How to Turn a Stick Into a Carrot: The Shift... Focus of English Agricultural Welfare, 1670-1870 .

1
How to Turn a Stick Into a Carrot: The Shift in
Focus of English Agricultural Welfare, 1670-18701.
Chris Willmore
1998
Unemployment has always been with us. Whether we like it or not, in most
times and places there have been more people (or the wrong type of people)
available than were needed to perform the tasks necessary for the well-being of
society. These non-contributors have to be accommodated, either by making
work for them, or giving them enough of the fruits of someone else's labour to
provide for their subsistence needs (or at the very least their burial costs). One
thing is puzzling - why has a surplus population, for doubtless that is what
unemployment is indicative of, been constantly regarded as a problem? Surely,
the optimal outcome for any society would be one in which only a small fraction
of the population has to work to provide for the whole.
Part of the problem is that historically, people have not enjoyed their work,
and there seems to be a general consensus among these disenchanted workers
that if they're going to sacrifice their happiness in order to provide for themselves,
they're going to keep all the benefit for themselves. Any handouts to those who
could work but do not, in their eyes, would be an injustice.
What of those who are capable of working, seek work, but cannot find it?
Dealing with these people is trickier - how much, if anything, they should be
compensated with, what measures should be forced upon employers and other
related questions have been tossed back and forth since the dawn of economic
history, and still no consensus has been reached.
1
I would like to thank A. Green and L.N. Willmore for their continued help and encouragement
during the writing of this paper.
2
England around the time of the industrial revolution provides a wonderful
probing ground.
Reams have been written on its welfare systems, and the
measures in use then bear remarkable parallels to some of the more recent
suggestions.
Plans that are only proposals today were in actual use a few
centuries ago, and thanks to the British obsession with note-taking and
memoranda, the qualitative evidence is quite enough to draw a few important
conclusions on their viability.
In particular, many of the programs for relieving underemployment
suggested by E. Phelps in Rewarding Work (see bibliography) were in use in
England's rural areas near the time of the Industrial Revolution. Indeed, they
were quite popular, and stuck through major changes in public policy and
government, but agricultural welfare seems to have done an about-face after the
Napoleonic wars.
Why this change?
Or better, as a starting point, what were these programs, and why did they
endure for as long as they did?
The Labour Situation
England was experiencing a labour shortage. Not a full-blown one - rather,
it was what I will term a 'marginal shortage', just enough to make labour the
valuable factor of production. This scarcity was not entirely due to a lack of
workers, though that was indeed part of the problem: another important factor
was the lack of communication between parishes, and the immobility of labour in
the days before quick, cheap and easy public transportation. Since England's
economy was predominantly agricultural, demand for labour was highly
seasonal: while there were barely enough hands to work the fields at haytime
and harvest, winter and summer were slack seasons which saw many of the
3
labourers unemployed or working at a 'cottage industry' (favourite examples are
glove-making and straw-plaiting). Since harvests happened at different times in
different parishes, according to their location, crop mix, soil, traditions, etc., much
of the labour shortage problem that arose at peak times could have been
remedied by having workers move from one farm to another - unfortunately, the
lack of convenient inter-regional communication, and the high costs (and risks!)
of transportation made this impracticable. There were individuals (as opposed to
communities) who took it upon themselves to travel such a route, from harvest to
harvest, offering their labour - but these migrant workers were mostly from the
Celtic countries; relatively few Englishmen undertook the venture, perhaps
because of the high uncertainty (would such-and-such a parish need workers?
maybe they'd had a bad year) and cost involved.
This cost was especially high when one considers that the majority of British
workers lived at subsistence, or close to it. As a rule of thumb, half of their total
income was spent on bread, and wages formed only a fraction of the income of
an agricultural labourer.
There was, as mentioned above, a high seasonal
variation in employment, particularly in the grain-growing areas, and the wage
paid during peak employment times was not enough to cover the yearly cost of
living for the average family. Some sort of relief was needed if the workers were
to survive, and several schemes were in place.
