Manchester, 2 November 1864 

Dear Hermann, 

No joy with the Niersteiner. The wine arrived here with a 
distinct sourness to it, it does not taste at all as it did at your 
house, and I shall therefore have to forgo any more orders. 

The money crisis, I think, is over. Now only 3 things can have 
any effect: 

1. possible major insolvencies owing to bad news from India. 
Such are, however, not expected by those most deeply involved. 
India had its crisis in the spring, when discount was at 32% in 
Bombay. 

2. large deliveries of cotton arriving in Liverpool, say 100,000 
bales in one week, which would mean the sudden completion of a 
mass of loss-making contracts and consequent insolvencies. This 
danger also appears to be receding. The Liverpool men know how 
deeply they are all implicated and are being extremely tolerant 
towards each other. Those who cannot pay the difference lost in 

a as an equal among equals 

full are offering part of it, and a settlement is usually reached. 
Moreover, the deliveries arriving are moderate, and the cotton 
now at sea (400,000 bales from India and China) will probably 
come little by little, and no one will be hit very hard. 

A favourable factor in both cases is that the money market is 
experiencing a decided lift and confidence is returning. 

3. if in America Lincoln were not elected. However, his 
re-election is as certain as anything ever can be in America. I have 
no doubt that the war will be continued until the South is totally 
subjugated," irrespective of who becomes President, but if 
McClellan should be elected, at least 6 months of uncertainty 
would ensue, until people learned precisely what his policy was. 
But after the elections in the individual states, there can be no 
question of that happening. 

The result of all this will, in my view, be as follows: the 
American war will continue, certainly, until late next year, and will 
end with bands of Southerners resorting to brigandry, as in 
Naples 2 years ago, in the course of which much cotton will be 
burnt. We shall therefore remain dependent on the same sources 
for our cotton as in the past year. Supplies from these are only 
increasing slowly. However, since consumption has become more 
and more limited owing to high prices, stocks of finished goods, 
even in the hands of the individual consumers themselves, must 
now be exceedingly small, and as consumption after all absolutely 
requires a very large quantity of cotton goods, I believe that 
increased demand will fully accommodate the increased supply of 
raw cotton, and, consequently, not only will the downward trend 
cease to continue, but by next summer we ought, by and large, to 
see a general rise. 

During the money crisis the price of cotton was not determined 
by the state of the cotton trade but by the state of the money 
market in general. I believe we’ve got over that now, and prices 
will once more be determined naturally by supply and demand, 
and then with the healthy state of business and the absolute 
deficiency in stocks, and with prices lower now, I am sure we can 
expect business to thrive with prices as a whole rising. 

There may yet be sporadic shocks, perhaps from India, 
perhaps from Liverpool. We may, in consequence, again find 
ourselves momentarily somewhat depressed, but it cannot last, nor 
will it be of any import, and it would assuredly be an error to 
speculate a la baisse? on such evidence. Conversely, I am equally 

4 on prices falling 

persuaded that any attempt to force prices up again rapidly would 
immediately be frustrated by the customers here and by the 
money market, too. This was already shown yesterday. Cotton has 
risen 3-3'/,d. above its lowest point, yarns 1d., in some instances 
1'/,d. Yesterday, the spinners were demanding a further increase 
of approx. Id., and business* came to an immediate halt. If we 
succeed in forcing prices down another '/y penny @ 1 penny in 
Liverpool, the spinners will be able to accept the prices being 
offered; otherwise, the purchasers will presumably have to pay the 
extra in the end, as the demand is undeniably there. 

Sewines were still very quiet, especially seven ieas, for which there 
is not a buyer to be found. 

This is my opinion. We are covered for one to two months and 
are expecting substantial orpers in a week or two. 

Please pass on my regards to Emma, the little ones, Rudolf, 
the Blanks and the Boellings, and, if you are writing to 
Engelskirchen, then to mother? and everyone there, too. The 
chicaneries arising from the fal] in prices have caused me a deal of 
botheration. 

Your 
Frederick