Kenton Beerman
Mr. Porter
A.P. U.S.
History
1 February 1993
The Beginning of a Revolution:
Waltham
and the Boston Manufacturing Company
In the United
States, the Industrial Revolution marked the
beginning of America’s
transition from a weak, agrarian nation to a global, industrial
superpower. The town of Lowell,
Massachusetts is popularly
recognized as the founding site of this transformation. Yet it was another town which really began
this process. The American Industrial
Revolution actually began in 1813 in Waltham,
a small, rural village in Eastern Massachusetts. The Boston Manufacturing Company built a
cotton mill there which, in less than a decade, would overcome all domestic and
foreign competition, expand faster than any textile company before or after it,
and be the direct inspiration for the Lowell
mills in Northern Massachusetts, some of the most
productive mills ever built. Under the
shrewd guidance of Francis Cabot Lowell and Paul Moody, the BMC invented a new
method of raising the money to start a business, developed new machinery,
discovered new methods with which to use the machinery, employed hardworking
farm girls as cheap labor, built an idealistic utopian mill town to become the
envy of the nation, and served as the prototype (model) of the modern
American corporation.
Looking at New
England around the turn of the nineteenth century, it would have
been hard to believe that in less than fifteen years, an Industrial Revolution
would be underway there. New
England was predominantly rural.
Ninety-four percent of the people lived in the countryside, tilling
their land and tending their farms as their forefathers had for not quite two
centuries. However, there were minor
signs that times were changing. Around
ten cotton mills had begun operation throughout New England. These mills worked on a very small scale,
usually employing no more than 30 to 40 laborers. The machinery they used was primitive, the
best they could afford with their limited capital (money). In addition, these mills met stiff
competition from imported English cloth.
India,
an English colony, grew huge amounts of cotton.
From India
the cotton was shipped to England,
where it was processed into cloth using the most advanced technology in the
world. The cloth was then exported to America. The English cloth’s quality was very high and
its price very cheap. American textile
businesses, with their inferior, more expensive product, floundered severely
(Cox 11).
Into the struggling
American mill scene came Francis Cabot Lowell.
Lowell was a wealthy Boston
merchant who, because of bad health, traveled to England
in 1810 to recuperate. While there, he
hit upon the idea of touring the British factories to learn the secrets of
their industrial technology and bring them back to America.
In the late 1700s, the
Industrial Revolution had begun in England. Through the discovery of such inventions as
the power loom, the spinning jenny and the dressing machine, Britain
had become the most powerful industrial nation on earth. The factories jealously guarded their
machinery and technology from one another, but welcomed Lowell
with open arms, not considering an American one of their rivals. Endowed with a superb memory, Lowell
remembered every piece of every machine he saw.
In 1812, just as the War of 1812 was beginning, he returned to Boston,
having “without doubt, a better knowledge of the manufacturing operations of Great
Britain than was possessed by any American”
(Batchelder 60). With such knowledge of British operations, Lowell
began to plan how to build an American factory with English technology. He started to think of ways to raise money
for such an adventurous project.
Lowell
had conceived of this idea at just the right time. The War of 1812 had caused an interruption of
Anglo-American trade. As Britain
was by far America’s
biggest trading partner, the American economy was severely retarded. During the war much American capital was
shifted from the trade with Britain
to manufacturing ventures, like Lowell’s,
in New England.
However, Lowell’s project
had a substantial edge over the competition: he knew about the British
technology.
Lowell
approached four rich and powerful men to join in his manufacturing venture: his
brothers-in-law Patrick Jackson and Uriah Cotting, and his friends Benjamin Gorham and Nathan
Appleton. Together, they asked the state
of Massachusetts for a charter of
incorporation with which to begin a new company. Because of the men’s financial stature and
social position, they were granted it within a week. On February
23, 1813, they incorporated the Boston Manufacturing Company (BMC),
“granted a corporation for the purpose of manufacturing cotton, woolen and
linen goods” (Mailloux 48-50).
