VOLUME VII SLICE V Cosway to Coucy (continued 3)

Some spinners cover their yarn contracts merely by buying “futures,” but the cover thus provided is frequently most inadequate owing to variations in the “points on or off” for the particular cotton that they want. For example, after the size of 1904-1905 crops became known, and the Americans attempted to hold back cotton, the “points on” for many qualities rose considerably owing to artificial scarcity, though the price of cotton, as indicated by “spot,” remained low. There is a tendency for cautious spinners in England to run no risks and fix the prices of their yarn in accordance with quotations for actual cotton of specified qualities made by their brokers.

We now return to exchange “future” transactions regarded as a genus. In addition to “futures” proper there are “options” and “straddles.” Options are single (“puts” or “calls”) or double (that “Options” and “straddles.” is, alternative “puts” or “calls”). The “put” is a right to sell cotton within some specified time in the future at a price fixed in the present, which need not, of course, be exercised. The “call” is similar, but relates to buying. It will be evident that the “put” is a hedge against prices falling, and the “call” a hedge against their rising. The basis of “options” is the same as that of ordinary “futures,” i.e. middling American cotton of “no staple,” &c. Whether the purchaser of an option gains or loses depends upon the price that he has paid in relation to the gain, if any, that he makes out of his power. The price of options of course varies: that of double options is always highest, but they are little used. A “straddle” is a speculation on the difference between the prices of nearer and more distant futures, which varies from time to time, or on the difference between the prices of different kinds of cotton. An example will make the nature of the straddle clear. Suppose a dealer buys April-May “futures” at 4d. a ℔ and sells the same quantity of May-June “futures” at 410⁄64d. a ℔. Then, whether prices rise or fall as a whole, he gains if the difference between the two prices becomes less than 10⁄64d., but if it becomes more, he loses. On the other hand, had the dealer bought May-June at 410⁄64d. and sold April-May at 4d. he would have gained in the event of the difference increasing, and lost in the event of its decreasing.

A question which has met with a good deal of attention is whether the speculation, which has been encouraged by the various arrangements made for facilitating operations in “futures,” has steadied or unsteadied prices. Measures of steadiness in prices. Before we are prepared to answer this question we must be furnished with a precise conception of what is meant by “steadiness” in prices. It is sometimes assumed that this is measured perfectly by the standard deviation,6 which is obtained by taking the squares of the differences between the average and the individual prices, summing them and extracting the square root. But obviously the information given by the standard deviation is limited: the frequency of movement cannot be inferred from it; two series might have quite different average oscillations and yet the same standard deviation; and the range of movement, or spread of the variations from the average price (though allowed for in the standard deviation more than in the average error), is hidden. Now frequency of movement, average daily price variation, and range of price movements are matters of fundamental importance to the public. Hence for practical purposes we require several kinds of measurement of price movements, and it is impossible to weigh exactly the one against the other in respect of importance. Observe that an increase of the frequency of movement, or even of the average daily movement, is not necessarily objectionable, since changes are less harassing when they take place by small increments than when they are brought about by a few big variations. The difference between the highest and lowest price, we may observe, is a very imperfect indication of the range of movement (though, taken in conjunction with the standard deviation, it is the best at our disposal), because either of the extreme prices might be accidental and quite out of relation to all others. An investigator must be on his guard against using quotations of this kind. There is also a difficulty about the frequency of movement, because as a rule many movements take place in one day the total over a period sufficiently lengthy to yield general results is enormous, and many are unrecorded. In one day, for instance, when the net drop was 33 points and the range of variation 59 points (namely, 8.45 to 7.86), 150 price fluctuations were recorded. However, the count of frequency of movement from daily closing prices would probably afford a roughly satisfactory comparative measurement in markets in which prices sometimes remain the same for a day or two together. The points just noted apply also to the average fluctuation and the standard deviation, but it is probable in these cases that daily or even weekly quotations would be sufficient to yield the information sought for with sufficient exactness for purposes of comparison.

Now, supposing dealing to be confined to experts, what effects upon the course of prices would one expect from the specialism of the cotton market and improved facilities for dealing, on the assumption that dealers were Effect of speculation on steadiness of prices. governed wholly in their actions by the course of prices and never tried to manipulate them? The frequency of movement ought to increase because the market would become more sensitive, but, other things being equal, the range of movement ought to diminish, and ultimately the average daily movement also, though at first the latter might not fall appreciably if, indeed, it did not rise, owing to the increased frequency of movement. These results would prove beneficial to the community. May we infer deductively that they have been attained because of the increase of speculative transactions? By no means, and for two reasons. In the first place, the public speculates to a large extent on the cotton exchange, and its speculation (taken as a whole) is sheer gambling. But, it may be replied, the outsiders, being as a whole completely ignorant of the forces at work, so that they cannot form rational anticipations, cannot have any effect either way: by the law of chance their influences would neutralize one another. This would be so if people acted independently and without guidance, but actually they are sometimes misled by published advice and movements in the market intended to deceive them, and, even when they are not, they watch each other’s attitudes and tend to act as a crowd. The mass becomes unduly sanguine or weakly surrenders to panic. Hence the law of error does not apply, and speculation by the public may unsteady prices. Again, dealers sometimes try to create corners and form powerful syndicates for that purpose: the dealing syndicate of late years has become a force to be reckoned with. Many large-scale operations are entered into, not because prices are relatively high or low, but to make them high or low for ulterior purposes; i.e. the market is deliberately “bulled or beared.” In consequence of this tampering with the market no certainty can be felt about the effect even of expert dealing.

What, then, we may profitably inquire next, has actually happened to price movements generally as the market has developed? This question can readily be answered as regards the past forty years or so, for which material Movement of prices. has been collected, but the reader must bear in mind that if improvement can be traced it cannot logically be attributed unhesitatingly to the perfecting of the machinery of speculation, whereby a larger use has been made of “futures,” since many other economic changes have taken place concomitantly and they may have wrought the major effect. The world may be steadying and steeling its nerves. Now, turning to the actual effects, we discover somewhat remarkable facts. Expressed both absolutely and as percentages of the price averaged from the 1st of October to the 31st of July, the range of movement, standard deviation, and mean weekly movement calculated between the times mentioned above (October 1st to July 31st), after diminishing significantly for some years after the later ’sixties, have risen appreciably on the whole of late years. The figures in the table below are from the Journal of the Royal Statistical Society, June 1906: quotations for August and September were omitted to avoid the transition movements between the price levels of two crops.

In this table measurements of price movements stated both absolutely and as percentages of price levels are given, because authorities have expressed doubts as to whether the former or the latter might be expected to remain constant, other things being equal, when price rose. On the one hand, it is argued that speculators are affected only by the absolute variations in price, while on the other hand it is contended that a movement of one “point,” say, is less influential when the price is about 8d. than when it is about 4d. In response to the first view it might be argued that if speculators are influenced only by the differences for which they become liable, a “point” movement would have a somewhat slighter effect on their action, other things being equal, when price was high, because, supplies being relatively short, each of them would tend to be engaged in a smaller volume of transactions measured in quantity of cotton, than when supplies were larger. But the point need not be discussed further here, since both percentage and absolute indices of unsteadiness have risen of late years. The explanation of this change in the direction of indices of steadiness cannot be proved to consist in any peculiarity in the supplies of recent years. But the dealing syndicate has probably been of late more common and more powerful—that is, the syndicate which exists to make profits out of manipulating the market—and the public has probably been speculating increasingly. It is plausible, then, to suppose that the dealing syndicate primarily, and the speculations of the public secondarily (secondarily, because in all likelihood the effect of its operation would be much less in magnitude), may account for the change.

Table calculated from Weekly Prices between the 1st of October and the 31st of July in each Year.

Expressed as Percentage of Average (1 Oct. to 31 July) Weekly Prices.

Year. Average Price. Lowest Price. Highest Price. Range of Movement. Standard Deviation. Mean Weekly Movement. Range of Movement. Standard Deviation. Mean Weekly Movement.

d. d. d. d. d. d. d. d. d.