Methods of Poor Relief
The six main methods of poor relief used up to the Napoleonic Wars were a)
allowances in aid of wages (also called outrelief), b) the Roundsman system, c)
the Labour Rate system, d) punishment for vagrancy, e) Child Allowances, and f)
aid to the sick, elderly, and otherwise obviously disadvantaged.
Part of the
reason for the variety of systems was that welfare was a local responsibility, and
each parish was free to choose the system which best fit its needs. In all cases,
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labourers were only entitled to benefits in their parish of birth or residency (this
last being usually defined as living in the area for over a year).
The most popular form was, by far, Outrelief. As D.N. McCloskey pointed
out (1973), this was in essence an income subsidy: it was acknowledged that
wages fell short of the accepted social minimum (let's call it Ws), and the parish
paid the worker just enough to bring him up to Ws. Since bread was the major
item of expenditure, and the main requisite for subsistence, Ws was usually
indexed to the price of bread (B), either overtly (this was the famous
'Speenhamland bread scale', instituted in 1795) or in secret. Thus, Ws = Ws(B),
with the precise function being determined by what was considered enough
bread for the average working family to live on. Since the final income was
independent of the actual work performed (an income subsidy rather than a wage
subsidy), there was great concern at the time about the disincentive effects of
Outrelief.
The Roundsman system was a variation on this, designed to fix the
problem. During slack times, the market-clearing wage for labourers would be
far below subsistence; farmers did not need extra hands to complete the work
available, and the little they would pay for the increased productivity brought
about from added labour was not enough for a worker to live on (MPL<Ws).
Nonetheless, many workers (those fully employed in cottage industry aside)
would be out of work during summer and winter. To solve the problem, the
parish would offer seasonally unemployed labourers to the farmers at market
wages, and would then pay the worker the difference between that wage, W, and
Ws. Those workers who remained unhired would receive a wage slightly below
that of their successful counterparts.
The Labour Rate was a late (1820 or thereabouts) mutation of the
Roundsman system. Under it, the total yearly cost of parish relief was assessed
to 'ratepayers' (landowners, land tenants) in proportion to the amount of land
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which they owned. They could then choose to pay this 'poor tax' directly to the
local government, or hire workers at Ws. Wages paid were deductible up to the
value of the farmer's poor rate contribution. That is (1),
P=
Lf Pt
Lr
− N Ws
Where P = the poor rate paid to the local government by the farmer Lf = land
occupied by the farmer Lr = total rateable land in the parish Pt = the total yearly
cost of parish relief N = number of labourers hired at Ws.
Punishment for vagrancy tended to be harsh, and usually involved physical
mutilation of some sort (branding, boring a hole through the ear) and
transportation back to the individual's parish of birth or residency.
Child allowances were extremely common, and extremely straightforward. A
certain amount of money was provided regularly (weekly, monthly) to a family for
each child under a threshold age (usually around 14) over a certain number of
children (typically 2,3 or 4). Boyer (1990) cites 1.5s weekly for each child beyond
the third as typical in the period 1750-1850.
The last kind of relief, that given to the sick, the elderly, orphans and
widows, was a constant from medieval times, and I will not deal with it, since my
concern is for the treatment of the mainstream workforce. For more information
on the topic, I recommend the books by Messrs. Mollat and Jutte listed in the
bibliography.
Why Relief?
Now that we've seen what the system was, why put it into place? Why
create such complicated machinery?
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A first answer might be compassion. This was undoubtedly a factor, and
there is ample scope for research by social historians into the effect of religion,
popular morality and social theory on welfare practices, but the topic is eminently
unsuitable for the purposes of an economic historian. "You can't buy me love,"
as the song goes, and so we shall exclude all such considerations.
What then, apart from human kindness, was responsible for the creation of
the above methods of poor relief?
Surely a good answer is that they kept the workers from starving. A healthy
worker is a productive worker, and a dead worker is of no use to anyone but the
undertaker2. But then another question is raised: since relief is parish-based, and
farmers are going to end up paying (at least) a subsistence wage in any case
through the poor rate, why not set up an appropriate minimum wage, and pay it
to the workers directly?
There are two main objections to a minimum wage. First, there's a problem
involved with variation in family sizes. A wage must be standard; one can't pay
John two shillings for a day's work and Jack five shillings, unless one wishes a
riot, but what family size should be set as the standard? If, say, subsistence for a
family of four is chosen as the basis for the wage, then a family of five is not
going to have enough to live on, and there's going to be a need for relief anyway.
What's worse, those whose family size is less than four will be overpaid. This
surplus over subsistence has three possible effects: a) it will entice the worker to
work less, b) it will allow the worker to become self-sufficient, by making it
possible to save enough to have his own cottage patch3; in this case, the farmer
2
See R.A. Church & B.M.D. Smith, Competition and Monopoly in the Coffin Furniture Industry,
1870-1918, EHR,2 19, p. 621 (1966).
3
Most farmers did not own the land they worked, but leased it from a landlord. See Mingay's
article.
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loses his labour, or c) the surplus would allow the worker to migrate, and once
again the farmer has lost a labourer. Since labour is a scarce and valuable
resource, this clearly won't do.
Of the above, migration was the worst of crimes. The farmers, one must
realise, were incredibly risk-averse. A bad year or two could be enough to wipe
them out (this happened to many in the agricultural depression of 1730-1750;
see Mingay's article). Given the marginal scarcity of labour and the competition
for the resource from the towns and industrial centres, they would rather pay
labourers to stay on the whole year and thus guarantee themselves enough
workers at peak times than rely on migrant workers who may or may not come.
Farmers dominated local government, and it follows that they would mould
the parish-based poor relief laws to their advantage.
The basic inequality (2) is
 N



N W d + 
R( B, Fn( i ) )  ≤ d Nh Wm + K


i = 1

∑
where W = market wage, d = days worked at peak times, Nh = numbers
expected to be needed at peak times, Wm = wage paid to migrant workers, R =
relief expenditures, B = price of bread, Fn = family size, N = number of labourers
in the parish, and K is a risk-aversion factor.
Equation (2) ensures that it is advantageous (at least cost-wise) to farmers
to keep workers all year.
Note also that (3)
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d Nh Ws + M ≤ d Nh Wm
where Ws = subsistence wage, and M = migration costs for a single individual,
since a migrant worker also has to live.
Hence, a migrant worker was
necessarily going to cost more than a local one, and depending on the size of M
relative to R(B,Fn), this would provide another incentive to keep a local reserve
of workers.
The local worker, of course, must also eat and feed his family, but in this
case we have the ameliorating factor of a cottage industry to provide some
income during slack times (4):
Fn Ws ≤ W d + R( B, Fn ) + C
where C is a variable encompassing extra income earned from a cottage industry
and work by women and children. I set an inequality down, but farmers would
naturally wish to keep this at an equality. Factors such as the migrant worker
also having a dependent family would make it difficult to do so in (3).
It is clear from (4) that W<Ws, and I propose that this market wage was
determined by two main factors: a) migration costs to the nearest centre of
alternative employment (typically, London), and b) the wage level in said centre
of employment (CE). These had opposite effects on W. Proximity to CE with
higher wage levels would end to drive wage up, since farmers would have to
encourage workers not to leave. Meanwhile, there would be a temptation to
reduce wages with distance from CE, to below the migration costs. This trend is
clearly found in the data - wages within 20 miles of London (a good day's walk)
were higher than in other agricultural areas, and they fell with distance beyond
that. This makes sense, since the first twenty miles involved trivial migration
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costs. If high wages were not offered as an incentive to stay on, the worker
could quite literally just walk to London. If, however, the nearest CE was too far
to go to costlessly, it was in the farmers' interest to keep wages below migration
costs as a barrier to emigration. This does not mean that agricultural labourers'
wages near London was higher than that in the city itself. This is because wages
were NOT all of the workers' salary - total income was determined by the lefthand-side of (4). Overall, the income package offered the worker would have to
be greater or equal to the wage received in London, with opportunity costs, risk
factors and cost-of-living adjustments (life in the city was likely more expensive
than life in the country) taken into account. In addition, the fact that receipt of
R(B,Fn) was conditional of the worker's staying in his parish of origin made
migration to another agricultural area a near-impossibility. Thus, the existing
forms of relief were geared towards immobilizing labour.