Having incorporated, Lowell
now needed capital to finance the construction of his mill. He needed a lot of
money, more than he had, as this venture would cost a lot. Lowell
soon devised a unique money-raising scheme, which would make the Boston
Manufacturing Company the original American corporation. Lowell
solicited eleven men, including Jackson, Cotting,
Gorham and Appleton. These men were
asked to raise capital for the BMC, in exchange for receiving BMC stock. Each of them could contribute any amount of
money he wished. For every $1,000 he
gave, he received a BMC share in return.
As the BMC grew, the value of these shares would also grow and the
shareholder would make money. Lowell
described the venture as having “considerable risque
(risk), as there is no precedence to it, but there is even more considerable
benefit in the results” (Mailloux 51). In total, 100 shares were bought, bringing
the BMC’s initial capitalization to $100,000—one of
the largest amounts of capital for any company up to that time (Dalzell 29).
Lowell’s
idea of shareholding companies dated from the seventeenth century and
joint-stock companies, in which people pooled their resources to start a
company. However, the practice of buying shares to
gain the capital needed to build an industrial corporation had never been done
before. In England,
which had a larger upper class than America
did, the factories were solely or dually owned.
Before the BMC, American mills had had initial capitalizations of less
than $10,000. But with increasingly
large corporations such as the BMC being formed, shareholding became the
easiest and most efficient way to start.
Sharing costs and reaping benefits together were ideas which caught on
quickly.
The basic new ideas
behind the BMC corporation were the following: the concept of limited
liability, where the shareholder could not lose more money than the amount he
had invested, share transferability, where one investor could easily transfer
his shares to another investor, and indefinite duration, where the shares could
continue to exist after the original investor had died. All these points combined to create the
corporation, an idea which caught on immediately among Lowell’s
investors and other manufacturers setting up factories. Within twenty years, the shareholding
corporation was the most popular method with which to start a company in America.
Following the BMC’s incorporation and capitalization, the twelve men (who
now called themselves the Boston Associates) searched for a suitable site for
their mill. Cotting
had been born in Waltham, and he
suggested that BMC buy the Boies Paper Mill, which
was for sale. The mill’s optimum
location—along the Charles River and next to a ten-foot
waterfall from which power could be harnessed—convinced the BMC to buy it in
late 1813.
The BMC hired Paul Moody
to remodel the mill. He was a mechanic
who had built his own little textile mill in 1798. Moody finished the renovations a few months
later. The mill building stood 90 feet
by 40 feet and was four stories high, taller than most buildings of the
day. The design of the mill was
inventive: it was the first American mill built of brick and one of the tallest
mills constructed in the world up to that time (Dunwell
30).
The mill did not begin
operation until March 1815. During 1814,
Moody and Lowell painstakingly recreated all the machinery which Lowell
had seen back in England. In this regard, the two men proved to be an
ideal partnership. As Appleton
described the two, “Lowell had a
retentive memory, inventive ability and was very intelligent in mathematics;
while Moody was excellent with his hands, a skilled workman, and with
considerable inventive ability” (Sanderson 121). Lowell
would simply tell Moody about a machine he had seen in England,
then Moody would go home and invent a working model of it.
Much important and
innovative machinery resulted from this partnership. Often, Moody’s ingenuity enabled him to make
a better American machine from the English ideas Lowell
gave him. On February 2, 1815, BMC log
books recorded the first time ever in the United States when cotton was
manufactured into cloth by machinery: the entry reading “1,242 yards wide 4-4,
36 inches wide” (Barry, City of Waltham,
69).
The cloth became a
success almost immediately in Boston. At 25˘ a yard, the cloth was somewhat more
expensive than its British equivalent (15˘ a yard), which was flooding the
American market in the wake of the lifting of wartime trade restrictions (Greenslet 158).
However, the Waltham cloth
was higher quality, and within three months it was almost immediately sold out
wherever it was marketed. Appleton
once remarked with confidence, “There was never the slightest hesitation or
doubt about the success of this manufacture” (Dalzell 26). The Waltham
mill was the first of the American mills to become successful.
