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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 494.42+3.8%Jan 28 4:00 PM EST
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maceng2
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To: maceng2 who wrote (177669)9/3/2021 8:39:16 PM
From: Gemlaoshi2 Recommendations  Read Replies (1) of 219850
 
The southern planters and brokers did indeed misjudge the extent of their importance to the English cotton industry. However, it was not the blockade nor embargo that broke their back.

There was no system for capital formation in the US in the early 1800s. No national bank, no national currency, only small commercial banks that issued their own questionable paper currency.

After the Indian Removal Act, 26 million acres in what is now the "cotton belt" created a stampede for capital to finance new plantations and slaves. From 1830-1860 was the heyday of the big southern cotton plantations.

Most of the capital came from two sources: (1) Chesapeake Bay tobacco plantations that had mainly played out by 1830 and were looking for fertile land, new crops, and employment for idle slaves. (2) British merchant banks (and cotton brokers) who funneled their investments through New York affiliates or directly through their Chesapeake Bay relationships. Rothschild's and Barring's were big players.

The speculation became so risky that in the late 1850s (1858?) the Bank of England instructed all merchant banks in the City of London to offload their risk on the cotton plantation financing. They did so by the creation of "shell" state banks so that tax revenues would back the plantation debt.

So the capital formation of the plantations collapsed before the first shot was fired.

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