by Sven Beckert
Remarkably, throughout the first half of the nineteenth century the penetration of European capital into the global cotton-growing countryside was largely limited to areas in which cotton was grown by slave labor—slavery, not peasant production, was the handmaiden of wage labor at the birth of the Industrial Revolution. Only after slavery became untenable as a mode of labor mobilization and European states had gained vastly increased administrative, judicial, military, and infrastructural capacities thanks to their ability to capture some of the wealth generated by mechanized manufacturing would European capital and state power begin to revolutionize the global countryside in India, Egypt, and, eventually, Central Asia and Africa.
Despite its failure to integrate peasant producers into the empire of cotton, the signal characteristic of the world’s first modern manufacturing industry was its global nature. This globalization required globalizers, people who saw the opportunities of the new order and inspired their business communities and their states to collective action to secure it. The principal globalizers were neither the planters nor manufacturers, many intensely local in their mind-set, but instead, as we have seen, the traders who specialized in creating networks that connected cultivators, manufacturers, and consumers.
Forging such global networks took courage and imagination. When Johannes Niederer tendered his services to the Swiss merchant house of Volkart in 1854, he offered to scout market opportunities in Batavia, Australia, Macassar, and Mindanao, Japan, China, Rangoon, Ceylon, and Cape Town. Such globetrotting traders, as one historian has concluded, “ruled the industry.” Indeed, manufacturers and growers regularly complained about the power of traders, while many merchants, for their part, looked down upon manufacturers as provincials and gamblers: Robert Creighton, a Pennsylvania cotton trader, warned his sons even in his will against becoming involved in manufacturing, as did Alexander Brown, reminding his son William in 1819 that all members of the firm are “unanimously opposed to any interest being taken in the Cotton Mill.”50
To become such powerful actors in the empire of cotton and to manage this trade profitably, the Rathbones, Barings, Lecesnes, Wätjens, Rallis, and others constructed dense networks through which information, credit, and goods could flow reliably.51 Building such networks was extraordinarily difficult. The Rathbones, for example, spent astonishing energy nurturing their links to merchants in New York, Boston, and various southern ports, especially Charleston and New Orleans. They corresponded constantly with business partners, trying to get market updates and gain access to trade opportunities. They also traveled frequently to the United States, and extended stays in North America became a rite of passage for young members of the firm.52
Other merchants labored just as hard to create these networks. In 1828, Thomas Baring traveled up the coast of the United States from New Orleans to Boston, researching local business conditions, establishing closer connections to merchants in southern towns to recruit more trade, and granting credit to various southern firms that allowed them to make advances on cotton shipments. Jules Lecesne followed the same path, building branch houses in various cotton ports throughout the Atlantic world, and staffing them with his relatives, who constantly exchanged information on prices and harvests, and who eventually even published a French bulletin on cotton shipments in New Orleans. What was needed above all was reliable information on everything from weather conditions to the temperaments of brokers.53
The global cotton trade, as we have seen, rested on credit. Credit rested on trust. Trust, in a global market extended well beyond the kin of any family or tribe, rested on information. Information was accordingly at the core of most merchants’ activities. A vast swath of information was potentially relevant to any merchant, but two strands were the most valuable: who paid back their debts, and what would happen to the price of cotton in the coming months. As a result, millions of letters—now housed in dark corners of libraries and archives—exchanged between merchants spoke to these subjects. Expectations about future price movements obviously mattered a great deal, and thus information about factors that could possibly influence prices—the weather in cotton-growing areas, the effects of wars, the state of regional economies—was precious. While institutions such as the Bank of England began gathering such information as well, most of it was still in private hands, collected (and hoarded) for private use only.54
Where reliable information was scarce, rumors and gossip filled the void. Reputation made and unmade firms, and the spread of manipulated information could move markets. Being able to provide information, not surprisingly, was a major source of prestige, and a primary way that both an individual merchant and his firm improved their reputation. When the Hamburg merchants of Menge & Niemann offered their services to Phelps, Dodge, a commercial house in New York in 1841, they introduced themselves and their business, then immediately provided information on the development of the Hamburg trade, including a price circular printed under their name, which listed the local prices for a whole range of commodities, including cotton.55 Doing business with them, they suggested, would give Phelps, Dodge privileged access to useful information.
