How far were entrepreneurs agents of change in the nineteenth century?

During the economic transformation between 1780 and 1830, entrepreneurs were regarded as the main instruments of change because of their enterprise and innovation, organisational skill and their ability to exploit commercial opportunities.[1] Many industrial pioneers operated in a uniquely favourable economic environment. They faced an expanding domestic market buttressed, especially in cotton, by a flourishing overseas demand. This allowed entrepreneurs such as Robert Owen[2], Benjamin Gott[3] and his partners, George Newton and Thomas Chambers to exploit profit potentials. In these largely favourable economic conditions, substantial profits could be achieved without effective use of power supplies or optimal factory layouts. However, successful entrepreneurs such as Arkwright, Strutt and Peel were perhaps not typical of contemporary businessmen. More representative were individuals such as the Wilsons of Wilsontown Ironworks[4] or the Needhams of Litton[5] whose concerns suffered from serious entrepreneurial shortcomings coupled with gross mismanagement. Such was the strength of the home and overseas markets, the former benefiting from the coming of railways and gradually rising living standards that entrepreneurs had no great inducement to alter the basic economic structure that had evolved before 1830.

The absence of any dramatic change in the scale of operations, the relatively slow enlargement of the labour forces of individual enterprises and the close coincidence of firm and plant, meant that the nature of entrepreneurship and the structure of the firm changed little in the middle decades of the century. However, some firms that traced their origins to the Industrial Revolution were declining in relative importance and some were disappearing altogether. Marshall’s of Leeds began to decline in the 1840s, though it was to linger on for another forty years by which time many of its leading competitors in flax spinning had already gone: Benyons in 1861, John Morfitt and John Wilkinson a few years later. The Ashworth cotton enterprises, built up between 1818 and 1834 by Henry and Edward Ashworth, began their relative decline in the 1840s. In iron, Joshua Walker & Co. did not long survive the end of the Napoleonic Wars, its steel trade being formally wound up in 1829 and its iron trade finally wasted away in the 1830s. Other ironmasters fared little better: John Darwin, one of Sheffield’s leading industrialists, had gone bankrupt by 1828. The Coalbrookdale Company bereft of managerial guidance when Abraham and Alfred Darby retired in 1849 and Francis Darby died in 1850, faltered and was sustained only continuing demand for the products of its foundry.[6]

The view of entrepreneurs in the late-nineteenth century as having declining initiative and flagging drive rests on a view of the dynamism of their predecessors of the classical industrial revolution that can be seen to lack firm foundations. [7] How competent were entrepreneurs in late-Victorian and Edwardian Britain?[8] Growth in industrial production declined; there was a relative deterioration in Britain’s international economic status and a sluggish rise in productivity that have, to some degree, been blamed on declining entrepreneurial spirit.[9] David Landes, for example, supported this position suggesting that British enterprise reflected a

...combination of complacency. Her merchants, who had once seized the markets of the world, took them for granted; the consular reports are full of the incompetence of British exporters, their refusal to suit their goods to the taste and pockets of the client, their unwillingness to try new products in new areas, their insistence that everyone in the world ought to read in English and count in pounds, shillings and pence. Similarly, the British manufacturer was notorious for his indifference to style, his conservatism in the face of new techniques, his reluctance to abandon the individuality of tradition for the conformity implicit in mass production.[10]

This view of British entrepreneurial failure implied an unfavourable comparison with performance elsewhere, usually in Germany and America. However, McCloskey [11] found that the British iron and steel masters exploited the potential of world technology before 1914 as well as, if not better, than their much lauded American competitors though he was less convinced by the potential of the British coal industry.[12] Similar studies of the cotton industry found that failure to introduce newer technology and reliance on mule-spinning did not lead to a decline in productivity.[13] On the basis of these and other studies, McCloskey argued that there was ‘little left of the dismal picture of British failure painted by historians’.[14] But doubts still remained. British entrepreneurs were criticised for failing to confront organisational weakness especially their labour-intensive nature that was progressively strangling the staple industries and for failing to enter more vigorously new manufacturing industries. Conversely, entrepreneurs did move into the service sector, whose relatively rapid rate of growth and high productivity between 1870 and 1914 was superior to the old staples and provided what little buoyancy there was in Britain’s aggregate economic growth. British entrepreneurial errors and hesitation were always present, even during the Industrial Revolution. They simply became more apparent after 1870.[15]