1867-1868 95⁄8 73⁄8 127⁄8 5½ 1.74 0.31 57.1 18.1 3.22

1868-1869 11½ 10½ 125⁄8 21⁄8 0.58 0.19 18.5 5.0 1.65

1869-1870 111⁄8 7¾ 123⁄8 45⁄8 0.92 0.23 41.6 8.3 2.07

1870-1871 81⁄8 73⁄16 93⁄16 2 0.65 0.17 24.6 8.0 2.09

1871-1872 107⁄8 93⁄8 11½ 21⁄8 0.75 0.15 19.5 6.9 1.38

1872-1873 9¾ 8¾ 105⁄16 19⁄16 0.53 0.10 16.9 5.7 1.08

1873-1874 85⁄16 7¾ 91⁄8 13⁄8 0.32 0.10 16.5 3.9 1.20

1874-1875 711⁄16 615⁄16 8 11⁄16 0.26 0.07 13.8 3.4 0.89

1875-1876 6½ 57⁄8 71⁄8 1¼ 0.37 0.08 19.2 5.7 1.23

1876-1877 65⁄16 57⁄8 7 11⁄8 0.33 0.11 17.8 5.2 1.74

1877-1878 6¾ 57⁄8 69⁄16 111⁄16 0.21 0.07 11.0 3.4 1.12

1878-1879 6 415⁄16 73⁄28 2¼ 0.67 0.13 37.5 11.2 2.17

1879-1880 7 610⁄16 73⁄8 1¾ 0.24 0.12 10.7 3.4 1.71

1880-1881 65⁄16 5¾ 613⁄16 11⁄16 0.34 0.08 16.8 5.4 1.27

1881-1882 65⁄8 63⁄8 71⁄16 11⁄16 0.15 0.07 10.4 2.3 1.06

1882-1883 513⁄16 57⁄16 65⁄8 13⁄16 0.31 0.07 20.4 5.3 1.20

1883-1884 61⁄16 5¾ 67⁄16 11⁄16 0.20 0.08 11.3 3.3 1.32

1884-1885 513⁄16 57⁄16 61⁄8 11⁄16 0.19 0.07 11.8 3.3 1.20

1885-1886 51⁄8 4¾ 58⁄16 ¾ 0.18 0.07 14.5 3.5 1.35

1886-1887 57⁄16 51⁄8 6 7⁄8 0.28 0.05 16.1 5.2 0.92

1887-1888 5½ 53⁄16 511⁄16 ½ 0.14 0.05 9.1 2.5 0.91

1888-1889 5¾ 55⁄16 63⁄16 7⁄8 0.23 0.06 15.0 4.0 1.04

1889-1890 61⁄8 59⁄16 611⁄16 1⁄8 0.34 0.08 18.4 5.5 1.31

1890-1891 5 43⁄8 5¾ 13⁄8 0.36 0.06 27.5 7.2 1.20

1891-1892 41⁄8 36⁄16 415⁄16 13⁄8 0.36 0.07 33.3 8.7 1.70

1892-1893 4¾ 41⁄8 515⁄16 13⁄16 0.37 0.09 25.0 7.8 1.89

1893-1894 4¼ 329⁄32 411⁄16 25⁄32 0.22 0.04 18.4 5.2 0.94

1894-1895 33⁄8 231⁄32 37⁄8 9⁄32 0.30 0.06 26.9 8.9 1.79

1895-1896 43⁄8 3¾ 427⁄32 3⁄32 0.28 0.07 25.0 6.4 1.60

1896-1897 43⁄16 325⁄32 411⁄16 29⁄32 0.22 0.07 21.6 5.2 1.67

1897-1898 313⁄32 33⁄16 313⁄16 5⁄8 0.18 0.05 18.5 5.3 1.47

1898-1899 39⁄32 3 315⁄32 15⁄32 0.15 0.04 14.3 4.6 1.22

1899-1900 415⁄16 329⁄32 61⁄16 25⁄32 0.63 0.12 43.6 12.8 2.48

1900-1901 51⁄8 45⁄16 6½ 23⁄16 0.53 0.13 42.7 10.3 2.54

1901-1902 4¾ 49⁄32 511⁄32 11⁄16 0.24 0.09 22.4 5.0 1.89

1902-1903 5.35 4.42 7.12 2.70 0.78 0.13 50.5 14.6 2.43

1903-1904 7.04 5.78 8.92 3.14 0.91 0.33 44.4 12.9 4.83

1904-1905 4.86 3.63 6.01 2.38 0.71 0.15 48.9 14.6 3.09

“Futures” are not used in all markets—for instance, they are not to be found at Bremen; and in those in which they are used they play parts of different prominence—at Havre, for instance, the transactions in “futures” are of Price movements in different markets. incomparably less relative importance than they are at Liverpool. But it is futile to seek the effect of much dealing in “futures” in the differences between price movements in the various markets, because (1) demand expresses itself in different ways—in Germany, for example, spinners buy to hold large stocks—and (2) the markets are in telegraphic communication, so that their price movements are kept parallel. Mr Hooker has shown with reference to the wheat market how close is the correlation between prices in different places,7 and the same has been observed of the cotton market, though the correlations have not been worked out.8 It is worthy of note that Liverpool “futures” are largely used for hedging by continental cotton dealers.

Spot Jan.- Feb. Feb.- Mar. Mar.- Apr. Apr.- May. May- Jun. June- July July- Aug. Aug.- Sep. Sep.- Oct. Oct.- Nov. Nov.- Dec. Dec.- Jan.

Nov. 18th, 1895 4.34 27 28 28½ 29½ 31 32 3 · · · · · · 27 27

Jan. 18th, 1899 3.8 6½ 6½ 7½ 8½ 9½ 10½ 1½ 12 12½ · · · · 6½

Sept. 14th, 1899 3.36 24½ 25 25½ 26 27 · · · · 30 28 26½ 25 24½

Conceivably some indication of the working of “futures” might be gleaned from observation of the relations of near and distant “futures” to one another and of both to “spot.” The complete explanation of changes in Differences between the prices of near and distant “futures.” these relations is still a mystery.9 Probably an infinitude of subtle influences came into play, and among these there seems reason to include the intentional and unintentional “bulling” or “bearing” of the market. Some examples of the diverse relations to be found, even when all the “futures” fall in the same crop year, may be quoted here—quotations running into the new crop year are obviously affected by anticipations of the new crop.

As we pass from the “future” of the month in which the quotation is made to the most distant “future” it will be observed that in the first and second cases price rises continuously, in the second case even passing “spot,” whereas in the third case it falls first and then rises. Instances might be given of its falling unintermittently. It seems a plausible conjecture that if “futures” were “bulling” the market in the first case, they were at least “bulling” it less in the second case ceteris paribus, and probably “bearing” it in the last case. A closer examination will reveal further that the magnitude of these gaps varies a great deal; and if the “futures” do “bear” and “bull,” as has been supposed, they probably influence these magnitudes. It might be thought that the “futures” of different months, being substitutes in proportion to their temporal proximity to one another, should vary together exactly; but it would seem to be a sufficient reply that as they are not perfect substitutes they are in some slight degree independent variables. The “spot” market might be judged generally as too high, in view of crops and the probable normal demand of the year, but it might not therefore drop immediately, owing partly to the pressure of demand that must be satisfied instantaneously. “Current futures” would be affected more than “spot” by this impression as to the relation of “spot” to a conceived normal price for the year, and they might therefore be expected to drop more than “spot” when this impression was at all widely entertained. But the fall of “current futures” would be checked by the demands that must be satisfied in the near future. Probably the prices of the more distant “futures” are determined in a higher degree by far-reaching imagination than the prices of nearer futures. This explains what has been called above the unintentional “bearing” of “spot” by “futures.” And it is immediately evident that the deliberate “bear” works by selling “futures,” and that the effect of his sales is propagated to “spot.” These statements are equally true of “bulling.” The influence of expectations of the new crop on “futures” running into the new crop is plain on inspection; but owing to the gap between the two crop years it would be astonishing if “futures” against which cotton from a new crop could be delivered were not appreciably independent of “spot” at the time of their quotation. However, it is noticeable that they are still so closely bound up with “futures” culminating in the old crop year that the daily movements of the former are closely correlated with those of the latter. Concluding cautiously, we may admit the probability of the relations between near and distant “futures” and “spot” (even in respect of “futures” running out in the same crop year) indicating sometimes at least the intentional or unintentional “bulling” or “bearing” or “spot” by “futures.” But nothing has yet been proved from these facts as to the effect “futures” are having upon the steadiness of prices. In the case of any crop year, if the relations which are suggested as indicating the “bulling” work of “futures” usually corresponded with “spot” prices being below the normal price of the crop year, or of what was left of the crop year, while the relations which are suggested to indicate the “bearing” work of “futures” on the whole corresponded with a relatively abnormal height of “spot,” it would be a legitimate inference that “futures” were tending to smooth prices. However, it is made clear as the result of an elaborate examination that the generality of these correspondences cannot be affirmed.10 The outcome of the whole matter is that the investigator is still baffled in his attempt to discover what effect the use of “futures” is having upon prices to-day. The sole piece of evidence, from which probable conclusions may be drawn, is that three separate measurements of price fluctuations over some forty years reveal a growing unsteadiness of late, whether they be expressed absolutely or as percentages of price.

The uneasiness caused by the excessive dependence of Great Britain upon the United States for cotton, coupled with the belief that shortages of supply are more frequent than they ought to be, and the fear that diminishing returns Recent attempts to open up new cotton-fields. may operate in America, occasioned the formation in England of the British Cotton Growing Association on the 12th of June 1902. The proportions of England’s supplies drawn from different fields is indicated in the table below.

British dependence on American supplies is greater even than that of the continent of Europe, for Russia possesses some internal supplies, and more Indian cotton is used in continental countries than in England.

Average Quantities of Raw Cotton imported Annually into the United Kingdom from the following Countries in the Periods 1896-1900 and 1901-1904.

Country. 1896-1900. Million ℔. 1901-1904. Million ℔.

United States 1436 1424

Brazil 13.8 31.5

Peru 8.5 8.6

Chile (including the Pacific coast of Patagonia) .8 2.2

Venezuela and Republic of Colombia .5 .5

British West Indies and British Guiana .3 .6

Turkey (European and Asiatic) .5 1.1

Egypt 295.7 314.4

British possessions in the East Indies 40.7 61.9

Australasia .035 .041

All other countries 2.3 3.8

Total 1800 1849

Re-exported 223 260

The annual average shipments from Bombay to the European continent and to Great Britain in 1900-1904 were as follows:—

To the continent 600 bales of 3½ cwt.

To Great Britain 50 bales of 3½ cwt.

At the end of the 18th century the bulk of British cotton was obtained from the West Indies. Approximately the supplies were as follows in million ℔:—

British West Indies 6.6

French and Spanish settlements 6

Dutch settlements 1.7

Portuguese ” 2.5

East Indies ” .1

Smyrna or Turkey 5.7

The British Cotton Growing Association works under the sanction of a royal charter and has met with valuable official support. Financial assistance and assurances as to sales and prices have been given liberally by the association where they are needed; ginning and buying centres have been established; experts have been engaged to distribute seed and afford instruction; and some land has been acquired for working under the direct management of the association. The governments of some colonies have aided the efforts of the association. Professor Wyndham Dunstan of the Imperial Institute, on a reference from the government, made favourable reports as to the possibilities of extending cotton cultivation. The results may be seen in the approximate estimates below of cotton grown more or less directly under the auspices of the association.

Bales of 400 ℔.

1903. 1904. 1905. 1906.

