Empire of Cotton

by Sven Beckert

  These activities allowed the Brown family to capture a significant share of the global cotton trade, anticipating the rising importance of American merchants in the late-nineteenth-century empire of cotton. William Brown’s share of cotton imports into Liverpool amounted to 2.8 percent in 1820, and 7.3 percent in 1839, putting him among the top ten importers of cotton in the world’s largest cotton port. In 1838, his brother James in New York handled 178,000 bales of cotton, equaling 15.8 percent of total U.S. cotton exports to the United Kingdom. The Browns would later channel some of their fabulous wealth into railroads, banks, and industrial ventures, and cultural institutions including the Museum of Natural History in New York. Through such diverse investments, the wages of plantation slavery and land expropriation were inscribed within economic and cultural institutions that endured well beyond abolition in 1865.35

  Whether in New York or Le Havre, Bremen or Liverpool, the vast majority of the cotton acquired and shipped by these merchants came from territories conquered by force and cultivated by slave labor—first the West Indies and Brazil, eventually the southern United States. Indeed, merchants built particularly dense connections to these apparently remote, rustic, and thinly developed parts of the world. Strikingly, territories dominated by slave labor, in contrast to so many long-settled cotton lands in South Asia and Africa, proved to be uniquely malleable by European capital and capitalists, and particularly adaptable to the patterns of machine production.

  Merchants’ most significant tool in building these connections was capital in the form of credit. Credit was the magic wand that allowed merchants to recast nature, clear lands, remove native inhabitants, purchase labor, produce crops in definite qualities and quantities, and meet the voracious appetites of manufacturers and their modern cotton machinery. For the time being, these essential steps turned out to be much more difficult, if not impossible, in the absence of slave labor.

  The ultimate success of these merchants came not only from their ability to organize complex transactions and transport a bulk commodity over very large distances but from their ability to infuse the rhythms of industrial production into the countryside. As any perusal of a plantation account book reveals, European credit was essential to planters’ ability to purchase ever more land and ever more slaves and hold them from one harvest season to the next. Less obviously, but more important, was the way the money market in London insinuated the logic of industrial capitalism among the planters. This is how New Orleans cotton merchant W. Nott described the link: When in 1829 Thomas Baring gave W. Nott & Co. in New Orleans a $10,000 line of credit, Nott in turn was able to advance money to the “Planters of Tennessee against their Drafts on their Factors here in anticipation of the Proceeds of their growing Crops—Drafts which are generally accepted, on the faith of the Planters promise to ship their Crops, when ready, 8, 10 or even 12 months before the Property comes into the acceptors hands.” Such a transaction, he continued, was relatively safe because of “the intimate knowledge possessed by J. W. & Co. of every Planter’s standing & character, & the constant residence of at least one of the Planters in Nashville…in advancing the approximate value of 25 to 30,000 bales of Cotton in a season—as they are supposed to—their reliance is not on the signature of the Factor who is perhaps not good for a fiftieth part of the sum, but on the Planters’ punctuality in forwarding his crop to such Factor in time to meet the Draft.”36

  Beyond advancing credit directly to planters, European and New York merchants also invested in southern state bonds and banks that financed a further expansion of cotton planting. In 1829, Baring underwrote Louisiana state bonds issued to finance the Consolidated Association of the Planters of Louisiana Bank. Although the bank was established by planters in 1828, foremost among them Baring’s friend Edmond Forstall, when it turned out to be impossible to raise sufficient capital, ultimately the State of Louisiana guaranteed the bonds. Once the bonds were issued, Baring took $1.666 million worth of them. Two years later, by April 1830, the bank had outstanding loans to planters of $1.6 million, secured by property valued at $5 million. In effect, Baring financed a great expansion of the Louisiana plantation complex, enabling the clearing of land and the purchase of slaves, all of which eventually fed into his own huge cotton import business. Few if any places in the world drew such concentrated capital investments as the plantation belt of the United States—and few places were the source of such massive profits.37

  Much of that European and, increasingly, New York and Boston capital went into the expansion of cotton agriculture via a group of intermediary merchants who connected cotton merchants with American cotton planters—the factors. They completed the chain of traders between factory and plantation. The interaction between the merchants exporting cotton and the factors who connected to the growers was the fulcrum through which European capital pushed the southern countryside toward the rhythms of the machine.

