Oregon Historical Quarterly/Volume 3/The Origin and History of the Willamette Woolen Factory
THE ORIGIN AND HISTORY OF THE WILLAMETTE WOOLEN FACTORY.
By L. E. Pratt.
About the year 1854 Mr. Joseph Watt, being at that time one of the largest sheep owners in the territory, and there being no market for the wool produced, Mr. Watt conceived the idea of manufacturing the wool into serviceable goods to supply the pioneers. He first attempted to organize a company and locate the factory in Yamhill County (then his place of residence), but, failing to get satisfactory encouragement, he came to Marion County and here met with better encouragement, and by perseverance succeeded in getting others interested and finally organized a joint stock company, which was duly incorporated by an act of the territorial legislature in 1856. He commenced operations by constructing a canal from the Santiam River, about one mile, to intersect with Mill Creek, (which was totally dry in the summer season,) which leads down through the prairie about 15 miles and intersects the Willamette at Salem, where the factory was located, furnishing abundant water power for the factory and for other extended improvements. Mr. Joseph Watt was the originator and also the father of the wool producing and wool manufacturing industry of Oregon. The following is the history of the first woolen factory on the Pacific Coast, by the manager from 1857 to 1863: Its unfavorable and almost unsuccessful commencement Its final perfect success Its changing ownership and by the mismanagement of the new company was burdened with debt and loss of credit Again changed ownership and was soon thereafter mysteriously destroyed by fire.
THE HISTORY.
In the year 1856 the Willamette Woolen Manufacturing Company was organized and incorporated with Geo. H. Williams, president; Alfred Stan ton, vice president; Joseph Watt, W. H. Rector, Joseph Holman, E. M. Barnum, L. F. Grover, directors; Joseph D. Wilson, secretary, and John D. Boon, treasurer.
In the autumn of this year Mr. W. H. Rector was chosen to proceed to the East to procure the machinery and to employ a competent man to go to Oregon to put in operation the machinery and to superintend the manufactory when in operation. Upon arriving in the East he chanced to meet a woolen manufacturer to whom he stated his business. Finding him free and communicative he asked his advice as to the course to pursue, which he freely gave as follows: In the first place secure your man, one who thoroughly understands every department and also capable of locating and drawing a plan of the building adapted to the machinery and water power, and finding such you will find all else easy. His adviser chanced to be my last employer, for whom I superintended for the last six years. He also recommended and advised him to secure my services if he could. I was also recommended by the machine builders in Massachusetts, with most of whom I was well acquainted. He came to see me and in about twelve hours I had engaged to him to go to Oregon. The first thing required was the plan of the building requisite for two sets of machinery, he giving me a verbal description of the location, fall of water, etc. The draft for a wood building completed was forwarded by mail in order to have the work on the building progressing. Then an itemized bill of the machinery and supplies was made out. This completed, I accompanied him to North Andover to Davis & Furber, woolen machinery builders, to procure the same. My surprise may be imagined upon hearing his proposition to Mr. Davis, having but $2,500 to pay for $12,000 worth of machinery and to get credit for the balance. Mr. Davis questioned Mr. Rector as to the respectability of the individual members of the company. Then calling me to one side the following conversation passed: "Have you engaged to this man to go to Oregon?' I answered, "I have.' "Don't you think you are making a great mistake, as you will soon get into a good situation here at home?' I replied, "Business is very dull. We don't know how long it will last, and I have a desire to go West to see and know something of the country, and decided to take this opportunity to go to the far West." Davis said, "Then you will go?" "I will." Then said Davis, "I would not like to take the risk of furnishing the machinery on account of the distance and no one there that I know; but as you are going the machinery can go on the terms proposed, and I wish you success."
All necessary arrangements completed, I then made preparations to leave New England for Oregon, which occurred on the fifth of May, 1857, via the Isthmus, arriving in Salem June 7.
Soon after my arrival here the money to liquidate the Davis & Furber bill of machinery was loaned to the company by Mr. Daniel Waldo, about $10,000, at 2 per cent per month, interest to be paid every six months or note renewed and interest added. In November ('57) the machinery arrived in Salem and the building was completed and ready to receive it.
