Public subsidy and private divestment: The Lancashire cotton textile industry, c.1950-c.1965

Business History

Volumn 42, Issue 1, 2000, Pages 59-84

  Higgins, David ^a,b   Toms, Steven ^a,b  

^a UNIVERSITY OF SHEFFIELD   (United Kingdom)

^b UNIVERSITY OF NOTTINGHAM   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

COTTON; INDUSTRIAL HISTORY; TEXTILE INDUSTRY;

ENGLAND(LANCASHIRE); UNITED KINGDOM;

EID: 0034054801     PISSN: 00076791     EISSN: None     Source Type: Journal    
DOI: 10.1080/00076790000000175     Document Type: Article

References (128)

1. Structure and technology issues, for example, are analysed in W.A. Lazonick, Competition, Specialisation, and Industrial Decline', Journal of Economic History, Vol.41 (1981), pp.31-8; idem, 'Industrial Organisation and Technological Change: The Decline of the British Cotton Industry', Business History Review, Vol.57 (1983), pp.195-236; these debates are summarised and contextualised in J. Singleton, 'The Decline of the British Cotton Industry Since 1940', in M.B. Rose (ed.), The Lancashire Cotton Industry: A History Since 1700 (Preston, 1996); financial performance has been examined in D.M. Higgins, 'Rings, Mules, and Structural Constraints in the Lancashire Textile Industry, c.1945-c.1965', Economic History Review, Vol.XLVI (1993), pp.342-62; D.M. Higgins and J.S. Toms, 'Firm Structure and Financial Performance: The Lancashire Cotton Industry, c.1884-1960', Accounting, Business and Financial History, Vol.7 (1997), pp.195-232.
2. Structure and technology issues, for example, are analysed in W.A. Lazonick, Competition, Specialisation, and Industrial Decline', Journal of Economic History, Vol.41 (1981), pp.31-8; idem, 'Industrial Organisation and Technological Change: The Decline of the British Cotton Industry', Business History Review, Vol.57 (1983), pp.195-236; these debates are summarised and contextualised in J. Singleton, 'The Decline of the British Cotton Industry Since 1940', in M.B. Rose (ed.), The Lancashire Cotton Industry: A History Since 1700 (Preston, 1996); financial performance has been examined in D.M. Higgins, 'Rings, Mules, and Structural Constraints in the Lancashire Textile Industry, c.1945-c.1965', Economic History Review, Vol.XLVI (1993), pp.342-62; D.M. Higgins and J.S. Toms, 'Firm Structure and Financial Performance: The Lancashire Cotton Industry, c.1884-1960', Accounting, Business and Financial History, Vol.7 (1997), pp.195-232.
3. Structure and technology issues, for example, are analysed in W.A. Lazonick, Competition, Specialisation, and Industrial Decline', Journal of Economic History, Vol.41 (1981), pp.31-8; idem, 'Industrial Organisation and Technological Change: The Decline of the British Cotton Industry', Business History Review, Vol.57 (1983), pp.195-236; these debates are summarised and contextualised in J. Singleton, 'The Decline of the British Cotton Industry Since 1940', in M.B. Rose (ed.), The Lancashire Cotton Industry: A History Since 1700 (Preston, 1996); financial performance has been examined in D.M. Higgins, 'Rings, Mules, and Structural Constraints in the Lancashire Textile Industry, c.1945-c.1965', Economic History Review, Vol.XLVI (1993), pp.342-62; D.M. Higgins and J.S. Toms, 'Firm Structure and Financial Performance: The Lancashire Cotton Industry, c.1884-1960', Accounting, Business and Financial History, Vol.7 (1997), pp.195-232.
4. Structure and technology issues, for example, are analysed in W.A. Lazonick, Competition, Specialisation, and Industrial Decline', Journal of Economic History, Vol.41 (1981), pp.31-8; idem, 'Industrial Organisation and Technological Change: The Decline of the British Cotton Industry', Business History Review, Vol.57 (1983), pp.195-236; these debates are summarised and contextualised in J. Singleton, 'The Decline of the British Cotton Industry Since 1940', in M.B. Rose (ed.), The Lancashire Cotton Industry: A History Since 1700 (Preston, 1996); financial performance has been examined in D.M. Higgins, 'Rings, Mules, and Structural Constraints in the Lancashire Textile Industry, c.1945-c.1965', Economic History Review, Vol.XLVI (1993), pp.342-62; D.M. Higgins and J.S. Toms, 'Firm Structure and Financial Performance: The Lancashire Cotton Industry, c.1884-1960', Accounting, Business and Financial History, Vol.7 (1997), pp.195-232.
