Empire of Cotton

by Sven Beckert

  The construction of markets, including global markets, was thus a political process. As more and more states competed for access to raw materials, labor, and markets, this political process was ever more framed by nation-states. National economies, empires, and national capitalists became increasingly the basic building blocks of the new global political economy. As the colonial world became an important supplier of raw materials and a significant market for some industries (up to 60 percent of British cotton goods exports, for example, went to India and the Far East), industrial capitalism took on a new cast, with states securing political control over territories that provided raw materials and markets. One-quarter of the globe “was distributed or redistributed as colonies” between 1876 and 1915, testifying to the rapidly growing importance of bounded territory. Statesmen and capitalists in effect fused their respective goals of power and accumulation, and in the process forged an entirely new form of capitalist globalization. The methods of industrial capitalism, developed in the world of factory production in England and elsewhere, now went global, increasingly replacing the true-and-tried methods of war capitalism.74

  Ironically, the project to strengthen newly consolidating nation-states and “national” economies increasingly also became an international project, best symbolized by the international cotton congresses that met regularly starting after 1905, bringing together merchants, manufacturers, planters, and bureaucrats in places such as Manchester, Vienna, Paris, Brussels, Milan, London, Stockholm, and Alexandria. By 1927, seventeen countries participated. They discussed cotton-growing conditions in various parts of the world, and tried to identify best practices. They also reviewed exemplary efforts to increase cotton production, discussing, for example, in great detail the German experiences with cotton agriculture in colonial Togo. The congresses were part and parcel of a global discourse among capitalists and bureaucrats on how to reconcile the needs of metropolitan economies for cheap and plentiful agricultural commodities from the periphery with new forms of labor. In Paris, the experts at the Ministry of Colonies constituted a commission aptly named the “Commission du Régime du Travail aux Colonies,” in Berlin and Chicago budding social scientists explored the possibilities of “free labor” regimes in securing access to agricultural commodities, and the Spanish ambassador to Paris asked the French minister of the colonies to report on the French experience with emancipation and its effect on labor supply. The British colonial authorities in Bombay inquired into the mobilization of labor in Russian Central Asia. And in the 1910s, the Japanese Ministry of Agriculture and Commerce, set on expanding cotton production in colonial Korea, investigated the efforts of European nations to use “free labor” for the growing of cotton in their colonial possession. Postcolonial and postcapitalist regimes, as we will see, were just as eager to learn from these experiences, and often implemented these lessons with an eager radicalism that overshadowed even their teachers’ revolutionary designs. As competitive nation-states strengthened in a few regions of the world, they shared a burning wish to reconstruct the global countryside, and embedded their policies in strategies transcending any particular nation-state. Again, state formation and globalization unfolded hand in glove.75

  And while the dilemmas of “free labor” would remain central to global conversations, by the 1870s, from the perspective of cotton capitalists, the crisis of the empire of cotton that had emerged from the emancipation of cotton growing workers had been resolved. The newfound ability of capitalists and states to transform the global cotton-growing countryside with the tools of industrial capitalism allowed for ever more cotton to arrive at ever cheaper prices in the ports of Liverpool, Bremen, Le Havre, Osaka, and Boston. So successful was the recombination of labor, land, capital, and state power that cotton prices in Liverpool not only returned to pre–Civil War levels, but fell further. In 1870, a pound of cotton in the United States had cost 24 cents; in 1894, that price had fallen to just 7 cents—below its cost before the Civil War (when it was about 11 cents.) In response, the Manchester Cotton Supply Association, which had been at the forefront of much of the push to make peasants the world over into cotton growers for export, disbanded in 1872. The defeat of the economic and political aspirations of freedpeople in the American South and the successful inventions of new systems of labor there and elsewhere had inspired confidence that the revolutionary activities of capital would continue to succeed in recasting the global countryside.76

  Chapter Eleven

  Destructions

  Cotton merchants in India. (illustration credit 11.1)

  The rapid expansion of industrial capitalism after 1865, as we have seen, transformed even more of the global countryside. Manufacturers in the industrial heartlands of cotton’s empire demanded raw material, labor, and markets, and their voracity was felt by the majority of humanity who lived far from the urban centers of Europe and North America. With the abolition of slavery in the United States, cultivators in India, Egypt, the American South, Brazil, and, a few decades later, West Africa and Central Asia found themselves drawn into new systems of labor, producing vast and increasing quantities of cotton. Thanks to their backbreaking and ill-remunerated labor, well into the twentieth century trade in cotton and cotton goods “was still by far the largest single trade” in both the Atlantic world and Asia. Even as late as the 1930s, the Japanese cotton traders of Toyo Menka Kaisha asserted that “cotton is indisputably the prime commodity in the international trade of the world.”1

  In more general terms, the emergence of new systems of labor and the stunning increase in raw cotton output pointed to one of the most revolutionary projects of industrial capitalism, the creation of a new relationship between manufacturing centers and the countryside. By the 1870s, as we have seen, capitalists had done what a few decades earlier seemed impossible: fully integrated an ever larger swath of the global countryside into serving the needs of industrial production without drawing on the institution of slavery. The reason for this success was clear: Powerful imperial states—which had come about not least thanks to merchants’ and manufacturers’ persistent agitation—now possessed the means to reach deeply into once remote parts of the world. The agents of industrial capitalism rode railways that penetrated Berar, sent cotton prices over telegraph cables that crossed the Atlantic, and followed behind military expeditions that “pacified” Tashkent and Tanganyika.

