The British cotton trade lost 54 per cent of its pre-war supply in the peak period of
scarcity from 1862 to 1864, and 37 per cent over the period from 1862 to 1867.1 If
lost market growth is taken into account, the figures are 64 per cent and 53 per cent respectively. Yet, to read the comments of most historians, this deficit was a mirage. They have claimed that the drastically reduced production of cotton goods in the war years was due mainly to their over-production before the war.
The historiography of this verdict can be traced back over time like accreted layers of silt upon a river bed. Scattered through the layers, the magical figure of 300 million lbs of an alleged excess of cotton goods is recited like a litany. Each succeeding historian seems to have assumed that some previous historian must have researched the claim, when it would appear that – in Britain at least – not one of them has done so. There is nothing beneath the silt. Thus:
(2016: David Olusoga) “Between 1859 and 1860 American cotton producers had exceeded world demand… At the end of 1860 there were vast stocks of
unsold cotton clothing on the world market.”2
(2014: Sven Beckert) “[At the outbreak of war], yarn and cloth markets from
Buenos Aires to Calcutta … were glutted.”3
(2013: Scott Marler) “British mill-owners had managed to accumulate ample reserve stocks of cotton from the bumper crop of 1860… Their ability to churn out finished goods had outpaced demand for these products, especially
in glutted overseas markets such as India.”4
(2010: Howard Jones) “The abundant cotton yield in the South during the three years before the war had banked up so much raw cotton in British warehouses that … producers had flooded the markets with finished goods, ______________________________________________________________
1 Table 4.4 (page 105)
2 Olusoga, Black and British, p. 350 3 Beckert, Empire, p. 247
while making drastic cutbacks in production that forced numerous laborers
into short time or layoffs.”5
(2006: Nigel Hall) “The notion that the period of extreme difficulty … during the American Civil War was mainly or even solely attributable to a shortage of the raw material has been challenged by W. O. Henderson and Eugene A. Brady. They have pointed convincingly to an overproduction of cotton goods
during the period 1858-61.”6
(2005: Jay Sexton) “Revisionist historians have even argued that the ‘cotton famine’ experienced during the war was not a famine at all but the product of
this gluttonous overproduction.”7
(1990: James McPherson) “Surplus stocks of raw cotton as well as of finished cloth piled up in Lancashire warehouses. The South’s embargo thus turned out
to be a blessing in disguise for textile manufacturers in 1861.”8
(1979: Douglas Farnie) “There was no real shortage of cotton in Lancashire
even during 1862.”9
(1978: Norman Longmate) “The over-production [was] estimated by Arnold
to be ‘at least 300 million lb. weight of manufactured goods’.”10
(1966: Arthur Silver) “This period of about two years [1862-63] enabled the industry to get rid, without ruinous losses, of the over-production of the last
several years.”11
(1963: Eugene Brady) “The so-called Cotton Famine was not predominantly due to a shortage of the raw cotton input, but was in large measure the result of an excess supply of cotton yarn and textiles that resulted from over-
production during the years 1858 through 1861.”12
(1959: Frank Owsley) “England alone had manufactured and stored in her warehouses at home and in the East 300,000,000 pounds in excess of the
normal productions.”13
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5 Jones, Blue and Gray, p. 226 6 Hall, ‘Civil War', p. 149 7 Sexton, Debtor, pp. 137-138 8 McPherson, Battle Cry, pp. 385-386 9 Farnie, English Cotton, p. 150 10 Longmate, Hungry Mills, p. 68 11 Silver, Manchester Men, p. 158
12 E. Brady, ‘A Reconsideration of the Lancashire "Cotton Famine"', Agricultural History, Vol. 37, No. 3 (July 1963), p. 156
(1952: Max Beloff) “Short-time in the mills was due to a falling-off in demand
owing to earlier over-production.”14
(1934: Otto Henderson) “The cotton crisis was not due entirely to a shortage of the raw material. In 1859-60 the Southern States produced more cotton than the world needed… By May, 1860, … there accumulated about 300 million lbs of cotton goods which could not have been sold at a profit if the
existing rate of production had been maintained.”15