5. Structure and technology issues, for example, are analysed in W.A. Lazonick, Competition, Specialisation, and Industrial Decline', Journal of Economic History, Vol.41 (1981), pp.31-8; idem, 'Industrial Organisation and Technological Change: The Decline of the British Cotton Industry', Business History Review, Vol.57 (1983), pp.195-236; these debates are summarised and contextualised in J. Singleton, 'The Decline of the British Cotton Industry Since 1940', in M.B. Rose (ed.), The Lancashire Cotton Industry: A History Since 1700 (Preston, 1996); financial performance has been examined in D.M. Higgins, 'Rings, Mules, and Structural Constraints in the Lancashire Textile Industry, c.1945-c.1965', Economic History Review, Vol.XLVI (1993), pp.342-62; D.M. Higgins and J.S. Toms, 'Firm Structure and Financial Performance: The Lancashire Cotton Industry, c.1884-1960', Accounting, Business and Financial History, Vol.7 (1997), pp.195-232.
6. J. Singleton, Lancashire on the Scrapheap (Oxford, 1991), pp.231-3.
7. R. Church, 'The Family Firm in Industrial Capitalism', Business History, Vol.35 (1993), pp.17-41.
8. C. Miles, Lancashire Textiles: A Case Study of Industrial Change (Cambridge, 1968), especially Chapter 4.
9. On recent advocacy of such changes to the tax structure, see W. Hutton, The State We're In (London, 1995), Chapter 6. On the use of historical investigation into their effects, see W.G. Christie and V. Nanda, 'Free Cash Flow, Shareholder Value, and the Undistributed Profits Tax of 1936 and 1937', Journal of Finance, Vol.49 No.5 (1994), pp.1727-55.
10. On recent advocacy of such changes to the tax structure, see W. Hutton, The State We're In (London, 1995), Chapter 6. On the use of historical investigation into their effects, see W.G. Christie and V. Nanda, 'Free Cash Flow, Shareholder Value, and the Undistributed Profits Tax of 1936 and 1937', Journal of Finance, Vol.49 No.5 (1994), pp.1727-55.
11. B.R. Mitchell and P. Deane, Abstract of British Historical Statistics (Cambridge, 1963), p.186.
12. J.S. Toms, 'Growth, Profits and Technological Choice: The Case of the Lancashire Cotton Textile Industry', Journal of Industrial History, Vol.1 (1998), pp.35-55.
13. Personal capitalism refers to the inhibiting effect of individual control of businesses on investment and growth, see A.D. Chandler, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA, 1990); the Lancashire variant is outlined in J.S. Toms, 'Windows of Opportunity in the Textile Industry: The Business Strategies of Lancashire Entrepreneurs, 1880-1914', Business History, Vol.40 No.1 (1998), pp.1-25.
14. Personal capitalism refers to the inhibiting effect of individual control of businesses on investment and growth, see A.D. Chandler, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA, 1990); the Lancashire variant is outlined in J.S. Toms, 'Windows of Opportunity in the Textile Industry: The Business Strategies of Lancashire Entrepreneurs, 1880-1914', Business History, Vol.40 No.1 (1998), pp.1-25.
15. For pre-1914 examples of divestment policies, see J.S. Toms, 'Financial Constraints on Economic Growth: Profits, Capital Accumulation and the Development of the Lancashire Cotton Spinning Industry, 1885-1914', Accounting, Business and Financial History, Vol.4 No.3 (1994), pp.364-83; a post-1918 example was (later Sir) Frank Platt, who used profits from the 1920 flotation boom initially to finance early retirement; J. Bamberg, 'Sir Frank Platt', in D. Jeremy (ed.), Dictionary of Business Biography (London, 1984-86), p.6.
16. For pre-1914 examples of divestment policies, see J.S. Toms, 'Financial Constraints on Economic Growth: Profits, Capital Accumulation and the Development of the Lancashire Cotton Spinning Industry, 1885-1914', Accounting, Business and Financial History, Vol.4 No.3 (1994), pp.364-83; a post-1918 example was (later Sir) Frank Platt, who used profits from the 1920 flotation boom initially to finance early retirement; J. Bamberg, 'Sir Frank Platt', in D. Jeremy (ed.), Dictionary of Business Biography (London, 1984-86), p.6.
17. A.P. Dickerson, H.D. Gibson and E. Tsakalatos, 'Short-Termism and Under-Investment: The Influence of the Financial System', Manchester School, Vol.63 (1995), pp.351-67.