Gambia 50 100 300 · ·

Sierra Leone 50 100 200 250

Gold Coast 50 150 200 250

Lagos 500 2,000 3,200 6,300

Nigeria 100 200 650 1,200

—— —— —— ——

West Africa 750 2,550 4,550 8,000

West Indies 1,000 2,000 4,000 6,000

East Africa 150 850 2,000 3,500

Sind · · · · 500 2,000

Sundries · · 100 250 500

Total 1,900 5,500 11,300 20,000

Approximate value £29,000 £75,000 £150,000 £270,000

In the West Indies results are most favourable, both as regards quantity and quality of the crops. West Indian grown cotton has realized even higher prices than American grown Sea Island. In West Africa also prospects appear encouraging. In Sierra Leone little success has been met with, but on the Gold Coast some cotton better than middling American has been grown, and the association has concluded an agreement with the government for an extension of its work. In Lagos crops increased rapidly. The cotton is almost entirely grown by natives in small patches round their villages, and generally it has sold for about the same price as middling American, though some of it realized as much as 25 to 30 “points on.” The quality in greatest demand in England, it should be observed, is worth about ¼d. to ½d. per ℔. above middling American. In Southern Nigeria the association has met with only slight success; in Northern Nigeria, a working arrangement was entered into with the Niger Company, and a small ginning establishment was set to work in February 1906. In British Central Africa, the results on the whole have not been satisfactory. Though planters who confined their efforts to the lower lying grounds—of which there is a fairly large tract—succeeded, all the cotton planted on the highlands proved more or less a failure. In Uganda the association took no steps, but activity in cotton-growing is not unknown, and some good cotton is being produced. Arrangements were concluded with the British South Africa Company for the formation of a small syndicate for working in Rhodesia.

The general movement for the extension of cotton cultivation was welcomed by the International Congress of representatives of master cotton spinners and manufacturers’ associations at the meeting at Zurich in May 1904. It placed on record “its cordial appreciation of the efforts of those governments and institutions which have already supported cotton-growing in their respective colonies.” England is pre-eminent but not alone in the matter. Germany and France, and in a less degree Belgium, Portugal and Italy, have taken some steps. Russia, too, is developing her internal supplies.

The advantages that might accrue from the wider distribution of cotton-growing are mainly fourfold, (1) Greater elasticity of supply might be caused. It is probably easier to extend the area under cotton rapidly when crops are raised from many places in proximity to other crops than when the mass of the cotton is obtained from a few highly specialized districts. Possibly the advantages of specialism might be retained and yet the elasticity of supply be enhanced. (2) Greater stability of crops in proportion to area cultivated is hoped for. The eggs are now too much in one basket, and local disease, or bad weather, or some other misfortune, may diminish by serious percentages the supplies anticipated. Were there numerous important centres, the bad fortune of one would be more adequately offset by the good fortune of another. (3) Desirable variations in the raw material might conceivably eventuate from the introduction of cotton to spots in the globe where its growth was previously unknown or little regarded. The results of the enterprise of Mehemet Ali and Jumel in Egypt prove such an idea to be not altogether fanciful, and warn us also against hastily arguing that the plan is too artificial to succeed on a large scale. Without the active intervention of a strong body of interested parties it is sometimes unlikely that new industries will be undertaken even in places well suited for them. (4) Lastly, the countries to which cotton-growing is carried should gain in prosperity.

The general difficulties in the way of the British Cotton Growing Association are many and will be sufficiently evident. Lessons of value may be learnt from the fate of similar work undertaken by the Cotton Supply Association, The Cotton Supply Association. which was instituted in April 1857. According to its fifth report, it originated “in the prospective fears of a portion of the trade that some dire calamity must inevitably, sooner or later, overtake the cotton manufacture of Lancashire, whose vast superstructure had so long rested upon the treacherous foundation of restricted slave labour as the main source of supply for its raw material.”11 Its methods were stated to be: “To afford information to every country capable of producing cotton, both by the diffusion of printed directions for its cultivation, and sending competent teachers of cotton planting and cleaning, and by direct communication with Christian missionaries whose aid and co-operation it solicits; to supply, gratuitously, in the first instance, the best seeds to natives in every part of the world who are willing to receive them; to give prizes for the extended cultivation of cotton; and to lend gins and improved machines for cleaning and preparing cotton.” Though the association brought about an extension and improvement of the Indian crop, in which result it was enormously assisted by the high prices consequent upon the American Civil War, it sank after a few years into obscurity, and soon passed out of existence altogether, while the effects of its work dwindled finally into insignificance. Much the same had been the ultimate outcome of the spasmodic attempt of the British government to bring about the introduction of cotton to new districts, after it had been pressed to take some action a few years prior to the formation of the Cotton Supply Association. A Mr Clegg, who afterwards interested himself keenly in the activities of the Cotton Supply Association reported that in the course of a tour in 1855 through the Eastern countries bordering on the Mediterranean he had found none of the gins presented by the British government at work or workable.

Bibliography.—On the question of cotton supplies, as treated in this article, the reader may be referred to Brook’s Cotton, its Uses, &c.; Dabney’s Cotton Plant (Department of Agriculture of the United States); Foaden’s Cotton Culture in Egypt; Dunstan’s Report on Cotton Cultivation for the British government; Oppel’s Die Baumwolle; Leconte’s Le Coton; publications of the British Cotton Growing Association; Report of the Lancashire Commission on the possibility of extending cotton cultivation in the Southern States of North America; Watt’s Lancashire and the Cotton Famine; publications of the old Cotton Supply Association (many will be found in the Manchester public library in the volume marked “677 I. C. ii.”), including their weekly paper, The Cotton Supply Reporter; Hammond’s Cotton Culture and Trade. On methods of marketing to certain portions of the above must be added: Ellison’s Cotton Trade of Great Britain; Chapman’s Lancashire Cotton Industry (ch. vii.); articles by Chapman and Knoop in the Economic Journal (December, 1904) and the Journal of the Royal Statistical Society (April, 1906); Emery’s Speculation on Stock and Produce Exchanges of the United States (small portions of which relate to cotton). Many statistics will be found in the works mentioned, and these may be supplemented from the trade publications of different countries. Many valuable figures of cotton imports, &c., in early years will be found in Baines’ History of the Cotton Trade. Recent statistics bearing upon cotton are collected annually in the two publications, Shepperson’s Cotton Facts and Jones’s Handbook for Daily Cable Records of Cotton Crop Statistics. For current information the following may be added: Nield’s, Ellison’s and Tattersall’s circulars; Cotton (the publication of the Manchester Cotton Association); and daily reports and articles in the local press. Price curves are published by Messrs Turner, Routledge & Co.

(S. J. C.)

Cotton Goods and Yarn

The two great sections of the cotton industry are yarn and cloth, and in Great Britain the production of both of these is mainly in South Lancashire, though the area extends to parts of Cheshire, Yorkshire and Derbyshire, and there is a Scottish branch, besides certain isolated ventures in other parts of the country. Though there are local rivalries there is nothing in competitive division to compare with the northern and southern sections in America, and the British industry is, for its size, more homogeneous than most of the European industries. Both operatives and employers are highly organized and both parties are able to make articulate contribution to the solution of the various problems connected with the trade.

Cotton Yarn.—The yarn trade is mainly in the hands of limited companies, and a private firm is looked upon as something of a survival from the past. The two great centres of production are Oldham, in which American cotton is chiefly, though not exclusively, spun, and Bolton, which spins the finer counts from Egyptian or Sea Island cotton. Spinning mills are established, however, in most of the large Lancashire towns as well as in some parts of Cheshire and in Yorkshire, where there is a considerable industry in doubling yarns. The centre of trade is the Manchester Royal Exchange, and though some companies or firms prefer to do business by means of their own salaried salesmen, managers or directors, most of the yarn is sold by agents. Frequently a single agent has the consignment of the whole of a company’s yarn, but many spinners, especially those whose business connexion is not perfectly assured, prefer to have more outlets than can be explored by an individual. At times of bad trade even those who usually depend on their own resources seek the aid of experienced agents, who sometimes find a grievance if their services are rejected when trade improves and sales are made easily.

Yarn is sold upon various terms, but a regular custom in the home trade is for the spinner to allow 4% discount, for payment in 14 days, of which 2½ goes to the buyer, who is commonly a manufacturer, and 1½ to the agent for sale and guaranteeing the account. In selling yarn for export it is usual to allow the buyer only 1½% for payment in 14 days, or in some cases the discount is at the rate of 5% per annum for 3 months, which is equivalent to 1¼%.

The great bulk of the yarn spun in Great Britain ranges between comparatively narrow limits of count, and such staples as 32s to 36s twist and 36s to 46s weft in American, 50s to 60s twist and 42s to 62s weft in Egyptian, make up a large part of the total. It is nevertheless the experience of yarn salesmen that Lancashire produces an increasingly large amount of specialities that indicate a continued differentiation in trade. The tendency to spin finer counts has been to some extent counteracted by the development of the flannelette trade, for which heavy wefts are used, and there has been again a tendency lately to use “condensor” or waste wefts, which has worked to the disadvantage of the spinners of the regular coarse counts spun at Royton and elsewhere. The demand for cloths which require careful handling and regularity in weaving has helped to develop the supply of ring yarns which will stand the strain of the loom better than mule twists. A great amount of doubled and trebled yarn is now sold, though it does not appear that recent expansions have added much to doubling spindles, and considerable developments continue in the use of dyed and mercerized yarns.

Yarns are sold according to their “actual” counts, though when they are woven into cloth they frequently attain nominal or brevet rank. There has been a long-continued discussion, which between buyer and seller sometimes degenerates into a dispute, on the subject of moisture in yarns, and the difficulty is not confined to the Lancashire industry. The amount permissible, according to the recommendation of the Manchester Chamber of Commerce, is 8%, but while it may be assumed that yarns at the time of their sale rarely contain less than this, they frequently contain a good deal more. It is a matter of experience that cotton yarns which when spun contain only a small percentage of moisture will absorb up to about 8% when they are exposed to what may be rather vaguely described as natural conditions. The exigencies of competition prompted the discovery that if yarn were sold by weight fresh from the spindle its comparative dryness made such early sale less profitable than if it were allowed to “condition.” Between loss and delay the spinner found an obvious alternative in damping the yarn artificially. As it was often clearly to the advantage of the buyer that he should receive immediate delivery he did not object to water in moderation, but art soon began to run a little ahead of nature. The essentially dishonest practice of deluging yarn with water, which has sometimes even degenerated into the use of weighting materials deleterious to weaving, has been recognized as a great nuisance, but while various attempts have been made to protect the buyer the question seems to have pretty well settled itself on the principles which commonly rule the sales of commodities between those who intend to do business continuously. The spinner who persists in over-weighting his yarn finds it difficult to obtain “repeat” orders.

