Liverpool's Cotton merchants and importers
On this page:
1. Early Cotton Importers: General Merchants
2. The Emergence of Specialist Cotton Merchants
3. Merchants Originating from outside Liverpool opening Branches to import Cotton through Liverpool
4. Importing Cotton on Commission and its Decline
1. Early Cotton Importers: General Merchants
2. The Emergence of Specialist Cotton Merchants
3. Merchants Originating from outside Liverpool opening Branches to import Cotton through Liverpool
4. Importing Cotton on Commission and its Decline
1. Early Cotton Importers: General Merchants
Liverpool’s first cotton importers were merchants who traded cotton among a range of other commodities. The first Liverpool importer of cotton we can identify was Richard Norris in the late seventeenth and early eighteenth centuries. Norris’s surviving letters indicate that he dealt with Ireland, Spain, Africa and the West Indies, transporting goods on his own ships. He would export goods such as Cheshire salt and textiles, frequently to Africa, where the captain or ‘supercargo’ of his ship would purchase slaves, and then sail on to the West Indies where these would be exchanged for sugar, spices and some cotton. The exact amount of cotton is unrecorded. The captain would then sail back to Liverpool where these West Indian goods would be sold by Norris. Besides this transatlantic activity, Norris imported beef and pork from Ireland, and fruit, wine, sherry and oil from Spain (Norris papers in the Liverpool Record Office: 920 NOR 2, 91, 111, 132, 145, 146, 152, 155, 179, 225, 289, 299, 302, 318).
This form of commerce conducted by general merchants remained the customary pattern throughout the eighteenth century at Liverpool, with merchants importing varying amounts of cotton among a host of West Indian products, of which sugar was particularly important. The accounts and letters of the Tarleton family from the period from the late 1740s to the end of the eighteenth century indicate a similar form of commerce to Richard Norris. The wealthy Tarletons owned several ships and imported sugar, rum, cocoa, spices and cotton. Again, the Tarletons also dealt with mainland Europe and Ireland (John Tarleton, summary accounts for the years 1748 to 1776, in the Liverpool Record Office: 920 TAR 2/1-24). It is not clear how much cotton the Tarletons imported because the accounts of theirs to survive only record sums of money due to John Tarleton at the end of March each year. Nonetheless, at the end of March 1767, John Tarleton noted that of his total ‘fortune’ of £63,219 4s. 6d. (which appears to have included valuations of property alongside sums of money owed to him) part of it was accounted for by a payment of £4,493 4s. 0d. he was awaiting for cotton that had been sold for him by two Liverpool broking firms: Peter Baron Junior and John Markland & Sons (Tarleton Papers in the Liverpool Record Office: 920 TAR 2/14, dated 31st March 1767).
The papers of several other later eighteenth century Liverpool merchants survive, such as David Shaw, the Nicholson family and Case & Shuttleworth indicating a similar (if less prosperous) trade as the Tarletons, with the importation of cotton among other goods, slaving interests, export of items such as textiles, and trade with both Ireland and mainland Europe (Nicholson Papers, letters dating from the 1750s and 1760s, in the Liverpool Record Office: 920 NIC 5/5. Case & Shuttleworth, sales account book, 1763-9, in the Liverpool Record Office: 380 MD 36. David Shaw, account book, 1787-8, in the Liverpool Record Office: 380 MD 31).
2. The Emergence of Specialist Cotton Merchants
From around the end of the eighteenth century the situation began to change as the demand for cotton grew from the growing British cotton industry and the growth of cotton expanded in the West Indies, Brazil and most significantly in the United States. Merchanting houses emerged with a heavy reliance upon cotton for a large part, if not the bulk, of their income. One suspects that some Liverpool merchants in the 1780s and 1790s must have drawn a large part of their income from importing Brazilian cotton from Portugal as this source of cotton expanded (all Brazilian cotton had to pass through the Portugal until the upheaval of the Napoleonic wars). Unfortunately the business records of Liverpool merchants specializing in trade with Portugal have not survived and hence this must remain a supposition.
