Under Col. H. H. Hickman's management of Graniteville there were regular dividends of 10 per cent.[406] The son of this former president, and until recently himself president of the mill as his father's successor, said: "Graniteville was so successful it had a large influence. It never ceased operation, and to my certain knowledge it had a fifty-year record of dividends."[407]
Perhaps some indication of the widespread popularity of cotton mills as an investment from a purely dividend-seeking point of view is contained in a newspaper notice of 1881 setting forth that a large mill at Nashville, Tennessee, had declared a dividend of 14 per cent. and another was built. In 1881 the Enterprise Factory, in Georgia, declared a 10 per cent. dividend, and decided to increase its capacity by 125 per cent. or more—from 13,890 spindles to over 33,000, and from 264 looms to more than 600.[408] Mills as Pulaski, in the same State, were anxious to double their capacity; $50,000 was subscribed for a mill at Jackson, West Tennessee; Dallas, Texas, was starting a $200,000 spindle plant, and the town of Sherman wanted a $75,000 factory.[409] The following year, the same paper printed an item showing further that dividends were being paid to stockholders in factories all over the South: "The cotton mills in Mississippi have proved bonanzas for the owners. The one at Wesson (it has been seen that this company made 30 per cent. profit from the plant) pays 26 per cent. dividends...."[410] The mill established by Mayor Courtenay, of Charleston, at Newry, South Carolina, paid no dividends for the first seven years of its life; this distinction from the earlier mills in regard to dividends, bears out what was said of profits in the period in which this plant was built (1892-3). Over the whole twenty-four years of its history, however, the company has paid an average of 6 per cent. to its shareholders.[411]
The building of the Salisbury Mill was completed December 1, 1888. The first cloth was turned out February 9, 1889. The first dividend of 5 per cent. was declared January 11, 1890. The mill has missed only one dividend payment, a quarterly one, since this time.[412] It is true that for the first three or four years of its life, the concern was in an uncertain way, the panic of 1893 proving embarrassing to it, though not as seriously so as in the case of the Newry Mill, just cited. For a long time the investment paid 8 per cent. dividends, then for several years of late 10 per cent. On July 10, 1916, the directors declared an extra dividend of 5 per cent., paid August 1. A part of the profits has for years and years gone back into the business, enabling it now to earn good sums.[413]
In the first ten years of its operation, the Laurens Mills were very profitable. Borrowing money to bring its spindleage up to thirty thousand, it expanded to 43,000 spindles on earnings. At the end of the ten-year period there was the plant worth about $800,000; the company owed no money, and the only liability against it was $350,000 of common stock. There was a cash surplus, probably small. For six years it had been paying 12 per cent. annual dividends. The mill was incorporated in 1895.[414] It is not certain that dividend payments were made by this company while it was carrying its debt, but the Anderson Mill, Anderson, South Carolina, paid interest on its indebtedness and 8 per cent. dividends as well.[415]
Reference has been made to Mr. Thompson's statement that large profits have frequently enabled mill companies to discharge all obligations before the last subscription-payment was due. He cites the case of an enterprise of $100,000 capitalization, with shares payable in weekly instalments of 50 cents, which after 70 weeks, with only $35 on the share paid up, declared a dividend of 4 per cent. on the capitalization. This plant, which he says is by no means universal, has, besides building large additions from profits always paid 4 or 5 per cent. in dividends each half-year. This is probably the Cabarrus, one of the Cannon mills, at Concord.[416]
From Mr. August Kohn was had a valuable estimate of the whole matter of Southern cotton manufactories as investments, assuming, that is, that the mills of his State have been typical in this respect of those of the rest of the section. He said: "If the people of South Carolina had put their money into farm loans at 7 per cent.—the same people and the same money—they would have been better off personally than they are after having invested in cotton mills. There are no failures in real estate mortgages at 7 per cent., but in cotton mill investments, principal and interest has frequently been lost."[417]
If this opinion is to be believed, had Mr. Goldsmith taken all the factories of the State, and not "the fifty more important cotton mills of South Carolina," he would have found an annual average dividend for 1905, 1906 and 1907, not of 7.56 per cent., but something below 7 per cent.[418]
It is well to conclude this random review of the dividends paid by the textile enterprises of the South with a thoughtful caution from Mr. Thackston, of Greenville, who has been of chief assistance to the writer in the financial aspects of the problem: "When it is said that the mills (have) made such and such dividends, it is to be remembered that in many cases the plant had cost more than the capitalization would show. Twelve or 10 per cent. on a $50,000 investment is very different from 12 or 10 per cent. on $30,000 paid up. The mills made so much money that they could pay off their indebtedness frequently in a few years, but the returns on capital paid up were not so great as might appear in some statements.
"Piedmont is capitalized at $800,000. The plant probably cost $1,500,000. When they pay 10 per cent. on the investment, it is because they are neglecting to reduce the debt on the plant. They are really paying about 6 per cent. on the investment, considering the total liabilities of the stockholders."
Tompkins has placed a useful modification upon the nominal showing of dividends which finds place here, and has application to what was earlier said of profits as well: "The tables ... showing range of profits, are made up from exhibits as usually made in annual reports. This is exclusive of depreciation, or wear and tear. Even in cases where an item of depreciation is carried in the accounts, it is often simply a matter of bookkeeping, and not a sum set aside for replacing of machinery.... Where large profits are reported, and large dividends paid, it is always a question whether the vitality of the mill is not suffering. There is a number of cases where mills have paid several large dividends at the start, but, on account of making no provision for depreciation, have finally collapsed."[419]