There is a deep-seated and enduring conviction that British culture was the root cause of Britain’s industrial decline. Central to this tradition is the belief that the British people, especially the middle-classes, have long been averse to industry. For them the real Britain has been the ‘green and pleasant land’ of the traditional British countryside. Those businessmen who could forsake industry and trade for a life of gentility have eagerly done so. This ‘gentrification’ of the English middle-classes caused a dampening of industrial energies and led to a decline in Britain’s economic prowess. [16] The politicians and civil servants whose actions shaped the economic environment in which private enterprise functioned were drawn from the gentry or, if of humbler birth, educated to the ideals of style, leisure and service at a public school or one of the ancient universities. The financiers and traders of London to whom they looked for economic expertise were also imbued with the same anti-industrial spirit. In reality, however, the middle-classes were not as hostile to manufacturing as some historians believe. The upper middle-classes sent a significant number of their sons into business and the flow of elite sons into manufacturing and commerce was neither limited to genteel pursuits like merchant banking. Sons of landowners and professional accounted for a quarter of British steel manufacturers active in the period 1865-1914 and both groups were substantially over-represented in this heavy industry in comparison with their incidence in the population as a whole.

Given the willingness of the landed and professional classes to embrace industry as a source of jobs for their sons, it is perhaps not surprising that British businessmen failed to ape the allegedly anti-industrial disposition of their social superiors. Industrialists and merchants, for example, long displayed an unwillingness to educate their sons at the public schools that served as the gateways to elite status in Britain. Just 21% of the men listed in the Dictionary of Business Biography born between 1840 and 1869 had been to a public school, and only 18% of the entrepreneurs who were active in Birmingham, Bristol and Manchester between 1870 and 1914 were so educated. The tendency for successful businessmen and merchants to become landowners in the late-nineteenth century did not represent a new departure. Since the purchase of estates by businessmen did not damage the economy in the decades before 1870 and since there is little evidence that the sons of businessmen were deflected to the lifestyle of landed gentry after 1870, it is hard to see why this tendency should have significantly weakened Britain’s competitiveness.

The decline of industrial Britain after 1870 was a matter of the decisions about tools and techniques, education and training and advertising and sales that the men who remained in the offices and on the shop-floors made. There is as yet virtually no direct evidence linking the choices entrepreneurs and managers made about production and marketing with the anti-industrial values to which they supposedly succumbed. If there was a ‘gentry cast’ to their minds, that strongly influenced business decision-making, historians have found few traces of it in the records of British enterprises.

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[1] See this issue from a literary perspective, McKinstry, Sam, ‘The positive depiction of entrepreneurs and entrepreneurship in the novels of Sir Walter Scott’, Journal of Scottish Historical Studies, Vol. 26, (2006), pp. 83-99.

[2] Donnachie, Ian L., Robert Owen: Owen of New Lanark and New Harmony, (Tuckwell), 2000 and Butt, John, (ed.), Robert Owen, prince of cotton spinners: a symposium, (David & Charles), 1971.

[3] See, Heaton, Herbert, ‘Benjamin Gott and the industrial revolution in Yorkshire’, Economic History Review, Vol. 3, (1931-2), pp. 45-66.

[4] Donnachie, Ian L. and Butt, John, ‘The Wilsons of Wilsontown ironworks, 1779-1813: a study in entrepreneurial failure’, Explorations in Entrepreneurial History, 2^nd ser., Vol. 4, (1967), pp. 150-168.

[5] MacKenzie, M.H., ‘Cressbrook and Litton mills, 1779-1835’, Derbyshire Archaeological Journal, Vol. 88, (1969 for 1968), pp. 1-25, Chapman, Stanley D., ‘Cressbrook and Litton mills: an alternative view’, Derbyshire Archaeological Journal, Vol. 89, (1970 for 1969), pp. 86-90 and MacKenzie, M.H., ‘Cressbrook and Litton Mills: a reply’, Derbyshire Archaeological Journal, Vol. 90, (1972 for 1970), pp. 56-59.

[6] Thomas, Emyr, Coalbrookdale and the Darby family: the story of the world’s first industrial dynasty, (Sessions), 1999.

