Institutions, Law, and Markets: The Lancashire Textile Industry, c. 1880-c.1914

Aashish Velkar and David M Higgins

We examine the nefarious practice of ‘short-reeling’ prevalent in Lancashire c1880 and the industry responses to eliminate it. Such rouge practices were further encouraged by the intense but pernicious competition between highly specialised firms. The industry introduced two institutions to deal with this practice: standardised or uniform contracts and a Testing House to monitor and enforce quality. This was tantamount to developing a quasi-legal system such that private standards established through cooperative agreements had legal sanction. Such governance measures were meant to eliminate endemic contractual problems caused by short reeling. They were only partially effective reflecting deep divisions within the domestic and international textile markets. Based on extensive archival sources (e.g. Manchester Chamber of Commerce, employers associations), our paper contributes to the understanding of different forms of market governance, especially those that operate at the boundary of state and civil society. We argue that it is the complementarities between different institutions – public and private – that matter. Through this, we show how firms struggled to make sense of changing regulatory environments and economic realities. We conclude that commercial institutions develop within grounded notions of governance rather than abstracted spaces of market exchange.