LANCASHIRE IN DECLINE a study in entrepreneurship, technology, and international trade •BY LARS G. SANDBERG $15.00 LANCASHIRE IN DECLINE A Study in Entrepreneurship, Technology, and International Trade By Lars G. Sandberg Few if any industries have a history as dramatic and exciting as the cotton textile industry of Lancashire, England, which be­ tween the middle of the eighteenth century and the early years of the twentieth under­ went a spectacular and unprecedented growth, only to enter a sharp and disastrous decline following the First World War that led to its eventual collapse. The industry was one of the first to success­ fully employ machinery and mechanical power in the manufacturing process, and in­ deed it can be argued that it was the world's first modern industry. Some have seen it as the major factor in Great Britain's emergence as the world's leading industrial power, and there is no question that a causal relation­ ship existed between the health of the indus­ trial economy and the state of the empire and nation. During the period in which the industry flourished, it brought a general prosperity to the entire British economy; and when it began to fail, severe depression afflicted the whole of society. Not surprisingly perhaps, little serious criticism of the cotton textile industry was voiced during the period of its success. Throughout most of the nineteenth century, the charges of contemporary observers were limited to allegations of social abuse: the in­ humane treatment of the women and children who worked in the mills, the length and hardships of the working day, and the absence of adequate sanitary facilities for the workers. It was only in the last quarter of the century, when the economic slowdown had obtained for some time and the political threat posed by Imperial Germany had become (Continued on back flap) LANCASHIRE IN DECLINE LANCASHIRE IN DECLINE a study in entrepreneurship, technology, and international trade BY LARS G. SANDBERG OHIO STATE UNIVERSITY PRESS: COLUMBUS Copyright © 1974 by the Ohio State University Press All rights reserved Library of Congress Cataloging in Publication Data Sandberg, Lars G Lancashire in decline. Bibliography: p. 263 1. Cotton trade—Lancashire, Eng. 2. Cotton manufacture—Lancashire, Eng. 3. Cotton machinery. I. Title. HD9881.8L3S25 338.4'7'6772'094272 73-18435 ISBN 0-8142-0199-7 Manufactured in the United States of America TO MY MOTHER AND FATHER TABLE OF CONTENTS Acknowledgments xv PART I. Entrepreneurship and Technology 1. Introduction 3 2. American Rings and English Mules 15 3. Rings and Mules: Part Two 49 4. Lancashire and the Automatic Loom 67 5. Overall Efficiency and Labor Productivity in Lancashire and Massachusetts before World War I 93 6. Investment in Lancashire between the World Wars 121 7. Some Final Remarks about Technical Progress in Lancashire 131 PART II. International Trade 8. Lancashire's Export Experience prior to World War I 139 9. Lancashire's Export Experience between the World Wars 175 viii) CONTENTS 10. Cotton Textiles and International Comparative Advantage 207 11. Conclusion 221 APPENDIXES 225 BIBLIOGRAPHY 263 INDEX 271 LIST OF TABLES 1. British Consumption of Raw Cotton and Exports of Cotton Textiles in Various Years 4 2. Employment in British Cotton Textile Industry in Various years 5 3. Difference in Labor and Capital Costs 45 4. Difference in Labor and Capital Costs 48 5. Labor Cost-Saving per Ring Spindle per Week at Various Counts 51 6. Cotton Consumption in the United States and Great Britain, 1885-1914 62 7. Labor and Capital Costs of Producing 5,400 Yards of Cloth on Draper and Plain Looms on Weekly Basis, 1903 73 8. Comparative Costs of Producing One Pound of Cloth by Plain and by Automatic Weaving in One Textile Mill, 1910-11 74 9. Rates of Return of Integrated Mills with and without Automatic Looms 86 10. Savings per Yard of Cloth Made Possible by the Introduction of Automatic Looms Returning 12% 86 x) TABLES 11. Capacity Utilization in British Cotton Weaving in Selected Years 88 12. Rates of Return on Integrated Mills with and without Automatic Looms "1 13. Savings per Yard of Cloth Made Possible by the Introduction of Automatic Looms Returning 32% 91 14. Indices of Output per Worker in the Lancashire Cotton Textile Industry 96 15. Dividends and Profits in British Cotton Spinning Industry Compared with Jones's "Real Cost" Index 105 16. British Exports of Cotton Piece Goods in Various Years 110 17. Indices of Output per Worker in United States Cotton Textile Industry 113 18. Dividends and Profits in British Cotton Spinning Industry 122 19. Capacity and Investment in British Cotton Spinning Industry 123 20. Counts of Yarn Spun in Great Britain during Various Years 125 21. Average Annual British Cotton Cloth Exports to All Parts of the World Combined by