New Hampshire Collapse

In Manchester, N. H. last week for a brief campaign speech to his onetime fellow townsmen was Republican Vice Presidential Nominee William Franklin Knox of Chicago. It was in Manchester that Frank Knox gained newspaper fame as publisher of the Manchester Union and Leader which he still owns. While he was there last week his papers carried the saddest dispatch they had ever printed. In Boston 55 miles away a Federal District Court ordered the immediate liquidation of Amoskeag Manufacturing Co., biggest cotton textile mill in the U. S. and Manchester's principal industry.

From his capitol in Concord, Governor Henry Styles Bridges of New Hampshire tried to make the best of what was nothing less than a calamity to his little State. Gloomed the Governor:

"The Federal Court order for the liquidation of New Hampshire's leading industry, while it has been expected, is nonetheless a severe blow to our State and to our principal city. . . . Now that it has come we must and will face the situation which it presents and rally our courage and our resources to replace this loss to our industrial activities."

Catastrophe was the only word to describe the effect of Amoskeag's collapse on Manchester's 76,000 inhabitants. Manchester grew up around the Amoskeag mills. Over half of the very land it stands on was sold or deeded to the city by Amoskeag owners. Since 1805 Amoskeag has provided the city's business lifeblood. At the peak of its prosperity in 1921, Amoskeag's red-brick plants, stretching for almost a mile along the Merrimack River (see cut), employed 18,000 workers, paid nearly one-half the city's industrial payroll. Last week Amoskeag's workers, jobless for ten months, had at least the certainty that they would never work for Amoskeag Manufacturing Co. again.

Early last summer Amoskeag began closing down, mill by mill. By last September every gate was locked, every worker on the street. As dust gathered on Amoskeag's 20,000 cotton looms, the citizens of Manchester endured a bad winter, a cheerless spring. Amoskeag workers who had been getting $13 a week from the mills were thrown on relief at $2 per week with $1 more for each family.

Last spring 7,000 gloomy Amoskeag mill hands filed into the Manchester Armory, voted by a slim majority to accept $9.60 a week if the plant would reopen. Few days later the flood crest of the Merrimack River wiped out $2,500,000 worth of Amoskeag property, ruined all hopes of putting the plant in operation. Editorialized the Boston Herald last week: "If there is any satisfaction for the unemployed in knowing that they stuck to the ship to the last, these Amoskeag workers have it."

Amoskeag's tragedy was not enacted in one short year. Beginning in 1922 the market for Amoskeag's coarse cottons, ginghams, denims and flannels shrank rapidly as the new market for rayons grew. More & more cotton mills were opened in the South, with a tremendous competitive advantage in labor and freight costs. Amoskeag's sales fell from $56,000,000 in 1920 to $28,000,000 in 1928; its production from 223,000,000 yd. of cloth in 1912 to 100,000,000 yd. in 1928. In 1927, when it looked as if Amoskeag would have to close, a company shake-up gave the job of saving the company to Treasurer Frederic Christopher Dumaine.

The Treasurer in most old-line New England companies is the real boss. Boss Dumaine started as an office boy in Amoskeag's Boston office in 1880, rose not only in Amoskeag but in Boston's Old Colony Trust Co. Two-fisted and frugal, Treasurer Dumaine looked a looming 1928 deficit in the eye, turned down a $42,000,000 offer for Amoskeag's plant and assets, promised: "I am ready to do all possible, institute every economy, shoulder every responsibility and stand every criticism, to carry on."

To the amazement of U. S. textile men, Amoskeag emerged the next year with a profit of $1,065,000. Dumaine had fired every nonessential jobholder in plant and office, cut wages, shaved overhead, started the production of rayon. It was a miracle of retrenchment but, except for a scant $31,000 in 1933, it was Amoskeag's last profitable year. Depression staggered the company in 1930 with a loss of $1,345,000 and during the next five years Amoskeag's losses piled up over $4,000,000. In two years the company paid the U. S. $2,516,000 in AAA processing taxes. In the spring of 1935 Treasurer Dumaine sat back grimly and wrote in his annual report: "

Today 80% of the country's cotton spinning is done outside of New England. ... No management is competent to operate a plant like this, handicapped with existing wage differentials. No management could by any ingenuity overcome the $2.56 average labor differential . . . particularly fatal to us, as we have no mills in the South. . . . [Our problems] are beyond the power of the management to solve."

By autumn Amoskeag's visible doom had aroused both State and City to consultations. Governor Bridges' textile committee pointed out that one of the immediate reasons for Amoskeag's inability to do business was a heavy burden of fixed charges. Applying for a 77B reorganization in December, Treasurer Dumaine proposed to lighten this load by getting holders of Amoskeag's outstanding $11,000,000 in bonds to exchange them for stock. Nearly half the bondholders, however, chose to take cash instead of new securities--more cash than the company could pay. The March flood completed Amoskeag's distress. Fortnight ago a bankruptcy referee declared reorganization impossible, recommended the liquidation order which was forthcoming last week.

Disturbing to Manchester is a bond-holder's suit, still pending, which argues that a court in Massachusetts has no jurisdiction over a New Hampshire firm. If this contention should be upheld in the autumn, Manchester citizens fear that more months of legal bickering would delay the start of new enterprises in the Amoskeag mills. Ever since the mills closed a Manchester Citizens' Committee has been trying to find purchasers or lessors for all or part of the Amoskeag plant.

Meanwhile the cost of keeping Manchester's jobless on relief from June 1935 to June 1936 was $1,619,000--about one-third of New Hampshire's total relief expenses.

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