A remarkable point in the Lancashire yarn trade is the looseness of the contracts between spinner and manufacturer. Doubtless some kind of sale note or acknowledgment usually passes between them, but in the home trade at least it is quite usual to leave the question of delivery an open one. It would not be correct to say that this system or want of system is satisfactory, but the trade manages to rub along very well with it, although inconveniences and disagreements sometimes arise when prices have advanced or declined considerably. Thus when prices have advanced the manufacturer may find it difficult to obtain delivery of the yarn that he had bought at low rates, for some spinners have a curious, indefensible preference for delivering their higher-priced orders; and, on the other hand, when prices have fallen the manufacturer sometimes ceases to take delivery of the high-priced yarn and actually purchases afresh for his needs. Yet positive repudiation is very rare though compromises are not uncommon, and a good many illogical arrangements are made that imply forbearance and amity. Litigation in the yarn trade is very unusual, and Lancashire traders generally have only vague notions of the bearing of law upon their transactions, and a wholesome dread of the experience that would lead to better knowledge.

The average yearly values of the exports of cotton, yarn and cloth from Great Britain for the decades 1881-1890 and 1891-1900 respectively, are given by Professor Chapman in his Cotton Industry and Trade, in million pounds:—

1881-1890. 1891-1900.

Cloth £60.4 £57.3

Yarn 12.3 9.3

—— ——

Total £72.7 £66.6

During the earlier decade the prices of cotton were comparatively high.

The whole of the cloth exports represent, of course, a corresponding home trade in yarns. The following table, taken from the Manchester Guardian, gives in thousands of ℔ the amounts of cotton yarns exported from Great Britain during 1903, 1904 and 1905 respectively, according to the Board of Trade returns, together with the average value per lb for each of the countries:—

1903. 1904. 1905.

℔.* Price per ℔. ℔.* Price per ℔. ℔.* Price per ℔.

d. d. d.

Russia 814 30.22 713 30.71 557 30.66

Sweden 1,526 11.00 1,486 12.55 1,512 11.12

Norway 1,656 9.54 1,511 11.05 1,606 9.73

Denmark 2,429 8.91 2,368 10.18 2,860 9.51

Germany 27,239 16.05 40,295 .27 39,513 16.38

Netherlands 29,591 9.10 29,384 10.48 37,341 8.93

Belgium 3,970 15.89 5,864 16.50 7,205 16.12

France 3,974 17.59 3,084 20.01 3,518 22.64

Italy 204 21.78 174 24.70 204 22.21

Austria-Hungary 2,662 11.60 3,329 14.36 3,066 13.36

Rumania 4,608 8.55 5,072 10.13 7,856 9.73

Turkey 12,966 8.93 14,253 10.05 17,389 9.37

Egypt 4,590 8.66 4,381 9.83 4,382 8.59

China (including Hong-Kong) 4,660 9.45 2,457 10.24 8,441 8.70

Japan 1,406 2.98 681 11.46 4,071 13.99

British India—

Bombay 6,286 10.80 8,145 11.88 13,112 10.86

Madras 6,683 11.07 8,288 12.48 10,930 11.91

Bengal 6,777 11.04 6,596 12.82 11,068 11.20

Burma 5,611 12.17 3,388 12.39 4,211 12.31

Straits Settlements 1,945 10.81 1,137 11.57 2,149 10.71

Ceylon 33 11.92 44 16.51 42 13.55

Other countries 21,129 12.39 21,252 13.28 23,970 12.43

Total and average 150,758 11.79 163,901 13.11 205,001 12.08

* 000 omitted.

It should be understood, however, that in some cases the Board of Trade figures represent only an approximation to the ultimate distribution, as the exports are sometimes assigned to the intermediate country, and in particular it is understood that a considerable part of the yarn sent to the Netherlands is destined for Germany or Austria. The large business done in yarns with the continent of Europe is in some respects an extension of the British home trade, though certain countries have their own specialities. A considerable business is done with European countries in doubled yarns and in fine counts of Egyptian, including “gassed” yarns, which are also sent intermittently to Japan. “Extra hard” yarns are sent to Rumania and other Near Eastern markets, and Russia, as the average price indicates, buys sparingly of very fine yarns. The trade with the Far East, which, though not very large for any one market, is important in the aggregate, is a good deal specialized, and since the development of Indian and Japanese cotton mills some of the trade in the coarser counts has been lost. The various Indian markets take largely of 40s mule twist and in various proportions of 30s mule, water twists, two-folds grey and bleached, fine Egyptian counts and dyed yarns. China also takes 40s mule, water twists and two-folds. The general export of yarn varies according to influences such as tariff charges, spinning and manufacturing development in the importing countries and the price of cotton. A particular effect of high-priced piece-goods is seen in various Eastern countries that are still partly dependent on an indigenous hand-loom industry. The big price of imported cloths throws the native consumer to some extent upon the local goods, and so stimulates the imports of yarn. It appears that as the native industries decline the weaving section persists longer than the spinning section.

Cotton Goods.—Cotton goods are of an infinite variety, and the titles that experience or fancy have evoked are even more numerous than the kinds. Descriptions of the following fabrics, which are not of course invariably made of cotton, will be found in separate articles: Baize, Bandana, Bombazine, Brocade, Calico, Cambric, Canvas, Chintz, Corduroy, Crape, Cretonne, Denim, Dimity, Drill, Duck, Flannelette, Fustian, Gauze, Gingham, Longcloth, Moleskin, Mull, Muslin, Nankeen, Print, Rep, Ticking, Twill, Velveteen. The following are notes on other varieties.

Grey cloth is a comprehensive term that includes unbleached cotton cloth generally. It may be a nice question whether “yellow” would not have been the more nearly correct description. A very large proportion of the Lancashire export trade is in grey goods and a smaller yet considerable proportion of the home trade.

Shirting, which has long since ceased to refer exclusively to shirt cloths, includes a large proportion of Lancashire manufacture. Grey and white shirtings are exported to all the principal Eastern markets and also to Near Eastern, European, South American, &c. markets. Certain staple kinds, such as 39 in. 37½ yd. 8¼ ℔. 16 × 15 (threads to the ¼ in.), largely exported to China and India, are made in various localities and by many manufacturers. The length quoted is to some extent a conventional term, as the pieces in many cases actually measure considerably more. The export shirting trade is done mainly on “repeat” orders for well-known “chops” or marks. These trade marks are sometimes the property of the manufacturer, but more commonly of the exporter. Generally the China markets use rather better qualities than the Indian markets. The principal China market for shirtings and other staple goods is Shanghai, which holds a large stock and distributes to minor markets. A considerable trade is also done through Hong-Kong and other Far Eastern ports. The principal Indian markets are Calcutta, Bombay, Karachi and Madras.

Shirt-cloth is the term more commonly applied to what is actually used in the manufacture of shirts, and it may be used for either plain or fancy goods.

Sheeting has two meanings in the cotton trade: (1) the ordinary bed sheeting, usually a stout cloth of anything from 45 in. to 120 in. wide (the extremes being used on the one hand for children’s cots or ship bunks and on the other for old-fashioned four-posters), which may be either plain or twilled, bleached, unbleached or half-bleached; (2) a grey calico, heavier than a shirting, sent largely to China and other markets, usually 36 in. by 40 yd. and weighing about 12 ℔. American sheetings compete with Lancashire goods in the China market. The Cabot is a kind of heavy sheeting, and for the Levant markets the name as a trade mark is said to be the exclusive property of an American firm, although the general class is known by the name and supplied by other firms.

Mexican is a plain, heavy grey calico, sometimes heavily sized. The origin of the word is doubtful, and it seems to be an arbitrary term. Mexicans are exported to various markets and also used in the home trade. For export the dimensions are commonly 32 or 36 in. by 24 yd., and a usual count is 18 × 18. In the Mexican the yarns were originally of nearly the same weight and number of threads to the ¼ in., an arrangement which gave the cloth an even appearance, thus differing from the “pin-head” or medium makes. Now, however, Mexicans are often made with lighter wefts, though the name is usually applied to the better class of cloths of the particular character. Punjum is a Mexican, generally 36 yd. in length, sent mainly to the South African market.

T Cloth is a plain grey calico, similar in kind to the Mexican and exported to the same markets. There is no absolute distinction between the two cloths, but the T cloth is generally lower in quality than the Mexican. The name seems to have been originally an arbitrary identification or trade mark.

Domestic, a name originally used in the sense of “home-made,” is applied especially to home-made cotton goods in the United States. In Great Britain it is employed rather loosely, but commonly to describe the kind of cloth which if exported would be called a Mexican. It may be either bleached or unbleached.

Medium is a plain calico, grey or bleached, of medium weight, used principally in the home and colonial trade. The word is sometimes particularly applied to cloths with a comparatively heavy weft, the distinction being made between the even “Mexican make” and the “pin-head” or “medium-make.”

Raising-cloths are of various kinds and may be merely mediums with a heavy weft, or “condensor” weft made from waste yarns. The essence of the raising-cloth is a weft that will provide plenty of nap and yet have sufficient fibre to maintain the strength of the web.

Wigan is a name derived from the town Wigan and seems to have been originally applied to a stiff canvas-like cloth used for lining skirts. Now it is commonly applied to medium or heavy makes of calico.

Double-warp, as its name implies, is a cloth with a twofold warp. It is usually a strong serviceable material and may be either twilled or plain. Sheetings for home trade are often double-warp, and double-warp twills and Wigans were and are used for the old-fashioned type of men’s night-shirts.

Croydon, which seems to be an arbitrary trade name, is a heavy, bleached, plain calico, usually stiff and glossy in finish. It used to be sold largely in the Irish trade as well as in the English home trade, but it has been supplanted a good deal by softer finishes.

Printing-cloth is a term with a general significance, but it is also particularly applied to a class of plain cloths in which a very large trade is done both for home trade and export. The chief place in Lancashire for the manufacture of printing-cloths is Burnley, and in the United States, Fall River. The Burnley cloths range in width from 29 in. to 40 in., and are usually about 120 yd. in length. The warp is commonly from 36s to 44s, the weft from 36s to 54s, and the threads from 13 × 13 to 20 × 20 to the ¼ in. Cheshire printers, which are made at Hyde, Stockport, Glossop and elsewhere, are commonly 34 in. to 36 in. wide, the warp is from 32s to 36s, the weft 32s to 40s, and the counts 16 × 16 to 19 × 22.