At this time another loan was effected from Joseph Watt of about $9,000, on same terms of that from Mr. Waldo. The freight on machinery and other expenses made this necessary. I immediately commenced to set up and get in operation the machinery with two men to assist and learn to operate when set up. In the last week in December ('57) we had the machinery in good working order, and at the end of the first week in January ('58) were finished the first lot of fine white blankets, and in a few days after cloths and flannels were finished and ready for market.
About this time E. M. Barnum was appointed "general agent.' In about one month after his appointment he resigned, discouraged with the unfavorable prospect of disposing of the goods and furnishing money and wool to keep the factory in operation.
A. S. Watt was then appointed his successor. About May 1 ('58) the stock of wool was nearly exhausted, the mill was stopped and all hands except myself went or started for Frazer River. About July 1 ('58) the men all returned and work was resumed. A. S. Watt not meeting with any better success than Mr. Barnum and for the same reason he resigned. A contract was then made with Joseph Watt to take all the goods manufactured, except what might be required to exchange for wool at the mill. He was to furnish money and wool sufficient to enable me to keep the mill in operation. After about two months, having been applied to a number of times for relief and failing to furnish any money and very little wool, and the employees being in debt to the market and stores in town and further credit being refused, a suspension of operations appeared certain in consequence. I then presented to the directors a statement of the situation of affairs, showing that it was impossible to continue longer without relief. A meeting of the company was called, which resulted in the abrogation of the contract with Joseph Watt with a stipulation in his favor and a decision as to the course to pursue.
I was then called into their meeting and the president related to me their decision, (the following appears in the margin: "Expecting to hear that they had decided to suspend operations,") which was: As a last effort to succeed in the enterprise the entire management was intrusted to myself with this remark: "There is the mill and the machinery, the wool and goods on hand. We put everything into your hands to do the best you can and abide the result.' I replied that under the circumstances and in justice to myself I ought to decline to take the responsibility and the risk. The reasons: First, the company's notes are out for over $20,000 at 2 per cent per month; second, there is very little money in circulation in the country, business nearly all done by trade and exchange and long credit. Stores throughout the country well stocked with cheap eastern goods sent to this country during the panic of '56 and '57, and, as has been reported by the three successive agents, with the exception of a few blankets very little could be sold; third, wages, the lowest to be obtained, at $2.50 and $3.00 per day. All the help, with myself, are in debt for our living and further credit declined, and some bills owing in San Francisco and Portland for oils, dyestuffs, etc. This is the present condition and situation. I am here and this is my occupation. In accepting your proposition upon myself rests the success or failure of this enterprise at this time in Oregon, but I accept and will make a most vigorous effort to succeed.
I at once informed the employees of the arrangement, asking them to continue on with the work to the best advantage, as we must consider we were then working for ourselves; that there should always be goods on hand at the mill sufficient, if the worst came, to pay every man, and I was taking my chance with them. I also gave the merchants in town the same assurance, they agreeing to extend our credit for a time. Having arranged everything as satisfactory as I could, I then turned my attention to introducing the goods, going the length and breadth of the valley to every responsible merchant, making an arrangement to exchange factory goods for wool, taking orders to be paid in wool. It was useless to propose to sell to them, but to exchange for wool suited them as well as myself. Almost without exception they readily agreed to that proposition. This was the first successful movement towards introducing the goods.
About the first of August I proposed to the secretary, J. G. Wilson, that there should be duebills issued by the company in value from 50 cents to $10, to the amount at that time of $1,000, to be issued to the employees to pay for their purchases in town, it being more convenient than giving orders and safer for the merchants than standing accounts with them. Seeing the advantage he recommended the plan to the directors and they consented to the plan, and the duebills, or as they were called "Factory Scrip," was issued and used as paper money. The advantage gained by this issue of factory scrip in different ways, and more particularly in introducing the goods, was almost incredible. In fact, for a time it was a current circulating medium. In about one year from the time it was first issued it accompanied the orders for goods from Victoria and the Sound to Roseburg, Oregon; and when greenbacks were first in circulation here, in most cases factory scrip was preferred. I then felt that the company was safe when the credit of the company was as good as that of the United States.
During the month of August ('59) I made arrangements with a firm in Portland dealing most entirely in groceries for the exchange of goods, which they did to quite an extent. Soon after, as the goods became known, a wholesale house made to me a more advantageous proposition which was accepted; the result was the opening of a store in connection with the factory, which was continued for some time and resulted in an increased demand for the factory goods.
