Jute, synonymous with the coarse textile burlap, was widely used during the late nineteenth century to wrap cotton bales for domestic and international transport and sale. In 1888, a business cartel known as the jute-bagging trust (also known as the jute trust or jute cartel) formed in the United States to control the production, distribution, and price of this packaging material. The trust colluded to limit production and sharply increase jute-bagging prices, drawing the wrath of the Populist movement, particularly in the South, where farmers relied upon jute to prepare their cotton for market. The Southern Farmers’ Alliance and the Georgia Alliance were at the forefront of efforts to boycott jute and to substitute cotton baling as an alternative. By the spring of 1891 Populists had forced prices to below 1888 levels, and the outcome of the conflict is generally interpreted as a victory, if a somewhat hollow one, for the Populist cause.
Jute was an essential component of the transatlantic cotton economy. Every cotton bale that was packaged and shipped to the various exchange markets required roughly seven yards of jute baling. Although there were high protective tariffs in place against the importation of manufactured jute textile, most of the jute used to package southern cotton was produced—either in St. Louis, Missouri, or Brooklyn, New York—from raw jute imported from India. On the eve of the jute conflict, the annual American cotton crop required more than 50 million yards of jute bagging.
In the post–Civil War period, the price of jute bagging remained flat, but prices crashed dramatically when Congressman Roger Mills introduced a bill to end the protective tariff against jute textile imports in early 1888. Mills's efforts triggered a panic among jute producers and distributors, who, fearing their reserves would become worthless, began to cut prices and liquidate stocks. As a response to this sudden crisis, industry leaders began efforts not only to lobby against the proposed bill but to organize the collaboration of the production and distribution of jute bagging. The large St. Louis firm of Warren, Jones, and Gratz urged other companies to join the cartel. The plan involved the further coordination and centralization of jute distribution and—perhaps more importantly—to restrict production by offering smaller firms money to remain idle.
The immediate outcome of the formation of the trust was a sharp increase in the price of jute. In late July and early August 1888, the price of jute nearly doubled. southern cotton producers were already reeling under the weight of the one-crop system and declining cotton prices of the 1880s. Cotton farmers allied with southern Populists had the organizational capacity to mobilize against the trust and immediately began two related efforts to break the power of the new cartel.
But the widespread adoption of cotton baling remained problematic. Not only were there insufficient amounts of cotton baling, it was significantly more expensive than jute. But there was a possible solution to this dilemma involving the tare, or the deduction by the various exchange markets to account for the weight of the baling. The international exchanges used the “Liverpool system”: for each 500-pound bale, buyers deducted 24 pounds to account for the jute packaging. The Populists urged a revision of the Liverpool system and a deduction in the tare, which would more than offset the higher price of cotton. The major cotton exchanges ultimately balked at revising the tare, and cotton baling was unable to supplant jute. Southern farmers eventually returned to jute bagging.
The legacy of the jute conflict remains ambiguous. On one hand, jute remained the standard packaging material for southern cotton and was increasingly controlled by a small number of firms. Thus, southern Populists failed in their efforts to break the trust and to find a viable substitute. On the other hand, the Populists forced these firms to sharply lower prices to pre-1888 levels. In this light, the jute conflict remains one of the great displays of collective strength by southern Populism and can be interpreted as a triumph for the Populist movement.
Jeffrey D. Howison
See also: Gilded Age ; Robber Barons ; Tenant Farming
Holmes, William F. “The Southern Farmers’ Alliance and the Jute Cartel.” Journal of Southern History 60 (1): 59–80.
Schwartz, Michael. Radical Protest and Social Structure: The Southern Farmers’ Alliance and Cotton Tenancy, 1880–1890. Chicago: University of Chicago Press, 1976.
Woodward, C. Vann. Tom Watson: Agrarian Rebel. London: Oxford University Press, 1938.