In substance the principal effect of the War on the English cotton trade for the first seven or eight months was felt, not in the manufacturing districts but in the Liverpool speculative and importing markets of raw cotton.  Prices rose steadily to over a shilling a pound in October, 1861.  On November 23 there was a near panic caused by rumours of British intervention.  These were denounced as false and in five days the price was back above its previous figure.  Then on November 27 came the news of the Trent and the market was thrown into confusion, not because of hopes that cotton would come more freely but in fear that war with America would cause it to do so.  The Liverpool speculators breathed freely again only when peace was assured.  This speculative British interest was no cause for serious governmental concern and could not affect policy.  But the manufacturing trade was, presumably, a more serious anxiety and if cotton became hard, or even impossible to obtain, a serious situation would demand consideration.

In the generally accepted view of a “short war,” there was at first no great anticipation of real danger.  But beginning with December, 1861, there was almost complete stoppage of supply from America.  In the six months to the end of May, 1862, but 11,500 bales were received, less than one per cent. of the amount for the same six months of the previous year[673].  The blockade was making itself felt and not merely in shipments from the South but in prospects of Southern production, for the news came that the negroes were being withdrawn by their masters from the rich sea islands along the coast in fear of their capture by the Northern blockading squadrons[674].  Such a situation seemed bound in the end to result in pressure by the manufacturers for governmental action to secure cotton.  That it did not immediately do so is explained by Arnold, whose dictum has been quite generally accepted, as follows: 

“The immediate result of the American war was, at this time, to relieve the English cotton trade, including the dealers in the raw material and the producers and dealers in manufactures, from a serious and impending difficulty.  They had in hand a stock of goods sufficient for the consumption of two-thirds of a year, therefore a rise in the price of the raw material and the partial closing of their establishments, with a curtailment of their working expenses, was obviously to their advantage.  But to make their success complete, this rise in the price of cotton was upon the largest stock ever collected in the country at this season.  To the cotton trade there came in these days an unlooked for accession of wealth, such as even it had never known before.  In place of the hard times which had been anticipated, and perhaps deserved, there came a shower of riches[675].”

This was written of the situation in December, 1861.  A similar analysis, no doubt on the explanations offered