The Sun.
London, England, 1866-06-19 00:00:00

Cotton from America and Cotton from
India.

The disturbance of the cotton trade caused by
the War in America has been the main cause of the
financial difficulties in England. The reason being
simple, requires no profound reflection to elucidate.
When the Southern States ceased to supply the raw
material to our Manchester looms, that material
was sought for mainly in India and in Egypt. The
West Indies, Turkey, China, the South Sea Islands,
and even Australia, were invited to produce their
quota, but these supplies were mere adjuncts ;—on
India rested the hopes of our manufacturers, and
their efforts were almost wholly directed to our
Eastern Empire. To stimulate the production an
enormous price was offered, and agents passing
freely into the interior bid against each other for
every pound of the growing crops. " Promises to
" pay" have little weight with the Hindoo culti-
vator ; they require hard coin, and millions were
poured into Bombay, and scattered broadcast by
these agents over Hindostan. The natives absorbed
the money as fast as it arrived, and it disappeared,
making little or no sign in the country, though in
the Presidency town the part that remained in the
hands of the merchants and exporters produced a
wonderful result. A sudden and unlooked-for in-
flux of money almost invariably produces a
like result—it is the old story of putting a
beggar on horseback. The affairs of the so-
ber citizens of Bombay became expanded with a
growing inflation, the wildest
reclamation schemes
found eager supporters and were quoted at
extravagant premiums, financial bubbles arose with
the most alluring colours, and banking institutions
grew up like mushrooms, sufficient for the monetary
affairs of a mighty empire. We will take another
opportunity of describing Bombay under the forcing
process of the cotton demand, transferred by the
American War to that port from New Orleans.
What happened in England is our object here to
show. Cotton became the great medium of specu-
lation,—and Bombay and Alexandria became the
two great marts. It mattered little to the Liver-
pool speculator to what result his operations were
likely to lead ; his calculations were simply based
on the margin of gain to himself. Every steamer
to the East carried away vast sums of the precious
metal, and the Peninsular and Oriental Company's
steamers poured into Bombay nearly all the gold
of Australia. Thus England suffered from the
double process ; losing at the same time her own
currency, while the supplies from her gold-producing
colonies were intercepted; and the whole was
shovelled in untold quantities into the same sink.
For this money there was no return but bad cotton,
ill-dressed, ill-cleaned, and packed with dirt to add
to its weight. The Hindoo grew fat on the spoil ;
Bombay expanded like a balloon ; and the Liver-
pool speculators made rapid fortunes. The port of
Alexandria became thronged with Liverpool
steamers, trade with the East became brisk, and
great gains were realised out of the countless
thousands of English sovereigns. But in proportion
as the hoards grew large in the hands of the Hin-
doos and Egyptians, the bullion in the Bank of
England decreased, and the rate of discount rose.
Fluctuations in the value of money became violent,
and merchants ceased to be able to calculate
to what their commitments would lead. Under
the Bank Act of 1844, the currency of this country,
sufficiently restricted already, became totally un-
equal for the work of its gigantic and growing com-
merce. Thus, while the medium on which we base
our barter was lying buried in far away villages
of Hindostan and Egypt, England was passing
through a series of small panics, to end in the Great

Financial Crash of May, 1866. The violent dis-
turbance caused by the sudden transition of the

,rade in this staple, from the West to the East,

seems to have enriched few and ruined many. It
revolutionised the economy of our Eastern empire,
unsettled wages and the price of commodities, pro-
duced two great panics in Bombay, and built up a
precarious and unstable trade.

The return of the cotton trade to its old channel
should be hailed by the Anglo-Saxon race, both here
and on the other side of the Atlantic, as almost an
unmixed good. The staple of the Southern States
is paid for by English manufactures. It gives rise
to an exchange profitable alike to the agriculture,
labour, and skill of both countries. Cotton from
America means a good material for our looms, in-
creased trade, and cheap money. Cotton from
India means a bad material, dear money, and violent
fluctuations. We hair° no wish to see a monopoly
in the hands of any nation ; but if there must be
a monopoly, it would be better that it benefited

directly the two sections of our race where it pro-

duces so profitable an exchange ; and on the

whole is attended with fewer dangers of a disas-

,rous disturbance. Though our Indian Empire would

undoubtedly be benefited if the trade which has
grown up could be made permanent, yet we cannot

see that it would be for the good of this country to
maintain that trade at so frightful a cost. However
admirable a being may be the " gentle Hindoo,"

we would rather that the Southern States of Ame-

rica should grow in material prosperity and bloom
with cultivation, than that the followers of Bramah
should bury our money in earthen jars, or string it
in bracelets around the arms and ankles of their
women and children ; while here, in London, sound
banking institutions Ahould go down with a crash,
and commercial firms, with assets in excess of their

liabilities, should break for lack of the ordinary
accommodation which such institutions when sound
should always bo able to commana.—Anglo-Ameri-
can limes.

Railway and Other Companies.