but far better have no Northern capital than have it holding native noses down to the grindstone. The half-starved wolf refused to change places with the sleek mastiff that wore a master's collar. Northern capital that brings Northern collars is not what we wish, and we will not have it as long as the people send incorruptible legislators to Columbia. We welcome foreign capital down here, provided it recognizes that the State is supreme...."

While it is easily understood how this attitude obtained--the wonder is, in fact, as already seen, that it was not more nearly universal than sporadic--the shortsightedness of such a policy for the South is apparent. For whatever outside capital reaped in dividends, the South reaped a larger advantage in collateral benefits socially. The gain to the communities where mills were located, supposing even that Northern capital was greatly in preponderance, were more than any money earnings, in sums however large, for it meant building for the future in material institutions that would prove dynamic. The cotton mills, and all they brought in their train, presaged a change in social ideals and economic outlook on which no price was to be set.

If Mr. Baldwin, the railroad president, was a little early in making the statement in the middle months of 1881, surely his purpose was good, and his hopefulness was justified, when he said: "I say on the strength of recent and extended observation that whatever of antagonism to Northern capital may have existed in the South has disappeared. I never met it, at any time, but (I) am willing to grant that it may have existed sometime and somewhere."

As a corollary of the fact, recognized at the South, that whatever were the social gains resultant upon the establishment of cotton factories, capitalists put their money into these ventures because they believed the conditions of manufacture assured to them dividend, the South grounded its appeals to Northern investors in the hard physical advantages possessed by the South as a field for cotton manufacture, usually stressing superiorities over the Northern States. Northern capitalists were as eager to reap profits as were Southern projectors of mills to enlist their aid and interest, and so the claims of the South were easily investigated without the medium of propaganda. The widespread publicity given to the whole matter of Southern manufacturing in the cotton mill campaign, while no doubt it was registered in all parts of the North and East, was commenced and carried on as of concern to the South.

Correspondence of the New York Times from Atlanta well illustrates this. It is to be noticed how quickly the preliminaries are got over--considerations and speculations in which Southern papers indulged to any length: "Manufacturing in the South is the one subject on which thinking men here speak with entire confidence. They have, most of them, some qualifying doubts as to agricultural progress, the cheapening of cotton production, the raising of home supplies, immigration, mining, and the many other now ambitions and enterprises which have engaged so much attention since the opening of the new era of industrial development. But concerning the future of manufactures, particularly of cotton, all men of intelligence and business experience speak with the assurance of inspired prophecy. It is, in fact, not easy to see why the mill should not seek the cotton instead of the cotton seeking the mill." With this introduction, the plunge is made into the supporting facts, which ought to turn the flow of capital toward the South.

The first statement is that it is a dead waste to ship raw cotton to a mill 1,500 miles away, when it can be made into yarns or fabrics in factories distant from the field only short half-day's journey for a mule. The cost of sending the cotton to New England is reckoned, in expenses of bagging, ties, ginning, baling, storage, insurance, drayage, sampling, compressing, commissions of brokerage, waste in handling, and freight to amount to $14.90 per bale, or almost exactly 1-1/2 cents per pound which the New England manufacturer pays for the cotton above the price received by the planter. The estimate of $100,000,000 is given as the charge on the cotton crop of the South of 1879, on Edward Atkinson's figures, for the items mentioned.

"... to the anxious capitalist tired of a petty 4 per cent. and seeking new and more profitable investments such facts are not without interest. They go to support the claim that the Southern mill has an advantage of from 10 to 20 per cent. over its New England competitor. But these advantages are by no means confined to the elimination of unnecessary charges for baling and transportation." Water power in the South, six dollars per horse power per annum, or in some instances given away for the location of a mill, as against a cost of twelve dollars in New England, is dwelt upon, with the greater utility of the Southern water powers due to the absence of freezes. The cheapness of labor is given prominent place, and the suitability of the climate of the South for cotton manufacture.

Exemption from taxation was a regular method of inviting outside as well as encouraging domestic investment. South Carolina exempted from taxation for a period of ten years all new machinery put in a factory. The Observer, of Raleigh, said editorially: "... North Carolina might well learn a lesson from the liberal course pursued in South Carolina and exempt from taxation for ten years all cotton factories within our borders. The tax does not net the State more than a thousand dollars or so, and the counties only double as much. But then there may be a great deal in it tending to induce Northern capitalists to make investments with us. Once here, they will be so pleased with our advantages that they will never think of leaving us."

As early as 1872 Georgia had passed a statute remitting taxes on cotton and woolen mills for a decade.

