The early development of the Liverpool cotton market (to 1860)
Contents of this page:
- Manchester: The Early Centre of Cotton Buying in the Eighteenth Century and Early Nineteenth Century
- Liverpool’s Growing Imports of Cotton in the Later Eighteenth Century
- Cotton from the West Indies
- Cotton from the Middle East/"The Levant"
- Cotton Re-exports from Mainland Europe
- Liverpool becomes the Largest Cotton Importing British Port (1790 to 1840)
- New Sources of Cotton: Brazil and the United States of America
- Decline of London's Cotton Imports due to War (1793 to 1815)
- Liverpool's Position as the Leading Cotton Importer after 1815
- Transport Improvements between Liverpool and the Cotton Spinning Districts: Railways
- Factors Persuading the Cotton Industry to buy Cotton through Brokers in Liverpool rather than through Inland Cotton Dealers
- The Price of Cotton in Liverpool and Manchester during the Late Eighteenth and Early Nineteenth Centuries
- Speculation/Raising of Prices by Inland Cotton Dealers
- Particular Cotton Price Conditions c1820 to c1840: An Intensified Need to Focus on the Cost of Production?
- Market Information at Liverpool: Keeping Cotton Buyers and Sellers Informed
- Easier to buy from One Liverpool Cotton Broker than a Number of Separate Inland Dealers
- Credit and Banks
- How Cotton was Traded in Liverpool: Auctions, Private Sales and selling by Samples
1. Manchester: The Early Centre of Cotton Buying in the Eighteenth Century and Early Nineteenth Century
As the cotton spinning industry of the North-West of England developed, dealers in raw cotton came into existence in the eighteenth century to supply the industry with its raw material, with the vast majority of them being based in and around Manchester. It is difficult to be certain exactly how many existed because they have left almost no records behind and, in commercial directories of the time, the distinction between those dealing in raw cotton, yarn and finished goods is far from clear. Stanley Dumbell, using the Manchester trade directories as his source, suggested in an article in the Economic Journal (published in 1923), that there were twenty cotton dealers in Manchester in 1788 and over forty by 1804. Pigot's Commercial Directory of 1819 states that there were no fewer than eighty-three cotton dealers in Manchester at that time and noted the existence of three such dealers in Stockport and two in Preston. Some of the dealers probably just sold raw cotton, while others combined this trade with dealing the finished yarn and cotton cloth. A financial ledger of Francis Reynolds (a cotton dealer from Blackburn who later became a Liverpool cotton broker) indicates that he traded in raw cotton, yarn and cloth in the 1790s (Liverpool Record Office: Ledger of Francis Reynolds, Acc. 1216). Manchester was certainly the centre of cotton dealing, as Pigot's Commercial Directory of 1819 commented: 'The manufacturers from all the neighbouring towns resort here to sell their goods, and purchase fresh supplies of cotton or other materials ... ' (page 296).
The reasons for Manchester emerging as the early cotton market at which spinners bought their raw cotton are several. Manchester was the ideal location for such a market because it was in the heart of the cotton spinning district and was where many spinners and manufacturers went to sell their finished products. Of equal importance is the fact that it was impossible for any port such as Liverpool to emerge as a central cotton market before the nineteenth century because cotton entered Britain in significant quantities through several different ports. For instance, in 1791-92, while forty-two percent of Britain's cotton was imported through Liverpool, thirty percent was imported through London, five percent through Lancaster and twenty-three percent through an assortment of other British ports (Liverpool Record Office: Holt and Gregson Papers, 91, 942 HOL: 10, 18, 19) . It was therefore necessary that some inland point close to the spinners should form some sort of 'nodal' market, grouping together cotton from the different British ports which brought cotton into the country.
It should be noted that the provision of credit by the Manchester cotton dealers may have been an important factor in the spinners buying their cotton from them (before the development of alternative sources of credit, particularly joint stock banking outside London, from the 1820s onwards). The cotton dealers often provided generous credit to the cotton spinners. While a cotton dealer in Blackburn, Francis Reynolds is recorded as selling raw cotton at various lengths of credit in the early 1790s. Sometimes no credit appears to have been advanced by him, while at other times he provided credit of up to four months (Liverpool Record Office: Ledger of Francis Reynolds, Acc. 1216). Presumably Reynolds was more willing to provide credit to those he deemed to be more financially secure. In the early nineteenth century the cotton spinning firm, James Lees, Son & Co. of Oldham, bought cotton from numerous dealers. For instance, in 1805, this company purchased cotton to the value of over nine thousand pounds from fifteen different dealers in forty-eight separate transactions. Two purchases were at two months credit, three at three months, twenty-four at six months and the rest at four months (Lancashire Record Office, Preston: James Lees, Son & Co., Oldham, Ledger (1804-20), DDRE 13/1, pp. 14-51).
As the cotton spinning industry of the North-West of England developed, dealers in raw cotton came into existence in the eighteenth century to supply the industry with its raw material, with the vast majority of them being based in and around Manchester. It is difficult to be certain exactly how many existed because they have left almost no records behind and, in commercial directories of the time, the distinction between those dealing in raw cotton, yarn and finished goods is far from clear. Stanley Dumbell, using the Manchester trade directories as his source, suggested in an article in the Economic Journal (published in 1923), that there were twenty cotton dealers in Manchester in 1788 and over forty by 1804. Pigot's Commercial Directory of 1819 states that there were no fewer than eighty-three cotton dealers in Manchester at that time and noted the existence of three such dealers in Stockport and two in Preston. Some of the dealers probably just sold raw cotton, while others combined this trade with dealing the finished yarn and cotton cloth. A financial ledger of Francis Reynolds (a cotton dealer from Blackburn who later became a Liverpool cotton broker) indicates that he traded in raw cotton, yarn and cloth in the 1790s (Liverpool Record Office: Ledger of Francis Reynolds, Acc. 1216). Manchester was certainly the centre of cotton dealing, as Pigot's Commercial Directory of 1819 commented: 'The manufacturers from all the neighbouring towns resort here to sell their goods, and purchase fresh supplies of cotton or other materials ... ' (page 296).
The reasons for Manchester emerging as the early cotton market at which spinners bought their raw cotton are several. Manchester was the ideal location for such a market because it was in the heart of the cotton spinning district and was where many spinners and manufacturers went to sell their finished products. Of equal importance is the fact that it was impossible for any port such as Liverpool to emerge as a central cotton market before the nineteenth century because cotton entered Britain in significant quantities through several different ports. For instance, in 1791-92, while forty-two percent of Britain's cotton was imported through Liverpool, thirty percent was imported through London, five percent through Lancaster and twenty-three percent through an assortment of other British ports (Liverpool Record Office: Holt and Gregson Papers, 91, 942 HOL: 10, 18, 19) . It was therefore necessary that some inland point close to the spinners should form some sort of 'nodal' market, grouping together cotton from the different British ports which brought cotton into the country.
It should be noted that the provision of credit by the Manchester cotton dealers may have been an important factor in the spinners buying their cotton from them (before the development of alternative sources of credit, particularly joint stock banking outside London, from the 1820s onwards). The cotton dealers often provided generous credit to the cotton spinners. While a cotton dealer in Blackburn, Francis Reynolds is recorded as selling raw cotton at various lengths of credit in the early 1790s. Sometimes no credit appears to have been advanced by him, while at other times he provided credit of up to four months (Liverpool Record Office: Ledger of Francis Reynolds, Acc. 1216). Presumably Reynolds was more willing to provide credit to those he deemed to be more financially secure. In the early nineteenth century the cotton spinning firm, James Lees, Son & Co. of Oldham, bought cotton from numerous dealers. For instance, in 1805, this company purchased cotton to the value of over nine thousand pounds from fifteen different dealers in forty-eight separate transactions. Two purchases were at two months credit, three at three months, twenty-four at six months and the rest at four months (Lancashire Record Office, Preston: James Lees, Son & Co., Oldham, Ledger (1804-20), DDRE 13/1, pp. 14-51).
Below: Manchester in 1840,
An engraving by Edward Goodall
"Manchester, from Kersal Moor",
(from a painting by W. Wylde).
Depicting the rapidly
growing, industrial city,
with its skyline filled with the
chimneys of cotton mills
An engraving by Edward Goodall
"Manchester, from Kersal Moor",
(from a painting by W. Wylde).
