In the Old South, did cotton factors typically travel to Britain to sell cotton and buy merchandise for their clients?

Sindane

Ad Honorem
Aug 2013
4,545
Europe
#11
Something to bear in mind is that these textile mills in the UK, and there were thousands of them, varied in size. Anything from a small backstreet business to huge multi storey mile long buildings.

Obviously the large mill barons would have ruled the roost but the many smaller businesses, when you add them all up, were important too. The large mills would have offices at the docks, the small ones would have bought locally. Parts of these mill towns/cities had whole areas dedicated to just warehouse buildings. Some mills had their own rail branch lines and railway stations.
 

Nemowork

Ad Honorem
Jan 2011
8,182
South of the barcodes
#12
I assume factors are persons, but I am not quite sure, could you elucidate?
In 18th century British terminology the factor was the title of the man who ran a business, usually at a long distance from the owner. for example the men sent out to india to buy raw materials and contract with the locals for the production of finished goods was the factor.

the establishment he set up where he ran this devolved business became known as the factory, by the 19th century the title had got stuck onto any businesses where manufacturing occurred.
 
Sep 2013
750
Chattanooga, TN
#13
I might be wrong but as far as I know mill owners would buy raw cotton at the warehouses at the docks, Liverpool for example, or at the exchanges. This would be in the UK.
Why do you think that the mill owners would buy raw cotton at the warehouses at the docks? How do you know that the mill owners themselves did not have representatives in America who would buy the cotton before the cotton was shipped to Great Britain? I'm not arguing with you. I'm just trying to get information.


The Importing side of it was a whole industry in itself. The importers would have representatives in the USA responsible for the purchasing side. The cotton would be insured for the journey, so I don't suppose there would be any need to travel with the shipment
How do you know that the importers would have representatives in the USA responsible for the purchasing side? In Antebellum times, would the importer be a company that is distinct from the textile factory in Great Britain that ultimately bought the cotton?

How do you know that the cotton factors did not have warehouses in Great Britain that the cotton factors would use to store the cotton while the cotton factors sold the cotton directly to the textile factory owners? I'm not asserting that the cotton factors had warehouses in Great Britain that the cotton factors would use to store the cotton while the cotton factors sold the cotton directly to the textile factory owners. I'm just curious as to how you know that's not the case.
 
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Sep 2013
750
Chattanooga, TN
#14
What was their function?
In a way, my asking what was the function of cotton factors is kind of the purpose of this thread. I know very little about cotton factors in the Old South. What I know about cotton factors is that plantation owners in the Old South would pay cotton factors to supervise the selling of the planters' cotton and to use the money obtained from selling the cotton to buy general merchandise in Great Britain.
 
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Sindane

Ad Honorem
Aug 2013
4,545
Europe
#15
Why do you think that the mill owners would buy raw cotton at the warehouses at the docks? How do you know that the mill owners themselves did not have representatives in America who would buy the cotton before the cotton was shipped to Great Britain? I'm not arguing with you. I'm just trying to get information.


How do you know that the importers would have representatives in the USA responsible for the purchasing side? In Antebellum times, would the importer be a company that is distinct from the textile factory in Great Britain that ultimately bought the cotton?

How do you know that the cotton factors did not have warehouses in Great Britain that the cotton factors would use to store the cotton while the cotton factors sold the cotton directly to the textile factory owners? I'm not asserting that the cotton factors had warehouses in Great Britain that the cotton factors would use to store the cotton while the cotton factors sold the cotton directly to the textile factory owners. I'm just curious as to how you know that's not the case.
I suppose the big mill owners would be able to cut out the middle man and have their own representatives in the USA. But this is why I also mentioned the smaller mill owners/manufacturers , who would buy the cotton at the docks, or locally, from dealers. Though the big mill owners would also visit these dealers too. To keep up with any latest imports. New cotton strains, innovations, blends and so on.

Deciding which raw cotton to purchase would be a specialised job. The cotton had to be correct for the machinery, the industrial frames (spinning) and looms (weaving). The ACW was disastrous because the machinery had only been able to handle American cotton and attempts to replace the cotton shortage with cotton from elsewhere failed, as the machinery had been designed to spin and weave only American fibres. This led to widespread manufacturing distress for the duration of the war
 

Sindane

Ad Honorem
Aug 2013
4,545
Europe
#16
International Cotton Association - Wikipedia

1759-1829
The first recorded cotton dealing in Liverpool was a newspaper advertisement for an auction of 28 bags of Jamaican cotton in 1759. Over the next seven decades the Industrial Revolution brought major changes to cotton production. Liverpool enjoyed a physical proximity to the world centre of the industry - the Lancashire cotton towns.[6] It also had well-established trading links with the new powerhouse of raw cotton - the USA. As imports soared to the million-bale mark, Liverpool overtook London as the country’s leading cotton importer.[1]