(1886: Thomas Ellison) “Between 1850 and 1861 … [there was] a considerable over-production of cloth, especially during the last three years of the period [leading to] to a serious diminution in the profits of manufacturers. It gave rise also to a gigantic amount of over-trading with the Eastern and other markets, from the disastrous effects of which the shippers were only saved by the
enforced reduced production occasioned by the cotton famine.”16
(1872: Ezekiel Donnell) “It is generally believed that, when our war broke out,
the whole world was overstocked with [cotton] goods.”17
In fact, almost the only cotton historian not to have made claims of this nature was Giorgio Riello, who wrote accurately of “the cotton famine of the 1860s caused by
the American Civil War”.18
If there is one source that is responsible for the over-production claim taking root in historical literature, it is Arthur Arnold’s original book on The Cotton Famine, written with an understandable passion, and in a great hurry, as early as the winter of 1863-64. Arnold did not originate the claim, but he gave it a prominence it had not previously enjoyed and, owing to the commercial success of his book, the
imprimatur of the truth. This was the heart of Arnold’s argument:19
During the past two years [mid-1859 to mid-1861], the excess of production over consumption amounted to at least 300,000,000 lb. weight of manufactured goods… With this surplus stock in the hands of the trade, it cannot be a matter of surprise that manufacturers should have become anxious to work their mills ‘short time’… They had in hand a stock of goods sufficient for the consumption of two-thirds of a year, therefore a rise in the ______________________________________________________________
14 Beloff, ‘Great Britain', p. 45 15 Henderson, Famine, p. 11 16 Ellison, Cotton Trade, p. 77 17 Donnell, Chronological, p. 465 18 Riello, Cotton: The Fabric, p. 267 19 Arnold, History, p. 80
price of the raw material and the partial closing of their establishments, with a curtailment of their working expenses, was obviously to their advantage.
When Arnold asserted this figure of 300 million lbs, he produced no evidence to justify a statement that has reverberated around the halls of history for a century and a half. He merely said that it had been ‘estimated’.20 There is a strong indication,
however, that the original source for the figure, and certainly the earliest so far discovered, was none other than Thomas Ellison, a fact hitherto unknown. In 1863, Ellison started his own brokerage firm of Ellison & Haywood. In their first annual circular, for the year 1863 and dated 19 January 1864, Ellison wrote: “the aggregate surplus production of the years 1859-61 was at least 300,000,000 lbs. This reduced to Cotton would amount to 337,000,000 lbs, and represent 842,000 bales of 400 lbs
each.”21 In his book, to which the preface was dated six months later, Arnold wrote:
“the excess of production over consumption amounted to at least 300,000,000 lb. weight of manufactured goods; which, in the raw material, would be equal to
842,000 bales of 400 lb. each.”22 Ellison is not referenced in Arnold’s work, but both
the timing and the wording suggest that he was the direct source of Arnold’s claim. It may seem presumptuous to dispute statements made by almost every historian to have written about the famine for a century and a half, but the fact is that only Brady has sought to substantiate either the general or the specific claim. He presented statistical evidence, principally consisting of a contentious analysis of cotton stocks, which allowed him to reach the extraordinary conclusion that “the Civil War did have some impact upon the Lancashire textile industry, but it does not appear that its most significant role was one of cutting off supplies of raw cotton from British textile manufacturers.”23 However strange it may seem, the
quotations from the other historians are not the conclusions reached after producing the evidence for them: they are the evidence. Arnold appears to have regarded Ellison’s statement as proof enough. Henderson appears to have regarded Arnold’s statement as proof enough. Longmate and Hall appear to have assumed that Henderson must have researched the issue, although there is no evidence that ______________________________________________________________
20 Arnold, History, p. 81
21 Ellison & Haywood, annual CC for 1863, LRO, 380 COT/1/11/68 22 Arnold, History, p. 80
he did. Farnie somehow managed to be persuaded by Brady. The others appear to have paraphrased the historical consensus.