  These American middlemen accepted planters’ cotton on commission, transported it to ports, and then sold it to merchants such as the Barings and the Browns. This service was of enormous benefit to planters, as it enabled them to sell their products in large coastal markets or even in Europe, giving in effect even the remotest of them access to distant markets. Factors also provided planters with manufactured goods and food supplies. And they were the most significant deliverers of capital into the cotton-growing regions of the U.S. South, channeling credit to planters who used the money to acquire the supplies they needed to tide themselves over until the next cotton harvest and to purchase more land and more slaves to expand the production of cotton.38

  Interest on these loans—8 percent and more—secured by future cotton harvests, was another source of factors’ revenue. Factors drew for capital on European merchants, and thus “the world’s money markets, like the world’s commodity markets, became available to the cotton planter through his factor.” Collecting cotton from slave planters and yeomen farmers and selling it to exporters did not make them the wealthiest traders in the empire of cotton, but it did make them the most numerous. Factors clustered wherever cotton was grown. Embodying coastal capital, they brought the global norms of capital accumulation and the manufacturers’ demand for ever cheaper cotton at predictable qualities to the doorsteps of slave plantations.39

  Cities such as New Orleans, Charleston, and Memphis counted within their confines dozens of factors, who drew huge quantities of cotton to those ports. Indeed, Samuel Smith, a Liverpool cotton broker, reported from New Orleans that “the levee or bank of the great Mississippi river…was lined with a double or triple row of cotton steamers extending for miles.” So many “cotton bales were piled up on their decks” that “they looked like floating castles.” But smaller cities attracted factors, and thus cotton, as well. In the small town of Newport on the St. Marks River in Florida, for example, Daniel Ladd plied his business. Born in Augusta, Maine, in 1817 into a family of merchants, shippers, and textile mill owners, at age sixteen Ladd joined one of his relatives as a clerk in a commission house in Florida, going into business on his own shortly afterward. Newport was a fortunate location for such a business, because the town had emerged by the 1820s as an important port to export cotton grown in northern Florida and southern Georgia. By 1850, Newport and the neighboring town of St. Marks would ship forty-five thousand bales of cotton a year, presenting, according to Ladd’s biographer, an opportunity for “his imaginative mind,” which “was continually devising ways of turning them into profitable ventures.” Ladd provided advances to planters, sold cotton for them on commission, purchased cotton, provided supplies, and offered shipping facilities. Deeply immersed in the slave economy, Ladd himself owned twenty-seven slaves by 1860, and also traded in slaves, advertising in 1847 hats, saddles, and “a field hand and a rough cook.” He held many mortgages secured by slaves, for example, “For $100 payable on February 15, 1845, R. H. Crowell pledged a sixteen-year-old Negro girl named Carolyn and 300 bushels of corn.” Ladd’s business, though local by defi
nition, was connected to the wider world of manufacturing and credit in many different ways. The cotton that Ladd sold was consigned to Boston, Savannah, or especially New York City houses, where most of the capital came from. And agents of Ladd’s went yearly to New York to purchase supplies, spending more than $50,000 in 1860.40

  At bottom, factors like Ladd drew on capital advanced by European merchants and they advanced that capital to planters to enable them to purchase land, slaves, and provisions. Those same European merchants also advanced credit to enable manufacturers to purchase cotton, and provided capital to cloth traders worldwide, enabling them to acquire cotton goods to sell to customers. Without credit, the empire of cotton would have crumbled—indeed, as any foreclosed planter knew only too well, the empire of cotton was at its heart an empire of credit.

