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¹¹ Jewkes, “Localisation.”

¹² In what follows I shall ignore the finishing (bleaching, dyeing, and printing) level of the industry since its firms were neither buyers nor sellers of intermediate products but rather served as sub-contractors for the merchant-convertors whobought gray cloth and determined its final color and design.

¹³ Famie, English Cotton, p. 256.

¹⁴ Ashton, T., “The Growth of Textile Businesses in the Oldham District 1884–1924,” Journal of the Royal Statistical Society, Vol. LXXXIX, (1926), p. 573.Google Scholar See also Farnie, English Cotton, ch. 6–7.

¹⁵ Farnie, English Cotton, p. 219.

¹⁶ Ibid., ch. 8.

¹⁷ Ibid., pp. 287–295; Cotton Factory Times, (CFT) 20 Nov. 1885.

¹⁸ Robson, R., “Structure of the Cotton Industry: A Study in Specialization and Integration” (Ph.D. Thesis, University of London, 1950), p. 190Google Scholar; Robson, Cotton Industry, p. 87–88; Barkin, S., “The Regional Significance of the Integration Movement in the Southern Textile Industry,” Southern Economic Journal, Vol. XV, No. 4, (April 1949) pp. 395 – 411CrossRefGoogle Scholar; Fabian Research Group, Cotton—A Working Policy (London, 1945), p. 3Google Scholar; Committee on Industry and Trade, Survey of the Textile Industries, (London, 1928), pp. 20–22Google Scholar; Henry Clay, Report on the Position of the English Cotton Industry, Confidential Report for Securities Management Trust, Ltd. October 20, 1931, pp. 30–39; Economic Advisory Council, Committee on the Cotton Industry, Report, pp. 13–14, in Parliamentary Papers, 1929–30, XII; Great Britain, Board of Trade Working Party Reports: Cotton (London, 1946), p. 46Google Scholar, Association of Cotton Textile Merchants of New York, Twenty-five years (New York, 1944).Google Scholar

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³⁰ Textile Manufacturer, June 15, 1979, p. 179; December 15, 1889, p. 567, March 15, 1980, pp. 88–89; November 15, 1908, p. 361; Nasmith, J., The Student's Cotton Spinning (Manchester, 1896) 3rd ed., p. 532Google Scholar; Walsh, W., “Fifty-years' Progress in Ring-spinning Machines,” Textile Manufacturer, Dec. 1925, p. 96.Google Scholar

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⁴⁵ It saved labor in more than one way; the better work conditions not only permitted more output per worker, but also helped to keep good workers from seeking jobs elsewhere. See Lazonick, “Production Relations.”

⁴⁶ Textile Manufacturer, 15 March 1903, p. 89; Ormerod, “Prospects,” pp. 12–13.

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⁶¹ Fitzgerald, P., Industrial Combination in England, (London, 1927), pp. 9–10Google Scholar; Committee on Industry and Trade, Survey, p. 34; Daniels, G. and Campion, H., “The Cotton Industry and Trade,” in British Association, Britain in Depression (London, 1935), p. 340Google Scholar; Macara, C., The New Industrial Era (Manchester, 1923), p. 90Google Scholar; Jones, “Agitation,” p. 450.

⁶² Committee on Industry and Trade, Survey, pp. 35–36; Daniels and Campion, “Cotton industry,” p. 341.

⁶³ M. Kirby, “Lancashire Cotton,” p. 148; Clay, H., The Problem of Industrial Relations (London, 1929), pp. 138–139Google Scholar; Clay, H., The Post-War Unemployment Problem (London, 1929), p. 163Google Scholar; Committee on Industry and Trade, Final Report (London, 1929), p. 46Google Scholar; Lucas, A., “The Bankers' Industrial Development Company,” Harvard Business Review, Vol. XI, No. 3, (April 1933), pp. 272–273.Google Scholar For a case of prolonged optimism see Fitzgerald, Industrial Combination, p. 8; “The cotton trade is one of the few sections of industry in which English firms have little to fear from foreign competition.”

