William George Freeman, Sydney John Chapman, and Allan Noble Monkhouse

“ Points of honour in the Manchester business may seem to be arbitrarily selected, but they are an important part of the scheme. An immense amount of business is done without any apparent check against repudiation. It is, of course, the verbal bargain that binds, and large transactions are commonly completed without witnesses, though before the contract or memorandum of sale passes the fluctuations of the market may have made the bargain, to one side or the other, a very bad one. ”

“ Thus when prices have advanced the manufacturer may find it difficult to obtain delivery of the yarn that he had bought at low rates, for some spinners have a curious, indefensible preference for delivering their higher-priced orders; and, on the other hand, when prices have fallen the manufacturer sometimes ceases to take delivery of the high-priced yarn and actually purchases afresh for his needs. Yet positive repudiation is very rare though compromises are not uncommon, and a good many illogical arrangements are made that imply forbearance and amity. ”

“ This would be so if people acted independently and without guidance, but actually they are sometimes misled by published advice and movements in the market intended to deceive them, and, even when they are not, they watch each other’s attitudes and tend to act as a crowd. The mass becomes unduly sanguine or weakly surrenders to panic. Hence the law of error does not apply, and speculation by the public may unsteady prices. Again, dealers sometimes try to create corners and form powerful syndicates for that purpose: the dealing syndicate of late years has become a force to be reckoned with. ”

“ By far the majority of Lancashire manufacturers sell their goods as they come from the loom, or, as it is called, in the “grey state,” but an increasing number now cultivate the trade in finished goods. Usually the manufacturer sells either directly or through an agent to a merchant who sells again to the shopkeeper, but the last twenty or thirty years have seen a considerable development of more direct dealing. Some manufacturers now go to the shopkeeper, and this has made it difficult for the merchant with a limited capital and therefore a limited assortment to survive. ”

“ Nothing definite can be said with regard to a rotation of crops upon the cotton plantation. Planters appreciate generally the value of broad-leaved and narrow-leaved plants and root crops, but there is an absence of exact knowledge, with the result that their practices are very varied. It is believed that the rotation must differ with every variety of soil, with the result that each planter has his own method, and little can be said in general. ”

“ Much buying might take place when stocks were scanty, with the result that prices would be needlessly forced up; and when stocks were plentiful demand might be weak and prices, therefore, be unduly depressed. It is evident that the buying of cotton on the principles suggested would be calculated to cause great unsteadiness of prices, especially as cotton is not continuously forthcoming, but is produced periodically in harvests. Demands for yarn cannot be expected to come always at the most favourable time socially for the distribution of the cotton. ”

“ Those manufacturers who act as merchants aim to retain the merchant profit and must employ a merchant capital in stocks. There has been a tendency, indeed, to make the manufacturer the stock-keeper, and some merchants do little more than pass on the goods a stage after taking toll. The great improvement in trade during 1905 and 1906 checked this tendency, and probably the manufacturing extensions owed something to the capital set free by the reductions of stocks. ”

“ A good many firms venture occasionally to buy in anticipation of their customers’ needs, especially when they expect a rising market. During the great trade “boom” of 1905 there was a good deal of buying by exporters in advance of their indents because manufacturers continued to contract engagements which threatened to exclude dilatory buyers. On the whole, however, what may be called the speculative centre of gravity of Great Britain’s export business in cotton goods is not in Manchester but abroad. ”

“ In the United States there has been an arduous struggle over this question, and combinations of merchants have sometimes compelled favourable terms. In England, though the merchant has maintained a great part of the trade with shopkeepers, the developing trade with makers of shirts, underclothing, &c., is mainly done by the manufacturers directly, and perhaps the simplification of relations by direct dealing in the cotton trade has now reached a point of fairly stable compromise. The tendency to direct trading is naturally controlled by the exigencies of capital. ”

“ The great general houses such as Rylands’s, Philips’s and Watt’s in Manchester, and Cook’s and Pawson’s in London, some of which are manufacturers to a minor degree, continue to flourish because under one roof they can supply all that the draper requires, and so enable him to economize in the time spent in buying and to save himself the trouble of attending to many accounts. Some general merchants, indeed, supply what are practically “tied houses,” which give all their trade in return for pecuniary assistance or special terms. ”

“ The colonies and dependencies of Great Britain, including India, seemed well able to grow all the cotton that could be required, whilst numerous other countries were ready to afford their co-operation. A powerful stimulus was thus given to the growth of cotton in all directions; a degree of activity and enterprise never witnessed before was seen in India, Egypt, Turkey, Greece, Italy, Africa, the West Indies, Queensland, New South Wales, Peru, Brazil, and in short wherever cotton could be produced ”

“ The Manchester Royal Exchange.—There are not many cotton mills or weaving sheds in Manchester, which is, however, the great distributive centre, and its Exchange is the meeting-place of most classes of buyers and sellers in the cotton trade and various trades allied to it. As buyers of finished goods for London and the country do not attend it, certain departments of the home trade are hardly represented, but practically all the spinners and manufacturers and all the export merchants of any importance are subscribers. ”

“ Possessing soil, climate and apparently all the requisite elements from nature for the production of cotton to an almost boundless extent, and of a useful and acceptable quality, India for a long series of years did but little towards supplying the manufactures of other countries with the raw material which they required. Between the years 1788 and 1850 numerous attempts were made by the East India Company to improve the cultivation and to increase the supply of cotton in India, and botanists and American planters were engaged for the purpose. ”

