Great Britain and the American Civil War

by Ephraim Douglass Adams

The American crop of 1860 was the largest on record, nearly 4,000,000 bales, and the foreign shipments, without question hurried because of the storm-cloud rising at home, had been practically completed by April, 1861. Of the 3,500,000 bales sent abroad, Liverpool, as usual, received the larger portion[670]. There was, then, no immediate shortage of supply when war came in America, rather an unusual accumulation of raw stocks, even permitting some reshipment to the Northern manufacturing centres of America where the scarcity then brought high prices. In addition, from December, 1860, to at least April, 1861, there had been somewhat of a slump in demand for raw cotton by British manufacturers due to an over-production of goods in the two previous years. There had been a temporary depression in 1856-57 caused by a general financial crisis, but early in 1858 restored confidence and a tremendous demand from the Far East--India especially--set the mills running again on full time, while many new mills were brought into operation. But by May, 1860, the mills had caught up with the heavy demands and the rest of the year saw uncertainty of operations and brought expressions of fear that the "plunge" to produce had been overdone. Manufactured stocks began to accumulate, and money was not easy since 1860 brought also a combination of events--deficient grain harvest at home, withdrawal of gold from England to France for investment in French public works, demand of America for gold in place of goods, due to political uncertainties there--which rapidly raised the discount rate from two and one half per cent. in January, 1860, to six in December. By the end of April, 1861, the Board of Trade Returns indicated that the cotton trade was in a dangerous situation, with large imports of raw cotton and decreased exports of goods[671]. The news of war actually begun in America came as a temporary relief to the English cotton trade and in the prospect of decreased supply prices rose, saving many manufacturers from impending difficulties. A few mills had already begun to work on part-time because of trade depression. The immediate effect of Lincoln's blockade proclamation was to check this movement, but by October it had again begun and this time because of the rapid increase in the price of raw cotton as compared with the slower advance of the price of goods[672].

In substance the principal effect of the War on the English cotton trade for the first seven or eight months was felt, not in the manufacturing districts but in the Liverpool speculative and importing markets of raw cotton. Prices rose steadily to over a shilling a pound in October, 1861. On November 23 there was a near panic caused by rumours of British intervention. These were denounced as false and in five days the price was back above its previous figure. Then on November 27 came the news of the Trent and the market was thrown into confusion, not because of hopes that cotton would come more freely but in fear that war with America would cause it to do so. The Liverpool speculators breathed freely again only when peace was assured. This speculative British interest was no cause for serious governmental concern and could not affect policy. But the manufacturing trade was, presumably, a more serious anxiety and if cotton became hard, or even impossible to obtain, a serious situation would demand consideration.

In the generally accepted view of a "short war," there was at first no great anticipation of real danger. But beginning with December, 1861, there was almost complete stoppage of supply from America. In the six months to the end of May, 1862, but 11,500 bales were received, less than one per cent. of the amount for the same six months of the previous year[673]. The blockade was making itself felt and not merely in shipments from the South but in prospects of Southern production, for the news came that the negroes were being withdrawn by their masters from the rich sea islands along the coast in fear of their capture by the Northern blockading squadrons[674]. Such a situation seemed bound in the end to result in pressure by the manufacturers for governmental action to secure cotton. That it did not immediately do so is explained by Arnold, whose dictum has been quite generally accepted, as follows:

"The immediate result of the American war was, at this time, to relieve the English cotton trade, including the dealers in the raw material and the producers and dealers in manufactures, from a serious and impending difficulty. They had in hand a stock of goods sufficient for the consumption of two-thirds of a year, therefore a rise in the price of the raw material and the partial closing of their establishments, with a curtailment of their working expenses, was obviously to their advantage. But to make their success complete, this rise in the price of cotton was upon the largest stock ever collected in the country at this season. To the cotton trade there came in these days an unlooked for accession of wealth, such as even it had never known before. In place of the hard times which had been anticipated, and perhaps deserved, there came a shower of riches[675]."

