This is the fifth installment of a history of the Royall Cotton Mill, later the Royal Mill, based on a thesis written by Don P. Johnston Jr. in 1945 for a degree from Princeton University. His father, Don P. Johnston, was the president of Royall Mill before and during the Depression.
(We also quote from “A Common Thread: Life at Royall Mill and its Village, 1899 to 1996” by R. James Cox Jr., then a planner with the Town of Wake Forest. It was printed in 1996 and reprinted in 2007 for the Town of Royall Mills Centennial Celebration.)
Keep in mind as you read this that Royall Mill and the later Royal Mill were family businesses. Don P. Johnston Sr. and Harvey Seward were brothers-in-law having married two daughters of William C. Powell, Johnston marrying Petronia and Seward marrying Annie. There were two other daughters, Jessie Powell Powers and Rosa Powell Larsen. The Johnston family lived with Jessie Powell Powers during all the time they were in Wake Forest, and Jessie Powers was to become the assistant to Johnston when he was president and head of the board of directors as well as a director. Petronia Johnston was a director of Royal Mill. Seward was usually a director in later years and at one time owner of the mill.
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It is difficult to sort through and understand all the pressures on Royall Mill during the 1920s and 1930s. And it was not the only area mill with financial problems that led to receivership (bankruptcy). While Don P. Johnston Sr. was the receiver, the one handling the finances and responsible for the Royall Mill’s operation, later Royal Mill, he became the receiver in 1931 of Sterling Mills in Franklinton and later Neuse Manufacturing Company five miles from Wake Forest and Vann-Moore Mills 12 miles away.
The Royall Mill company president and head of its board of directors, William C. Powell, died in 1923 leaving a young second wife. In his will, he directed that she would receive $50,000 in a trust fund that would be handled by three trustees, Robert E. Royall, William L. Royall and William R. Powell. They deposited that $50,000 in the mill and later took out bonds secured by a mortgage on the trust fund that paid 6 percent interest. That mortgage, although all the Royall, Powell and Johnston family members referred to the trust fund for the widow as a “sacred trust,” would soon become a second mortgage when the new mill directors had to take out a large mortgage on the mill building, contents and 84 operative houses.
The large salaries continued for the directors during the fat years of the 1920s: in 1923 Robert E. Royall got $8,000, two Royall sons received $4,800 each and the mill superintendent, G.H. Greason, $6,000 plus free housing for his family. The management continued to pay dividends to stockholders – and the Royall and Powell families were the largest stock owners. Very little new equipment was added to the mill, though in 1926 the management paid $60,000 for wider looms.
(To make a comparison about salaries, G.W. Paschal wrote in his history of Wake Forest College that in 1928 the pay of full professors was raised from $3,300 to $3,500, but that increase was rescinded for most during the Depression. Ed Morris, the director of the Wake Forest Historical Museum, wrote this week, “$2,000 would have been a huge salary. I think $1,500 was probably more like it in the teens and twenties.” He also said, “Coach Peahead Walker resigned when President Tribble refused him a $500 a year raise in 1950 from what I remember as $4,500 to $5,000.”)
By July of 1927, Robert E. Royall was sufficiently concerned about the diminishing annual profit to write to Johnston, then living in Okeechobee, Florida about his fears: “It is going to be necessary for us to do some new financing. We have had several very lean years in which we have made practically no money. In spite of this we have not only paid a dividend each year but we have expended money in improvement of our Plant; and these two policies have greatly weakened our cash position. We are going to find it hard to borrow money by simply offering banks the Mill’s Note endorsed by W.R. Powell and me. This is the way in which we have borrowed in N.Y., Richmond and Wake Forest during the present year and during the past several years.”
Robert E. Royall’s health was affected by the worry and pressure, and he had a large correspondence with Johnston and Seward, and the last two wrote to each other about the mill’s woes and ways to alleviate or fix them.
At the directors’ meeting on September, 1927, some voted to issue mortgage bonds totaling $150,000 with $100,000 to be used for running the mill and $50,000 to be kept in reserve. But the lending bank, Virginia Trust Company, said it would not lend the money without the full participation of all directors. There was confusion and a flurry of letters. Then in November Robert E. Royall and W.R. Powell went to Petersburg, Virginia, to stay overnight with Seward, who then wrote to Johnston:
“The financial condition of the mill is in one hundred percent worse condition than I ever thought. They absolutely have no money to work on, and it looks it is impossible to borrow any on their statement.” He went on to say that Robert E. Royall had even suggested a receiver, that the mill was worth “twice or three times as much as the mortgage and other indebtedness . . . Mr. Royall was in a state of almost total collapse and I really believe if something had not been done he would have died in the next few days.” He added a postscript that $30,000 had been borrowed, and a few days later said, “And no dividend will be declared until we get the mill on ‘Easy Street.'”
Johnston had been reluctant to do as Seward proposed, pass a bond issue. Finally, Johnston wrote in his correspondence file, “We had the meeting at Roy’s home at night and passed the resolutions.” That was December 10, 1927, and a bond issue for $100,000 was floated and all the mill property – 68 acres, the mill buildings and machinery, and 89 operatives’ houses – were on the deed of trust.