Depicting the rapidly
growing, industrial city,
with its skyline filled with the
chimneys of cotton mills
2. Liverpool’s Growing Imports of Cotton in the Later Eighteenth Century
Liverpool's imports of cotton expanded steadily during the eighteenth century. Information collected by William Enfield in his book An Essay Towards the History of Leverpool (Warrington: 1773, page 79), suggests that in 1770, Liverpool imported 6,000 bags of cotton, or approximately thirty-seven per cent of Britain's total cotton imports. By the early 1790s, Liverpool was taking forty-two percent. However, throughout the whole of the seventeenth century and for almost all the eighteenth century, London was the most important port for the importing of cotton into Britain. It was only at the end of the eighteenth century that Liverpool began to import more cotton than London (Liverpool Record Office: Holt and Gregson Papers, 91, 942 HOL: 10, 18, 19).
3. Cotton from the West Indies
The reason for London's early dominance of cotton importing, and Liverpool's later ascendancy in this, is largely explained by the sources of cotton supply. For most of the eighteenth century the West Indies were the most important single source of raw cotton for Britain. The importing of West Indian cotton favoured Liverpool due to the port's extensive transatlantic trade, but London also possessed important trading links with this region. In 1791 it is recorded that London received 12,755 bags of cotton directly from the West Indies, while Liverpool received 20,409 (Liverpool Record Office: Holt and Gregson Papers, 91, 942 HOL: 19). West Indian cotton arrived in Britain in ships laden with goods including sugar, rum or spices. Most of these goods were just as saleable in London (if not more so) as in other ports including Liverpool. Hence, cotton that would later be spun in the north of England was often landed in London amongst cargoes of other West Indian goods. If ships from the West Indies had only carried cotton, it would be fair to say that it would have been much less desirable for them to have discharged their cargo in London, from where cotton had to be transported further and at greater cost to the spinners than from Liverpool. Until the last quarter of the eighteenth century the West Indies were almost the only source of cotton for Liverpool (aside from some cotton re-exports from mainland Europe). When William Enfield, in the early 1770s, calculated the total imports of Liverpool in 1770, he concluded that the total import of cotton in that year was 6,037 bags, 3 bales and 3 barrels. All this came from the West Indies excepting 3 bales from New York and 3 bags from Alicante or Gibraltar (William Enfield, An Essay Towards the History of Leverpool, Warrington: 1773, pages 73-79).
Below: A Map of the West Indies in 1732
(by Hermann Moll)
(by Hermann Moll)
4. Cotton from the Middle East/"The Levant"
The Middle East or "The Levant" (as it was referred to in the past) was the main source of raw cotton in the seventeenth century and remained important until the later eighteenth century. 'Outports' (British ports outside London) including Liverpool, were shut out of this trade by the existence of a London monopoly trading company: "The Levant Company". In 1753 an Act of Parliament permitted non-London merchants to join the Levant Company. Interestingly, few Liverpool merchants did so (despite previous campaigning by Liverpool merchants to be granted access to this trade). The first ship to depart for the Middle East from Liverpool did not sail until 1759, and only three vessels from the Middle East discharged cargoes in Liverpool between 1775 and 1785 (Alfred C. Wood, A History of the Levant Company, Oxford: 1935, pages 156-7 and House of Commons Journal, 26 January 1753, 14 February 1753, 14 March 1753). In surviving import figures for 1792, Liverpool is recorded as receiving no cotton directly from the Middle East, although it is possible that Liverpool may have received some Middle Eastern cotton as re-exports from mainland European ports, particularly through the Italian port of Livorno (Liverpool Record Office: Holt and Gregson Papers, 942 HOL: 93). London merchants not only had experience of trading with the Middle East - which was not by any means the easiest region to transact business in - but also possessed long-established trading connections with this area, through the existence of The Levant Company. Liverpool had other alternative, very profitable, largely transatlantice and African/slave trading patterns, which were more financially attractive than commerce with the Middle East. It should also be noted that, compared with West Indian cotton (the main alternative type at the time), Middle-Eastern cotton was of a relatively low quality. Given this, it is perhaps not surprising that Liverpool merchants took relatively little interest in cotton from this region. London’s much greater interest in Middle-Eastern cotton than Liverpool was an important factor in the capital’s early leading role in cotton imports.
Below: Map of The Levant
in the mid eighteenth century
(from Frederik Hasselquist,
Voyages and Travels in the Levant,
London: 1766)
in the mid eighteenth century
(from Frederik Hasselquist,
Voyages and Travels in the Levant,
London: 1766)
5. Cotton Re-exports from Mainland Europe
It is not generally appreciated that London’s early importance as a cotton port in the eighteenth century was furthered by a greater involvement than Liverpool in another source of raw cotton: cotton re-exports from mainland Europe. This was a result of London’s greater proximity and greater commercial ties with mainland Europe than Liverpool. Both France and Holland had developed early trading interests in the Middle East ("The Levant") and took considerable quantities of cotton from there. Later, France and Holland acquired trading connections in the West Indies. A proportion of the cotton imported by these countries was then re-exported to England - mostly to London. In 1792, London imported 22,610 bags of cotton from mainland Europe, or about forty percent of its total supply of cotton, while Liverpool only imported around half as much at 11,498 bags of cotton, or sixteen percent of its total supply (Liverpool Record Office: Holt and Gregson Papers, 942 HOL 19, 91-3).
6. Liverpool Becomes the Largest Cotton Importing British Port (1790 to 1840)
London’s leading role in cotton imports did not continue into the nineteenth century, with Liverpool taking the lead by the early years of the nineteenth century. Between 1790 and 1825, Liverpool approximately doubled its share of Britain’s cotton imports, with new sources of supplies finding their way to the British cotton industry almost exclusively through Liverpool:
Percentage of British Cotton Supplies
Imported through Liverpool
1791-1840
(Calculated to the nearest
one per cent)
1791 to 1795 37%
1796 to 1800 42%
1801 to 1805 56%
1806 to 1810 60%
1811 to 1815 63%
1816 to 1820 70%
1821 to 1825 85%
1826 to 1830 86%
1831 to 1835 88%
1836 to 1840 89%
Imported through Liverpool
1791-1840
(Calculated to the nearest
one per cent)
1791 to 1795 37%
1796 to 1800 42%
1801 to 1805 56%
1806 to 1810 60%
1811 to 1815 63%
1816 to 1820 70%
1821 to 1825 85%
1826 to 1830 86%
1831 to 1835 88%
1836 to 1840 89%
(Calculated from: Holt and Gregson Papers in Liverpool Record Office: 942 HOL 19, 91.
George Holt & Co., Annual Circular (1859) in Liverpool Record Office: MD 230 21.
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, appendix, Table 1.
Richard Burn, Statistics of the Cotton Trade, London: 1847, page 14).
George Holt & Co., Annual Circular (1859) in Liverpool Record Office: MD 230 21.
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, appendix, Table 1.
Richard Burn, Statistics of the Cotton Trade, London: 1847, page 14).
7. New Sources of Cotton: Brazil and the United States of America
It might be assumed that Liverpool’s ‘take-off’ in cotton importation came with the spread of cotton cultivation in the United States of America (which became the leading source of Britain's cotton in the nineteenth century). However, a significant development in the supply of cotton, and Liverpool’s share of it, came with the exportation of cotton from Brazil in the last two decades of the eighteenth century. By Portuguese law, all colonial produce (including cotton) had to pass through the ‘mother country’ of Portugal. Liverpool was already involved in trade with Portugal (and Spain), and had been since Elizabethan times. Liverpool traders, and Manchester merchants trading through Liverpool, seem to have expanded commerce with Portugal in the late eighteenth century, specifically to acquire cotton for the nearby cotton industry of Lancashire. We have references to Liverpool merchants, Manchester cotton dealing firms, spinners and even early Liverpool cotton brokers importing cotton from Portugal into Liverpool in the late eighteenth and early nineteenth centuries. The Liverpool trade papers of the time indicate that ships entering Liverpool from Portugal at this time (besides a little wine) brought cotton exclusively (Alfred P. Wadsworth and Julia de Lacy Mann, The Cotton Trade and Industrial Lancashire: 1600-1780, Manchester: 1931, page 233. R. S. Fitton and A. P. Wadsworth, The Strutts and the Arkwrights: 1758-1830, Manchester: 1958, page 282). The late eighteenth century Liverpool trade papers, Williamson’s Advertiser and Gore's Liverpool Advertiser list the goods brought to Liverpool on individual ships in its weekly editions).
The activity of those trading through Liverpool in acquiring Brazilian cotton had an important effect on both the composition of Liverpool’s cotton imports and the port’s cotton trading position with regards to London (the leading British cotton port in the eighteenth century). In 1792 out of a total Liverpool cotton import of 72,576 bags of cotton, no fewer than 37,442 were from Portugal (although it should be noted that the weight of bags from Portugal tended to be lower than those coming from other regions). At London, cotton from Portugal accounted for only 7,611 bags out of a total cotton import of 55,525 bags (Liverpool Record Office: Holt and Gregson Papers, 942 HOL 19, 91-3).
