The aristocratic elite: Deference and decline

The involvement of landowners on boards of manufacturing and commercial companies was complemented by the continuing movement of industrial and commercial wealth into land. At the same time the extent of intermarriage between the classes increased. By 1830 London bankers and merchants such as Lloyd, Baring, Drummond and the Rothschilds, brewers such as Barclay, Hanbury and Whitbread had bought into land, as had wealthy lawyers. Entry into land through purchase or through marriage continued after 1830 at very much the same rate as in the previous century. It must be presumed that the main reason for this was the status land brought since alternative and more profitable investment outlets were available. Later in the century industrialists such as Tennant, Armstrong, Coats and Wills bought into land.

To be a gentleman

The movement of the privileged social classes towards one another was marked culturally by the emergence of the status of the ‘gentleman’ with its associated life-style. The notion of the gentleman had long marked a fundamental status divide in society and, as the number of manufacturers and merchants increased so this social status took on an increased significance in social control. The relatively small size of the peerage in relation to the large manufacturing and commercial classes meant that even the admission of their most wealthy representatives into the peerage could only operate as a mechanism of social control if the peerage continued to be associated with the more informal and flexible concept of the gentleman. Acceptance as a gentleman by those who were already recognised as gentlemen defined a person as someone who mattered socially and politically. The fact that the status could be accorded or withdrawn at will by influential social circles without having to be justified in terms of any explicit, formal criterion, made it a curiously subtle and effective mechanism of social control.

The life-style of the gentleman, therefore, had to be accommodated to the practices of the manufacturing and commercial classes. The round of dining and visiting in the great country houses, the meetings of the Quarter Sessions, and rural pursuits such as fox-hunting and racing were already integrated into the London-based ‘Season’ of activities in which all members of ‘Society’ participated. After 1830 this became increasingly more formalised and acquired a new authority over those who regarded themselves as gentlemen. In part this was a consequence of the need to accommodate the rise of wealthy men from outside the ranks of the landed classes. L. Davidoff is undoubtedly correct when she states that ‘Society can be seen as a system of quasi-kinship relationships that was use to "place" mobile individuals during the period of structural differentiation fostered by industrialisation and urbanisation.’[1]

In this period ‘Society’ was rapidly growing in size and directories listing the families of gentlemen found a growing market. In 1833 John Burke published the first edition of his genealogical directory of county families: initially called Burke’s Commoners, it was subsequently given the more acceptable title of Burke’s Landed Gentry. The 1833 volume listed 400 county families, the qualification for inclusion being possession of at least 2,000 acres of land. The 1906 volume had grown to 5,000 families, of whom 1,000 were of industrial background. Burke’s General Armory was published in various editions from 1842 and listed all those families claiming the right to bear heraldic arms. Most of the 60,000 families included in the definitive 1844 edition owned little or no land. Such were the changes that were occurring to Society.

Presentation at court was regarded as central to the life of a gentleman and his family. By 1850 it had become an essential entry into Society, and the needs of the newcomers to Society were met by the publication of manuals of instruction and by Certificates of Presentation. The London Season, together with such events as yachting at Cowes and grouse-shooting on the Scottish moors, were central features of the life-style of the gentleman. It was, however, the Victorian public school that was the most important institution in forging a cultural unity between the landed classes and the newcomers.

To be educated a gentleman

The educated revolution initiated by Thomas Arnold at Rugby was intended to produce ‘Christian Gentlemen’, an amalgam of the traditional notion of the gentleman with the romanticism and humanitarianism of evangelical Christianity. The public school reforms of the 1860s led to the formation of the ‘Headmasters’ Conference’ as the central forum through which the major schools could exert control and influence over the lesser schools. By the 1870s the public school to Oxbridge route to top positions had been established.

The rise of new men aspiring to social leadership, the expansion of the number of suitable posts in government service and the increasing use of competitive examinations for recruitment, all lent force to the benefits of a public school education. The moral and leadership training deemed necessary for a gentleman played a central role in mediating the relations between economic changes and the cultural and political order. The code of gentlemanly behaviour passed on through the public schools defined what was ‘done’ and what was ‘not done’. Its central assumption was that the gentleman had certain definite duties and obligations towards other members of society. The latter were regarded as having a corresponding obligation to defer to the ‘natural’ superiority of the gentleman. Deferential behaviour was expected of subordinates as a sign of the legitimacy of the prevailing patterns of inequality. The economic dependence of farmers and rural workers on the local gentleman provided a fertile ground for at least an outward show of deference. In the urban context force was the normal and frequent sanction of authority in the first half of the century, but the code of the gentleman was eagerly adopted by the rising class of manufacturers.