The minutes said Johnston had made a motion to borrow $50,000 from the executors of W.C. Powell’s will that would be secured by a bond due and payable on January 1, 1938 and a deed be executed “. . . conveying thereby a second lien on the [village] property.” But Johnston two years later added a handwritten note to the minutes, saying he “did not make any motion and did not hear second mortgage discussed.”
Somewhat later the widow learned about the mortgage “and recognized that she had been wronged by this action.” Her lawyer tried to correct That action, but the second Mrs. W.C. Powell as well as the possible heirs, his children, was to lose nearly all of the $50,000 during the receivership. Johnston Jr. called it a sad situation and “apparently so unnecessary.” He noted that she was not insistent at first about righting the wrong because she did not want to embarrass the family. Her attorney, C.D. Weeks, noted that, even if the trustees tried to reimburse her, they “are insolvent.”
After 1927 and for two more years, Johnston and Seward fretted and tried to find a course of action for the mill, mostly through letters between Petersburg and Okeechobee but also on fishing trips they took together. They also included Robert E. Royall, whose health continued to be of concern along with his age. Finally all three agreed on the change in the mill management.
In late May 1929, Robert E. Royall wrote to Johnston, “If you shall decide to come here and to take charge of and direct the affairs of this corporation along the lines mentioned by Mr. Harvey Seward in our conference in Raleigh last week, you may rest assured that you will receive a hearty welcome from Wm. L. Royall and me, and that you will at all times and in every way have our friendly and earnest cooperation with you.”
And that was why the Johnston family – husband, wife and son – moved to Wake Forest and became involved with the saga of the Royall Mill. At the stockholders meeting in late September 1929, days before the stock market crash, Robert E. Royall was elected chairman of the board of directors with a $3,180 salary, Johnston was elected president at $5,000 and William L. Royall was elected secretary and treasurer at $3,300. The vice president at a $600 salary was Hugh Camp, part of the management at Roanoke Mills and someone Seward had thought could be the head of Royall Mills before Johnston was persuaded to take the job.
Some new blood but still the Royall family had part of the power. Tough talk was needed and Seward supplied it in a letter to Robert E. Royall and Johnston. “You have no cash, your surplus has been depleted, your capital has been infringed upon and the plant has run down. You have to sell machinery to pay your current bills, and it is only a question of whether you can convert your inventories and bills receivable fast enough to meet your bills payable.”
At a directors meeting in September, 1930, the office of the chairman of the board was discontinued, and Johnston was elected president, Hugh Camp was vice president and Foster Bentley (who soon disappeared) was named secretary and treasurer.
Through all this turmoil, nothing was said about the mill workers. However, at that same meeting Johnston said that the management had not been charging rent on the 89 operatives’ houses “since we have been running on such a reduced schedule.”
A week later the directors decided that, because the mill did not have orders for yarn for several weeks and the workers “have already received advances for rations,” they would have to continue to forego charging rent, accept enough orders even at a slight loss to run the mill at least two days a week, continue to give families enough for food against future salaries, move any unemployed families out of the village and hope for enough orders to return to a regular schedule.
Some of the workers had asked for Christmas loans but Johnston said no, general conditions being what they were. He also said, “During October we paid some electric light bills and furnished rations in many cases. There were not cash loans. This week we made two advances against in cash against tomorrow’s payroll. These were not loans. The last advance which we made which may in the proper sense be considered a loan was to Clarence Warren on July 1, $30 to get his child out of the hospital in Raleigh.”
At that time, these were the wages at Royall Mill: “. . . a spinner (six sides, 55 hours) made $7.94 (the highest). A ply spooler (55 hours) made $14.96 (the lowest) and another ply spooler (55 hours) made $15.51 (the highest).”
Meanwhile, in the minutes for a directors meeting on February 6, 1931, “. . . Mr. Andrew Davis (salesman and Wake Forest mayor three times) wants his $2,000 note paid now and . . . Dr. Gorrell is calling for additional security on his $10,000 Trust Fund (the Denmark Loan Fund established to aid needy Wake Forest College students).” The mill had lost $11,000 in the last four months, the mill had been run at a loss to benefit the employees and the $2,000 which had been given in credit to employees had been all collected except $17.
On May 2, 1931, Johnston asked the directors to consider the recent audit of the company which showed current assets were four times the current liabilities. He listed all the ways the mill company had tried to get more orders and more work and to borrow more money even though the mill owed more than it should. Often, he said, the mill could not afford to have enough yarn on hand at end of day Saturday to provide for full operation Monday.
Davis and Gorrell were continuing to press for payment or security, and Dr. N.Y. Gulley, dean of the law school at Wake Forest College, and C.D. Weeks were representing the widow, Mrs. W.C. Powell, and demanding that $2,250 interest on the $50,000 trust fund be paid no later than May 10, 1931.
All of the dodges and ploys failed to work, and on June 6, 1931 the Royall Mill went into receivership (bankruptcy) with Johnston as the receiver. He took the step to go to court to protect the assets of the mill.
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2 Responses
Wonderful stuff. Thank you!
Carol, you are functioning on a higher level than most of us schmucks to sort through this tangled web.