18. Toms, 'Financial Constraints', p.380.
19. Theoretically, the payment of a dividend has no effect on the market value of the company. By extension, dividend payments are unrelated to the investment requirements of a business. As far as shareholders are concerned, if a profit distribution is insufficient, additional dividend can be manufactured, in an efficient capital market, via the disposal of a proportion of the holding. In theory, it is argued, this 'irrelevance' proposition must be true since the present values of the investment projects of the firm are unaffected; M.H. Miller and F. Modigliani, 'Dividend Policy, Growth and the Valuation of Shares', Journal of Business, Vol.34 (1961), pp.411-33.
20. D.N. McCloskey, Knowledge and Persuasion in Economics (Cambridge, 1994), p.154.
21. S. Grossman and J. Stiglitz, 'On the Impossibility of Informationally Efficient Markets', American Economic Review, Vol.70 (1980), pp.393-408.
22. W. Kennedy, Industrial Structure, Capital Markets and the Origin of British Economic Decline (Cambridge, 1987).
23. Chandler, Scale and Scope, pp.240-86; B. Elbaum and W.A. Lazonick (eds.), The Decline of the British Economy (Oxford, 1986).
24. Chandler, Scale and Scope, pp.240-86; B. Elbaum and W.A. Lazonick (eds.), The Decline of the British Economy (Oxford, 1986).
25. Chandler, Scale and Scope, p.286.
26. A. Hirschman, Exit, Voice and Loyalty (Boston, 1970).
27. 'Operational efficiency' refers to the speed and accuracy of transaction processing, F. Fabozzi and F. Modigliani, Capital Markets: Institutions and Instruments (London, 1992), p.249.
28. See, for example, M. Rozeff, 'Growth, Beta and Agency costs as Determinants of Dividend Pay-out Ratios', Journal of Financial Economics, Vol.5 (1982), pp.249-59.
29. See, for example, R. Pettit, 'Dividend Announcements, Security Performance and Capital Market Efficiency', Journal of Finance, Vol.27 (1972), pp.993-1007.
30. For example, see J. Lintner, 'Distribution of Incomes of Corporations among Dividends, Retained Earnings and Taxes', American Economic Review, Vol.46 (1956), pp.97-113.
31. For a summary of tax differentials on distributed and undistributed profits, see Political and Economic Planning, Growth in the British Economy (London, 1960), p.123.
32. T.J. Hatton and A. Chrystal, 'The Budget and Fiscal Policy', in N.F.R. Crafts and D. Woodward (eds.), The British Economy Since 1945 (Oxford, 1991), p.56.
33. S. Pollard, The Development of the British Economy (London, 3rd edn., 1983), pp.392-8; J. Tomlinson, 'British Economic Policy since 1945', in R. Floud and D.N. McCloskey (eds.), The Economic History of Britain Since 1700, Vol.3: 1939-1992 (Cambridge, 1994).
34. S. Pollard, The Development of the British Economy (London, 3rd edn., 1983), pp.392-8; J. Tomlinson, 'British Economic Policy since 1945', in R. Floud and D.N. McCloskey (eds.), The Economic History of Britain Since 1700, Vol.3: 1939-1992 (Cambridge, 1994).
35. J.C.R. Dow, The Management of the British Economy, 1945-60 (Cambridge, 1964); R.W. Price, 'Budgetary Policy', in F.T. Blackaby (ed.), British Economic Policy, 1960-74 (Cambridge, 1978).
36. J.C.R. Dow, The Management of the British Economy, 1945-60 (Cambridge, 1964); R.W. Price, 'Budgetary Policy', in F.T. Blackaby (ed.), British Economic Policy, 1960-74 (Cambridge, 1978).
37. For example, see M.B. Rose, 'The Politics of Protection: An Institutional Approach to Government-Industry Relations in the British and United States Cotton Industries', Business History, Vol.39 No.4 (1997), pp.128-50; and Singleton, Lancashire on the Scrapheap. The political economy framework used here is after M. Zald, 'Political Economy: A Framework for Competitive Analysis', in M. Zald (ed.), Power in Organizations (Nashville, 1970).
38. For example, see M.B. Rose, 'The Politics of Protection: An Institutional Approach to Government-Industry Relations in the British and United States Cotton Industries', Business History, Vol.39 No.4 (1997), pp.128-50; and Singleton, Lancashire on the Scrapheap. The political economy framework used here is after M. Zald, 'Political Economy: A Framework for Competitive Analysis', in M. Zald (ed.), Power in Organizations (Nashville, 1970).
