Abraham Lincoln’s war on King Cotton

By most conventional measures, the balance of economic power in the American Civil War was tipped highly in favour of the Union. In terms of raw population, the states loyal to the Union in 1861 mustered 23 million people against around nine million in the new Confederacy. Even those numbers are misleading, as those ‘southerners’ include the slaves. The North had access to around 3.5 million men of military age against the South’s one million white men of fighting age. Around 90 per cent of the nation’s manufacturing plants were to be found in the north, together with about 70 per cent of America’s railtrack and more than 85 per cent of the country’s banks. The North, in other words, had a preponderance of manpower, industrial clout, transport infrastructure and financial capital.

And yet, as the war began in the summer of 1861, many in the South – and a fair few northern observers – were convinced that the South had control of the key economic weapon: cotton.

In a stormy Senate debate in 1858, South Carolina Senator James Henry Hammond declared that:

Without firing a gun, without drawing a sword, should they make war on us, we could bring the whole world to our feet. What would happen if no cotton was furnished for three years? I will not stop to depict what everyone can imagine, but this is certain: England would topple headlong and carry the whole civilised world with her, save the South. No, you dare not make war on cotton! No power on earth dares to make war upon it. Cotton is King.

Between 1861 and 1865 President Lincoln dared to test Hammond’s proposition and make war on cotton.

Hammond’s logic looked, at first glance, to be sound. The slave labour-based rural economy of the Deep South did produce an awful lot of cotton, which was one of the key commodities of the mid-19th century economy.

Textiles were the poster child of Britain’s Industrial Revolution and a sector that, more than any other, had propelled the country into its position as the first industrial nation and the world’s leading economy by the middle of the century. A series of inventions – from the flying shuttle in the 1730s to the power loom in the 1780s – had revolutionised textiles production and, when coupled with the factory system, saw output and employment in the mills soar to previously unthought-of highs. As late as 1788, the entire British linen industry had used around 50,000 spindles. By 1860 there were an estimated 30 million spindles in Lancashire alone. Manchester, nicknamed Cottonopolis by the 1870s, sat at the centre of the industry. A thriving city of more than 330,000 by 1861, it had quintupled in size since 1800. Thirty or so miles away, and linked to Manchester by both canals and rail, Liverpool was the world’s busiest port, with much of that business being made up of the importation of raw cotton and the export of finished linens. About half of British goods exports were composed of cotton products. According to the 1861 Census, 456,646 people in Britain worked in cotton textile manufacturing, around 10 per cent of all manufacturing workers or two per cent of the total population.

All those spindles needed a large supply of raw cotton to keep on operating. Raw cotton, which was impossible to grow in a Western European climate, had to be imported. Imports leapt from just 2.5 million pounds annually in 1750 to 52 million pounds by 1800. But the industry continued to expand at breakneck pace. By 1850, Britain’s annual imports of raw cotton were running at 588 million pounds.

Here lay the supposed power of King Cotton because, by the late 1850s, the United States – and in particular the states of the lower South – were providing between 75 and 80 per cent of it. Senator Hammond, and his fellow secessionists, could see the crucial role that textiles manufacturing played in the British economy and the seeming dependence of that industry on access to a raw commodity from the South. Threaten to cut off the flow of raw cotton and surely Britain would see that it had no choice but to, at the very least, recognise the independence of the Confederacy and pressure the Union to make peace? Indeed, in April 1861, when the war correspondent of The Times found himself in Charleston covering the stand-off over Fort Sumter, one dining partner explained to him that ‘we have only to shut off your supply of cotton for a few weeks and we can create a revolution in Great Britain… No sir, we know England must recognise us’.

The actual use of the cotton weapon followed a strange course. To begin with, as states began to secede from the Union towards the very end of 1860, some of them, together with individual planters in other members of the breakaway states, began to restrict their cotton exports both to the mills of New England and to those of the old world in both Britain and France. The Confederate government as a whole did not endorse this policy, but it did ban trade with the Union and moved to reduce exports to Europe. Furthermore, as Confederate armies were driven back in the western theatre of the war, they burned stockpiles of cotton rather than let them fall into enemy hands.

Rather quickly, the South as a whole began to rethink the strategy of self-embargoing its own primary export in order to draw Britain and France into the war. Confederate leaders were quick to grasp that the export earnings from raw cotton could be transformed into weapons, ammunition and other vital military needs purchased in Europe. The Union grasped this, too. When the real cotton embargo came, it was imposed not so much by Southern planters choosing to exercise their leverage on European mills but by the United States navy imposing a blockade.

President Lincoln announced the blockade in April 1861 and gradually expanded it. This took time. Getting the blockade up and running required a navy capable of covering a coastline stretching for more than 3,500 miles of the Atlantic and the Gulf of Mexico and, as late as March 1861, the US Navy had only 42 ships in commission. By Christmas 1861 a crash-building programme, together with the taking of many previous civilian vessels into service, had grown the fleet to 264 ships. Two years later in December 1863, the fleet mustered 588 ships and by the end of 1864, 671. In just four years the US Navy grew from one of the world’s smallest to the largest fleet in the world. The blockade was further tightened as the Union used its domination of the seas to land expeditionary forces and seize key Confederate ports.

