Chapter 7: Southern self-development: the Southern Textile Industry

THE OTHER SIDE OF THE STORY: THE SOUTHERN TEXTILE INDUSTRY

What happened when the South developed its own manufacturing capacity through southern entrepreneurial activity? It could work if it had a natural advantage, like tobacco and cigarette-making, but if the sector had existing rivals things got complicated pretty quickly. An oozing sore opened up between New England (Massachusetts, Connecticut and Rhode Island) and the Carolinas/Georgia during the 1880s. At issue was the initial rise of the southern textile industry.

Massachusetts (and southern New England) dominated America’s early industrial revolution by virtue of its gazelle textile processing-apparel and machine-building industries started at the turn of the nineteenth century. That initial start translated into a regional agglomeration by the century’s end. New England in 1880, with 8 percent of the nation’s population, accounted for 20 percent of the nation’s manufacturing employment. Nearly half of New England’s manufacturing employment worked in textile-related industries; 80 percent of the region’s textile employment ranged in an arc 20–60 miles around Boston; and one-half of the nation’s textile workers hailed from New England (Rosenbloom, 1998, pp. 4–5).

If there were an industry the South could have dominated, it was King Cotton. Cotton growing was one thing, however, its processing and manufacture of cotton products quite another. The South lacked transportation infrastructure until the early 1880s, so cotton was inaccessible to its own firms; it was instead transported by sea to New England and other processing centers (Great Britain). That changed in the 1880s. The key to southern textile industrialization was surplus labor. Post-Reconstruction decline in the Carolinas’ farm size and growth of share cropping dispossessed poor whites who subsequently migrated to new mill towns founded by startup textile mills: “From the 1870s to the end of the century [southern textile] employment grew at nearly 10 per cent per year with no detectable upward pressure on wages” (Wright, 1986, p. 130). In 1880 southern wages ranged 30–50 percent below northern equivalents. After Reconstruction (1876), however, southern investment in its textile sector exploded. In 1880 Massachusetts alone employed over 60,000 in cotton manufacturing; and North/South Carolina and Georgia about 11,000 (Wright,1986, p. 127, Table 5). Southern employment almost doubled between 1870 and 1880. By 1900 one half of the South’s looms were within 100-mile radius of Charlotte: Greenville, Salisbury and Spartanburg (the Southern Railway) (Goldfield, 1982, p. 124ff). Textile mills required building new towns—company towns:¹¹

The mills clustered around towns and transportation facilities. Their local supporters were merchants and landowners in the town and surrounding areas. Their rhetoric was boosterism, the town as a collective enterprise … the supply of cheap labor was the key to the continued growth of southern textiles over the subsequent half-century … [But] with the rise of the cotton mills, the poor whites were welcomed back into the service of the South. (Wright, 1986, pp. 44–5)

The mills typically were set up outside city limits to avoid taxation. The basic unit of production was the “family labor system,” with female and child labor heavily relied upon. Often employers constructed housing, but seldom schools. Initial investment for these mills often came from “cotton mill campaigns” whereby the community in a semi-evangelistic, patriotic, crowdfunding movement (“Next to God, what this town needs is a cotton mill”) raised capital by selling stock in 50-cent lots. Mill towns grew through the 1920s. Annexation was common in later years; small town urbanization resulted, and the southern textile industry painfully came into existence—on its own!

As the southern textile industry gathered strength, it attracted northern capital investment, particularly from New England’s textile machinery manufacturers. Investing in the South’s developing textile sector diffused the latest and greatest textile-producing technology to young southern mills while increasing New England textile machinery profits. The specialized machinery companies, offspring of the New England textiles parent, played the role of aggressive propagators of grandchildren who would ultimately destroy their own grandparents. As early as 1881, northern textile machinery manufacturers were well represented at Atlanta’s International Cotton Exposition (Wright, 1986, p. 131). But New England’s textile manufacturing dominance gradually faded after the 1880s.

The concentration of textile and footwear production in New England up to 1880 reflected the region’s pronounced comparative advantage in these activities. After 1880, however, a series of events began to undermine the sources of this advantage … New England manufacturers now found themselves competing against lower cost producers in other parts of the country … . [New England’s] poor transportation links to the growing interior population, and limited natural resources endowments meant that it was poorly positioned to compete in many of the rapidly growing manufacturing industries … it is not especially hard to explain, the region’s relative decline after 1880. (Rosenbloom, 1998, p. 2)

Post-1890, disruptive textile innovations—“ring spinning” made obsolete New England’s traditional “mule spinning” and the 1894 Draper automatic loom—transformed weaving, increasing the importance of cheap labor as the primary price differential in the final product. All of this strongly suggests the textile industry had entered into a Markusen stage 3/4 cost-minimization/price sensitivity environment. New England manufacturers retained competitiveness in high-quality production of skilled labordependent fabrics, but lost market share in low-cost textile manufacturing. At this critical juncture (the 1890s), however, New England owners were not willing to invest in new machinery or reconstruct facilities at their original sites (Rosenbloom, 1998, pp. 9–13). Disruptive technologies disproportionately went south. Why?

New England textile manufacturers were fully aware of potential implications from introducing innovations into southern textile mills. The challenge of the southern textile industry was apparent to all—especially when the Panic (Depression) of 1893 hit New England textile-related industries like a ton of bricks. New England textile bankruptcies, unemployment and emotions ran high throughout the 1890s. Industry reaction to this disruption, however, was captured by an 1897 Arkwright Club of New England report.¹² Arkwright reported:

the fact that labor is cheaper in the South; that the hours of labor are longer, and that there is neither any of the restrictive legislation urged among us by the labor unions … nor any prospect even of an early agitation in behalf of such restrictions … So far as we could learn there is no disposition to organize labor unions. (Cited in Woodward, 1981, p. 307)

Shades of state business climate comparisons and right to work laws!

Massachusetts manufacturers initially turned to their state government for help. In early January 1895 “representatives of three of Lowell’s largest corporations appeared before the Massachusetts legislature seeking amended charters permitting them to do business below the Potomac.” In 1897, the Massachusetts Legislature sent a delegation down South to figure it out—“several delegations, representing (textile) manufacturers of New England” followed and “some of the leading newspapers of the East have dispatched reporters to the Southern mills.” As reported in an 1898 Forum article:

They have with one accord concluded that the South has an insuperable advantage in cheap labor, and that the mills of the East cannot at present compete with those of the South without cutting down wages. Hence the general precipitate reduction of wages in New England early in the year [1898]. However, the wage-earners of New England do not seem to agree with their employers … They say that the reduction of wages has diminished the purchasing power of the masses … They also hold that the cheap labor of the South has nothing whatever to do with the stagnation in New England, that everywhere cheap labor means inefficient labor, that high-priced labor always turns out the most product and the best product, and that consequently, the capitalist who employees high-priced labor has the advantage over the capitalist who employs low-priced labor. The effect of these teachings has been to impress upon the wage-earners and capitalists of New England that they are in no danger from the South, or any other country having cheap labor. The unanimity of opinion has lulled New

England manufacturers to sleep by the soothing assurance of immunity from danger; /meanwhile, Southern capitalists have continued to erect mill after mill, and to produce every year a higher grade of work, until the very sand has been dug from under the foundations of the cotton industry of New England. (Dowd, 1898, pp. 438–9) In the years that followed millions of New England textile manufacturer dollars set up/bought into southern mills (Woodward, 1981, p. 306). Unions screamed in protest. Prosperity and jobs returned and the problem and debate subsided.