The next great step in Liverpool’s cotton importing was indeed the emergence of the United States as a cotton exporter from the 1790s onwards. Liverpool was well placed to dominate Britain’s importation of United States cotton – the variety which came to absolutely dominate the British cotton trade. The basis of Liverpool’s international commerce was largely transatlantic: it was noted above that Liverpool had been shut out of trade with the Middle East; Liverpool was also shut out of trade with India until 1813 (due to the monopoly of Indian trade by the London based East India Company). As well as establishing trading links with the West Indies, Liverpool had developed trading connections with North America, including the important early cotton states of Georgia and South Carolina before the American Revolutionary War (1776-1783). William Enfield tells us that out of 348 ships arriving in Liverpool in 1764, 188 had sailed there from ports in the West Indies and North America (William Enfield, An Essay Towards the History of Leverpool, Warrington: 1773, page 71). In the period 1788-90, no fewer than 344 ships arrived in Liverpool from the United States, being the most common port of origin behind only Ireland (3,050 ships) and the West Indies (479 ships), (J. Aikin, A Description of the Country from Thirty to Forty Miles Round Manchester, London: 1795, page 367).
With the nearby growing cotton industry in Lancashire and its brisk demand for raw cotton, it is not surprising that ships soon began to bring cotton from the two southern states of Georgia and South Carolina to Liverpool as cotton production there expanded, and that cotton eventually became almost the only commodity ships brought from there (except, perhaps, when cotton was not readily available). By the close of the French and Napoleonic wars in 1815, Liverpool was already relying upon the United States for a considerable proportion of its raw cotton. In 1815, 57 percent of the cotton imported into Liverpool originated in the United States, by 1820 the proportion had risen to 66 percent (Calculated from: Liverpool Record Office: William & Edgar Corrie, Brokers, annual circulars, Hq 658.73, 6 January 1816, 31 December 1821).
The emergence of United States cotton supplies during the long war period (1793 to 1815) sealed the place of Liverpool as the leading British cotton port. It would seem that few merchants in London could see any commercial advantage in securing cargoes dominated by cotton from the southern United States and directing them to London, far further from the cotton industry than Liverpool.
Below: The Liverpool commercial newspapers of the
late eighteenth and early nineteenth centuries
listed the goods imported into Liverpool each week.
The example below is typical
(from Gore's Liverpool Advertiser, 28 March 1805, page 3),
indicating the importation of cotton (among other goods)
into Liverpool from the United States of America
and Portugal
8. Decline of London's Cotton Imports due to War (1793 to 1815)
The long period of war in Europe between 1793 and 1815, gave rise to conditions which further reduced London's role in cotton importing. This was due to the curtailing of commercial contact between Britain and mainland Europe, which, as noted above, was a source of re-exported cotton for London. France and Holland had been key sources of cotton re-exports. In the last year of peace, 1792, a total of 840 ships arrived in London from France and Holland, by 1795 this figure had dropped to just 107 ships (United Kingdom, Parliamentary Papers, Commons, Proceedings, Report from the Committee Appointed to Enquire into the Best Mode of Providing Sufficient Accommodation for the Increased Trade and Shipping of the Port of London, (1796), Appendix MM).
9. Liverpool's Position as the Leading Cotton Importer after 1815
By the time the Napoleonic Wars were over (1815), Liverpool’s share of cotton imports was considerably greater than that of London. Figures from 1818 indicate that in that year, while London imported 191,029 ‘packages’ of cotton (this includes both bales and smaller "bags" of cotton), Liverpool imported 425,344 packages (James Cleland, The Rise and Progress of the City of Glasgow, Glasgow: 1820, appendix, p. 236). By 1825 Liverpool imported 488,000 packages of cotton and London less than fourteen percent of this amount at 66,500 packages. At the end of December 1818, Liverpool could boast a considerable stock on hand of 311,000 packages of cotton in its warehouses (out of the 416,000 packages of cotton remaining unused in Britain) - in other words, about three-quarters of Britain’s stock of unused cotton (Liverpool Record Office: William & Edgar Corrie & Co., Hq 658.73, Annual Circular, 1825). Twenty years later, in 1845, the situation was even more dramatic. In this year, Liverpool imported 1,652,731 packages of cotton compared to London’s 68,300 (less than five percent of Liverpool’s total). Significantly, no less than 61,400 (nearly ninety percent) of London’s packages of cotton came from India; it will be recalled that Liverpool had been shut out of trade with India until 1813, and London retained an important role in cotton trading with India (Liverpool Record Office: George Holt & Co., MD 230-21, Annual Circular, 1846). However, much of the Indian cotton imported into London ceased to be sent to British cotton spinners (who preferred the higher quality United States variety), most was re-exported to mainland Europe. For instance, in 1846, London had in its warehouses at the start of the year 90,000 bales of cotton, with a further 36,200 bales being imported into the capital during the course of the year. Of this cotton, only 13,100 bales were sold to British cotton spinners - the majority was re-exported to mainland Europe. The quantity exported to mainland Europe from London in 1846 was 54,000 bales (Liverpool Record Office: George Holt & Co., MD 230-21, Annual Circular, 1846).
10. Transport Improvements between Liverpool and the Cotton Spinning Districts: Railways
An important factor that affected the rise to pre-eminence of the Liverpool cotton market was transport. The improvement of water communications between Liverpool and inland areas in the eighteenth and early nineteenth centuries (through canal building and improvements to the River Mersey) certainly aided the transportation of cotton between Liverpool and the cotton spinning districts, but in the early decades of the nineteenth century there are indications of difficulties in taking cotton from Liverpool to the growing number of mills.
The lack of swift and reliable transport between Liverpool and its manufacturing hinterland placed a brake upon the ability of Liverpool to succeed inland cotton dealers (mostly based in Manchester) as the main source of cotton spinners’ supply of cotton. This was because on the one hand, cotton could not be dispatched quickly and with certainty to the cotton mills, and on the other hand, the ability of spinners to go to Liverpool to inspect cotton and make purchases was limited - it was faster and simpler to buy from a locally based inland cotton dealer in the late eighteenth and early nineteenth centuries.
There were a number of problems with the waterways. For instance, in the winter the canals could freeze over, preventing the delivery of cotton. The Liverpool cotton broker, Godfrey Barnsly, wrote to the cotton spinner Joshua Fielden of Todmorden in the winters of both 1813-14 and 1814-15 noting that cotton could not be delivered from Liverpool by canal because of the freezing over of the waterways. As a result, the cotton had to be sent by the slower and more expensive means of road (John Rylands Library, Manchester: letters of Godfrey Barnsly to Joshua Fielden, FDN/1/1/1, 14 January 1814 and 23 December 1814).
The problems at other times were made almost impossible by the insufficient number of river and canal barges to carry cotton inland from Liverpool - this could result in very considerable delays. In 1825, William Huskisson, Member of Parliament for Liverpool, stated that at times spinners who did buy in Liverpool had to wait two weeks for their cotton to arrive - or even had to stop production completely - because it had not been delivered (UK Parliament, House of Commons, Parliamentary Debates, XII, 3 February - 18 April 1825, col. 849).
One Liverpool cotton broker related in the mid 1820s how he often went to the barge quays once a day, sometimes more frequently, in order to try to get cotton taken to Manchester, explaining that it was difficult because the carrying companies simply did not have enough barges. He also explained that in one incident he had had to wait six weeks for cotton to be forwarded to Manchester, with the buyer having to pay the Liverpool warehouse fees for the cotton to be kept during this period (Liverpool Record Office: Liverpool and Manchester Railway Papers, 385 LIV 10/5). Other Liverpool brokers, such as Robert Barber of the firm Cook & Comer, complained that canals at times simply refused to take cotton if they were too busy. It was argued by those trading cotton in Liverpool that the waterways simply could not cope with the demands placed upon them by the 1820s (Evidence of the cotton brokers George Leveson Clowes, James Hardy Wrigley and Robert Edwards in Proceedings of the Committee of the House of Commons on the Liverpool and Manchester Railroad Bill, Sessions, 1825).
The transport difficulties faced by cotton traders (and members of other trades) led to the construction of the Liverpool and Manchester Railway, which was completed in 1830. Members of the cotton trade in both Liverpool and Manchester were keen supporters of the railway project. A key proponent of the Liverpool and Manchester Railway, Joseph Sandars, made a particular point of arguing the case of those involved in cotton when proposing the railway's construction - pointing to the delays and expense which the existing communications confronted the trade with (Robert E. Carlson, The Liverpool and Manchester Railway Project: 1821-31, Newton Abbot: 1969, page 17). The first experimental goods train on the new railway took commodities, including cotton, from Liverpool to Manchester on 4 December 1830 in just under three hours. From the very beginning, the necessities of carrying cotton were considered by the railway company with the provision of heavy tarpaulins to cover the wagons and the erection of warehouses at the end of the line specifically for the reception of this commodity (R. H. G. Thomas, The Liverpool and Manchester Railway, London: 1980, pages 201-5).