[7] Payne, P.L., British Entrepreneurship in the Nineteenth Century, (Macmillan), 2^nd ed., 1988 is a brief analysis bibliographical study. Dintenfass, Michael, The Decline of Industrial Britain 1870-1980, (Routledge), 1992 and Dormois, Jean-Pierre and Dintenfass, Michael, (eds.), The British industrial decline, (Routledge), 1999 provide a challenging account of Britain’s long-term decline since the 1870s.

[8] Payne, Peter, ‘Entrepreneurship and British economic decline’, in Collins, Bruce and Robbins, Keith, (eds.), British culture and economic decline, 1990, pp. 25-58.

[9] Westall, O.M., ‘The competitive environment of British business 1850-1914’, in Kirby, M.W., and Rose Mary B., (eds.), Business enterprise in modern Britain: from the eighteenth to the twentieth century, (Routledge), 1994, pp. 207-235 and Kirby, M.W., The Decline of British Economic Power Since 1870, (Taylor & Francis), 1981, pp. 1-24 provides a valuable context.

[10] Landes, D., The Unbound Prometheus, (Cambridge University Press), 1969, p. 564.

[11] McCloskey, D.N., Economic maturity and entrepreneurial decline: British iron and steel, 1870-1913, (Harvard University Press), 1973, pp. 1-21, 56-72, 125-130.

[12] McCloskey, D.N., Enterprise and Trade in Victorian Britain, (Allen & Unwin), 1981, pp. 74-93.

[13] Chapman, S.D., ‘The Textile Industries’, in Roderick, G.W., and Stephens, M.D., (eds.), Where did we go wrong? Industrial performance, education and the economy in Victorian Britain, (Taylor & Francis), 1981, pp.125-138.

[14] Ibid, McCloskey, D.N., Enterprise and Trade in Victorian Britain, p. 106.

[15] See, for example, Brown, K.D., ‘Entrepreneurial Failure and Retailing: a case-study’, Journal of Industrial History, Vol. 5, (2002), pp. 71-88, Toms, Steven, ‘Windows of opportunity in the textile industry: the business strategies of Lancashire entrepreneurs, 1880-1914’, Business History, Vol. 40, (1998), pp. 1-25.

[16] The classic modern exposition of this view can be found in Wiener, Martin, English Culture and the Decline of the Industrial Spirit 1850-1980, (Cambridge University Press), 1981. See also, Trainor, Richard, ‘The gentrification of Victorian and Edwardian industrialists’, in Stone, Lawrence, Beier, A.L., Cannadine, David and Rosenheim, James M., (eds.), The First modern society: essays in English history in honour of Lawrence Stone, (Cambridge University Press), 1989, pp. 167-197 and Thomson, F.M.L., Gentrification and the Enterprise Culture: Britain 1780-1980, (Oxford University Press), 2003, pp. 19-142 and Robbins, Keith, Politicians, diplomacy, and war in modern British history, (Hambledon), 1994, pp. 67-84 on British culture versus British industry.

Was there a middle-class political revolution?

The Reform Act 1832, traditionally regarded as the beginnings of middle-class political power, does not provide an index of the rise to power of the industrial bourgeoisie.[1] The new franchise increased the representation of the urban middle-class but it was also designed to reduce the power of newly wealthy owners of corrupt boroughs and to restore and give fresh legitimacy to the traditional influence of the landed interest. As late as the 1860s, almost two-thirds of the country’s MPs came from landed backgrounds, over one-third, hereditary aristocrats and around half of the cabinets of both parties were still aristocratic.[2] It was not until after the Reform Act 1867 that the first major changes in the nature of the political elite began to emerge. The Act extended the franchise to certain sections of the urban working-classes and this led to the replacement of local patterns of influence with professionally organised political machines. This was accelerated by further extensions of the franchise in 1884 but also by such reforms as the Secret Ballot Act 1872, the restriction of candidates’ spending on elections by the Corrupt Practices Act 1883, the dilution of the aristocracy through awards of peerages in recognition of wealth and political service that began in 1885 and the establishment of elections for local government in the counties in 1888 and 1894.

