Greg Lindsay's Blog

December 03, 2010  |  permalink

From King Cotton to Cargo King

Interesting news from Memphis today— Dunavant Enterprises Inc., which sold off its cotton-trading operations earlier this year, has decided to refocus its attention on (you guessed it, assuming you know Memphis) logistics. Dunavant Enterprises was founded by the legendary William B. “Billy” Dunavant, dubbed “the Michael Jordan of cotton” by his peers. Years before Paul Tudor Jones made his first billion swapping commodities, Dunavant had built his small family business into an empire trading cotton. He was the first to trade cotton futures and the first of his kind to abandon “Cotton Row” along the waterfront for the area around the airport. His company’s decision to stop growing, making or trading goods to focus on transporting them instead is the story of 20th century Memphis in a nutshell. Before he retired in 2005, Dunavant pulled off on last big score, the second-largest single cotton trade in history. It was for $225 million, and the client was in China. That tells you all you need to know about where the cotton business ultimately went.

I mention all of this because it’s impossible to tell the story of Memphis (and FedEx) without telling the story of Billy Dunavant, which is why I began the second chapter of Aerotropolis with a visit to the Memphis Cotton Museum, with a cameo from Dunavant himself:

The trading floor of the Memphis Cotton Exchange sits at the corner of South Front Street and Union Avenue, overlooking the bank of the Mississippi River and the docks that once lined it. Plantation owners and their salesmen guided skiffs up and down the delta to those piers before dragging their bales across the road to the base of the exchange. There, beneath its vaulted windows, traders broke pieces off the soft piles and twisted them into ropes called snakes. They would hold these up to sunlight, judging the cotton’s color, quality, and seediness on the spot. “Spot trading” was their métier, buying bales already picked and packed, unlike their counterparts at the Chicago or New Orleans exchanges, who traded in futures– essentially contracts to deliver a later harvest at a set price.

Front Street was both the geographic and the spiritual center of Memphis’s cotton trade, and the center of the world’s until the 1970s– a strip of ware houses, dry- goods stores, barbecue joints, and diners populated by traders, bankers, Teamsters, and hangers- on all swapping gossip with discarded snakes underfoot. The exchange’s dues- paying members, fearing they had drifted too far from the street in their headquarters just a few blocks inland, decided in 1922 to move the trading floor back onto “Cotton Row,” into the base of an Art Deco tower built to house it.

Today, the Memphis Cotton Exchange is the Memphis Cotton Museum, the trading floor frozen in time and reconstituted as an average day in 1939. On the spring afternoon of my visit not too long ago, the exchange was empty of traders and visitors alike. Under brass ceiling fans and above the glass display cases was the original Big Board– a chalkboard fifty feet long and ten feet high, spanning an entire wall and rising to the ceiling. Chalkers, usually young men with deft hands, stalked back and forth along an elevated walkway, continually rewriting prices sent over the ticker from New York and Liverpool to the Western Union offi ce below. When exchange members spotted an opening for arbitrage or an untenable position, they strode to one of the four phone booths lining the far wall.

Mounted in each booth today is a small screen displaying a lineup of talking heads reciting the history of King Cotton in Memphis. One of them is a Southern gentleman well past retirement age named William B. “Billy” Dunavant, dubbed “the Michael Jordan of cotton” by his peers. “We used to consume eleven million bales of cotton each year,” he says through a molasses- thick drawl. “Now it’s six million. China used to consume fifteen million bales a year. Now it’s forty million.”

Dunavant liquidated his own firm’s physical position on Front Street in the early 1970s, moving to one of the broad, squat ware houses that had already begun sprouting like toadstools along the access roads just east of Memphis International Airport. He dismissed the rivals he left behind as “a bunch of old men gossiping,” A few members stayed in the exchange tower for sentimental reasons. Many others followed Dunavant’s trail to East Memphis, where the airport, highways, and rail yards had given birth to an entire forest of white, multistory ware houses adorned with the stubs of truck- loading docks instead of Art Deco flourishes. These were the spawn of a twenty- seven- year- old former marine pilot named Fred Smith, who moved home from Little Rock with his new company in tow, Federal Express.

 

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Greg Lindsay is a generalist, urbanist, futurist, and speaker. He is a non-resident senior fellow of the Arizona State University Threatcasting Lab, a non-resident senior fellow of MIT’s Future Urban Collectives Lab, and a non-resident senior fellow of the Atlantic Council’s Scowcroft Strategy Initiative. He was the founding chief communications officer of Climate Alpha and remains a senior advisor. Previously, he was an urban tech fellow at Cornell Tech’s Jacobs Institute, where he explored the implications of AI and augmented reality at urban scale.

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