by Sven Beckert
For standards to work over the long term, purchasers had to be able to verify the quality of the cotton they had purchased. At first these rules and regulations were informal, conventions not written down but personally understood. As trading by sample increased in volume and expanse, traders in far-flung ports and manufacturers demanded rules with “some sense of permanence”—standards protected by institutions. In response, brokers created the Liverpool Cotton Brokers’ Association in 1841. One of the first things the Association did was to pass a resolution that all cotton sold by sample was warranted to contain such quality. By 1844, they had defined standards for “fair” and “middling” cotton. In 1846, the American Chamber of Commerce in Liverpool, founded in 1801 by Liverpool merchants trading with the United States, suggested that the brokers “cause samples of the several classes of American Cotton to be taken, to be placed at the disposal of the American Chamber so as to form a standard for reference in all questions as to quality of cotton.” Increasingly, the cotton market was no spontaneous interaction of utility-maximizing individuals, but a set of institutions forged outside the market itself.17
Once standards were formalized, efforts emerged to apply them internationally. In 1848 the New Orleans Chamber of Commerce wrote to the American Chamber of Commerce in Liverpool about the “great inconveniences which have hitherto frequently attended the operations of the purchasers of Cotton in New Orleans for want of a fixed standard of quality uniform with that of Liverpool and recognized as such by the Trade in both ports.” It proposed to create mutual standards for “fair middling & ordinary cotton, both New Orleans and Alabama.” These duplicate standards would then be kept in New Orleans and Liverpool, to adjudicate disputes. The American Chamber of Commerce in Liverpool obliged and voted to create such standards. A modern cotton market was now emerging as the result of collectively articulated conventions, with a private association of Liverpool merchants at its core. Capital was changing the way the cotton plant itself was seen—it would soon change the plant itself. In such subtle ways, the unrelenting pressure of capital-intensive factory production moved closer to the growing of cotton itself, forcing the logic of capital upon the logic of nature.18
Cotton standards emerged hand in hand with, and indeed enabled, another invention: a trade in cotton that had not yet arrived. For a futures market to work, information and samples had to travel faster than bulk cotton itself, something that seems to have emerged in the 1810s in Liverpool. By 1812, cotton brokers had begun to trade in cotton while it was still on the high seas, exchanging so-called “bills of lading”—documents certifying ownership of certain bales of cotton. Two years later, on August 13, 1814, George Holt sold to George Johnston & Co. one hundred bags of cotton “to arrive” from Amelia Island in ten days. Such trade in the future delivery of cottons increased throughout the first half of the nineteenth century. In 1858, the American Chamber of Commerce in Liverpool explicitly regulated such “to arrive” contracts. This was the moment in which, according to the Baring house in Liverpool, the “hypothecation of shipping documents” began. And not just in Liverpool: Such “to arrive” contracts were also used in the American South by New York merchants before 1860, and in Le Havre, where merchants created ventes à livrer contracts as early as 1848. But there and elsewhere, these contracts were still exceptional, and as late as the 1850s cotton broker Samuel Smith observed that “nearly all the business was bona-fide transfers of cotton in warehouse, and it was quite an exception to sell a cargo afloat.”19
Moreover, during the first half of the nineteenth century selling cotton for future delivery was still based on the eventual delivery of a particular parcel of cotton. George Holt had promised in 1814 to deliver particular bags of cotton to Johnston, his customer, not just a certain quality. Yet gradually the connection between a particular contract and a particular batch of cotton began to weaken. Cotton began to be sold that had not yet been shipped, indeed that would only come onto the market in distant months, and might not even have been planted yet.20 This further abstraction of the trade would blossom during the American Civil War, when true futures dealings came about. The quantifiable, steady, and ongoing demands of mechanized production encouraged an ever greater abstraction of its essential raw material inputs, protecting manufacturers against price fluctuations and enabling them to price their finished goods across global markets.