The prevalent forms of welfare also solved the surplus-minimization problem
posed by the imposition of a minimum wage. Too high a minimum wage would
create a surplus, which would tempt the labourer to emigrate or become selfsufficient: in both cases, his labour is lost. Too low a wage would result in loss of
productivity through starvation, and perhaps even emigration. (If Income<Ws,
migration would likely take place regardless of the costs, since a rational
individual would rather take a long shot at subsistence than stay where he is and
work towards certain death.) Yearly relief in the Outrelief system (of which the
Labour Rate and Roundsman system are variations) was given by (5)
R( B, Fn ) = Ws( 365 − d ) − C + d ( Ws − W ) + A( Fn )
where A was the child allowance described above. It was the power to define A
which eliminated the problem of choosing the ideal 'standard family size'. In this
form, relief supplemented the workers' wages and the extra earnings hidden in C
to an ideal 'variable minimum income', which even included adjustments for
family size and allowed each family to be kept at a near-perfect socially accepted
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subsistence level. The farmers' risk was now minimized, since their workers
were properly fed, and the lack of an income surplus and the conditionality of
R(B,Fn) of the labourer staying in the parish of residency minimized risks of
losing the worker through emigration4.
The Roundsman and Labour Rate systems worked much in the same way,
with one interesting difference. Where before, in the slack season, the farmer
would be tempted to do all the work himself (or with as little labour as possible) to
minimize total costs, under these two systems labour is subsidized5, and the
farmer will now hire until the marginal product of labour is zero or his subsidy
runs out, whichever comes first..
In brief, farmers in the period under study attempted to act like feudal lords,
but lacked the legal backing to do so. They faced the same basic problem as
Domar's6 aristocracy: too much land in need of harvesting, complete reliance
upon the harvests for subsistence, and too little labour. Domar's ruling class
solved the problem by turning their labourers into serfs and slaves, thus
immobilizing them.
Unfortunately for the English farmers of the post-plague
period, there were some important differences in their situation from that of the
cited article, so their solution was not as clear-cut. To wit, slavery was not an
option, since law and popular morality alike frowned it upon, labour was only
marginally scarce (that is, there was enough to accomplish the necessary tasks,
but not to fully satisfy their risk-aversion), and there was competition for workers
from the commercial sector. To fix this, they used their political power to institute
a local system of poor relief that kept workers at an adequate level of feeding
(and thus productivity), and discouraged emigration of said scarce resource.
4
I should once again emphasize that the 'parish-of-residency' restrictions on receipt of relief were
most effective at preventing migration to other agricultural parishes.
5
Under the Labour Rate system, the marginal cost of labour to the farmer is zero up to the value
of his poor rate contribution, and under the Roundsman system, the cost is by definition set to
what the farmer is willing to pay.
6
Domar, 1970.
11
The Napoleonic Wars: 1796-1814
The War's removal of over 400,0007 able-bodied men from the workforce
turned England's marginal agricultural labour shortage into a real one, and
competition from other sectors, such as the massive canal-building craze of the
1790s, didn't help the situation. Winter wages rose, unemployment fell drastically
during the slack periods, and at peak times (haymaking and harvest) there were
not enough labourers available to do the necessary work.
In desperation,
8
women and children were hired to do 'men's tasks' . Only a succession of bad
harvests prevented the shortage from reaching crisis proportions.