1830-1913
... The Liverpool Cotton Brokers’ Association was established in 1841 and it quickly established a successful system of arbitration. The Transatlantic Telegraph Cable reduced long distance communication from weeks to minutes. Liverpool broker John Rew recognised the far-reaching implications of this development and created the hedge fund system. This led to the hugely successful Liverpool Cotton Futures Market, which doubled the business of the Liverpool Cotton Market. In 1911-12 Liverpool imported 5,230,399 bales of cotton.[1]

Added

This looks interesting and worth a read

1898 Revenues: Cotton Brokers: Henry Hentz & Company


"The cotton firm of H. Hentz & Co. was established by Henry Hentz in 1856. Mr. Hentz was the President of the New York Cotton Exchange from 1873 to 1876.

In the December 20, 1890 edition of The New York Times, Henry Hentz reflected on the history and conditions of the cotton industry, and the change in the business in the late 1800s to the trading of futures contracts on exchanges. Mr. Hentz' reflections offer a fascinating summary of the trade in cotton during the mid to late 1800s,..."
 
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Chlodio

Ad Honorem
Aug 2016
3,062
Dispargum
#17
The system of long range trading partners that Sindane and I have described was already functioning in Medieval times, so it was not new in the 19th century. Buying cotton on futures contracts may have been new, but not long range trading partners. Wool merchants in England might load up a ship with L500 worth of wool and send it to Flanders where a partner would sell it for L1,000 to dyers and weavers who turn it into cloth. The man in Flanders would send L500 worth of cloth back to his partner England who would sell it for L1,000. The man in Flanders would also send back an accounting statement saying "I received your wool and sold it for L1,000. You therefore have a L1,000 credit here in Flanders." With his next wool shipment, the man in England would send a similar statement "I have received your cloth and sold it for L1,000. You now have a L1,000 credit here in England." On his next shipment back to England the Flanders man would say "You can have my L1,000 and I'll take yours, and we'll call it even." Both men got paid without any need to ship money across long distances. Come forward 600 years, change wool to cotton, and Flanders to South Carolina and pretty much the same thing is happening. Cotton was exchanged for British manufactured goods, everyone was making money, without any need for money to be shipped long distances.

Plantations were big businesses. They made all of their money once a year, at harvest time. We're talking the modern equivalent of hundreds of thousands of dollars. Rather than transfer all of that cash, it was easier for the factor to just give the planter credit. Throughout the year, as the planter made purchases, he paid for them by applying debits against the credit held by his factor. The factor therefore did most of the planter's purchasing for him. In your example, these goods were manufactured in Britain. The factor knew what kinds of goods the planters would want, so he advised his British partner on what kind of goods to send.
 
Likes: grey fox
Mar 2015
1,275
Yorkshire
#18
The transaction would typically be made using a Bill of Lading and still is.

The "old fashioned" method was for the seller to receive the B\L from the ship owner when the ship had been loaded. The Seller then presents to the B\L to his Bank (in the US), meanwhile the corresponding Bank in the UK receives the monies from the buyer. The US Bank informs the UK that the B\L is clean (ie quantity and goods are as stated and other conditions,eg no-transship, fob or cif terms etc are correct). Providing everything is Ok, the monies are transferred to the US Bank who credits the US seller whilst the original B\L is sent via the UK Bank to the buyer.

The B\L is a financial instrument and the Shipping Line will only release the Goods on presentation by the Buyer or his agent of a valid confirmed B\L .

So everyone is happy - especially the Banks who naturally charge for their services!
 
Apr 2010
975
evergreen state, USA
#19
off topic, but possibly related (vaguely): A sister of my great grandfather (last name Green) married an Englishman. Hardly any records or traces of her line seem to exist. She was born in New Albany, Indiana, across the river from Louisville, Ky, in 1838. Her older English husband was supposedly born in 1825. The next info is their first child was born in Louisiana in 1859, and the next child was born in Alabama in 1863, in the middle of the Civil War. Then there is a gap of 9 years, and two more children were born in Ohio and Kentucky. No records seem to exist about what ever happened to the children, except one son who died at 13 years of age or so. The question is, what was that Englishman and wife doing down there in the deep south before and during the war? My great grandfather, her brother, fought in the Union army. Weird!
 

Edratman

Ad Honorem
Feb 2009
6,069
Eastern PA
#20
Here is a link to an excellent paper on the factor system. There is one line in the paper that indicates that the factors did not usually travel, instead the factor dealt with an additional middleman termed "broker".

"In the early days cotton sales were effected through a broker who acted as a middleman be- tween the factor and the resident agent of a foreign mill or merchant."

The Cotton Factorage System of the Southern States

https://www.jstor.org/stable/pdf/1835857.pdf
 
Likes: grey fox

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