Keynes and the cotton industry: a reappraisal

D. Higgins; S. Toms; I. Filatotchev

Keynes and the cotton industry: a reappraisal

The York Management School

Research output: Working paper

Abstract

The paper reinterprets Keynes’s analysis of the crisis in the Lancashire cotton industry in the 1920s. It presents empirical evidence showing that syndicates of local shareholders, but not the banks, were an important brake on firms exiting, at a time when exit barriers were otherwise unproblematic in this competitive industry. Moreover, syndicates milked firms of any profits through dividends, thereby limiting reinvestment and re-equipment possibilities. The case shows that where laissez-faire fails in response to a crisis, the associated response may need to assess both ownership structure and its relationship to competitive industry structure.

Original language	English
Publisher	Department of Management Studies, University of York
Publication status	Published - 2007

Keywords

Keynes
Cotton
Banks
Syndicates

Access to Document

tomss20007.pdf

http://www.york.ac.uk/management/research/working-paper/

Cite this

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AB - The paper reinterprets Keynes’s analysis of the crisis in the Lancashire cotton industry in the 1920s. It presents empirical evidence showing that syndicates of local shareholders, but not the banks, were an important brake on firms exiting, at a time when exit barriers were otherwise unproblematic in this competitive industry. Moreover, syndicates milked firms of any profits through dividends, thereby limiting reinvestment and re-equipment possibilities. The case shows that where laissez-faire fails in response to a crisis, the associated response may need to assess both ownership structure and its relationship to competitive industry structure.

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KW - Banks

KW - Syndicates

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