to J. & P. Coats (Inc.). In 1883, John Clark, Jr., & Co., not connected with the other institutions established previously, set up a mill in New Jersey under the name of Clark Mile-End Spool Cotton Co. About this time, James Chadwick & Bro. (Ltd.), another English company, began to operate a company at Jersey City. 4 Under the management of Hezikiah Conant, who had supervised the Conant plant purchased by Coats at Pawtucket, the Willimantic Linen Co., which still retained that name in spite of being diverted entirely to the production of cotton thread, continued to expand. In its consolidation with the Willington Thread Co., as already mentioned, it had acquired the services of Timothy Merrick, who later became the founder of the Merrick Thread Mill, at Holyoke, Mass. The Willimantic Co. thus became at an early date a dominating factor in the industry, in a sense the parent company of the pioneer thread manufacturing concerns of the United States. Other companies were established about the period of the Civil War, the largest ones being the Hadley Thread Mills at Hadley, Mass., the Williston firm of East Hampton, Mass., and the Gardner Hall, jr., firm of South Willington, Conn. By 1890 there were 34 companies with a personnel of 9,220 and a capital of nearly $28,000,000.5 In the late nineties and the first decade of the present century the thread industry entered upon an era of consolidation both here and abroad. The Coats business at Paisley, Scotland, which had been incorporated in 1890 as J. & P. Coats (Ltd.), with a capital at that time of over $27,000,000, absorbed in 1895 the firm of Kerr & Co., of Paisley, and in the following year purchased its chief rivals, the Clark Thread Co., of Paisley, and the concerns of James Chadwick & Bro. (Ltd.), of Bolton, and Jonas Brook & Bros. (Ltd.), of Meltham. The Clark Thread Co. (Ltd.) had previous to this merger with the Coats interests acquired control in the United States of the Clark Mile-End Spool Cotton Co. of New Jersey. It took over also the Chadwick mill in Jersey City. Thus the three New Jersey plants, consolidated under the Clark Co. of Newark, became by the merger of the parent company of Scotland a part of the J. & P. Coats enterprise. In addition to the amalgamation of the Coats and Clark interests, there occurred in 1897 the merger of a dozen or more thread companies in England into a corporation known as the English Sewing Cotton Co. (Ltd.), with a capital of $11,250,000. At the outset this new company became allied with J. & P. Coats (Ltd.), which took shares of the common stock, valued at approximately a million dollars, half of which was later sold. J. & P. Coats also extended financial assistance to the English Sewing Cotton Co. during a subsequent period of reorganization of the affairs of the concern. 6 In the United States the first big merger of domestic companies was the American Thread Co. This concern was organized in 1898 to acquire title to the common stock, plants, and stocks in trade of 14 domestic companies. The disastrous price cutting at that time prevailing in the thread industry and the custom of large manufacturers of extending long-period credits to the trade-terms which the smaller firms were financially unable to duplicate-had brought these firms to the verge of bankruptcy. The severity of the competition 4.Davis, W. T., The New England States, pp. 163-165. Report on Manufacturing Industries in the United States, Eleventh Census, 1890, Pt. III, p. 180. • Macrosty, H. W., The Trust Movement in British Industry. practically forced them into the position of being unable to refuse options to purchase their plants. The constituent companies in the consolidation were as follows:7 8 E. J. W. Morse Co., Boston, Mass. The Warren Thread Co., Ashland, Mass. The National Thread Co., Mansfield, Conn. Kerr Thread Co., Fall River, Mass.. Morse & Kaley Manufacturing Co., Milford, N. H. The William Clark Co., Westerly, R. I... Established 1834 1854 1863 .1865 1865 1866 1866 1873 1881 1881 1882 1883 1891 1891 By January, 1903, the above-mentioned companies were all dissolved and their property merged into the American Thread Co. The machinery and inventories of several of the smaller firms in the more remote localities had been transferred to the largest and most centrally located plants. The following reasons were advanced for the consolidation 12 in the prospectus issued in 1898: The business of the above companies has for a considerable time been injuriously affected by excessive competition among themselves, and the cutting of rates having, during the past three years resulted in a very large portion of the trade being done below cost of production, it was realized that a complete consolidation of the various interests was necessary to insure renewed prosperity. * * * The benefits to be derived by the union were set forth as follows: Where practicable, it is intended that at least one partner or one director in each of the undertakings acquired by the company shall continue in responsible management. The individual experience of those actively engaged in directing the various businesses will thus be combined for the benefit of all; but the management of all the businesses will be under one central control, and the disadvantage of carrying on the various processes of spinning, doubling, finishing, and spooling in each of the mills will be avoided by concentrating in each manufactory the particular work it is best suited to do. This will