The Cotton Board was also involved in planning for post-war reconstruction. In 1943 it produced a report for the Board of Trade which suggested, among other things, that the necessary re-equipment of the industry would depend on stable prices, and this would require a price maintenance scheme of the sort envisaged in the 1939 Act. Another view, pressed by Frank Platt following a mission which he led to the US in 1944, was that the industry should be reorganised along American lines, with more standardisation, more vertical integration and more investment in new equipment.18 No consensus on these issues had been reached by the end of the war.
1945–1960: A Short-Lived Boom
As the country’s largest exporter, the cotton textile industry had a central role to play in the post-war export drive. ‘Britain’s bread’, as the slogan put it, ‘hangs by Lancashire’s thread.’ With Japanese and German textile manufacturers temporarily out of action, there was no problem in finding customers. The constraint was the shortage of labour, and, although production increased strongly in the first five years after the war, exports in 1950 were only half the 1937 level (TABLE 4.1). These were years of full order books and high profits, a welcome relief from the inter-war depression. But the industry was well aware that it had to prepare for the return of its pre-war competitors to the world market. In September 1945, Stafford Cripps, President of the Board of Trade in the new Labour government, set up a working party, consisting of employers, trade union representatives and outside experts, to examine the industry’s future.
All the members of the working party agreed that ‘the one thing that must be avoided is the enjoyment of this period as a fool’s paradise of easy profits at the end of which the industry, and all those who rely on it for employment, may find themselves in worse difficulties even than those of the inter-war years’.19 But when it came to proposals for action, opinions were divided. Some favoured a drastic programme of rationalisation. Others argued against larger groupings on the grounds that, unlike their American counterparts, British mills needed the flexibility to meet the needs of widely varying markets. ‘To compare the American industry, with its vast and highly protected home market and its minor interest in exports, with the British industry, which exports half its products to markets all over the world, is to compare organisations which are geared up for entirely different functions.’20
TABLE 4.1 Output and exports of cotton and allied textiles 1937–65
(in million square yards)
| Output | Exports | |
| 1937 | 4,532 | 2,002 |
| 1945 | 1,928 | 531 |
| 1950 | 2,937 | 1,017 |
| 1955 | 2,568 | 689 |
| 1965 | 1,900 | 300 |
Source: Marguerite Dupree, ‘Struggling with Destiny: The Cotton Industry, Overseas Trade Policy and the Cotton Board, 1940–1959’. Reprinted by permission from Business History, vol. 32, no. 4, published by Frank Cass & Company, 900 Eastern Avenue, Ilford, Essex, England. Copyright Frank Cass & Co Ltd.
The lack of unanimity disappointed Cripps, but he had no blueprint of his own to offer. Although nationalisation was favoured by the trade unions, it would have been a disruptive and controversial measure at a time when the urgent priority was to maximise production for export, and it was not seriously considered by the government. One of the few concrete results from the working party’s deliberations was the Cotton Industry (Re-equipment Subsidy) Act of 1948, which made funds available for re-equipment to firms which agreed to form larger groups. But the take-up was small. Most manufacturers, scarred by their pre-war experience, took a cautious view of the industry’s prospects, and were content to run their existing equipment with as much labour as they could obtain, without much investment in new machinery.21 Their biggest fear was that when the post-war boom came to an end, the industry would be plunged into another crisis of over-capacity, as had happened in the 1920s.
The boom did indeed come to an end in 1952, partly because of a shift of consumer spending away from clothing towards domestic appliances, partly because of increasing competition in export markets. The stabilisation of Lancashire’s export trade in the 1930s had depended on imperial preference and on discrimination against Japanese exports to the colonies. Both these props were weakened after the war by the US-led drive for freer trade, starting with the signature of the General Agreement on Tariffs and Trade (GATT) in 1947. Quotas on Japanese exports to the colonies were removed, and it was no longer possible to manipulate tariffs in Lancashire’s favour. By the mid-1950s Japanese textile manufacturers had returned to the world market in full force.
At the same time an unexpected threat materialised in the domestic market. Under the agreement reached between Britain and the Commonwealth countries at the Ottawa conference in 1932, most imports from the Commonwealth were allowed to enter Britain free of duty. This gave an opportunity for the textile industries of India, Pakistan and Hong Kong to build up their sales in Britain. Imports from these three countries increased rapidly during the 1950s, and by the end of the decade Britain had become a net importer of cotton cloth for the first time since before the industrial revolution.22 Another factor working to Lancashire’s disadvantage was the growing popularity of knitted fabrics in applications previously served by cotton cloth. Two of the biggest growth areas were warp knitted fabric for shirts and sheets, and double jersey knitting for dresses and suits. The expansion of the knitting industry during the 1950s was linked to the wider use of the new synthetic fibres, principally nylon and polyester.
The reaction to these events, once again, was defensive: an attempt to keep prices up through a price-fixing agreement, and an appeal to the government for help on imports. After 1951 the industry was dealing with a Conservative government which was inclined to leave Lancashire to its fate. Peter Thorneycroft, President of the Board of Trade in the 1951–5 Churchill government, insisted that the industry’s future lay in its own hands. ‘The government’, he told the Cotton Board in 1952, ‘has no featherbed to offer you and very little shelter in the harsh winds of competition which are blowing through the world today.’23 In the second half of the decade, however, the political tide began to turn in Lancashire’s favour. With a general election in prospect, the Prime Minister, Harold Macmillan, was fearful of loss of support in an area which supplied a large number of Conservative MPs, and he agreed to support the industry’s efforts to secure a voluntary restriction on imports from the three main Commonwealth suppliers. The ceilings negotiated in 1958 were higher than Lancashire had hoped for, but ministers were at least taking an interest in the industry’s problems.
In the following year the government went further, acceding to the industry’s request for a state-supported scrapping scheme. The Cotton Industry Act of 1959 was designed to eliminate 50 per cent of the industry’s spinning capacity and 40 per cent of its weaving capacity. Two-thirds of the costs of scrapping surplus machinery were funded by the government, with a levy on the industry providing the rest. In addition, a re-equipment subsidy was made available to firms which installed new machinery. This was a new departure in government-industry relations, a foretaste of the interventionism which was to characterise British industrial