This was written of the situation in December, 1861. A similar analysis, no doubt on the explanations offered by his English friends, of "the question of cotton supply, which we had supposed would speedily have disturbed the level of their neutral policy" was made by Mason in March, 1862. "Thus," he concluded, "it is that even in Lancashire and other manufacturing districts no open demonstration has been made against the blockade[676]." Manufactures other than cotton were greatly prospering, in particular those of woollen, flax, and iron. And the theory that the cotton lords were not, in reality, hit by the blockade--perhaps profited by it--was bruited even during the war. Blackwood's Magazine, October, 1864, held this view, while the Morning Post of May 16, 1864, went to the extent of describing the "glut" of goods in 1861, relieved just in the nick of time by the War, preventing a financial crash, "which must sooner or later have caused great suffering in Lancashire."

Arnold's generalization has been taken to prove that the immediate effect of the Civil War was to save the cotton industry from great disaster and that there immediately resulted large profits to the manufacturers from the increased price of stocks on hand. In fact his description of the situation in December, 1861, as his own later pages show, was not applicable, so far as manufacturers' profits are concerned, until the later months of 1862 and the first of 1863. For though prices might be put up, as they were, goods were not sold in any large quantities before the fall of 1862. There were almost no transactions for shipments to America, China, or the Indies[677]. Foreign purchasers as always, and especially when their needs had just been abundantly supplied by the great output of 1858-60, were not keen to place new orders in a rising and uncertain market. The English producers raised their prices, but they held their goods, lacking an effective market. The importance of this in British foreign policy is that at no time, until the accumulated goods were disposed of, was there likely to be any trade eagerness for a British intervention in America. Their only fear, says Arnold, was the sudden opening of Southern ports and a rush of raw cotton[678], a sneer called out by the alleged great losses incurred and patriotically borne in silence. Certainly in Parliament the members from Lancashire gave no sign of discontent with the Government policy of neutrality for in the various debates on blockade, mediation, and cotton supply but one Member from Lancashire, Hopwood, ever spoke in favour of a departure from neutrality, or referred to the distress in the manufacturing districts as due to any other cause than the shortage in cotton caused by the war[679].

But it was far otherwise with the operatives of Lancashire. Whatever the causes of short-time operation in the mills or of total cessation of work the situation was such that from October, 1861, more and more operatives were thrown out of employment. As their little savings disappeared they were put upon public poor relief or upon private charity for subsistence. The governmental statistics do not cover, accurately, the relief offered by private charity, but those of public aid well indicate the loss of wage-earning opportunity. In the so-called "Distressed Districts" of Lancashire and the adjoining counties it appears that poor relief was given to 48,000 persons in normal times, out of a total population of 2,300,000. In the first week of November, 1861, it was 61,207, and for the first week of December, 71,593; thereafter mounting steadily until March, 1862, when a temporary peak of 113,000 was reached. From March until the first week in June there was a slight decrease; but from the second week of June poor relief resumed an upward trend, increasing rapidly until December, 1862, when it reached its highest point of 284,418. In this same first week of December private relief, now thoroughly organized in a great national effort, was extended to 236,000 people, making a grand total at high tide of distress of over 550,000 persons, if private relief was not extended to those receiving public funds. But of this differentiation there is no surety--indeed there are evidences of much duplication of effort in certain districts. In general, however, these statistics do exhibit the great lack of employment in a one-industry district heretofore enjoying unusual prosperity[680].

The manufacturing operative population of the district was estimated at between 500,000 and 600,000. At the time of greatest distress some 412,000 of these were receiving either public or private aid, though many were working part-time in the mills or were engaged on public enterprises set on foot to ease the crisis. But there was no starvation and it is absurd to compare the crisis to the Irish famine of the 'forties. This was a cotton famine in the shortage of that commodity, but it was not a human famine. The country, wrote John Bright, was passing through a terrible crisis, but "our people will be kept alive by the contributions of the country[681]." Nevertheless a rapid change from a condition of adequate wage-earning to one of dependence on charity--a change ultimately felt by the great bulk of those either directly or indirectly dependent upon the cotton industry--might have been expected to arouse popular demonstrations to force governmental action directed to securing cotton that trade might revive. That no such popular effect was made demands careful analysis--to be offered in a later chapter--but here the fact is alone important, and the fact was that the operatives sympathized with the North and put no pressure on the Cabinet. Thus at no time during the war was there any attempt from Lancashire, whether of manufacturers or operatives, to force a change of governmental policy[682].