Circular Letter to Merchants and Tobacco Growers of Virginia
London, New-street, Bishopsgate-street,
October 5, 1784.
I beg your Attention, and particularly that of the Merchants, who are, as Individuals, more essentially interested therein, while I state for your consideration a new mode lately adopted of disposing of Tobacco at this place, to your manifest prejudice and disadvantage. It first, however, may not be unnecessary to relate, for the information of those unacquainted therewith, the former usage respecting the sale of this commodity, which was, that it remained in the hands of the Merchant of London, to whom it was consigned from Virginia, until it was sold privately to the different purchasers thereof for export and home consumption, and that in quantities from 1 to 100 hogsheads, as occasion and demand occurred. Hence a fair price for the same was obtained, by a thorough knowledge of its intrinsic value, from the various and numerous offers made by the purchasers thereof, privately and unknown to each other, both for foreign and British consumption, and therefore, where the Merchants of London were honest, the Citizens of Virginia received the reward of their labour, and the Merchants thereof the advantages resulting from commercial transactions.
I shall, in a very concise manner, now tell you, that recently a custom has been almost universally adopted, to center the disposal of Tobacco with a few brokers, as you will discover by the sales herewith sent to Mr. Hayes, Printer at Richmond, for your inspection. I am very unwilling to censure, where the fact is not indubitably established; but, surely, it would be no difficult matter at one of these public sales, where the lots of Tobacco exceed in a tenfold proportion the number of purchasers, where the commodity is forced upon the buyer to a degree of madness hardly to be credited; I say it would be no difficult matter for the purchasers to agree, that “you shall have that lot, I will have this,” &c. A combination of this tendency has been hinted to me as existing, as well as some others, to lessen the value of Tobacco; but I must freely confess that I do not know it to be the case. However, it appears demonstrably certain that the policy by which the trade has been so considerably and rapidly contracted, has evidently reduced the price of the commodity, and it must be acknowledged to be done by every man in the least acquainted with the business, by the establishment of public sales, which gives an advantage to the purchaser obvious to every capacity.
I have frequently attended the public sales of Tobacco, and beg leave to notice that the expence of brokerage is 20 s. per hogshead for British consumption; 10 s. 6 d. per hogshead for exportation; and 2 s. per hogshead is paid for the use of the coffee-house where it is sold, punch, candles, &c. Now this extra expence upon 50,000 hogsheads, at a moderate estimation, amounts to upwards of 35,000 1. a manifest loss to the Merchant and Citizen of Virginia, and stands a decided balance of trade, arising from the sale of this commodity, against that State.
The method of bidding for Tobacco is to advance a farthing per bid upon each lot, which are knocked off at the rate of about 250 lots per hour: Now what struck me as exceedingly reprehensible was, that it sometimes happened a bid of a farthing per pound was rather late, which being disputed, is decided by a shew of hands, and if given in favour of the sale, establishes an obvious loss of upwards of 40 s. per hogshead, which a person or persons present would give, but are not permitted. It also sometimes happens, that there are half a dozen bidders for the same lot, which is decided in like manner by a shew of hands whose it should be; whereas I consider it would be more fair and just for him who would give something more, to have it; for where six or seven persons want the same thing, and obstinately persist that each is entitled thereto, surely one amongst the number would advance the price.—I can prove, from the declaration of one of the most considerable export purchasers of Tobacco, that he has bought the quantity he wanted at public sale from a farthing to a penny per pound cheaper than he had offered to give for it a few hours before such sale privately; which in two or three hundred hogsheads, the quantity (perhaps) so purchased, makes a difference of 5 or 600 1.; a circumstance in fact, undeniable as alarming.
I have made a minute enquiry into the price of Tobacco at foreign markets, and do not find that it has been as yet materially injured, though the consequence of its fall in London will certainly operate in time upon that exported; nor do I find any difference in the price of that manufactured and sold in England; and therefore no good reason can be given for the reduced price. But admitting, for the sake of investigation, (which, by the bye, I neither can nor do admit that Tobacco sells as well at public as private sale) surely the expence of brokerage, &c. in addition to that of former usage, is an object worth notice, and ought to be got rid of.
The London market at present is considered to govern that of all the world; Gentlemen will therefore remember, that to whatever port they may send their Tobacco, it will unavoidably be affected by the London price, and from hence reflect how indispensably necessary and expedient it is for them to adopt the most probable means to support the price of the commodity, and to prevent its being sold publicly in future. Great Britain is supposed to consume from ten to twelve thousand hogsheads of tobacco annually; a very inconsiderable part to that exported from hence for foreign consumption, and which is bought up by about six or seven capital export purchasers, said to be in a combination together under the disadvantages before stated. It is no uncommon thing for one or two persons to be the purchasers of three-fourths of five or six hundred hogsheads of Tobacco sold publickly in two or three hours time.
Having said enough to carry conviction to the mind of every person desirous of this information, I shall close my remarks by observing, that there are several old-established houses, who, to their credit, have not, and declare that they will not, come into the mode of selling Tobacco publickly, and such surely deserve your support; but to destroy and put an end to the custom totally, is simple, easy, highly necessary and expedient. Let the Merchants and Gentlemen of Virginia immediately convene a meeting, and come to a resolution not to ship or consign Tobacco to any person or persons who shall suffer it to be disposed of at public sale. Let the resolution so made be transmitted to, and published in London: the certain consequence will be, that all persons meaning to commence and continue in the mercantile line, or to receive consignments of Tobacco, will also have a meeting, and resolve to conform themselves accordingly. I know many Gentlemen long used to, and conversant in the Trade, able and willing to sell double the quantity of Tobacco annually made in Virginia, who will engage not to sell at public sale, and from whom you may with confidence expect a better price than you can possibly receive at present, and who will use their best efforts to support with care and attention the value of the commodity.
I am, Sir, Very respectfully, Your most obedient And most humble Servant,
Printed leaflet (DLC); four numbered pages.