The Liverpool Cotton Market

The Liverpool Cotton Market

In the infancy of the trade, when the arrivals into Liverpool were small and intermittent, the cotton imported was for the most part sold to dealers, who retailed it to spinners in Manchester, Blackburn, Bolton, and other centres. Sometimes it was sold direct to the dealers by private treaty; at other times by auction, either by the importers themselves or by brokers in their employ.

The first known reference to raw cotton shipped to Liverpool from the West Indies appeared in a letter written in 1703 by Liverpool merchant Robert Norris. The expansion of the British cotton industry in the second half of the eighteenth century created a demand for the cotton fibre. As the cotton industry grew, increasing quantities of cotton entered Liverpool rather than London. By 1800, as cotton cultivation continued to spread in the Atlantic basin, Liverpool developed a sophisticated cotton market. A Lancashire dealer wanting to purchase cotton on the Liverpool market could, by the early nineteenth century, choose from thousands of bales entering Liverpool‘s docks each week, and from at least fifteen varieties of cotton, ranging in quality and price.

Photograph by Mike Peel: www.mikepeel.net

In 1831 the Bank of Liverpool was founded and had a major impact on the cotton trade in the city. It became the most important bank to the cotton market. Merchants would put cotton in the hands of a broker and draw up a bill the broker would then take it to the bank for a loan and then present the money to the merchant. The cotton held by the broker provided the security on the loan. By the end of the decade, the Bank of Liverpool was making advances on such cotton of up to 80% of its market value. This meant that merchants were able to hold on to their cotton for longer or until they could get the best price by a spinner, who, like the merchants, would also be working with a broker.

Increasingly, a group of specialised brokers with expertise and knowledge in the raw cotton trade acted as middlemen on the Liverpool cotton market connecting buyers and sellers in speedy transactions. In 1808, an Exchange Building opened, but while cotton brokers took offices there, they preferred to conduct their business in the open square. By 1815, Liverpool was the undisputed British port for cotton imports and its merchants played the principal role in securing cotton to supply Lancashire cotton factories.

Exchange Flags

The cotton market continued to meet out of doors until the 1880s. The Flags were a place to meet and swap information about the cotton market. New technology like the telegraph and telephone played a major part in moving the cotton men indoors. A new building in Old Hall Street was erected in 1905-06 to a design by Matear and Simon. Its façade was in Neoclassical style, with Baroque towers at the angles. Its exterior decoration included statues. Inside the building was the latest technology for communicating with cotton trading elsewhere in the world, including telephones, and cables linking directly with New York, Bremen and Bombay.

Liverpool to Manchester Railway

Later improvement in transport and communication helped the cotton trade to improve and expand. The development of the railway and in particular the opening of the Liverpool to Manchester line in 1830, improved reliability in transporting cotton to the Lancashire towns. In 1841 The Liverpool Cotton Brokers' Association was established and the Transatlantic Telegraph Cable system reduced long distance communication from weeks to minutes. In 1911-12 Liverpool imported 5,230,399 bales of cotton.

The cotton market was affected by both world wars, in 1914 at the outbreak of World War 1 the markets in Liverpool and New York were closed and although they later re-opened much of the demand for cotton was being met by Japan and India. During World War two large numbers of men were called up.The decimation of the American crop of 1921 by the ravages of the Boll Weevil and the  Wall Street Crash of 1929 which led to the Great Depression had a severe effect on the Liverpool Cotton Market. By 1931 Liverpool’s cotton imports were at their lowest for 62 years.

After the second world war, the Lancashire cotton industry went into decline. This was partly based on a lack of investment in new technology and partly due to production moving to countries where labour was cheaper. Cotton processing increasingly takes place close to where the crop is grown.

Developing countries now account for over 80% of global cotton consumption. This is because labour costs in the developed countries have risen, so cotton processing and production has moved to countries with lower labour costs.

Today, there are still about 4000 companies involved in the textile industry in the North West. However, the raw cotton is no longer spun into yarn in the UK. Yarn and finished fabric is manufactured closer to where the cotton is grown, in India, Pakistan and increasingly China. Textiles tend to be designed in the UK and then made overseas

Liverpool Cotton Exchange

The front of the Old Hall Street Cotton Exchange was replaced with a modern-style façade designed by Newton-Dawson, Forbes and Tate in 1967–69, and the former main exchange hall was replaced by a courtyard. In addition to offices, the building also incorporates retail facilities.

Sources

Liverpool Central Library

Liverpool Records Office

English Heritage

International Cotton Association

Wikipedia -Image

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