A number of the more cotton orientated Liverpool merchants, naturally enough, evolved out of the general merchants of the eighteenth century. One example would be the Rathbones. In the eighteenth century the Rathbones had traded with the West Indies, North America and mainland Europe in a range of export and import commodities including timber, salt, earthenware, iron, linen, tobacco, sugar, foodstuffs and cotton, in much the same way that merchants such as the Tarletons, David Shaw or Richard Norris had. However, in the early nineteenth century the Rathbones took an ever larger stake in importing United States cotton, as this source of the raw material expanded and the Lancashire cotton industry grew. This is not to say that the Rathbones concentrated upon cotton to the exclusion of all else, indeed, as new trading possibilities emerged, they readily pursued them, for instance trade with China after the abolition of the East India Company’s monopoly in 1834. In the 1840s, the Rathbones began to import Egyptian cotton (Sheila Marriner, Rathbones of Liverpool, Liverpool: 1961, pages 5-8, 43-4. Rathbone Papers, in Liverpool University Library: RP).
Below:
William Rathbone
(1787 - 1868)
William Rathbone
(1787 - 1868)
The merchant John Croft is another example of a Liverpool merchant who came to rely heavily upon cotton for a major portion of his income. In the period c.1810 to 1817 we find Croft trading principally with South America. He dealt in a variety of goods including tropical hardwoods but had a particular interest in coffee and cotton (John Croft, ledger and journals, in the Liverpool Record Office: 380 MD 40, 41, 42). As the trade in United States cotton expanded, Croft appears to have moved decisively into this particular commodity. No later account books survive belonging to Croft but the letter book of a captain of his ship survives for the period 1844 to 1855. The letters indicate that Croft would generally send out his ship to New Orleans from Liverpool with nothing more than Cheshire Salt. In New Orleans, his ship was loaded with cotton (on account of Croft or others) before returning to Liverpool. The letters make it clear that it was only in exceptional circumstances (such as smaller cotton supplies) that the ship would be freighted with commodities other than cotton, principally grain (James Brown, letter book, in the Liverpool Record Office: 387 MD 87).
Other Liverpool merchant families similarly took an ever greater interest in cotton as opposed to other goods. One example would be the Forwood family. No business books survive, but the business correspondence between Thomas Bower Forwood and his son, Arthur Bower Forwood, mostly from the 1850s and 1860s, indicate that while the family firm (Leech, Harrison & Forwood) retained interests in sugar, port, oil, breadstuffs, ashes etc., the largest single item handled was United States cotton (Forwood Papers, in the Hampshire Record Office, Winchester: 19M62).
3. Merchants Originating from outside Liverpool opening Branches to import Cotton through Liverpool
Besides the growing specialization of a number of Liverpool merchants into cotton importing, a second important feature of the first half of the nineteenth century was the increase in the number of Liverpool cotton importers originating from outside the port. It seems that these new cotton importers were attracted by the growing prosperity of Liverpool’s trade in general and of its cotton importing business in particular. An important example of this is Barings. The Baring family originally came from Bremen. Johann Baring, after settling in Exeter in 1717, made a large fortune through trading in West Country woolen cloth, investing in land and marrying well. Johann’s sons opened their London house in 1763. The firm built up its merchant activity, trading with mainland Europe, the West Indies and North America, at the same time it developed its role as a finance house, buying and selling exchange and discounting bills. The firm’s wealth and capital grew. In the early nineteenth century, Barings greatly expanded their transatlantic finance and merchanting activity, hence leading them into an involvement with cotton, an involvement which they wished to see expand still further. The firm therefore opened a Liverpool branch in 1832 that undertook merchanting activity and finance, in both cases with particular regard to cotton importing (Ralph W. Hidy, The House of Baring in American Trade and Finance, Cambridge, Mass.: 1949, pages 3-128). Surviving reference books indicate that Barings were already playing a role in financing cotton imports through Liverpool prior to their establishment of a branch house in the port (see for instance: Baring Brothers, reference book, in the Barings Archive, London, HC16.11).