In September ('59) I put up quite a large invoice of goods to be exhibited and sold at the California State Fair at Sacramento, which was successful, receiving from the fair a fine diploma on silk in a fine frame for first woolen goods manufactured on this coast. The goods were all sold at a fair price, Charles Crocker of San Francisco being the principal purchaser. From this introduction orders were received from California until the Mission mill in San Francisco was in operation in the following year. At about the same time I made a tour through the Sound country with samples. Succeeded in getting a number of orders; though small, they answered well as an introduction of the goods, as it afterwards proved. Having made a thorough distribution of the goods and being satisfied what the result would be, turned my attention to the manufacture through the winter. More wool having arrived than expected as the result of the exchange plan, there being about 80,000 pounds more than could be consumed before the new clip, I sold it to a San Francisco firm at the rate of 20 per cent above cost. The proceeds from this sale and from a small contract for blankets for the Indian Department yielded an amount of money which enabled me to pay the indebtedness of the company in San Francisco and Portland for soap, oils, dyestuffs, etc., and procure for the winter a supply of the same. May 1, quite a large supply of goods on hand; wool had commenced to arrive; soon found goods were being exchanged as fast as made; commenced running a part of the machinery nights on the first of August ('60). Found that we had a surplus of about 25,000 pounds of wool, which was sold to a San Fransisco firm for 25 per cent above cost. The balance of the amount received for this wool, after reserving an amount sufficient for the purchase of supplies, along with $5,000 borrowed at 1 per cent, paid off the Watt note and interest amounting to about $11,000. May, 1861, found us better prepared to receive the wool, the store being well supplied with an assorted stock of goods and the factory goods found to be more serviceable and giving better satisfaction than the imported and the rapidly increasing confidence in the company relieved to a great extent the anxiety of myself and the company.
Again in August of this year ('61) I found that we would have a surplus of about 55,000 pounds of wool and run the machinery day and night. The directors not complying with my wish to ship it East it was sold to the same firm in San Francisco for about 30 per cent above cost. The proceeds paid all the indebtedness of the company, except the claim of Mr. Waldo, who preferred to let his remain by the interest being paid and at 10 per cent per annum instead of 2 per cent a month . This was thought advisable, as it was now evident that to increase the machinery to five sets might be advisable and this was being considered.
In the early spring of 1862 it was evident that the wool clip would be increased this year fully 100 per cent and we had it all secured and partly paid for, and our surplus would be about 100,000 pounds. Renewing my urgent advice and insisting upon it, the directors finally consented for me to ship this year's surplus East. I accordingly shipped 100,000 pounds to Boston—the first shipment of wool direct from Oregon to the East. About August 1, 1862, all the wool was taken from Salem. It reached Boston in February, 1863.
Immediately after shipping the wool I ordered three sets of machinery complete. Made a draft of the new proposition</noinclude>building to be erected and ordered lumber for the same. Employed a competent accountant, took an account of stock, made a balance sheet which showed at that time the assets of the company made the stock worth fully $650 a share (in pencil: "the original not counting cost of Santiam water in the account") . The wool arriving in Boston in good condition and at a favorable time sold readily at a net gain of over 200 per cent. Including the proceeds in the estimate of the value of the stock it would exceed $850 a share. It will be observed that in about four years the value of the stock increased from $250 per share and over $20,000 in debt, to over $850 a share and no debt, making a net gain of over 400 per cent. (In pencil the figures 156 and 500 are placed over $250 and 400 per cent respectively). This was accomplished with the disadvantages under which we were laboring as before mentioned at the commencement. I would challenge any other woolen factory on this coast to exhibit as favorable a showing under less difficulties.
L. F. Grover, being one of the shareholders of the company, upon hearing my report of the standing of the company associated with him Joseph Smith, W. K. Smith, and J. F. Miller, and in a quiet way commenced to procure the controlling interest in the stock, in which they succeeded by paying from $2,000 to $2,500 a share. A meeting of the company was called in January, 1863. I had about twelve shares at the time and was putting all my earnings in the stock. At this meeting James F. Miller claimed and voted a share of stock I had paid for two months previous and I held the certificate transferred to me by the original owner, but he did not allow me to represent it. This gave to those men the majority or control.
