Creative Accounting in the British Industrial Revolution: Cotton Manufacturers and the ‘Ten Hours’ Movement

42 Pages Posted: 15 Nov 2013  

Steve Toms

University of Leeds - Leeds University Business School (LUBS); University of Leeds - Division of Accounting and Finance

Alice Katherine Shepherd

University of Leeds; University of Leeds - Division of Accounting and Finance

Date Written: November 14, 2013

Abstract

The 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.

It then 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 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.

Keywords: British Industrial Revolution, Accounting, Child labour, Factory Reform, Lancashire cotton textiles, Greg, Quarry Bank Mill

JEL Classification: J21, J31, K31, L50, L67, M4, N13, O14, O15, O38

Suggested Citation

Toms, Steve and Shepherd, Alice Katherine, Creative Accounting in the British Industrial Revolution: Cotton Manufacturers and the ‘Ten Hours’ Movement (November 14, 2013). Available at SSRN: https://ssrn.com/abstract=2354300 or http://dx.doi.org/10.2139/ssrn.2354300

Steve Toms (Contact Author)

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

Alice Katherine Shepherd

University of Leeds ( email )

Leeds, LS2 9JT
United Kingdom

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

Paper statistics

Downloads
185
Rank
133,148
Abstract Views
963