Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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Creative accounting in the British Industrial Revolution: Cotton manufacturers and the ‘Ten Hours’ Movement
Steven Toms

Last modified: 2014-03-08


The paper re-analyses the arguments presented by pro and anti-regulation interests during the debates on factory reform. It illustrates how creative accounting was used by lobbying interest groups on both sides of the argument. In particular, it shows  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 It shows how a group of leading manufacturers, the Ashworth Brothers, Robert Hyde Greg, and Holland Hoole, who led the campaign against the Factory Acts and who were called as witnesses to parliamentary commissions, used accounting evidence to make their case.  

The paper uses archival evidence to contrast how accounting was used in the manufacturers' financial evidence to parliament and in campaigning pamphlets with the reality of their economic performance. These sets of figures are compared and contrasted and discrepancies noted. They are then used to consider the implied interrelationship between fixed costs, the rate of profit and the length of the working day. The interrelationship casts new light on the lobbying positions on either side of the debate. It also allows the compromise position of the working day length compatible with reasonable rates of profit based on actual cost structures to be identified. It is thereby able to reinterpret the validity of the claims of contemporary political economy used to support the cases for and against factory regulation. Discrepancies between figures given in evidence to parliament and business records were substantial, motivated by mill owners' incentives to present a particular view of low profits, high fixed costs, and the threat of cheaper overseas competition. The figures as presented also 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. Creative accounting thus assisted the establishment of the presumptions of political economy, with its narrative of the necessity of long working hours, and impacted legislation, diluting the provisions restricting child labour and delaying the introduction of the ten hour day until the late 1840s.