Lancashire Cotton Famine

The Lancashire Cotton Famine, also known as the Cotton Famine or the Cotton Panic (1861–65), was a depression in the textile industry of North West England, brought about by overproduction in a time of contracting world markets. It coincided with the interruption of baled cotton imports caused by the American Civil War and speculators buying up new stock for storage in the shipping warehouses at the entrepôt. This, as well as causing cotton prices to rise in China, in which trade had been steadily increasing following the Second Opium War and during the ongoing Taiping Rebellion. The increase in cotton prices caused the textile trade to rapidly lose two-thirds of its previous value of exports to China from 1861-1862.

The boom years of 1859 and 1860 had produced more woven cotton than could be sold and a cutback in production was needed. The situation was exacerbated by an overabundance of raw cotton held in the warehouses and dockyards of the ports and the market was flooded with finished goods, causing the price to collapse, while at the same time the demand for raw cotton fell. The price for raw cotton increased by several hundred percent due to blockade and lack of imports. The inaccessibility of raw cotton and the difficult trading conditions caused a change in the social circumstances of the Lancashire region's extensive cotton mill workforce. Factory owners no longer bought large quantities of raw cotton to process and large parts of Lancashire and the surrounding areas' workers became unemployed and went from being the most prosperous workers in Britain to the most impoverished.

Local relief committees were set up and appealed for money locally and nationally. There were two major funds, the Manchester Central Committee and the Mansion House Committee of the Lord Mayor of London. The poorest applied for relief under the Poor Laws, through the Poor Law Unions. Local relief committees experimented with soup kitchens and direct aid. In 1862, sewing classes and industrial classes were organised by local churches and attendance merited a Poor Law payment. After the Public Works (Manufacturing Districts) Act 1864 was passed, local authorities were empowered to borrow money for approved public works. They commissioned the rebuilding of sewerage systems, cleaning rivers, landscaping parks and surfacing roads. In 1864, cotton imports were restored, the mills were put back into production but some towns had diversified and many thousands of operatives had emigrated.

Background

The 1850s had been a period of unprecedented growth for the cotton industry in Lancashire, the High Peak of Derbyshire, and north east parts of Cheshire. The region had swamped the American market with printed cottons and was speculatively exporting to India. The populations of some mill towns in the Lancashire and the surrounding region had almost doubled, the profit to capital ratio was running at more than 30 per cent and a recession was looming. In 1861, the slave-owning Southern States of America, where most of the world's raw cotton was produced, declared their independence and attempted to secede from the United States of America. The situation quickly deteriorated, culminating in the outbreak of the American Civil War and leading to an immediate, protracted interruption of the cotton supply-first by a voluntary boycott by Southern planters who believed a run on the cotton would quickly debilitate the British economy and force them to intervene on the South's behalf. By the time it became clear that this strategy was ineffective, the resumption of cotton exports was prevented by the Union blockade of Southern ports.Surdam, David G. "King Cotton: monarch or pretender? The state of the market for raw cotton on the eve of the American Civil War." The Economic History Review. Vol. 51. no. no. 1 (1998): 113-132. : https://www.jstor.org/stable/2599694 . (accessed March 20, 2013).

In 1860, there were 2,650 cotton mills in the region, employing 440,000 people who were paid in total £11,500,000 per annum. 90 per cent were adults and 56 per cent female. The mills used of which 18,500 was generated by water power. The mills had 30.4 million spindles and 350,000 power looms. The industry imported of raw cotton a year. It exported 2.78 billion yards of cotton cloth and of twist and yarn. The total value of its exports was £32 million.

First year

Unsold cloth had been building up in the warehouses in Bombay (Mumbai); production had exceeded demand and short time working was inevitable. As indications came that trouble was possible, the American growers hurried to export their crop early. Almost enough of the 1861 crop reached Liverpool to supply the mills. Middling Orleans, the type of cotton that was used to gauge the prices, was selling for d a pound in June 1861.

It was initially believed that British warehoused stocks of cotton would be adequate to see out the anticipated brief conflict. As all the Union advances early on were driven back, it became clear to European observers that the war would not be over quickly. By December, Middling Orleans was selling at 11¾d/lb. The merchants were holding onto their cotton, speculating on a price rise. By the beginning of 1862, mills were being closed and workers laid off; one-third of the families in one Lancashire cotton town were in receipt of relief. The price of Middling Orleans, which had been produced at a cost of d and bought by the merchants for 8d in 1861, rose to 2s. 3d. by October 1862, and to 2s. 5d. the following year. It is calculated that the merchants had a windfall of £35 million.