The chain from factory to plantation, however, had many more links. Liverpool’s brokers communicated the needs of manufacturers to another powerful group of cotton traders: the import merchants. In contrast to the brokers, these merchants engaged in transoceanic trade of cotton, handling goods on an incomparably larger scale, with opportunities for profit proportionally greater. In Liverpool and its French competitor, Le Havre, merchants specializing in cotton importation had emerged as early as the late eighteenth century, to be followed in the nineteenth century by merchants in Bremen. They focused on purchasing cotton abroad or, more typically, shipping it for a commission (rather than taking ownership of the cotton) from distant ports to Europe.21 They, more than any others, directly connected rural producers with the most dynamic manufacturing sector the world had ever known. At first, they helped slavery blossom in Louisiana and Brazil, but later they would enable peasant producers in India to grow cotton for transoceanic markets, and allow Muhammad Ali’s domination of Egyptian peasants to turn into profit.
Liverpool’s merchants were far and away the world’s most important cotton importers. By the mid-1700s they had brought the first cotton to Liverpool; by 1799, a full 50 percent of all British cotton imports arrived there (most of the rest went to London), and by the late 1830s that proportion had grown to 89 percent. Liverpool’s merchants cornered the global cotton market in ways few merchants ever have. They succeeded for several reasons. Initially, Liverpool’s central position in the Atlantic slave trade set it up well for trade in cotton. Cotton initially arrived, along with sugar, tobacco, and other goods, as return freight from the West Indies—one of the sides of the triangular trade. Liverpool may have controlled up to 85 percent of the British slave trade, and by its 1807 abolition as much as one-quarter of Liverpool shipping was in slaves; everyone who worked the city’s ports, therefore, was experienced with long-distance trade, and also with the cotton-growing regions of the Americas. And, as cotton increasingly came across the Atlantic rather than the Mediterranean, Liverpool was well situated to capitalize. The city also benefited from its location near the spinning districts in and around Manchester, a connection that rapidly improved thanks to the building of canals, improvements on the river Mersey, and eventually, in 1830, the arrival of the world’s first railroads. With such connections in place, Liverpool could benefit from the institutional innovations created by its traders.22
The most powerful and wealthiest of Liverpool’s merchants engaged in the cotton trade. A careful study of the Liverpool cotton import trade has found that in 1820 fully 607 merchants traded cotton. Yet the same study also established that the number of merchants who imported cotton regularly (more than six times a year) was small, 120 in 1820, and 87 in 1839. The import trade was therefore composed of a very large number of merchants who traded small quantities of cotton occasionally, and a few merchants who regularly traded large numbers of bales. Yet as margins fell in the second quarter of the nineteenth century, the merchant community consolidated. In 1820, the leading ten cotton merchants had imported 24 percent of all cotton into Liverpool, and the top thirty cotton importers had imported a total of 37 percent. Nineteen years later, the leading ten traders brought in 36 percent of all cotton and the leading thirty a full 60 percent. That year, 1839, the largest importer of cotton into Liverpool sold more than fifty thousand bales.23
While the majority of traders continued importing small quantities of cotton along with other commodities, Liverpool’s major cotton traders reaped tremendous rewards by specializing and intensifying their cotton trade. The Rathbone family, one of the city’s prime cot
ton traders, had moved into the cotton trade in the eighteenth century (they supplied Samuel Greg when he opened Quarry Bank Mill), at first adding to and later superseding their older timber, salt, and tobacco trade. Indeed, they were perhaps the first Liverpool firm to receive U.S.-grown cotton. They shipped cotton throughout the first decades of the nineteenth century, and by the 1830s wholly specialized in it. Like many other merchants, they acquired this cotton through agents in southern ports of the United States who had purchased it on the Rathbones’ account or who sent it to them on a commission basis. The profits were large: In the years from 1849 to 1853, the Rathbones earned £18,185 from the cotton trade, in the years 1854 to 1858 they made a full £34,983—at a time when a physician might earn £200 a year. The cotton profits of just five years could finance the construction of a huge and fully furnished English country manor; as the nineteenth century wore on, more and more such stately homes dotted Liverpool’s countryside.24
The Rathbones’ trajectory from their earlier trade in other commodities into cotton was typical of the major nineteenth-century transcontinental cotton merchants. But there was another path into the cotton trade. Those whose wealth or skills did not originate in trade itself saw cotton as a promising way to diversify. So spectacularly profitable was the cotton trade that all but a few of the major capitalists of the era sought to gain a footing—bringing with them significant amounts of capital. The Baring family, most notably, made such a move. Along with the Rothschilds, the Barings were Europe’s most powerful bankers, and just like the Rothschilds, the Barings forged an important connection to cotton during the first half of the nineteenth century. They also had a long-standing relationship to the United States, not least because they had facilitated that expanding slave power’s purchase of Louisiana from the French.