Below: A print of 1831 titled
"Travelling on the Liverpool
and Manchester Railway"
by M.B. Cotsworth, Holgate, York,
showing both goods and passenger trains
(reproduced in H.F. Helmolt, History of the World,
New York: 1902, volume VII, pages 130 - 131)
The importance of the Liverpool and Manchester Railway (and later railways that branched off it) to the expansion of the Liverpool cotton market is demonstrated by comparing the number of cotton broking firms existing in Liverpool before the opening of the railway with the number in business after its opening. In 1829, on the eve of the opening of the Liverpool and Manchester Railway, there were forty-five cotton broking firms in the port. By 1841, this figure had more than doubled to 111 (Gore’s Liverpool Directories, 1829 and 1841). The Ashworth cotton mills in Bolton, Lancashire, provide a good example of how the railways changed cotton buying practices. With the opening of the railways the Ashworths’ purchases of cotton from inland cotton dealers dropped to just twenty percent of their requirements, with the rest (eighty percent) being bought in Liverpool through a broker. By the 1840s, the Ashworths bought only two to three percent of their cotton from nearby dealers, with the rest being bought through Liverpool cotton brokers. The Ashworths were keen supporters of the projected railway line that linked Bolton (and hence their cotton mills) to the Liverpool and Manchester Railway - along which their future supplies of cotton were destined to arrive (Rhodes Boyson, The Ashworth Cotton Enterprise, Oxford: 1970, pages 48-52).
Not only did the railways make it easier and faster to transport cotton from Liverpool to the mills, they also helped to reduce costs. The rate for taking one ton of cotton by water from Liverpool to Manchester had, at times, been as high as twenty shillings in the early decades of the nineteenth century. In an attempt to see off the impending competition of the railway, water companies’ rates were reduced to fifteen shillings per ton in the mid 1820s. The Liverpool and Manchester Railway charged eleven shillings per ton, and this induced the waterways to compete with it by cutting rates to as low as ten shillings (Robert E. Carlson, The Liverpool and Manchester Railway Project: 1821-31, Newton Abbot: 1969, pages 26, 29, 178, 243). One should be careful not to overstate the extent of the savings to the industry. The gain represented only about 0.05 d. per pound (weight) of cotton. Taking the average cost of one pound of ‘Middling’ quality United States cotton in 1830 (six pence), this represented less than one percent upon the price. The rapidity and reliability of the railway service was almost certainly the most important point.
Another important matter is the way in which the railways made it much easier for cotton spinners to visit the Liverpool market and their cotton buying brokers there. In the 1820s it took a coach traveling by road approximately four and a half hours to travel from Manchester to Liverpool - a round trip of nine hours. The same journey on the railway took two hours. In addition, the cost of the journey fell by over forty percent, and contemporaries certainly described the rail journey as more comfortable than the coach (Robert E. Carlson, The Liverpool and Manchester Railway Project: 1821-31, Newton Abbot: 1969, p. 236. The Liverpool Mercury, 7 August 1820).
Below: The Mature Railway System of Lancashire in 1915,
showing the large extent of the railway network
connecting Liverpool, Manchester and
other cotton manufacturing towns by the
early twentieth century.
(The various colours for the map's lines
indicate the different railway owning companies.
This map is a portion of one titled
"Lancashire and Yorkshire Railway
and its Connections", published in 1915)
showing the large extent of the railway network
connecting Liverpool, Manchester and
other cotton manufacturing towns by the
early twentieth century.
(The various colours for the map's lines
indicate the different railway owning companies.
This map is a portion of one titled
"Lancashire and Yorkshire Railway
and its Connections", published in 1915)
11. Factors Persuading the Cotton Industry to buy Cotton through Brokers in Liverpool rather than through Inland Cotton Dealers
Liverpool's increasing share of Britain's raw cotton imports in the early decades of the nineteenth century, coupled with the ability to transmit these supplies rapidly to the mills and the greater ease with which spinners could visit Liverpool, created the conditions that permitted Liverpool to become the key cotton market at which the industry bought. As the sharp increase in the number of cotton brokers based in Liverpool indicates (discussed above), the opening of the Liverpool and Manchester Railway appears to have been particularly important in the development of the Liverpool cotton market. However, why should spinners decide to buy in Liverpool? The greater Liverpool imports could simply have been transmitted (by the new railways) to the established inland dealers who could have continued to supply the industry themselves. Clearly factors led the spinners to prefer buying at Liverpool - the higher imports and improved communications allowed them to exercise that choice. We therefore need to ascertain why the industry felt it was better served by buying its cotton through Liverpool brokers and the benefits it derived from so doing.
12. The Price of Cotton in Liverpool and Manchester during the Late Eighteenth and Early Nineteenth Centuries
Spinners would clearly prefer to buy cotton in Liverpool if it was cheaper than in Manchester. We would intuitively suspect that cotton would be lower in price if bought through a broker working on a fixed commission rate than through a dealer. The dealer bought and sold cotton on his own account and therefore would logically seek to sell cotton for the highest price he could get. A former employee of Manchester cotton dealers, John Slack, writing around 1815 in a pamphlet attacking cotton speculation suggests that a "moderate" or "fair" mark-up in price by a cotton dealer would be 3 ¼ percent (John Slack, Remarks on Cotton, Liverpool: c.1815, pages 28-9). Perhaps the implication of Slack’s comment that a 3 ¼ per cent mark up on the price by cotton dealers would be “fair”, suggests that it may frequently have been rather more. The Liverpool broker, on the other hand, was employed by the spinner to make purchases for him and only earned his keep through commission. In the early nineteenth century the Liverpool cotton brokers’ rate of commission was ½ % on the price of the cotton bought. (The merchant would employ a broker to sell cotton and the broker secured ½ % commission from him). (Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, page 175).
Generally higher prices from dealers as opposed to brokers are strongly suggested by the fact that during the evolution of the Liverpool market, some inland dealers actually employed Liverpool cotton brokers to buy cotton for themselves, which they would in turn sell (with their own mark up in price added) to spinners. The ledger of the early Liverpool cotton broker, Nicholas Waterhouse, indicates that he bought for a number of cotton dealers. For instance, in 1799-1800, cotton was bought through Waterhouse by one Francis Reynolds (at this point in his career, a dealer based in Blackburn). In 1801, the Manchester cotton dealer, Robert Spear, bought cotton to the value of £11,525 through Waterhouse (Ledger of Nicholas Waterhouse, Cotton Broker in Liverpool University Library Special Collections: MS24.54). Later, when Francis Reynolds himself became a Liverpool cotton broker (around 1810), his surviving ledger suggests that he may have bought cotton for a dealer named George Gibson (Ledger of Francis Reynolds, in Liverpool Record Office: Acc. 1216). Thomas Ellison in 1886 noted that the practice of dealers buying through brokers in Liverpool may have been common in the early days of the Liverpool market (Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, pp. 165-6). Clearly, if the cotton sold by dealers (which they had bought from brokers) had to bear their own profit margin, it must have been more expensive than cotton bought directly from a Liverpool broker.
It would be desirable to compare price data for the Liverpool broker-based and Manchester dealer-based markets to establish whether prices between the two markets were substantially different, not only to explore the question of why spinners started buying at Liverpool, but also to measure any savings derived by the industry from so doing. However, evidence is a major problem. It does not appear that any records belonging to cotton dealers have survived, and although price information has survived in other forms, there are difficulties in making comparisons. Relatively plentiful price information survives for Liverpool cotton from the first decade of the nineteenth century onwards in cotton brokers’ weekly circulars, which they sent to clients – but far less information survives for the Manchester market. The major problem when comparing the price information that does survive, is that one is not comparing like with like. One cannot simply compare two prices for cotton and assume that because one is lower, that the purchaser was at an advantage. Cotton is a highly variable commodity and its value is intimately linked to its quality. To take some market data at random, one finds that in Liverpool in the last week of October 1818, the price of raw cotton ranged between 8d. per pound for the lowest quality Indian cotton to 4s. 2d. for the highest quality United States cotton. In this period, no fewer than twenty-two varieties of cotton were listed as being available in Liverpool, each with a range of prices based upon the quality (see The Liverpool Mercury, 30 October 1818, p. 139). Unless one could obtain a series of data for cotton prices in both Liverpool and Manchester for exactly the same type and exactly the same quality of cotton, comparisons are largely worthless. For instance, Richard Burn, in a statistical survey of the cotton industry published in 1847, lists prices in the Manchester market from 1782 to 1825 for United States, Brazilian, Indian and West Indian cotton. For each year he provides the range of prices. Prices for this period survive for Liverpool, but Burn’s figures seem to refer to all qualities of cotton from a particular source while the Liverpool figures refer to a particular grade from these sources: ‘good’.