⁶⁴ Clay, Post-War Unemployment, p. 49; Economic Advisory Council, Report, p. 20; Streat, R., “The Cotton Industry in Contraction; Problems and Policies of the Inter-war Years,” District Bank Review, No. 127, September 1958, p. 7Google Scholar; Lucas, A., Industrial Reconstruction and the Control of Competition: The British Experiments (London, 1937), p. 155Google Scholar; Wisselink, J., “The Present Condition of the English Cotton Industry,” Harvard Business Review, Vol. VIII, No. 2 (Janaury 1930) p. 158Google Scholar. On the rationalization movement in general, see Hannah, L., The Rise of the Corporate Economy: The British Experience (Baltimore, 1976), ch. 3.Google Scholar

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⁶⁹ Wisselink, “Present Condition,” p. 159.

⁷⁰ Economist, October 8, 1932, p. 635; Hannah, Rise, pp. 84–85; Lucas, Industrial, pp. 156–159; Kirby, “Lancashire Cotton,” p. 152.

⁷¹ Pollard, Development, p. 122. The purpose of the Lancashire Cotton Corporation was not to reduce surplus capacity in the cotton industry as some have argued. See e.g. Furness, G.W., “The Cotton and Rayon Textile Industry,” in Burn, D. (ed.), The Structure of British Industry (Cambridge, England, 1958), pp. 187–188Google Scholar; and Kirby, “Lancashire Cotton,” p. 151. Rather its purpose was to salvage the financial investments of the bankers which inevitably involved some scrapping of the least serviceable machinery in the plant acquired. That the founders of the L.C.C, intended in 1929 to scrap about half of the Corporation's spindleage capacity over the next decade is by no means evident.

⁷² Federation of Master Cotton Spinners' Associations, Cotton Spinning Industry Bill (1935): The Industry's Case for the Bill (Manchester, 1935), p. 2.Google Scholar

⁷³ Ibid., pp. 11–13.

⁷⁴ Robson, Cotton Industry, pp. 229, 230, 340.

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⁷⁹ Productivity Team Report, Cotton Weaving, p. 16.

⁸⁰ Miles. Lancashire, p. 26.

⁸¹ Ibid., p. 68.

⁸² Lucas, Industrial Reconstruction, p. 159; Clay, Report, p. 68; Vitkovitch, “U.K. Cotton,” p. 262; Ormerod, “Prospects,” p. 14; UTFWA, Plan, p. 16. See also, Vibert, F., “Economic Problems of the Cotton Industry,” Oxford Economic Papers, N.S., Vol. 18, No. 3, (Nov. 1966).Google Scholar

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⁸⁷ Ibid., pp. 50–57, 60, Fishwick, F. and Cornu, R., A Study of the Evolution of Concentration in the United Kingdom Textile Industry (Commission of European Communities, October 1975), pp. 27–29Google Scholar; Tippett, Portrait, p. 161.

⁸⁸ Miles, Lancashire, pp. 65. 85, 87.

⁸⁹ Robson, Cotton Industry, p. 345; Miles, Lancashire, pp. 13, 85.

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⁹⁴ Coase, R., “The Nature of the Firm,” Economica, N.S. Vol. IV, (November 1937)Google Scholar; reprinted in Stigler, G. and Boulding, K. (eds.), Readings in Price Theory (Chicago, 1952).Google Scholar Over three decades later, Coase argued quite correctly that “modern economists writing on industrial organization have taken a very narrow view of their subject,” and he specifically criticizes the work of Joe Bain, Richard Caves, and George Stigler for treating the study of industrial organization as simply applied price theory. Coase, R., “Industrial Organization: A Proposal for Research,” in Fuchs, V. (ed.), Economic Research: Retrospect and Prospect (New York, 1972), Vol. III.Google Scholar “What one would expect to learn from a study of industrial organization,” Coase argues, “would be how industry is organized now, and how this differs from what it was in earlier periods; what forces were operative in bringing about this organization of industry, and how these forces have been changing over time; what the effects would be of proposals to change, through legal actions of various kinds, the forms of industrial organization.” Ibid., p. 603. Indeed, Coase claims that such issues had been his prime concern when he wrote “The Nature of the Firm” in the 1930s. Coase's latter-day critique of the neoclassical approach is well-taken, but he seems oblivious to his own important role in bringing the study of “the nature of the firm” into the ahistorical neoclassical perspective of constrained optimization. After all, the central analytical point of Coase's 1937 article was the notion that “substitution at the margin” can explain both horizontal combination and vertical integration. “A firm can expand in either or both of these ways,” he argued there. “The whole of the “structure of competitive industry” becomes tractable by the ordinary technique of economic analysis.” Coase, “Nature”, p. 398.