The Barings had begun investing in the cotton business as early as 1812, when they advanced £6,000 to New Orleans merchant Vincent Nolte to start a cotton export house. Thanks to this capital influx, Nolte’s “position in the cotton market now became, step by step, more influential,” and by the 1820s he traded sixteen thousand to eighteen thousand bales per season. When Francis Baring visited Nolte in the early 1820s to check on his investments, he was, according to Nolte, “evidently gratified when he took his first walk along the so-called Levee…and saw it strown [sic], from the upper to the lower suburb, with cotton bales, on which were stamped the marks of my firm.” Nolte failed in 1826, however, and the Barings in consequence added an American agent to their operations, Thomas Ward in Boston, to enforce tighter controls over their American investments.25
Under Ward’s watchful eye, the Barings’ London-based cotton business grew rapidly, so much so that by 1832 they had opened an office in Liverpool. Step by step, they built a globe-spanning system of information collecting and trading whose epicenter was Liverpool. It was there that they collected information on the globe’s raw cotton supplies, cotton manufacturing, and cotton goods consumption and then translated it into orders to Thomas Ward, who then made arrangements with commission houses in New York, Philadelphia, Charleston, Savannah, Mobile, and New Orleans. The Barings also took shares—that is, they purchased particular lots of cotton forwarded by other commission houses. Funds for both advances and purchases were provided by drafts on Baring Brothers & Company. It was this credit, wielded by merchants like the Barings, that made the brutality of war capitalism more and more efficient, and thus made industrial capitalism more and more profitable.26
Riding this wave of activity, in 1833 the Barings became the fifth largest importer of cotton, and between 1839 and 1842 they ascended to the largest, the firm whose “motions are watched” by their competitors. In fiscal year 1839–40 alone, for example, they imported 104,270 bales of cotton—the annual labor product of at least seventy thousand slaves.27
The operations of the Barings, like those of the Rathbones, dwarfed those of most of their colleagues—not just in Liverpool, but even more so in Europe’s other emerging cotton ports. Still, important cotton merchants emerged elsewhere, catering to the needs of other national cotton industries. On the northern German coast, Bremen rose to prominence during the first half of the nineteenth century as a cotton trading center. The first sacks of cotton landed in 1788; by 1829, Bremen’s port counted six merchants trading in cotton, and by 1845 the Bechtel, Vietor, Delius, Meier, Hagendorn, Gildemeister, and Fritze families collectively imported 18,498 bales.28
Bremen, unlike Liverpool, did not have a thriving cotton industry in its own hinterland, with most of its cotton imports shipped to manufacturers hundreds of miles away in such places as Saxony and southern Germany. What Bremen had was human ties to the United States. Indeed, Bremen’s cotton trade emerged largely as return freight in the holds of ships that had brought European immigrants to the United States. The Bremen cotton merchants of D. H. Wätjen & Co. in January 1852 sent their ship Albers from New Orleans to Bremen loaded with cotton, brought immigrants to New Orleans in April, then returned with cotton to Bremen in June. It sailed once more with immigrants to New Orleans in September, before bringing tobacco to London in November. The Bremen cotton trade demonstrated the symbiosis between the export of continental Europe’s surplus labor and the import of agricultural commodities. Globalization increasingly fed upon itself.29
More significant than the Bremen merchants were their counterparts in Le Havre. Situated on the Norman coast of northwestern France, it was continental Europe’s most important cotton port in the first half of the nineteenth century, and supplier to the French, Swiss, and western German industries. In 1830 port workers, as underpaid and overworked as their counterparts in Liverpool, unloaded 153,000 bales, and in 1860, 600,000—accounting for 89 percent of all cotton imports into France. Cotton became as central to Le Havre as it had become to Liverpool. Le Havre’s central position in the European cotton trade built, like Liverpool’s, on its earlier role in the East India and slave trade, and, like Bremen’s, on its role as a major port of embarkation for European migrants to the United States.30