It is probably fair to talk of a major restructuring of the British Establishment from the 1870s but the extent to which the middle-classes as a whole benefitted from this was limited. It did not give the provincial manufacturers a greatly enhanced position at national level.[3] Membership of the ruling circle was being extended to include larger numbers of bankers and merchants but few manufacturers. However, though the great country houses were being displaced from the centre of political power, the network of power and influence was based even more firmly in the south of the country and the aristocracy still remained the leading group within the ruling classes. Who held what position and what social classes they came from may be less important than how and in whose interests they acted.

It can be argued that the industrial bourgeoisie was able to exert sufficient pressure on the nation’s political elite to get the kind of government it wanted. However, the challenge to which the restructuring of the Establishment was a response came less from industrial employers than from occupationally-based pressure groups among both the professional middle-classes and the working-classes that had been able to win major reforms in the 1860s and 1870s and were to make important advances in the 1890s and 1900s.

Lancashire factory owners became a substantial group in the House of Commons after 1832 but their effectiveness was limited by internal political divisions and by their inability to create external alliances with other parliamentary groupings. [4] In the longer term, factory owners became less active in politics and more conservative in their social behaviour. Their strong attachment to the Tory Party echoed the traditional allegiance of the Lancashire aristocracy. The one apparent assertion of industrial against the landed interest was the debate over the Corn Laws that led to their eventual repeal in 1846. The Anti-Corn Law League was a popular radical campaign that secured an unusual amount of financial backing from manufacturers because of the economic benefits they expected. Repeal was beneficial to manufacturers who had a direct interest in reducing food prices but it was by no means disadvantageous to the aristocracy much of whose land was devoted to pastoral farming and whose rents from arable land were largely maintained during the long mid-century boom. It was the tenant farmer who stood to suffer most. Repeal was a result of aristocratic concession to popular opinion during a short-term crisis rather than of the long-term growth of bourgeois political power.[5]

The middle-class ‘victory’ of 1846 was atypical of their success in this period and did not mark the beginnings of middle-class control of the political system. This explains why the limitation of the hours of work in factories contained in the 1847 Factory Act was passed in the face of strong opposition from most of the Lancashire manufacturers and why it was a further twenty years before the next instalment of parliamentary reform. Similar pattern can be seen in the 1870s, not only in the widespread aristocratic support for agricultural labourers’ demands but also in government attitudes towards labour policy in general. The main line of government policy was a liberal one of not only recognising but even strengthening the rights of employees to bargain collectively over wages and conditions. It had been possible for Britain’s ruling elite, based as it was on landownership, commerce and increasingly on foreign finance, to maintain social stability through liberal concessions to pressure from below without having the sacrifice its own immediate political and economic interest.

So if the position of manufacturers within the British ruling classes was marginal, what power did they have within their own industrial regions? Given their wealth, it would not be surprising if they exercised considerable local power but, at least within the political arena, there were limitations on that power. First, aristocratic influences persisted in many industrial towns until at least the 1870s acting as a counterbalance to the economic and political impact of the factory elite. Secondly, there were other competing non-landed groups, above all the mercantile, retailing and professional middle-classes, who were generally more active in local urban politics than manufacturers. In Bolton and Salford, for example, over half the councillors in the 1840s had been manufacturers but this had fallen to under 40% by the 1870s and continued to decline thereafter. The political dominance of manufacturers was confined to the smaller industrial towns but even there it was not unlimited. The growing powers of local government acquired either by special parliamentary private bills or by national permissive legislation led to the establishment of more democratic local procedures.

The middle-classes had a relatively lowly status in terms of wealth-holding and political power, but can they be seen as a leading or ‘hegemonic’ class in terms of its ability to shape policy through its impact on the attitudes and values of the country as a whole? How far did the middle-classes mould society in their own image and indirectly influence the behaviour of the more prominent actors, who were after all themselves major property owners? Harold Perkin contrasted the ‘entrepreneurial ideal’ of the emergent middle-classes with the ‘aristocratic’ ideal but this characterisation has been questioned. It is difficult to define ‘bourgeois’ as opposed to ‘aristocratic’ values and it is perhaps better to focus on the simpler questions of whether the specific interests of manufacturers were represented in the attitudes and values of the ruling classes.[6]

