Provided below is the first chapter of my book, Trading With the Enemy, which is about intersectional commerce between the North and South during the Civil War The version below excludes the documenting footnotes that are available in book which you can buy here.
The World Cotton Economy
Trading with the enemy would have been immaterial during the Civil War but for the significance of cotton.
Although the South was desperate for supplies of all kinds, the North had no reason to provide them if the South had nothing of value to trade. While the South’s ‘King Cotton Diplomacy’ failed to create enough anxiety in Europe about a war-induced cotton shortage to prompt Great Britain and France to intervene on the side of the Confederacy, the resultant intersectional trade between North and South demonstrated that cotton was no puppet monarch. The Northern states, and the industrialized economies of Europe, were more dependent on the staple than is commonly realized today. The profits were so extraordinarily tempting that efforts to block such trade were hopeless. Historian Lauriston Bullard wrote, “Massachusetts depended almost as much on cotton as did South Carolina and Mississippi.” Charles Francis Adams Jr., who was the son of Lincoln’s minister to Great Britain and grandson and great-grandson of two American presidents, said, “Boston . . . became . . . a proslavery community, and it remained so until 1861.”
King Cotton was not the impotent power it is often ridiculed to be by twenty-first century observers. Ward Hill Lamon, who was one of Lincoln’s legal partners for five years before the war and his personal bodyguard during the presidency, explained why Southern secession was such a frightening threat to Northerners:
[Cotton] formed the bulk of our exchanges with Europe; paid our foreign indebtedness; maintained a great marine; built towns, cities, and railways; enriched factors, brokers, and bankers; filled the federal treasury to overflowing, and made the foremost nations of the world commercially our tributaries and politically our dependents. A short crop embarrassed and distressed all Western Europe; a total failure, a war, or non-intercourse, would reduce whole communities to famine, and probably precipitate them into revolution.
Presently it is easy to take the abundance of cotton clothing for granted. However, in the eighteenth century, cotton was more expensive than wool, linen, or silk. Before mechanization of the cotton textile industry, it took up to fourteen man-days to create one pound of thread, compared to six man-days for silk and two-man days for wool. Like modern semiconductors, from 1784 to the start of the Civil War in 1861, the price of cotton dropped 90 percent owing largely to technological advances in the production process. In response, cotton fabrics rapidly gained market share. In Europe during the century from 1783 to 1883, the fabric rose from a 6 percent share to nearly an 80 percent share, while wool dropped from about 80 percent to 20 percent.
The steadily declining cost created an almost insatiable demand for more cotton. It became known as a cash crop because it was nearly imperishable and could be inventoried indefinitely. It was practically a substitute for gold in international settlements between the United States and Europe. Financiers could extend credit on cotton inventories because it was fungible. In the sixty years from 1801 to 1861, shipping tonnage at Liverpool increased tenfold, from 500,000 to 5 million, translating to a 4 percent growth rate compounded annually. Consequently, cotton textiles became Great Britain’s single largest industry at the start of the American Civil War, with about 20 to 25 percent of its population dependent on the sector. Continue reading