Barings were well placed to become a major force in Liverpool cotton importing due to their existing extensive connections with the United States and the large capital of the company. In the early 1830s, Barings could boast contacts with over two hundred different American firms and a capital of almost half a million pounds, with a further quarter of a million pounds invested in mortgages and sugar estates in the West Indies (Hidy, Baring, pages 102, 129). Within ten years of opening their Liverpool branch, Barings were vying for the position as Liverpool’s largest cotton importing house. In 1841 alone, they may have handled up to ten per cent of Liverpool’s total cotton import (Bank of England, Liverpool letter book, 1841, page 270, in the Bank of England Archive, London: C129/2). In mid-October 1844, the Liverpool branch of Barings noted that it held 15,686 bales of cotton on Barings own account. This would have had a market value of something in excess of one hundred thousand pounds (letter from Barings Liverpool to Barings London, 17 October 1844, in the Barings Archive, London: HC3.35).
The successBarings were not alone as newcomers to Liverpool that quickly came to play a leading role in Liverpool’s cotton importation. Another important firm to establish a Liverpool branch in the first half of the nineteenth century, largely to handle consignments of cotton, was Alexander Brown & Sons. Alexander Brown originally came from Belfast but established himself as a merchant in Baltimore in the United States at the end of the eighteenth century, being largely concerned with the importing of Irish linens. As Brown’s business grew, he employed his sons to manage branch offices in New York and Philadelphia. Alexander’s son William was sent to Liverpool and opened the house of William Brown & Co. in 1810. In 1825 the American agent of a Philadelphia house, Joseph Shipley, was brought into the Liverpool business as a partner. The Liverpool house took consignments of cotton, tobacco and other goods but increasing emphasis was placed upon cotton (Aytoun Ellis, Heir of Adventure: The Story of Brown, Shipley & Co., London: 1960, pages iv, 1-29. John Killick ‘Risk, Specialization and Profit in the Mercantile Sector of the Nineteenth Century Cotton Trade: Alexander Brown and Sons’ in Business History, volume 16 (1974), pages 1-6). In a manner similar to Barings, the substantial capital and extensive American contacts placed William Brown & Co. in a position to become a major force in Liverpool’s cotton trade. In 1815, the capital of Alexander Brown & Sons exceeded half a million dollars and by 1830 was just short of three million dollars (Killick, ‘Risk, Specialization and Profit’, appendix, page 15). The success and importance of William Brown & Co. in Liverpool's importation of cotton can be seen in the table below:
(Figures in the above table are calculated from: John Killick ‘Risk, Specialization and Profit in the Mercantile Sector of the Nineteenth Century Cotton Trade: Alexander Brown and Sons’ in Business History, volume 16 (1974), page 3. Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, appendix, table 1. Bank of England, Liverpool letter book, 1841, page 270, in the Bank of England Archive, London: C129/2)
Below:
The Merchant, William Brown
of Brown, Shipley & Co.
The Merchant, William Brown
of Brown, Shipley & Co.
A substantial number of other merchant houses from elsewhere in the United Kingdom, or from the United States, opened branches at Liverpool such as Alexander Dennistoun & Co., James Finlay & Co. (both from Scotland) or Fraser, Trenholm & Co. (from the United States). These newcomers pushed most indigenous Liverpool merchants into the second rank of cotton importers.
In the late 1960s, the historian D. M. Williams painstakingly identified from Customs Bills of Entry (lists of goods arriving on ships into Liverpool), Liverpool’s major cotton importers in the period 1820 to 1850. Unfortunately, the later one proceeds in the nineteenth century, the less reliable customs material is in identifying the individuals importing cotton (due to the individual names of importers increasingly not being recorded). The information D. M. Williams amassed indicates the leading position of firms originating outside Liverpool towards the mid nineteenth century:
(Source: D. M. Williams ‘Liverpool Merchants and the Cotton Trade: 1820-1850’ in J. R. Harris, Liverpool and Merseyside: Essays in the Economic and Social History of the Port and its Hinterland, London: 1969, pages 206-7.)