39. For example, see M.B. Rose, 'The Politics of Protection: An Institutional Approach to Government-Industry Relations in the British and United States Cotton Industries', Business History, Vol.39 No.4 (1997), pp.128-50; and Singleton, Lancashire on the Scrapheap. The political economy framework used here is after M. Zald, 'Political Economy: A Framework for Competitive Analysis', in M. Zald (ed.), Power in Organizations (Nashville, 1970).
40. Rose, 'Politics of Protection', p.143.
41. Dividend pay-out was calculated as the ratio of dividend to profit before tax and to profit after tax. Financial gearing is the ratio of long-term borrowings to total capital employed. Growth in capital employed is the annually compounded percentage change in capital employed. Return on capital employed is profit before interest and tax divided by capital employed. In all measures, capital employed is defined as shareholders' capital plus reserves plus long-term borrowings.
42. For the basic model (1) in the appendix, see Lintner, 'Distribution of Incomes', p.109. For an empirical example, see R. Alpine, 'Cross Section Regression Analysis of Profit and Dividends in the Brewing Industry, United Kingdom, 1951-1963', in P. Hart (ed.), Studies in Profit, Business Saving and Investment in the United Kingdom, 1920-1963, Vol.2 (London, 1968), pp.164-81. For extensions to this model (models 1.1, 1.2 and 2, Appendix), see T.M. Ryan, 'Dividend Policy and Market Valuation in British Industry', Journal of Business Finance and Accounting, Vol.1 (1974), pp.415-28.
43. For the basic model (1) in the appendix, see Lintner, 'Distribution of Incomes', p.109. For an empirical example, see R. Alpine, 'Cross Section Regression Analysis of Profit and Dividends in the Brewing Industry, United Kingdom, 1951-1963', in P. Hart (ed.), Studies in Profit, Business Saving and Investment in the United Kingdom, 1920-1963, Vol.2 (London, 1968), pp.164-81. For extensions to this model (models 1.1, 1.2 and 2, Appendix), see T.M. Ryan, 'Dividend Policy and Market Valuation in British Industry', Journal of Business Finance and Accounting, Vol.1 (1974), pp.415-28.
44. For the basic model (1) in the appendix, see Lintner, 'Distribution of Incomes', p.109. For an empirical example, see R. Alpine, 'Cross Section Regression Analysis of Profit and Dividends in the Brewing Industry, United Kingdom, 1951-1963', in P. Hart (ed.), Studies in Profit, Business Saving and Investment in the United Kingdom, 1920-1963, Vol.2 (London, 1968), pp.164-81. For extensions to this model (models 1.1, 1.2 and 2, Appendix), see T.M. Ryan, 'Dividend Policy and Market Valuation in British Industry', Journal of Business Finance and Accounting, Vol.1 (1974), pp.415-28.
45. Tattersalls, Cotton Trade Review, 1952-62 inclusive. This gave a sample of six companies: Amalgamated Cotton Manufacturing Trust (ACMT), Crosses and Heatons, Fine Cotton Spinners and Doublers Association (FCSDA), Joshua Hoyle, Lancashire Cotton Corporation (LCC) and Rylands.
46. These records include Board Minutes and Annual Reports, Lancashire Cotton Corporation (LCC), Greater Manchester Record Office (GMRO); annual journals of the National Federation of Textile Works Managers' Associations (NFTWMA); Parliamentary Debates (Hansard), Fifth Series, London HMSO (hereafter PDH).
47. Lancashire Cotton Corporation, Statement by the Chairman, Annual Report and Accounts, 1952.
48. Calculated using the CUCD data set as the average compound growth rate of equity for all sample companies between 1952 and 1958.
49. To examine the relationship between dividend policy and capital requirement for the period prior to the 1959 Act, model (1), Appendix 1, was re-tested in turn with coefficients added for size, financial risk and capital requirement (proxied by the average growth rate in capital for the previous six years), models 1.1 and 1.2, together with model 2 for the year 1958 (appendix, Table 3).
50. The re-flotations of 1919-20 were largely financed by loans and overdrafts; S. Bowden and D.M. Higgins, 'Short Time Working and Price Maintenance: Collusive Tendencies in the Cotton Spinning Industry, 1919-1939', Economic History Review, Vol.LI No.2 (1998), pp.319-43; thus, by the 1930s, cotton, along with iron and steel, was the most indebted sector of the British economy, H. Sjogren, 'Financial Reconstruction and Industrial Reorganisation in Different Financial Systems: A Comparative View of British and Swedish Institutions during the Inter-War Period', Business History, Vol.39 No.4 (1997), p.90.