considerably cheapen production, whilst, on the other hand, very large savings will be effected in the expenses of distribution, which have been enormously heavy in the past, not only on account of each one of the 13 companies having a separate selling organization, but also through the keenness of their competition one with another, resulting in excessive expenditure in various ways, the free distribution of cabinets and other advertising matter alone amounting to a very large sum. 13 The capital stock of the Willimantic Linen Co., the largest of the merging companies, had previous to the consolidation been acquired by the English Sewing Cotton Co. (Ltd.). In the financial transactions incident to the merger, the latter took over practically all the common stock of the American Thread Co., thereby securing almost the sole voting power in its affairs. J. & P. Coats (Ltd.) at the time 7 Moody's Manual of Corporation Securities, 1902, p. 1336. • Including patent rights, machinery, and good will of the Morse Machine Co. Including spool factory in Maine and rights of birch and poplar stumpage. 10 Including factory in Maine for manufacturing wood spools and packing cases. 11 Including good will and trade-marks of Alexander King & Co. 12 Report of the Industrial Commission on Trusts and Industrial Combinations, 1901, Vol. XIII, p. 36. 18 Another important benefit was the elimination of trade abuses. All sizes of manufacturers' thread had been sold at one price, notwithstanding the wide difference in cost between the fine and heavy yarn counts. This unsound practice was abandoned in favor of a scientific selling list yielding approximately the same margin of profit on all items belonging to the same line or brand mark. of the organization of the American Thread Co. applied for approximately $500,000 worth of preferred stock. The acquisition of this block of preferred stock by Coats and the transfer of common stock to the English Sewing Cotton Co. (Ltd.) which, as already stated, had previously become financially allied with the Coats enterprise abroad, made the three most important thread companies in the United States, viz, the Clark Thread Co., of Newark; J. & P. Coats (Inc.), of Pawtucket; and the American Thread Co., of New York, connected in one way or another with the J. & P. Coats concern of Paisley, Scotland. As a result of a suit in equity instituted by the United States Government, the financial relationship of the Coats business here and abroad with the American Thread Co. and the English Sewing Cotton Co. (Ltd.) was terminated in 1914. By a decision rendered in that year by the District Court of the United States for the District of New Jersey, 15 J. & P. Coats (Ltd.), James Chadwick & Bro. (Ltd.), and Jonas Brook & Bros. (Ltd.), of Great Britain; J. & P. Coats (Inc.), of Pawtucket, R. I.; the Clark Thread Co, the Clark MileEnd Spool Cotton Co., and George A. Clark & Bro., of Newark, N. J., together with the selling agency, the Spool Cotton Co., were jointly and severally enjoined from "acquiring, or, after January 1, 1915, from holding, directly or indirectly, any pecuniary or property interest whatsoever in the capital stock or other securities" of the American Thread Co., the English Sewing Cotton Co., or their sales organization, the Thread Agency. Domestic production and consumption.-Statistics issued by the Bureau of the Census do not indicate the output of crochet, darning, embroidery, and knitting cottons put up for handwork, figures for these being merged with the statistics of yarn production. Census reports, moreover, fail to segregate the sewing-thread production for retail trade and production for industrial consumption. However, it is estimated by competent authorities in the industry that the quantity of sewing thread produced for the manufacturing industry is between two and two and one-half times the quantity produced for household use. On the other hand, the value of the output of manufacturing thread does not bear the same ratio to the value of thread for household sewing because of the greater cost of the short-length put-ups in the production of articles for home consumption. Yet, in spite of this fact, the value of thread for manufacturers' use is approximately double that of thread and cottons for retail sale. Production of manufacturing thread has assumed the lead quantitatively largely as a result of the technical improvement in industrial sewing machines which had made possible mass production of articles formerly made exclusively in the home. Needlework, which was a general and necessary occupation in the home a generation ago, has, with the changed economic status of women, fallen into comparative neglect. Dexterity in sewing has declined with the availability of large assortments of factory-made wearing apparel for men, women, children, and infants, as well as with the availability of house furnishings of all kinds in price ranges suitable for all purchasing con 14 Report of the Industrial Commission on Trusts and Industrial Combinations, 1901, Vol. XIII, p. 392. 