  Merchants, in turn, gained access to capital from various sources. Partly, they generated capital in the trade itself; many a cotton merchant had begun as a clerk or partner in another merchant’s house and then used the accumulated profits to go into trade under his own name. Other merchants, as we have seen, moved their assets from a different line of trade into the cotton business. The Barings did just that, transferring capital from their government loan business and East India engagements into the cotton trade. So did the Browns, who used the capital accumulated in the linen trade to go into cotton; the Rathbones, who used the profits from their diversified trade to specialize in cotton; Nathan Rothschild, who used his father’s profits in banking and general trade to invest massively in the textile business; and Bombay merchant Jamsetjee Jejeebhoy, who used profits from the opium trade to get into the cotton export business. Other merchants accumulated riches in the slave trade—Liverpool merchants sometimes shifted into cotton after Britain abolished the slave trade in 1807. And then there were the banks that pooled merchants’ resources in cities such as Liverpool, Le Havre, and New York, banks willing to advance credit to traders who in turn could use it to oil the global machinery of cotton production.41

  Much of this credit was secured by the future delivery of commodities grown by slaves and even by the value of slaves themselves. This link became most obvious when things went wrong—for example, when planters could not repay the advances of their factors and factors could not repay the credit of exporting merchants. In this way, the Browns of New York, who advanced large sums of money to southern planters, came to own at least thirteen cotton plantations in the South, along with hundreds of slaves. In 1842, William and James Brown estimated that the value of these plantations amounted to $348,000, out of a total investment in the South of $1.55 million. James Brown, in fact, sat in his New York office hiring resident managers for slave plantations.42 The American Chamber of Commerce in Liverpool understood this relationship when it reported at its 1843 meeting that

  it very often happens that in the course of such transactions planters or other persons in Slave holding countries become indebted to British merchants who, with a view to secure themselves from loss, take security from their debtors by means of mortgage of their plantations with the Slaves which form an essential part of the value. In the Commercial transactions between England and the United States of America which a few years since resulted in so heavy a debt owing to this Country, British Merchants either directly or through their Agents were obliged to take securities of this kind to a large amount, many of which are yet unrealized. The debtors in many cases had nothing else to offer.43

  Not only did individual merchants become slave owners, but more broadly, the flow of credit between Britain and the United States rested to a significant degree on slave property. It was exactly for this reason that in 1843 the American Chamber of Commerce in Liverpool lobbied against the Slave Act, which, they feared, would make “all mortgages [secured by slaves] and other Securities made…to accomplish any object or contract in relation to any object” unlawful. People used as collateral, not just as laborers, lubricated the flow of capital, and thus cotton, around the globe with ever greater velocity.44

  This system of extending credit was vulnerable to disruptions precisely because it was so global in scope. Every one of its parts was related to every other; if people failed in one part of the empire, the crisis could spread rapidly to every other part. Lancashire manufacturers were dependent on foreign markets, and the failure of merchants in these markets to remit payments could create serious problems at home. “As it is about Eleven months since you purchased from us the last parcel of Goods, and our engagements are heavy and will be no doubt pressing this spring, permit us to request from you an early remittance in Cash or produce,” exhorted the New York merchants Hamlin and Van Vechten with considerable anxiety. If prices for raw cotton fell rapidly, as sometimes happened, merchants would hold cotton worth less than the advances they had made, making it difficult or impossible for them to pay their debts. The result: the global panics of 1825, 1837, and 1857.45

  Despite periodic collapses, capital for the most part moved with remarkable ease into the farthest reaches of cotton production in regions of the world dominated by slave labor. It was much harder for European buying brokers, selling brokers, importing merchants, and factors, despite the rapidly growing capital at their command, to penetrate cotton-growing countrysides dominated by peasant labor. The rhythms of peasant production, as we have seen, proved stubborn—much to the voluble frustration of cotton merchants and manufacturers. In fact, the tools of European war capitalism, so effective in North America, did not allow for the full incorporation of land and labor in Asia and Africa into the global cotton nexus. The necessary infrastructure, physical, administrative, military and legal, simply did not exist.