51. The re-flotations of 1919-20 were largely financed by loans and overdrafts; S. Bowden and D.M. Higgins, 'Short Time Working and Price Maintenance: Collusive Tendencies in the Cotton Spinning Industry, 1919-1939', Economic History Review, Vol.LI No.2 (1998), pp.319-43; thus, by the 1930s, cotton, along with iron and steel, was the most indebted sector of the British economy, H. Sjogren, 'Financial Reconstruction and Industrial Reorganisation in Different Financial Systems: A Comparative View of British and Swedish Institutions during the Inter-War Period', Business History, Vol.39 No.4 (1997), p.90.
52. A. Rubner, 'The Irrelevancy of the British Differential Profits Tax', Economic Journal, Vol.74 (1964), pp.347-59.
53. Singleton, Lancashire on the Scrapheap, pp. 116-17.
54. Accountant, 24 April, 1954, p.453; the damaging impact of Purchase Tax on the fine spinning sector is discussed in Higgins, 'Rings, Mules and Structural Constraints', pp.351-4.
55. R. McDonald and D. Siegel, 'The Value of Waiting to Invest', Quarterly Journal of Economics, Vol.101 (1986), pp.707-27.
56. Toms, 'Growth, Profits and Technological Choice'; D.M. Higgins and J.S. Toms, 'From the Age of Laissez Faire to the Age of De-Industrialisation: New Perspectives on the Decline of the Lancashire Cotton Textile Industry, 1880-1965', unpublished working paper presented at the Economic History Society Conference, University of Leeds, April, 1998.
57. Toms, 'Growth, Profits and Technological Choice'; D.M. Higgins and J.S. Toms, 'From the Age of Laissez Faire to the Age of De-Industrialisation: New Perspectives on the Decline of the Lancashire Cotton Textile Industry, 1880-1965', unpublished working paper presented at the Economic History Society Conference, University of Leeds, April, 1998.
58. M. Dupree (ed.), Lancashire and Whitehall: The Diary of Sir Raymond Streat, Vol. 2 (Manchester, 1987); pp.186, 215, 226-7, 472-3.
59. Political and Economic Planning, Growth in the British Economy, p.123.
60. D. Walker, 'Some Economic Aspects of the Taxation of Companies', Manchester School, Vol.1954; I.M.D. Little, 'Higgledy Piggledy Growth', Bulletin of the Oxford Institute of Economics and Statistics, Vol.24 (1962), p.412; Rubner, 'The Irrelevancy of the British Differential Profits Tax'.
61. D. Walker, 'Some Economic Aspects of the Taxation of Companies', Manchester School, Vol.1954; I.M.D. Little, 'Higgledy Piggledy Growth', Bulletin of the Oxford Institute of Economics and Statistics, Vol.24 (1962), p.412; Rubner, 'The Irrelevancy of the British Differential Profits Tax'.
62. D. Walker, 'Some Economic Aspects of the Taxation of Companies', Manchester School, Vol.1954; I.M.D. Little, 'Higgledy Piggledy Growth', Bulletin of the Oxford Institute of Economics and Statistics, Vol.24 (1962), p.412; Rubner, 'The Irrelevancy of the British Differential Profits Tax'.
63. Rubner, 'British Differential Profits Tax', p.355.
64. Total government expenditure as a result of the 1959 Act was £24.7m, that is, scrapping grants £11.3m plus total eligible expenditure on re-equipment of £53m, with rate of grant applied to the latter at 25 per cent. C. Miles, 'Protection of the British Textile Industry', in W. Corden and G. Fels (eds.), Public Assistance to Industry: Protection and Subsidies in Britain and Germany (London, 1976). Our figure of £9.7m, based on a sample of only the larger quoted companies, significantly under-estimates the total for the whole industry. Applying the tax differentials in Table 1 to 300 companies the size of the Oldham Twist Co. Ltd (a representatively capitalised company for the industry) assuming similar gross profits, gives a total of £33m. A conservative estimate for the whole industry would be £40-£50m.
65. Whilst intended as illustrative, these figures are broadly typical of those relevant to the LCC, as discussed subsequently. See also the numerical illustration in Dupree (ed.), Lancashire and Whitehall, p.226.
66. R. Robson, The Cotton Industry in Britain (London, 1957), pp.208-9.
67. Between 1950 and 1960, replacement costs of ring spindles and automatic looms more than doubled; Singleton, Lancashire on the Scrapheap, p.151.
68. To give one example, in 1956 Jackson and Steeple made its largest capital investment of the decade, £207, 000. With an effective rate of tax of 50 per cent, profits for that year were sufficient to relieve only approximately £124, 000, or 60 per cent of total expenditure.
