Rensselaer Republican, Volume 22, Number 17, Rensselaer, Jasper County, 26 December 1889 — SOUTHERN BUSINESS ENTERPRISE. [ARTICLE]

SOUTHERN BUSINESS ENTERPRISE.

[Written forTmc Heitblican.| There is no question* that the South at the present time affords rare chances, where prices are not already inflated, for those who desire to invest theit surplus capital in real estate in the growing towns and cities. There are also many localities where manufacturing industries are much needed, and the conditions of success are so evident that it is not surprising that thousands have already availed themselves of these opportunities, aind other thousands are contemplating a change at the earliest possible moment. Wherever employes can find a MILD AND HEALTHY CLIMATE, and have their household expenses reduced to a minimum, in that place they can save the most money at the least wages, and this condition is the most favorable for the employe), because without diminishing his profit, it secures him the-market against all competition. To illustrate: In this part of Northern Alabama, outside the large cities, and in a good railroad town, half-acre building lots can be bought for SIOO, lumber sells from $6 to sl2 per thousand, and the problem of purchasing a home by a inech; nic is easily solved. It costs to build and complete a good tasteful four-room cottage from S2OO to $250. The rent of the same is about $5 per month. With good surrounding farm land, at from $2.25 to $7 per acre, because of short, mild winters and large crops, living is cheap, Flour costs 83.75 to $4 j er bbl. corn 50 cents per bushel, Irish and , sweet potatoes 30 to 40 cents, fresh j beef from 5 to 10 cents per pound, sorghum of excellent quality, 30 cents per gallon; coal is $2 25 to $3 per ton, and wood can be had for the cutting. A half acre of fruit and vegetables, included in house ■ rent, will abundantly supply aI large family. Cow-keep for the year, amounts to but little more than three or four months winter forage. Fires are kept for heating during three or foui months only, and even then but for a portion of the day. Thus it will be seen that the household expenses are merely nominal, and hence such 1 MANUFACTURING ENTERPRISES as require a large number of operatives, as cotton and woolen mills, fruit canning, the manufacture of leather goods, furniture agricultural implements, etc., must necessarily be profitable. Interest is high, 8 per cent being the legal rate, and although money is often loaned at 20 per cent in small amounts, yet mortgages are very rare, except as part of purchase money for farms, and mortgage sales are seldom heard of. The high rate of interest is caused by the influx of immigrants with small capital, who purchase land and make improvements, the profit of their crops enabling them to pay such a large percentage for the use of money. Those farmers who owe on purchase money, are Rapidly paying up their indebtedness from the products of farm crops, Real eetate taxes are light, being only onehalf to three-quarters of one per cent, on a valuation of $2.25 per acre. THE MANUFACTURING INDUSTRIES, although few, when not mis man- ■ aged, are without exception very i successful, and are yearly increasing their capacity. The rental value of real property in the cities, according to their. population, is mjichhigber than in towns of corresponding size in the North. The rental value of farm , land is much in excess of the mar-. ket price; thus, land which has a rental value of $5 per acre, can be bought for from $7 to $lO. The high price of property and consequently high rents in cities are caused by the system of “AIDS AND INDUCEMENTS,” which land and improvement companies offer to those who come South seeking for localities for the establishment of manufactories, or the investment of capital. A syndicate of capitalists, a combination of northern and southern Yankees, organize to ‘'boom" or build a southern town to benefit —themselves. First they buy, say 2,000 acres of land, contiguous to some old village, or elsewhere, it matters but little where, if cheap,; at not exceeding an average of five or six dollars an acre, or say $12,000. They then proceed to organize a laud and improvement company with a capital stock of $2,000,000, obtain a certificate of incora-| tion, and pay for the stock with ■ the aforesaid $12,000 worth of land, i They now transfer about 40 per' cent, of the stock, or SBOO,OOO, into the treasury as “treasury stock" or working capital, and an advertisement fund, the balance, $1,200,000, the syndicate quietly slip into their • i