  Not that there was no connection between European merchant capital and peasant producers, for example in India. However, the quantities of cotton traded remained limited, and the quality never quite satisfied European manufacturers. The ways cotton was produced in India never meshed well with the particular needs of modern European spinning factories. Indeed, in regions where cotton was grown by peasant labor, European capital did not reach the producers. Instead, local growers retained sufficient control over their land and labor to escape the monocultural production of cotton for global markets, and indigenous merchants retained control over the internal cotton trade—and even exports. As late as 1851, Indian merchants such as Cursetjee Furndoonjee, Cowasji Nanabhoy Davar, and Merwanji Framju Panday exported more cotton bales from India than did European merchants. If anything, European firms were more often subordinate agents for Indian cotton merchants, and borrowers of Indian merchant capital. Indian merchants, of course, also dominated cotton production within India itself, with local capital largely financing cotton growing for export.46

  The central role of Indian merchants in the trade in raw cotton built upon their earlier role in the cloth trade. In 1788, the Board of Trade in India had reported to the governor-general of the East India Company that the cotton trade “is still very much in the simple inartificial state of the Natives, the business of it greatly depending on them.” At first, Indian merchants such as Bombay traders Pestonjee Jemsatjee, Jamsetjee Jejeebhoy, and Sorabje Jevangee were able to translate this expertise in the cloth trade to the trade in raw cotton as well. As a result, throughout the first half of the nineteenth century, the influence of Western merchants in India usually remained limited to coastal cities, and even there they encountered stiff competition from Indian merchants. The Bombay Chamber of Commerce, founded in 1836, counted among its numbers numerous Indian merchants, reflecting their continued importance. As the chamber observed as late as 1847, “Your Committee did not think it proper to hold out any hope that Merchants, as such, could in the present state of European agency and operation in the country, take up any such position, involving as it would do the maintenance of Establishments in the interior: and it was thought proper to add the only support which English Merchants could contemplate affording, must be limited to the purchase of Cotton when brought here to market, and which, it wa
s said, they were quite prepared to do.”47

  In the cotton-growing countryside itself, Indian traders advanced funds to growers, often at exorbitant rates of interest, who in turn sold the raw cotton to brokers, who then advanced the cotton to coastal merchants—a system the British considered “evil,” principally because it eluded their control. As Bombay-based merchant John Richards reported in 1832 to the Barings in London, “The Native Merchants exclusively receive the produce from the interior, from along the Coast, the Persian Gulf, the Red Sea, China there are many of them both Hindoos & Parsees that are wealthy, some even possessing large capital. As yet the Business is so completely in their hands that Contracts for Cotton which have been attempted to be entered into with Merchants up the Coast have failed in the attempt.” This dominance of non-European capital, along with the continued control over land and labor by local peasants, resulted, among other things, in cotton production geared to the needs of local producers, including local manufacturers, rather than the specifications of distant European mill owners.48

  The independence of Indian merchants and producers was hardly exceptional in the first half of the nineteenth century; European commercial penetration into the hinterland of cotton-growing areas was still the exception rather than the rule in most of the world. At mid-century, most cotton produced was never traded through the books of European or North American merchants. In China, imported Indian cotton came under the control of Hong merchants who sold it to dealers in the hinterland. In western Anatolia, like India, the trade between its port city, Izmir, and its cotton-producing regions was in the hands of local merchants. In another part of the Ottoman Empire, Egypt, the impact of Western merchants on trade between producers and the port of Alexandria remained just as limited. Until the late 1840s, Muhammad Ali enforced a virtual monopoly of acquiring raw cotton from producers and selling it to coastal merchants, not least by forcing peasants to pay their taxes in cotton. And some newly industrializing areas avoided dependence on imported cotton. In Mexico, for example, the Puebla industrialists either purchased cotton directly from producers or drew on the offers from Veracruz merchants.49