and cloth. From this collection of statistics I select

Reduced

profits of manufac

ture.

The condition of the cotton trade is summed up by the Statist' as follows:- Thus the position comes out worse now than in the past four years. The spinner obtains only 34d. per lb. for yarn in excess of the cost of the raw material, where he used to obtain about 4d. The manufacturer of long cloth obtains similarly less than 2d. per lb. where he has been accustomed to a margin of more than 3d. per lb. above the cost of material. Making all allowance for reduced outlay on wages, machinery, and fuel during the past year or two, the reduction of margin runs from 25 to 45 per cent., as compared with 1874. In other words, consumers of raw cotton find the gross profit, on working it up, only two-thirds of what they then obtained; they have to pay wages, buy coal and machinery, make repairs, and

live themselves, upon that fraction of the sums left for such purposes in 1874. More than that, the prices of cotton and cotton goods have been for years on the decline, and falling prices are always fruitful of loss in a trade.'

of the raw

The gradual and considerable fall in the price of Cheapness cotton is the one consolatory feature amid the prevail- material. ing gloom. It has fallen in the last ten years from 111d. to 53d. per lb., and the supply has never been more abundant than it is at the present time. The crop of 1878 was estimated by the Agricultural Bureau at Washington at 5,500,000 bales, by far the largest ever known, the nearest approach being the crop of 1877, with 4,811,000 bales.

len trade.

The history of the woollen trade for 1878 was also The woolreviewed in the Economist.' This branch of industry has not received the same compensation for the fall in prices through the reduced cost of the raw materials, which has been obtained in the cotton trade. Of woollen fabrics, a total of 32,000,000l. in 1872 has shrunk to 17,000,000l. in 1877, at least two-thirds being in the quantity of goods exported, and of the six or seven millions loss in value there is no saving whatever in the price of the raw wool, which the import tables show to have been as costly as before, though probably the cotton mixed with a large number of the articles coming under this denomination may have cost from one to two millions less.'

tions due

The causes of recent fluctuations in the cotton trade Fluctuahave been traced back by the Statist' to the American to the Civil War, which, by cutting off for four consecutive Civil War.

American

Depression mainly

duction.

years the supply of raw cotton from the Southern
States, had not only given time for clearing off the
surplus stock of goods previously accumulated, but
had created an actual scarcity. Prices accordingly
rose to an unprecedented height, and fortunes were
rapidly made. Capital eagerly rushed into a business
so exceptionally fortunate, and during the ten follow-
ing years there was a rivalry among nations in the
building of mills and the multiplication of spindles.
But gradually consumption began to lag behind pro-
duction. The void that had been occasioned by the
American Civil War was filled up, and the restriction
of the purchasing power of the nations of the world,
to which we have already referred as manifesting itself
in 1873, began to tell seriously.'

It cannot be doubted that over-production is a due to main cause of the depression in the cotton trade. An over-pro- important admission in this sense was made by the President of the Chamber of Commerce at Manchester. His words have been quoted by Mr. Morley. It is well known,' he said, that during the last ten years the building of spinning factories by private firms, and more especially by joint-stock companies, has been in the nature of a mania.' The enormous outlay of 10,000,000l. sterling represents the extension from 1865 to 1875. During this interval, 'the exports followed the increased production, until within the last three or four years the over-production of both yarn and cloth has filled every available market.'

Increased number of

spindles.

The growth in the productive capacity of our cotton mills can be most accurately gauged by a comparison

of the number of spindles at successive dates. A table published in the 'Statist' gives the following figures:

At the annual meeting of the Manchester Chamber of Commerce in 1878, an important discussion took place on the growth of our cotton industry, a condensed report of which was published in the 'Economist.' Mr. W. Hoyle declared that in the three years ended in 1851, the number of spindles in the United Kingdom was 20,937,000; in the three years ended 1861 it had risen to 30,387,000; in the three years which closed in 1871 it had further advanced to 34,600,000, while for the three years which expired in 1877 the number was 39,000,000. Taking the exports of cotton yarns for the same period, it was found that in the three years ended 1851 there were 424,000 lbs. of yarn exported; in the three years ended 1861 the export was 567,000,000 lbs. ; in the three years which terminated in 1871 the quantity exported had fallen to 538,000,000 lbs., but in the triennial period ended 1877 it had increased to 675,000,000 lbs. Turning to the number of looms in the country, he found that in 1851 there were 249,627; in 1861 the number had risen to 399,900; in 1871 to 440,676; and in 1877 to 470,000. Still more rapid

Temporary limi

tation of production,

had been the growth in the export of cotton goods. In the three years ended 1851 the export amounted to 423,900,000 yards; in the three years ended 1861 there were exported 7,902,000,000 yards; in the three years terininated in 1871, 9,553,000,000 yards; and in the three years ended 1877 the export had increased to 11,068,000,000.'

The cotton manufacture has been developed with a rapidity which has exceeded the consuming power of the world. Hence a large proportion-probably from twenty to thirty per cent.-of our machinery is standing idle. The British manufacturers have gone far beyond their rivals abroad in the rashness with which factories have been multiplied. The proportionate increase may not be so great in the United Kingdom as in some other countries which were in a singularly backward condition as compared with ourselves; but if we take the actual, as distinguished from the proportionate increase, we find that we have added ten and a half millions, while Europe and the United States together have added not more than twelve millions, to the number of spindles in operation in 1860. Our new spindles, in the seventeen years from 1860 to 1877, are more numerous than all the spindles, both new and old, existing at this moment in the United States, and show an augmentation in what the 'Statist calls the potential producing power' of over 50 per

cent.

6

As the depression has been mainly caused by excessive production, a combination of circumstances must sometimes occur in which a temporary limitation.