Commission Merchants and Factors

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COMMISSION MERCHANTS AND FACTORS. The factor or commission merchant was one of the significant figures in the early commercial life of the country. These merchants were responsible for all facets of exchange and took responsibility for transporting and disposing of goods themselves, as well as providing credit to their customers.

The factor age system was known through the colonial and early national periods but was of most importance from 1815 to 1860. During these years cotton, tobacco, sugar, and rice from southern plantations were sent to urban centers in the Northeast and in Europe. Southern planters then purchased manufactured goods and supplies from these cities. Commission merchants advanced money to planters and manufacturers; in return, the products of farm and factory were consigned to them for sale. The planter and manufacturer were thus freed from the expense and trouble of selling and could devote their time, capital, and energy to the production of goods.

Frequently, however, the proceeds of the sales did not equal the sum advanced by the merchant, leaving the planter or manufacturer in debt. Southern planters especially resented that their trade and credit went through northern merchants. Consequently, there were numerous attempts by southerners to bypass northern commission merchants and build up direct trade connections between Europe and the southern ports. All of these attempts failed, and only the development of the commodity exchanges, the tremendous increase of industrial capital, and the improved methods of transportation and communication ended the dominant position of the commission merchant in American economy.


Porter, Glenn, and Harold Livesay. Merchants and Manufacturers. Baltimore: Johns Hopkins University Press, 1971.

Woodman, Harold D. King Cotton and His Retainers: Financing and Marketing the Cotton Crop of the South, 1800–1925. Columbia: University of South Carolina Press, 1990.

T. P.Govan/t. d.

See alsoCredit ; Hardware Trade ; Trade, Foreign .

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Commission Merchants and Factors

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Commission Merchants and Factors