15 Petition in equity, United States of America v. The American Thread Co. et al., unpublished decision, June 2, 1914. stituents. Moreover, much of the time of women nongainfully employed, released in recent years by the invention of labor-saving devices, has been diverted to other channels of activity. Modern conditions and standards of living and the pleasures now offered by the automobile, radio, and moving pictures have also lessened the time given to needle craft. Transitions in fashions have been another strong factor in the decline of cotton-thread consumption in the home. The simplicity of the mode and the narrow straight-line silhouette in vogue during the past few years have brought about a lessening consumption of household thread. Furthermore, the popularity of silk apparel has shifted some of the domestic demand from cotton to silk spool thread. With the declining demand for household spool sewing thread of cotton, the two large companies which practically control the bulk of this business in the United States are placing increased emphasis on production of an extensive range of handwork cottons, many of which were formerly imported. The basic unit of sales and production in most thread mills is the number of dozens of 200-yard spools, or 2,400-yard units, the various types and put-ups of thread being all converted to this unit of length as a basis of computation. It is the consensus of opinion among large thread producers that a No. 36 three-cord thread, which averages theoretically 10,080 yards to the pound, represents a fairly accurate annual average size of all the different kinds of household and manufacturers' sewing thread produced in the United States for a period of years. Using this as a conversion factor, the production as reported by the Bureau of the Census in pounds has been converted to a yardage basis in order to facilitate comparison in a later section with the import statistics which are stated in units of 100 yards. Table 3 gives the official figures for the value and pounds of the cotton sewing thread production of the United States for two decennial, four quinquennial, and three biennial censuses. The last two columns of the table have been computed to show the approximate equivalents, of the recorded pounds, in 100-yard units and in dozens of 200-yard spools. TABLE 3.-Cotton thread-Domestic production, 1890–1925 In 1870 production of 11,560,241 dozens of spool cotton was reported by the Census-the only year in which this unit of quantity was employed. As indicated by these figures, thread production which amounted to almost 16,000,000 pounds in 1899 increased 50 per cent in the following decade and continued to expand, reaching approximately 26,500,000 pounds at the beginning of the war. While steadily on the upgrade during this 15-year period, it had not kept pace, however, with expansion in most other branches of the cotton industry, a fact which may be attributed in part to the effect. of the consolidation of the producing companies on the more accurate approximation of supply and demand. During the war nearly every thread concern increased its facilities for production and many new concerns were inaugurated, particularly in the manufacturers' thread business. The productive capacity, therefore, of the thread industry was considerably larger in 1919 than in 1914. Census figures, however, do not reflect an increase in production at the end as compared with the beginning of the war period. This was probably due to market conditions then obtaining, since a reduced output in 1919 as compared with pre-war conditions was also noted abroad. In the fiscal year 1918-19, the production of J. & P. Coats (Ltd.), of Paisley, was 20 per cent less by weight than in the year 1913-14.16 The depression in trade which affected the thread industry severely in 1920 reduced production in 1921 over 3,000,000 pounds as compared with the output reported at the previous census and brought it even below the figure for the year 1909. In 1923 the industry had recovered and production had advanced to 31,646,000 pounds. This was an exceptionally big year in the thread industry and according to manufacturers represented a market demand 10 per cent above average. Even this large putput was exceeded by the record production of 37,585,000 pounds in 1925. The production of cotton thread is considered by competent men in the industry to be at the present time far in advance of consumption. It has been estimated by one well-informed manufacturer that the total United States consumption, plus exports, of thread is at the present time only about 50 per cent of the amount which could be manufactured if all the thread companies operated to 90 per cent of their capacity without overtime work. Production figures, other than those of the Bureau of the Census, are not available, as thread manufacturers, both at home and abroad, are extremely reluctant to divulge statistical information concerning the industry. Production data in particular are jealously guarded, and manufacturers are unwilling to cooperate in furnishing such information even to their own trade bodies. Although there were until recently two trade associations 7 devoted to the interests of the industry in the United States, neither of them compiled any statistics of production. Production of darning, mending, knitting, and crochet yarns, for which no census figures are available, was carried on in the United States on a small scale prior to the war. There was virtually no production of mercerized hand embroidery cottons, however, as the demand was mainly for Alsatian and English brands. 16 Great Britain Board of Trade Standing Committee on Trusts, Findings on the Alleged Existence of a Combine Among Manufacturers of Sewing Cotton, Feb. 3, 1919, p. 4. 17 One of the trade associations, composed of New England manufacturers, disbanded in 1926. 54129-27-3 |