Hotten died suddenly in 1873, and Chatto bought the firm from his widow for £25,000. The money came from William Edward Windus (1828–1910), the partnership being therefore named
Chatto & Windus. Windus was a silent partner, leaving the business decisions to Chatto and living for some of the time on the Isle of Man. The two men had probably met when Hotten published Windus's first volume of verse in 1871. When Chatto took over from Hotten, there were a number of legacy problems, resulting in part from Hotten's somewhat shady business practices. In particular, Hotten had alienated the poet
Algernon Charles Swinburne by paying him little if any of the profits from the publication of his
Poems and Ballads, which had sold well. Chatto mended fences by sending Swinburne a cheque for £50 and a formal request to publish his work. Chatto subsequently published Swinburne's
Bothwell. The biographer Catherine Peters contrasted Chatto who was "not only an active and successful publisher, but an honest one", compared with Hotten, "who was something of a rogue". Hotten had spent years in the United States and knew more about American literature than any other publisher in London. He made ruthless use of this knowledge to pirate works by American authors, as few had taken any steps to copyright their work in England. One of the Hotten's victims was
Mark Twain, but Chatto managed to establish good relations with him and they became good friends. Despite his speech, Chatto enjoyed very good relations with Mark Twain. Chatto worked his charm with other authors also, and
Robert Louis Stevenson said: "If you don't know that you have a good author, I know I have a good publisher. Your fair, open and handsome dealings are a good point in my life, and do more for my crazy health than has yet been done by any doctor." In 1876, Chatto brought in Percy Spalding to help him manage the firm. Spalding was much more of a financial manager than a literary man, so Chatto was left to decide editorial matters himself. During the 1880s, Chatto was determined to make his firm the leading publisher of novels in London, and set out to dramatically increase their list. He bought the rights to the existing works of popular novelists such as
Ouida and
Wilkie Collins, and then reprinting them in cheap editions. He bought the remaining stock and copyrights of
Henry George Bohn for £20,000, which expanded the range and type of books that he published. His strategy was to dramatically increase the firm's share of the novel market, and be the first choice for novelists. He certainly won the good will of writers. Chatto saw periodicals as another possible outlet for the firm's authors (and for the intellectual property that the firm had bought). He bought
The Belgravia and its associated annual. He published
The Idler from 1892 to 1911, and he also handled ''
The Gentleman's Magazine''.
Frank Arthur Swinnerton, who worked at the firm, recalls Chatto as "a gentle elderly man with a rolling walk, genially sweet in manner to every member of his staff, and much loved". ==Rujub the Juggler==