The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [156]
New Bedford, the town that was his headquarters, once shone as the diamond in New England’s crown. For a while the ships that sailed from its harbor to hunt sperm whales made New Bedford North America’s richest city.11 Stanton’s grandfather, a whaling captain, had been head of one of the ruling families of the city, capital of the world’s most swashbuckling business. But in the mid-nineteenth century, as sperm whales grew scarce, the great harpoon ships had to venture ever farther north in search of the bowhead whale, all the way to the Arctic Ocean. In the autumn of 1871, the families of New Bedford waited in vain for their sons and husbands. Twenty-two ships, surprised by an early winter, lay trapped behind the Arctic ice and never returned.12 New Bedford would never be the same. Nor would the whaling business, once its mainstay, ever recover. As the supply of whales shrank, demand for their products had dwindled. After 1859, when oil gushed from the ground in Pennsylvania, kerosene became an increasingly popular substitute for the ever-scarcer whale oil. The flexible, comblike whale baleen13 used in women’s corsets, hoop skirts, and fancy parasols, in buggy whips and other mainstays of Victorian life, ceased to find a market as those products gradually disappeared from the shelves.
In 1888, Horatio Hathaway, whose family had roots in the China tea trade,14 and Joseph Knowles, his treasurer, organized a group of partners to follow what they saw as the next business trend. They formed a pair of textile mills, Acushnet Mill Corporation and Hathaway Manufacturing Company.15 One of their partners was Hetty Green, the notorious “Witch of Wall Street,” a shipping heiress raised in New Bedford who rode the ferry to New York City from her tenement apartment in Hoboken to make loans and investments. She stalked through lower Manhattan in an ancient black alpaca gown, swirling cape, and rusty veiled hat like an elderly bat, her appearance so eccentric and her parsimony so notorious that rumors circulated that she wore newspapers as underclothes. By the time of her death in 1916, Green would be the richest woman in the world.16
Financed by such investors, mill after mill sprang up to comb, spin, weave, and dye the deep stacks of cotton bales unloaded from Southern ships onto the wharves of New Bedford. Congressman William McKinley, chairman of the House Ways and Means Committee, who passed through the region from time to time to christen new mills, sponsored a tariff to protect the textile mills from foreign trade, for it was already cheaper to make fabric elsewhere.17 Thus, even from the beginning, the textile mills of the North needed political help to survive. Early in the twentieth century, a new technology—air-conditioning—revolutionized factories by allowing precise control of humidity as well as particulate matter in the air, and it was no longer economically justifiable to ship cotton out of the South, where labor was cheaper, to the chilly shores of New England. Knowles’s successor, James E. Stanton Jr., watched half his competitors’ mills melt away to the South.18 Put to the rack by repeated wage cuts, workers at the remaining northern mills went out on a crippling five-month strike that broke their employers’ backs. James Stanton “hesitated to spend stockholders’ money on new equipment when business was so bad and the prospects were so uncertain,” recalled his son.19 He pulled capital out of the business by paying dividends.
By the time Stanton’s son Seabury, a Harvard graduate, took over in 1934, the aged, rickety Hathaway plant still rattled out a few bolts of cotton cloth each day. Seabury became seized with a vision of himself as the hero who saved the textile