An indication of the comparative coolness of the States near Northern influence, already remarked, in a little controversy which took place in the Richmond papers over exemption of mills from taxation. Said "Hanover": "It is true that a law exempting capital invested in manufacturing, even for a limited period, is unconstitutional. But if it is necessary to that end, the constitution can be amended." The farmers would not object, he thought, since increased size and prosperity of the cities would mean increased gains to them in sale of produce. Richmond, he said, in addition to her natural advantages, needed to offer exemption from taxation to secure the desired capital. But "King William", in rejoinder, asserted that the city was more dependent upon the country than was the latter on the former; that exempting manufactures from taxation would mean increasing the tax for farmers; and that Richmond was doing well enough as it was.

An indirect appeal to outside capital was felt to lie in a direct appeal to domestic capital, and the fact that foreign interest would be attracted by evidence of native faith in the mills was used as an argument in securing capital at home. Thus the Columbia Register, speaking of the plan of the Columbia and Lexington Water Power Company said editorially: "Columbia is now resolved to find money for herself, in the City and the State, for the development of the Canal and the establishment of factories. This will bring in outside capital later on. Nothing so attracts investors in other States as the knowledge that people on the ground have proved their faith in an undertaking by putting money in it."

Again it was said: "More than three-fourths of the capital invested in the cotton mills since the war has been subscribed by our own people, and new enterprises are opening up the way to a proud and successful future. The Southern investment encourages Northern capital to come into the same field, and the rate of progress is far more rapid than if it depended on either Southern savings or Northern capital alone."

A county paper told its readers: "We believe there is money enough in the county, here and there, to make at least a modest beginning so as to attract outside capital."

Having sought to define the attitude of the South toward Northern capital, and to indicate the nature of the appeals made to the outside capitalist, the last topic of this discussion is reached in an examination of the response of investors outside of the South to invitations, and the influx of capital when the opportunities for profit had become apparent.

It must be plain that as the sections drew together with each year that removed the "reminders of the Civil War, the South was more welcoming in her attitude toward Northern capital, and the North more ready to invest in the South. This is recognized in an editorial of The News and Courier, headed The North and Europe Building Up the South": "It has been evident during the past two years that the distrust which had prevented capital from coming to the Southern States for investment has, in a large measure, been dissipated, and that the disposition to place money in the South in undertakings which promise a fair return is rapidly growing strong. Indeed, the process has gone on much more swiftly than is supposed by those who have not watched the course of events...." Continuing, the editorial quotes an estimate appearing in the New York Herald, that in the eighteen months preceding Northern and European capitalists subscribed to Southern enterprises located in the section east of the Mississippi and South of the James, $100,000,000. Of this amount, more than $90,000,000 was invested in railroads, without the $20,000,000 in the Cincinnati Southern. "Besides the investments in railroads there are the investments in cotton manufactures. There is hardly a city in the South in which there is not a new factory building organizing, and in nearly every case a considerable part of the capital is raised at the North."

The Baltimore American said the same thing: "The South is now the focal point of trade aspirations for the whole country. Capital and industrial activity are crowding upon it from every point of the compass. Every railroad system in the land is struggling to reach it...."

Outside capital invested in Southern cotton mills took two forms--subscriptions to the stock of mills managed in whole or in part by Southern men, and the actual setting up of plants in the South owned throughout by Northern promoters. Of these two, the second was of much the rarer occurrence. Capital not domestic came from two main sources, the North and East, and from England. There is no reason to believe that the English subscriptions, in spite of frequent allusions to England as a possible investor, were large or many.

Pawtucket being the pioneer cotton manufacturing place in the North, Providence, which had come to virtually absorb the smaller city, took a great interest in the new mills of the South after the Civil War. A Providence mechanical engineer designed the mills and machinery for some of the most successful plants, and that its men were thinking of setting up mills of their own in the South is evidenced by the visit of Mr. Boyd to Georgia in 1881, when on behalf of New England capitalists he prospected the State for the best location for a large cotton factory.

A little later it was given as common knowledge that several of the largest manufacturing firms of Manchester, England, had secured sites for mills in the Southern States. A London correspondent of the New York World remarked a clear disposition of English capital to seek investment in Southern manufactures.

