The early English cotton industry

by George W. Daniels

This additional channel through which capital and credit could flow in and out of the country was rendered more indispensable by the gradual stoppage of trade with Central Europe through the Netherlands. But in the second decade of Elizabeth fresh hostilities arose between the Merchant Adventurers who had settled at Hamburg and the Hanseatic League with the result that the German merchants were in 1576 excluded from trading in Blackwell Hall, and later in 1580 deprived of all their remaining privileges in England, whilst the Adventurers lost their foothold in Hamburg.[18] At the very moment when the foreign channels for the export trade were thus being closed the native channels were being seriously narrowed through the action of the same vested interests. The monopoly of the Merchant Adventurers extended only to the Low Countries and Germany. The trade with Spain and the Baltic, with Venice and the Levant and Morocco had been free to all Englishmen and had been opened up by enterprising merchants, frequently from the lesser parts, who more truly deserved the title of Adventurers than the corporate monopolists of the markets nearer home. But between 1575 and 1588 each of these branches of foreign commerce was monopolised by a chartered syndicate formed after the model of the Merchant Adventurers and controlled largely by the same group of Londoners. Prices went up by leaps and bounds. “When every nation,” said Harrison, “was permitted to bring in her own commodities ... we had sugar for fourpence the pound that now ... is well worth half-a-crown, raisins and currants for a penny that now are bidden at sixpence. I do not deny that the navy of the land is in part maintained by their traffic, but so is the price of wares kept up now that they have gotten the only sale of things upon pretence of better futherance of the common wealth into their own hands.”[19]

Far more serious, however, was the monopoly of the export trade in cloth. In 1586 the Privy Council was receiving alarming reports of the discontent in Somerset. The poorer sort, who were wont to live by spinning, carding and working of wool, were starving for lack of work and on the point of rebellion. An accidental fire at Bath was taken for a beacon lighted to proclaim a general rising. “This great matter of the lack of work,” writes Burleigh to Hatton, “not only of cloths, which presently is the greatest, but of all other commodities which are restrained from Spain, Portugal, Barbary, France, Flanders, Hamburg and the States, cannot but, in process of time, work a great change and dangerous issue to the people of the Realm, who heretofore in time of outward peace lived thereby, and without it must either perish for want or fall into violence to feed and fill their lewd appetites with open spoil of others, which is the root of rebellion.”

The remedy proposed by Burleigh was to undo at one stroke the whole effect of the restrictions that had been accumulating since 1564. To have more sales there must be more buyers and more ships. The Hanseatic trade must be restored. Other alien merchants must receive the same liberty and be encouraged to use it by lower export duties.[20] Blackwell Hall must be opened again to German buyers, and if the Londoners refused, a cloth hall must be set up at Westminster. Finally, the exportation of cloth must be free to all English merchants whether members of the Adventurers’ Company or not.[21] But the application of these sound remedies was frustrated by the war with Spain and the reign of Elizabeth closed with a period of intensified monopoly and of commercial depression.[22]

The expansion of the textile industries of England, which there is no reason to doubt was taking place at this period, is clearly not to be placed to the credit of Elizabethan statesmanship. It took place almost entirely in the district exempted from the Weavers Acts. Foremost amongst those districts were Lancashire and the West Riding, which thus enjoyed the advantages of comparative laissez faire at a time when restrictions on the creation and the free flow of capital were part of the accepted national policy.

IV

The importance for the expansion of British industry of the subsequent removal of those restrictions can be best understood if we compare the conditions under which English woollen industry was developing at the close of the sixteenth century with those that prevailed in the cotton industry at the close of the eighteenth century. In the earlier period, of course, there was nothing to correspond to the jenny, the mule, and the steam-engine. But certain conditions quite as essential to the development of the industry are common to both cases—above all, a rapid accumulation of new capital and a simultaneous expansion of organising ability. It was a vital factor in both these developments that the capital and ability accumulating in one field should be free to flow over into and fertilise other fields.

This is clearly shown in the instructive case of William Radcliffe, whose account of the transition of the cotton industry to the factory system has been critically discussed and set in a new light by Mr. Daniels. William Radcliffe commenced working life as a hand-loom weaver at Mellor. Any young man, he tells us, of moderate ability and self-confidence could have got on at that time. The capital accumulating in his hands enabled him to give out work, exactly as a sixteenth-century clothier would have done, to all the villages round. Within about fifteen years he was finding employment for one thousand hand-looms; he had £11,000 invested in the business; a bank gave him credit for £5000. Most of this capital and credit was employed, not in the manufacture itself, but in trade. It was represented by large quantities of piece goods on their way to the consumer, but still unsold. The new captain of industry could not extend his enterprise unless he used his capital to find a new market. For this purpose Radcliffe took as his partner a young Scot with more education than himself, who brought another Scot into the business, and who regularly visited Frankfort and Leipzig to open a market for the firm’s muslins. Or let us take the case of David Dale, the father-in-law of Robert Owen and the founder of the New Lanark Mills. He commenced life, like Radcliffe, as a hand-loom weaver, but soon became clerk to a mercer who very likely found work for weavers. Then we find him importing foreign yarns to set weavers at work on his own account and taking in a partner to help him. With the capital thus acquired he started a whole series of spinning mills—the first in Scotland—and the need of finding an outlet for his yarns led him to extend his operations to weaving and dyeing. Finally, as he was getting on in years, he disposed of his manufacturing interests to younger and more energetic men like his son-in-law, and withdrew his own capital and organising ability into the less speculative field of banking. In the cases of Dale and Radcliffe we see capital accumulated in industry flowing over into commerce and banking. But all were not so successful as Dale. Even Radcliffe came to grief in his later years and was dependent on the capital of others. And in many cases capital and credit are to be observed flowing in the opposite direction. The merchant who imported cotton enabled the young manufacturer to set up for himself by giving him three months’ credit, whilst the exporting merchant rendered similar assistance by paying for the manufacturer’s output week by week. It was in this way, by a flow of capital inwards from commerce, that most of the early industrial enterprises of Lancashire got started and the immense expansion of the cotton industry was rendered possible. One other example will serve to complete the account and to show the international significance of the development at the moment when Radcliffe was sending out his partner to Germany. Nathan Meyer Rothschild was buying Manchester goods at Frankfort for transmission to more easterly markets. Some quarrel with a Manchester merchant led him to think that he could make better use of his capital by settling in Manchester himself. His father supplied him with £20,000, and he arrived to take part in an almost feverish expansion of the industry. He found there were three separate profits to be made in the manufacture: one upon the supply of the raw material, one upon the manufacturing, and one upon the dyeing and spinning. His capital and organising ability enabled him to combine all three. In half-a-dozen years he had turned his £20,000 to £60,000, and then, obeying the instinct of his race and following the signs of the times, he withdrew his capital to banking and became one of the leading figures in the London money market.[23]

Enough has been written—perhaps too much—by way of introduction to the new and valuable chapters which the researches of Mr. Daniels have added to the history of the Lancashire cotton industry—enough if I have succeeded in indicating the historical background of the industry and the world-wide character of the development—too much if I have anticipated here and there some of the more important conclusions that Mr. Daniels has drawn from his investigations.

G. Unwin.

THE EARLY ENGLISH
COTTON INDUSTRY