4.1 Firms and competition
So far, we have discussed the jute industry as a whole. But any industry is composed of enterprises. Further insights into Dundee’s links to empire can be gained from taking the case study approach a stage further and looking at how individual firms adapted to the demands of an industry based on global networks.
The following is a description of the jute and linen ‘market’ in Dundee:
Almost all the day to day business was carried on between merchants and manufacturers in a ‘market’ shelter which had been built next to the Chamber of Commerce building about 1889. In fine weather this overflowed into Panmure Street outside, regardless of the effect this might have on the passing traffic. Contracts were all verbal, to be confirmed later in writing, and this system worked well until 1939 when it ceased on the outbreak of war in that year. Markets were held daily (Monday to Friday) between the hours of 3 pm and 4 pm and one could usually tell on arrival from the hum of conversation whether business was active or the reverse.
The writer was born in 1900 and took over the running of his family firm, William Halley & Sons Ltd, in 1925, and so his memories are likely to be of the market as it was in the interwar years rather than earlier. Nevertheless, his description tallies with what we know for earlier periods. Figure 3 shows Panmure Street and one can see a crowd of businessmen, many in bowlers, behind the park railings. Although the photo caption provides few details, it seems likely that this was the market in action. The ‘market shelter’ (a more solid building than the word ‘shelter’ might suggest) can be seen in the background.
What was going on? Halley talks of ‘merchants and manufacturers’. In 1900, the Dundee Directory lists fifteen shipping companies, fifty-four brokers, fifty-four commission agents, and over 150 merchants. The jute trade was one with many participants. From the peasant producers in Bengal, to the buyers of jute sacks in Argentina or the Mid-West, jute passed through many hands. At each stage – transportation to Calcutta, compressing the bales, shipping to Dundee, spinning, weaving, preparing the cloth for sale, and selling overseas – there were many competing firms offering the same service. William Lazonick contrasts Britain’s nineteenth-century ‘market-coordinated industrial economy’ with American managerial capitalism in the twentieth century. Nineteenth-century British firms, he argues, were specialists who relied on external networks for supplies and marketing (Lazonick, 1991). Most Dundee enterprises only engaged in one part of the process of jute trading and production – relying on the market for supplies (in the case of a spinner, raw jute) and sales (yarn). Hence the importance of the Panmure Street market.
Activity 8 (optional)
Warden’s book includes a list of textile manufacturers in Dundee in 1864. You will find this in ‘Textile manufacturers in Dundee, 1864’ (from the Rachel Gibbons book referred to in the Introduction to this course). Examine it now and consider the following questions:
- What does this list tell you about the scale and structure of the industry?
- What does it tell you about the manufacturers?
Sixty-one companies engaged in the same industry is a large number for a small area; all the firms listed had their factories within three miles of the town centre. Some of the firms are very large. Using the number of employees (‘hands’ as Warden terms them), nine firms are listed as having 1,000 workers or over, with the largest (Baxter Brothers & Co.) employing 4,000 – a large workforce in any period. However, there are also many smaller ones – there are twenty-four firms with 200 workers or fewer.
The columns headed ‘Spindles’ and ‘Power looms’ denote the two major branches of the industry: spinning and weaving. Some of the firms are engaged in both – thus Baxter Brothers has 19,744 spindles and 1,200 looms. But many of the smaller firms, and one or two of the larger ones, were only involved in one part of the process. O. G. Miller, for instance, has the third largest number of spindles but no looms. Most of the very smallest firms were only engaged in weaving. Firms that only spun or wove would, of course, need to sell or buy yarn.
There is not a lot to go on here. However, the names of the firms are interesting – every name on the list is that of one or more individuals. In many cases, the name suggests that the firm was owned by a single individual or by a family – brothers or a father and son. In other cases, the name suggests a partnership between unrelated individuals. None of the firms have ‘Ltd’ after their names.
It is possible that not all the firms were owned by one or a few individuals and that the names disguise more complex ownership patterns. However, legislation allowing limited liability had only existed since 1856 and was long not widely used. It is therefore very likely that all the firms were unincorporated, which would mean that the owners or partners were fully liable for the debts of their firms. Under such circumstances, trust was important, and this often meant that businessmen preferred to enter partnerships with closely related individuals.
Warden wrote his book at a time of great change and it is perhaps not surprising that there were so many textile firms in Dundee in this period: many may have been keen to try their luck in the boom industry. Powerlooms were also new in 1864. It is often the case that barriers to entry are low in a time of rapid technological change – think of the dot.com boom at the turn of the twenty-first century. Many of the smallest firms in Warden’s table were only weavers and it seems likely that the new technology was seen by new men as an opportunity to make their fortune. But the dot.com boom was followed by a slump and many of the new firms failed. What happened in Dundee when conditions got tougher?
Frustratingly, I was not able to trace a comparable list for a later period. In general, firms were regarded as the private property of their owners in nineteenth-century Britain and, as a result, we have rather less information on British businesses than is the case for many other countries (including, interestingly, India). So I used the valuation rolls (a list of property for local taxation) for an industrial ward in the city to explore which textile companies were there in 1864, 1880 and 1900. Table 1 summarises what I found.
Table 1: Textile firms in Ward 8, Burgh of Dundee
|Firms there in 1864||20||14||8|
|New in 1880||9||2|
|New in 1900||12|
The table shows no reduction in the total number of firms. Only eight of the firms survived throughout the period, but as some firms dropped out, others replaced them. This continued to happen after 1880, even though, by then, the boom conditions of the 1860s and 1870s had passed. Interestingly, more of the firms that had survived 1864–1880 survived to 1900 than did new ones.
If the value of the property can be taken as a measure of the size of the firm, then the largest firm in 1864 was still the largest in 1900. But the second and third largest in 1864 (no.2 was O. G. Miller) had disappeared by 1900. The survivors in 1900 included some that had been quite small in 1864, and, although most had higher valuations in 1900 than in 1864, many were still in the middle ranks of the table. If most new entrants started small, some were able to start big by taking over factories. The failure of O. G. Miller in 1884 put its five mills on the market and these were taken over by other firms, including some newcomers.
These patterns – high exit and entry rates, the survival of the biggest firms but also of many smaller ones, business failures creating opportunities for new men – appear to have been true of Dundee as a whole. There was no consolidation in the industry by merger and takeover (as was to happen in the even tougher trading conditions after the First World War).