The public school ethos was, in part, a response to the reforms of recruitment and promotion in the civil service, the law and the army but it ran counter to the rationality, efficiency and functionality of trade and industry. The capitalist spirit was regarded as ungentlemanly in the extreme. Traditional gentlemanly virtues eschewed any rigorous application to instrumental matters. In some respects therefore the public schools came to represent the balance between rationalised organisation and traditional power, a compromise between landed and entrepreneurial ideals. The notion of the public school gentleman was an expression of the modus vivendi between the landed classes and the newcomers and, as such, it legitimised their expectations of deference from the middle stratum and the working-classes below them.

‘Amateurism’: a cause of decline?

The dominance of the values of the gentleman and the associated cult of amateurism has been cited in the context of the arguments about entrepreneurial decline after 1870. The constant flow of successful businessmen from the ungentlemanly field of trade and industry to the more acceptable fields of politics and the land is held to have resulted in a haemorrhage of talent. It is certainly true that many manufacturers had for a long time seen the creation of a successful family business as the first step in a longer-term strategy of establishing a landed family. Members of the rising manufacturing class found a set life-style waiting for them once they had accumulated sufficient wealth. The successful businessman would become a ‘gentleman’, doubtless with a country seat, perhaps even a knighthood or peerage, a seat in Parliament for himself or his Oxbridge educated son and a clear social role. He ceases to be a ‘player’ in the entrepreneurial field and became a ‘gentleman’. There was nothing new about this. During the industrial revolution it was taken as a sign of successful entrepreneurialism, so why historians have argued is the same process in the late nineteenth century taken as an explanation of entrepreneurial failure.

More likely as an explanation of entrepreneurial failure were the attempts by heads of family firms to keep control of their own firms. Given this situation, there were positive incentives not to grow: once a certain level of income had been achieved, maximum growth could be traded-off against the pursuit of leisure or a political career. It was for these reasons that family firms did not follow the path towards large-scale amalgamation and new technology. So long as satisfactory profits could be earned from old, perhaps obsolete plant, there was no incentive to risk investment in new technologies that would not yield significantly higher earnings.

Conclusions

Victorian society was characterised by the move towards unity among the privileged social classes, in terms of both class and status situations. But there was never complete integration. Landowners and the City may have come closer together but manufacturers and provincial merchants remained apart. By the 1870s autonomous and assertive industrial dynasties were firmly entrenched in areas such as Glasgow, Manchester, Liverpool, Birmingham, Cardiff and Newcastle. It was at this provincial level that manufacturers and merchants came closer together. The three privileged classes could no longer be clearly distinguished from each other. Although each class was based round a particular kind of property, they entered into ever more extensive business and personal relationships with each other. Each class also included people who were not active participants in the control and use of property, but who drew their income from this and had family links with the core of their class. Such people were to be found in politics, the professions and the intelligentsia; and these occupations constituted major areas of overlap between the fringes of the three privileged classes.

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[1] L. Davidoff The Best Circles, Croom Helm, 1973, page 15.

The aristocratic elite: Landowners and financiers: a narrowing circle?

Landowners complemented their estate business with interests in industrial and commercial ventures. This diversification was eased by the already close business links between landowners and City financiers. City financiers were also important in their own right as promoters if business ventures, especially railway companies. The railways were giant enterprises whose capital requirements outweighed those of all other businesses together. London bankers, especially Glyn Mills, acted as active promoters for railway companies and brought together the masses of ‘anonymous’ investors, many from the professions and many ‘widows and orphans’, who provided much of the railway capital.

The railway boom in the 1840s led to a situation where the 15 largest companies controlled 75 per cent of railway revenue and by the boom of the 1860s the top four companies had 44 per cent of revenue. As a result, from the 1860s many landowners began to take portfolio investments in the big main-line companies, a move away from their previous commitment only to local lines. The railway booms brought together some of the interests of the financial community and the landowners. But the development of railways was also to have an indirect impact on industrial funding. Limited liability had rarely been thought necessary by industrial entrepreneurs but, as the capital requirements of some industries increased, the trust and the partnership gave way to the joint-stock company. This enabled manufacturers to draw on a wider pool of capital and to provide for the various members of their families by issuing shares to them. By the mid-1860s about a thousand new joint-stock companies were being registered annually, though the majority were still run as partnerships. The spread of railway shareholding encouraged the growth of the London and provincial stock exchanges and so made it easier for expanding industrial enterprises to raise capital and for landowners to invest.

