The Massachusetts spy, and Worcester County advertiser. [volume] ([Worcester, Mass.]) 1825-1831, 1829-08-12

was an over-production of cotton cloths
Early IN 1896, manufacturers notes were
reluctantly renewed and soon after, con-
hdence and credit were withdrawn from
them altogether. At a bank where thew
never divided above six per cent. thew
would refuse the note of a manufacturing
company, where they had capital exceed
/ ing that of the bank, and where thew had
never made less profit than ten per cent.
| per ahnum. Distrust was carried to an un-
reasonable, and even ludicrous extent. |
have known manufacturing company's
note refused at bank, when it was well
known, that one alone of that manufactur-
ing company, who was liable for all their
notes, could buy the whole of two such
banks. And at the same time any stock
holder in that company, of ordinary credit.
could readily get his notes, taken for his
factory goods, discounted at the same bank.
because 1t was business paper.
Being almost wholly denied credit, the
manufacturers were compelled 10 reserve
their profits for the creation of working
capital; and for a year or two past, though
their operations have resulted in as great
gam as they anticipated, few of them have
made any dividends, and probably will not
for year to come.
They require for working capitals about
twenty five per cent on the amount of their
permanent investments. and when thew
shall have been driven by such necessity
to provide this, they will become compara-
lively small customers at the banks. They
will doubtless be restored to credit, as soon
as they cease to want it. But the banks
will find, too late, that they have labored
eftectually TO drive from them for ever
safe class OF customers. 1t is believed that
no loss has ever happened to any bank in
Boston on q cotton manufacturing compa-
nys note-and fewer losses have occurred
on individuals notes secured by their stock.
than most other classes of men.
Tempted by the hope of sudden accumu
latlon of fortune, many adventured to the
extent of their means, and made dangerous
additions on credit. But when confidence
and credit were Withdrawn from them, their
stock was forced into the market, to be sold
for whatever it might avail.
Dark and gloomy insinuations, industri-
ously circulated, had induced the public
generally, honestly to adopt the opinion
that the whole concern was placed on an
unsolid basis, and would result in total loss.
purchases
or loans were told that there were no pres
ent dividends, they would listen no longer.
They could not or would not be convinced
that while dividends were reserved and the
gains added to the capital, the value of the
stock was improving.
The result naturally was, that when the
stock was forced at auction, none would
bid, but those who thoroughly knew its val
ne, by being owners themselves, and well
acquainted with every fact and clrcum-
stance that Affected IL. Ant they we're
generally more or less involved in the same
embarrassment, and prudence forbade them
to purchase any thing, unless they could
get it for half its value.
This shows sufficient cause for the pres
ent reduced price of factory stock.
A scrutiny of undated rigor, and unex-
ampled severity, has been upon the manu-
facturers for three years. The result has
been the ruin of many Northumberland
many families have been hurled from COM
petence into hopeless poverty. Those VINO
yet survive may be considered sufficiently
tried, and spared from further sacrifices
and when similar trial falls to the lot of
any other class of business men, it is to be
hoped they will bear it as we'll as the man
ufacturers have done.
The establishments to which they belong
ed will be strengthened by individual mis-
fortune and overthrow. For if the recent
owners of good factory have been obliged
to sell their stock for half its value, their
successors will make fair profit on their
investment with half the gains which they
required.
Most of our cotton factories will continue
to operate, as surely as merchants will keep
contingencies. For they supply never
ending, and constantly increasing want OF
the communicated they at present fur
nish the supply cheaper than it could be
done by foreign nations, even if importation
were free from all tariff. GossYPIuM.