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 1½ 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.[229]
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."[230]
As early as 1872 Georgia had passed a statute remitting taxes on cotton and woolen mills for a decade.[231]
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."[232]
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."[233]
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."[234]