Surat

Sea Island (also known as extra long staple), grown on the islands off the Carolina coast of America, was the best quality cotton; Egyptian — the name given to Sea Island cotton that had been introduced into Egypt — was the second best grade. The most common grades were the short staple Gossypium hirsutum (American upland) cottons which included Middling Orleans; it was these grades that were used by the majority of Lancashire's calico producers. The Surat cottons from India were the least suitable for machinery and were only ever used as a small percentage of a mixture as the fibres were short and broke easily. Surat came in smaller bales which contained stones and other impurities. Each town in Lancashire used different mixtures and when the supply of American and Sea Island Cotton dried up, the mill owners moved over to Surat. Some machines could be adjusted to take it but extra humidity was needed to reduce breakages. Running a loom on Surat could only produce about 40 per cent of the previous throughput and, as workers were paid by the piece, their income was slashed.

Mill owners were also in difficulty as many of the smaller family-owned mills were mortgaged and if they stopped running the owners would fall behind with payments. Shopkeepers had no sales and could not afford the rents, workers defaulted on their rents and the landlord who stood the loss was often the mill owner. The wealthier mill owners such as Henry Houldsworth, were confident that the famine was temporary and planned for the new more efficient larger machinery that was becoming available, it was during the famine (1863–65) that he built Houldsworth Mill, Reddish, the first of the next generation of larger mills and at the time the world's largest mill with 138,000 spindles. With most raw cotton unavailable, mill owners had to either close mills and attempt to help the workers financially, use inferior cotton or bring new cotton into production. Surat was available but mainly used internally in British India. Some limited increase in production was achieved. Attempts were made to establish Sea Island in Queensland and New Zealand and to grow short staple near Mumbai.

Suffering

The cotton industry had become highly specialised by the 1860s and the severity of the famine in different towns depended on many factors. Some towns were built around mills using short fibre American cotton, while others used the longer fibre Egyptian cotton still available. Some mills had mules that could be adjusted to use a different cotton, while others did not. Owners of "integrateds" (mills that both spun and wove) could better balance the workload, thus preserving the precious raw material for longer. Some cautious mill owners always held stock in hand, while others bought as required.

The older paternalistic mill owners who lived among the local community were quick to divert their neighbours and workforce to maintenance work at their own expense. For example, in Glossop, Lord Howard called a family meeting of mill owners, clergy and "respectable" residents to take charge of the situation. Two relief committees were formed which experimented unsuccessfully with soup kitchens then set about distributing thousands of pounds worth of provisions, coal, clogs and clothing. Calico printer Edmund Potter loaned money to his workers and Howard took on extra workers on his estate. They set up schools, provided free brass band concerts, gave public readings from the Pickwick Papers and after the enactment of 1864 Public Works Act, took a loan to extend the waterworks. The only recorded tension was when the Relief Committee mistakenly decided to auction, instead of distributing free, a gift of food from the American federal government.

Towns with room and power mills and a strong co-operative tradition were quick to mitigate the social damage. The firms using them would rent the space and buy the machines on credit; cotton was cheap and the profit from the cloth was used to pay off the loan and provide a return for the risk. When cotton was unavailable they were the first to go bankrupt. After the famine the need was for more advanced machines and bigger mills. The investment required was too much for many private mill owners, and limited companies built the new larger mills. Limited companies developed fastest in the areas with a room and power tradition. Municipal authorities did not have the legal power to borrow money to finance public works until the 1864 Act; before this they had to use their own reserves, which varied from town to town.

Panic

Some workers left Lancashire to work in the Yorkshire woollen and worsted industries. A small number of mills such a
Crimble Mill
Heywood converted to woollen production buying in second hand fulling stocks, carding equipment, mules and looms. The towns of Stockport, Denton and Hyde diversified into hat making. Tameside was the worst affected district and suffered a net loss of population between 1861 and 1871. In 1864 there were 2,000 empty houses in Stockport and 686 in Glossop, along with 65 empty shops and fifteen empty beer houses. The exodus was caused primarily by evictions. The spring saw a wave of emigration stimulated by special agencies. The steamship companies cut their rates (steerage to New York cost £3 15s 6d), the Australian and New Zealand governments offered free passage, and 1,000 people had emigrated by August 1864, 200 of them from Glossop.

Relief effort

Relief in times of hardship was governed by the Poor Law Act

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