Concentrating industrial power

The move towards joint stock capital was associated with an increase in the levels of economic concentration. In the 1880s the hundred largest industrial firms accounted for less than ten per cent of the total market. However, a spate of company amalgamation led to greater concentrations in the 1890s as the increased merger activity outpaced the growth of the market. Companies were floated on the stock exchange and might then grow by taking over their competitors; or rival firms might join together to float a common holding company. The families whose firms were floated or merged at this time often retained the ordinary, voting, shares for themselves and allowed debentures and non-voting shares to be sold to the wider public. This, family control could be maintained on the basis of a relatively small capital investment. The flotation of firms allowed capital to be raised from outside the family circle; and the joint-stock form allowed family wealth to be diversified and so made more secure.

Large amalgamation of family firms occurred in a rapid burst between 1898 and 1900, but the rate of flotation and merger remained at a high level until 1914. These were, however, often hamstrung by attempts to maintain the autonomy of the constituent family firm, leaving the large firms as merely holding companies with no real control over their subsidiaries. The desire to maintain family control was paramount and could lead to difficulties in managing the newly created company. For example, in the fusion of 59 firms that produced the Calico Printers’ Association in 1899, each of the 84 directors on the board was determined to safeguard the interest of his original company that, in the majority of cases, was still under his management. Because of this situation of family loyalties and priorities, those larger companies that succeeded in adopting a more centralised structure were generally either those in which one constituent firm was considerably larger than the others, or those in which a particular family managed to subordinate its fellows in the struggle for control. The families who lost out in the struggle for the fewer positions of control in the amalgamated firms were faced with the choice of either retiring into land or politics (the gentleman’s route) or moving into new business ventures (the so-called player’s route).

Families that wished to leave business often decided to sell out to a company promoter prior to the stick exchange flotation. These families sometimes retained a stake in the firm but were not involved in active control. These promoters were often keen to recruit peers to the board of companies of the companies that they floated, feeling that a ‘lord on the board’ would help the sale of shares. From the 1870s landowners joined the boards of joint-stock companies and by 1896 a quarter of all peers had directorship. Many of these men would have been invited on to a board for decorative purposes but many landowners found their directorships to be a significant supplement to their income. They may even have performed a useful function for the companies since the managerial problems of large firms and the need for delegated administration was similar to those faced on their estates. Companies may even have benefited from the ‘managerial’ expertise of the landowners.

A concentration of wealth?

The declining return of agriculture as a proportion of the returns of the economy as a whole was aggravated by the agricultural depression of 1873-1896. Smaller landowners were hit far more severely than the larger landowners who had been able to diversify into non-agricultural activities. The squeeze that this exerted on the smaller landowners exacerbated the growing awareness and criticism of the accumulation of wealth in land, commerce and industry. The result of this controversy and criticism was the establishment of an official investigation to scotch the claim that the bulk of British land was owned by 30,000 people. In fact this backfired: the investigation discovered that the land was owned by a much smaller number of people.

The results of the survey for 1873 were published in the Returns of Owners of Land (the ‘New Domesday Book’) and, although there is some confusion in the various summaries of the Return, certain conclusions about the ownership of land are clear. First, 80 per cent of land was owned by 7,000 people, of whom 4,200 in England and Wales and 800 in Scotland held 1,000 acres or more. Secondly, among these people a total of 363 held 10,000 acres or more, 44 having 100,000 acres or more. Most of the largest estates were in Scotland: there were a total of 35 estates larger than 100,000 acres, of which the 25 Scottish estates accounted for a quarter of the Scottish land. Thirdly, in total the large landowners held about 24 per cent of the land, the smaller rentiers held about 55 per cent and owner-occupiers held a further 10 per cent with the Church of England and the Crown holding a similar amount. Finally, this national picture was repeated at local level: in East Anglia, for example, 350 people owned 55 per cent of the agricultural land in Norfolk, Suffolk and Cambridgeshire.