We can graph the Liverpool price figures against the median of Burn’s range of prices for Manchester:
We can graph the Liverpool price figures against the median of Burn’s range of prices for Manchester:
Graph Below:
Comparison of Prices for
"Upland" American Raw Cotton
in Manchester and Liverpool,
1811 to 1825
Comparison of Prices for
"Upland" American Raw Cotton
in Manchester and Liverpool,
1811 to 1825
(Price data for construting the graph above is from:
Richard Burn, Statistics of the Cotton Trade, (London, 1847), p. 20-21,
and the annual statistical circulars issued by
George Holt & Co., Liverpool cotton brokers,
in the Liverpool Record Office: MD 230-21)
Richard Burn, Statistics of the Cotton Trade, (London, 1847), p. 20-21,
and the annual statistical circulars issued by
George Holt & Co., Liverpool cotton brokers,
in the Liverpool Record Office: MD 230-21)
When looking at the graph above, one is indeed left with the impression that we are not comparing like with like. The graph would suggest that the price of cotton was actually higher in Liverpool than Manchester until around 1818 - the absurdity of this is clear; it would suggest that Manchester dealers were buying cotton at the port and selling it for less than they paid for it to the spinners (similar charts to the one above are produced if one graphs the price data for the other varieties of cotton in Liverpool and Manchester from the same sources).
However, the graph above does suggest something of interest. The price of cotton at Liverpool (according to the graph) fell relative to Manchester prices from around 1818. Presuming that both sets of data, Liverpool and Manchester, were kept consistently, this would suggest a relative cheapening of prices at Liverpool to those at Manchester. Indeed, as common sense suggests that prices at Manchester must surely have tended to be higher there than at Liverpool, this development after 1818 suggests that prices had become cheaper still in Liverpool when compared to Manchester - hence providing a stronger motive still to buy cotton in Liverpool. Quite why Liverpool prices should have fallen at this time relative to those at Manchester is difficult to establish; it could be that the emergence of more broking firms in Liverpool made the market there more competitive.
However, the graph above does suggest something of interest. The price of cotton at Liverpool (according to the graph) fell relative to Manchester prices from around 1818. Presuming that both sets of data, Liverpool and Manchester, were kept consistently, this would suggest a relative cheapening of prices at Liverpool to those at Manchester. Indeed, as common sense suggests that prices at Manchester must surely have tended to be higher there than at Liverpool, this development after 1818 suggests that prices had become cheaper still in Liverpool when compared to Manchester - hence providing a stronger motive still to buy cotton in Liverpool. Quite why Liverpool prices should have fallen at this time relative to those at Manchester is difficult to establish; it could be that the emergence of more broking firms in Liverpool made the market there more competitive.
13. Speculation/Raising of Prices by Inland Cotton Dealers
Another price related issue - periodic speculation in cotton by dealers - may have provided another motive for spinners to reject the dealers’ services and buy in Liverpool instead. Some sources indicate that the spinners believed that the dealers kept prices up in order to make large profits and there are, indeed, examples of considerable speculation in cotton by inland dealers.
The pamphlet written by John Slack (who had worked for cotton dealers) mentioned above, is a good source of information concerning cotton dealer speculation; sadly, it was printed before the end of the Napoleonic War and hence the important period between 1815 and 1830 is not discussed, when the Liverpool market was developing rapidly. Nonetheless, Slack's account, covering the period from the 1770's to 1815, may be indicative. For instance, Slack describes how in 1779, during the American Revolutionary War, the Manchester cotton dealers Slack worked for heard a rumour that Jamaica (an important cotton-producing island) had been captured by the French. His employers therefore bought all the cotton they could in Manchester and sent orders to buy elsewhere, in order to profit from higher prices that would have ensued from a curtailment of cotton supplies from Jamaica. (News was soon received that Jamaica had not been captured and the company had to sell at great loss) (John Slack, Remarks on Cotton, Liverpool: c1815, pp. 5-6). In the mid 1780’s there seems to have been an attempt on the part of some inland dealers to form a cartel to push up the price of cotton, this group became known as the ‘long-tailed company’. (There were disagreements over whether to hold or sell their cotton holdings and the speculation broke down). (John Slack, Remarks on Cotton, Liverpool: c1815, pp. 5-6).
As early as the 1770’s, due it would seem to dissatisfaction with buying from inland cotton dealers and the prices for cotton they asked, some Manchester-based cotton spinners attempted to by-pass their local cotton dealers in an attempt to keep the price of their raw material down. A meeting of Manchester spinners took place in September 1774, with the declared aim of discussing the price of cotton and ways in which to keep it lower. Some of the spinners decided to work together, and formed a sort of cotton buying consortium, which they called the "Cotton Manufacturers’ Company" (see: The Manchester Mercury, 27 September 1774). This consortium does not appear to have been very succesful, and it ceased to trade in 1778. It is not quite clear why it did not last. It is possible that, during the difficult commercial and trading conditions Britain faced during the American Revolutionary War (1776 to 1783), it could not cope with the strain of wartime trading conditions (see: Arthur Redford, Manchester Merchants and Foreign Trade: 1794 - 1858, Manchester: 1934, p. 3). Another possibility is that it may not have been able to provide the large range of cotton available on the open market, or the credit facilities available from cotton dealers. Nonetheless, it demonstrates an early desire on the part of spinners, motivated by price considerations, to explore alternatives to buying through local dealers.
Note:
Over a century later, cotton spinners once again formed their own cotton trading firm, the Oldham Cotton Buying Company Ltd., which was more successful, and will be discussed on another page of this website, in due course.
Over a century later, cotton spinners once again formed their own cotton trading firm, the Oldham Cotton Buying Company Ltd., which was more successful, and will be discussed on another page of this website, in due course.
14. Particular Cotton Price Conditions c1820 to c1840: An Intensified Need to Focus on the Cost of Production?
Particular price conditions in the second quarter of the nineteenth century may have been an important spur for spinners to focus more sharply upon the cost of their raw material. Cotton prices tended to fall from 1818 onwards. However, between the mid-1820’s and mid-1830’s the price of cotton was generally rising. If the price of yarn is compared to that of the raw material, it is clear that the spinners were not able to pass on the higher cost of raw cotton to the purchaser. In the graph below, one can see that between 1825 and 1830, the price of finished cotton yarn fell by about thirty-five per cent., and then, from around 1830 to 1840, hovered around this lower price. The price of raw cotton fell from 1825 to 1830, by just over forty per cent., but from 1830 to 1835, the price of raw cotton rose by just over thirty per cent. :
Graph Below:
Comparison of the Price
of Raw Cotton
and Finished Cotton Yarn,
Liverpool and Manhester,
1821 to 1840
Comparison of the Price
of Raw Cotton
and Finished Cotton Yarn,
Liverpool and Manhester,
1821 to 1840
(Source of data for the graph above:
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886,
appendix, tables 1 and 2.
Note: Ellison obtained much of his price and other data
from circulars issued by the
Liverpool cotton broking firm of George Holt &co.)
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886,
appendix, tables 1 and 2.
Note: Ellison obtained much of his price and other data
from circulars issued by the
Liverpool cotton broking firm of George Holt &co.)
The second graph (below), indicates the price of raw cotton when expressed as a percentage of the price of finished cotton yarn. It suggests that cotton spinners were not able to pass on the higher prices they were paying for their raw cotton in the early 1830s:
Graph Below:
Price of Raw Cotton
Expressed as a Percentage
of the Price of Finished Cotton Yarn,
Liverpool and Manhester,
1821 to 1840
Price of Raw Cotton
Expressed as a Percentage
of the Price of Finished Cotton Yarn,
Liverpool and Manhester,
1821 to 1840
(Source of data for calculations for the graph above:
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886,
appendix, tables 1 and 2.)
Thomas Ellison, The Cotton Trade of Great Britain, London: 1886,
appendix, tables 1 and 2.)
This rising cost of raw cotton, coupled with the spinning industry not being able to pass on this cost to its customers in the early 1830s (by charging higher prices for its finished yarn), would, no doubt, have forced the cotton spinners to focus on obtaining cotton as cheaply as they possibly could. As noted above, the year 1830 saw the opening of the Liverpool to Manchester Railway, and in the decade following this, the number of cotton broking firms in Liverpool increased markedly. As also noted above in 1829 there were forty-five cotton broking firms in Liverpool, but by 1841, this figure had more than doubled to 111 (Gore’s Liverpool Directories, 1829, 1841). This all points to the decade of the 1830s as being crucial in entrenching the position of Liverpool as the leading cotton market - with the opening of railway communications between the centres of spinning and the port, and pressure on the industry from rising raw cotton prices, the cotton spinners increasingly bought their cotton in Liverpool.
