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 Canal, however, is that its competition has brought down railway rates.

Fundamental alterations have been made in the structure of the leading cotton markets, and in methods of buying and selling cotton, in the last hundred years. We shall not attempt to trace the changes as they appeared in every market of importance, but shall confine our attention to one only, and that perhaps the most important of all, namely, the market at Liverpool. This selection of one market for detailed examination does not rob our sketch of generality, as might at first be thought, since broadly the history of the development of one market is the history of the development of all, and on the whole the economic explanation of the evolution that has taken place may be universalized.

Cotton landed at the Port of Manchester since the Canal was opened. (In thousand Bales.) The season is from the 1st of September to the 31st of August each year.

Originally cotton was imported by the Liverpool dealer as an agent for American firms or at his own risk, and then sold by private treaty, auction, or through brokers, to Manchester dealers, who retailed it to the spinners. This statement is, of course, only roughly correct. Some Manchester dealers imported themselves, and some spinners bought direct from Liverpool importers, but the rule was the arrangement first described. Early in the 19th century it became customary for Manchester dealers and Liverpool importers to carry on business with one another through representatives known as “buying” and “selling” brokers. About this time the broker of cotton only began to specialize from the ranks of the brokers who dealt in all kinds of colonial produce. Previously there had not been enough business done in cotton to make it worth any person’s while to devote himself to the buying and selling on commission of cotton only. The evolution of the distinct business of cotton broking is readily comprehensible when we remind ourselves that the requirements, as regards raw material, of all spinners are much alike generally, and that no spinner could afford to pay an expert to devote himself entirely to purchasing cotton for his mill.

So far change had been gradual, but the success of the Manchester and Liverpool railway undermined beyond repair the old system of doing business. Spinners could easily run over to Liverpool and buy their cotton from the large stocks displayed at that port. Before the railway was opened some spinners had been in the habit of making their purchases of raw material in Liverpool, but the great inconveniences of the journey, combined with less easy terms for payment than were usual in Manchester, prevented any great numbers from departing from the beaten track. Cotton dealers up to this time had regularly financed the spinners, who were frequently men of little capital, by allowing long credit, and had even employed them to spin on commission. As men of substance increased among the ranks of the spinners, the Manchester cotton dealers found it impossible to retard a movement set on foot by the prospects of such appreciable advantages. Ultimately many of the old Manchester cotton dealers became brokers for their old customers. In 1875 there were said to be upwards of 100 cotton dealers in Manchester, but from that time onward their members steadily declined. It is interesting to observe that a later development of transport between Manchester and Liverpool, namely, the Manchester Ship Canal, has drawn back into Manchester a part of the cotton market which was attracted from Manchester into Liverpool by the famous improvement in transport opened to the public three-quarters of a century ago.

The centralization of the cotton market in Liverpool fixed firmly the system of buying through brokers, for the Liverpool importer, or his broker, was in no sense a professional adviser to the spinners, informally pledged to advance the latter’s interests, as the old Manchester dealers had been. The system was rendered comparatively inexpensive by the drop in commissions from 1 to ½ % which had followed the adoption of selling by sample. This custom of buying and selling through brokers continued unshaken until the laying of the Atlantic cable tempted selling brokers occasionally, and even some buying brokers, to buy direct from American factors by telegraph and thus transform themselves into quasi-importers. The temptation was made the more difficult to resist by the development of “future” dealings. When the agents of the spinners, that is, the buying brokers, by becoming principals in some transactions, had acquired interests diametrically opposed to those of their customers, the consequent feeling of distrust among spinners gave birth to the Cotton Buying Company, which, constituted originally of twenty to thirty limited cotton-spinning companies, represents to-day nearly 6,000,000 spindles distributed among nearly one hundred firms. Its object was to squeeze out some middlemen and economize for its members on brokerage. This company, it is said, helped to attract the brokers back to the spinners, and an informal understanding was arrived at that the buying broker should not figure both as agent and principal in the same transaction.