The following is a re-print of a past column by former Advertiser columnist Stephen Thorning, who passed away on Feb. 23, 2015. Some text has been updated to reflect changes since the original publication and any images used may not be the same as those that accompanied the original publication.
On several occasions over the past couple of years I have offered accounts of unsuccessful industrial ventures in Wellington County’s smaller villages, the Arthur shoe factory and the Rockwood battery factory being the most recent.
Failed industries were not unique to Wellington. Historians and geographers have long puzzled over the reasons for the general failure of industry to establish a solid foothold in small-town Ontario.
The village of Drayton offers a particularly fascinating case study on the subject.
Drayton existed through the 1850s and 1860s as a small commercial hamlet, sustained in large part by a monthly cattle market. Its very survival, though, was not assured until the railway station opened for business in 1871.
The boom that resulted, as Drayton pulled commercial and agricultural business from nearby hamlets, tripled the population in less than five years, and led to the incorporation of Drayton as a separate village with its own council in 1875.
Desiring to expand the municipality’s economy beyond the usual assortment of stores and the small blacksmith and wagon shops that formed the economic core of agricultural communities, the first Drayton council offered an interest-free loan to Archibald Filshie to build and operate a foundry and agricultural implement factory.
At the time, the talented and ambitious Filshie held the position of general manager of the Elora Agricultural Machinery Co., but he was clashing with increasing frequency with shareholders over the direction of the firm. In 1875 he began negotiations with both Drayton and Lucknow to start a new firm under his complete control in one or the other of those villages.
It was the practice of most municipalities, beginning in the 1870s, to offer inducements in the form of tax concessions, loans and outright grants to industries to locate within their borders.
By the mid-1870s it was already obvious that the practice was an unsound one at best. Most of the industries started on the basis of civic assistance did not last long. Prospective industrialists soon learned to play one town against another for the best offer.
At the same time, civic boosters pressured their own councils into continuing the policy because everyone else was doing it.
Drayton’s 1876 council withdrew the offer made a few months before. They had become wary of the cost of the aid to Filshie, impatient over new demands he was making, and suspicious that they were in a bidding war with Lucknow.
The lack of enthusiasm for financial aid to industry proved to be a wise one for Drayton taxpayers. During the 1880s and 1890s the cost of aid to failed industries proved costly to Guelph, Fergus and especially Elora.
Drayton did come forward once with aid: a $2,000 loan to Pollock Bros. to help construct a flax mill in 1891. This was not a major industry, though, offering only low-paid seasonal employment to a handful of people.
By 1900 there was still no major industry in Drayton, the largest firms being Haack’s tile yard (manufacturing clay tile), Clark’s brick works (source of much of the white brick in the Drayton area), and the two flour and feed mills, one operated by Louis Noecker and the other by Amos Hilborn and George Pleffer.
None of these industries employed more than a half-dozen men, and all were seasonal in their production. This meant there was no permanent pool of labour in Drayton. Some of the employees worked for a few months in town and drifted on, but the bulk of them were farmers, working for periods in town for extra income.
In the years immediately after 1900, there was a change in Drayton’s approach to industry. An important factor was the reeve, E.E. Dales, who served between 1899 and 1903. With his black moustache, portly stature and forceful manner, he bore a striking resemblance to U.S. President Grover Cleveland.
Most of Drayton’s businessmen supported the efforts of Dales to push Drayton well beyond the 1,000 population mark and to diversify the local economy into manufacturing to supplement the stagnant commercial sector.
Early in 1901, a group of Drayton men started to discuss the formation of a company to manufacture felt and shoes. On March 11 of that year they held a meeting to organize their venture.
Leaders of the venture were businessmen O.B. Henry, who became president of the Drayton Felt and Shoe Company, John Lunz, Bill Lawton and John Peel. Also involved were the professional men in Drayton: Dr. Bob Lucy, veterinarian Jim Pickel and J.G. Coram, the dentist who was the brother of Jabez Coram, publisher of the Drayton Advocate.
There is no surviving record of why these men decided to commence a factory in the felt and shoe line. John Peel, who sold and repaired shoes in his store, may have had useful contacts in the business. Felt was already something of a specialty in Waterloo County to the south, with felt manufactures in New Hamburg, Waterloo, St. Jacobs and Elmira.
The Drayton men may have had some sort of arrangement with one of them to provide technical expertise.
In any case, they spent considerable time on their proposal. They intended to construct a two-storey building, 100 by 50 feet, of brick, with machinery to keep 65 employees busy. They estimated the cost of the building and equipment to be $15,000, and believed a total investment of $40,000 would be needed (for equivalent amounts in 2001 dollars, these amounts should be multiplied by 60 or 70).
The organizers wanted this to be a locally owned and managed business. They proposed to sell 150 shares at $100 each, and to borrow the working capital, up to $15,000, through banks and other lenders. The remainder of the capitalization would come through a $10,000 interest-free loan from Drayton, repayable at $500 per year for 20 years.
It was a far more ambitious scheme than had ever been seen at Drayton. Most importantly, it promised permanent year-round employment to working men, something that Drayton did not yet possess.
Supporters of the scheme could see many desirable spin-off effects, both social and economic.
During March 1901, the organizers sold some $8,000 of stock to themselves and to others in Drayton. To make the ownership as wide as possible, and to sell more stock, they began offering quarter shares in the firm for $25.
Reeve Dales was involved in the discussions from the beginning. He took the proposal to council, and at a meeting on April 1 the parties had reached a provisional agreement, with some details to be worked out. The council wanted guarantees of employment, a first mortgage on the property, and wanted all of the stock to be sold before any municipal money went into the project.
Anxious to proceed as quickly as possible, council called a referendum on the proposal, a necessary requirement at that time, for May 6, after three meetings in the first week of April before the bylaw was drafted. The measure required a “yes” vote from two-thirds of the property owners on the tax roll.
There was a degree of nervousness among the provisional directors in the days leading up to the vote. Shareholders in the firm were disqualified from voting, so it was necessary to temporarily stop the drive to sell shares. As well, the directors believed that council was inflexible in its demands for the maintenance of employment levels.
Rather than maintaining a minimum payroll at all times, as council wanted, the directors offered an averaging formula over a period of years, to account for the inevitable swings in demand and production.
The provisions of the bylaw offered ample protection to the village. Drayton would have the first mortgage on the property. The firm was required to employ at least 25 people for at least 10 months per year. Only half the loan of $10,000 would be given during construction, with the remainder payable only when production started. A late concession to the firm was a 10-year exemption from property taxes.
The firm’s organizers felt relief when no organized opposition to the loan materialized. When all the ballots were counted, the measure passed by a margin of 138-8.
The affirmative side would have been higher had the shareholders in the company been able to vote.
The $10,000 loan to the Drayton Felt and Shoe Co. was confirmed at a meeting of Dayton council on May 13, 1901.
But there would be more obstacles in the path of the firm.
*This column was originally published in the Wellington Advertiser on May 18, 2001.