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This proposed legislation prohibits Massachusetts savings banks from accepting three name paper to an amount exceeding $2,500, unless it be protected by collateral. If mutual savings banks are restricted to this extent, mills will suffer severely. Such loans have played an important part in making Massachusetts the leading textile centre of the Union, and if they are prohibited, it will be little short of a calamity to textile mills. In New Bedford and Fall River, the amount of funds loaned on three name paper by savings banks is about equal in aggregate to the total amount of loans on discounted paper by Boston National Banks and Trust Companies. I feel confident, that the more conservative banking interests in this state will not permit the enactment of this restriction.

SOUTHERN COTTON MILLS.

Not until after the Civil War were the necessary economic conditions created in the Southern states that would allow the establishing of cotton mills. When the economic progress, which had been throttled for a period of years, again became a fact, cotton spinning and weaving were introduced in the Carolinas. The initial labor force was furnished by the natives of the mountains in Kentucky and Tennessee, who were more or less familiar with hand weaving. Then the families of the small farms and the better class of colored help, were educated to the requirements of the industry. Plain goods and the cheaper grades of fancies predominate in the South, although there has been quite a general introduction of the finer counts during the past few years.

Southern cotton mills that have paid dividends for the past ten years, with a very few exceptions, have declared comparatively small profits. More at an average of six per cent. annually and under than over, with no extra disbursements to the stockholders from surplus profit, while during the same period in the North, extra dividends have been chronic. I am familiar with negotiations that were pending in 1901 and 1902, for the consolidation of about fifty weaving and spinning mills in North

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COMPARISON OF INDUSTRIAL PREFERRED STOCKS AND FALL RIVER COTTON MILL STOCKS.

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Carolina, South Carolina and Georgia, with a capitalization of $60,000,000 or slightly in excess of $20.00 per spindle, The object of this consolidation was to provide about $10,000,000 of northern money for working capital, which would have placed these fifty odd mills on a sound financial basis, and eliminated, to a large extent, large commissions being paid New York commission houses for the sale of their products and for the advancement of funds. The industrial reaction in 1903 prevented the completion of negotiations. This is the nearest approach to a cotton manufacturing trust that has ever been contemplated in the South. Southern mills, as a whole, are well managed, equipped with modern machinery and have many known advantages over northern plants. Their securities are more closely held than northern cotton mill stocks and the market for them is quite narrow, but the first suggestion of the approach of an era of extra dividends and stock bonuses will broaden the market materially.

ENGLISH COTTON MILL STOCKS.

Since cotton spinning is the more important department of cotton manufacture in England, I have contined my search for data regarding the investment value of English cotton mill stocks to spinning corporations. Dividend disbursements and surplus earnings reached a new high record in 1907. The average dividend disbursement for 100 mills in the Oldham district was 15% per cent., while the actual net earnings showed an average of 351⁄2 per cent., or an 18 per cent. increase over the net earnings for 1906. These figures are from mills that make public returns of their financial operations, while the net earnings of 80 corporations that do not disclose trade profits, reveal an average dividend of 17% per cent. These dividend disbursements do not represent the actual percentage paid on the capital stock, because English cotton mill financiers issue stock of a given par value, say $25, and then call for payments in instalments as the funds are required, and dividends declared

are on the actual amount paid in, and not on the par value of the securities.

Here is an illustration of English cotton mill financiering:

A few operatives or managers in a cotton manufacturing community, having saved $5,000 to $10,000 each, form a limited. company or corporation, with a par value of $25 per share of stock. Mill builders, machinery manufacturers, architects, oil merchants, belt manufacturers, etc., are solicited to subscribe for as many shares of capital stock as the order for their particular line would amount to. The first assessment or instalment to the amount of $5 to $12.50 is called for as the work progresses, which amount, with the original subscriptions from the promoters, is generally sufficient to pay for the buildings and equipment. Then the item called "Loan Capital" becomes operative. Call loans are secured from individuals and banking institutions, at from four to five per cent. interest, and used for the working capital. All earnings, after the payment of operating expenses and interest on the "Loan Capital" are applicable to dividends on the actual amount paid in and not on the entire capital stock; hence, a dividend of ten per cent. would not indicate very large earnings per share of capital stock.

When trade becomes dull and the "loan holders," as they are called, become uneasy over the situation, they demand their loans and the mill is obliged to call upon the stockholders for instalments sufficient to cover the funds withdrawn, but only up to the par value of the stock. The next dividend on the same earnings would be considerably reduced; that is to say, there is a sliding scale of dividend returns depending upon the ratio of "Loan Capital" to instalments paid in on capital stock.

At Oldham and Manchester, England, there are public auctions daily for the sale of cotton mill stocks which command a fairly. broad market. During the past three months cotton manufacturing and spinning in England has been about as unsatisfactory as in this country, and cotton mill shares have declined in market value from twenty-five to fifty per cent. because of enforced liquidation.

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SUMMARY OF ONE HUNDRED MILLS IN THE OLDHAM DISTRICT.

Capital employed, $30,501,230.00; net earnings, 1907, $6,605,785.00; average earnings per mill, 1907, $66,055.00;
average earnings per mill, 1906, $32,775.00; average dividend, 1907, 15% per cent.; average dividend, 1906, 923 per
cent; spindles, 8,592,788.

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