During the American Civil War, American cotton exports slumped due to a Union blockade on Southern ports, and also because of a strategic decision by the Confederate government to cut exports, hoping to force Britain to recognize the Confederacy or enter the war. This prompted the main purchasers of cotton, Britain and France, to turn to Egyptian cotton. British and French traders invested heavily in cotton plantations. The Egyptian government of Viceroy Isma'il took out substantial loans from European bankers and stock exchanges. After the American Civil War ended in 1865, British and French traders abandoned Egyptian cotton and returned to cheap American exports,[citation needed] sending Egypt into a deficit spiral that led to the country declaring bankruptcy in 1876, a key factor behind Egypt's occupation by the British Empire in 1882.

When did the American cotton industry fail?