Jaffe on Oldroyd, _Estates, Enterprise and Investment at the Dawn of the Industrial Revolution_

[eh.net-review at eh.net]

Published by EH.NET (April 2008)

David Oldroyd, _Estates, Enterprise and Investment at the Dawn of the 
Industrial Revolution: Estate Management and Accounting in the 
North-East of England, c.1700-1780_. Aldershot, UK: Ashgate, 2007. 
xii + 217 pp. $100 (cloth), ISBN: 978-0-7546-3455-3.

Reviewed for EH.NET by James Jaffe, Department of History, University 
of Wisconsin-Whitewater.


Michael Flinn, the economic historian who authored the former 
National Coal Board's official history of the British coal industry 
during industrialization, wonderfully illuminated the anomalous 
situation of his subject. In an era dominated by small-scale units of 
production, low levels of capital investment, and a relatively slow 
rate of mechanization and technological innovation, the North-east 
coal industry exhibited precisely the opposite characteristics: 
large-scale units of production, exceptionally high levels of capital 
investments, and relatively rapid technological innovation.

Among other things, the unique attributes of the northern coal 
industry necessitated the very early separation of ownership from 
management and the concomitant development of a set of managerial 
tools appropriate to the new industrial circumstances. However, these 
tools were not created ab ovo. Instead, the close relationship 
between traditional estate management and the exploitation of 
underground mineral rights formed the principal background for the 
evolution of managerial practices in this region. Of course, this 
evolution was not linear. In some instances, mines were managed by 
estate stewards who employed "viewers," or mining engineers, to plan 
and supervise coal production. In other instances, viewers were 
granted a more significant degree of autonomy. The most famous viewer 
of the early industrial era, John Buddle, for example, reported 
directly to his employer, the third marquess of Londonderry.

Nevertheless, the scale, complexity, and extent of the northern coal 
trade encouraged both entrepreneurs and managers to investigate ways 
to plan, monitor, and control the production, transport, and sale of 
their product. In this endeavor, nothing might be more helpful than 
"A Good Accountant," as one entrepreneur stressed in a letter of 1696.

In assessing the role of accountants during the industrial 
revolution, historians generally have been guided by Sidney Pollard's 
interpretation expressed in _The Genesis of Modern Management_ 
(1965). Pollard contended that early industrial accounting exhibited 
a marked confusion between capital and revenues. This confusion 
suggested to him that early industrialists were more concerned with 
calculating and extracting interest on their investments rather than 
maximizing their rate of return. Thus, Pollard concluded, these early 
entrepreneurs apparently lacked the true profit motive possessed by 
modern capitalists.

David Oldroyd's book seeks to test these contentions by subjecting 
the financial accounts of three northern estates to detailed analysis 
in four specific areas: the performance of contracts, investment 
planning, labor management, and managerial behavior. Although the 
three estates differed from one another in some important regards, 
they all were active in the northern coal trade and all possessed 
significant mining interests. Considering the "advanced" nature of 
industrial development in this sector, an analysis of these estates 
might provide detailed evidence with which to evaluate Pollard's 
thesis.

The result is a discussion of early industrial entrepreneurship that 
is both revealing and nuanced. For example, Oldroyd shows that an 
extensive network of contracts regulated the exploitation of the 
Durham and Northumberland coalfield. These contracts covered a myriad 
of circumstances involved in both the underground mining and 
aboveground transportation of minerals. A typical enterprise might 
need to contract the leasing or subcontracting of a mine, aboveground 
"wayleaves" to transport coal across neighboring properties, the 
shipment of coal to London or other ports, and the off-loading of 
coal at the point of sale. In all of these areas, accounting records 
carefully quantified not only total production and transport, but 
very often unit costs as well. Oldroyd therefore concludes that, 
contrary to Pollard, accounting was an essential and extremely 
adaptable tool promoting economic efficiency during this era.

Oldroyd's examination of the firms' profit and loss accounts points 
to similar conclusions. As was the case in monitoring their 
contractual obligations, firms' accounting records reveal an 
extraordinary sensitivity to unit costs. Perhaps more surprising 
still was the extent to which accounting methods were used to plan 
future investments. Viewers played a key role here. They not only 
were responsible for estimating the total volume of production in a 
new venture, but they also were responsible for estimating unit costs 
for production and transportation. Oldroyd might have included here 
the fact that by the early nineteenth century both the projections 
and profit and loss statements often included unit-cost analyses of 
different grades of coal. As primarily a consumer item, coal from the 
northeast was marketed under a variety of brand names that indicated 
different sizes and burning qualities. Each coal seam produced a 
different brand of coal and each brand had a different price point, a 
fact of which viewers were very well aware. However, such additional 
information only further supports Oldroyd's conclusions that 
accounting information was regularly used both as a planning tool for 
future investments and as a tool to maximize profits.

Given the extent to which viewers and entrepreneurs relied on unit 
cost information provided by accounting records to extract and 
transport coal, it is somewhat surprising to find that the same 
degree of attention was not accorded to unit labor costs. This 
presents an especially interesting problem since wages usually 
accounted for approximately 70 to 75 percent of total production 
costs. Here, I think, the author's intention to examine management 
practices "through the lens" of accounting unfortunately omits 
important work done in related fields. Using evidence such as pay 
bills and rentals, Oldroyd infers that miners worked to a customary 
level of output, the workforce was relatively stable, and labor 
discipline was not a major problem. These conclusions are correct but 
only in so far as they apply to these specific estates all of which 
appear to have been at a similarly mature stage of a colliery's 
life-cycle. Both younger and older mining communities established 
around newly-won or worked-out collieries exhibited significantly 
different industrial relations. Moreover, as Oldroyd admits, the 
nature of the surviving records make it difficult to track family 
earnings, fines, working days lost, and other aspects of the total 
pay packet that significantly affected industrial relations.

Accounting historians appear to be divided into roughly three 
theoretical camps: functionalists, Marxists or neo-Marxists, and 
Foucauldians, the last group of which view accounting ultimately as a 
technique of behavioral control. It is to the author's credit that he 
is able to draw upon the theoretical insights provided by all three 
to illuminate this subject. It is to the author's credit as well that 
he has produced such a valuable and interesting book.


James Jaffe, professor of history at the University of 
Wisconsin-Whitewater (jaffej at uww.edu), has written extensively on 
industrial relations in England's Northeast coal industry. His most 
recent publication is "The Affairs of Others": The Diaries of Francis 
Place, 1825-1836_ (2007) in the Camden Series of the Royal Historical 
Society.

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