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Financing the Micro-Scale Enterprise: Rural Craft Producers in Scotland, 1840–1914

Published online by Cambridge University Press:  13 December 2011

Craig Young
Craig Young
Affiliation:
Dr. Craig Young is currently senior lecturer in geography in the Department of Environmental and Geographical Sciences at theManchester Metropolitan University.
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Abstract

The micro-scale businesses of independent craft producers have received little attention from historians. This article examines the links between the financing and use of capital by these businesses, and the ambiguous social position of the petit bourgeois business owners. A quantitative examination of the relative importance of the various sources of finance for these firms is assessed in the context of the generally accepted picture of financing for British industry, revealing differences in the pattern of funding for micro-scale enterprises. The ambiguous social relationships between the micro-scale business owners and the larger bourgeoisie, and with the working class, are partly explained by the underlying economic relationships. In particular the supply of trade credit by larger firms, and the use of credit and infrequent wage payments in their relationships with the working class, are identified as important elements.

Type
Articles
Information
Business History Review , Volume 69 , Issue 3 , Autumn 1995 , pp. 398 - 421
Copyright
Copyright © The President and Fellows of Harvard College 1995

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References

1 Recently, however, interest in this topic has increased. See Kent, D. A., “Small Businessmen and their Credit Transactions in Early Nineteenth-Century Britain,” Business History 36 (1994): 47–64CrossRefGoogle Scholar; Nenadic, Stana, “The Small Family Firm in Victorian Britain,” Business History 35 (1993): 86–114CrossRefGoogle Scholar; Young, Craig, “The Economic Characteristics of Small Craft Businesses in Rural Lowland Perthshire, c. 1830–c. 1900,” Business History 36 (1994): 33–52CrossRefGoogle Scholar; Blackford, M. G., “Small Business in America: A Historiographic Survey,” Business History Review 65 (1991): 1–26CrossRefGoogle Scholar.

2 For examples from Europe and the Americas see Knox, Ewan, “Between Capital and Labor: The Petite Bourgeoisie in Victorian Edinburgh,” (Ph.D. diss., Edinburgh, 1986)Google Scholar; Crossick, Geoffrey and Haupt, H.-G., eds., Shopkeepers and Master Artisans in Nineteenth Century Europe (London, 1984Google Scholar); Blackford, , “Small Business in America”; Bechhofer, Frank and Elliot, Brian, eds., The Petite Bourgeoisie: Comparative Studies of the Uneasy Stratum (London, 1981)Google Scholar; Crossick, Geoffrey, ed., The Lower Middle Class in Britain (London, 1977)Google Scholar.

3 This definition draws on Blackford, “Small Business in America,” 3.

4 Tayside region, for example, had a rather unique employment structure. Male employment in agriculture was higher there than in other areas of the east-central lowlands (27% in 1851, 20% in 1881 and 18% in 1911). The manufacturing sector, especially textiles, dominated employment in the region. Manufacturing employed 45%, 46% and 42% of the male population in 1851, 1881 and 1911 respectively. Treble, J. H., “The Occupied Male Labor Force,” in Fraser, W. H. and Morris, R. J., eds., People and Society in Scotland, vol. 2 (Edinburgh, 1990), 194–205Google Scholar.

5 Young, “Economic Characteristics” and Young, Craig, “Women's Work, Family and the Rural Trades in Nineteenth-Century Scotland,” Review of Scottish Culture 7 (1991): 53–8Google Scholar.

6 Concluded Sequestration Processes brought under the 1856 Bankruptcy (Scotland) Act, CS318 [hereafter CS318], Scottish Record Office [hereafter SRO]. Liabilities ranged from £60 to £10,414.

7 Young, Craig, “An Assessment of Scottish Sequestrations as a Source in Historical Analysis,” Journal of the Society of Archivists 12 (1991): 127–35CrossRefGoogle Scholar; Jobert, P. and Moss, M. S., eds., The Birth and Death of Companies: An Historical Perspective (Park Ridge, N.J., 1990)Google Scholar. The source is described in Young, Craig, “The Content and Use of Scottish Sequestrations: Businesses in Lowland Perthshire, 1856–1913,” The Local Historian 24 (1994): 4–14Google Scholar.