Jacconet is understood to be the corruption of an Indian name, and the first jacconets were probably of Indian origin. They now make one of the principal staple trades of Lancashire with India. The jacconet is a plain cloth, lighter than a shirting and heavier than a mull. When bleached it is usually put into a firm and glossy finish. A nainsook is a jacconet bleached and finished soft. It also goes largely to India.

Dhootie is a name taken from a Hindu word of similar sound and referred originally to the loin-cloth worn by Hindus. It is a light, narrow cloth made with a coloured border which is often so elaborate as to require a dobby loom for its manufacture. The finer kinds, made from Egyptian yarns, are called mull-dhooties. The dhootie is one of the principal staples for India and is exported both white and grey.

Scarf is a kind of dhootie made usually with a taped or corded border.

Madapolam or Madapollam is a name derived from a suburb of Narsapur in the Madras presidency where the cloth was first made. It is now exported grey or white to India and other countries. In weight it is lighter than a shirting, and it is usually ornamented with a distinctive coloured heading.

Baft, probably of Persian derivation, and originally a fine cloth, is now a coarse and cheap cloth exported especially to Africa.

Sarong, the Malay word for a garment wrapped round the lower part of the body and used by both men and women, is now applied to plain or printed cloths exported to the Indian or Eastern Archipelago for this purpose.

Jean, said to be derived from Genoa where a kind of fustian with this title was made, is a kind of twilled cloth. The cloth is woven “one end up and two ends down,” and as there are more picks of weft per inch than ends of warp the diagonal lines pass from selvage to selvage at an angle of less than 45 degrees. The weft surface is the face or wearing surface of the cloth. Jeans are exported to China and other markets, and are also used in the home trade. Jeanette is the converse of jean, being a twill of “two ends up to one down”; the diagonal passes from selvage to selvage at a greater angle than 45 degrees and the warp makes the wearing surface.

Oxford is a plain-woven cloth usually with a coloured pattern, and is used for shirts and dresses. The name is comparatively modern, and is, no doubt, arbitrarily selected.

Harvard is a twilled cloth similar to the Oxford.

Regatta is a stout, coloured shirt cloth similar in make to a jeanette. It was originally made in blue and white stripes and was used largely and is still used for men’s shirts.

Fancy cotton goods are of great variety, and many of them have trade names that are used temporarily or occasionally. Apart from the large class of brocaded cloths made in Jacquard looms there are innumerable simpler kinds, including stripes and checks of various descriptions, such as Swiss, Cord, Satin, Doriah stripes, &c. Mercerized cloths are of many kinds, as the mercerizing process can be applied to almost anything. Lace and lace curtains are made largely at Nottingham. Various light goods are made in Scotland, such as book muslin, a fine light muslin with an elastic finish, so called from being folded in book-form.

Among the fancy cloths made in cotton may be mentioned: matting, which includes various kinds with some similarity in appearance to a matting texture; matelassé, which is in some degree an imitation of French dress goods of that name; piqué, also of French origin, woven in stripes in relief, which cross the width of the piece, and usually finished stiff; Bedford cord, a cheaper variety of piqué in which the stripes run the length of the piece; oatmeal cloth, which has an irregular surface suggesting the grain of oatmeal, commonly dyed cream colour; crimp cloth, in which a puckered effect is obtained by uneven shrinkage; grenadine, said to be derived from Granada, a light dress material originally made of silk or silk and wool; brilliant, a dress material, usually with a small raised pattern; leno, possibly a corrupt form of the French linon or lawn, a kind of fancy gauze used for veils curtains, &c.; lappet, a light material with a figure or pattern produced on the surface of the cloth by needles placed in a sliding frame; lustre, a light dress material with a lustrous face sometimes made with a cotton warp and woolen weft; zephyr, a light, coloured dress material usually in small patterns; bobbin-net, a machine-made fabric, originally an imitation of lace made with bobbins on a pillow.

Some fancy cloths have descriptive names such as herringbone stripe, and there are many arbitrary trade names, such as Yosemite stripe, which may prevail and become the designation of a regular class or die after a few seasons.

Cotton linings include silesia, originally a linen cloth made in Silesia and now usually a twilled cotton cloth which is dyed various colours; Italian cloth, a kind of jean or sateen produced originally in Italy. Various cotton cloths are imitations of other textures and have modified names which indicate their superficial character, frequently produced by finishing processes. Among these are sateen, which, dyed or printed, is largely used for dresses, linings, upholstery, &c.; linenette, dyed and finished to imitate coloured linen in the north of Ireland and elsewhere; hollandette, usually unbleached or half-bleached and finished to imitate linen holland; and interlining, a coarse, plain white calico used as padding for linen collars.

Country. 1903. 1904. 1905.

Thousands of Yards. Price per Yard. Thousands of Yards. Price per Yard. Thousands of Yards. Price per Yard.

Germany 60,650 3.77 60,129 4.02 65,842 3.98

Netherlands 47,570 3.57 46,187 3.68 56,639 3.47

Belgium 52,199 4.34 56,237 4.42 67,509 4.41

France 17,552 4.61 17,759 4.39 14,875 4.65

Portugal, Azores and Madeira 32,824 2.70 29,440 2.92 29,867 3.03

Italy 6,363 5.07 7,904 5.19 8,746 5.31

Austria-Hungary 2,405 3.44 2,102 3.40 1,905 3.60

Greece 40,973 2.64 32,658 3.11 28,190 3.20

Turkey 305,611 2.45 379,557 2.53 376,209 2.53

Egypt 229,704 2.41 283,521 2.57 272,737 2.53

Algeria 709 2.74 438 2.71 455 2.63

Morocco 52,368 2.28 51,262 2.44 44,407 2.44

Foreign West Africa 64,589 2.92 55,131 3.12 69,163 3.08

Persia 34,859 2.46 33,119 2.67 38,647 2.59

Dutch East Indies 156,905 2.45 185,196 2.72 226,586 2.57

Philippine Islands 25,558 2.59 25,969 2.86 42,876 2.66

China, including Hong-Kong 477,691 2.83 548,974 3.34 799,732 3.06

Japan 67,315 3.08 42,373 3.34 128,725 2.99

United States of America 72,360 6.80 52,391 7.18 65,563 7.40

Foreign West Indies 86,349 2.08 98,797 2.21 80,679 2.24

Mexico 19,327 3.10 21,679 3.42 21,028 3.31

Central America 40,879 1.97 53,018 2.21 49,523 2.29

Colombia and Panama 44,299 2.25 44,648 2.54 31,798 2.41

Venezuela 52,330 1.87 52,934 2.07 32,717 2.11

Peru 28,962 2.66 32,430 2.85 39,035 2.78

Chile 84,118 2.50 80,836 2.57 96,996 2.62

Brazil 152,402 2.64 134,841 2.89 131,504 2.50

Uruguay 44,062 2.79 35,670 2.85 56,770 2.95

Argentine Republic 151,003 2.91 186,022 3.04 159,115 3.24

Gibraltar 11,961 2.39 10,578 2.47 3,960 2.73

Malta 4,065 3.11 3,659 3.45 4,006 3.31

British W. Africa 69,795 3.27 69,308 3.43 74,392 3.40

British S. Africa 61,778 3.61 29,670 4.03 50,592 3.69

British India—

Bombay 678,684 2.07 818,261 2.23 908,619 2.24

Madras 132,825 2.48 141,675 2.63 131,145 2.62

Bengal 1,122,004 1.97 1,215,607 2.18 1,280,314 2.18

Burma 64,654 2.84 79,765 3.10 72,528 3.13

Straits Settlements* 112,006 2.61 100,230 2.84 121,690 2.71

Ceylon 17,395 2.75 19,336 2.95 24,991 2.94

Australia 106,000 3.83 128,247 4.01 136,481 3.85

New Zealand 38,499 3.58 33,538 3.81 32,315 3.63

Canada 47,439 4.15 49,903 4.25 45,189 4.47

British West India Islands,

Bahamas and British Guiana 49,614 2.49 43,487 2.61 47,173 2.21

Other countries 188,662 2.84 197,339 3.14 226,971 3.03

Total 5,157,316 2.57 5,591,822 2.75 6,198,200 2.74

* Including Federated Malay States.

Various cotton imitations share the name of the original, such as lawn, batiste, serge, huckaback, galloon, and a large number of names are of obvious derivation and use, such as umbrella cloth, apron cloth, sail cloth, book-binding cloth, shroud cloth, butter cloth, mosquito netting, handkerchief, blanket, towelling, bagging.

Among the miscellaneous cloths made or made partly of cotton may be mentioned: waste cloths, made from waste yarns and usually coarse in texture; khaki cloth, made largely for military clothing in cotton as well as in woollen; cottonade, a name given to various coarse low cloths in the United States and elsewhere; lasting, which seems to be an abbreviation of “lasting cloth,” a stiff, durable texture used in making shoes, &c.; bolting cloth, used in bolting or sifting; brattice cloth, a stout, tarred cloth made of cotton or wool and used for bratticing or lining the sides of shafts in mines; sponge cloths, used for cleaning machinery; shoddy and mungo, which though mainly woollen have frequently a cotton admixture; and splits, either plain or fancy, usually of low quality, which include any cloth woven two or three in the breadth of the loom and “split” into the necessary width. Cotton is used too for many miscellaneous purposes, including the manufacture of lamp wicks and even of billiard balls.

British Cotton Cloth Exports.—The main lines of the Lancashire export trade in cotton goods are indicated in the Board of Trade returns. The table on p. 278 compiled from them is taken from the Manchester Guardian. It gives in thousands of yards the quantities of cotton goods exported from Great Britain during 1903, 1904 and 1905 respectively, together with average value per yard for each of the countries.

The following table gives, approximately, in thousands of yards the quantities exported of the four main divisions of cotton cloths:—

1903. 1904. 1905.

Thousands of Yards. Thousands of Yards. Thousands of Yards.