The table above indicates that by 1839 some 36.44 per cent of Liverpool’s cotton was passing through the hands of just ten firms, most, if not all of which, had originated outside Liverpool. There was, however, what might be termed a long tail of companies importing the remaining two-thirds of Liverpool’s cotton. In 1841, the Bank of England’s Liverpool agent identified fifty-two merchanting firms that had imported over one thousand bales of cotton in the first half of this year. The large importers were mostly the same as 1839, with Barings and the United States houses heading the list as the largest importers. The long tail of remaining importers contained a mixture of companies, some such as Moon Brothers or Melly Prevost originated from outside Liverpool (the United States and Switzerland respectively) and others such as Rathbone Brothers, Phipps & Co. or C. B. Buchanan & Co. originated in Liverpool (Bank of England, Liverpool letter book, 1841, page 270, in the Bank of England Archive, London: C129/2).
In the second half of the nineteenth century, the tendency for firms based in the United States to play a leading role in the supply of cotton continued, although the individual firms in question changed. Unfortunately, there is no information available enabling us to calculate precisely how much cotton individual firms, or types of firms, imported. Liverpool's largest cotton importing firm at the end of the nineteenth century appears to have been the American company of Zerega & Co., with branches in Liverpool, New York, New Orleans and Bremen. In mid-March 1894, Barings in Liverpool noted that since the beginning of September 1893, Zerega & Co. had imported no fewer than 215,311 bales of cotton into Liverpool. The second largest importing firm in this same period of 1893-4 was the firm of Paton, Maclaren & Co. (another United States cotton shipper) that had imported 85,166 bales (Baring Brothers, Liverpool to Baring Brothers, London, 15 March 1894, letter, in the Baring Brothers Archive, London: document ID No. 102142 letter book). The influence of Zerega & Co.’s business in Liverpool was such that the merchant banking firm of Kleinworts noted in 1904: ‘Their transactions are so large that they can at times make the [cotton] futures market improve or decline according to how they are acting.’ (Kleinworts, United Kingdom information book No. 2, page 5, in the London Metropolitan Archives: CLC/B/140/KS04/08/08/MS22030/002). In 1909 Zerega & Co. was certainly referred to as the largest cotton business in Liverpool (ibid.).
Other large American cotton shippers impoting through Liverpool around the same time included Weld & Co. with branches in Liverpool, New York, Boston, Houston and Bremen, possessing a capital of about £200,000 (Bank of Liverpool, reference book, page 379, in the Barclays Bank Archive, Manchester: Acc. 25/151. Baring Brothers, Liverpool reference book, page 85, in the Barings Archive, London: document ID No. 102140). Weld & Co. was originally founded in Boston, United States, by Stephen M. Weld, but Stephen Weld gradually established his various branch houses: Stephen M. Weld & Co. of New York and Boston, Weld & Neville of New York and Houston, Texas and Weld & Co. in Liverpool (The New York Times, 19 February 1914, page 9, and 17 March 1920, page 11. Massachusetts Historical Society, Boston, Stephen Minot Weld Papers, 1859-1928, Box 1, Folder 12, newspaper cutting).
Below:
A 1909 Advert for Weld & Co.,
one of the largest importers of cotton
into Liverpool in the Late ninetweenth and
early twentieth centuries
(Source of advert: Auguste Bruckert, Cotton Pamphlet
relating to the Liverpool Cotton Market, Liverpool: 1909, page 112).
A 1909 Advert for Weld & Co.,
one of the largest importers of cotton
into Liverpool in the Late ninetweenth and
early twentieth centuries
(Source of advert: Auguste Bruckert, Cotton Pamphlet
relating to the Liverpool Cotton Market, Liverpool: 1909, page 112).