⁹⁵ Ormerod, “Prospects,” pp. 10–11. See also U.S. Productivity Team, British Cotton, p. 6; Miles, Lancashire, p. 56; Furness, Cotton,” pp. 214–217.

⁹⁶ Chandler, The Visible Hand, Parts II-IV.

⁹⁷ Burnett-Hurst, A., “Lancashire and the Indian Market,” journal of the Royal Statistical Society, Vol. XCV, Part III, (1932), pp. 399–400.Google Scholar

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⁹⁹ Quoted in Ibid., p. 424; see also Pennington, “Competition,” pp. 213–228.

¹⁰⁰ Streat, “Cotton industry,” p. 14; see also Robson, Cotton Industry, pp. 215–216; Daniels and Campion, “Cotton Industry,” p. 342.

¹⁰¹ See note 18; Miles. Lancashire, p. 68. In 1965 there were still 1000 merchant-convertors in the industry. Alfred, A.M., “U.K. Textiles — A Growth Industry,” Transactions of the Manchester Statistical Society. 1965–1966, P.9.Google Scholar

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¹⁰³ Chandler, A., Strategy and Structure (Cambridge, Mass., 1962)Google Scholar; Chandler, Visible Hand, Part V.

¹⁰⁴ Chandler, “Growth of the Transnational”; see also Hannah, L., “Managerial Innovation and the Rise of the Large-scale Company in Interwar Britain,” Economic History Review, Vol XXVII, No. 2, (May 1974), pp. 252–270CrossRefGoogle Scholar; Mathias, P., “Conflicts of Function in the Rise of Big Business: The British Experience,” in Williamson, H. (ed.), Evolution of International Management Structures (Newark, Delaware, 1975).Google Scholar

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¹⁰⁷ Fabian Research Group, Cotton, p. 13n.

¹⁰⁸ Miles, Lancashire, p. 74.

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¹¹⁴ Frankel, M., “Obsolescence and Technological Change in a Maturing Economy,” American Economic Reveiw. Vol. XLV, No. 3, (June 1955), pp. 296–297.Google Scholar

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¹¹⁶ Ibid., pp. 313–314.

¹¹⁷ See e.g. CFT, 16 January 1885 for a specific example.

¹¹⁸ Frankel also argues that the Lancashire weaving industry had little opportunity for modernization because the industry grew little after 1900. But see the data in Jones, Increasing Return, p. 277.

¹¹⁹ Schumpeter, J., The Theory of Economic Development (New York, 1961), p. 60n.Google Scholar On these issues, Schumpeter finds himself drawn to Marx's theory of capitalist development, but, as he humbly notes, “my structure covers only a small part of his ground.”Ibid.

¹²⁰ See McCloskey and Sandberg, “From Damnation.” See also the collection of essays in McCloskey, D. (ed.), Essays on a Mature Economy: Britain after 1840 (London, 1971)Google Scholar and Harley, C., “Skilled Labour and the Choice of Technique in Edwardian Industry,” Explorations in Economic History, Vol. II, No. 4, (Summer 1974), pp. 391–414.CrossRefGoogle Scholar In what follows, I shall be concerned only with the theoretical merits of the work of the “new” economic historians. For a critique of Sandberg's quantitative efforts, see Lazonick, “Factor Costs.”

¹²¹ McCloskey and Sandberg, “From Damnation,” pp. 91–94.

¹²² Ibid., p. 108. This view has begun to gain acceptance in the textbooks. See e.g. Payne, P., British Entrepreneurship in the Sineteenth Century (London, 1974), pp. 48–51Google Scholar: Musson, A., The Growth of British Industry (New York, 1978), p. 163.Google Scholar For a critique, see Kindleberger, C., Economic Response (Cambridge, Mass., 1978), ch. 7.CrossRefGoogle Scholar

¹²³ McCloskey and Sandberg, “From damnation,” p. 108.

¹²⁴ In McCloskey (ed.), Essays, p. 241.

¹²⁵ Ibid., p. 243. This approach is explicit in Sandberg, Lancashire, ch. 2–A, and implicit in Harley, “Skilled Labour,” and McCloskey, D., Economic Maturity and Entrepreneurial Decline: British Iron and Steel 1870–1913 (Cambridge, Mass., 1973).Google Scholar For a much earlier statement of the neoclassical approach, see Jervis, F., “The Handicap of Britain's Early Start,” Manchester School, Vol. XV, No. 1, (January, 1947), p. 212Google Scholar: “It is a commonplace of economic theory that the entrepreneur combines his factors in the optimum manner under the circumstances applicable to him.”

