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...."[243]
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."[244] This statement is to be interpreted in connection with the announcement a fortnight later[245] 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.[246]
CHAPTER V
FINANCING THE MILLS
The preceding chapter dealt with the capital of the Southern cotton mills in the period of their establishment. It was first noticed that local capital was naturally drawn upon before any other, and the character of the appeals to local resources and the response to these appeals were brought out. The second division of the report dealt with the attitude of the Southern mill promoters toward outside, usually Northern capital, the nature of the appeals made to Northern capital, and the extent of the response to these solicitations.
Altogether, the surface aspects of the securing of capital were dealt with in a large way; in denominating the present chapter and that following: "The Financing of the Mills", it is intended to bring out the minutiae of the process, and to set forth the mechanism of the problem in its detail.