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Monday 4 August 2008

The middle-classes: Entrepreneurs

The quality of British entrepreneurship in the nineteenth century is continually being reassessed. Historians suggested until the mid 1960s that from being the organisers of change in the first half of the nineteenth century, British entrepreneurs had, by its latter decades, come to be responsible for Britain’s failure to retain her role as workshop of the world.[1]

Entrepreneurs and the Industrial Revolution: the need for reassessment

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. But is this assumption fully justified? It is grounded in a view that an economic transformation did take place between 1780 and 1830 and that entrepreneurs were the chief instruments of change with their reputations for courage and adventurousness, progressive efficiency, organisational ability and grasp of commercial opportunities, combined with a capacity to exploit it. Historians have questioned the promethean basis for economic change and, as a result, have begun to look seriously at the role that entrepreneurs played. The problem is the nature of the sample used to justify the progressive nature of entrepreneurs. The evidence that survives is from those concerns that were sufficiently successful to have created conditions favourable for untypical longevity. Historians have few records of where entrepreneurship failed. On the basis of this biased sample, the temptation has been to construct a composite ‘complete businessman’ possessing all the virtues and to extrapolate from these qualities not only to the hundreds of concerns mentioned in local histories, but even to those whose names have never been recorded. This has confused the issue. In fact the ancestors of the much maligned later Victorian businessman may not have been superior entrepreneurs in every facet of business activity and many who succeeded in the early years may not have fared so well in later decades.

Many industrial pioneers operated in a uniquely favourable economic environment. They faced a buoyant domestic market buttressed, especially in cotton, by a flourishing overseas demand. This allowed entrepreneurs like Robert Owen, Benjamin Gott and his partners and George Newton and Thomas Chambers to exploit profit potentials. In these generally favourable demand situations the perpetration of the grossest errors often went unpunished by bankruptcy. Imbalances of power supply, mill capacity and potential demand for the product often resulted and optimal factory layouts were rarely achieved. The focus on the successful entrepreneurs during the industrial revolution creates a degree of entrepreneurship that was perhaps not typical. More representative than the Arkwrights, Strutts and Peels were the Wilsons of Wilsontown Ironworks or the Needhams of Litton whose concerns suffered from serious entrepreneurial shortcomings coupled with gross mismanagement.

The hidden decades: 1830-1870?

The overwhelming majority of business records for this period have either been destroyed or have not yet attracted much attention. Analysis is thus either impossible or insubstantial. This is a grave misfortune. Many of the problems of the pioneers had been overcome: relatively sophisticated managerial techniques evolved and the markets of the world long remained open to British exploitation. However, such was the strength of the home and overseas markets, the former benefiting from the coming of railways and gradually rising living standards that the entrepreneur 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, coupled with the fact that the majority of large companies were but ‘private firms converted’ meant that the nature of entrepreneurship and the structure of the firm changed little in the middle decades of the century. However, the decline of hitherto leading firms can be traced to this period. 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 by sheer momentum and a continuing demand for the products of its foundry. Though these examples could be multiplied, little can be proved from them. What they do illustrate is that many more firms would have gone down in this period had they been confronted by the degree of competition encountered after 1870.

Some firms that traced their origins to the Industrial Revolution were declining in relative importance; some were disappearing altogether; others were crowding in to take their chances in both old and new fields of enterprise. It would appear that the majority of British firms -- whether their products were sold directly to the customer or through intermediaries -- became increasingly specialised during the middle decades of the century. It was an ideal way to get started and, having become established, to survive.

1870-1914: The critical decades?