The effectiveness, or not, of this blockade still provides a source of some contention, often made worse by too much trading of misleading statistics. For the US Navy, running this blockade was tedious work. An average of 150 ships were on patrol at any given time over the course of the war and, as one officer wrote to his mother, this was unpleasant work; he advised her that if she wanted an insight into his typical duties, ‘go to the roof on a hot summer day, talk to a half-dozen degenerates, descend into the basement, drink tepid water full of iron rust, climb to the roof again, and repeat the process until [you are] fagged out’. Boring as the day-to-day operations may have been, the Union navy slowly developed a broadly effective system. Smaller picket boats hung close to enemy harbours and inlets, keeping an eye out for ships attempting to enter or exit, and, on spotting them, fired a flare to attract the support of their larger peers. Further out, a second cordon of Union ships patrolled over a wider area.

It was less tedious for the blockade runners of the other side. By 1862, the blockade runners were generally small and fast, designed specifically for their purpose, and mostly constructed in British yards. Painted grey to blend in with the sea and employing smokeless anthracite as further camouflage, a fair few British seamen served on them and seemed to relish the thrill. As one later wrote: ‘pig-sticking, steeple-chasing, big-game hunting, polo – I have done a little of each – all have their thrilling moments, but none can approach running a blockade’.

In reality, enforcing a blockade – especially against the later generation of purpose-built and well-crewed runners – was tricky. Cordons were always rather porous. Of slightly more than 2,700 attempts to run the blockade between 1862 and 1865, around 1,900 were successful. But such a high success rate at evasion misses the wider point. The blockade worked not so much by catching those attempting to break it but by deterring most shipping from happening at all.

Raw cotton exports from the United States collapsed as a result of the initial voluntary embargo and then the Union’s naval operations. In 1860 the United States, before the secession of the southern states, exported 3,615,000 bales of cotton. Exports in 1861 were just 10,000 bales, in 1862 23,000 bales and in 1864 24,000 bales. What had been a torrent of raw cotton flowing into European markets became a sporadic trickle, a period described by economic historians as ‘the cotton famine’.

For Britain, the numbers were stark. Cotton imports from what had been the United States fell by more than 90 per cent and the price of a pound of raw cotton in Liverpool leapt from about 15 US cents in 1860 to more than $1.10 by 1864. These were surely the sort of numbers that Senator Hammond might have expected to cause Britain to ‘topple headlong and carry the whole civilised world with her’. But while the British economy certainly did wobble, there was no toppling. Several factors were at work.

First, 1859 and 1860 had seen bumper crops in the South and higher than usual export volumes. British merchants and manufacturers had been happy to meet the sudden glut and lower prices had increased their inventories of raw cotton. That meant that, initially at least, the reserves already in the system could substitute for the shortage of new imports and stocks could be run down in the face of reduced flows. What is more, it seems that the larger – and more efficient and profitable – mills were better provisioned than their smaller peers. In the first wave of the cotton famine, it was the smaller firms more likely to fail and go bankrupt, often allowing the larger mills to snap up their equipment at knockdown prices.

Over the course of 1863 and 1864, imports of cotton from – in particular – Egypt and India began to pick up, rapidly replacing around half the missing southern bales. None of which is to deny that, especially in 1862 and 1863 when reserves had been run down and the alternative supplies were not available, there was serious economic pain in Lancashire. In cotton districts, Poor Law expenditures, the nascent local welfare system that gives the best clues to the level of societal stress, were running at around three and a half times their pre-war level by 1863. An emergency public works programme was put in place whereby local authorities could borrow money from central government and spend it on putting people to work building, among other things, the so-called ‘cotton famine roads’, some of which are still part of the modern road network.

But, and this is the big but, outside of Lancashire the picture was rather different. Poor Law relief spending outside of the cotton districts was essentially unchanged. Because while the cotton reliant parts of the economy suffered, many other bits did rather well out of the war. Take wool manufacturing for example. While not as high profile as cotton textiles with their booming trade and half a million workers, the woollen textiles still employed around 175,000 workers – concentrated in Yorkshire and Ireland. And with cotton on the ropes, they regained some market share. Exports of woollen goods rose from around £15 million in 1861 to more like £25 million by 1865. Or take arms manufacturing. While the government technically banned arms sales to either the United States or the Confederacy, ways around this were found. Arms exports trebled over the course of the war. Another major winner was merchant shipping. In 1860, the US merchant marine was one of the British merchant marine’s major global competitors. But the rapid growth of the US Navy shrank the US civilian fleet and, at least in the first half of the war, the threat of Confederate privateers against US flagged commerce made it much less attractive to third parties. Total British merchant tonnage grew by a fifth over the course of 1861 to 1865.

Cotton was a vital British industry and there is little doubt that the overall net impact of the cotton famine and the American Civil War was negative for the British economy. But it did not fall into catastrophe and, despite Confederate predictions, nor did Britain experience a revolution.

Economies are surprisingly adaptable and resilient systems. In Britain’s case in the 1860s, when faced with the loss of a seemingly vital import, the result was not an immediate collapse but an – often painful, especially for Lancashire textile workers – adaptation. Inventories were run down where they could be, firms consolidated, alternative suppliers were found, and public policy helped to ease the worst affected areas. Meanwhile other sectors of the economy expanded into the gaps left by the cotton textile downturn and firms grew in response to new opportunities in arms manufacturing and shipping.

Even if King Cotton had produced the devastating economic consequences in Britain – and France – that Senator Hammond foresaw, it is still, at best, debatable whether the European powers would have been prepared to intercede on behalf of the Confederacy. Even those whose economic interests were tied to Confederate cotton often opposed supporting the South on moral grounds, not least many associations of Lancashire workers.

The South learned between 1861 and 1865 that economic weapons can indeed be powerful tools but that predicting the course of any economic war, much like an actual conflict, is fraught with difficulty. Southern cotton was a vital commodity for Britain’s economy when it was widely available and cheap. When those facts changed, the economy changed, too.