own pockets as an investment The coiripany is now ready for business. It proceeds to LAY OUT A CITY in lots, streets, aventies and parks, and obtain a city charter, and employ a small force of men to commence grading streets, etc. A liotel company, a street u.ilwav company, a water supply company, an electric light company, and probably an ice company are nqjw. organized, and the subscription to the stock of each is paid for from the said “treasury” stock, except so far as outside capital can be induced to invest. All this is duly advertised and the foundation of a great city is laid, and its success assured—on paper. The land is scheduled at an average pi ice of SI,OOO per acre, or S2OO per lot, and the same is placed on the market for sale. A manufacturer comes South to look for a location and an “inducement” for his shoe factory. The manager of our Land Company smilingly meets him, shows him the hotel site, the incipient water works, the-partially graded streers, the prospective railvay and ti e foundation of the electric plant ai.d ice factory, He offers to our manufacturer, a gift of SIO,OOO in stock or ten acres of land, for the site of the proposed factory, which is to employ 100 men. He also offers him an additional $3,000 in stock, if within six months he will erect a building worth not less than $6,000. The manufacturer is astounded at such unheard of liberality, and consequently locates, not thinking that here as a matter of fact malarial fevers are prevalent for three or four months of the year. The city is located on a beautiful river, but which in these days of railroads, he, in his business, would never think of utilizing, and which as a matter of business economy, he never could utilize. Now, let us examine the “inducement” The ten acres of land, at $6 per acre, costs the land company S6O; the 40 per cent, additional cost, as an improvement fund, increased the cost $24, making the total cost SB4. The $3,000 stock on the same basis, costs $25.20, making the total cost of the “inducement” $109.20. Our manufacturer will invest $6,000 in building and probably as much more in machinery for the privilege of locating in this magnificent city— to be, andacnsh ■premium of $109.20. He is to employ one hundred men, and this means that interest at 8 per cent or rent must be pnid upon 100 houses, built on the 1000acre land, and food and merchandise for the 500 persons constituting the families of these employes must be bought of grocers and merchants, who also pay the same interest or rent on the same valuation. All this added expense must be included in the wages of the 100 employes, which enter into the cost of the boots and shoes our manufacturer produces, and which in turn is deducted from our manufacturer’s profit for an indefinite number of years, for what? For the nominal ffifl of $23,000, having the entrinsic value of $109,20! Again an investor comes South to invest his savings. The manager of our land company is still smiling, takes him in his barouche with bis colored driver to see the enterprises, in this rapidly growing town; he points with pride to the street grading, the foundation of the waterworks, the partially laid track of the street railway, the machinery of the electric plant, the walls of the grand hotel, and the uncompleted building of the shoe factory. He is also assured that there are two or three iron furnaces, a large iron foundry, a cotton mill or two, and numberless minor enterprises, all very anxious to locate in the only available “model” -city pf the South, in which in a few years every building lot will be worth its weight in gold. He is also assured that there is no question as to the future, that money invested here will bring a rich harvest to the investor with no risk. Says he:“This shoe factory will need a hundred houses for its workmen, which are soon to be employed, and to show you our confidence, we will make you this guarantee, that if you w ill buy those ten lots at S2OO each, which is our bottom price, and build on each a house costing not less than SSOO each, if the investment does not pay you 8 per cent above taxes, and commissions for five years, we will be responsible for the deficiency.” Here is another generous offer: Our investor says, surely (here can be no risk here; the land company ought to know—know what? Thev ought to know that the said ten lota or two acres of land coat them $16.80, and that they are selliag them at a net profit of 51984.90, which with intareat added for

five years, They that they will for rents in any locality, at least 10 per cent the rest of the buildings, or J ear, which for five ye«rs will amount to $2,500. They kuoW also tliAt the initerest on our investor’s $7,000. for the five years, will amount to $2,800, and adding 10 per cent, for com mission sand other expenses, it will make an aggregate of $3,080, or a loss of SSB for the same five y?ars. This Joss deducted from the net profit of $2,777.88 leaves the company a suug sum of $1,197.88 by the operation,, and rhe m&nager—smiles again. All these transactions are widely advertised, and the wonderfull progress of this “magic" city is heralded in all the northern metropolitan journals by special reporters, paid for this purpose. This scheme has been success, ful in connection with one or two cities which would have become metropolilan in spite of it, owii g to other causes, and now scores of towns and country villages, each have a land company, and offers its “inducements” to rhe uortiiern investor, and whenever etich ‘inducements” are sought for, they will be found. Far be’it from us to depreciate the association of persons or capital for the encouragement of any industrial enterprise, because there are many localities possessing peculiar natural advantages, which otherwise would be ’ unknown, and a little stimulant is often net only necessary but healthy; but the reaction following intoxication often produces dans gerous, if not fatal depression.- -S. A. F., Cullman, Ala., Oct. 19,1889