They voted to themselves all the offices of the company. Then, voting to each one an exorbitant salary, the meeting adjourned. In about two weeks after this meeting the four, with J. F. Miller at their head, came to me at my desk and Miller in an authoritative and to me insulting manner said, "Pratt, we will run this thing now.' I (being surprised) replied, "I suppose you have no further use for me?" Don't recollect of either of them making any reply to me, but waiting a few minutes and nothing being said or notice given me, I went home. In a few days Mr. Rector was sent to me by them with a proposition to return and take the agency of the company and set up the new machinery which had then arrived in Portland. I declined their proposition, and made them a proposition stating the terms on which I would return, which they in turn declined with a threat that, unless I acceded to their terms and came and set up the machinery, (which in fact was all they wanted of me,) they would make such representations that would reflect seriously upon my reputation and prevent me from getting another situation in Oregon. I replied, "That settles it. If those men will condescend to such contemptible business, they altogether have not money enough to employ me. Tell them they can go to ." Thus ended my connection with the Willamette Woolen Manufacturing Company.
[The lines of the following sentence are inclosed within braces: "The next year ('64) located, drew up plan of the Oregon City factory, procured the machinery and put the mill in operation."]
Upon leaving the factory company I sold my stock in the company, and also advised my friends, Daniel Waldo and W. H. Rector, to do the same, particularly advising Mr. Waldo to draw his money he had loaned the company, as I was sure he would then realize more for his stock and money than he ever would again. He declined to take my advice. The result was as I told him. He withdrew from the company in 18 with about $5,000 instead of $25,000 if he had done as advised.
It was my intention, with the proceeds of the last sale of wool, to liquidate the indebtedness of the company, have regular monthly pay days for the employees, and, when it was necessary, to pay cash for wool; and by all means to retain this as the market for all the wool of this valley, as it then was and could have been for some time to come with proper management, but the "quartette' owning property in the vicinity of South Mill Creek, and aiming to make it more valuable, an extensive "flour mill" was erected with the proceeds of that wool, and, that not being sufficient, and finding that there was quite a large amount of factory goods distributed through the valley (intended to be exchanged for wool) an immediate demand for payment in money was made (a violation of my understanding and agreement), which would have been a great disappointment to the best patrons of the company. In consequence of which many of those who had engaged wool intending it for the factory sold to San Francisco buyers, who, finding the factory company was working under a different management and a different plan, sent men through the valley to purchase the wool, the result of which was that it checked the demand for factory goods and invited competition in the securing the wool to such an extent that the company found it difficult to secure sufficient for the factory.
In 18— Robert Kinney became one of the Willamette Woolen Manufacturing Company by purchasing one of the Smiths' eighteen shares of the stock. At about this time, or before, the Smiths, seeing where their superior mismanagement was taking them, in some way extricated themselves altogether from the company. I am not able to learn how or in what way, other than the unloading the above eighteen shares onto Robert Kinney. The Smiths being out, the agency devolved on L. F. G. In 18— Robert Kinney discovered his mistake, and, thoroughly disgusted with the management, immediately set to work to extricate himself from the company, in which he finally succeeded in 1870 by taking the flour mill for his portion, paying therefor the eighteen shares of stock in the Willamette Woolen Manufacturing Company and $7,500 coin.
It has been said that the Willamette Woolen Manufacturing Company was doing better under the management of Joseph Smith (my successor) than at any other time, which should have been the case I will admit for the following reasons: First, the company soon after his appointment to that position came into the possession of about $60,000 cash, the proceeds of the wool I shipped East in 1862; second, it being the time during the war that the woolen goods were advancing from 10 to 20 per cent, and a ready market for all that could be made; third, the increased capacity of the factory to three times what it had been by the addition of the new machinery, just arrived from the East. With the benefit of the above advantages in his favor, most of which was accomplished and provided by his predecessor, why should he not have succeeded better? And if the company did succeed better, why did they soon after commence to borrow money from the Bank of British Columbia and from Ladd & Bush, and continue to borrow until finally the whole property was mortgaged to secure a debt of $85,000? Add to this $20,000 that was swindled out of Daniel Waldo, making over $100,000. Then in 1875 it was deeded to W. C. Griswold in consideration of the sum of $100.