Before its civil war, America supplied 80 per cent of the raw material for Britain’s largest industry, the cotton trade. During the war, this fell to almost zero. Jim Powell’s new book Losing the Thread: Cotton, Liverpool and the American Civil War examines what happened to this trade and to the Liverpool cotton market, its beneficiaries and its victims, during the war.
Jim has produced two videos discussing topics covered in his book with Meredith Wheeler, for many years a writer/producer for ABC News in New York and London. Both videos are available to watch on YouTube: the first covers The Civil War and Britain’s Cotton Trade, and the second The Civil War and Anglo-American Relations. This is the second of four blog posts based on the transcripts of the videos. The original post can be found on Jim’s website.
MW Let’s talk about the great port city of Liverpool. It was key, wasn’t it, to the cotton trade?
JP Yes. All the raw cotton coming into Britain was traded on the Liverpool market by the town’s cotton brokers. No cotton reached the mills without passing through Liverpool. So the brokers there controlled Britain’s raw cotton trade.
MW So did these Liverpool cotton brokers suffer from the scarcity of cotton during the American Civil War?
JP Far from it. In 1863, while the rest of Lancashire starved, the Liverpool Mercury reported that the town’s cotton trade had enjoyed its most profitable year ever. To a large extent, this was the result of wild speculation in cotton and gambling on its future price. During the war, Liverpool can best be seen as a giant casino.
The price of raw cotton rose nearly five-fold at its peak. Roughly speaking, half of that increase was due to the cotton scarcity and half to speculation. Most consignments were bought and sold several times over before they ever reached the mills. Despite a halving of the volume, the value of cotton imports attained a peak in 1864 that would not be repeated until the extreme circumstances of the First World War. And the value of the cotton actually traded in 1864 was almost certainly the highest ever.
The brokers earned a commission of 1% for trading each consignment, based on its value. With the inflated price and with multiple sales of the same cotton, a broker could – and did – earn at least 20 times as much on the same weight of cotton as he had before the war.
MW So how did all this play with the Manchester mill owners?
JP Badly. Manchester believed that Liverpool held the cotton import hostage, allowing it to leave only when its price had been artificially inflated and a ransom of 1% had been paid. To them, Liverpool was little more than a toll booth on the Mersey.
Towards the end of the civil war, the cotton spinners, led by the future MP Hugh Mason, declared war on the brokers. This hostility between Manchester and Liverpool – which, one has to say, still exists today – is explored extensively in the book. Eventually, long after the war, it led to a complete change in how raw cotton was traded in Liverpool.
MW The cotton brokers were directly engaged in speculation themselves, weren’t they?
JP Absolutely. And so, it must be said, were the spinners. Everyone speculated.
MW And, according to your research, these cotton brokers in England had massive conflicts of interest, didn’t they?
JP Yes, they did. They frequently acted for both the seller and the buyer in the same transaction, trying simultaneously to achieve the highest price for one client and the lowest price for another. This is all detailed in the book.
I have also analysed the Bills of Entry for the port of Liverpool, never previously examined by historians. The study proves that 91% of Liverpool’s cotton brokers took responsibility for cotton consignments when they arrived at the docks. This proves the degree to which they were engaged in trading cotton themselves, instead of purely acting as middlemen, as they were supposed to do.
MW It’s generally believed that during the American Civil War, Liverpool – unlike the rest of Britain – sided with the Confederacy and that Liverpudlians in general supported the South. Is that true?
JP No, or at least not to the extent that is claimed. The crucial point is that Liverpool was the main communications hub between Britain and both parts of America – not just the South. Liverpool’s ties with the North were more extensive and more valuable than its ties with the South. This fact has largely been overlooked by historians.
During the war, the port did indeed swarm with Confederate agents, as one commentator put it, but it swarmed with Union agents too. It is worth noting that Laird Brothers, which controversially built warships for the Confederacy, were also approached to build warships for the Union and agreed to do so.
Overall, no hard and fast conclusion on Liverpool’s sympathies can be reached. There isn’t enough evidence. But Liverpool had strong vested interests in both sides of the conflict and it is time for a more nuanced view of opinion there.
MW You did considerable work with primary sources on your book and you are a bit critical of some of the leading historians of this era. Can you talk a bit about that?
JP I felt I had to to follow the evidence wherever it led and not to sugar-coat the implications.
Thomas Ellison, the revered 19th century historian of British cotton, had a major conflict of interest, because he was also a cotton broker. He has been given a free pass for too long. Douglas Farnie, the doyen of 20th century British cotton historians, was in serious error in his writings on the civil war. There are also substantial flaws in Sven Beckert’s recent work, Empire of Cotton.
But these criticisms relate specifically to the period of the American Civil War and only to that. I have no basis for making any wider criticism. The aim of the book is to correct some major misconceptions that have arisen, and not to rewrite history completely.
Find out more about Jim Powell’s book Losing the Thread on our website.
Read all four posts in this series, or watch the video which these posts are based on below: