In 1932, Lancashire, the U.K.’s cotton-manufacturing center, was a terrible mess.
At its peak in 1913, the nation’s cotton industry turned out 8 billion yards of cloth, 85 percent of which was sold abroad, the Economist reported. In 1924, production had slowed to 5.6 billion yards, 83 percent shipped internationally. By 1931, output was dismal, 3.1 billion, as exports shrank 60 percent due to higher tariffs and increasing capacity elsewhere, particularly in Japan.
What were cotton manufacturers to do? Market Darwinists argued that destruction must take its course. The weakest firms would go to the wall. The survivors, which were stronger, would return to profitability. Economic planners urged a staged retirement of machinery across yarn-spinning and cloth-weaving firms to match what looked like a permanent reduction in the U.K.’s global sales.
Some investors urged mergers to achieve efficiencies. But critics made a telling counterargument: Scale economies in textiles rapidly diminished when companies passed the 1,000-worker mark.
Worse, even before the cash, Lancashire’s unemployment rate was already 12 percent, with a third of its idle 180,000 workers credited to the cotton industry. By 1932, about 100,000 graduates had been added to those seeking work.
There was a “large number of workless between 18 and 24 -- a disastrous age at which to experience prolonged unemployment,” the Economist reported. Lancashire unemployment reached 560,000 in 1932, triple the 1929 count.
What could make this situation worse? Employers were driven to reduce wages as union contracts neared expiration. As the employers’ association and textile traders’ federation undertook summer negotiations, assertive owners started unauthorized reductions, provoking retaliatory walkouts.
In July, 20,000 operatives in about 100 mills in Burnley “stopped work because of the decision of employers to inaugurate cuts before the negotiations were completed,” the Wall Street Journal reported. The strike’s unexpected success bolstered the union position, but rolling announcements of 12.5 percent reductions resumed quickly.
In mid-August, 15,000 workers protesting arbitrary cuts shut down mills in Preston. On Aug. 27, “strike notices were posted at 700 mills,” and 200,000 union weavers promptly quit. Despite hardships, the workers faced the future “with stubborn Lancashire courage,” the New York Times reported.
Amid fears that another 200,000 spinners would walk, “the biggest and bitterest struggle in the history of the textile industry had begun in earnest,” the New York Times reported. Critics blamed unions for using the strike “to demonstrate the solidarity of their organizations,” workers for their “stark, irrational antagonism,” and both sides for their “blundering obstinacy.”
Pleas for government intervention brought an early response, as turnover on the Manchester raw-cotton market collapsed. Three weeks later, the Labor Ministry brokered a settlement, but at the price of a 15 percent wage cut that workers widely denounced.
The Wall Street Journal wrote that “wages are certainly not so high,” but that pressure to reduce them derived from owners’ “old-fashioned methods and machinery” and their avoidance of “plant modernization and rationalization.” Wise words, wholly ignored.
(Philip Scranton is a Board of Governors professor of the history of industry and technology at Rutgers University, Camden, and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
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