Northern Business Interests Gained Control of the Cotton Trade
In the early days after the invention of the cotton gin, the American South had controlled its own cotton industry. Southern cotton was shipped directly from southern ports by its owners to the textile mills of England.
During the three decade period before 1860, a combination of factors enabled the cotton trade to become dominated by the North. First, the Navigation Acts authored by Congress at the turn of the century had established protectionist laws favoring American shipping over foreign interests.
The exporting South was required by law to either use American owned, Northern ships, for their shipping, or pay to the Treasury compensation for their use of foreign ships. Foreign ships were prohibited by law from engaging in coastal trade between US harbors.
The laws also discouraged the Southern businessmen from becoming involved in the shipping business by prohibiting the purchasing of finished ships from overseas.
Therefore, Northern shipping companies, with the aid of Federal laws, came to dominate the carrying trade of the South.
As the trade in cotton increased, northern and particularly New York traders saw their opportunity and began sending agents south to purchase all the cotton they could, and ship it themselves by packet ships to England and Europe.
This direct purchase of cotton by the “factors” enabled the Southern growers to quickly turn a profit instead of waiting months for the cotton to be sold, and the money to return to them.
This benefit also cut their profits.
The plantation owners that could retain ownership and ship independently found themselves in a bind. If they wanted to ship their own cotton to market, the packet ship owner would charge them very high rates that were slightly under the rate of the foreign ship rate, plus the Federal shipping penalty that would be added.
That law was repealed in May 1830. Link