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 (, 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.