It would appear that these important late nineteenth century American cotton shippers were often backed by other wealthy United States houses. For instance, in the early 1870s the firm of Newgass, Rosenheim & Co. opened its doors in Liverpool. In 1873 it was stated to have imported 80,000 bales of cotton, established for itself an important role in the Liverpool cotton futures market and possessed a capital of approximately $300,000. The firm was backed by, and linked to, Lehman Brothers of New York, with Emanuel Lehman and Mayer Lehman as the New York partners in the house (Baring Brothers, reference book, section 2732, in the Barings Archive, London: HC16.11. The London Evening Standard, 16 September 1875, page 7. The London Gazette, 17 September 1875, page 4548). Benjamin Newgass was the brother-in-law of Mayer Lehman and had been born into a Jewish family in Bavaria. Newgass had run the New Orleans branch of Lehmans from the close of the American Civil War until 1872 (Jeffrey S. Gurock, Central European Jews in America, London: 1998, page 35. Rolande Flade, The Lehmans, Wurzburg, Germany, page 70. Stephen Birmingham, Our Crowd: The Great Jewish Families of New York, New York: 2015), page 102). Joseph Leopold Rosenheim was also born into a Bavarian Jewish family in 1835. He moved to London in 1857, becoming a British citizen in 1863, initially establishing himself as a wine merchant in the capital. He moved to Liverpool in 1872/3 and became involved in the cotton trade (Public Record Office, Kew: HO 1/108/3974, Naturalisation Papers: Rosenheim, Joseph Leopold, from Bavaria. Certificate 3974 issued 1 January 1863. Evelyn Wilcock ‘Joseph Leopold Rosenheim’, http://www.deanroadcemetery.com/joseph-leopold-rosenheim). The partnership between Lehmans and Newgass, Rosenheim & Co. was dissolved in 1875. The house continued as L. Rosenheim & Sons, Liverpool but also had a London branch. Joseph Leopold Rosenheim was a member of the New York Cotton Exchange until his death in Liverpool in 1889, Felix J Rosenheim, became head of the Liverpool firm (The London Evening Standard, 16 September 1875, page 7. The New York Herald, 22 January 1889, page 10. B. Guiness Orchard, Liverpool’s Legion of Honour, Birkenhead: 1893, page 601).
Below:
Emanuel & Mayer Lehman:
Financial backers of the Liverpool
cotton imprting firm of
Newgass, Rosehheim & Co.
Emanuel & Mayer Lehman:
Financial backers of the Liverpool
cotton imprting firm of
Newgass, Rosehheim & Co.
Below:
Felix J. Rosenheim
(pictured in 1893)
head of L. Rosenheaim & Sons
from 1889
(photograph from: B, Guinness Orchard,
Liverpool's Legion of Honour, Birkenhead: 1893,
facing page 136)
There were some exceptions to the dominance of leading cotton importing houses originating in the United States. One large Liverpool cotton importing house was A. Stern & Co. It seems that Abraham Stern was a British merchant, who established a branch house in St. Louis in 1880 (taking one A. L. Wolff as his partner in St. Louis) (Kleinworts, United Kingdom Information Book., No. 3, page 69, in the London Metropolitan Archives: CLC/B/140/KS04/08/08/MS22030/003. Letter of Brown, Shipley & Co., Liverpool to Brown, Shipley & Co., London, 6 January 1885, in the London Metropolitan Archives: CLC/B/032/MS20, 107. Walter Ehrlich, Zion in the Valley: The Jewish Community of St. Louis, Columbia, Missouri: 1997, volume 1, page 350). Stern was originally born into a Bavarian Jewish family and was naturalized as a British citizen in 1883, probably establishing himself in Liverpool in the early 1870s (Stern, Abraham in the Leeds Database, http://www.british-jewry.org.uk/leedsjewry). Information regarding this firm is scanty, but we do know that it must have been wealthy. When Abraham Stern died in 1901, he left a personal estate of nearly one hundred thousand pounds when his son, Maurice Stern, succeeded as head of the firm (The Manchester Courier and Lancashire General Advertiser, 17 January 1901, page 7. The Lancashire Evening Post, 5 March 1901, page 5. J. Wallace Coop & Seymour Taylor, Bulls and Bears, Liverpool: 1908, No 72, no pagination).
Below:
Maurice Stern,
head from 1901 of the Liverpool
cotton imporing firm of A. Stern & Co.
(a cartoon from Wallace Coop & Seymour Taylor,
Bulls and Bears, Liverpool: 1908, Number 72)
Maurice Stern,
head from 1901 of the Liverpool
cotton imporing firm of A. Stern & Co.
