Commercial Organisation and Markets

Abstract

ALL the raw material used in the cotton industry was imported, and an organisation had to be evolved to supply the manufacturers with increasing quantities of raw cotton (or cotton wool, as it was generally known). From the early 1780s merchants and manufacturers recognised that further growth depended on increased supplies of cotton at low prices, particularly the finer qualities, and they were not slow to press their views with the Board of Trade and the planters. However, projects to increase the cotton crop in the West Indies (especially the Bahamas) and introduce the commodity into Sierra Leone met with only a limited response. The East India Company was reluctant to export the finer Indian staples as it was anxious to maintain its trade in Indian muslins, which depended on a restricted supply. The most encouraging response at first came from Brazil, where the crop was encouraged by the Portuguese government, but this source was quickly superseded in the 1790s by the rapid expansion of cotton in the southern plantations of the recently established United States of America. In the early 1790s the profits on the cotton crop were high, and quickly displaced other cash crops, such as rice, indigo and tobacco. The supply of land seemed almost unlimited, particularly after the Louisiana purchase of 1801, and the United States cotton crop rose from 2 million lb in 1791 to 182 million lb in 1821, becoming the major source of Lancashire’s supply at the turn of the century. The high elasticity of supply of cotton, due primarily to the responsiveness of the American planters and the adoption of Whitney’s cotton gin, was clearly a crucial factor in the phenomenal growth of the British cotton industry in these years [52: Ch. 5].