These two plans are brought nearer together, however, by Dr. Beattie's opinion that in practice Dr. Parker's idea of the saving to be derived from the merger would not work out, from the fact that all officers and higher employees of the combination would want increased pay for additional work, and not in proportion to the extra labor and responsibility imposed.[345] To this is to be added the caution that Mr. Cannon probably does, in borrowing and in administration generally, accomplish many economies not indicated in his statement.
An editor said that there was no "graft" particularly in the promoting of the mills; that the minutest details of an enterprise were watched by the people of the community. This tends to be a confirmation of the view the writer brought to take of the development of the industry in the South, that it was to a larger extent the child of the public initiative and concern than most economic movements.
Mr. Thompson says that "The North Carolina mills have been almost invariably managed honestly in the interest of all the stockholders."[347] This is true of the entire South. There have, however, been two instances of fraud, one chargeable to Northern selling agents, but the other, unhappily, though also inexplicably, the result of wrong-doing on the part of a Southern man who had drawn together a number of mills. The former case was one in which a New York commission firm which had taken the president of a successful plant under its patronage, and placed him at the head of a mill in which the firm was sinking large sums, was angered at his effective attempts to free the second mill from the influence of the selling agents, and sought vengeance by ruining the original mill of which he was president. In the second instance, it is said, the president of the merger, during years in which his associates and the general public had every confidence in him, had been owing, unknown to a soul, $400,000 to the holding company and to the constituent mills. When there was a directors' meeting of the holding company, the constituent mills would appear to be the ones involved, and when the several companies met, the sum seemed due to the general company. One of his intimate co-workers stated that "His failure shook this whole section, not only in a business way, but in a moral way."[348] And of both incidents, it was believed by another that to them was attributable a loss of interest by the Southern communities in mill building.
The depression following the panic of 1873 gave trouble to most of the cotton mills established in the years before the period of the industrial revival. During the hard times, for instance, some of those who had gone into Colonel Hammett's enterprise for the Piedmont Factory declined to pay their subscriptions. For the three months during which the machinery was being installed, the only pay the workmen got was credit for groceries at a small store in Greenville, two officers of the company giving their individual note of $500 as guarantee.[349] Colonel Hammett drew upon every resource of business and personal friendship to tide the venture over from 1873 to 1876.[350] He went so far as to mortgage his horses and carriage to buy the belting for the plant.[351]
In some of the mills, the treasurer has the largest part in financial administration. In such cases he is frequently a younger man, a product of the newer South, who has pushed his way up in the enterprise to the position of real power, leaving the president, who is perhaps a man better equipped in community esteem than in specific training, as nominal head of the concern. This has happened at Gastonia, North Carolina, a particularly progressive spinning place. But in most of the companies, especially the smaller concerns, the president is in chief control of financial affairs. He often stamps his personality deeply on every department of the business of the mill and village and region even. A case in point is that of Mr. Charles Estes, when interviewed 98 years old, and for twenty years before his retirement in 1901, president of the John P. King Manufacturing Company, Augusta. With some show of pride, he related how during his active career the manager of the R. G. Dunn commercial agency in Augusta one day called him into the office and let him see the report of the King Mill. It read: "John P. King Mfg. Co. Capital Stock $1,000,000. 3 per cent. semi-annual dividends. President calls directors together once in six months and tells them what he has done." "And that was the way I ran the mill," he declared.[352]
The Salisbury, N.C., Mill has a singular plan. Financial administration is concentrated in the hands of a finance committee composed of the president, treasurer and agent, or manager. The directors do about as the finance committee indicates; they hold a less important place because of the ill health of several of their number. Though nominally the whole finance committee passes on questions, the president does not attend regularly, and one of the directors not on the committee always agrees in the action of the smaller group.[353]
The effect of strong personality in a promoter and of the business reputation of his enterprise upon impressionable Southern communities has been mentioned in a previous report. This came out clearly in the ease with which money could be borrowed. It was said by an old gentleman who knew Colonel Hammett in South Carolina very well that "The few capitalists we had then (we didn't have many) just came to his assistance whenever he asked them."[354] With respect to certain wholesale merchants of New York, Philadelphia and Boston, the writer was made to believe that they have so much confidence in a particular North Carolina manufacturer, that they give him any amount of capital he needs.[355] Mention has already been made in another connection, of the fact that Mr. Parker was offered large sums of money at 3 instead of 5 per cent. when he broached his merger successfully. The recent depression of the famous Graniteville mill, one of the first in the South, was accounted for by the statement that everybody was ready to lend money to Graniteville as an old and reliable mill, and never thought of requiring it back, until all at once all the lenders wanted their money, and this fortuitous trend made reorganization necessary.[356]
During the war the old Augusta Factory was sold into new hands at, ostensibly, $200,000. The new company capitalized the plant at $600,000, about what it was worth. It must have been a device to lend financial prestige to the mill that Governor Jenkins of Georgia was given $100,000 stock for his influence as a director. He did nothing to earn this, was the writer's assurance.[357]
Perhaps it was to facilitate financial management of his mill that William C. Sibley preferred New York and Cincinnati subscriptions to large blocks of stock, to local subscriptions in smaller amounts, when soliciting backing for the Sibley Mill at Augusta.[358]
Turning now from the subject of financial administration of the mills to that of profits; it is not clear that gratifying earnings were usually due to good management; it is, however, true that poor profits or no profits were due oftener than otherwise to faulty executive control. It is meant by this to indicate that the industry in the South has shown itself, on the side of profitableness, singularly responsive to the material condition of the section, and to the state and trend of public opinion. The degree of success of the mills has displayed the fundamental fact that the South has in the past forty years been above all else in a process of growth, and has given fresh proof of the intimate connection between the fortunes of the companies and the changes in the whole section—economic, mental and spiritual. The profits of the mills have constituted a good barometer to the evolution of the South since Reconstruction. Graphically represented, the earnings of the plants would exhibit a curve of decided aspect. It is sought by specific references to make this curve appear, and afterwards to sum up the results with several reasons therefore.