(a cartoon from Wallace Coop & Seymour Taylor,
Bulls and Bears, Liverpool: 1908, Number 72)
Below:
An Advert for A Stern & Co.,
dating to around 1913
(from: The Annual Cotton Handbook for Daily Cable Records, London: 1913?, page viii,
in the Bodleian Library, Oxford: Per. 1784 f.42)
An Advert for A Stern & Co.,
dating to around 1913
(from: The Annual Cotton Handbook for Daily Cable Records, London: 1913?, page viii,
in the Bodleian Library, Oxford: Per. 1784 f.42)
It seems to have been a common practice, when United States cotton merchants established a Liverpool branch house, to take an existing Liverpool cotton trader into partnership. This would supply the new Liverpool firm with a cotton trader with local knowledge of the city’s cotton market and its other Liverpool cotton merchants and brokers. When Frederick Zerega established a Liverpool branch house with his fellow American, John Howard McFadden, in 1882, he took one George Ward Cook into the partnership. Cook had been a partner in the Liverpool merchant firm of Barnes, Davidson & Co. (The London Gazette, 1 August 1882, page 3601).
Weld & Co.’s Liverpool house had, up to 1902, seven partners: S. M. Weld, A. R. Weld, E. M. Weld (members of the American Weld family), G. W. Neville, J. W. Inman, J. F. M. M’Gowan and James I. Briggs (The Manchester Courier and Lancashire General Advertiser, 5 November 1902, page 5). George Wilder Neville was born in Portsmouth, Virginia in 1862 and went into partnership with Stephen W. Weld. Neville established himself in New York in the early twentieth century and twice served as President of the New York Cotton Exchange (The New York Times, 19 February 1914, page 9). The James I Briggs mentioned as being a partner in the Liverpool branch of Weld & Co., was from Liverpool. He had served his apprectiveship with the Liverpool cotton firm of M. Belcher & Co., before joining Liverpool's Ralli Brorthers. In 1899 he joined Weld & Co's Liverpool branch which was being established in this year. Also at the establishment of Weld's Liverpool branch in 1899, one Thomas R. Charles joined the new firm. Charles was again from Liverpool. He had started his career in the 1880s with the Liverpool cotton importing firm of Swanson, Cairns & Co., before going to work for the Liverpool cotton broking house of Rew & Co. Charles became a partner in Weld & Co. in 1906, after some seven years working for the firm. (J. Wallace Coop & Seymour Taylor, Bulls and Bears, Liverpool: 1908, no pagination, numbers 16 and 23. The Manchester Courier and Lancashire General Advertiser, 27 January 1912, page 6).
Below:
James I Briggs (left) and Thomas R Charles,
Liverpool partners in Weld & Co.
(cartoons from Wallace Coop & Seymour Taylor,
Bulls and Bears, Liverpool: 1908, number 16 and 23)
James I Briggs (left) and Thomas R Charles,
Liverpool partners in Weld & Co.
(cartoons from Wallace Coop & Seymour Taylor,
Bulls and Bears, Liverpool: 1908, number 16 and 23)
Just as the largest importers of American cotton originated from outside Liverpool in the later nineteenth century, the largest importers of Egyptian cotton also originated from elsewhere. For instance, the largest importer of Egyptian cotton into Liverpool in the late nineteenth and early twentieth centuries was the firm of Davies, Benachi & Co. Although this large firm (with a capital at the turn of the century in excess of £300,000) had a branch in Liverpool, its head office was in Alexandria. It also owned extensive cotton growing estates in Egypt (Barings Brothers, Liverpool reference book, page 62, in the Barings Archive, London: document ID No. 102140). As with United States houses establishing branches in Liverpool, Egyptian cotton importers may have similarly engaged or taken into partnersip an exisiting Liverpool cotton trader. It is recorded that in 1892, one of the partners in the Liverpool branch of of Davies, Benachi & Co. was one Cecil Mellor, it is possible that he was a member of the Mellor Family, who were leading Liverpool cotton brokers (The London Gazette, 6 September 1892, page 5113. The Liverpool Mercury, 17 July 1897, page 5).
