The first recorded cotton dealing in Liverpool was a newspaper advertisement for an auction of 28 bags of Jamaican cotton in 1759. Over the next seven decades a series of technological and industrial developments revolutionised cotton production. Liverpool enjoyed a physical proximity to the world centre of the industry – the Lancashire cotton towns. It also had well established trading links with the new powerhouse of raw cotton – the USA. As imports soared to the million-bale mark, Liverpool overtook London as the country’s leading cotton importer.
3 June 1757
The first recorded transaction of cotton dealing in Liverpool in the press appears
The full advertisement in the “Liverpool Chronicle and Marine Gazetter" ran as follows: "To be sold by auction at the Merchants' Coffee House, on Thursday 16th inst., at one o'clock precisely, 28 bags Jamaica cotton in four lots, samples to be seen with R. Robinson, broker." This was not, however, the first cotton to arrive in Liverpool. Small parcels of cotton had been arriving at the port for almost 50 years, albeit amongst mixed cargoes of various other goods, including sugar, tobacco, ivory, coffee and rum. The Richard Robinson mentioned above, like all of the people who dealt in cotton in this early period, was a general broker rather than a cotton specialist.
James Hargreaves invents the Spinning Jenny.
Even after John Kay patented his Flying Shuttle in 1733, cotton production could not keep up with the demand for it. Hargreaves revolutionised this process with his Spinning Jenny, which reduced the amount of time required to produce yarn by enabling the worker to spin eight spindles at a time. As the technology improved, this figure would rise to as high as 120.
Richard Arkwright patents the Water-Frame
Arkwright's interest in the spinning and carding machinery, which turned raw cotton into thread, led to his Water-Frame. It produced a strong twist using wooden and metal cylinders, rather than human hands, whilst drawing out a carding or roving. This development meant that it was now possible to use inexpensive yarns to manufacture similarly inexpensive cheap calicoes, which was the basis for the great expansion of the cotton industry.
Joshua Holt becomes the first Liverpool Cotton Broker
The first people who engaged in brokering in cotton in Liverpool could not, strictly speaking, be called cotton brokers, as they dealt in various commodities and were general brokers. Holt began his working life a stay-maker (or corset-maker as it later became known) in Moor Street and had built up a sound knowledge of the West Indian cotton, which was being imported to Liverpool in increasing quantities. This cotton was becoming more popular with the dealers in Manchester and a number of them, recognising Joshua Holt’s abilities to judge the quality of the cotton, commissioned him to examine it as it came into the port and buy whatever he thought was of suitable quality. For this service, as the city’s first buying broker, he was paid 1% commission. It was a sign of things to come: in future it would be commonplace for dealers in Manchester and Lancashire, reluctant to face the then-arduous journey to Liverpool by coach, to commission a broker in Liverpool to purchase cotton on their behalf.
Samuel Crompton invents the Spinning Mule
Spinning MuleSo-called because it was hybrid of hargreaves' Spinning Jenny and Awkwright's Water-Frame, the Mule combined the best parts of both - with 48 spindles which could produce one pound of 60s thread every day. It resulted in strong, thin yarn, which was suitable for every kind of textile.
James Watt and Matthew Boulton perfect their steam engine for use in factories
These machines, although a little slow to take off in the cotton industry (Manchester did not get one until 1879, for example), were eventually installed in increasing numbers. It would prove to be a revolutionary development. No longer would the availability of water be a crucial factor in the establishment of new mills, which could now be built anywhere where there was a plentiful supply of labour and could be installed with machinery that was all made of metal. Steam engines provided unrivalled power which was cheap to operate in Lancashire, where there were abundant coal supplies just waiting to be mined.
A Good year for the cotton industry
This was the year that Richard Arkwright’s patents came into the public domain, making it cheaper to build and modify the Spinning-Jenny; the first Power Loom, designed by Edmund Cartwright, was built; Claude Berthollet discovered how to apply chlorine to the bleaching process, which James Watt further developed a year later, thus reducing the bleaching time to a matter of days; the first steam engine was installed inside a cotton mill, in Nottinghamshire; and regular shipments of cotton from the United States to Liverpool started. By this time, Joshua Holt was no longer the sole cotton broker in Liverpool, as cotton was becoming an increasingly valuable commodity.
The first monthly "Prices Current" sheet is issued by Ewart and Ruston
At this stage, the prices of cotton were presented alongside those for a variety of other goods imported into Liverpool at the time. Cotton was not as yet important enough to warrant its own statistical information sheet, but it was significant enough to be recorded as one of the major imports into the port of Liverpool.