8 Compare Moss, M. S. and Hume, J. R., “Business Failure in Scotland 1839–1913: A Research Note,” Business History 25 (1983): 3–10CrossRefGoogle Scholar and Rodger, R. G., “Business Failure in Scotland 1839–1913,” Business History 27 (1985): 75–99CrossRefGoogle Scholar.

9 Moss and Hume give annual totals of sequestrations by occupational group 1850–1879 and Rodger lists annual totals of sequestrations in the building trades 1857–1913. Neither set of data suggests significant changes in the relative proportions of occupational groups. See Moss and Hume, “Business Failure,” 8–9; Rodger, “Business Failure,” 98–99.

10 Moss and Hume, “Business Failure,” 7–9.

11 Rodger, “Business Failure,” 78.

12 Rodger, “Business Failure,” 75; see also Marriner, Sheila, “English Bankruptcy Records and Statistics before 1850,” Economic History Review 33 (1980): 351–66CrossRefGoogle Scholar.

13 Young, “Economic Characteristics,” 38–40 demonstrates that in some sectors over 60% of all craft shops in this area went bankrupt between 1890–1900.

14 Young, “Assessment of Scottish Sequestrations”; see also Young, “Economic Characteristics”; Kent, “Small Businessmen”; Nenadic, “The Small Family Firm”; Marriner, Sheila, “Cash and Concrete: Liquidity Problems in the Mass Production of Homes for Heroes,” Business History 18 (1976): 163CrossRefGoogle Scholar; Alexander, David, Retailing in England During the Industrial Revolution (London, 1970)Google Scholar; Ward, J. R., “Speculative Building at Bristol and Clifton, 1783–93,” Business History 20 (1978): 3–18CrossRefGoogle Scholar; Donnachie, Ian, “Sources of Capital and Capitalization in the Scottish Brewing Industry, c. 1750–1830,” Economic History Review 30 (1977): 269–83Google Scholar.

15 Young, Craig, “The Economic, Social and Geographical Aspects of Rural Tradespeople in Lowland Perthshire, C.1750–C.1950” (Ph.D. diss., Edinburgh, 1990)Google Scholar.

16 Collins, Michael, Banks and Industrial Finance in Britain, 1800–1939 (London, 1991), 24CrossRefGoogle Scholar, 31–4; Cottrell, P. L., Industrial Finance, 1830–1914 (London and New York, 1980)Google Scholar; Michie, R. C., “Options, Concessions, Syndicates and the Provision of Venture Capital, 1880–1913,” Business History 23 (1981), 147–64CrossRefGoogle Scholar; Rose, M. B., “The Role of the Family in Providing Capital and Managerial Talent in Samuel Greg and Co. 1784–1840,” Business History 19 (1977): 37–54CrossRefGoogle Scholar; Nenadic, “The Small Family Firm,” 93.

17 The role of banks in industrial finance is fully discussed in Collins, Banks and Industrial Finance. On the lending practices of Scottish banks see Checkland, S. G., Scottish Banking: A History, 1695–1973 (Glasgow, 1975), 416Google Scholar, 488; Munn, C. W., “The Development of Joint-Stock Banking in Scotland, 1810–1845,” in Slaven, Anthony and Aldcroft, D. H., eds., Business, Banking and Urban History, (Edinburgh, 1982), 114Google Scholar. However, bank lending was significant in the early Scottish brewing industry and in the West Yorkshire wool textile industry. See Donnachie, “Scottish Brewing Industry,” 277, and Hudson, Pat, “The Role of Banks in the Finance of the West Yorkshire Wool Textile Industry, c. 1780–1850,” Business History Review 55 (1981): 379–402CrossRefGoogle Scholar.

18 Munn, “Joint-Stock Banking,” 113–17.

19 Checkland, Scottish Banking, 478, 506; Rodger, “Business Failure,” 91. The view is questioned by Collins, Banks and Industrial Finance, 41–2.

20 Young, “Economic Characteristics,” 40–1.

21 The relationship between capital requirements and capital obtained is not entirely simple, however, as some of these firms may well have required more capital than they could raise. Indeed, a frequent cause of bankruptcy was under-capitalization. Nenadic, “The Small Family Firm,” 97; Geoffrey Crossick and H.-G. Haupt, “Shopkeepers, Master Artisans and the Historian: The Petite Bourgeoisie in Comparative Focus” in Crossick and Haupt, Shopkeepers and Master Artisans, 9; Clive Behagg, “Masters and Manufacturers: Social Values and the Smaller Unit of Production in Birmingham, 1800–50” in Crossick and Haupt, Shopkeepers and Master Artisans, 141–4; Haupt, “Petite Bourgeoisie in France,” 100; on shopkeepers see Winstanley, M. J., The Shopkeeper's World, 1830–1914 (Manchester, 1983), 10Google Scholar.

22 CS318/6/37 1864; CS318/2/100; CS318. SRO.

23 CS318/8/276 1864; CS318/6/242 1861; CS318/2/14 1858. SRO.

24 CS318/45/125 1900; CS318/40/264 1894; CS318/46/59 1899. SRO.

25 CS318/22/27 1865; CS318/17/259 1872. SRO.

26 CS318/ll/97 1862; CS318/11/145 1862; CS318/15/295 1870; CS318/10/233 1866. SRO.

27 CS318/48/297 1903; CS318/17/367 1871; CS318/11/97 1862; CS318/15/98 1870. SRO.

28 CS318/25/515 1880; CS318/45/125 1900. SRO.

29 CS318/51/171 1905. SRO.

30 For example CS318/45/125 1860, CS318/29/242 1881, CS318/25/515 1880. SRO.

31 CS318/45/125 1900. SRO.

32 CS318/25/515 1880; CS318/29/242 1881; CS318/52/137 1907. SRO.

33 Registrar General's marriage certificates, SRO. Sample consists of all marriages between 1860–70 where the groom was a tradesman in 10 parishes in lowland Perthshire.

34 CS318/8/246 1860; CS318/6/226 1860; CS318/6/242 1881; CS318/12/87 1867; CS318/1/72 1857; CS318/43/197 1896; CS318/34/174 1888. SRO.

35 CS318/34/333 1888; CS318/8/376 1864; CS318/32/105 1887; CS318/15/98 1870. SRO.

36 Jones, Geoffrey and Rose, M. B., “Family Capitalism,” Business History 35 (1993), 8CrossRefGoogle Scholar.

37 CS318/17/367 1871; CS318/6/242 1861; CS318/9/305 1863; CS318/9/83 1861; see also CS319/60 1856. SRO.

38 Perthshire Courier and General Advertiser [hereafter Courier], 26 September 1865; Perthshire Advertiser and Strathmore Journal [hereafter Advertiser], 8 February 1855; Courier, 26 September 1865.

39 CS318/17/367 1871; CS318/24/103 1878; CS318/34/174 1888. SRO.

40 The figure for merchant credit excludes a unique loan of £3350 to another hotelier, as this isolated example would otherwise vastly overemphasize the contribution of this source.

41 CS318/46/401 1901. SRO.

42 CS318/5/88 1861; CS318/6/242 1861. SRO.

43 Cf. Holderness, B. A., “Credit in a rural community, 1660–1800,” Midland History 3 (1975): 110–13CrossRefGoogle Scholar; Hudson, Pat, The Genesis of Industrial Capital (Cambridge, 1986)CrossRefGoogle Scholar.

44 CS318/6/242 1861; CS318/45/88 1900. SRO.

45 CS318/45/88 1900; CS318/11/97 1862; CS318/25/307 1878; see also CS318/25/515 1880, CS318/15/98 1870, CS318/2/69 1857. SRO.