69. Pollard, Development of the British Economy, p.393.
70. For example, PDH, 12 April 1954, Vol.256, pp.822-3; 2 May 1955, Vol.540, pp.1383-90.
71. For example, PDH, 12 April 1954, Vol.256, pp.822-3; 2 May 1955, Vol.540, pp.1383-90.
72. GMRO/LCC, Annual Reports, Chairman's Statements, 1947-62.
73. The Times, 20 Jan. 1956, 15b. The support of the US government for its own producers provides many contrasts with the UK, see Rose, 'Politics of Protection'.
74. The Times, 20 Jan. 1956, 15b. The support of the US government for its own producers provides many contrasts with the UK, see Rose, 'Politics of Protection'.
75. The Times, 22 Jan. 1960, 19d.
76. Rose, 'Politics of Protection', p.143.
77. W.T. Shackleton, 'Government Trade Policy Criticised', NFTWMA, Vol.XXXV (1956), p.228.
78. J. Orme, 'The Future of Lancashire Textiles', NFTWMA, Vol.XXXIV (1955), p.113.
79. For examples of advocacy of this general argument, see G. McPherson, 'The Textile Trade's Problems: Improved Efficiency the Only Remedy', NFTWMA, Vol.XXXV (1956), p.241, and the specific solution via tax incentives, A. Green, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), p.56. All of these advocates rejected arguments for import controls.
80. For examples of advocacy of this general argument, see G. McPherson, 'The Textile Trade's Problems: Improved Efficiency the Only Remedy', NFTWMA, Vol.XXXV (1956), p.241, and the specific solution via tax incentives, A. Green, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), p.56. All of these advocates rejected arguments for import controls.
81. G. McPherson, 'The Outlook for the Textile Industry', NFTWMA, Vol.XXXIV (1955), p.128.
82. H. Rhodes, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), pp.58-9.
83. Ibid., p.58; Dupree (ed.), Lancashire and Whitehall, p.65.
84. Ibid., p.58; Dupree (ed.), Lancashire and Whitehall, p.65.
85. For example, F.J. Erroll (Altrincham and Sale) PDH, 9 March 1955, Vol.538, p.517, William Shepherd (Cheadle), p.528, Richard Fort (Clitheroe), p.551. On the latter member, see also Dupree (ed.), Lancashire and Whitehall, p.774.
86. For example, F.J. Erroll (Altrincham and Sale) PDH, 9 March 1955, Vol.538, p.517, William Shepherd (Cheadle), p.528, Richard Fort (Clitheroe), p.551. On the latter member, see also Dupree (ed.), Lancashire and Whitehall, p.774.
87. For example, F.J. Erroll (Altrincham and Sale) PDH, 9 March 1955, Vol.538, p.517, William Shepherd (Cheadle), p.528, Richard Fort (Clitheroe), p.551. On the latter member, see also Dupree (ed.), Lancashire and Whitehall, p.774.
88. For example, F.J. Erroll (Altrincham and Sale) PDH, 9 March 1955, Vol.538, p.517, William Shepherd (Cheadle), p.528, Richard Fort (Clitheroe), p.551. On the latter member, see also Dupree (ed.), Lancashire and Whitehall, p.774.
89. GMRO/LCC Annual Reports, Chairman's Statements; W.A. Burke, MP, PDH, Vol.538, pp.485-6; MPs' voting records on resolution for effective action to assist the cotton industry, pp.571-6.
90. GMRO/LCC Annual Reports, Chairman's Statements; W.A. Burke, MP, PDH, Vol.538, pp.485-6; MPs' voting records on resolution for effective action to assist the cotton industry, pp.571-6.
91. By this Castle meant the resolutions of local Conservative Associations (for example, Middleton and Prestwich) and of local Chambers of Commerce (for example, Blackburn) calling on MPs to oppose government and support intervention on behalf of the cotton industry, PDH, Vol.538, pp.518-19.
92. Rose, 'Politics of Protection', p.129.
93. In the period 1951-57, the median number of firms making capital repayments was three, with an average of £80, 000 per firm. In the period 1958-61 this rose to 11.5 and £178, 000 respectively (calculated from Tattersall's Cotton Trade Review, 1952-62).
94. The relatively low rates of capacity utilisation in the industry convinced many observers from the mid-1950s that some form of contraction was inevitable (Singleton, Lancashire on the Scrapheap, pp.154-7).
95. Political and Economic Planning, Growth in the British Economy, p.123.
96. In model 1, in the appendix, current year profit became a much more important explanatory variable and prior year dividend exhibits a corresponding decline in significance for the years immediately following the 1959 Act. For some years, such as 1959 and 1963, the model as a whole under-performs. produces unexpected coefficients (1962 profits), or shows significant deviation from the long-run profit/dividend elasticity of one.