As in Liverpool, a growing number of merchants plied the cotton trade in Le Havre; 279 competed for business in 1835. Like their Liverpool counterparts, they operated on a global scale. Jules Siegfried, for example, one of Le Havre’s major traders, was born into a family of cotton printers in Mulhouse and learned the business not just in his father’s firm in Le Havre, but also via apprenticeships in Manchester and Liverpool. In 1859, his brother Jacques opened a cotton house in New Orleans, eventually turning the firm into the transatlantic Siegfried Frères, with the partners traveling frequently between France and the United States. As in Liverpool, Le Havre cotton merchants infused the trade in raw cotton with the rhythm of machine production.31
Jules Lecesne, another French merchant, was even more globetrotting. Trained in England, New York, and Boston, he founded his first cotton-export firm in Mobile, Alabama, in 1840 (a move also made by some Bremen merchants, who settled temporarily in southern towns to get access to cotton and expertise). Ten years later, he created a firm in New Orleans, under the name Jules Lecesne Frères et Cie, in 1851 an agency in Galveston, in 1854 one in New York, in 1857 one in Paris, and in 1858 one in Manchester, all linked to a house in Le Havre. Eventually he had agents working for him in a remarkable range of cities, among them Galveston, New Orleans, Mobile, New York, Havana, Cork, Glasgow, Manchester, Liverpool, Paris—and, of course, Le Havre. He became Le Havre’s major cotton importer and supplier of the Alsatian industry, bringing in a full 22 percent of that city’s cotton imports in 1860.32
As the nineteenth century progressed, European import merchants—the people who shipped cotton across oceans—faced competition from what would have seemed, early in the century, a most unlikely quarter: the United States of America. In New York, but also in Boston and elsewhere, cotton traders emerged who would come to play an increasingly important role both in the transatlantic cotton trade and in the supply of American cotton mills.
REIMAGINI
NG THE GLOBAL COUNTRYSIDE
Jules Siegfried (illustration credit 8.3)
Francis Baring (illustration credit 8.4)
One American firm, Brown Brothers, would eventually join the ranks of the world’s most important cotton merchant houses. The Browns were immigrants from Ireland. Alexander Brown founded a modest linen business in 1800 in Baltimore, then branched out into the cotton trade. As part of this diversification, Alexander sent his son William to Liverpool in 1810 to open a house for the importation of American cotton and the export of cotton goods. He sent his other sons to other port cities. Most important of all, in 1825 son James went to New York, with the goal of promoting “the interest of Messrs. William & James Brown & Co., of Liverpool, and of affording greater facility, and the choice of markets, to our southern friends who are disposed to give…us their business.” By the 1820s, Brown Brothers was among the largest cotton traders between the United States and Liverpool.33
From the 1820s to the 1850s, Brown Brothers involved itself in all aspects of the southern cotton trade. The firm offered cotton growers and factors in the South advances on future crops. It arranged shipping to Liverpool; indeed, the Browns themselves owned a number of ships. It provided insurance on cotton in transit. It sold huge quantities of cotton on commission (typically, Brown would advance about two-thirds of the market value of cotton on these consignments), procured from factors, including its own agents in the ports of New Orleans, Mobile, Savannah, and Charleston. Even though the Browns favored the less risky commission business, at times they bought cotton outright and shipped it to Liverpool for sale. In addition, and ever more important, the Browns provided credit and exchange facilities (converting various currencies) to southerners to enable them to trade crops grown by slaves. In the 1830s they advanced $100,000 to New Orleans cotton traders Martin Pleasants & Co., and a $200,000 line of credit to the New Orleans banking house of Yeatman Woods & Co. They also moved capital into a variety of southern banks, among them the Planters’ and Merchants’ Bank in Mobile, Alabama, and the Merchants’ and Traders’ Bank of Mississippi. The Browns made themselves central to the global cotton economy and so they became rich. In the flush times of the early 1830s, it has been estimated, Brown Brothers made profits of more than $400,000 per year—enough to buy thirteen one-hundred-foot yachts, or thirteen hundred carriages.34