Without the Moody/Lowell
partnership, Waltham would have
been just like the other American mills: unsuccessful. The BMC had to rely on some industrial
espionage in order to get started, but once Moody and Lowell began
brainstorming, nothing would stop them from churning out inventions. The Waltham Industrial Revolution had begun.
It was not only in the
technological field where Waltham
made an impact. In the BMC mill, a
solution to a labor problem was reached; a solution which would change gender
roles in workforces forever. In the
beginning, the Waltham mill was
suffering from high costs and low revenue—the dilemma of most New
England mills. To cut
costs, Lowell wanted to find
workers “who were not necessarily strong, but who were dexterous and intelligent
enough to work the mill’s complicated machinery” (Dunwell
32). His answer was to find a group of
workers who both fit the bill and allowed him to pay the bill. Lowell
decided to use country girls.
Country girls were an
ideal choice for workers. They were
intelligent, easily trained, and had experience weaving yarn and spinning cloth
on their family farms. Compared to their
male counterparts, they were willing to work relatively cheap.
The conditions in America
during the period induced the recruitment of “mill girls.” They were economic burdens to their families
back on the farms, not being able to work in the fields. By working in a mill, they could enjoy a new,
adventurous experience rather than being relegated to the farmhouse.
To convince the girls’
fathers to let them leave home and work in an alien environment, Lowell
and Jackson set about to create an
ideal factory community. Jackson
said, “One of the fundamentals of the mills would be that they were morally and
intellectually upright” (Barry, City of
Waltham, 56). The houses where the
girls were to reside were strictly supervised by chaperones. Religious services and moral instruction were
mandatory. All the amenities worked: the
fathers were impressed and comforted by the mills’ good morals.
The BMC kept its promises
to be virtuous and moral for the employees.
In fact, the girls received many benefits which most companies of the
time did not offer. Long blocks of boardinghouses
were built next to the mills for the girls to live in. While not exactly comfortable, the spartan
(plain, without luxury) boardinghouses were clean and adequate. The girls also received wages for their
work. They were able to spend this money
anywhere: a novel idea, for most companies at the time paid their workers “wage
credit,” which forced them to buy their things at the company store. In other words, “wage credit” was just
another way to take money from the worker.
BMC official Alfred Gooddale said, “workers
were paid in cash, not in company credit.
Lowell believed this to be
fairer to the worker” (Petersen 90). In
terms of an employer’s consideration for his workers, the BMC was way ahead of
its time—perhaps even ahead of today’s time.
Giving the girls these benefits was also advantageous to the BMC. Contented workers made productive
workers. So in the long run, the BMC
probably profited from this approach, seeing production increase while at the
same time improving their public relations.
The BMC was also generous
concerning the town of Waltham. In 1816, the BMC established two schools,
allocated $500 for a library (now the Waltham Public Library), expanded Waltham’s
meeting house, built one church and enlarged another. It built Waltham’s
first fire engine in 1817, and in response to public demand, built Waltham’s
first fire station a year later. In
1819, the BMC organized the Waltham Savings Bank. By 1820, the BMC had helped to construct or
renovate almost every public building in Waltham.
The social and economic
conditions created by the BMC were never really ever successfully recreated
anywhere else in the world, not even in the city of Lowell,
which directly followed Waltham. Perhaps it is due to the unusual qualities
found in Lowell, the man—he was so caring, so intelligent, so shrewd, that
there may never have been another company leader like him. When he succumbed to illness and died in 1817
at age 42, Appleton said, “He
impressed on his colleagues the necessity of providing means for improving the
education and morals of the employees....
It was Mr. Lowell who was the informing soul in introducing the new
system of cotton manufacture” (Appleton
15).
Lowell’s
death was an incalculable loss to the BMC.