In the last two decades there has been a stimulating debate on the competence of entrepreneurs in late-Victorian and Edwardian Britain. There was a declining rate of growth of industrial production, a relative deterioration in the international position and a sluggish rise in productivity and all have, to some degree, been blamed on declining entrepreneurial spirit. David Landes, for example, in summarising the case for the prosecution, suggested that British enterprise reflected a ‘combination and 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.’ [2]

The hypothesis of entrepreneurial failure took quite a beating in the late 1960s. The factual basis was broadened away from the areas of iron production and cotton to the new industries where the factory was encroaching on old craft and the multiple on the village store, to the manufacture of soap, patent medicine, mass-produced foodstuffs and confectionery. In these areas, it was argued, the very real commercial and technological successes had been generally underestimated. British historians piled case study upon case study that, if anything, confused the issue of entrepreneurial failure even more.

Assertions of British entrepreneurial failure imply a comparison with performance elsewhere, usually in Germany and America. McCloskey studied the iron and steel industry and 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. 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. On the basis of these and other studies, McCloskey expressed the belief that there was ‘little left of the dismal picture of British failure painted by historians’. But doubts still remained. If the British entrepreneur is to be criticised for failing constructively to confront the organisational constraints that were progressively strangling the staple industries, especially their labour-intensive nature, and if he is to be criticised for failing more vigorously to enter new manufacturing industries, then arguably the same entrepreneur deserves some praise for moving into the service sector, whose relatively rapid rate of output growth and high productivity between 1870 and 1914 was so much superior to the old staples that its expansion provided what little buoyancy there was in Britain’s aggregate economic growth. The four decades before the First World War were not, therefore, a critical period of entrepreneurship. British entrepreneurial errors and hesitation were always present, even in the period of the classic Industrial Revolution. They simply became more apparent after 1870.

A gentrification of British businessmen?

There is a deep-seated and enduring conviction that British culture was the root cause of Britain’s industrial decline. The central tenet of this tradition is the belief that the British people, and especially those of 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.[3] 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.

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. However, what little evidence there is suggests that the biases of British life were not nearly as hostile to manufacturing as some historians would have us believe. The upper middle-classes did send 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 roughly 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 per cent of the men listed in the Dictionary of Business Biography who had been born between 1840 and 1869 had been to a public school, and only 18 per cent of the entrepreneurs active in Birmingham, Bristol and Manchester between 1870 and 1914 were so educated. It is questionable whether the propensity of successful businessmen and merchants to become landowners in the late nineteenth century represented a new departure. Land and the status that its possession entailed had figured in the definition and distribution of prestige in Britain long before 1870. 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 increasingly 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 shopfloors 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.


[1] P.L. Payne British Entrepreneurship in the Nineteenth Century, Macmillan, 2nd. ed., 1988 is a brief analysis of research. Michael Dintenfass The Decline of Industrial Britain 1870-1980, Routledge, 1992 is a challenging account of Britain's long-term decline since the 1870s and provides the most accessible, and briefest, discussion of this vexed question.

[2] D. Landes The Unbound Prometheus, CUP, 1969, page 564.

[3] The classic modern exposition of this view can be found in Martin Wiener English Culture and the Decline of the Industrial Spirit 1850-1980, CUP, 1981.

Friday 1 August 2008

How far were the middle-classes the ruling class?

The rise of the bourgeoisie or middle-classes has often been used in ways that imply a reference to the country’s dominant group.[1] Before examining the development of the middle-classes in the nineteenth century it is important to consider the relative power of the aristocracy and the emergent bourgeoisie.

Wealth-holding

There are two major sources of extensive quantitative data that have been used by W.D. Rubinstein to analyse the relative wealth of different groups of property owners: the value of individual property at death as recorded in probate calendars and assessments of incomes in different districts made by the Inland Revenue for the purposes of taxation. Each of these measures is subject to some technical qualifications for, even before the imposition of heavy death duties on inherited wealth in the twentieth century, the rich may still have had other reasons to dispose of some of their property before death. Tax assessments of the living promise a solution to this problem but the measurement of income by area of residence is likely to undervalue the importance of capital holdings in other districts[2]. Despite criticisms, a clear picture emerges from his data. First, the wealth of landowners was predominant for longer than many historians have assumed. Secondly, among the increasingly important non-landed wealth-holder, industrial employers came third behind bankers and merchants with only 30-40 per cent of non-landed fortunes at their mid nineteenth century peak.

