cotton goods because this branch of manufacturing is of more importance and better understood than any other. "Some years since a pamphlet was published in England, by Mr. Graham, on The Impolicy of the Tax on Cotton Wool.' In this is an affidavit of Mr. Gemmell, of Glasgow, who states, that, although he was for several years in the habit of supplying Chili with cotton domestics, he has latterly been obliged to abandon the trade in consequence of being unable to compete with the manufac turers of the United States.' "Chili is a market equi-distant from the two competitors for her trade. What gave New England such an advantage over cheap labor, cheap coal, and cheap capital of England? The difference in the cost of transportation on the raw material. "In 1839-40, Montgomery gives this estimate of the cost of importation of cotton to the British manufacturer, the first cost of the cotton being 14 cents per pound. Charges on shipment - Importer's profit Inland carriage - Total average 4 per cent. "While the average cost to the New England manufacturer is stated at 11 per cent. "The estimate of the actual charges of manufacturing in the two countries gives an average of six mills per yard against us; yet, taking both charges into the estimate, the net advantage was three per cent. in our favor; and besides this, our goods were the best. "Since 1840, the British Government has been obliged to take off the duty, but it could not lessen the cost of labor, of power, or capital. The wages of the operative then were barely enough to support life; the cost of coal must increase as the seams nearest the surface are exhausted, and it is doubtful whether the capital then invested in the cotton mill was paying any interest. "The changes that have since occurred on this side of the water have all been in our favor; that is so far as the cost of manufacturing is concerned. More experience has given us greater skill; we have more system and more economy; new facilities of intercommunication have brought our producers and manufac turers of cotton nearer to each other and lessened the cost of their mutual exchanges; but, more than all, the cost of labor, in which England had so much the advantage, has been lessened over one-half; that is, less than one-half is now required. Besides, of late years, the supply of cotton has been so near the demand that the price has fallen from fourteen cents per pound to an average of nine or eight cents; as the cost is reduced our relative advantage is increased. "From these facts we have this corollary; that, as the cost of labor, power, and material is reduced, the cost of transportation rises in importance. "If England cannot profitably compete with us in the Chili market, certainly she cannot compete with us here: for the width of the Atlantic gives us a protection, directly or indirectly, of at least fifteen per cent. ad valorem. “In point of fact, just as fast as the American manufacturer is able to supply the home demand in any article, the English manufacturer is driven from our market, unless, to raise money or to break down a rival, he is prepared to sell a less than cost. It is to be hoped that the wages of labor in this country will never be so low that we can compete with China in embroidered shawls or ivory trinkets; or with France and Germany in tapestry or laces made by hand. In such fabrics the cost of transportation bears but a slight proportion to the cost of labor. "It is clear then that England cannot sell coarse, heavy, and cheap goods in this valley in competition with our own manufacturer. Let us see if New England can. "In 1821, as I am told, the first mill for spinning cotton yarn on an extensive scale was established on the Ohio. Now, who sees in our stores a hank of English or Eastern cotton yarn? The same cause that has produced this resultthat is, the cost of transportation-must, in a few years, build up all the mills we need to supply us with domestics.' "To see what the precise inducements are to start such a mill here, I give the following details of the cost of transporting cotton from its point of production to us and to the New England mill, and of the goods from the mill to us. It is clear that the difference in the first and the amount of the last give the sum of our advantages in this item, at least to the extent of our home market. "I base my estimates on a mill of 10,000 spindles for convenience, and because that is near the most economical size. It will be borne in mind that the calculation includes machinery for preparing the cotton and weaving the goods. "At almost any point on the Ohio river the cost of building is less than Massachusetts. We have stone, lime, clay, and generally lumber on or near the spot. There the lumber and lime is brought from Maine; but few positions furnish good clay for brick; and granite is not so easily worked as our lime or sandstone. The moment there is a demand for it, machinery can be made here twenty per cent. cheaper than at the East. The cost now would be nearly this: Here a working capital, sufficiently large to lay in a stock of cot ton for five months, is Capital stock 66 46,500 $220,000 This estimate is larger by $20,000 to $30,000 than that made by persons who have far more practical knowledge on the subject than I have. "The longer the material and its product are in transitu, or, in other words, the further the manufactory is from the raw material and the market, the larger must be the working capital; and the interest on the difference is fairly a part of the cost of transportation. And besides, as England and New England are obliged to enter the cotton market once a year, and at the same time, and at the - very time when our other great staples are ready for shipment, prices and freights are then generally at their highest rates; sometimes, as we have seen, sufficient means of transportation cannot be had at all; to guard