They built an extremely expensive and complex railway (for the time) just to get the cotton from Liverpool to Manchester. Why not just open up the mills in Liverpool?
There were several reasons why Manchester became the centre of the British cotton industry, rather than Liverpool. Firstly, Manchester had been a key centre for the textile industry during the 18th Century. Manchester (and its surrounding towns, like Stockport, Oldham and Rochdale) dominated textile production in the north-west of the UK. It had one of the largest textile markets outside of London, and a large workforce experienced in textile production - baptismal records from Manchester suggest that 50-70% of men were engaged in the textile industry at the time. Liverpool, meanwhile, was peripheral in the industry, with its industry being only about a fifth the size of Manchester's. Liverpool's textile industry also focused more on linens, while Manchester's focused on fustians (fabrics combining linen and cotton). As a result, Manchester had a workforce experienced with working in cotton and an easily accessible market for cotton. A second important reason was easy access to the other important raw material for the cotton industry: coal. The mills of the early 19th Century were steam-powered, and needed a constant supply of coal to keep them running. Manchester had easy access to the coal mines of Lancashire through the Bridgewater Canal; this had been built in 1761 to link Manchester with the Duke of Bridgewater's coal mines at Worsley. This greatly reduced the price of coal in Manchester. Liverpool was not so well-connected, making shipping costs for coal considerably higher. A further consideration was that Liverpool had other industries competing for the available workforce. The shipbuilding industry and the dockyards both paid higher wages than the textile industry. This greatly cut the workforce available for textile production. Manchester's industrial scene, in comparison, was dominated by the textile industry. Workers had little ability to seek employment elsewhere, and so as Manchester's population grew, it allowed the textile industry to grow with it.