  These cotton kings riding on the coattails of a strengthened state furthered a double process of creative destruction. They pushed metropolitan capital closer to cotton producers outside the world’s slave areas, in the process often destroying older merchant networks that had moved cotton from field to factory prior to the 1860s. And they undermined hand spinning and handloom weaving, effecting the world’s most significant wave of deindustrialization ever. Millions of people, especially women, gave up their spinning and weaving, work that had structured their societies for centuries or even millennia.

  In the last third of the nineteenth century, metropolitan capital and manufactured goods moved into ever greater areas of the world’s countryside. The success of European merchants was most remarkable in a huge area in which they had traditionally been the weakest: Asia. It was there that they managed to move closer to the actual producers and consumers of cotton. By the 1870s, for example, Berar’s central market town, Khamgaon, hosted merchants from Britain, Germany, France, Italy, Switzerland, and the Habsburg Empire, all focused on acquiring raw cotton. These merchants sent Indian agents into the nearby growing areas to purchase the material raw, then they had it cleaned and pressed before shipping it to the port of Bombay. They had now truly gained control of the cotton trade, replacing a world they had inherited from previous generations in which “the trade was entirely in the hands of the local dealers.”2

  It had been the terminal crisis of slave labor that pushed European and later also Japanese merchants inland beyond the port cities of India, Egypt, western Africa, and elsewhere. Already upon the first sign of disintegratio
n of slavery in 1861, manufacturers in the Manchester Cotton Supply Association had hoped that Europeans could be “induce[d]…to take up their position in the interior of India and superintend the trade among Natives.” A year later, the India Office in London had conveyed to the governor in council in Bombay that it supported the “establishment of Agencies in these districts, for the purpose of purchasing cotton direct from the cultivating classes, instead of through middlemen.” Doing this in India was not so easy, however, because Indian cotton dealers were deeply rooted in both the local cotton trade and the social structure of cotton-producing villages—in fact, without revolutionizing the Indian social structure it was hard to imagine that European capitalists would ever be able to replace their Indian counterparts. But they did, not least thanks to the support they received from an increasingly powerful imperial state, and by 1878 a British colonial administrator observed that “the [cotton] trade [of Berar]…has fallen almost entirely into the hands of European merchants.”3

  Among the European capitalists who came to dominate cotton production in a remote hinterland of industrial capitalism such as Berar’s Khamgaon was the firm of Volkart Brothers. Headquartered in the quaint town of Winterthur near the shores of Lake Constance, these Swiss merchants had been active in the Indian cotton trade since 1851, relying on the services of Indian brokers to purchase cotton for European markets. In the last third of the nineteenth century, however, they had moved their capital ever closer to the actual cotton growers, creating purchasing agencies in cotton-growing regions of India, including Khamgaon, and erecting cotton gins and presses. Agents in the employ of Volkart would purchase cotton from local dealers, have it processed in the firm’s own gins, then press it at “Volkart’s Press” and send it by rail to Bombay, where it was branded by Volkart agents to be shipped to Liverpool, Le Havre, or Bremen to be sold to mill owners who put great trust in the “VB” stamped on the bales. While the old system had relied on many intermediary merchants, Volkart now single-handedly connected cotton growers to cotton manufacturers.4

  European capital moves into the Indian countryside: Volkart Brothers cotton press in Berar. (illustration credit 11.2)

  By 1883, sixteen Volkart presses dotted the Berar countryside and by 1920 Volkart would be the largest shipper of Indian-grown cotton, selling more than 180,000 bales, or one-quarter of the total exports. And the Volkarts were not alone. They worked side by side the agencies, gins, and presses of other European merchants, including the Rallis, Knoops, and Siegfrieds. In the early twentieth century, Japanese cotton trading firms joined in: Toyo Menka Kaisha alone counted 156 Indian subagencies by 1926, and most of the firm’s profits derived from such hinterland trading activities.5

  As European and Japanese exporters moved into once remote cotton-producing towns, rural cultivators were able to sell their products to global markets. To be sure, smaller dealers and moneylenders who connected the growers to European and Japanese merchants persisted, providing Indian peasants with the capital they needed to acquire seeds, pay their taxes, and tide them over to the next harvest, almost always at ruinous rates of interest. These sowkars were deeply rooted in the villages and European dealers depended on them—just as the locals needed the access to the markets and capital provided by European traders.6