If the country’s literary culture is taken as an index of the concerns of its rulers, it is clear that in Britain manufacturers, far from reshaping dominant attitudes, were consistently rejected unless they conformed to existing social values. Economic success was viewed with some suspicion and the early-modern notion that money was rootless and without the reciprocal obligations and duties of landowning retained its potency. Until the 1760s, attitudes were ambiguous, but thereafter the trend was distinctly towards literary condemnation of new wealth reaching its peak in the rejection of provincial manufacturers between the 1840s and the 1930s. The only route to acceptance and ‘respectability’ was to adopt the values of civilised culture and public service associated with the ‘gentleman’, and later the professional man and to abandon the values of mere money-making and sectional interest associated with new wealth.[7] These elite values had an effect on the industrial bourgeoisie itself. Many of its members lived in town houses or holidayed at coastal resorts located on large landed estates. Most aspired to acceptance by the Establishment. The wealthier sent their sons to public schools and bought their own landed estates. Those who were active in political life did so in the Conservative and Liberal parties led by the aristocracy.[8] It is, however, clear that there was a significant space for the cultural influence of non-landed groups within the industrial regions. As with political influence, merchants, retailers and professionals were just as active, if not more so, than manufacturers and there were important political and religious differences within local middle-classes.

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[1] Garrard, John Adrian, ‘The middle classes and nineteenth century national and local politics’, in Garrard, John Adrian, Jary, David, Goldsmith, Michael and Oldfield, Adrian, (eds.), The middle class in politics, (Saxon House), 1978, pp. 35-66 and Briggs, Asa, ‘Middle-class consciousness in English politics, 1780-1846’, Past & Present, Vol. 9, (1956), pp. 65-74 provide a brief overview.

[2] Ibid, Searle, G.R., Entrepreneurial Politics in Mid-Victorian Britain, is the clearest statement of the position of the middle-classes in politics.

[3] The economic strength of this group, measured in terms of their share of the national wealth, began to decline from the 1870s under pressure from foreign competition.

[4] Kadish, A.’, Free trade and high wages: the economics of the Anti-Corn Law League’, and Lloyd-Jones, Roger, ‘Merchant city: the Manchester business community, the trade cycle, and commercial policy, c.1820-1846’, in Marrison, Andrew (ed.), Freedom and trade, Vol.1: Free trade and its reception, 1815-1960, (Routledge), 1998, pp. 14-27, 86-104.

[5] Adelman, Paul, Victorian Radicalism: The Middle-Class Experience 1830-1914, (Longman), 1984, pp. 11-28 and Chaloner, W.H., ‘The Agitation against the Corn Laws’ in Ward, J.T., (ed.), Popular Movements 1830-1850, (Macmillan), 1970, pp. 135-151 are good summaries of the work of the Anti-Corn Law League. McCord, N., The Anti-Corn Law League 1838-1846, (Allen and Unwin), 1958 and Pickering, Paul A and Tyrrell, Alex, The People’s Bread: A History of the Anti-Corn Law League, (Leicester University Press), 2000 provide different perspectives but Prentice, Archibald, History of the Anti-Corn Law League, 2 Vols. 1853, new edition with an introduction by W.H. Chaloner, (Cass), 1968, is still a valuable source. The political strategies of the League can be approached through Hamer, D.A., The Politics of Electoral Pressure, (Harvester), 1977, pp. 58-90 and Prest, J., Politics in the Age of Cobden, (Macmillan), 1977, especially chapters 5 and 6.

[6] Gunn, Simon, The public culture of the Victorian middle class: ritual and authority in the English industrial city, 1840-1914, (Manchester University Press), 2000 and Kidd, Alan J. and Nicholls, David, (eds.), Gender, civic culture, and consumerism: middle-class identity in Britain, 1800-1940, (Manchester University Press), 1999, Green, S., ‘In search of bourgeois civilisation: institutions & ideals in 19^th century’, Northern History, Vol. 28, (1992), pp. 228-245 and Morgan, S., ‘‘A sort of land debatable’: Female influence, civic virtue and middle-class identity, c.1830-c.1860’, Women’s History Review, Vol. 13, (2004), pp. 183-210.

[7] See one dimension in Jeremy, David J., (ed.), Religion, business, and wealth in modern Britain, (Routledge), 1998.

[8] MacLeod, Dianne Sachko, Art and the Victorian middle class: money and the making of cultural identity, (Cambridge University Press), 1996.