Despite the existence of powerful international merchant houses in Liverpool in the later nineteenth and early twentieth centuries, all the evidence points to there being a great deal of diversity in importers in this period. The reason for this was the greater ease with which individuals could import cotton in the later period. In the first place, the improvement of communications, especially the laying down of the Atlantic cable in 1866, facilitated rapid communication between buyers and sellers over great distances. In the second place, the development of cotton ‘futures’ trading in Liverpool around the same time (1860s and 1870s) permitted cotton shipments to be ‘hedged’ so reducing substantially the risks stemming from changes in the value of cotton while in transit or storage. Third, the continued expansion of credit facilities coupled with the fact that banks perceived ‘hedged’ cotton as ‘safe’ led to a willingness on their part to extend credit of up to ninety per cent. of its value to importers in this later period (For the development of the Liverpool cotton futures market and hedging, see: Nigel Hall, ‘The Liverpool Cotton Market: Britain’s First Futures Market’, in Transactions of the Historical Society of Lancashire and Cheshire, volume 149 (1999), pp.99-117). One of the key classes of traders to expand their cotton importing was Liverpool’s cotton brokers. This was facilitated by the new hedging and related credit facilities. This expansion came particularly in the late 1860s and 1870s. So much so, that Liverpool’s cotton merchants complained of the competition from the cotton brokers in the late 1870s and early 1880s (For the development of Liverpool’s cotton brokers’ merchanting activity see: Nigel Hall, ‘The Business Interests of Liverpool’s Cotton Brokers, c. 1800-1914’, in Northern History, volume 41 (2004), pp.339-55).
In credit assessments made by banks of Liverpool cotton importers around 1900, quite a number are discussed that, despite limited financial means of their own, were importing cotton and gaining banks’ advances to enable them so to do. For instance, in 1900, Alexander & Co. were described as cotton merchants whose capital was ‘practically nil’. Arthur Clason & Co. had a capital of around ten thousand pounds, the merchant George Kenworthy was described as possessing ‘practically no means’, Minoprio & Holford had £5,300, Stock, Briggs & Co., had £11,000 and W. J. Walmsley & Co. possessed between three and four thousand pounds (Bank of Liverpool, reference book, pages 4, 61, 182, 341, 371, in the Barclays Archive, Manchester: Acc 25/151). All these Liverpool firms, despite their limited resources, were able to import cotton through the willingness of banks to lend and the security provided by hedging with Liverpool cotton futures contracts.
4. Importing Cotton on Commission and its Decline
In the early decades of the century, major cotton importers including the Barings, Browns or Rathbones preferred to import as much as they could on a commission basis. In other words, owners of cotton, typically in the United States, would consign their cargoes to a Liverpool house where it would be sold on commission, normally of between two and a half and four per cent. For merchants this clearly reduced the risks inherent in importing on one’s own account through a possible fall in the price of cotton. These merchants, however, would normally have to advance a considerable portion of the value of the cotton to the consignor before sale, normally between two-thirds and three-quarters of its worth, or even more, hence the need to have substantial capital or credit in order to undertake such business on a large scale (Sheila Marriner, Rathbones of Liverpool, Liverpool: 1961, pages 54-9. Minutes of the American Chamber of Commerce of Liverpool, 2 February 1808, in the Liverpool Record Office: 380 AME 1). The Liverpool merchants would tend to import some cotton on their own account (particularly if they anticipated a rise in prices) but preferred to keep this in limited bounds. For instance, in 1835 the Barings imported 2,000 bales on their own account but 10,000 on a commission basis (Ralph W. Hidy, The House of Baring in American Trade and Finance, Cambridge, Mass.: 1949, page 186). In November 1860, Leech, Harrison & Forwood were expecting 7,308 bales of cotton consigned to their Liverpool house by eight Unites States companies based in New Orleans, Mobile and Charleston, while at the same time, Leech, Harrison & Forwood were only expecting 237 bales to arrive on their own account. In addition to this, three Liverpool cotton brokers were holding 1,748 bales for the firm, all of it the property of American consignors (Forwood papers, memorandum titled ‘Cotton to Arrive’, 21 November 1860, in the Hampshire Record Office, Winchester: 19M62/11/23).