It was uncertain how it would fare with its chief inventor, leader and
mentor gone. Jackson
took over as head of the BMC after Lowell’s
death. He faithfully adhered to many of Lowell’s
policies, including the use of mill girls and the paternalistic (acting
in a fatherly or protective fashion) system, partly because Lowell’s
formulas worked and partly because Jackson
was not imaginative enough to think up any new methods. In any case, the mills’ production exploded
in 1816 and 1817. Even when a depression
hit in late 1817, the BMC’s business continued to
expand. Ironically, the BMC achieved its
greatest growth and expansion in the midst of this depression, due to shrewd
maneuvering of capital. During the boom,
the BMC had stayed cautious, preferring to build its reserves slowly by
gradually adding stockholders, rather than rashly seeking loans. So when the depression hit, the BMC proved
their shrewd corporate strategies to be a success. While most companies were in bankruptcy
court, the Associates were rich, comfortable and aggressively planning new ways
to expand.
All the time, the shareholders
were multiplying in number, and the BMC was becoming more and more
powerful. By 1820, after the fourth mill
opened for production, more than 500,000 yards of cloth were being produced
each year, compared with around 4,000 yards just five short years earlier. Share dividends were 19.25% a year in 1820,
increasing to 27.5% in 1821, an extremely high profit margin, which is almost
unattainable even today. In addition,
prices of Waltham cloth were
steadily going down, while output, revenue, and production were increasing and
technology was continually improving.
For example, in 1816, Waltham cloth was priced at 30˘ per yard; in 1819
this figure dropped to 21˘, and by 1823 it was a mere 13˘, a 57% decrease in seven
years (Appleton 16). The BMC was one of
the most successful companies out of the gate in the history of industry.
Ironically, the good
fortune Waltham was experiencing
soon led to its downfall. The river’s
waterpower had been exhausted by the four mills, and further expansion in Waltham
was impossible. The Associates needed a
new place to work. They looked at
several expansion site possibilities, and in 1822 decided upon a sparsely
populated place on the Merrimack River in Northeast
Massachusetts. A city was
quickly built and named Lowell. In a couple of years Lowell’s
production surpassed that of Waltham. Concurrently, Waltham
lapsed into obscurity, and Lowell
became renowned as the place where the American Industrial Revolution
began. However, Harvard historian Alfred
Chandler has said, “Waltham was
more important to U.S.
history than Lowell. It is merely because the Merrimack
afforded more wheel turning power than the Charles, that Lowell
became more productive and, ultimately, more famous than Waltham”
(Hall 21).
When the Waltham
mill began operating in 1814, no one took notice. It was just another mill making small
quantities of crude cloth, feebly competing against British and Indian
products. From these humble beginnings
rose a factory, which would serve as a model for the American industrial and
corporate systems. Because of the
inventive minds of Lowell and Moody, the use of the paternalistic system and
the Boston Associates’ shrewd corporate maneuverings, the BMC was the catalyst
of the American Industrial Revolution.
Works Cited
Appleton, Nathan.
Introduction of the Power Loom. Lowell:
B.H. Penhallow, 1858.
Barry, Ephraim.
The City of Waltham-Its Advantages to Manufactures and as a
Place of Residence. Waltham:
Waltham Board of Trade, 1887.
--- ed. Proceedings at the Celebration of the Sesqui-Centennial of the Town of Waltham (1888).
Waltham: Ephraim Barry
Press, 1893.
Batchelder,
Samuel. Introduction and Early Progress of the Cotton Manufacture of the United States.
Boston: Little, Brown and
Co., 1863.
Cox, John W.
Waltham’s Industrial Heritage. Waltham:
L. Michael Kaye Co., 1983.
Dalzell, Robert.
Enterprising Elite. Cambridge:
Harvard University
Press, 1987.
Dunwell, Steve. The Run
of the Mill. Dartmouth:
Godine Publishing, Inc., 1978.
Greenslet, Ferris. The Lowells and their Seven Worlds. Boston:
Houghton Mifflin Company, 1946.
Hall, Max. The
Charles-The People’s River. Boston:
David Godine Publishing, 1986.
Mailloux, Kenneth. The
Boston Manufacturing Company of Waltham. Ann Arbor, MI:
University Microfilms International, 1953.
Sanderson, Edmund. Waltham
Industries. Lunenburg,
VT: Waltham
Historical Society, Inc., 1957.