Gotham_ A History of New York City to 1898 - Edwin G. Burrows [267]
At almost the same time, New York merchants were gaining control of another agricultural hinterland, this one in the American South. Here the story hinged on cotton rather than foodstuffs. The world’s chief markets for raw cotton were Manchester and other great British textile manufacturing centers, where the production of muslin and broadcloth continued to drive the industrial revolution. Prior to 1790 North America had supplied relatively little of Britain’s voracious demand for cotton, in part because the time-consuming work of removing seeds from the lint made it commercially less attractive than other cash crops. Only scattered shipments passed through New York in the 1780s and early 1790s, city merchants shunning it as a “dull article.”
Then, in 1792 or 1793, a Connecticut inventor named Eli Whitney devised a handcranked mechanism—afterwards called the cotton engine, or “gin”—that did the job quickly and cleanly. Virtually overnight, the production of cotton below the Mason-Dixon line doubled, then doubled again. In 1796 over six million pounds were exported from the United States, the bulk of it to Great Britain. By 1804 cotton exports had climbed to thirty-five million pounds, and British manufacturers were buying more cotton from the United States than from Britain’s own colonial possessions. Cotton suddenly became a major component of American trade with the former mother country, and it was on the way to becoming the nation’s single most valuable export.
New Orleans shipped out more cotton than any other American city because it was cheaper and easier to raft bales down the Mississippi River than to send them overland to eastern ports. However, New York possessed several distinct advantages of its own that enabled its merchants to divert a significant part of that traffic through the East River waterfront of Manhattan.
For one, New York commanded a much stronger regional market. Slave societies couldn’t generate the same level of consumer demand for foreign manufactures as did seaboard cities and midwestern towns, so British buyers coming to New Orleans for cotton found themselves unable to sell their own exports as quickly or profitably as they could along Pearl Street or in Hanover Square. New York’s attractiveness was enhanced by a superior commercial infrastructure and abundant human resources—ships, wharves, storehouses, auction rooms, sailors, cartmen, dockworkers—which made it possible to move mammoth quantities of cotton directly to European mills more efficiently and reliably.
Above all, New York enjoyed financial resources second to none in the country. By the turn of the century Manhattan had more banks and a greater volume of financial transactions than any other American city. New York’s primacy in trade with the British Isles had also made it the nation’s principal market for the bills of exchange that were the lifeblood of international commerce. As cotton production mounted, southern planters relied more heavily on the New York financial market to turn the receipts they received from exporters into cash. Shrewd merchants like Isaac Hicks soon took to advancing money to southerners (at customary rates of interest) and, in the absence of southern banks, to handling transactions between them and northern creditors (for a percentage). From time to time Hicks also acted as an agent for southerners wanting to use the proceeds from cotton sales to speculate in other commodities on the New York market. Using “factors” (resident agents) and correspondents, other city merchants bought cotton outright from planters for shipment back to New York or, more often, directly to Liverpool or Le Havre.
New York also had an unrivaled concentration of insurance firms. During the wartorn nineties, the mounting cost of private insurance for ships and cargoes had prompted