At the commencement of the great period of cotton mill building in the South, every town which could make any pretensions to ability to establish a mill was engaging the utmost resources of the moneyed men it had—capital was hardly seeking opportunities for investment. Sometimes, however, a place with almost no resources and with only a few enterprising citizens, perhaps, would advertise itself openly as an inviting chance. An advertisement in the winter of 1881 read: "We will give to a Cotton Manufacturing Company, that will organize and locate at Landsford, S.C., with a capital of $300,000 a site, 20 acres of land and 300 horse water power." Those interested were directed to apply for particulars to three gentlemen living respectively in Rock Hill, Landsford and Charleston.[274] These were doubtless promoters who had settled on this particular town as worth effort, or who were burdened with real estate of no value unless the town could be built up.
But these instances were the exception at a time when everybody was too much concerned with the cotton mill in his own town, to think of the needs of another place. There is a notable instance of the bidding of one place against another for a proposed cotton mill, however, in recent years. Captain Ellison A. Smythe announced that he would put up a fine goods mill as all of his interests in the Piedmont of South Carolina have prospered, there was keen rivalry between Greenville and Laurens for the plant. There were campaigns in both places, much enthusiasm being evidenced; Greenville was able to offer the best proposition, and got the Dunean Mill.[275]
In the methods of securing capital at home, two co-operative schemes are to be considered. The plan that comes first to mind as co-operative is said by Mr. Holland Thompson book to have been often employed in the building of cotton mills in North Carolina; shares would be of $100 par value, made payable in weekly instalments of one dollar, fifty or even twenty-five cents, thus attracting the very small investor—operatives took shares under such an arrangement. The last payment plan requires eight years for completion, as against four or two for the first plans; those wishing to do so might pay cash, less six per cent. for the aver payment-time, the discount bringing the share down to $89.60 plus.[276]
The second mill—the Cabarrus—built by Mr. Cannon at Concord, North Carolina, was financed in this manner. Its plant was an old wood-working and iron establishment slightly modified to house cotton machinery; its capital stock was only $15,000 one-half paid up, and the other half payable in fifty cents weekly instalments, the whole to be paid in two years. Mr. Hartsell of Concord, remembers seeing the old secretary-treasurer of the mill going about the town with his collection books under his arm.[277] The Spartan Mills, Spartanburg, South Carolina, were rected under a building and loan scheme which gave the mill management little ready money.[278] Besides the expense of collecting the small and frequent payments, serious disadvantages might result from such a method of financing a mill. For instance, in the case of the Spartan Mills, John H. Montgomery, the projector, was persuaded to buy the old machinery of a mill at Newberryport, Massachusetts; he lacked capital to purchase machinery otherwise, and the Newberryport mill took payment in stock. The machinery thus installed was worn out, out of date, showed quick deterioration and proved very expensive.[279]
The other co-operative plan is said to have been followed in the case of a good many South Carolina mills. All of those who might contribute to the erection of the plant—dealers in lumber, paint, tin, brick, etc.,—would be asked the question: "If you get this contract, how much stock will you take?"[280]
Some account has been given of the additional issues of stock on account of extensions in plant. There is evidence that very often, however, increases in capacity were made through earnings and credit rather than by the issue of more stock. Indeed, the latter method has been much more frequently followed, if the opinion of one of the best informed of the younger cotton mill men is to be taken.[281] He recited in support of his contention the typical case of the 5,000 spindle mill at Williamston, South Carolina, which issued extra stock to $30,000 and increased its spindleage to 15,000. Since then, the plant has grown to have 32,000 spindles, its capital standing at $300,000; this was accomplished through earnings and credit. It is fair to say that the normal capitalization of a plant of 32,000 spindles would be something in excess of $600,000, computing the cost at $20 to the spindle.
The first two-story addition of the Gaffney Manufacturing Company was rected upon earnings of the original plant in the first three years of its operation.[282] The finishing plant of the same mill, erected some years later, had to be dismanteled and given over to looms because the stockholders in the company would not give the president the required support, and the debt incurred was pressing.[283]
The Young-Hartsell Mill, at Concord, North Carolina, has been built up in plant by putting earnings back into the factory. Considerable enlargement, on the most approved lines, has recently been completed, the end of the extension being weatherboarded to allow of easy further addition.[284]
The capital stock of the Arlington Mill, Gastonia, organized by G. W. Ragan and some of his friends who had withdrawn their holdings in the Trenton Mill, at the same town, was over-subscribed in fifteen minutes. At organization, the stock was fixed at $130,000 for 3,000 spindles; in three years an additional stock dividend of $45,000 was issued, and the spindleage increased to 9,500 and later still to 12,000.[285] There evidently was not here, as it has been intimated there sometimes was, an impetus toward expansion by reason of over-subscription at the time of organization, for the additional stock issued, presumably at least, went automatically to the original subscribers. It was a case of extension from earnings.
The mills established at the opening of the era made frequently huge profits, which made increases in size from earnings to the natural course.[286]