¹²⁶ McCloskey, Economic Maturity, pp. vii – viii; see also the following statement in a piece extolling the recent work of “new” economic historians: “[F]ew economists outside of agricultural economics and economic history have given serious attention to measuring (as distinct from theorizing about) managerial ability or, in more elaborate language, entrepreneurship,” McCloskey, D., “Does the past have useful economics?” Journal of Economic Literature, Vol. XIV, No. 2, (June 1976), p. 452.Google Scholar

¹²⁷ See Landes, D., The Unbound Prometheus (Cambridge, England, 1967), p. 354Google Scholar; Landes, D., “Factor Costs and Demand: Determinants of Economic Growth,” Business History, Vol. II, (January 1965), p. 26.Google Scholar

¹²⁸ In McCloskey (ed.), Essays, pp. 272–277.

¹²⁹ Chandler, Strategy; Chandler, Visible Hand. See also Dahmèn, E., Entrepreneurial Activity and the Development of Swedish Industry 1913–1934 (Homewood, 1970).Google Scholar On the conceptual distinction, see Schumpeter, J., “The Analysis of Economic Change,” Review of Economic Statistics, Vol. XVII, No. 4, (May 1935), pp. 2–10CrossRefGoogle Scholar, and “The Creative Response in Economic History,” Journal of Economic History, Vol. 7, No. 2 (November, 1947), pp. 149–159, both reprinted in Clemence, R. (ed.), Essays of J.A. Schumpeter (Cambridge, Mass., 1951), pp. 1–19 and 216–226Google Scholar; Evans, G., “The Entrepreneur and Economic Theory: A Historical and Analytical Approach,” American Economic Review, Vol. XXXIX, No. 3, (May 1949), pp. 336–355Google Scholar; Evans, G., “Business Entrepreneurs: Their Major Functions and Related Tenets,” Journal of Economic History, Vol. XIX, No. 2 (June 1959), pp. 250–270CrossRefGoogle Scholar; Cole, A., Business Enterprise in its Social Setting (Cambridge. Mass., 1971)Google Scholar; Chandler, A. and Redlich, F., “Recent Developments in American Business Administration and Their Conceptualization,” Weltwirtschaftliches Archiv, No. 86, (1961), pp. 103 – 130Google Scholar; Hartmann, H., “Managers and Entrepreneurs: A Useful Distinction?” Administrative Science Quarterly, Vol. 3, (1958–59), pp. 429–45CrossRefGoogle Scholar; Baumol, W., “Entrepreneur in Economic Theory,” American Economic Review, Vol. LVIII, No. 2, (May 1968), pp. 64–71Google Scholar; Soltow, J., “The Entrepreneur in Economic History,” American Economic Review, Vol. LVIII, No. 2. (May 1968), pp. 84–92.Google Scholar

¹³⁰ In some quarters, however, there is genuine confusion concerning the theoretical issues involved. For example, Peter Payne. in his recent contribution to the Cambridge Economic History of Europe, is careful to make a distinction between entrepreneurs who make strategic decisions and managers who keep the concern running. Yet after discussing the empirical contributions of the “new” economic historians he concludes that the hypothesis of entrepreneurial failure has taken “quite a beating.” Payne, P., “Industrial Entrepreneurship and management in Great Britain,” in Mathias, P. and Postan, M. (eds.), The Cambridge Economic History of Europe, Vol. VII, Part I, (Cambridge, England, 1978). pp. 180–181, 208–209.CrossRefGoogle Scholar Similarly, Nathaniel Leff notes that “in recent years the term entrepreneurship has sometimes been used as a synonym for the firm, or for management in general, with little regard for special ‘entrepreneurial’ qualities,” but he then goes on to accept the McCloskey-Sandberg argument that entrepreneurial performance was not an important problem in the relative decline of the British economy. Leff, N., “Entrepreneurship and Economic Development: The Problem Revisited,” Journal of Economic Literature, Vol. XVII, (March 1979), pp. 47, 50–51.Google Scholar A recent discussion of British entrepreneurial activity that well reflects this confusion can be found in the opening chapter of Kirby, M.W., The Decline of British Economic Power since 1870 (London. 1981).Google Scholar