The Cotton Trade

Cotton dominated the global economy in the early 19th century, joining tens of millions of people in a sprawling network of economic relationships. This system linked plantations in the American South and their slave labor with cotton factors, brokers, merchants, shippers, bankers, and insurers on both sides of the Atlantic; and ultimately, with the workers who spun cotton into finished cloth in factories in England and the United States.

Virtually all U.S. businesses operating in the first half of the 19th century participated in this system directly or indirectly. In this period, the U.S. economy was a slave economy, impacting the politics, economics, regulations and culture of every U.S State and Territory, whether in the North, South or West. While many commodities derived from U.S. farms and plantations, cotton alone accounted for 50% of total U.S. exports and was at the heart of booms and busts through the antebellum era.

Thousands of specialist players enabled the system financially by advancing money to brokers, traders, factors, and merchants; by financing shipbuilding, arranging shipments as principals and agents on consignment, and insuring shipments of cotton; by supporting local banks that made loans to planters and manufacturers; and by otherwise financing much of the movement of raw cotton and cotton products from one side of the Atlantic to the other. Borrowers put everything on the line including land, slaves, and machinery to collateralize this system of cotton finance.

Much is made of Alexander Brown’s origins as an importer of fine linens from his Irish homeland. Not long after his arrival in Baltimore in 1800, he also began to solicit consignments of U.S. products for sale abroad. Among these were flour, tobacco, cotton, coffee, cocoa, and sugar produced by slave labor in the United States and Latin America.

As cotton grew into America’s dominant crop, and a staple of industrial demand in the United Kingdom, the Browns appointed agents in Charleston, Mobile, New Orleans, and Savannah. Acting on behalf of the Browns, these agents advanced money on cotton consigned to the Browns in Liverpool, raised a flow of goods for the Browns’ ships, and bought bills of exchange denominated in foreign currencies for U.S. dollars. From roughly 1818 to the 1840s, Brown Brothers was one of the largest providers of cotton export finance in the U.S. and simultaneously one of the largest providers of cotton import finance in the U.K.

At least one of the Browns’ agents, James Adger of Charleston, was known to have owned slaves. There is no known instance of slaves being owned by members of the Brown family or being transported on any of the Browns’ ships. (Alexander Brown and Brown Brothers & Co. were unrelated to the Brown brothers of Rhode Island.)

In the depression that followed the Panic of 1837, a number of prominent southern planters went bankrupt, leading Brown Brothers in New York to foreclose on property that had served as collateral for the firm’s cash advances. The properties included several cotton plantations in the South. Brown Brothers hired resident managers to operate the plantations until the businesses could be sold.

Records from the time attest to the Brown family’s awareness of the contradiction in their business activities and their personal behaviors in support of abolition. The firm began a gradual withdrawal from the cotton business in the 1840s. In the years preceding the Civil War, the sentiments of the Brown family had firmly coalesced behind abolition, the Republican party, and the Union cause. As the Civil War began, John Crosby Brown spoke for the firm in saying, “the system of slavery is so abhorrent, I will do everything in my power to bring it to an end.”

Through the Civil War, family and nonfamily partners of Brown Brothers & Co. invested on their own account to finance the Union. On both sides of the Atlantic, Browns lobbied government officials to sustain British neutrality. Milnor Brown, son of Brown Brothers Partner Stewart Brown gave his life at the Battle of Gettysburg. Senior Partner James Brown’s youngest son, Clarence, enlisted in his local regiment shortly after the attack on Fort Sumter in 1861 and served with distinction. At the conclusion of the Civil War in 1865, James Brown backed the launch of a journal, The Nation, to supply the intellectual foundations for a postwar America based on racial equality and the enfranchisement of African-Americans.

Brown Brothers Harriman & Co.’s 200-year legacy mirrors America’s economic history. Nothing in America’s history is as shameful and abhorrent as slavery. Today, the firm is deeply remorseful for Brown Brothers’ involvement in the cotton trade which relied on slave labor. Brown Brothers Harriman is committed to promoting equal opportunity and racial equity within the firm and in our communities, and to fostering an open and inclusive environment.

For Further Reading

  • Edward E. Baptist, The Half has Never Been Told: Slavery and the Making of American Capitalism. New York: Basic Books, 2014.
  • Sven Beckert, Empire of Cotton: A Global History. New York: Knopf, 2015.
  • John Crosby Brown, A Hundred Years of Merchant Banking. Privately printed, 1909
  • John Killick, “Risk, Specialization and Profit in the Mercantile Sector of the Nineteenth Century Cotton Trade: Alexander Brown and Sons, 1820-80,” Business History, 16:1 (1974), pp. 1-16.
  • John Killick, “The Cotton Operations of Alexander Brown & Sons in the Deep South, 1820-1860,” The Journal of Southern History, 43:2 (May 1977), pp. 169-194.
  • John A. Kouwenhoven, Partners in Banking. New York: Doubleday, 1968.
  • Bonnie Martin, “Slavery’s Invisible Engine: Mortgaging Human Property,” Journal of Southern History 76 (2010), 817-866.
  • Edwin J. Perkins, Financing Anglo-American Trade: The House of Brown, 1800-1880. Cambridge, Mass: Harvard University Press, 1975
  • Harold D. Woodman, King Cotton and His Retainers: Financing and Marketing the Cotton Crop of the South, 1800-1925. Lexington: University of Kentucky Press, 1968.
  • Zachary Karabell, Inside Money: Brown Brothers Harriman and the American Way of Power. New York: Penguin Press, 2021.
  • “Memoranda dated November 1842 and November 1845, Year End Accounts 1840-1846, Brown Brothers Harriman Historical File, New-York Historical Society.
  • “New Orleans Agency Correspondence,” Box 6, folder 6, Brown Brothers Harriman Historical File, New-York Historical Society.

200 Years of Partnership

Brown Brothers Harriman & Co. (“BBH”) may be used as a generic term to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2021. FIRM-00337-2021-04-20

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