(This is the sixth 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 in the gray Colonial Revival house that William C. Powell had built in 1895 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 for Royal Mill 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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On June 6, 1931, the Royall Mill went into receivership granted by a state court, and Don P. Johnston Sr. was named receiver of all the property of the mill and ordered to sell the mill and everything covered by the first and second mortgages. The Virginia Trust Company, trustee for the bondholders, was the highest bidder at $45,000 later increased to $60,000. That sale was confirmed but later vacated in hopes of a better bid, then reinstated and the sale confirmed on Nov. 15, 1933. During those two years Johnston tried to operate the mill at a profit.
His son wrote in his Yale thesis that the remaining eight years of the receivership, which ran until Aug. 2, 1941 when Johnston deeded the property to the renamed Royal Mill, “. . . were required to clean up the last crumbs of the old corporate loaf.”
Johnston Jr. also wrote, “It seems a pity that the corporation had to be washed through a receivership. Many individuals lost heavily. But had the mill not been liquidated at that time, it would have had to flounder through a still worse decade of hardship before reaching the lush years of the Second World War. So even if the receivership had been avoided in 1931, it would probably have fallen in early 1933 or, failing that, in 1937 or 1938.” He also said “The proximate cause of the receivership was pressure for payment by two creditors, A.J. Davis and Mrs. W.C. Powell” – Andrew Davis, the three-time Wake Forest mayor, and the young widow of William Powell who left her $50,000 in trust that was first invested in the mill by the trustees, later mortgaged and then had that mortgage overtaken by a larger one. (Readers today will wonder why her part of his estate was left to her in trust with Royall relatives as the trustees. Was it thought that the poor frail young widow was not capable of managing her own money?)
As the receivership began, another character in this drama was introduced, Raleigh attorney Willis Smith, who was the attorney for the receivership and who worked hand-in-hand with Johnston during the receivership. (If the name is familiar it is because he was a candidate in the 1950 Democratic primary for U.S. Senate, facing incumbent Sen. Frank Porter Graham. The primary was hard-fought and filled with invective and worse as Graham, the former president of the University of North Carolina in Chapel Hill and a liberal by North Carolina standards, was backed by President Harry Truman while an up-and-coming journalist named Jesse Helms backed Smith. Smith’s term in the U.S. Senate was cut short by his death in 1953.)
Meanwhile, what about the mill workers in 1931 and the years later in the Depression? Johnston and Superintendent George Greason had to keep cutting wages. Johnson wrote to Harvey Seward, “We are running just as little as we can and still feed the hands.” Orders were few, the cotton market was unsettled.
Later, in 1933, Johnston sent a memo to Greason: “The payroll including wages in the higher brackets total $6,174.31. If the figure of 95 families you give me is proper this means $5 per family per week during this period.”
“To mitigate the terrible poverty, the mill operatives were urged to garden their own food. To this day, most households in the village have a number of chickens and many raise pigs and have substantial gardens.”
The mill hands were not the only ones feeling not a pinch but the grind of hard times. T.E. Holding had left the mill’s board of directors because of his poor health but still had the Bank of Wake where the town commissioners transferred town funds in early 1929 or 1930. The funds had been in the Brewer family’s Citizens Bank, which failed shortly after the transfer. The town fathers insisted on collateral so that town funds would be repaid. After the Bank of Wake closed its doors on Dec. 17, 1931, town residents had to pay off their debts even though they had lost all their savings.
One of those was Roy Powell, who in the 1970s was town clerk. He was the son of William R. and Susie Powell who built the big white house with four two-story pillars just south of the William C. Powell house and where Roy and his wife Elaine would live. He said he did not have much in the bank but it hurt to lose it.
That Powell family nearly lost the home they called Cameron Heights even though William had been a town commissioner. There were unpaid town taxes and the town was about to foreclose or demand a sale before other Powell family members transferred some bonds to the town.
T.E. Holding still owned his drugstore on South White Street after the bank failed, but the taxes on his house on South Avenue were unpaid and foreclosure loomed until the family transferred some lots together worth $5,000.
It was a dark time. Johnston Jr. remembered: “Those were the days when I heard my father at breakfast speak of revolution. And one evening, when a speeding motor car crashed and exploded near our home, I thought that ‘they’ had begun to throw bombs.”
Though never described, there were brief mentions of at least two attempts at a strike at the mill during this time.
The mill owed $130,000 with three covering mortgages, one to Virginia Trust Company covering all the mill property including the 98 workers’ houses; one to the Denmark Loan Fund (the student aid fund at Wake Forest College); and a second mortgage for the widow’s $50,000 trust fund.
The mill stock was valued at $6 per share; the total of assets was $200,736.62 and liabilities were $152,075.93, a net worth of $38,660.69.
But the mill lacked working capital to be able to buy enough cotton to operate and operate while waiting to be paid for the finished product. “No cotton mill man can successfully operate without several hundred bales of cotton in the warehouse and an average of two months uncollected invoices on the books,” Johnston wrote to Seward.
He tried to obtain a Reconstruction Finance Corporation loan for the mill to no avail and even tried again in 1935 and 1939 with the same results.
The new Roosevelt administration brought a number of new codes and standards, including wages. One required that some workers be paid $12 (per week, it appears) and Johnston wrote to another mill owner that Royall had as a result “increased the pay of practically every employee in the higher brackets and it is my purpose to maintain those wages.” The work week was still 55 hours.
Johnston Jr. also noted that the mill continued to use Dr. Timberlake as company physician and continued to charge 10 cents per week per person for the doctor to visit when needed.
As receiver, Johnston was allowed a salary of $15,720 over the two years and the counsel was paid $9,250. Greason as superintendent received $300 a month with a free house for his family. The court also made clear that Johnston could not operate the mill at a loss. But as he wrote to Seward, “The more we push sales at the present level, the more money we lose.”
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