Until the 1880s over half of the very wealthiest still had the bulk of their property in land. Even when income from rents began to fall from the 1870s, large landowners were able to increase their incomes from coal and mineral royalties and from urban rents, while landowners of all sizes were able to supplement their incomes by diversifying into commercial and financial activities in the City of London, then experiencing rapid growth because of its emergence as the major service centre for the world economy. As a result of this, there was also a marked concentration of non-landed wealth in London, particularly the City, and this was to be found at the level of the middle-classes as well as the very rich. Within the industrial regions much the same pattern is repeated: centres of commerce like Liverpool contained the highest general levels of wealth and even in a city like Manchester only one out of six recorded millionaires was a cotton manufacturer, the others were bankers and merchants.

The growth of manufacturing employment and of the wealth of employers in the northern industries was undoubted but their fortunes were only impressive a small town level. This was partly the result of the limited nature of their ambitions for prosperous family-based firms, as well as of the greater uncertainty and lower rate of return from productive activity in comparison with landownership and finance and it was closely connected with manufacturers’ general avoidance of heavy fixed investment in plant and equipment. The result was that, even within their own regions, the manufacturers were still overshadowed by the landowning classes.

Political power

The Reform Act 1832, traditionally regarded as the beginnings of middle-class political power, cannot be taken as an index of the rise to power of the industrial bourgeoisie. The new franchise certainly 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 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 were hereditary aristocrats and around half of the cabinets of both parties were still aristocratic.[3]

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. It 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 how far did the middle-classes benefit from this? It did not give the provincial manufacturers a greatly enhanced position of power at the national level.[4] 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 that 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 seems to have come 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. In the longer term, the 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. Repeal was directly advantageous to manufacturers who had a direct interest in keeping food prices down. Repeal, however, was by no means disadvantageous to the aristocracy much of whose land was devoted to pastoral farming and whose rents from arable land were in any case largely maintained for the duration of the long mid-century boom. It was the tenant farmer who stood to suffer most. The Anti-Corn Law League should be seen as a popular radical campaign that secured an unusual amount of financial backing from manufacturers because of the economic benefits they expected. Repeal should be seen as a result of aristocratic concession to popular opinion during a short-term crisis rather than of the long-term growth of bourgeois political power.

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. In this way it is possible to explain why the significant limitation of the hours of work in factories contained in the 1847 Factory Act was passed ion 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 a marginal one, what power did they have within their own industrial regions? It has long been held that, given their wealth, it would be surprising if they had not exercised considerable local power. However, what is striking about most of the recent research is the emphasis on the limits of that power, at least within the political arena. First, there was a clear counterweight to the provision of employment on the development of towns and that was the ownership of land: aristocratic influence persisted in many industrial towns until at least the 1870s. Secondly, there were other competing non-landed groups, above all the mercantile, retailing and professional middle-classes, who were in general more active in local 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 per cent by the 1870s and continued to decline thereafter.

It would seem that the political dominance of manufacturers was confined to the smaller industrial towns and even there it would not have been unlimited. The powers of local government were acquired either by special private bills that had to be approved by Parliament, or by national permissive acts that generally required the establishment of more democratic local procedures.

Cultural influences

The middle-classes had a relatively lowly status in terms of wealth-holding and political power, but can it 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 it mould society in its 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 avoid such intractable general problems and to focus on the simpler questions of whether the specific interests of manufacturers were represented in the attitudes and values of the ruling classes.

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 -- money was rootless and without the reciprocal obligations and duties of landowning. Up to 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. 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 among them sent their sons to public schools and bought their own landed estates. Those who were active in political life did so in parties led by the aristocracy.

It is, however, clear that there was a significant space for the cultural influence of non-landed groups within the industrial regions. Here research parallels that on political influence with merchants, retailers and professionals just as active, if not more so, than manufacturers and there were important political and religious differences within local middle-classes.

