The exchange of cotton : Ugandan peasants, colonial market regulations and the organisation of international cotton trade, 1904-1918

Abstract: Between 1904 and 1918, the British colonial administration in Uganda regulated the cotton industry in order to maintain and improve the quality of the exported cotton. The main topics of the dissertation are: Why were these regulations enacted and who initiated them? The dissertation analyses the impact of the organisation of the international cotton trade on the buying practices in the local Uganda cotton market. The assumption is that there were economic factors, which induced the colonial regulations. Therefore, the study applies a marketing channel perspective combined with transaction costs analysis. The study is primarily based on the correspondence between the Colonial Office in London and theGovernor's Secretariat in Entebbe and on records from the Uganda Company. In the beginning of the twentieth century, the international cotton trade was concentrated to a few cotton exchanges, which provided an open market for cotton from various parts in the world. In Uganda, peasants were provided with cotton seeds from their chiefs, who in turn had got it from private companies or from the colonial administration. The chiefs then organised the marketing of raw cotton while European and Indian companies and free intermediary traders bought the cotton in local markets. The larger firms then organised the export of the cotton. It is shown that the buyers' costs for assessing the quality of the cotton and their methods of financing the purchase of the crop can explain changes both in the methods of buying operations and in the colonial market regulations. The main problem was to countervail the effects of adverse selection in the local market. The economic aspects of the cotton regulations were to affect the quality premium of the exported cotton on the cottonexchange, to reduce quality control costs and to reduce the quality risk premium in the local market. It is then argued that the colonial administration in Uganda had an interest in issuing cotton regulations, since an increased quality of the exported cotton would improve local prices and increase the cotton growing peasants' taxable income.