Creative accounting in the British Industrial Revolution: Cotton manufacturers and the ‘Ten Hours’ Movement
AbstractThe paper examines an early case of creative accounting, and how, during British industrialization, accounting was enlisted by the manufacturers’ interest to resist demands, led by the ‘Ten hours’ movement, for limiting the working day. In contrast to much of the prior literature, which argues that entrepreneurs made poor use of accounting techniques in the British industrial revolution, the paper shows that there was considerable sophistication in their application to specific purposes, including political lobbying and accounting for the accumulation of capital. To illustrate lobbying behaviour, the paper examines entrepreneurs’ use of accounting to resist the threat of regulation of working time in textile mills. It explains why accounting information became so important in the debate over factory legislation. In doing so, it shows that a significant element was the accounting evidence of one manufacturer in particular, Robert Hyde Greg, which had a strong impact on the outcome of the parliamentary process. The paper uses archival evidence to illustrate how accounting was used in Greg’s enterprise and the reality of its economic performance. The archival evidence of actual performance is then contrasted with the figures presented by Greg to the Factories Inquiry Commission, convened by the House of Commons in 1833-1834 to hear witnesses from the manufacturing interest. These sets of figures are compared and contrasted and discrepancies noted. Conclusions show that the discrepancies were substantial, motivated by Greg’s incentives to present a particular view of low profits, high fixed costs, and the threat of cheaper overseas competition. The figures appeared to lend some credibility to the apparent plight of manufacturers and to Nassau Senior’s flawed argument about all profit being earned in the ‘last hour’ of the working day. The consequence was a setback for the Ten Hours movement, leading to a further intensification of political struggles over working conditions in the 1840s.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 51478.
Date of creation: 15 Nov 2013
Date of revision:
Key words: British Industrial Revolution; Accounting; Child labour; Factory Reform; Lancashire cotton textiles; Greg; Quarry Bank Mill;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables
- M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting
- N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-11-22 (Accounting & Auditing)
- NEP-ALL-2013-11-22 (All new papers)
- NEP-HIS-2013-11-22 (Business, Economic & Financial History)
- NEP-HME-2013-11-22 (Heterodox Microeconomics)
- NEP-HPE-2013-11-22 (History & Philosophy of Economics)
- NEP-HRM-2013-11-22 (Human Capital & Human Resource Management)
- NEP-LAW-2013-11-22 (Law & Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Early uses of accounting: to help in firm management or to pursue an agenda?
by Economic Logician in Economic Logic on 2013-12-16 15:02:00
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