Accounting for Deception in the Industrial Revolution

12 03 2014

AS: Another great article review from Nep-His. This one concerns the use of “creative accounting” by 19th century factory owners in response to regulation.

The NEP-HIS Blog

Creative accounting in the British Industrial Revolution: Cotton manufacturers and the ‘Ten Hours’ Movement

Abstract

The paper examines an early case of creative accounting, and how, during British industrialization, accounting was enlisted by the manufacturers’ interest to resist demands, led by the ‘Ten hours’ movement, for limiting the working day. In contrast to much of the prior literature, which argues that entrepreneurs made poor use of accounting techniques in the British industrial revolution, the paper shows that there was considerable sophistication in their application to specific purposes, including political lobbying and accounting for the accumulation of capital. To illustrate lobbying behaviour, the paper examines entrepreneurs’ use of accounting to resist the threat of regulation of working time in textile mills. It explains why accounting information became so important in the debate over factory legislation. In doing so, it shows that a significant element was the accounting evidence of one manufacturer…

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