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Published online by Cambridge University Press: 05 June 2015
From the mid-nineteenth century, raw wool became a global commodity as new producing countries in the Southern Hemisphere supplied the world's growing textile industries in the North. The selling practices of these big-five exporters—Australia, New Zealand, South Africa, Argentina, and Uruguay—ranged from auction through a hybrid of auction and private sale to exclusively private sale. We explore why these countries persisted with different marketing arrangements, contradicting two streams of literature on institutions: isomorphism and the new institutional economics. The article makes several important contributions through blending distinct branches of theory and by focusing on the international constraints to convergence in an earlier period of globalization.
1 For an account of the growth of the woolen textile industry in the nineteenth and twentieth centuries, see Jenkins, David, “The Western Wool Textile Industry in the Nineteenth Century” and “Wool Textiles in the Twentieth Century,” in The Cambridge History of Western Textiles, vol. 2, ed. Jenkins, David (Cambridge, U.K., 2003), 761–89Google Scholar, 993–1022.
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30 Brearley, “International Wool Market,” 136. After 1900, growers not selling direct from the farm used commission agents to consign their wool, which would be offered to the fifty or sixty firms operating in the main markets, Buenos Aires and Bahia Blanca (Australia, Statistical Handbook of the Sheep and Wool Industry, 77). See also Brown, Jonathon C., “Dynamics and Autonomy of a Traditional Marketing System: Buenos Aires, 1810–1860,” Hispanic American Historical Review 56, no. 4 (1976)CrossRefGoogle Scholar; Sabato, Hilda, “Wool Trade and Commercial Networks in Buenos Aires, 1840s to 1880s,” Journal of Latin American Studies 15, no. 1 (1983)CrossRefGoogle Scholar; and Sabato, Hilda, Agrarian Capitalism and the World Economy: Buenos Aires in the Pastoral Age, 1840–1890 (Albuquerque, 1990), chap. 6Google Scholar.
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39 Ibid., 150–54.
40 North, Institutions, chaps. 5 and 6.
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48 Coatsworth, “Structure, Endowments,” 131; Coatsworth, “Political Economy,” 259–61; Amaral, Samuel, The Rise of Capitalism on the Pampas: The Estancias of Buenos Aires (Cambridge, U.K., 1998)CrossRefGoogle Scholar; Acemoglu and Robinson, Why Nations Fail, 258–71. For a comparison of Australian and Argentinian experiences, see McLean, Ian W., Why Australia Prospered: The Shifting Sources of Economic Growth (Princeton, 2013)Google Scholar, chaps. 4 and 5.
49 We owe this point to Malcolm Abbott.
50 Ville, Rural Entrepreneurs; Butlin, Investment, 57–166.
51 The wool trade was both a result of and a contributor to a “network” resulting from the movement of people, goods, and capital within the British world, as described by Magee and Thompson, Empire and Globalisation.
52 Skinner, Skinner's Wool Trade Directory, 1948, lxxv–lxxxiii; Abbott, Malcolm, “Promoting Wool Internationally: The Formation of the International Wool Secretariat,” Australian Economic History Review 38, no. 3 (1998): 258–79.CrossRefGoogle Scholar
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54 Skinner, Skinner's Wool Trade Directory, 1948, xxviii.
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56 Beckert, Sven, Empire of Cotton: A New History of Global Capitalism (London, 2014), 320–21Google Scholar.
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58 Du Plessis, Marketing of Wool, 120, 135; Blau, “Wool in the World Economy,” 216–17.
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61 The Australian Mercantile Land and Finance Company estimated that it would need to sell at least 25,000 bales to be profitable in the Brisbane market prior to World War I. We have raised the minimum efficient scale figure to 30,000 as brokers’ costs would have risen. Moreover, the crossbred wool dealt with by New Zealand brokers both reduced selling commissions and increased handling charges (Bailey, John D., A Hundred Years of Pastoral Banking: A History of the Australian Mercantile Land and Finance Company [Oxford, 1966], 196Google Scholar).
62 Australasian Insurance and Banking Record, 19 Oct. 1899, 699.
63 Merrett, Morgan, and Ville, “Industry Associations as Facilitators”; Merrett and Ville, “Industry Associations”; Merrett and Ville, “Institution Building and Variation.”
64 “For two generations those sales [at the Wool Exchange in Coleman Street] have been the centre of the international wool trade,” Clapham, Woollen and Worsted Industries, 91.
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72 Textile Mercury, Wool Year Book, 1915, 465.
73 Ibid., 62–63.
74 “The success of grading depended entirely on the extent to which each bale contained wool of one quality only and each lot contained bales of even quality,” Barnard, The Australian Wool Market, 81.
75 Du Plessis, Marketing of Wool, 58–59; Barker and Priestley, Wool Carding and Combing, 69, 105.
76 Barker and Priestley, Wool Carding and Combing, 97, 129–39, 144–87.
77 Classing prior to auction cost British top makers 15 to 18 pence per 240 pounds (weight) of wool; see Textile Mercury, Wool Year Book, 1915, 93. For classing costs in Australia, see Jeffrey, Geoffrey, The Principles and Practice of Australasian Woolclassing (Adelaide, 1899), 45Google Scholar; and Smith, Henry B., The Sheep and Wool Industry of Australasia (Melbourne, 1917), 89Google Scholar.
78 Blau, “Wool in the World Economy,” 191.
79 Sabato, Agrarian Capitalism, 229.
80 We ignore differences in interest rates and currency fluctuations.
81 Price categories at London auctions were “super,” “average to good,” and “inferior to average.” Textile Mercury, Wool Year Book, 1930, 51.
82 Sabato, Agrarian Capitalism, 229–30.
83 Sabato, “Wool Trade and Commercial Networks,” 60.
84 Du Plessis, Marketing of Wool, 102.
85 Fibers comprised around 16 percent of all primary products exports in 1913 and 1928, and about 10 percent of all merchandise exports in those years. See Yates, P. Lamartine, Forty Years of Foreign Trade (London, 1959), 222–23Google Scholar, table A.16.
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89 Scott, Institutions and Organizations.
90 See Merrett and Ville, “Institution Building and Variation,” for an account of interselling center differences within Australia.
91 Acemoglu and Robinson, Why Nations Fail.