15. Market Information at Liverpool: Keeping Cotton Buyers and Sellers Informed
Accurate market information, for instance prices, volume of sales, supply of goods and the insights of market traders, all enable those wishing to trade in a particular market, to buy or sell in an informed way. This was another area that distinguished buying or selling cotton through a Liverpool cotton broker, as opposed to using an inland cotton dealer.
From the early years of the nineteenth century onwards, Liverpool's cotton brokers took increasing steps to keep spinners and importers well-informed regarding the stocks, imports, prospects and prices of cotton in the Liverpool market. Around the year 1805, the cotton brokers, M. & J. Pool of Liverpool noted that they sent “advices” about the Liverpool cotton market to twenty-three people on a weekly basis, to twelve people once a fortnight, to five people once a month, and to eight others “occasionally”. With the exception of two in London and one in Glasgow, all of the Pools’ correspondents were in Lancashire (M. & J. Pool, Liverpool cotton brokers, notebook, pp. 7-8, in Wiltshire Record Office, Trowbridge: 946/286). The Liverpool cotton broker, Godfrey Barnsley bought cotton for the firm of Fielden Brothers, Todmorden, in the early nineteenth century. (Todmorden is in Yorkshire, close to its border with Lancashire, and about 17.5 miles/28 kilometres to the north-east of Manchester). A substantial number of Godfrey Barnsley’s letters to Joshua Fielden of Fielden Brothers survive. In the year 1814, we find that Barnsley wrote to Fielden concerning the Liverpool market two or three times each week. Barnsley informed Fielden about such matters as the state of the market, cotton currently available, recent imports, likely future imports, who was buying cotton, and transport conditions and arrangements for sending cotton from Liverpool to the mills (Letters of Godfrey Bansley, Liverpool cotton broker, to Joshua Fielden of Fielden Brothers, Todmorden, in the year 1814, in Manchester University Library: FDN/1/1/1).
Apart from writing (by hand) to their commercial contacts, Liverpool’s cotton brokers began to produce weekly printed circulars. Thomas Ellison (writing in 1886) suggests that the (general) Liverpool broking firm of Ewart & Rutson began this practice in 1805, with the production of a weekly cotton report. This report detailed sales, imports and prices of cotton in Liverpool. Ewart & Rutson were joined in producing a weekly circular in the same year by the cotton broker, Samuel Hope. In the following years, other Liverpool cotton brokers quickly joined in this practice by printing their own circulars for clients (Thomas Ellison, The Cotton Trade of Great Britain. London: 1886, p. 179). A date around 1805 for the commencement of printed cotton circulars in Liverpool is borne out by the contents of annual cotton circulars issued by broking firms at a later date - such as the surviving ones of George Holt & Co. (one of Liverpool's leading broking firms). These annual circulars contained a wealth of information, including details of such matters as prices, imports, volume of sales, dating back to 1807, hence confirming Thomas Ellison’s suggestion that it was in the first decade of the nineteenth century that cotton market printed circulars were first produced by brokers in Liverpool (see: George Holt and Co., annual cotton circulars, in the Liverpool Record Office: MD 230-21).
It is not certain what exact form the earliest weekly circulars took, but they may have been similar to one that survives from 1818. It is a printed form on a single side of paper with blank spaces for the prices and market statistics to be filled in by hand. It lists all the varieties of cotton then available, the Liverpool prices for the past week for three qualities of each type of cotton (‘ordinary to middling’, ‘fair to good’ and ‘fine’) and the Liverpool prices on the day the circular was completed. In addition, this 1818 circular states the number of bales of each type of cotton sold and imported in the preceding week (Cotton Circular, for 3 to 9 October 1818, in the Liverpool Record Office: Acc. 2153). Other brokers may have produced completely printed circulars (rather than printed forms to be completed by hand) from an early date. The earliest surviving, completely printed weekly circulars, providing information about the Liverpool cotton market are ones produced by the Liverpool (general) brokers, William & Edgar Corrie & Co., in 1822 (William & Edgar Corrie & Co., Brokers, weekly circulars, for the year 1822, in the Liverpool Record Office: Hq658.73).
Below:
T. & H. Littledale & Co., Liverpool (general) brokers,
showing the section of their weekly circular
concerning the Liverpool Cotton Market,
for the week ending
3rd August 1850
(original document belonging to Nigel Hall) :
T. & H. Littledale & Co., Liverpool (general) brokers,
showing the section of their weekly circular
concerning the Liverpool Cotton Market,
for the week ending
3rd August 1850
(original document belonging to Nigel Hall) :
Below:
A detail from the above circular,
showing cotton prices in
the Liverpool market
on 2nd August 1850
(the price quotations are in
pence per pound weight/"lb") :
NOTES: In the above table from the 1850 printed circular of Littledale & Co:
The abbrevaitaion at the top of the columns are the grades/quality of the cotton (in ascending order of quality from "ordinary" to "fine"):
Hence: "Ord. @ mid." means "ordinary to middling quality" cotton
- Sea Island, Upland, Orleans, and Mobile are United States cotton.
- Pernambuco, Bahia & Macao, and Marnaham are Brazilian cotton.
- Surat, Madras and Bengal are Indian cotton.
The abbrevaitaion at the top of the columns are the grades/quality of the cotton (in ascending order of quality from "ordinary" to "fine"):
- Ord. = ordinary
- Mid. = middling
- Fr. = fair
- gd. fr. = good fair
- Gd. = good
- fi. = fine
Hence: "Ord. @ mid." means "ordinary to middling quality" cotton
Liverpool’s cotton brokers began to produce annual circulars shortly after weekly circulars first appeared. These annual circulars presented a mass of statistical information relating to the Liverpool market. Some produced by the brokers, William & Edgar Corrie & Co., survive from the early 1820’s, and one for George Holt & Co survives from 1846 (William & Edgar Corrie & Co., Brokers, annual circulars, in the Liverpool Record Office: Hq658.73; George Holt & Co, annual circular for 1846, in the Liverpool Record Office: MD 230-22). The Holt & Co. circular (which is very similar to later ones surviving for other cotton broking firms) provides not only price information for various types of cotton for every week of the preceding year, but presents details of monthly imports of cotton, the amount of stock in Liverpool (and other ports) and, as stated above, statistics regarding the Liverpool cotton market dating back to 1807.
The keeping and disseminating of market information through the medium of cotton brokers’ circulars, is another matter that distinguished the Liverpool cotton market from the Manchester, dealer-based cotton market. There is no evidence that the inland cotton dealers ever produced detailed and printed market information (if they ever did, none has survived). It is telling that even in Manchester newspapers in the early years of the nineteenth century, the price quotations for raw cotton printed, are the figures from Liverpool. Indeed, the difficulty in finding details about the prices charged by inland dealers in this early period, strongly suggests that they were never systematically recorded.
Below:
The cotton market report in the
Manchester Courier and Lancashire General Advertiser,
9 January 1830
(page 2):
As can be seen, all the cotton market
data printed in this manchester newspaper
comes from the
Liverpool cotton market:
The cotton market report in the
Manchester Courier and Lancashire General Advertiser,
9 January 1830
(page 2):
As can be seen, all the cotton market
data printed in this manchester newspaper
comes from the
Liverpool cotton market:
16. Easier to buy from One Liverpool Cotton Broker than a Number of
Separate Inland Dealers
Another important factor in the rise of the Liverpool market and spinners’ increasing preference to buy in it, may well have been the ease with which cotton could be purchased there. If a spinner bought from inland dealers, potentially, he may have had to contact several before securing the cotton he desired at a satisfactory price - each dealer would only represent to the spinner the cotton he had on hand himself. Thomas Ellison suggests that when spinners bought their raw cotton in Manchester, they had to go into the actual warehouses of dealers, to inspect the bales of cotton (Thomas Ellison, The Cotton Trade of Great Britain, London: 1886, pp. 175-6). The Liverpool cotton broker, because he was making bids on behalf of the spinner for cotton held in the hands of anyone in the port, he potentially offered all the cotton on hand in Liverpool. The spinner need only deal directly with one person - his Liverpool broker. This point is illustrated if one examines the cotton buying practices of mills during the period of the development of the Liverpool market.
