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prices
and profits in cotton textiles during the industrial revolution =
C. Knick Harley
Department of Economics
& St Antony’s College, Oxford
Abstract
Cotton
textile firms led the development of machinery-based industrialization in t=
he
Industrial Revolution. This paper presents price and profits data extracted
from the accounting records of three cotton firms between the 1770s and the
1820s. The course of prices and profits in cotton textiles illumine the nat=
ure
of the economic processes at work. Some historians have seen the Industrial
Revolution as a Schumpeterian process in which discontinuous technological
change created large profits for innovators and succeeding decades were cha=
racterized
by slow diffusion. Technological secrecy and imperfect capital markets limi=
ted
expansion of use of the new technology and output expanded as profits were
reinvested until eventually the new technology dominated. The evidence here
supports a more equilibrium view which the industry expanded rapidly and pr=
ices
fell in response to technological change. Price and profit evidence indicat=
es
that expansion of the industry had led to dramatic price declines by the 17=
80s
and there is no evidence of super profits thereafter.