Eli Whitney invents the Cotton Gin
This was a mechanical device that mechanised the process of removing seeds from the cotton crop, which previously had been extremely labour intensive. It revolutionised cotton production in the USA. To give an illustration, in 1793, cotton imports from the US to Britain were 487,600 pounds; one year later, that figure rose to 1,601,700 pounds; and by 1800 it was 17,789,803 pounds. Whitney's Cotton Gin was instrumental in Liverpool's development as one of the world's greatest cotton markets. For more about Eli Whitney, click here (this link has kindly been sent to us from the Charlotte Library History Club in Tennessee).
Liverpool overtakes London as the leading British cotton importer
Liverpool had actually overtaken London in the period 1790-1792, but London regained its primacy in 1793 and held it in 1794. When Liverpool took the lead again in 1795, however, it did so permanently. It was the emergence of the USA as the major cotton exporter that helped Liverpool cement its ascendancy. Liverpool's transatlantic trade was the basis of its international commerce and it had already established trading connections with South Carolina and Georgia, which were both important cotton regions at this time. The Napoleonic Wars saw both the curtailment of London's trade as a re-exporter to mainland Europe and the emergence of American cotton supplies to Liverpool as a crucial import. With more cotton came more brokers and more work for the existing firms in Liverpool.
Imports of American cotton exceed those from the West Indies for the first time
From this point onwards, the short staple American Uplands cotton would dominate cotton imported into Britain. In 1810, 246,759 bales of American cotton were imported out of 561,173 in total (just under 44%); and in 1825, the total was 646,776 out of 894,063, or just over 72% of the total cotton imports. This served to strengthen Liverpool's advantage as the country's premier cotton importer.
The first Weekly Circular of cotton prices is published by Ewart and Ruston
With the growing importance of the rapidly-expanding cotton market came an equally expanding need for facts relating to prices, supplies, movement and demand for cotton. Brokers needed this information in order to conduct their business properly. There was a fashion for brokers to write “circular letters” to their clients, with information on prices paid, the quantities involved, and shipping news. As these circular letters became increasingly popular, Ewart and Ruston saw that there would be a demand for a more comprehensive and systematic collection of such data. Their weekly reports published details of sales, imports, prices and other related information. Very soon, all of Liverpool's leading brokers issued similar weekly or monthly circulars. The next development saw firms joining together to pool sources of information, culminating in a “General Circular” involving almost the whole cotton market with an extensive record of prices, sales, imports and stocks.
7 March 1808
Traders move from the top of Castle Street to Exchange Flags
"Monday the 7th March, of that year, was a day of much importance in the commercial annals of Liverpool, as on that day the merchants abandoned their usual place of meeting, at the upper end of Castle St, and assembled for the first time in the grand area of the New Exchange. No place in the world affords so elegant and commodious a situation as this for the purposes of a public exchange, and we have often been surprised to hear it observed that it would be difficult to bring the merchants to abandon their old situation to which they were so much attached by the strong ties of habit and early prepossession. In opposition to this common opinion, we are happy to observe that the transference was absolutely perfect the first day, not a single person being found loitering about his old haunts during the whole 'Change hours." No doubt to the relief of local shopkeepers around the Castle Steet area, under whose awnings the brokers would do business when it rained. In January 1809 the Commercial Room was opened in the New Exchange. This was afterwards renamed the News Room.
Robert Gill proposes buying cotton from sample
By this time, many inland cotton buyers, faced with the prospect of long journeys to Liverpool to inspect the ever-increasing quantities of cotton that were being imported, increasingly placed decisions to purchase cotton in the hands of brokers in Liverpool. These brokers built up an extensive knowledge of all the different varieties of cotton and were good judges of its quality. They provided a very useful service to the dealers, especially in relation to cotton from the West Indies and Brazil, whose qualities varied hugely in the amount of dirt in the lint and the length and strength of the fibres.
The arrival of cotton from America brought with it a great change. American short staple cotton was much more even-running than other varieties and the planters were quick to adopt very careful pre-shipment selection. Robert Gill suggested that the time-consuming process of inspecting cotton in bulk could be replaced by buying from samples shown on a counter. Although there was initial opposition, it was soon realized that this was a viable proposition. The brokers could do their work much more quickly, and even though they reduced their commission rate from 1% to 0.5% (which pleased the dealers), they still had more than enough work as a consequence of the increasing imports. It further cemented Liverpool brokers’ position in the cotton market.
Egyptian long staple cotton is imported into Liverpool for the first time
This cotton was of a quality that had not been seen in any quantity before, being only slightly shorter in the length of its fibres than the supplies of the best Sea Island cotton, which tended to be of limited supply. This cotton met with a very favourable reception in the spinning towns of Lancashire and it started a highly specialised trade spinning very silky brown yarns of very fine counts.