The railroads, both the minor lines connecting individual points, and the great systems penetrating the South in this period, were influential in fostering and inaugurating manufactures. The little railroads helped the mills by affording transportation facilities and by making the inland water powers accessible, but the big ones could lend money and did of course make it their business to encourage manufacturing along their lines. President Baldwin, of the Louisville and Nashville, distinguished three ways in which the railroads assisted the sections by aiding mills in reach of their tracks, by uniting the parts of the country, and by affording a strong commercial backbone. Hon. Gabriel Gannon urged the claims of railroads upon South Carolina as bringing capital to the Southern field; he attributed the erection of a mill with $500,000 capital largely to the railroad connections of Spartanburg.

An article already referred to said of the railroads in their bearing upon manufactures: "The railroad syndicates are of necessity interested in the general growth of the country through which the lines run, and will spare no pains to bring in immigrants and to encourage the opening of mines and the establishment of factories."

In the majority of instances, Northern capitalists subscribed to the stock of Southern mills after a considerable proportion of the shares had been taken at the South. Similarly, a very usual juncture for the investment of Northern capital was a projected enlargement of a plant, machinery manufacturers taking stock in payment for equipment. Thus the Rock Hill Cotton Factory, the $100,000 capital stock of which was owned in Rock Hill and Charleston, South Carolina, in doubling the capital secured a large part of the additional $100,000 at the North.

A vigorous solicitor of Northern funds for Southern mills was D. L. Love, the pioneer cotton manufacturer of Huntsville, Alabama. Before going on one of his trips to New England "for continuous exertion for the establishment of factories in the South," he made a statement of his successes and plans. His project of a cotton mill at Vicksburg, Mississippi, was "on the high-road to success;" he had secured the organization of a company with $40,000 then subscribed to manufacture the staple at Jackson, Tennessee; he had about consummated a contract with New England capitalists to revive manufacture in a building at Corinth, Mississippi; a Connecticut manufacturer was looking for an opening at the South, and would be induced to settle at Huntsville; in all, he expected to bring about the investment of $1,000,000 in factories in Huntsville in the three years to come.

Mr. Verdery, of Augusta, telegraphed from New York news of his success in seeking capital at the North. He "placed $85,000 of the new stock of the Enterprise Factory, and expects to book from $25,000 to $50,000 more in that city. He has had urgent requests from Boston, Philadelphia and other cities to go to those places, and has no doubt he will be able to obtain large subscriptions...."

Much is to be learned from a close study of the founding of the Charleston Manufacturing Company, which was a representative Southern mill, a child of the cotton mill campaign and an expression of the patriotism, statesmanship and farsightedness of the South of the day. It embodied in its history nearly every element and feature to be noticed in this study. In an advertisement calling for additional local subscriptions, the company made the statement: "Arrangements have been made with capitalists at the North to take such an amount of stock as may be necessary to ensure the success of this enterprise." This statement is to be interpreted in connection with the announcement a fortnight later of the complete organization of the company, with the exception of the election of a secretary and treasurer, two of the nine directors being W. H. Baldwin, Jr., and O. H. Sampson. "Maj. Smythe stated that a considerable amount of the stock was held in Baltimore and Boston, and for that reason Mr. W. H. Baldwin, Jr., of Baltimore, and Mr. C. H. Sampson, of Boston, had been nominated." Woodward, Baldwin and Norris were dry goods commission merchants of Baltimore, and "agents for the goods of several Southern cotton mills," and C. H. Sampson was the senior partner in the firm of Sampson & Co., of Boston, "dealers in yarns and also agents for several Southern cotton mills." Two days earlier Messrs. Sampson and Baldwin visited the site for the company's mill and expressed themselves as pleased with it. On the same day a meeting was held at which it was decided that the mill should manufacture standard sheetings and 3-ply yarns.

In this instance the commission merchants in all probability were those who agreed "to take such an amount of stock as may be necessary to ensure the success of this enterprise," it being either agreed that in return for this they should get the brokerage of the mill, or even, perhaps, receiving their pay as agents in shares of stock, which meant taking dividends instead of commissions. The practise was a common one, and machinery manufacturers followed the same plan. It is not at all clear that it could have been avoided, and the net profits which were earned by the mills of the South in this period would seem to dispute the statement, that the commissions charged by firms which had thus gained control over the product were exorbitant, and left the mills barely enough earnings to continue to turn out the goods which was the instrument of their own exploitation.

A final instance of Northern pecuniary interest in the development of cotton manufactures at the South may be noticed in the fact that New York bankers were expected to exceed the subscription of $25,000 to the International Cotton Exposition at Atlanta, alloted to the city. Among the large subscribers were Inman, Swan & Co., $2,000; Drexel, Morgan & Co., $1,000; Brown Bros. & Co., $1,000.