The need both to have information and to be seen to have it was why at the outset of his career as a Liverpool cotton broker, Samuel Smith immediately launched his own cotton circular, a step that in retrospect he judged “aided not a little in establishing my business.” On a grander scale, in his memoir of his life in the cotton industry, Vincent Nolte, the Barings agent in New Orleans, claimed he was the first person to print up a cotton market circular, starting in 1818: “The meteorological weather tables had given me the idea of getting up one similar to them, which should exhibit the course and fluctuations of prices, from week to week, during the shipping period of three successive years, and designate the difference of exchange, each time, by black, red, and blue lines.” Such information sharing, he went on to note, had resulted in much new business.56
Because production was so dispersed and so global, information was difficult to assemble. In 1845, Frédéric C. Dollfus, a member of one of the oldest cotton manufacturing families in Mulhouse, arrived in the port of Singapore. His goal was to understand what kinds of cotton goods were in demand there, and to inform cotton manufacturers back home what prices they might fetch. After detailed studies of the local markets in Singapore, Dollfus proceeded to Macao, Canton, Hong Kong, Manila, Batavia, and Semarang. Covering some of the most important Asian cotton marts, he shared his hard-won intelligence with an interested audience back home. A year later, Dollfus returned home to Mulhouse.57
This trip was just one of many efforts of Mulhouse manufacturers to gain market information. In one of the era’s greatest information-gathering ventures, they collected throughout the eighteenth and nineteenth centuries thousands of cloth samples from around the world and took careful notes as to their provenance and local market prices, all in an effort to equip local manufacturers to produce for remote markets. Catalan manufacturers engaged in a very similar though more modest project.58
Access to information in turn privileged certain locations within the empire of cotton, as William Rathbone VI realized in 1849, when he predicted that New York would become “more and more the centre of the American trade (guided of course by advices from European markets)…. Within 10 days sail from England & within an hour of information [by the newly invented telegraph] & communication with New Orleans, St. Louis, Cincinnati, Charleston & a party is in possession of more information of importance than at any other point.”59 Rather than proximity to either cotton-growing or cotton-manufacturing areas, what really counted for the Rathbones and others was access to information. And New York, a city with neither a cotton-growing hinterland nor spinning mills, provided exactly that—although it could not compete with the information, credit, and trade hub that Liverpool had become.
Such was the necessity of knowledge that merchants invented or adopted increasingly more formalized ways of collecting and disseminating information. They creat
ed publications dedicated to the task: The British Packet and Argentine News, published from August 1826 in Buenos Aires, reported on Latin American and global markets, including cotton yarn and cloth. The Landbote, a journal published in Winterthur, disseminated after 1840 regular news about the cotton market of Le Havre. The Bremer Handelsblatt reported regularly on cotton harvests, cotton markets, and price developments in that city.60
Faster ships meant faster movement of information as well. Already in 1843 the Asiatic Journal was able to announce that “English periodicals and newspapers arrive in Bombay almost damp from the press.” Bombay, after all, “is very near us now,—a voyage of only five-and-thirty days from London Bridge.” When by the 1840s telegraphs began connecting cotton-growing, -trading, and consumption centers (though not yet across oceans and continents), merchants had even more immediate access to crucial information.61
Eventually the desire to formalize access to information became one of the prime reasons for merchants to organize collectively. Liverpool brokers had at first individually assembled information on the state of the cotton trade and dispersed that information to their customers in private circulars. In 1811, however, the brokers agreed to cooperate on the gathering of information, though continuing to distribute it privately to clients. Efforts to create a collective price circular for cotton began in 1832, and when in 1841 the Liverpool Cotton Brokers’ Association came into being, its ninety members focused principally on collecting and disseminating market information, especially on the “visible supply” of cotton in the market. Such information-gathering bodies emerged everywhere cotton was grown, traded, or made into yarn and cloth. Chambers of commerce were often at the forefront: Manchester merchants gathered in the Society of Merchants beginning in 1794, Le Havre merchants formed a chamber of commerce in 1802, by 1825 there were already twelve such institutions in the United Kingdom alone, in Bombay merchants formed the Bombay Chamber of Commerce in 1836, in the 1830s merchants in Brazil began organizing commercial associations, and by 1858 there were thirty such chambers in the United States. All these bodies gathered market information, but they were also political lobbies pleading the case for special attention from the burgeoning imperial states.62
The dependence of this economic order on reliable information, trust, and credit led merchants to depend on networks created outside the market itself. The fashioning of global trade, just like the emergence of wage labor, rested on social relations that predated the advent of capitalism. What set merchants apart was not just their ability to accumulate and deploy capital, or even their privileged access to information, but their ability to build and draw upon these networks, networks of trust based on extended family ties, geographical proximity, and shared religious beliefs, ethnic identities, and origin. In a world in which trade was extremely risky and the survival of a firm could depend on the trustworthiness of just one correspondent, reliability was essential. Reliability, however, came more easily when people who had ways of enforcing trust embedded in social connections, creating in effect what one historian has called a “relational capitalism.” The importance of these networks was such that Olivier Pétré-Grenouilleau, the leading French historian of merchant communities, concludes that “the characteristics of Atlantic trade did not depend only on the rules of the market.” Cotton markets rested more than most on such extra-market social relations.63