Grey or unbleached 1,880,321 2,033,895 2,336,018

Bleached 1,326,255 1,528,165 1,710,742

Printed 1,027,925 1,036,901 1,053,900

Dyed and coloured 922,735 993,009 1,097,540

In the case of cloth, too, the Board of Trade returns must not be taken as an absolute record of imports to the particular countries, as the ultimate recipient is not always determined. The development of the Eastern trade has been one of the most remarkable features of the cotton trade in the 19th century. Professor Chapman writes in his Cotton Industry and Trade: “In 1820 Europe received about half the cotton fabrics which were sent abroad, while the United States received nearly one-tenth and eastern Asia little more than one-twentieth. By 1880 Europe was taking less than one-twelfth, the United States less than one-fiftieth, and eastern Asia more than a half.”

Naturally a trade tends to find out the most direct means of distribution, and Manchester merchants are now generally in direct connexion with native dealers in India. Bombay was the pioneer in the custom, followed now by Calcutta and Karachi, by which deliveries of goods from British merchants remained under the control of the banks until the native dealers took them up. Manchester business with India, China, &c., is done under various conditions, however, and a good many firms have branches abroad. The regular “indent” by which most of the Manchester Eastern business is conducted now implies a definite offer for shipment from the dealer abroad, either direct or through the exporter’s agents, and commonly includes freight and insurance. The term “commission agent” is now discredited, and buying done by Manchester houses on simple commission terms is unusual though not unknown. This has been so since the famous law case of Williamson v. Barbour in 1877, when it was established that whatever might be the custom of the trade a commission agent was not entitled to make a profit over his commission on the various processes, such as handling and packing, which are a necessary part of the exporter’s work. A good deal of business is done, however, for South America and other markets in which the goods are bought for delivery in the Manchester warehouse, all charges for packing, &c., and carriage being extra.

Transactions with distant markets are now done almost entirely by cable, and a remarkable development of the telegraphic code has enabled merchants to pack a good deal into a brief message. A cable sent to India in the evening may bring a reply next morning, and in these days of rapid cotton fluctuations mail advices are confined mainly to general discussion, hypothetical inquiry, advice, admonition and complaint. Some Manchester export business is done through London, Glasgow, and continental towns, of which Hamburg is the principal. Glasgow buys largely of yarns and cloth, some considerable part of which is dyed or printed, for India and elsewhere, and has an indigenous manufacture and trade in fine goods such as book-muslins and lappets, a somewhat delicate department of manufacture which necessitates a slower running of machinery than is usual in Lancashire.

Besides the indent business there is, of course, purely merchant business by Manchester exporters, who buy on their own initiative at what they consider to be opportune times or on recommendations from their houses or correspondents abroad. In the Indian trade, especially in the Calcutta trade, a large proportion of the total amount is done by a few houses who buy in this way, and there is some difference of opinion as to whether the method, which had fallen out of fashion, may not further develop. It is more speculative than the indent business, but the dealing with large quantities which it involves gives the opportunity to buy very cheaply. A good many firms venture occasionally to buy in anticipation of their customers’ needs, especially when they expect a rising market. During the great trade “boom” of 1905 there was a good deal of buying by exporters in advance of their indents because manufacturers continued to contract engagements which threatened to exclude dilatory buyers. On the whole, however, what may be called the speculative centre of gravity of Great Britain’s export business in cotton goods is not in Manchester but abroad.

The terms on which business is conducted are various even in a single market, and it is sometimes a reproach that British firms are old-fashioned in their reluctance to give credit. The so-called enterprising methods of some German traders are, however, condemned by many experienced English traders, and it is said that in China, for instance, the seeming successes of the newcomers are delusive. The Tientsin developments of German business on credit terms are said to have proved unsatisfactory, and heavy losses were suffered in Hong-Kong some years ago by merchants who endeavoured to initiate a bolder system of trading. The very common complaint of British consuls that British firms neglect to send out travellers may have some foundation, but a commercial house naturally follows the line of least resistance to the development of its trade, and cannot be expected to work remote and barren ground when better opportunities are near at hand. On the whole it appears that the British cotton trade continues to increase to a satisfactory degree in fancy and special goods, which require for their production a comparatively high degree of technical skill, and are more lucrative than some of the simpler products in which competitors have been most formidable. Various finishing processes, and particularly the mercerizing of yarn and cloth, have increased the possibilities in cotton materials, and while staples still form the bulk of our foreign trade, it seems that as the stress of competition in these grows acute, more and more of our energy may be transferred to the production of goods which appeal to a growing taste or fancy.

British Home Trade.—The home trade in cotton cloths is a great and important section, but it is not comparable in volume to the export trade. It involves more numerous and more elaborate processes, and the qualities for home use are generally finer and more costly than those for export. Of course by far the larger part of the yarn spun in Lancashire is woven in Lancashire, but of the cotton cloth woven in Lancashire it is roughly estimated that about 20% is used in Great Britain. Not only is the average of quality better, but the variety of kinds and designs is greater in the home trade than in the export trade. A good home trade connexion is considered an extremely valuable asset, and as the trade is highly differentiated the profits are usually good. Some manufacturers devote themselves exclusively to the home trade, and some exclusively to foreign trade, but there is a large class with what may be called a margin of alternation, which serves to redress the balance as business in one or other of the sections is good or bad.

Certain kinds of light goods made for India and other Eastern markets are not used in the home trade, and the typical Eastern staples are not generally used in their particular “sizings,” but with these exceptions and various specialities almost every kind of cotton cloth is used to some extent in Great Britain. Grey calicoes for home use, except the lowest kinds, are comparatively pure, and of late years the heavy fillings which used to be common in bleached goods have become discredited. The housewife long persisted in deceiving herself by purchasing filled calicoes, and the movement in favour of purer goods owes a good deal, strangely enough, to the increase in the making-up trade and the consequent inconveniences to workers of sewing machines, whose needles were constantly broken by hard filled calicoes.

This development of the making-up trade has become an important element in the home trade, and it has greatly reduced the retail sale of piece-goods. The purchase of ready-made shirts, underclothing, &c., corresponds to a change in the habits of the people. The factories which have been erected in the north of Ireland, on the outskirts of London and elsewhere turn out millions of garments that would, under the old conditions, have been made at home. It is not necessary here to balance the advantages and disadvantages of the two systems, and it must not be supposed that made-up cotton garments are necessarily cheap and inefficient.

The chief distributing centre of cotton made-up goods is London, though a considerable trade is done through wholesale houses in Manchester and elsewhere. Large warehouses in the city of London carry on the trade and frequently supply Lancashire with her own goods. Of course the partial loss of the piece-goods trade by the shops is not a loss in aggregate trade, as they are the ultimate distributors of the made-up garments, which are probably at least as profitable to retail as calico or flannelette sold in lengths.

The normal course of home trade piece-goods is from manufacturer to bleacher, dyer, printer or finisher, either on account of a merchant to whom the goods are sold or on the manufacturer’s own account. By far the majority of Lancashire manufacturers sell their goods as they come from the loom, or, as it is called, in the “grey state,” but an increasing number now cultivate the trade in finished goods. Usually the manufacturer sells either directly or through an agent to a merchant who sells again to the shopkeeper, but the last twenty or thirty years have seen a considerable development of more direct dealing. Some manufacturers now go to the shopkeeper, and this has made it difficult for the merchant with a limited capital and therefore a limited assortment to survive. The great general houses such as Rylands’s, Philips’s and Watt’s in Manchester, and Cook’s and Pawson’s in London, some of which are manufacturers to a minor degree, continue to flourish because under one roof they can supply all that the draper requires, and so enable him to economize in the time spent in buying and to save himself the trouble of attending to many accounts. Some general merchants, indeed, supply what are practically “tied houses,” which give all their trade in return for pecuniary assistance or special terms.

The tendency to eliminate the middleman has not only brought a good many manufacturers into direct relation with the shopkeeper, but in some exceptional cases the manufacturer, adopting some system of broadcast advertisement and postal delivery, has dealt with the consumer. Naturally, the merchant resents any developments which exclude him, and some mild forms of boycott have occasionally been instituted. In the United States there has been an arduous struggle over this question, and combinations of merchants have sometimes compelled favourable terms. In England, though the merchant has maintained a great part of the trade with shopkeepers, the developing trade with makers of shirts, underclothing, &c., is mainly done by the manufacturers directly, and perhaps the simplification of relations by direct dealing in the cotton trade has now reached a point of fairly stable compromise. The tendency to direct trading is naturally controlled by the exigencies of capital. Those manufacturers who act as merchants aim to retain the merchant profit and must employ a merchant capital in stocks. There has been a tendency, indeed, to make the manufacturer the stock-keeper, and some merchants do little more than pass on the goods a stage after taking toll. The great improvement in trade during 1905 and 1906 checked this tendency, and probably the manufacturing extensions owed something to the capital set free by the reductions of stocks.

It must be noted, however, that while most of the spinning concerns are worked by limited companies or individuals with a considerable capital, a good many small manufacturers exist who have little capital and are practically financed by their agents or customers. This is so in both the export and home trades.

The home trade merchant or merchant-manufacturer works largely through agents and travellers, and though railway facilities continue to improve, some shopkeepers rarely visit their markets. The difficulty that is naturally experienced by a traveller in finding sufficient support on a sparsely populated “ground” has brought into vogue the traveller on commission who represents several firms. The traveller with salary and allowances for expenses survives, but the quickening induced by an interest in the amount of sales has caused many firms to adopt the principle of commission, which may, however, be an addition to a minimum salary. Of course, such travellers are not peculiar to the cotton trade, but cotton goods in various forms are an important factor in the home trade.

The profits of manufacturers, merchants and shopkeepers are commonly very much less on the lower classes of cotton goods than on the higher ones. Thus while there may be a difference of 1d. per yd. between the qualities on a manufacturer’s list, the difference in cost may not be more than a farthing; and, again, while the shopkeeper sometimes pays 2½d. or even 25⁄8d. per yd. for a calico to retail at 2¾d., his next selling price may be 3¾d. for one which costs him only 2¾d. or 3d. per yd. It appears, therefore, that if the poorer classes of the community have the discretion to avoid the lowest qualities they may obtain very good value in serviceable goods. In the matter of profits, however, there is a good deal of irregularity.