It is also possible to reach some conclusions about income from land. Of the 2,500 people with an annual rental income of £3,000 or more in 1873, 866 received an income of £10,000 or more and 76 received £50,000 or more. Sixteen people received a rental income in excess of £100,000, the largest incomes going to the Dukes of Norfolk and Buccleuch and the Marquess of Bute. Any attempt to construct a list of Britain’s richest people is complicated by the fact that there was not a perfect correlation between income and acreage. Only 7 people had both 100,000 acres and £100,000 annual income: the Dukes of Buccleuch, Devonshire, Northumberland, Portland and Sutherland, the Marquess of Bute and the Earl Fitzwilliam. The survey did not extend to the rental income derived from urban rents and the wealth if men such as the Duke of Westminster were underestimated.

To identify Britain’s richest landowners more closely it is necessary to include the Dukes of Norfolk and Westminster, who had large incomes from relatively small estates and six men with massive estates though receiving less than £100,000 rental: the Duke of Richmond, the Earls of Breadalbane, Fife and Seafield, Alexander Matheson and Sir James Matheson. These fifteen people constituted the core of the British landed class. The continuing overlap between the rich and the peerage is obvious. Of the 363 people with both £10,000 income and 10,000 acres, together holding almost a quarter of Britain’s land, 246 were members of the peerage; and a further 350 peers had smaller estates.

Landed wealth-holders 1809-1899

	1809-1858	1858-1879	1880-1899
Millionaires	75	33	32
Half-millionaires	150	50	n/a
Total	225	83	--

 

This table shows the estimate by Rubinstein of the numbers of landed millionaires and half-millionaires -- that is those leaving land valued at £500,000 or more on their death. It is clear that the number of landed millionaires fell considerably between the first and second half of the century. It is, however, important to recognise that the holding of land through settlements and trusts tended to result in an underestimation of landed wealth in studies based on land held at death.

The position of landowners in relation to wealthy merchants and industrialists was deteriorating significantly. In his researches for Capital, Marx tried to assess the number of industrial millionaires by analysing the returns for Succession Duty so as to discover the number of personal estates of more than £1m. He found no deceased millionaires for 1815-1825, eight for 1825-1855 and in the three years 1856-189 he found four. More recently Harold Perkin has estimated that there were, in 1850, 2,000 businessmen with profits of £3,000 or more; 338 of these people received £10,000 or more and 26 £50,000 or more. In 1867 the wealthiest 0.5 per cent of the population received 26.3 per cent of the total income. By 1880 the number of businessmen with Schedule D profits of £3,000 or more had risen to 5,000 of whom 987 received £10,000 or more and 77 £50,000 or more. By 1880 the commercial and manufacturing classes had overtaken the landed classes in economic terms.

Top British wealth-holders outside land 1809-1914

 

	1809-1858	1858-1879	1880-1899	1900-1914
Millionaires	9	30	59	75
Half-millionaires	47	102	158	181
Total	56	132	217	256

 

The financial sector consistently accounted for between 20 and 40 per cent of all non-landed millionaires. Within the manufacturing sector, textiles accounted for about 10 per cent (rather more in the earlier period) and metals accounted for the same percentage in both of the earlier periods and then fell away. It can be concluded that both of the main industries of the industrial revolution were well-represented among millionaires. In the later periods the food, drink and tobacco industries together accounted for about 20 per cent of all non-landed millionaires, and from 1858 the distributive trades accounted for one-tenth.

Conclusions

The wealthy men of land, commerce and manufacturing were drawing closer together during the Victorian period, though landowners still tended to deprecate merchants and manufacturers as ‘middle-class’ and concerned with ‘trade’. This status exclusion was made easier by the existence of a vast number of clerks, shopkeepers and tradesmen who were oriented towards the commercial and manufacturing classes and appeared to form a continuous social category with them. In fact, the economic gulf between them was immense.

It was the development in the scale of business activity and the emergence of the joint-stock company that brought into existence a class of salaried managers and administrators who occupied an increasingly important position in the class system. These ‘professionals’ were distinct from manual workers by virtue of their higher earnings, the ‘career’ nature of their work and their participation in the control and surveillance of the labour process but they were distinct from the capitalists themselves. They constituted a loose middle stratum below the main areas of privilege, but enjoyed superior life chances to the majority of the population. They were, however, dependent on the business and private actions of manufacturers and merchants and were also direct beneficiaries of the new form of property that the joint-stock company represented. Yet with the landowners, manufacturers and merchants, the intellectual property of the professions represented an important shift in the definition of property in late Victorian Britain.