British cotton and the American Civil War

Liverpool University Press has recently published a book based on my doctoral thesis at the University of Liverpool. It is called Losing the Thread: Cotton, Liverpool and the American Civil War.

I have made two videos, in which I discuss the book with Meredith Wheeler, for many years a writer/producer for ABC News in New York and London. Both videos are available on YouTube, clicking on these links . The first video covers The Civil War and Britain’s Cotton Trade, and the second The Civil War and Anglo-American Relations.

This is the first of four blogs based on the transcripts of the videos.

MW   Americans usually consider the American Civil War through the prism of slavery, but today your book is looking at it from a different perspective, from an economic thread, one might say. Cotton threads. And while Americans are aware of the devastating effects of the American Civil War on the United States, I wonder if you could tell us a little bit about the devastating effects it had on Britain.

JP   Yes, by all means. The cotton trade was by far Britain’s largest industry at the time. In 1861, when the civil war started, cotton generated 12% of Britain’s national income. Half the factories in the country were for cotton production. Cotton goods accounted for 38% of all British exports. A sixth of the population relied on cotton for its income.

80% of the raw cotton for that trade came from the slave states of the southern USA. In July 1861, that fell to zero, literally overnight. It remained close to zero for the next three years. This can be regarded as the world’s first raw material crisis, and one of the most dramatic periods in Britain’s industrial and economic history. Yet little has been written about it.

MW   But America wasn’t the only country producing cotton, was it? There was the West Indies – India itself ?

JP   The book examines in detail what was done to reduce the dependence on American cotton before the war, and to replace the supply lost during the war.

Other countries, India especially, did indeed ship extra cotton during the civil war. However, before the war, America grew two-thirds of the world’s cotton and more than three-quarters of all cotton entering world trade. The vacuum left by the absence of American cotton was simply too great to fill, especially at short notice.

The consequence was that between 1862 and 1864, British yarn production was at 36 per cent of what the market needed. About 4.5 billion lbs of raw cotton were denied to British manufacturers in the seven years to the end of 1867. This caused massive unemployment in the industry, leading to the Lancashire cotton famine.

MW   During the American Civil War, the Union side famously blockaded Confederate ports precisely to prevent the export of American-grown cotton. However, I was interested to read in your book that this wasn’t the only reason that so little American cotton reached Britain during the war.

JP   That’s right. Throughout the war, the absence of American cotton from Britain was due as much to actions of the Confederacy as of the Union. Indeed, the complete cessation of exports in July 1861 had nothing to do with the blockade, which had only recently been imposed and was not yet effective. The cessation was due to the Confederate states placing an embargo on the export of their own cotton.

MW   And why was that?

JP   It was part of the South’s ‘King Cotton’ strategy. Confederate leaders were convinced that Britain and other countries were so dependent on the South’s cotton that they would be forced to recognise Confederate independence. Three months into the war, there had been no such recognition. The embargo was intended to to remind Britain that its economy would soon be devastated without Confederate cotton.

MW   But this “King Cotton” strategy of holding up cotton exports ultimately failed, didn’t it? Because the British never recognized the Confederacy as a legitimate entity.

JP   No, it didn’t. Recognition was discussed in Britain, but it was never a likely option and it never happened. The British economy was far more diverse than the Confederate leaders appreciated. 16% of the population may have depended on cotton for their livelihoods, but 84% did not – and that 84% was doing pretty well in the 1860s.

MW   So, despite an almost complete absence of American cotton, you say that most historians believe that there was no shortage of cotton in Britain during the war – because there was a cotton glut beforehand.

JP   That’s right. The claim was first advanced at the end of 1862 by people who understood little about the global cotton trade, and nothing at all about the role played in it by a stock pipeline. Few subsequent historians have undertaken original research into the issue and most have simply repeated the erroneous contemporary claims.

Although the civil war was to last for four years, at its commencement nobody in Britain expected it to last longer than a few months. The global cotton trade carried enough stock, as it needed to do, to cover those months. So, when the price of cotton started to rise, the trade sold from stock. The outbreak of war suppressed demand, paralysed the world market and led to short-time working in Britain. In time, the stocks were exhausted. By then, there was a severe cotton scarcity, which caused the famine.

So the over-production argument has no validity. In the book, this issue has been considered from every conceivable viewpoint and with the aid of detailed and reliable statistics. The conclusion is unarguable. The Lancashire cotton famine was the direct result of the American Civil War and of nothing else.

Going round in circles

When in France, we are visited each autumn by an invasion of green scutal beetles, generally known as stink bugs, although ours don’t stink. They fly around the room like overloaded transport planes, lurk in the window frames and settle on ledges. One of their favourite tricks is to perch on the rim of a lampshade. The bulb throws a giant silhouette on to the ceiling that makes the bugs look like something from a horror movie.  Continue reading

Falling in and out of Europe

It is nearly a year since I decided to divorce The Times after decades of fidelity and embark upon a reckless fling with The Guardian. It hasn’t turned out to be as ecstatic as I had expected. Yes, there is more serious news and comment, but it comes at a price. The price is a relentless pessimism and negativity that infects the entire newspaper. Britain and the world, as presented by The Guardian, constitute a living hell. To anyone contemplating a similar migration, may I suggest that a prescription for Prozac should accompany your subscription.   Continue reading

Tomorrow never knows

From the start of the American Civil War until just before it ended, there was no doubt amongst informed opinion in Britain as to how it would end. “I suppose,” the Foreign Secretary, Earl Russell, wrote to the British Ambassador in Washington, “that the break-up of the Union is now inevitable.” The Chancellor of the Exchequer, William Gladstone, agreed. It was all but impossible, he said, that the North could win.   Continue reading

An end to liberalism

Recently, The Economist celebrated its 175th birthday. As it reminded its readers, “in September 1843 James Wilson, a hatmaker from Scotland, founded this newspaper. His purpose was simple: to champion free trade, free markets and limited government. They were the central principles of a new political philosophy to which Wilson adhered and to which The Economist has been committed ever since. That cause was liberalism.”   Continue reading

The free market and fairness

The second crisis of capitalism (part 5)

Do we support a free market?
The answer is clearly “maybe”.
We’ve nothing against the free market,
just as long as it doesn’t stay free.

That is from a poem I wrote in about 1990, satirising Labour Party policy. Neil Kinnock was trying to walk a precarious tightrope between traditional socialist policies and the new economic (and electoral) realities of the time. Now I look at the lines again, I am disconcerted to find that – far from satire – they come quite close to saying what I now believe.   Continue reading

The rich and the super-rich

The second crisis of capitalism (part 3)

In last week’s blog, I summarised research published by Thomas Piketty that showed how economic growth was increasingly being diverted into the pockets of the very rich. The result is that inequalities in wealth are now at a level, throughout the Western world, approaching those obtaining at the start of the First World War. Piketty has shown how, even at an average rate of return on investment and with taxes paid, the growth in the wealth of the wealthy will, year by year, outstrip the growth in the wealth of everyone else.   Continue reading