against this contingency, as well as the fluctuations of price, many mills keep a heavy surplus stock. We can command the market at all times, we are always ready to contract, and can select our own time to receive the cotton. We are here also at the point of consumption, we cannot for years supply the home demand, and our goods will be taken as fast as they are made. "With these facts in view, it is very safe to say that the New England mill requires a working capital of $100,000 more than ours; but, to be altogether within the mark, put it at $50,000; the interest on this is the first item of saving or advantage to be carried out-say per annum $3,000. As we can turn over our capital more than once a year, and its earnings at each time will exceed six per cent., we might with propriety make the item much larger. "At Lowell there are forty-five mills containing 253,456 spindles, and with a capital of $11,490,000, or over $450,000 for every 10,000 spindles. If $50,000 is deducted for capital required to purchase the power, $50,000 more to cover the difference in communicating the power and the additional cost of buildings, the working capital would seem to be $130,000 over that required here by my estimate. But I am not advised as to how much of this capital is required to enable the mill to sell on credit, or whether the surplus fund, usually laid aside out of profits, is sufficient for this purpose. The Lowell corporations rarely publish the amount of their reserved funds, or even of their profits unless when they are remarkably low.; --- "The mill in question will turn out, on the average, two tons of goods a day say 600 tons per annum. The English estimate of waste and loss is onesixth; our rule gives eighty-nine pounds of goods for 100 pounds of cotton; by this the mill will require 666 tons of cotton per annum. "The following estimate of the cost of bringing dry goods to Louisville from Boston, via New Orleans, was obtained from one of our largest dry goods houses, and I feel confident that the rates are below the average: Insurance, 2 per cent. on $60, or on cost and 10 per $3 42 40 Add average cost on the bale from the mill to and at $382 The bale, of 4-8 brown cotton, of 750 yards, average cost $60; 3 yards to the pound. This gives over half a cent to the yard, one and a half cent to the pound, and $30 per ton. "There are, however but few houses that ship by New Orleans, and at times when freights are low; altogether the largest portion of brown cottons and prints brought to the central West come from the Eastern agent or jobber and by the lakes or across the mountains. "This is the ordinary course of trade, and there is no reason why we should not base our estimates on what is usually done, if the same system is likely to continue. "By these last routes, as every dry goods merchant (wholesale) can satisfy himself by reference to his books, the average freights from the Eastern cities is from two-thirds to three-fourths of one cent per yard. If to this is added the coastwise freight, insurance, interest, profit of the jobber or commission of the second agent, the cost will swell up to, at least, one cent per yard, three cents per pound, or $60 per ton. "But, as I have often been told, the agent at Baltimore will sell domestics just as low as they can be had at Boston or Lowell, and the Philadelphia jobber will often sell lower to draw in customers, as he relies for his profits on other goods. All very true; but a moment's reflection will satisfy any man of the fallacy of this reasoning. The manufacturer may wish to get rid of his surplus, and find it his interest to pay the transportation to, and the commission of an agent in a remote market, but this does not lessen the actual cost of the transportation or agency. The jobber may entice a customer into his store by selling silver at fifty cents an ounce, but this does not prove that the ounce of silver is actually worth less than a dollar. The same kind of argument is often applied to cost of transportation on our river. The Peytona will ask $5 from a passenger to Louisville who calls her in at Brandenburg, and the price would be the same if he got in at Cairo; yet the writer on the Western carrying trade would be laughed at were he to state that the cost of transportation from Cairo and Brandenburg, to Louisville was the same. Coal often sells for a less price at St. Petersburg than at Newcastle; yet no one has attempted to show that the shipment of coal a thousand miles lessens its cost, or that St. Petersburg is the proper site of manufactures, because coal was sold there at a particular day cheaper than at the English coal mines. The balance sheet of every business must show the profits or losses in each of its branches. The high prices demanded by the larger boats for way-passengers and freight have introduced the river packets, and the extra costs paid by the Eastern manufacturer are now building up the Western mills. "To return to the figures: the mill given will consume 666 tons of cotton per annum. "Freight from the cotton districts of Nashville, Florence, Tuscumbia, and points on the Mississippi river in Tennessee and Arkansas, and on the Arkansas river, are about the same to Louisville as to New Orleans. As the river packets multiply, the rates in this direction will probably be lower. Besides, as our agricultural exports increase, the return boats will run light and charge less. Our mill, then, will save the charges on the cotton at New Orleans and the cost between that city and the New England mill. I have not access to a series of New Orleans prices current, but I presume the following estimate will not be wide of the mark: Drayage, storage, brokerage, and commission of agent or Insurance on $36, or 8 cents per pound Freight cent per pound Interest, forty-five days $1.00 3 38 27. But if we add the ordinary freight on the goods, or $60 per ton, we have |