The Manchester Royal Exchange.—There are not many cotton mills or weaving sheds in Manchester, which is, however, the great distributive centre, and its Exchange is the meeting-place of most classes of buyers and sellers in the cotton trade and various trades allied to it. As buyers of finished goods for London and the country do not attend it, certain departments of the home trade are hardly represented, but practically all the spinners and manufacturers and all the export merchants of any importance are subscribers. Transactions between spinners and manufacturers are largely effected on Tuesdays and Fridays, the old “market days,” when the manufacturing towns are well represented, but a large amount of business is transacted every day. Besides the persons immediately concerned in the cotton trade and connected with allied trades, a large number of members find it convenient to use this great meeting-place as a means of approach to a body of responsible persons. Thus not only bleachers, carriers, chemical manufacturers, mill furnishers and accountants find their way there, but also tanners, timber merchants, stockbrokers and even wine merchants. Since the Ship Canal made Manchester into a cotton port there has been a steady development of the raw cotton trade in Manchester, and many cotton brokers and merchants have Manchester offices or pay regular visits from Liverpool.

The various expansions and developments have made it difficult to maintain the ratio between accommodation and requirements, and although overcrowding is troublesome only during some three or four hours a week, at “high ’Change” on market days, various complaints and suggestions provoked in 1906 an appeal from the chairman of directors to the Manchester corporation. This took the form of a suggestion that the Exchange should be worked as a municipal institution on a new site, and though such a development met with opposition it was apparent that Manchester must presently have a new or an enlarged Exchange. The present building is, however, the largest of the kind in the world, and the history of the various exchanges coincides with the expansion of the Lancashire industry.

According to semi-official records “the first building in the nature of an Exchange” was erected in 1729 by Sir Oswald Mosley, and though designed for “chapmen to meet and transact their business” it appears that, as to-day, encroachments were made by other traders until cotton manufacturers and merchants preferred to do their business in the street. In 1792 the building was demolished, and for a period of some eighteen years there was nothing of the kind. In 1809 the new Exchange was opened, and terms of membership were fixed at two guineas for those within 5 m. of the building and one guinea for those outside this radius. In the following year plans for enlargement were submitted to the shareholders, and various extensions followed, particularly in 1830 and 1847. The present building was opened partly in 1871 and partly in 1874. The area of the great room is 4405 sq. yds. The subscription was raised on the 1st of January 1906 from three guineas to four guineas for new members, but the number of members continues to increase and early in 1906 amounted to 8786.

Of course in this great mart a large variety of types is to be found and the members fall into some kind of rough grouping. Export buyers, attended by salesmen, are commonly more or less stationary and prominent; Burnley manufacturers abound in one locality and spinners of Egyptian yarns in another. The importance of the Exchange as a bargaining centre is fairly maintained, though buyers are assiduously cultivated in their own offices, and the telephone has done a good deal to abbreviate negotiation. As to the amount of business transacted on the Exchange there is no record. The market reporters make some attempt to materialize the current gossip, and doubtless catch well enough the great movements in the ebb and flow of demand, but the sum of countless obscure transactions cannot be estimated. Some few years ago an attempt was made to mark more clearly the course of business in Manchester, and a scheme was prepared for the recording of daily transactions. This could only have been a somewhat rough affair, but its originator maintained reasonably that it would be of interest if some indication of the daily movements could be obtained. For some time a memorandum of the total of daily sales reported was posted on ’Change, but the indifference of traders, together with the distrust that makes any innovation difficult, caused the scheme to be abandoned.

It would be difficult in any attempt to estimate the volume of British home trade to distinguish what may be called the effective movements of goods. There is a considerable amount of re-selling both in yarn and cloth, and, though the bulk of cotton goods finds the way through regular and normal channels to the consumer, these channels are not always direct. A good many transactions on the Manchester Exchange are intermediate, without fulfilling any useful function, and could be accomplished by the principals if they were brought together. Agents, of whom there are many, sometimes occupy a precarious position, but they are protected in some degree by law as well as by the custom of the trade and the point of honour. Points of honour in the Manchester business may seem to be arbitrarily selected, but they are an important part of the scheme. An immense amount of business is done without any apparent check against repudiation. It is, of course, the verbal bargain that binds, and large transactions are commonly completed without witnesses, though before the contract or memorandum of sale passes the fluctuations of the market may have made the bargain, to one side or the other, a very bad one.

(A. N. M.)

COTTON MANUFACTURE. The antiquity of the cotton industry has hitherto proved unfathomable, as can readily be understood from the difficulty of proving a universal negative, especially from such scanty material as we possess of remote ages. That in the 5th century B.C. cotton fabrics were unknown or quite uncommon in Europe may be inferred from Herodotus’ mention of the cotton clothing of the Indians. Ultimately the cotton industry was imported into Europe, and by the middle of the 13th century we find it flourishing in Spain. In the New World it would seem to have originated spontaneously, since on the discovery of America the wearing apparel in use included cotton fabrics. After the collapse of Spanish prosperity before the Moors in the 14th century the Netherlands assumed a leadership in this branch of the textile industries as they did also in other branches. It has been surmised that the cotton manufacture was carried from the Netherlands to England by refugees during the Spanish persecution of the second half of the 16th century; but no absolute proof of this statement has been forthcoming, and although workers in cotton may have been among the Flemish weavers who fled to England about that time, and some of whom are said to have settled in and about Manchester, it is quite conceivable that cotton fabrics were made on an insignificant scale in England years before, and there is some evidence to show that the industry was not noticeable till many years later. If England did derive her cotton manufacture from the Netherlands she was unwillingly compelled to repay the loan with interest more than two hundred years later when the machine industry was conveyed to the continent through the ingenuity of Liévin Bauwens, despite the precautions taken to preserve it for the British Isles. About the same time English colonists transported it to the United States. Since, as transformed in England, the cotton industry, particularly spinning, has spread throughout the civilized and semi-civilized world, though its most important seat still remains the land of its greatest development.

As early as the 13th century cotton-wool was used in England for candle-wicks.1 The importation of the cotton from the Levant in the 16th century is mentioned by Hakluyt,2 and according to Macpherson it was brought over Early history in England. from Antwerp in 1560. Reference to the manufacture of cottons in England long before the second half of the 16th century are numerous, but the “cottons” spoken of were not cottons proper as Defoe would seem to have mistakenly imagined. Thus, for example, there is a passage by William Camden (writing in 1590) quoted below, in which Manchester cottons are specifically described as woollens, and there is a notice in the act of 33 Henry VIII. (c. xv.) of the Manchester linen and woollen industries, and of cottons—which are clearly woollens since their “dressyng and frisyng” is noted, and the latter process, which consists in raising and curling the nap, was not applicable to cotton textiles. John Leland, after his visit to Manchester about 1538, used these words—“Bolton-upon-Moore market standeth most by cottons; divers villages in the Moores about Bolton do make cottons.” Leland, it is true, might conceivably be referring to manufactures from the vegetable fibre, but it is exceedingly unlikely, since the term “cottons” would seem to have been current with a perfectly definite meaning. The goods were probably an English imitation in wool of continental cotton fustians—which would explain the name. Again we may quote from the act of 5 and 6 Edward VI., “all the cottons called Manchester, Lancashire and Cheshire cottons, full wrought to the sale, shall be in length twenty-two yards and contain in breadth three-quarters of a yard in the water and shall weigh thirty pounds in the piece at least”; and from the act 8 Elizabeth c. xi., “every of the said cottons being sufficiently milled or thicked, clean scoured, well-wrought and full-dried, shall weigh 21 ℔ at the least.”3 These are evidently the weights of woollen goods: further, it may be observed that milling is not applicable to cotton goods. The earliest reference to a cotton manufacture in England which may reasonably be regarded as pointing to the fabrication of textiles from cotton proper, is in the will of James Billston (a not un-English name), who is described as a “cotton manufacturer,” proved at Chester in 1578.4 It may plausibly be contended that James Billston was a worker in the vegetable fibre, since otherwise “manufacturer of cottons” would have been a more natural designation. But the proof of the will of one cotton manufacturer establishes very little.

The next earliest known reference to the cotton industry proper occurs in a petition to the earl of Salisbury, made presumably in 1610, asking for the continuance of a grant for reforming frauds committed in the manufacture of “bambazine cotton such as groweth in the land of Persia being no kind of wool.”5 But a far more valuable piece of evidence, discovered by W. H. Price, is a petition of “Merchants and citizens of London that use buying and selling of fustians made in England, as of the makers of the same fustians.”6 Its probable date is 1621, and it contains the following important passages:—

“About twenty years past, divers people in this kingdom, but chiefly in the county of Lancaster, have found out the trade of making of other fustians, made of a kind of bombast or down, being a fruit of the earth growing upon little shrubs or bushes, brought into this kingdom by the Turkey merchants, from Smyrna, Cyprus, Acra and Sydon, but commonly called cotton wool; and also of linen yarn most part brought out of Scotland, and othersome made in England, and no part of the same fustians of any wool at all, for which said bombast and yarn imported, his majesty has a great yearly sum of money for the custom and subsidy thereof.

“There is at the least 40 thousand pieces of fustian of this kind yearly made in England, the subsidy to his majesty of the materials for making of every piece coming to between 8d. and 10d. the piece; and thousands of poor people set on working of these fustians.

“The right honourable duke of Lennox in 11 of Jacobus 1613 procured a patent from his majesty, of alnager of new draperies for 60 years, upon pretence that wool was converted into other sorts of commodities to the loss of customs and subsidies for wool transported beyond seas; and therein is inserted into his patent, searching and sealing; and subsidy for 80 several stuffs; and among the rest these fustians or other stuffs of this kind of cotton wool, and subsidy and a fee for the same, and forfeiture of 20s. for putting any to sale unsealed, the moiety of the same forfeiture to the said duke, and power thereby given to the duke or his deputies, to enter any man’s house to search for any such stuffs, and seize them till the forfeiture be paid; and if any resist such search, to forfeit £10 and power thereby given to the lord treasurer or chancellor of the exchequer, to make new ordinances or grant commissions for the aid of the duke and his officers in execution of their office.”

Here the date of the appearance of the cotton industry on an appreciable scale—it is questionable whether any importance should be attached to the expression “found out”—is given by those who would be speaking of facts within the memory of themselves or their friends as “about twenty years past” from 1621, and the annual output of the industry in 1621 is mentioned. Moreover, it is established by this document that for a time at least the cotton manufacture was “regulated” like the other textile trades. The date assigned by the petitioners for the first attraction of attention by the English cotton industry may be supported on negative grounds.