The spinners James Lees, Son & Co. of Walshaw Mills, Oldham, bought all their cotton at the start of the nineteenth century from inland dealers. If we take one example year, 1805, it can be seen that this firm bought varying amounts of cotton through fifteen different cotton dealers:
The spinners James Lees, Son & Co. of Walshaw Mills, Oldham, bought all their cotton at the start of the nineteenth century from inland dealers. If we take one example year, 1805, it can be seen that this firm bought varying amounts of cotton through fifteen different cotton dealers:
Below:
Raw Cotton Purchases of James Lees, Son & Co.,
Cotton Spinners, Oldham,
January to December 1805
(Source: James Lees, Son & Co., Ledger,
in the Lancashire Record Office, Preston: DDRE 13/1) :
Raw Cotton Purchases of James Lees, Son & Co.,
Cotton Spinners, Oldham,
January to December 1805
(Source: James Lees, Son & Co., Ledger,
in the Lancashire Record Office, Preston: DDRE 13/1) :
As the Liverpool market developed, James Lees, Son & Co. increasingly orientated its raw cotton buying towards Liverpool, and away from Manchester. In 1823, the firm appears to have bought just over sixty per cent of its cotton through the Liverpool brokers J. & A. Taylor, with the rest being bought from Manchester dealers (James Lees, Son & Co., Cash Account Book 1822-8, pp. 44-80, in the Lancashire Record Office, Preston: DDRE 13/5). By the mid-1830s, the firm was buying exclusively in Liverpool through just two brokers, John Taylor and J. S. Barton - suggesting simplicity and a considerable saving in time (James Lees, Son & Co., Cash Account Book 1834-8, passim, in the Lancashire Record Office, Preston: DDRE 13/10).
17. Credit and Banks
The expansion of credit may have played an important role in leading cotton to be retained in Liverpool rather than being sold quickly to inland dealers. There were two basic forms of cotton broking in Liverpool: selling cotton for the importing merchants and buying it for spinners. Many of the early cotton selling brokers emerged from the ranks of general brokers in Liverpool who sold goods for merchants in the eighteenth century. Some of these brokers were wealthy and employed their resources to extend credit to cotton merchants, on which they earned interest. Some of the credit was very considerable in its extent. The ledger of the early Liverpool cotton broker, Nicholas Waterhouse, indicates that this leading broking house had by April 1801 extended credit to the cotton importing firm of Thomas and William Earle to the enormous sum of £23,505 2 s. 0 d. (Ledger of Nicholas Waterhouse, Cotton Broker, in Liverpool University Library Special Collections: MS24.54). Other Liverpool broking houses, such as M. & J. Pool, also made advances to cotton merchants, although not to the extent of wealthy Waterhouse (M. & J. Pool, Journal, in the Wiltshire Record Office, Trowbridge: 946/283). In 1823, the Liverpool broker, Samuel Hope, explained before a select committee of the House of Commons that for merchants, this credit allowed them to hold their cotton in Liverpool and await higher prices. He related one incident in which he had held cotton under advances for a merchant for a full year, awaiting ‘a better market’ (UK Parliament, House of Commons, Report from the Select Committee on the Law Relating to Merchants, Agents or Factors, (1823), pp. 153-4).
At the start of the nineteenth century this credit extended to cotton importers was limited to the extent of a cotton broker’s own financial resources. However, the expansion of banking facilities in the early decades of the nineteenth century, opened up new sources of credit for cotton merchants. Sometimes Liverpool’s merchants gained loans directly from banks and merchant banks. For instance, Baring Brothers (both a merchanting and merchant banking house) began to extend credit to a number of cotton importers in the early decades of the nineteenth century (Baring Brothers, Reference Book, in the Barings Archive, London: HC16.11). The major advance came with the establishment of “joint stock” banking in Liverpool – in other words, rather than “private” banks, new banks that were “limited”, share-issuing concerns. This was permitted by new legislation enacted in 1826, which allowed (outside London) the establishment of banking co-partnerships with any number of shareholders and a right to issue their own banknotes. Before this new legislation, Liverpool’s banks were private firms, and were what we would term “merchant banks”: They were Liverpool merchanting houses that had begun to offer banking facilities. The first joint stock bank to open a Liverpool branch was the Manchester and Liverpool District Bank in 1829. However, the key event was the foundation of the Bank of Liverpool in 1831, which became the most important bank servicing the port’s cotton market. A number of the founders of the Bank of Liverpool were closely connected with Liverpool's cotton trade, including the leading Liverpool cotton merchant, William Brown, who became Chairman of the bank (George Chandler, Four Centuries of Banking, London: 1964, volume I, pp. 239-43).
Below: A Newspaper Announcement of 1830
published in Liverpool,
inviting people to apply for shares
in the newly-established Bank of Liverpool
(from Gore's Liverpool Advertiser,
16th December 1830, page 1)
Below: Application for Fifty Shares
in the new Bank of Liverpool
by William Brown, Liverpool cotton merchant
and Chairman of the Bank of Liverpool
(reproduced from: George Chandler,
Four Centuries of Banking,
London: 1964, volume I, page 246)
In the years following 1831, a number of other banks opened in Liverpool, while some of the existing private banks converted into joint stock banks (John Hughes, Liverpool Banks and Bankers, Liverpool: 1906, pp. 30-34, and passim). By the early 1840s, besides four remaining private banks, six joint stock banks had been founded in Liverpool and branches of other banks opened in the city (Alexander Brown, Smith's Strangers' Guide to Liverpool for 1843, Liverpool: 1843, p. 40). This expansion of banking facilities in Liverpool provided new and larger sources of credit for cotton importers. By 1843, the Liverpool joint stock banks had raised capital totaling £3,439,875 through their issuing of shares (Alexander Brown, Smith's Strangers' Guide to Liverpool for 1843, Liverpool: 1843, p. 40), this would equate to approximately £321,000,000 in today's prices (calculated using the "Measuring Worth" website's tools: https://www.measuringworth.com ).
Below: The Offices of the
Royal Bank of Liverpool
in 1843 - one of the
Joint Stock Banks established
in Liverpool following the change
to banking legislation in 1826
(from: Alexander Brown, Smith's Strangers' Guide to
Liverpool for 1843, Liverpool: 1843, facing page 37)
Royal Bank of Liverpool
in 1843 - one of the
Joint Stock Banks established
in Liverpool following the change
to banking legislation in 1826
(from: Alexander Brown, Smith's Strangers' Guide to
Liverpool for 1843, Liverpool: 1843, facing page 37)
Evidence suggests strongly that the normal practice was not for cotton importing merchants to gain credit directly from the Liverpool banks. Banking records indicate that the common practice was for a merchant to place his cotton in the hands of a Liverpool selling broker. The merchant would draw a bill upon the broker (generally for three months) and the broker took the bill to a bank where it was “discounted” – in other words, exchanged for cash at a rate set by the bank. The broker would then present the money to the merchant. The security for the loan was formed by the cotton in the brokers’ hands (see for instance the bills drawn by Purton, Parker on their brokers Hollinshed, Tetley & Co. in June 1841, mentioned in the Bank of Liverpool, Private Minute Book No. 3, page 69, in the Barclays Archive, Manchester: Acc. 26/52).
By the mid-nineteenth century, London “discount houses” such as Overend, Gurney & Co. had joined the Liverpool banks in discounting bills drawn against cotton in Liverpool brokers’ hands (see for instance letters from Overend Gurney & Co. to Thomas Haigh, a Liverpool cotton broker, during 1858, in the Public Record Office, Kew: J90/994). By the late 1830s, the Bank of Liverpool was making advances upon cotton held by brokers of up to eighty per cent of its estimated market value (see for instance the bills drawn on the brokers Kearsley & Son in October 1838, mentioned in Bank of Liverpool, Private Minute Book No. 1, pages 120-1, in the Barclays Archive, Manchester: Acc. 26/50). The expansion of credit made it far easier for merchants to retain their cotton in the brokers’ hands in Liverpool until a spinner offered (through his broker) a suitable sum of money for it – there was no need to sell it quickly to inland dealers to secure ready funds, and it was now the merchant rather than the dealer who could await a rise in the value of his cotton before selling it.
18. How Cotton was Traded in Liverpool: Auctions, Private Sales and Selling on Samples
Early historians of the Liverpool cotton market, such as Thomas Ellison writing in the 1880s, have tended to focus upon the role of cotton auctions in the early stages of the market’s development. This is understandable given that announcements of these auctions can easily be found in the Liverpool commercial newspapers from the mid eighteenth century onwards. In the eighteenth century, Liverpool brokers would arrange auctions at which they sold goods imported by the port’s merchants. In this early period, cotton was generally auctioned alongside other imported commodities. The following announcement, published in Gore’s Liverpool General Advertiser, on 29th September 1780, is typical:
‘To be sold by auction, at George’s Coffee House, on Friday the 6th Day of October next, the sale to begin at Ten o'clock in the forenoon.