46 Advertiser, 6 January 1870, 3 March 1870; on the role of the attorney in England see Miles, M., “The Money Market in the Early Industrial Revolution: the Evidence from West Riding Attorneys,” Business History 23 (1981): 127–46CrossRefGoogle Scholar; Anderson, B. L., “The attorney and the early capital market in Lancashire” in Crouzet, Francois, ed., Capital Formation in the Industrial Revolution (London, 1972), 223–56Google Scholar.

47 Michie, “Provision of Venture Capital,” 147.

48 Nenadic, “The Small Family Firm;” H.-G. Haupt, “The Petite Bourgeoisie in France, 1850–1914: In Search of the Juste Milieu?” in Crossick and Haupt, Shopkeepers and Master Artisans, 100–1, 115; Alain Faure, “The Grocery Trade in Nineteenth-Century Paris: A Fragmented Corporation” in Crossick and Haupt, Shopkeepers and Master Artisans, 168, 172; Winstanley, Shopkeepers World, 10.

49 Young, “Economic Characteristics,” 41–2.

50 Hudson, Genesis of Industrial Capital, 17.

51 Nenadic, “The Small Family Firm,” 103.

52 It is not always possible to identify the primary economic activities of the creditors, especially when the sources do not list the names of their companies. However, only 14% of creditors remain unidentified, many of whom were individual creditors and local farmers. The type of debt, moreover, sometimes remains obscure, though the percentage does not greatly affect overall results. Creditors could be ranked for debts of cash, bills, rent, goods or services, trade and wages.

53 James Murray, for example, received leather on credit from firms such as McBride and Logie of Glasgow, Sinclair & Moir of Edinburgh, and McNab's of Dundee. CS318/56/152 1911. SRO.

54 CS318/47/339 1902. SRO.

55 CS318/34/174 1888. SRO.

56 For example, CS318/21/111 1872, CS318/8/376 1864. SRO.

57 CS318/ll/97 1862; CS318/25/515 1880; CS318/8/246 1860; CS318/24/481 1877; CS318/25/515 1880; CS318/8/246 1860. SRO.

58 SRO, CS318. Total creditors=1747, total credit=£55,581, number of firms=67.

59 Public flotations, moreover, were costly, and the market discriminated against small concerns (issues below £30,000 to 60,000). Harrison, A. E., “Joint-Stock Company Flotation in the Cycle, Motor-Vehicle and Related Industries, 1882–1914,” Business History 23 (1981): 178–9CrossRefGoogle Scholar; Collins, Banks and Industrial Finance, 31.

60 In Scotland, the transfer of a woman's estate to her husband (her legal representative upon marriage) effectively continued until 1920. Though it was legally possible for married women to retain control over their own capital it rarely happened because of earlier social pressures and women's own view of their roles. See, for example, Davidoff, Leonore and Hall, Catherine, Family Fortunes: Men and Women of the English Middle Class, 1780–1850 (London, 1987)Google Scholar; Goransson, Anita, “Gender and Property Rights: Capital, Kin, and Owner Influence in Nineteenth-and Twentieth-Century Sweden,” Business History 35 (1993): 11–32CrossRefGoogle Scholar.

61 Labor historians have documented the widespread labor force participation of Scottish women, and the central role work played in shaping their self-identities. See, for example, Gordon, E. and Breitenbach, E., eds., The World is Ill Divided (Edinburgh, 1990)Google Scholar.

62 An example of a widow investing is given in Harrison, A. E., “F. Hopper and Co.— the Problems of Capital Supply in the Cycle Manufacturing Industry, 1891–1914,” Business History 23 (1981): 165–90CrossRefGoogle Scholar. Nenadic, “The Small Family Firm,” 103.

63 Young, “Economic Characteristics,” 45–9; Young, Craig, “Small Craft Business Owners, Finance and Social Relations in Nineteenth Century Rural Lowland Perthshire, Scotland,” The Journal of Regional and Local Studies 15 (1995): 21–37Google Scholar.