From the interview, there is the instance of a 12,000 spindle mill; not one of the most successful in Gastonia, which made $2,500 the week previous.
While the mill expected to make 125 per cent. net profits for 1916 is said to be exceptional, a number of mills were, as near the end of the old year as November 28th, expected to show from 75 to 100 per cent. net profits for 1916, the writer was told that it would be a pretty poorly managed plant that did not clear the lower percentages.[392]
A burly, forceful man in middle life, who has risen from foot pedlar to mill president, said with frankness: "I am making more money than I know what to do with. I am ashamed to take it!" He showed me the statements of the orders for product with which his four mills would be kept busy for the next four or five months. He expected to clear $60,000 on the output of each plant for this period.[393] Mr. Robinson, previously quoted, recognizes that the cotton mills at Gastonia are more prosperous than those of any other section of which he knows.[394] Not even early in the period, when mills were first building, did they make such profits as now, is the opinion of an old manufacturer at Gastonia.[395]
The foregoing citation of the earnings of various mills at various points of time in the period since their establishment has served to exhibit the general movement of profits. At the outset, most conditions were favorable to large gains—there was little competition, labor was most plentiful and cheap, the lack of advantageous marketing facilities was to some degree offset by purely local demand for the product, and the deficiencies of management tended to be neutralized by the presence of physical advantages which disappeared when a more advanced development increased the size of plants, widened the area from which raw cotton was drawn, and extended the market for product. It is said repeatedly that in those days any fool could make money in cotton manufacture in the South.[396]
With the closing years of the second decade of the mill growth, most of these advantaging circumstances were fading before the increase of competition. Their very success was proving fatal to the mills. They had ceased to be local affairs. When outside influences came in—commission and machinery men—new and difficult problems had to be faced. The factories were assuming the physical proportions which they were bound to assume, and which it was right they should assume, but they ran ahead of the development in the textile industry, and in the South of expertness of management, business resourcefulness and economic outlook. The spirit could not keep up with the flesh, and the mind lagged behind the body.
The prosperity which the mills are now enjoying they very well understand to be hectic, the result of the European War. They were having a hard time enough until the war came and put them all on velvet, as someone expressed it; 25% of the Southern Mills were in bad shape, defaulting an interest, etc.[397]
There are in the industrial community of Gastonia, however, and in certain individual mills and managers, particularly in North Carolina, signs, that point to a catching up of internal capacities with external maturity. There is being developed—not yet clearly seen by any means, and in not a few points apparently contradicted[398]—a manufacturing spirit in the South, an industrial faculty that is able to cope with difficult conditions, the results of economic progress. This promises that the South is learning after forty years what Edward Atkinson said it did not know, the difference between a penny and a nickel. It indicates that the South will be meeting narrow margins of profit with close figuring of the costs of production.
It is natural to turn from the subject of profits to that of dividends. There is in the history of the mills a general parallel between the two, with, however, certain variations arising from the fact that the industry has been and is now in constant process of growth. With the exception of perhaps a few years, earnings could always be profitably invested in the business,[399] particularly in expansions of plant.[400] As will be seen in more detail later, the peculiar conditions under which the mills took their rise involved indebtedness for plant and for running capital, and earnings had to go to pay interest and principal of this.
The Augusta Factory was founded in 1847,[401] and, with Graniteville nearby, though in South Carolina, resembled in its earlier years, and to a diminished extent still does, the English and Continental textile manufactories.[402] They have both fallen upon evil days more recently. The Augusta Factory made 5 per cent. quarterly dividends for eight years and nine months from its founding.[403] In 1858, eleven years after establishment, the plant was sold to a company with Wm. H. Jackson at its head, for the sum of $140,000. Though the stockholders in the Jackson Company paid $60,000 for repairs to the property, the purchase price, payable in instalments for ten years, was made up from profits. The mill at the close of the war was the wealthiest in the South. It was said in 1884 that it had had an uninterrupted course of prosperity since the war. From 1865 to 1880 the company paid average annual dividends of 14 21⁄32 per cent.[404]
In 1880 the stock of the mills at Augusta, Georgia, paid about 8 per cent. interest per annum, in semi-annual and quarterly dividends.[405]