  Despite the persistence of sowkars, however, long-dominant Indian cotton merchants who, as late as the 1850s, had played a major role in the export of cotton, were pushed to the margins of the trade. Despite the riches that they had accumulated during the American Civil War, many went under during the rapid fall in cotton prices in its aftermath. Moreover, the changes in transportation infrastructure and the advent of the telegraphic connection to Liverpool and with it the trade in futures on Indian cotton squeezed the speculative profits of merchants who sold on consignment. Major European merchants responded by vertically integrating their businesses—connecting growers and manufacturers—as the Volkarts had done with spectacular success, a move that Indian merchants, who lacked the ability to establish a presence close to European manufacturers, could not replicate. As a result, Indian merchants were increasingly under pressure, especially in the overseas trade. In 1861, they still exported 67 percent of all cotton from Bombay, but by 1875 their share had fallen to just 28 percent, and it kept declining. Unable to compete in the overseas cotton trade, some of these merchants would invest their capital in fledgling Indian cotton mills.7

  Elsewhere in the world, the infusion of capital into cotton production evolved in similar ways. In Egypt, for one, “merchants sent agents out into the villages to buy small lots,” either from local traders or from the cultivators directly, replacing the once total monopoly of the Egyptian viceroy. Many of these merchants were Greeks who had come to Egypt in the wake of the cotton boom of the Civil War, and almost all were part of family or place-of-origin networks that stretched not just into Greece but also to Trieste, Marseille, London, and Manchester.8

  In the Çukurova in western Anatolia, things followed a similar pattern with Greek and Christian Arab merchants taking on that role, at first in interaction with Armenian traders who connected their transmediterranean networks to the rural cultivators themselves. By the 1880s, however, foreign banks and trading companies had moved in, muscling aside local capitalists. In 1906, the German Cotton Society of the Levant began its operations, in 1909 the Deutsche Orient Bank opened a branch in Mersin, and a year later Deutsche Bank began investing heavily in irrigation schemes. In exceptional cases, the capitalization of the countryside went even one step further, with foreign investors owning entire cotton plantations. In La Laguna, Mexico, British investors operated the huge cotton-growing hacienda Compañía Agricola, Industrial y Colonizadora del Tlahualilo; in Mississippi, the British Spinners Ltd. owned the Delta and Pine Land Company with its thirty-seven thousand acres of cotton lands.9

  Volkart Brothers, Swiss cotton merchants, connecting cotton growers and manufacturers, 1925: purchasing and sales organization (illustration credit 11.3)

  Even in the cotton states of North America, long subject to vast infusions of European capital, the relationship between merchants and cotton growers increasingly evolved toward the imperial model pioneered in India and Egypt, which worked to marginalize cotton growers. Before the Civil War, the United States had been exceptional as the only major cotton-growing area in the world dependent on and receptive to European capital. But in the United States, unlike, for instance, India, merchants had played a relatively subordinate role vis-à-vis the powerful growers of cotton—the planters. That changed in the late nineteenth century, as merchants gained new powers and capital entered the southern countryside in new ways.10

  The slow disappearance of factors was at the core of the recasting of the cotton trade in the United States. Where factors had typically advanced capital to planters, sold their crops, and provided them with supplies, now they were displaced by merchants who settled in interior towns. As transportation and communication access to the southern hinterland improved dramatically in the wake of the Civil War, and as the empire of cotton moved farther into the West, growers sold their cotton directly to merchants or mill agents, or even to foreign buyers, instead of entrusting it for sale to a factor in a distant port. As a result, interior Texas cities such as Dallas, far away from the ocean, became important cotton-trading places in their own right. As early as 1880, Dallas counted thirty-three such cotton buyers, many of them agents of giant European and American firms, such as Alexander Sprunt of Wilmington, North Carolina, or Frank and Monroe Anderson, who, along with Will Clayton, organized Anderson, Clayton & Co. to become the largest cotton dealers in the world.11

  Jean D. Zerbini: Greek cotton merchant in Egypt (illustration credit 11.4)

  With the purchasing of cotton moving into American hinterland towns, cotton presses and gins were built there as well, and experts, such as cotton classifiers, moved in, paralleling developments in India, Egypt, and elsewhere. Local merchants began purchasing the crop, as the
telegraph communicated Liverpool and New York prices rapidly to the remotest southern towns, just as it did to Khamgaon. At the same time, the railroads increasingly brought a panoply of goods to small rural stores, further undermining the former role of the factor as supplier of plantations. And these merchants increasingly provided credit to growers, usurping yet another function of antebellum factors. The old factors responded to this new situation by becoming interior buyers themselves, another blow to the old system of factorage. As a result, “cotton marketing moved inland,” and by the early 1870s representatives of Manchester spinners purchased cotton directly in towns such as Memphis. Alexander Sprunt and Son, for example, ran purchasing agencies all over the southern states and selling agencies in Bremen, Liverpool, New England, and Japan, paralleling in many ways Volkart’s operations in India.12

  In India, Egypt, the United States, and elsewhere metropolitan capital gained new powers over cotton growers, marginalizing both local control over the trade as well as the formerly powerful cotton planters of the American South now defeated in war. Yet ironically, under manufacturers’ pressure to deliver the cheapest possible cotton, the commission-intensive business of importers, brokers, and factors were increasingly squeezed as well, and eventually replaced by a much simpler—and much less expensive—system of trade. In fact, so successful had merchants become in connecting distant growers and manufacturers to one another that their own labor had become less and less important.