Ellison did not justify his claim either. His circulars, and later his book, were festooned with meticulously compiled statistics, the accuracy of which there is no general reason to doubt. The figure of 300 million lbs is mentioned casually in the text. It is placed next to a table which shows that, comparing the three years 1859- 61 with the three years 1862-64 – itself a strange comparison, since Ellison was
writing at the end of 1863 – cotton production fell by 50 per cent.24 The relevance
of the table to the statement is not explained. As will be shown, Ellison’s own stock
figures contradict his claim of an “aggregate surplus production” for 1859-61 of at
least 300 million lbs. And his own figures also contradict the allegation of “a serious diminution in the profits of manufacturers”. They show that the profits of British cotton manufacturers were 33 per cent higher between 1859 and 1861 than in the previous 3-year period.25
Ellison surely cannot have been suggesting that the true level of demand for cotton goods was only half that at which the trade had been producing for years: that would have been absurd. A more probable explanation, in fact the only plausible explanation, is that Ellison was reacting to the immediate present alone. Writing at the end of 1863, the inflated price had drastically reduced the demand for cotton goods, and both that fact and the related scarcity of cotton had reduced the scale of their production. Judged by the market conditions when he was writing, too much had indeed been produced in the immediate pre-war years. But those changed circumstances were exclusively the result of the American war. Neither Ellison, nor anyone else, considered what might have happened to the market without the war. Until that is investigated, any comment upon the level of pre-war production is meaningless, unless clairvoyance is considered to be a required competence for cotton manufacturers.
When examined closely, it will be seen that the quotations at the start of this chapter incorporate a number of different elements. The precise claim being made is not the same in each case, nor is every claim wholly inaccurate. The problem is ______________________________________________________________
24 Ellison & Haywood, annual CC for 1863, LRO, 380 COT/1/11/68 25 Ibid. for 1865, LRO, 380 COT/1/11/70
not that the issue of over-production is illusory or irrelevant, but that it has been persistently bloated and misinterpreted. As the starting point for an overdue revisionism, it will be helpful to isolate the questions raised and to provide simple answers to them now. This chapter and the next will then justify these answers.
Had manufacturers produced at above the level of demand in the pre-war period? Not in 1859; to a small extent in 1860 and 1861. Had the war not intervened and had the market continued on its existing path, this would not have presented a problem.
Were raw cotton stocks in Liverpool unusually high when the war started? No: they were relatively low, and they declined through most of 1861.
Were the stocks of cotton goods in Britain unusually high when the war started? Stocks were high, but not inordinate. At the end of 1860, manufacturers’ stocks represented 16.7 weeks of sales at the prevailing level, as opposed to an average of 12.7 weeks for the four preceding years.
Did manufacturers make large profits on these stocks? Yes, but only because of the inflation of price caused by the war.
Were stocks in other parts of the world high? Impossible to quantify: the only evidence is anecdotal, all of it alleged after the war had started and the temporary global market had emerged. The probable answer is that these stocks were high in some parts of the world, but not in others, and not inordinate in total.
Was there a scarcity of raw cotton in Britain during the war? At wartime prices, no – but that is a self-fulfilling statement, since the demand adjusted itself to the price, which in turn adjusted itself to the supply. Judged against demand, prices and production levels before the war, there was a vast scarcity.
Did this scarcity cause the cotton famine? Yes.
Did it lead to the adoption of short-time working in October 1861? No. Did a surfeit of cotton goods cause it? No: the paralysis of demand following the outbreak of war caused it.
Should anything significant, other than the war, affect discussion of any of these issues? No.
This chapter quantifies Britain’s supply of raw cotton during the war, placed in the context of the years immediately before and after it. Chapter 5 examines the merits of the over-production claim. The statistical foundation of this chapter rests
on the weekly data on raw cotton imports and sales collected by the LCBA and summarised in the tables of Holt and Donnell, augmented by additional data from Pender and Ellison. Where figures are quoted in the text of this chapter, they are referenced only if they are taken from sources other than these. To ensure internal consistency, some raw statistics have been amended, in the manner described in Appendix 1. None of the amendments is significant or contentious, or affects the conclusions to be drawn from the data. The statistics have been supplemented with information from other primary sources. Few secondary sources are available to inform this chapter or the next, and those that do exist are mostly mistaken.
In 1866, the year after the civil war ended, Britain imported 11 per cent more bales of cotton than it had in 1860, the year before it started. And 1860 had itself been a record year for imports. Yet appearances are deceptive. This simple statistic ignores four separate factors, all of which conspired to reduce the raw cotton available. Instead of the 1866 supply being 11 per cent higher than in 1860, it was effectively 23 per cent lower and amounted to a mere 60 per cent of the market requirement. The years between were worse still by far.