Baines assures us that William Camden, who wrote in 1590, devoted not a sentence to the cotton industry, though Manchester figures among his descriptions: “This town,” he says, “excels the towns immediately around it in handsomeness, populousness, woollen manufacture, market place, church and college; but did much more excel them in the last age, as well by the glory of its woollen cloths (laneorum pannorum honore), which they call Manchester cottons, as by the privilege of sanctuary, which the authority of parliament under Henry VIII. transferred to Chester.”7 It is significant too that in the Elizabethan poor law of 1601 (43 Elizabeth), neither cotton-wool nor yarn is included among the fabrics to be provided by the overseers to set the poor to work upon; though, of course, it might be argued that so short-stapled a fibre needed for its working, when machinery was rough, a skill in the operative which would be above that of the average person unable to find employment. However, a proposal was made in 1626 to employ the poor in the spinning of cotton and weaving wool.8

Prior to Mr Price’s discovery of the petition mentioned above, the earliest known notice of the existence in England of a cotton industry of any magnitude was the oft-quoted passage from Lewes Roberts’s Treasure of Traffic (1641), which runs: “The town of Manchester, in Lancashire, must be also herein remembered, and worthily for their encouragement commended, who buy the yarne of the Irish in great quantity, and weaving it, return the same again into Ireland to sell: Neither doth their industry rest here, for they buy cotton-wool in London that comes first from Cyprus and Smyrna, and at home work the same, and perfect it into fustians, vermillions, dimities and other such stuffs, and then return it to London, where the same is vented and sold, and not seldom sent into foreign parts.”9

Despite Lewes Roberts’s flattering reference, the trade of Manchester about that time consisted chiefly in woollen frizes, fustians, sackcloths, mingled stuffs, caps, inkles, tapes, points, &c., according to “A Description of the Towns of Manchester and Salford,” 1650,10 and woollens for a long time held the first place. But before another century had run its course cottons proper had pushed into the first rank, though the woollen industry continued to be of unquestionable importance. In 1727 Daniel Defoe could write, “the grand manufacture which has so much raised this town is that of cotton in all its varieties,”11 and he did not mean the woollen “cottons,” as he made plain by other references to the industry in the same connexion; but it was not until some fifty years later that the ousting of the woollen industry from what is now peculiarly the cotton district became unmistakable.12 As a rule the woollen weavers were driven farther and farther east—Bury lay just outside the cotton area when Defoe wrote—and finally many of them settled in the West Riding. Edwin Butterworth even tells of woollen weavers who migrated from Oldham to the distant town of Bradford in Wiltshire because of the decline of their trade before the victorious cotton industry. Much the same fate was being shared by the linen industry in Lancashire, which was forced out of the county westwards and northwards. The explanation of the three centralizations, namely of the woollen industry, the cotton industry and the linen industry, is not far to seek. The popularity of the fabrics produced by the rising cotton industry enabled it to pay high wages, which, indeed, were essential to bring about its expansion. This a priori diagnosis is supported by contemporary analysis: thus “the rapid progress of that business (cotton spinning) and the higher wages which it afford, have so far distressed the makers of worsted goods in that county (Lancashire), that they have found themselves obliged to offer their few remaining spinners larger premiums than the state of their trade would allow.”13 The best operatives of Lancashire were attracted sooner or later to assist the triumphs of art over the vegetable wool. At the same time the scattered woollen and linen workers of Lancashire were suffering from the competition of rivals enjoying elsewhere the economies of some centralization, and the demand for woollen and linen warps in the cotton industry ceased after the introduction of Arkwright’s water-twist. When the factory became common the economies of centralization (which arise from the wide range of specialism laid open to a large local industry) increased; moreover they were reinforced by the diminution of social friction and the intensification of business sensitiveness which marked the development of the 19th century. Once begun, the centralizing movement proceeded naturally with accelerating speed. The contrast beneath is an instructive statistical comment:—

Distribution of Cotton Operatives in 1838 and 1898-1899 (from Returns of Factory Inspectors).

1838. 1898-1899.

Cheshire 36,400 34,300

Cumberland 2,000 700

Derbyshire 10,500 10,500

Lancashire 152,200 398,100

Nottinghamshire 1,500 1,600

Staffordshire 2,000 2,300

Yorkshire 12,400 35,200

England and Wales14 219,100 496,200

Scotland 35,600 29,000

Ireland 4,600 800

United Kingdom 259,300 526,000

The distribution of the industry has varied greatly in the two periods. If it had remained constant Lancashire would only have contained 300,000 operatives in 1899, instead of the actual 400,000. Scotland, on the other hand, only contained 30,000 instead of 70,000, and in Ireland the numbers were one-tenth of what they should have been. The percentage of operatives in Lancashire in 1838 was 58.5, but this increased to 75.7 in 1898.

Why, we may naturally inquire, did not the cotton industry localize in the West Riding or Cheshire and the woollen industry maintain its position in Lancashire? Accident no doubt partly explains why the cotton industry is Lancashire advantages. carried on where it is in the various parts of the globe, but apart from accident, as regards Lancashire, it is sufficient answer to point to the peculiarly suitable congeries of conditions to be found there. There is firstly the climate, which for the purpose of cotton spinning is unsurpassed elsewhere, and which became of the first order of importance when fine spinning was developed. In the Lancashire atmosphere in certain districts just about the right humidity is contained on a great number of days for spinning to be done with the least degree of difficulty. Some dampness is essential to make the fibres cling, but excessive moisture is a disadvantage. Over the county of Lancashire the prevailing west wind carries comparatively continuous currents of humidified air. These currents vary in temperature according to their elevation. Hot and cold layers mix when they reach the hills, and the mixture of the two is nearer to the saturation point than either of its components. The degree of moisture is measured by the ratio of the actual amount of moisture to the moisture of the saturation point for that particular temperature. Owing to the sudden elevation the air is rarefied, its temperature being thereby lowered, and in consequence condensation tends to be produced. In several places in England and abroad, where there is a scarcity of moisture, artificial humidifiers have been tried, but no cheap and satisfactory one has hitherto been discovered. To the advantages of the Lancashire climate for cotton spinning must be added—especially as regards the early days of the cotton industry—its disadvantages for other callings. The unpleasantness of the weather renders an indoor occupation desirable, and the scanty sunshine, combined with the unfruitful nature of much of the soil, prevents the absorption of the population in agricultural pursuits. In later years the port of Liverpool and the presence of coal supplemented the attractions which were holding the cotton industry in Lancashire. All the raw material must come from abroad, and an enormous proportion of English cotton products figures as exports. The proximity of Liverpool has aided materially in making the cotton industry a great exporting industry.

Before the localization of the separate parts of the industry can be treated the differentiation of the industry must be described. We pass then, at this stage, to consider the manufacture in its earliest form and the lines of its development. First, and somewhat incidentally, we notice the early connexion between the conduct of the cotton manufacture, when it was a domestic industry in its primitive form, and the performance of agricultural operations. A few short extracts will place before Early system of manufacture and organisation. us all the evidence that it is here needful to adduce. First Radcliffe, an eye-witness, writing of the period about 1770, says “the land in our township (Mellor) was occupied by between fifty and sixty farmers ... and out of these fifty or sixty farmers there were only six or seven who raised their rents directly from the produce of their farms, all the rest got their rent partly in some branch of trade, such as spinning and weaving woollen, linen or cotton. The cottagers were employed entirely in this matter, except for a few weeks in the harvest.”15 Next we may cite Edwin Butterworth who, though not an eyewitness (he was not born till 1812), proved himself by his researches to be a careful and trustworthy investigator. In the parish of Oldham, he recorded, there were “a number of master (cotton-linen fustian)16 manufacturers, as well as many weavers who worked for manufacturers, and at the same time were holders of land or farmers.... The number of fustian farmers who were cottagers working for manufacturers, without holding land, were few; but there were a considerable number of weavers who worked on their own account, and held at the same time small pieces of land.”17 Other passages might be quoted, but these two will suffice. Weaving was not exactly a by-employment of farm labourers, but many weavers made agriculture a by-employment to some extent, (a) by working small parcels of land, which varied from the size of allotments to farms of a very few acres, and (b) by lending aid in gathering in the harvest when their other work enabled them to do so. The association of manufacturing and weaving survived beyond the first quarter of the 19th century. Of the weavers in many districts and “more especially in Lancashire” we read in the report of the committee on emigration, “it appears that persons of this description for many years past, have been occupiers of small farms of a few acres, which they have held at high rents, and combining the business of the hand-loom weaver with that of a working farmer have assisted to raise the rent of their land from the profits of their loom.”18 One of the first lines of specialism to appear was the severing of the connexion described above, and the concentration of the weavers in hamlets and towns. Finer fabrics and more complicated fabrics were introduced, and the weaver soon learnt that such rough work as farming unfitted his hands for the delicate tasks required of them. Again, really to prosper a weaver found it necessary to perfect himself by close application. The days of the rough fabrics that anybody could make with moderate success were closing in. As a consequence the dispersion of the weavers becomes less and less. They no longer wanted allotments or farms; and their looms having become more complicated, the mechanic proved himself a convenient neighbour. Finding spinners too was an easier task in the hamlet or town than in the remote country parts. But there is no reason to suppose that agriculture and the processes of the domestic cotton manufacturer had ever been universally twin callings. There never was a time, probably, when weavers who did nothing but weave were not a significant proportion, if not the major part, of the class of weavers. All again were not independent and all were not employees. Some were simply journeymen in small domestic workshops; others were engaged by fustian masters or Manchester merchants and paid by the piece for what they made out of material supplied them; others again bought their warps and cotton and sold to the merchants their fabrics, which were their own property. The last class was swept away soon after the industry became large, when by the organization of men of capital consumers and producers were more and more kept in touch. In early days most weavers owned their looms, the great part of which they had frequently constructed themselves: later, however, a large number hired looms, and it was as usual in certain quarters for lodgings to be let with a loom as it is to-day for them to be provided with a piano. When it became customary for weavers to undertake a variety of work, the masters usually provided reeds (which had to vary in fineness with the fineness of the warp), healds, and other changeable parts, and sometimes they employed the gaiters to fit the new work in the looms.