“ The essentially dishonest practice of deluging yarn with water, which has sometimes even degenerated into the use of weighting materials deleterious to weaving, has been recognized as a great nuisance, but while various attempts have been made to protect the buyer the question seems to have pretty well settled itself on the principles which commonly rule the sales of commodities between those who intend to do business continuously. ”

“ Cultivation in the United States.—The United States being the most important cotton-producing country, the methods of cultivation practised there are first described, notes on methods adopted in other countries being added only when these differ considerably from American practice.
The culture of cotton must be a clean one. It is not necessarily deep culture, and during the growing season the cultivation is preferably very shallow. The result is a great destruction of the humus of the soil, and great leaching and washing, especially in the light loams of the hill country of the United States. ”

“ There is a considerable amount of re-selling both in yarn and cloth, and, though the bulk of cotton goods finds the way through regular and normal channels to the consumer, these channels are not always direct. A good many transactions on the Manchester Exchange are intermediate, without fulfilling any useful function, and could be accomplished by the principals if they were brought together. Agents, of whom there are many, sometimes occupy a precarious position, but they are protected in some degree by law as well as by the custom of the trade and the point of honour. ”

“ Clay and “bottom” lands produce a large, leafy plant, yielding less lint in proportion. The most suitable soils are medium grades of loam. The soil should be able to maintain very uniform conditions of moisture. Sudden variations in the amount of water supplied are injurious: a sandy soil cannot retain water; on the other hand a clay soil often maintains too great a supply, and rank growth with excess of foliage ensues. The best soil for cotton is thus a deep, well-drained loam, able to afford a uniform supply of moisture during the growing period. ”

“ Now frequency of movement, average daily price variation, and range of price movements are matters of fundamental importance to the public. Hence for practical purposes we require several kinds of measurement of price movements, and it is impossible to weigh exactly the one against the other in respect of importance. Observe that an increase of the frequency of movement, or even of the average daily movement, is not necessarily objectionable, since changes are less harassing when they take place by small increments than when they are brought about by a few big variations. ”

“ Various finishing processes, and particularly the mercerizing of yarn and cloth, have increased the possibilities in cotton materials, and while staples still form the bulk of our foreign trade, it seems that as the stress of competition in these grows acute, more and more of our energy may be transferred to the production of goods which appeal to a growing taste or fancy. ”

“ There is in the cotton states a rural population of over 7,000,000, more or less occupied in cotton-growing, and capable, at the low average of 100 ℔ a day, of picking daily nearly 500,000 bales. It is evident, therefore, that if this number could work through the whole season of 100 days, they could pick three or four times as much cotton as the largest crop ever made. Great efforts have been made to devise cotton-picking machines, but, as yet, complete success has not been attained. Lowne’s machine is useful in specially wide-planted fields and when the ground is sufficiently hard. ”

“ The chief distributing centre of cotton made-up goods is London, though a considerable trade is done through wholesale houses in Manchester and elsewhere. Large warehouses in the city of London carry on the trade and frequently supply Lancashire with her own goods. Of course the partial loss of the piece-goods trade by the shops is not a loss in aggregate trade, as they are the ultimate distributors of the made-up garments, which are probably at least as profitable to retail as calico or flannelette sold in lengths. ”

“ The risks of anticipating are carried by those who create or hold “futures” without a hedge. In order to facilitate business, “futures” are all drawn in the same unit (100 bales) , and are all based on the same class of cotton, namely Upland cotton of middling grade of “no staple” (i.e. with a fibre of about 3/4 in.) and of the worst growth. American cotton, we may remind the reader, is graded into a number of classes, both on the Liverpool and New York Exchanges, and an attempt is made in each market to keep the grades as fixed as possible. ”

“ In the future Korea may become an important source of supply for Japan, especially if, as appears likely, Korea proves suited to the cultivation of American cotton.
Japan received cotton from India before China, and the plant is extensively grown, especially in West and Middle Japan. The production is not sufficient to meet the home demand; during the five years of normal trade before the war with Russia Japan imported annually about 800,000 bales of cotton, chiefly from British India, China and the United States, and during the same period exported each year some 2000 bales, mainly to Korea. ”

“ The housewife long persisted in deceiving herself by purchasing filled calicoes, and the movement in favour of purer goods owes a good deal, strangely enough, to the increase in the making-up trade and the consequent inconveniences to workers of sewing machines, whose needles were constantly broken by hard filled calicoes.
This development of the making-up trade has become an important element in the home trade, and it has greatly reduced the retail sale of piece-goods. The purchase of ready-made shirts, underclothing, &c., corresponds to a change in the habits of the people. ”

“ The two great centres of production are Oldham, in which American cotton is chiefly, though not exclusively, spun, and Bolton, which spins the finer counts from Egyptian or Sea Island cotton. Spinning mills are established, however, in most of the large Lancashire towns as well as in some parts of Cheshire and in Yorkshire, where there is a considerable industry in doubling yarns. The centre of trade is the Manchester Royal Exchange, and though some companies or firms prefer to do business by means of their own salaried salesmen, managers or directors, most of the yarn is sold by agents. ”

“ The average annual production in India approximates to 3,000,000 bales. The area under cotton in all British India is about 20,000,000 acres, the crop being grown in a very primitive manner. The bulk of the cotton is of very short staple, about three-quarters of an inch, and is not well suited to the requirements of the English spinner, but very large mills specially fitted to deal with short-stapled cottons have been erected in India and consume about one-half the total crop, the remainder being exported to Germany and other European countries, Japan and China. ”