The first factor concerns the unit of measurement. Raw cotton was usually measured in bales. However, bales are a useless measurement, since the weight of a bale differed from one producing country to another, and from one year to another. During the period under study, the weight of a bale varied from 160 lbs (a
Brazilian bale in 1865) to 500 lbs (an Egyptian bale in 1864).26 A pre-war American
bale weighed about 445 lbs and an Indian bale, which was itself the average of three production sources on the sub-continent, about 370 lbs. Through the war, the average bale weight declined by 18 per cent as heavier American bales were replaced by lighter Indian bales. Such an elementary factor should not have been overlooked. Yet Harnetty gave British consumption figures only in bales for the
period 1855-72, and Farnie and Hall discussed changes to stock levels only in bales.27
The Cotton Association’s own historian did the same thing throughout his account of the civil war years, resulting in some wildly inaccurate statements.28
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26 Ellison & Haywood, annual CC for 1866, LRO, 380 COT/1/11/71
27 Harnetty, Imperialism, p. 57; Farnie, English Cotton, p. 141; Hall, ‘Civil War', p. 153 28 Machin, ‘History, Part 1', pp. 107-304
The second factor is the issue of re-exports. British imports of raw cotton are another misleading statistic. Cotton brought into British ports serviced not only British mills, but many of the mills of northern Europe.29 Much raw cotton was
shipped directly to European ports, but some of the requirement of continental mills was imported to Britain, traded on the Liverpool market and then re- exported. The share of British imports that were re-exported varied over time, and especially during the civil war. To understand what happened to the British cotton trade during the war, imports need to be considered net of re-exports.
The third factor is the issue of cotton quality. There was wastage in all cotton manufacture and again it varied, both over time and according to the source of the cotton. American cotton was usually amongst the most reliable, which was one reason for its pre-eminence; Indian cotton the least.30 As the balance of imports
shifted from the former to the latter, the level of wastage increased substantially. Since the statistics for British cotton consumption were derived from known sales to British spinners – in other words, at a point before manufacture – this factor is excluded from the published consumption data. The loss on Indian cotton was more than double that on any other cotton. Its increased use raised the overall level of wastage by more than 60 per cent. More than one-sixth of the cotton that arrived at the mills in 1862 was unusable.31
When these three factors are quantified, it will be seen that British cotton consumption during the civil war was even lower than it is generally supposed to have been. That is without taking into account the fourth issue: the fact that cotton manufacture was an expanding industry. Without the war, one would have expected consumption to have grown. To comment on the figures as if one was dealing with a static market is misleading. Yet, as will be seen, this mistake and many others were first made by contemporary commentators, while the sheer weight and depth of British nineteenth-century comment has awed later historians into accepting ______________________________________________________________
29 Ellison, Cotton Trade, p. 91; Farnie, English Cotton, p. 16; J. Brown, A Hundred Years of Merchant Banking (New York: Arno Press, 1978), p. 139; Hall, ‘Brokers', p. 59
30 Another advantage was that fewer drawings were required. “American cotton requires fewer drawings than that of any other country, and genuine Orleans fewer than any other variety of American. Hence the general popularity of American cotton, and the exceptional popularity of the variety known as Orleans” (Ellison, Cotton Trade, p. 44).
contemporary verdicts as historical facts. A narrative constructed at the time made the sense that the cotton trade and others thought it made, but which should not now be taken at face value.
The sequence of tables and figures in the rest of this chapter interprets the available data step by step in the light of the factors mentioned above. Together, they demonstrate the practical effect of the American war on the British cotton market and quantify the loss to Britain during the war years. Although the war ended in April 1865, it makes sense to look at the figures through to the end of 1867, because the immediate post-war period was as much a reflection of the problems caused by the war as the war years were themselves. The starting point is to quantify raw cotton imports into Britain during the war and immediately after it (Table 4.1). As was shown in Figure 3.1, American imports stopped dead in August 1861. After that, little American cotton reached Britain for four years. It began to flow again only in the autumn of 1865, after the war was over, which is the sole