126 Hhds Muscavado SUGAR, Prize,
127 Tierces '' ''
75 Tierces COFFEE ''
110 Hhds COFFEE, British Plantation,
100 Bags COCOA,
48 Bags PIMENTO,
9 Barrels INDIGO,
4 Tierces ''
100 Bags TORTOLA COTTON,
100 Bags FRENCH ''
100 Bags ST. DOMINGO ' '
The Samples to be seen the day preceding the sale and catalogues had by applying to Thomas Ryan, Broker,
or RAWLINSON, CHORLEY and GRIERSON.’
126 Hhds Muscavado SUGAR, Prize,
127 Tierces '' ''
75 Tierces COFFEE ''
110 Hhds COFFEE, British Plantation,
100 Bags COCOA,
48 Bags PIMENTO,
9 Barrels INDIGO,
4 Tierces ''
100 Bags TORTOLA COTTON,
100 Bags FRENCH ''
100 Bags ST. DOMINGO ' '
The Samples to be seen the day preceding the sale and catalogues had by applying to Thomas Ryan, Broker,
or RAWLINSON, CHORLEY and GRIERSON.’
NOTES: In the above:
- “Hhds” = Hogsheads (A cask of about 52 to 54 imperial gallons/238 to 245 litres)
- “Tierce” = A type of cask
The venues of early auctions of goods in Liverpool were very often one of the coffee houses in the centre of the town. The Liverpool coffee houses in the mid to late eighteenth century were:
- George’s (or St George's) Coffee House, Castle Street
- Neptune Coffee House, High Street (demolished when Exchange Flags/Buildings were created)
- Pontack’s Coffee House, Water Street
- Exchange Coffee House, Water Street
- Merchants’ Coffee House, Dale Street (before c.1767)
- Merchants’ Coffee House, Old Churchyard (after c.1774, possibly the site of the former Bath Coffee House)
(See: A. H. Arkle, "The Early Coffee Houses of Liverpool" in Transactions of the Historic Society of Lancashire & Cheshire, volume 64 (1912), pages 1-16.)
Below: Map of Central Liverpool
in the mid to late Eighteenth Century,
showing the locations of the
various Coffee Houses:
in the mid to late Eighteenth Century,
showing the locations of the
various Coffee Houses:
Notes on Map above:
- The base map is a detail from John Gere's 1796 map of Liverpool
- Locations of coffee houses from: A. H. Arkle, "The Early Coffee Houses of Liverpool" in Transactions of the Historic Society of Lancashire & Cheshire, volume 64 (1912), pages 1-16
We have little information about Liverpool’s early coffee houses, but they seem to have performed functions for Liverpool’s business community in the eighteenth and early nineteenth centuries very similar to those in London at the same point in time. The London coffee houses (which we know considerably more about), were central to the commercial community of the capital. It was out of Jonathan’s Coffee House, in Change Alley, London, that the London Stock Exchange evolved, and from Edward Lloyd’s Coffee House, that Lloyd’s of London (insurance) and “Lloyd’s Register” (for shipping) originated. Other London coffee houses were frequented by the city’s merchants and brokers involved in international trade, and the London coffee houses were frequently used (as in Liverpool) for auctioning imported goods. London coffee houses were convenient meeting places for businessmen, as well as sources of information, through the newspapers taken in by them and notices posted by traders. In an age before email, the Internet, telephones, telegrams and even a cheap and reliable postal system, a venue where a trader could reliably find information and others in the same branch of business as himself, was absolutely vital. It was also a common practice for London's coffee houses to be used like modern Post Office boxes/mailing addresses, where letters and messages could be left for particular traders who frequented them. (For an account of the early London coffee houses and their importance to London’s business community, see: John Timbs, Club Life of London with Anecdotes of the Clubs, Coffee-Houses and Taverns of the Metropolis, London: 1866, volume II, pages 1-109).
Below: A London Coffee House in the 1660s:
(The print clearly shows the
availability of reading matter
and notices posted on the walls)
(The print clearly shows the
availability of reading matter
and notices posted on the walls)
(Source of the illustration above: A print dating to 1668 by an anonymous/unknown artist, produced in London)
Below: Lloyd's Coffee House, London, in the 1790s:
("Lloyd's of London" insurance and
"Lloyd's Register of Shipping"
developed from this coffee house)
("Lloyd's of London" insurance and
"Lloyd's Register of Shipping"
developed from this coffee house)
(Source of the illustration above: A print dating to 1798 and designed by the caricaturist, Thomas Rowlandson, and printed in London)
Mention of auctions organised by brokers at which various commodities were sold has already been made. As Liverpool’s imports of cotton grew, and its role as a cotton market expanded, auctions purely for selling cotton developed. This is an example of an advert for a sale from 1805 (from Gore's Liverpool General Advertiser, 26th September 1805):
‘At Ewart Rutson And Co.’s office in Exchange Alley,
Liverpool, on Saturday next, 28th inst. at eleven o'clock,
200 Bags of SEA ISLAND Cotton
150 Ditto PERNAMBUCCO Ditto
100 Ditto CAYENAS Ditto
800 Ditto BARBADOES Ditto
Just imported.
For catalogues and other particulars apply to EWART, RUTSON and Co. Brokers.’
Liverpool, on Saturday next, 28th inst. at eleven o'clock,
200 Bags of SEA ISLAND Cotton
150 Ditto PERNAMBUCCO Ditto
100 Ditto CAYENAS Ditto
800 Ditto BARBADOES Ditto
Just imported.
For catalogues and other particulars apply to EWART, RUTSON and Co. Brokers.’
(It is interesting to note that in the same edition of the newspaper this broking firm, which was a large general broking business, was selling sugar at a separate auction). The above cotton advert suggests a number of interesting points. The names of the importing merchants (presuming Ewart and Rutson did not import the cotton themselves) are omitted, and this may indicate the increased importance of the brokers in Liverpool, or that the cotton being auctioned was grouped together from several different importers in order to organise a large, and solely cotton, auction. The auction was going to take place in the brokers' own offices, again suggesting the increased importance of brokers in the trading of cotton. Exactly what is meant by a ‘catalogue’ is uncertain because none appear to have survived. They are, however, frequently mentioned in adverts for cotton sales in this period and may, perhaps, have indicated the quality of cotton or the names of the importers and the ships the cotton arrived on.
In the Liverpool trade papers, there is a marked decline in the number of adverts for cotton auctions in the second quarter of the nineteenth century as the Liverpool cotton market matured. Indeed, by the 1840s, auctions of cotton appear to have ceased almost entirely, with cotton now being bought and sold in private sales conducted by Liverpool’s cotton brokers. The reason for this change is the manner in which Liverpool changed from being a market supplying inland dealers with cotton to supplying cotton spinners directly. Lancashire’s cotton spinners tended to by highly specialised in the types of yarn that they spun, and hence only wanted to purchase cotton suitable for their purpose. The earlier inland dealers were ‘wholesalers’ who could buy a variety of cotton types in large lots and retail this to individual spinners. So, as the role of cotton dealers declined and spinners increasingly bought directly in Liverpool, the desirability of selling cotton by auction declined.
The process of buying cotton at Liverpool was made considerably easier by the development of selling using samples – spinners did not need to go from warehouse to warehouse examining the cotton in bulk. Liverpool trade papers indicate that already by the later eighteenth century, a variety of commodities, including cotton, were being sold in Liverpool in this way (adverts often stated that smaples of goods were available for inspection at a certain place - often a broker's premises). The brokers selling cotton would hold samples drawn from individual cotton bales in their offices, where prospective buyers could examine them, without the need to visit individual warehouses. A letter written in 1845 explains how the system had developed by the mid-1840s. The cotton buying broker would visit brokers acting on behalf of sellers of cotton in the early part of the morning. The buying broker would collect a very large range of samples - perhaps anywhere between fifty and 150. When a cotton spinner arrived, the broker and he would spend a couple of hours examining the samples before deciding what to buy (American Chamber of Commerce in Liverpool, Minutes, 9 January 1845, in the Liverpool Record Office: 380 AME 2).
One of the advantages of samples was that they could be sent to spinners. In 1806 it is recorded that the Liverpool brokers M. & J. Pool were buying cotton for the Preston spinner, John Eamer. The Pools were apparently in the habit of sending samples and prices to Eamer by coach (letter from John Eamer, Preston to M. & J. Pool, Liverpool, 3 November 1806, in the Wiltshire Record Office, Trodbridge: 946/281). The cotton spinners, the Strutts (who would have had to travel all the way from Derbyshire to inspect cotton at Liverpool) were certainly buying on samples sent to them by the 1820s (R. S. Fitton and A. P. Wadsworth, The Strutts and the Arkwrights: 1758-1830, Manchester: 1958, page 286).