Physical proximity was one way to establish networks of trust. The global cotton trade concentrated in a relatively small number of trading hubs not least because proximity allowed such networks and supporting institutions to flourish. Nicholas Waterhouse, one of the first cotton brokers in Liverpool, studded his businesses with family members and a network of local “friends.” Liverpool merchants more broadly nurtured a code of “strict probity and honour” that regulated their relationships, as Edward Baines observed in 1835.64
But these networks needed to stretch halfway across the globe as well. Establishing trust across vast distances was considerably more difficult and required enormous effort. When William Rathbone VI visited New York City in 1841 to energize the cotton business, he wrote to his father of the urgent need to confirm “some valuable friendships.” Indeed, the Rathbones’ correspondence is full of efforts to create networks of trust and friendship. When Rathbone partner Adam Hodgson scouted the U.S. cotton market in the early 1820s, he reported to Rathbone from New York, “I am so well aware, that our united feeling of mercantile obligation, & personal friendship will render you solicitous to avail yourselves of every opportunity of reciprocating the kindness & confidence which our friends have ever manifested towards us, that I need not remind you in how great a degree I have been experiencing both, ever since I landed in this country.” In language reminiscent of a marriage proposal he reported about one merchant house that “they are quite friendly & I think true to us & with the help of an occasional cotton order may be seduced into consignments.” Other merchant houses proceeded in similar ways: When the Volkarts wanted to establish themselves in the European cotton trade, they listed a number of Indian, German, English, and Swiss merchant houses as “references” that testified to their respectable character. They appealed to others to “trust” them, and mentioned their “intimate friend[s].” When the Barings wanted to expand trade with India, their Bombay agent identified local traders whom he considered “attentive, intelligent, & very honourable men, in whom you could place confidence with perfect safety.”65
Family members who did not have to be sought out or specially cultivated were especially crucial to these networks. When in 1805 William Rathbone had problems selling off the cotton he had purchased and urgently needed access to cash, his father and brother each gave him £3,000, helping William to overcome his “considerable anxiety.” When the Browns sought to expand their network of agents and correspondents in southern ports, they looked for ties that held. Their Charleston agent, James Adger, originated from northern Ireland, like the Browns, and was an old friend of Alexander’s. In Savannah, their agent, John Cumming, was connected by marriage to the Browns, as were representatives in other ports. For the Volkarts, family connections were just as important. Volkart’s father-in-law Eduard Forrer established an agency in St. Louis. Theodor Reinhart, after having learned the cotton business in his father’s house, in 1876 married Lily Volkart, daughter of the owner of Volkart Brothers, thus uniting two merchant firms, a truly dynastic marriage in the world of cotton.66
Consider too one of the most important cotton trading houses of the nineteenth century, the Rallis.67 Their world-spanning empire had its roots on a small Greek island off the Anatolian coast, as most if not all of the principals of the house of Ralli came from Chios, and indeed, most were members of the Ralli family themselves. John Ralli and Strati Ralli, two brothers, had gone to London to start trading there. In 1822 they brought a third brother, Pandia S. Ralli, to London. In 1825 Strati Ralli opened the office in Manchester to trade in textiles, and in 1827 John Ralli went to Odessa. A fourth brother, living in Istanbul, opened an office in Persia in 1837, and a fifth, Augustus S. Ralli, opened a cotton firm in Marseille. By the 1860s, the house of Ralli had representatives in London (from 1818), Liverpool, Manchester (from 1825), “the Orient” (Constantinople, Odessa), various places within India, including Calcutta (1851), Karachi (1861) and Bombay (1861), and the United States.68 Ralli thus was able to purchase cotton in the United States, ship it to Liverpool, sell it to manufacturers in Manchester, and then sell the finished goods in Calcutta—all within their own family.
As the example of the Rallis shows, the Greek diaspora, like others—Armenian, Parsis, Jews—played an important role in the global cotton trade. By the last quarter of the eighteenth century, Greeks had become particularly important to networks connecting the Ottoman Empire to the outside world, and were especially prominent in the Egyptian cotton trade. Arriving in Egypt in the first half of the nineteenth century during the first wave of Muhammad Ali’s industrialization efforts, they became
the largest group of foreign merchants. By 1839, twelve Greek merchant houses, including the Rallis, had captured 33 percent of the Alexandria cotton export market, with the largest Greek house, Tossizza Frères et Cie, exporting 11 percent of Egypt’s cotton.69
Other diaspora communities played an important role in the global cotton trade. Jews assumed a central position in the global trade of yarn and cotton cloth, partly because earlier discrimination had forced them to work as itinerant traders, often in textiles. The most famous example for this important role are the Rothschilds, who upon entering the textile trade in Manchester mostly found customers among their coreligionists in Frankfurt for the goods they exported to the European continent. Nathan Meyer Rothschild’s story can stand in for many others: Born in 1777 into a distinguished Frankfurt banking and merchant family, he went to London for a mercantile apprenticeship in 1798 and a year later moved to Manchester to open his own textile agency, bringing with him plenty of capital. “The nearer I got to England,” he remembered in his autobiography, “the cheaper the goods were. As soon as I got to Manchester, I laid out all my money, things were so cheap; and I made good profit.” He purchased Manchester goods for the Frankfurt and continental European market, and advanced credit to manufacturers. Rothschild’s success in Manchester encouraged other Jewish families from Frankfurt to start up businesses in Manchester. As a result, by the early nineteenth century Frankfurt Jewish families played an important role in the continental trade in English cottons.70