Decades 140 22. British Cotton Cloth Exports to India and to the World Excluding India in Various Years 142 23. British Cotton Cloth Exports to Various Markets in Various Years 145 24. British Cotton Cloth Exports to Selected Countries in Various Years 150 TABLES (xi 25. British and Japanese Cotton Cloth Exports and British Raw Cotton Consumption, 1913-38 176 26. Worldwide Trade and Production of Cotton Textiles in Selected Years 179 27. Imports of Cotton Piece Goods and Factory Production in India, 1913-38 183 28. The Indian Cotton Textile Market 185 29. Percentage Distribution of Indian Import Market for Cotton Piece Goods between the United Kingdom and Japan through 1930-31 187 30. Indian Imports of Cotton Cloth on Monthly Basis, 1929-30 to 1931-32 31. Chinese Imports of Cotton Cloth, 1912-36 192 32. Cotton Cloth Production in China, 1918-36 193 33. British Cotton Textile Exports to the Middle East, Turkey, and Egypt 196 34. British Cotton Textile Exports to Latin America 198 35. British Cotton Textile Exports to Canada, Australia, New Zealand, and Sub-Saharan Africa 201 36. British Cotton Textile Exports to "Other Asia" 203 37. Share of Home Market Held by Domestic Producers of Cotton Goods in Selected Countries 219 38. Estimated Quality of British Cotton Textile Exports, 1815-45 239 39. Estimated Quality of British Cotton Textile Exports, 1845-1898 240 xii) TABLES 40. Estimated Quality of British Cotton Textile Exports, 1856-71 242 41. Estimated Quality of British Cotton Textile Exports, 1898-1913 242 42. Estimated Quality of British Cotton Textile Exports, 1815-1913 243 43. British Cotton Textile Exports to Various Countries, 1815-1913 254 LIST OF FIGURES 1. Principles of Mule and Ring Spinning 19 2. Cotton Staple Lengths "Suitable" for the Spinning of Various Yarns 37 3. Prices of Various Cottons by Quality and Staple Length, New Orleans, April 1, 1913 38 4. Extra Cost of the Longer Staple Needed for the Ring Spinning of Warp (Twist) 40 5. Extra Cost of the Longer Staple Needed for the Ring Spinning of Weft 41 6. Quality Index of British Cotton Cloth Exports, 1815-1913 (1815 = 100) 244 ACKNOWLEDGMENTS By far the greatest debts, both intellectual and personal, that I have incurred in the writing of this book are owed to Professor Alexander Gerschenkron. Without his help and encouragement, this project would probably never have reached fruition. I have also received many valuable suggestions at the various seminars and workshops at which parts of the book have been presented. In particular, I have benefited from comments by Donald McCloskey, Peter McClelland, and Richard Sylla. Finally, one of the readers consulted by the Ohio State University Press, who remains anonymous to me, made a large number of very useful suggestions for improving the original manuscript. None of these persons, of course, are responsible for any remaining errors of commission or omission. In addition, I would like to thank the Quarterly Journal of Economics and the Journal of Economic History for granting me permission to republish material from articles of mine that previously appeared in those journals. Finally, the Oxford University Press has granted me permission to reprint Figure 1. PART I ENTREPRENEURSHIP AND TECHNOLOGY 1 INTRODUCTION Few if any industries have a history as interesting and exciting as that of the Lancashire cotton textile industry. * Over one hundred and fifty years of spectacular and usually steady growth was, after World War I, followed by an even more spectacular and steady decline. Shirtsleeves to shirtsleeves in two centuries. Both in its rise and in its decline, the Lancashire cotton textile industry was of great importance not only to the British economy but to the whole world. Indeed, it can be argued cogently that it was the world's first modern industry. Certainly it was one of the first industries successfully to employ machinery and mechanical power. As for the industry's role in the emer­ 1 Throughout this study, the Lancashire cotton textile industry and the British cotton textile industry are referred to as if they were identical. Strictly speaking, of course, they are not, and never were, the same thing. It is true that Lancashire has persistently dominated the British cotton textile industry. The concentration of activity in Lancashire increased throughout the nineteenth century, reaching a peak just before World War I. In 1838, 59% of all British cotton textile workers were employed in the county of Lancashire; by 1898-99, this figure had increased to 75.7%. If the neighboring county of Cheshire is included, the figure for 1838 increases to 73% and that for 1898-99 becomes 82.2%. As a percentage of all cotton workers in England and Wales (i.e., excluding Scotland), the combined county figures were 86.1% in 1838 and 87.1% in 1898-99 (S.