the exclusion of the interests of others. He was born on a small farm in Lancashire, where he learnt the cotton weaving trade from his father, who was a small landowner. So industrious was he that he expanded his business to the point where he was employing 1,000 weavers scattered over three counties. In the record he left the industry, he referred to the capital which he had managed to save and he confidently issued a challenge:
I can truly say that it had not been got by ‘grinding the face of the poor;’ for my greatest pride was to see them comfortable; and in every transaction with them, my equals and superiors, ‘I did by each, as I would they should have done to me,’ and I challenge enquiry in the circle I moved in, that no fact can be found to contradict what I have said; and I give the same challenge as to any deviation from this principle to the present day.14
From his home in the small town of Mellor he undertook public-spirited works, such as improving the roads; his reputation grew and he was appointed to three district commissions and was destined for the magistrate’s bench. But at the age of 40 he uprooted his family and moved to Stockport. The new factory system proved too strong to resist.
Radcliffe quickly established a sound business just 14 miles from Manchester, the mecca of the cotton industry. But he soon realised that cotton spinning was going to pose problems. Rather than export the industry’s surplus yarn, why not develop a new process under one roof which would ensure that the yarn was woven as fast as it was spun ? He talked the problem over with his partner in 1800, but it was not until the following summer that he worked out his finances and decided to act. Risking his own capital, he bought premises from Messrs. Olknow and Arkwright and set about constructing a new system with the aid of a handpicked team of workers. Radcliffe had confidence in his eventual success. He had a wager with his partner that he would prove successful within two years: he won the bet.
Radcliffe built on Cartwright’s power loom inventions, and in 1803-4 he patented a dressing machine. The business soon yielded him a profit of £ 100 a week, and money began to roll in from the licences accorded under his patent rights. But there was no question of his trying to steal a march over his competitors in the industry, for in 1811 he set up a club with the aim of diffusing knowledge about the latest mechanical methods of cloth-making. It was one of his proud boasts that he employed more skilled men than he needed, so that some of them could go off to other factories to help manufacturers to master the latest techniques.
Radcliffe was clear about the reason why he originally undertook the risky business of invention, which could have absorbed his capital and left him penniless: the demand for mechanical weaving existed within the industry. At no point in his detailed account of these developments did he complain that entrepreneurs could not obtain bank loans for new investment. Yet despite all his efforts the diffusion of the new technology was painfully slow. Why?
The deterioration in the condition of the weavers began with the termination of what he called the golden years, from 1788 to 1803. The industry went into a decline. Profits and wages were cut back drastically. Within two decades, he recorded, the price of weaving had dropped ‘from 17s. (with a profit of 10 to 20 per cent to the master,) to 4s. to the weaver (and no profit to the master!)’. With the decline in price, the employers were forced to reduce wages: ‘... the masters foresaw the evils this system of lowering the wages would produce, they had no choice left; as they must either go on in this way, or give up their manufacture altogether’.15 Wages, he declared with emphasis, were below the bread and water level.
The power loom was popularly blamed and attacked as a threat to the employment of weavers. These were men who could hardly be expected to understand the macro-economic forces which were responsible for their pitiable condition. Radcliffe was one of the targets of protest: attempts were made to burn down his factory, and stones were thrown through the windows of his home.16 This was the time of the Luddites, who wished to smash machines on the assumption that they created hardship rather than increased general welfare. Robert Owen, the utopian socialist, believed that he had demonstrated that mechanisation created an increasing gap between consumption and potential production: he was one of the first economic theorists to advance the under-consumption hypothesis as an explanation of economic recession. But if there was under-consumption, this could not be attributed to a lack of demand. For the workers and their families were hungry and over-worked, their homes were small and mean: there was enormous unsatisfied consumer demand. To blame the economic recession in the 1820s on ‘over-production’ was a perversion of reality.
Radcliffe’s experience with technological innovations during his early years in Mellor convinced him that machines could not be held responsible for the plight of the weavers. ‘Surely there must be some other cause for their distress, than the interference of the new system, which, in fact, has never yet interfered directly with them at all,’ he asked. The new methods of spinning cotton, he pointed out, actually increased the demand for labour and boosted wages.17 Radcliffe had no doubt about the enemy of his industry: it was that ‘Foreign Anglo Junto’ which conspired in Manchester to carry off the yarn to foreign lands, there to be spun cheaply and sold in competition with British cloth. By imposing a duty on such exports, he repeatedly informed the Lords and Commoners of Parliament, the British weavers would be able to recover the markets which they had lost to foreign manufacturers. Was this thesis correct ?
First, he argued, foreign labour was cheap. In a memorandum to a committee of the House of Commons which he submitted on April 7, 1808, he referred to the foreign manufacturers ‘whose labour might be had at half the price such labour was paid for in this country’.18 If correct, this would have constituted an advantage to Britain’s competitors, although the difference in wages would have been partly (if not wholly) offset by the cost of transporting the yarn abroad. But this is an implausible argument; Radcliffe himself had noted how the wages of English weavers were below subsistence level. Many of them lived only with the additional support of money from the poor rates.19 So there could have been no comparative advantage on this score.
What of profits? Foreign manufacturers were not accepting lower returns than the Lancashire millowners. UK profit margins had been cut right down to the bone, and many manufacturers were eventually rendered bankrupt. Radcliffe had predicted this ruin, and had recorded the drop in yields on capital investment.20 In a breakdown of the costs of producing a piece of calico of 28 yards length he recorded ‘Other expences, including the master’s profit’, at 1s. in both Blackburn and Elberfeldt.21
There were no significant variations in the level of wages and profits, then, to explain the striking development of foreign weaving — or, to put the problem in a different way, the curious incapacity of British manufacturers to exploit their initial innovative advantage by weaving their own yarn at lower costs than their foreign competitors. So we have narrowed down the analysis to one possible explanation: UK rents were so prohibitively high that domestic manufacturers could not expand their premises and productive capacity. How much truth is there in this hypothesis ?
Blindly — from the analytical viewpoint — Radcliffe failed to perceive the crucial importance of the differences in one of the costs of production. The rents paid by foreign producers were low,22 while land values in Britain during this critical period of the industrial revolution were very high. The results of this on the cost of production were, in fact, documented by Radcliffe, who cited them for his readers when he gave a breakdown in the cost of producing 28 yards of calico.