Conclusions

The view of the nineteenth century as one in which all groups of property owners, landed and non-landed, were increasingly integrated into a new ruling class after 1850 can be questioned. Given the weight of evidence on the different economic functions, different geographical locations and different access to wealth and power of the groups involved, it is difficult to establish a viable case for this. In many respects the problem has arisen because of a misreading of the emergence of middle-class power in the first half of the century. It is true that the middle-classes were given[5] the vote in 1832, municipal government was reformed in 1835, they managed to get the Corn Laws repealed in 1846[6] and their ideological stance, characterised by ‘respectability’, was of growing significance. But these all occurred within a framework of aristocratic economic and political power.

There is little doubt that the ‘power’ of the middle-classes, however it is construed, did increase and that they became more influential in determining policy directions and agendas. However, this does not mean that they acquired political power in any meaningful sense. Political power in 1914 lay, to a considerable degree, where it had in 1832 with the aristocratic elite. Like the gap between the popular image and the reality of the aristocracy, the concept of the bourgeoisie was not wholly in accord with the realities of middle-class life. To talk of the bourgeoisie is not to employ a precise description so much as to imply a certain status or quality common to all those who ranked between the gentry and the working-class in the social hierarchy.


[1] There is less literature on the middle-classes in the nineteenth and early twentieth century than for the labouring population. Lawrence James The Middle Class: A History, Little, Brown, 2006 is an exhaustive study. I. Bradley The English Middle Classes are Alive and Kicking, Collins, 1982 takes a longer perspective but contains a few pages of assistance.  D. Read The English Provinces c.1760-1960: a study in influence, Edward Arnold, 1964 is a tentative attempt to explore provincial society where the middle-classes were at their strongest. T.J. Nossiter Influence, Opinion and Political Idioms in Reformed England: Case Studies from the North-East 1832-1874, Harvester, 1975 and G. Crossick and H.G. Hauge Shopkeepers and Master Artisans in Nineteenth-Century Europe, Methuen, 1984 contain some useful comments on the 'shopocracy'.  J.R. Vincent Pollbooks: How Victorians Voted, CUP, 1968 is a valuable examination of a major source of middle-class political strength and much else.  For the development of the professions see W.J. Reader Professional Men: the rise of the professional classes in Victorian England, Weidenfeld, 1966. G. Best Mid-Victorian Britain 1851-1875, Weidenfeld, 1971 has essential discussions of 'respectability' and 'the gentleman'.  J.M. Bourne Patronage and Society in Nineteenth Century England, Edward Arnold, 1986 is excellent for the changing notion of 'patronage' and its effects on the middle-classes. G. Crossick (ed.), The Lower Middle Class in Britain 1870-1914, Croom Helm, 1977 is the most useful collection of papers and G. Anderson Victorian Clerks, Manchester, 1976 deals with an increasingly numerous occupational group.

[2] W.D. Rubenstein Men of Property: The Very Wealth in Britain since the Industrial Revolution, Croom Helm, 1981, Elites and the Wealthy in Modern British History, Methuen, 1987 and Wealth and Inequality in Britain, Faber, 1988 provide valuable analyses of wealth-holding, point to the relatively low standing of manufacturers and argue that few businessmen brought landed estates and that the aristocracy was a closed elite.

[3] G.R. Searle Entrepreneurial Politics in Mid-Victorian Britain, OUP, 1993 is the clearest modern statement of the position of the middle-classes in politics.

[4] 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.

[5] The use of the phrase 'were given the vote' is informative. It implies concession from the aristocratic elite.

[6] The chronology of repeal is again informative. Repeal occurred as a result of famine in Ireland rather than as a result of pressure from the League. Sir Robert Peel's resignation speech in mid 1846, where he praised the role of Richard Cobden and the League, misrepresented their significance and has misled historians ever since.