97. To test the relationship between dividend policy and capital requirement during the scrapping and re-equipment phases of the 1959 Act, models 1, 1.1, 1.2 and 2 were re-tested using 1963 as the base year; Appendix, Table 4. In contrast to the 1958 results (Table 3), there was a positive relationship between dividends and growth (Table 4, models 1.1, 1.2 and 2, and cf Table 3).
98. These issues are, of course, quite separate from the perceived inequitable effects of the Act on re-equipping firms. For example, those firms that remained had to pay a levy to compensate those firms leaving the industry. In addition, those firms which had re-equipped prior the 1959 Act (and therefore had very few re-equipping plans in the short-term future) would have lost out to those firms which delayed re-equipping as long as possible in the hope that just such a scheme would be introduced.
99. A particularly vociferous exponent of this issue was A. Ormerod, 'The UK Cotton Textile Industry: Some Thoughts on Re-equipment', NFTWMA, Vol.XL (1961), pp.156-68.
100. Using the weekly share price data in Tattersall's for a single period lagged regression of log returns, three out of the six companies for which data was available, through serial correlation, demonstrated evidence of market inefficiency (t statistics for the lagged variable in parentheses): ACMT (0.14), Crosses and Heatons (0.16), Fine Spinners (1.34), Joshua Hoyle (2.59), LCC (2.47) and Rylands (2.31). In contrast to other studies, the expected result is that all statistics of serial correlation should be insignificant; E. Fama, 'The Behaviour of Stock Market Prices', Journal of Business, Vol.38 (1965), pp.34-105.
101. Ormerod, 'The UK Cotton Textile Industry', pp.156-68. Ormerod pointed out that, because of high fixed costs, the effect of the Act was to transfer risk from the operatives to the holders of equity (p.158).
102. Ormerod, Industrial Odyssey, pp.154 and 198.
103. Rose, 'The Politics of Protection', p.130.
104. Ibid., p.x; Memorandum submitted by the Cotton Board, p.40; Q.222; Q.238; Memorandum submitted by Mr. Cartwright, p.71; QQ.399-400; Q.500; Memorandum submitted by Colonel Whitehead, p.130.
105. Ibid., p.x; Memorandum submitted by the Cotton Board, p.40; Q.222; Q.238; Memorandum submitted by Mr. Cartwright, p.71; QQ.399-400; Q.500; Memorandum submitted by Colonel Whitehead, p.130.
106. Ibid. Q.395; Q.429.
107. Ibid. QQ.361-2; QQ.386-90. Estimates of the premium necessary to obtain workers for a night shift ranged from 36 to 40 per cent. Q.523; Q.656.
108. Ibid. QQ.562-5.
109. Ibid. QQ.328-31; QQ.402-3. Given the success of the scrapping schemes in 1959-60, there was a substantial increase in orders by merchants who feared that they would be unable to obtain supplies in the near future. By the time the industry's capacity had stabilised, there was a great deal of over-stocking, and orders dropped off very quickly from 1961.
110. Regulations laid down by the Board of Trade provided that, in order to be eligible for a re-equipment subsidy, firms in the spinning, doubling and weaving sections of the industry should place their orders no later than 8 July 1962. Because of the uncertainty in the industry and the delay in applying for re-equipment subsidies, this deadline was extended by a further year. Ibid., p.8; Q.282. Even this was thought insufficient, and there were calls for an even greater extension. Ibid., QQ.285-9. As it turned out, total expenditures which were eligible for the government subsidy amounted to £53.5 million, some £30-£40 million below what was originally anticipated; Miles, 'Protection of the British Textile Industry', p.191.
111. Ibid., Q.380; Memorandum submitted by Mr. Cartwright, p.91; Q.660; Q.758; Q.803.
112. Ibid. Q.216. In the reorganisation (scrapping) phase of the Act, two-thirds of the cost of scrapping machinery was to be borne by the government, the remaining one-third was to be borne by firms remaining in the industry. However, under the re-equipment phase, only 25 per cent of the costs of re-equipment were to be borne by the government, the remaining 75 per cent was to be borne by the firms themselves. The justification for this was that whereas the reorganisation phase would benefit all firms remaining in the industry, re-equipment subsidies would only benefit those firms that actually re-equipped.
113. Inland Revenue Memorandum, reproduced in the Accountant, 29 Aug. 1959, outlined the interaction between subsidies and tax allowances. The net effect was a reduction in the value of re-equipment grant; Miles, Lancashire Textiles, p.77. For the impact on a particular firm where a 25 per cent grant was reduced to 7.5 per cent in de facto cash terms, see GMRO/LCC, Chairman's Statement, 1962.
114. Inland Revenue Memorandum, reproduced in the Accountant, 29 Aug. 1959, outlined the interaction between subsidies and tax allowances. The net effect was a reduction in the value of re-equipment grant; Miles, Lancashire Textiles, p.77. For the impact on a particular firm where a 25 per cent grant was reduced to 7.5 per cent in de facto cash terms, see GMRO/LCC, Chairman's Statement, 1962.
115. Inland Revenue Memorandum, reproduced in the Accountant, 29 Aug. 1959, outlined the interaction between subsidies and tax allowances. The net effect was a reduction in the value of re-equipment grant; Miles, Lancashire Textiles, p.77. For the impact on a particular firm where a 25 per cent grant was reduced to 7.5 per cent in de facto cash terms, see GMRO/LCC, Chairman's Statement, 1962.
116. Ibid., Q.222.
117. Ibid., QQ.371-2.
118. Open discussion, 'Functions and Problems of Management', NFTWMA, Vol.XXXIII (1954), p.113. Some commentators have gone further than this. Sutherland, for example, has argued that perhaps the most important feature of the YSA may have been that it produced evidence about the cotton spinning industry undermined the hope that the 1959 Act would have spectacular results; A. Sutherland, The Restrictive Practices Court and Cotton Spinning', Journal of Industrial Economics, Vol.8 (1959), p.61.
119. Open discussion, 'Functions and Problems of Management', NFTWMA, Vol.XXXIII (1954), p.113. Some commentators have gone further than this. Sutherland, for example, has argued that perhaps the most important feature of the YSA may have been that it produced evidence about the cotton spinning industry undermined the hope that the 1959 Act would have spectacular results; A. Sutherland, The Restrictive Practices Court and Cotton Spinning', Journal of Industrial Economics, Vol.8 (1959), p.61.
120. Profits declined as trading conditions worsened in 1962 (CUDC; GMRCO/LCC Annual Report and Accounts); for a record of the abortive negotiations, see GMRCO/LCC, Board Minutes, 13 Dec. 1962, 11 April 1963, 16 May 1963, 17 Sept. 1963, 17 Oct. 1963. For a more detailed discussion, see D.M. Higgins and J.S. Toms, 'Public Subsidy and Private Divestment', School of Management and Finance Discussion Paper, IX (1998) University of Nottingham, pp.21-4.
121. Profits declined as trading conditions worsened in 1962 (CUDC; GMRCO/LCC Annual Report and Accounts); for a record of the abortive negotiations, see GMRCO/LCC, Board Minutes, 13 Dec. 1962, 11 April 1963, 16 May 1963, 17 Sept. 1963, 17 Oct. 1963. For a more detailed discussion, see D.M. Higgins and J.S. Toms, 'Public Subsidy and Private Divestment', School of Management and Finance Discussion Paper, IX (1998) University of Nottingham, pp.21-4.
122. Profits declined as trading conditions worsened in 1962 (CUDC; GMRCO/LCC Annual Report and Accounts); for a record of the abortive negotiations, see GMRCO/LCC, Board Minutes, 13 Dec. 1962, 11 April 1963, 16 May 1963, 17 Sept. 1963, 17 Oct. 1963. For a more detailed discussion, see D.M. Higgins and J.S. Toms, 'Public Subsidy and Private Divestment', School of Management and Finance Discussion Paper, IX (1998) University of Nottingham, pp.21-4.
123. FCI, pamphlet, published by the organisation, March 1961, p.4.
124. Details of loans to the steel industry, ibid, p.3, FCI Report and Accounts, 1947-65, passim; for condemnation of large profits in that industry vis-à-vis cotton, see Rhodes, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), p.58.
125. Details of loans to the steel industry, ibid, p.3, FCI Report and Accounts, 1947-65, passim; for condemnation of large profits in that industry vis-à-vis cotton, see Rhodes, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), p.58.
126. Details of loans to the steel industry, ibid, p.3, FCI Report and Accounts, 1947-65, passim; for condemnation of large profits in that industry vis-à-vis cotton, see Rhodes, 'Government Policy and the Textile Industry', NFTWMA, Vol.XXXV (1956), p.58.
127. M.B. Rose, 'The Politics of Protection', p.142; Singleton, 'Decline Since 1940', pp.314-15.
128. M.B. Rose, 'The Politics of Protection', p.142; Singleton, 'Decline Since 1940', pp.314-15.