Even the
migrants from the Celtic countries were not enough to make up the difference,
and to make matters worse, new-found local employment opportunities in Wales
encouraged previously migratory labourers to stay at home.
Poor relief
9
expenditure at this time remained stable , and was a reaction to the rising
agricultural prices (and thus higher cost of living) brought about by increased
demand for produce rather than an ameliorant for unemployment.
This is
evidenced by the increased use of flour subsidies, where flour was sold by to the
public by parish authorities at below-market prices10.
The result was predictable.
There was a half-hearted attempt in some
areas to remedy the lack of migrant labour (and the lack of inter-parish
communication and transportation discussed earlier) by creating 'work gangs',
which were in essence artificial groups of migrant labourers gathered from
nearby parishes who would travel from harvest to harvest, selling their work. A
far more important response was the implementation of technological
7
8
Jones, 1964
See Snell, 1981, for the gendered breakdown of agricultural tasks.
9
Baugh.
I should note here that such subsidies do not necessarily preclude rising real wages - the
English peasantry was notorious for rioting whenever the price of bread rose. For more on bread
riots, please see E.P. Thompson's classic account, The Making of the English Working Class
(Penguin, 1991).
10
12
innovations. Many devices, such as a threshing machine, had already been
invented, but hadn't been put to use due to employment considerations threshing was a winter (read: slack time) activity, and so it was important in many
parishes to keep the labour-intensive flail-threshing system in operation to
provide employment. Moreover, if the farmers were going to keep the workers all
year anyway, it didn't pay them to invest in labour-saving machines. Since they
were paying for the workers' subsistence (N*Ws) regardless, be it out of the poor
rate or out of wages, they might as well obtain labour for their payments. Rising
costs (as might be expected, wages were skyrocketing at this time, and
negotiation was firmly on the workers' side) and a real labour shortage, then,
provided great incentives to the implementation of innovations during the war
years.
After the War (1814-1865)
Just as the agricultural sector had adjusted to a real labour shortage, there
was a massive influx of servicemen returning from the wars. It's no surprise that
Blaug found chronic unemployment and rising poor relief to be typical of the
period 1814-1820. The same years saw an increase in agricultural productivity,
brought about by the better cultivation methods and machinery introduced during
the war. Clearly, the old methods of poor relief, which focused on immobilizing
labour, were no longer suitable when labour was no longer the scarce factor of
production.
The trend now was towards cost minimization and security.
Migration of labour was not a problem, but the peasants had to be kept from
revolting - something that would certainly happen if they were kept at undersubsistence income levels.
Poor relief was now geared towards maintaining
workers, in the strictest sense of the word, at a subsistence standard of living,
and minimizing the expense of this effort.
In 1834, the Poor Law Amendment Act prohibited Outrelief, stipulating that
welfare recipients should only receive Ws/2, in kind, and be forced to work at the
13
workhouse for the remaining half of their subsistence wage. If they refused the
workhouse, they were denied relief. Thus, only those who were fit and disposed
enough to work, and were thus potentially useful to the economy, would be
maintained.
Though admirably suited in theory for an economy with more workers than
jobs and a propensity towards economy, the order was largely ignored.
Allowances-in-aid-of-wages continued to be given, using loopholes in the
phrasing of the Act to avoid explicitly breaking the law. The pre-Napoleonic
system remained in use, albeit with a changed focus: rather than the hindrance
of labour mobility, cost factors were operative. It cost twice as much to keep a
person in the workhouse than to provide him with outrelief11. Not only that, but
since outrelief was parish-based, it could be just as discriminating as the
workhouse test. The 'guardians of the poor' tended to know each recipient at
least by reputation, and could thus judge whether the poor were deserving of aid
or not case by case, and according to varying local standards. A different spin
on the outrelief system beat the workhouse at its own game: discrimination of the
deserving poor, and cost-efficiency.
At the same time, many measures were introduced to reduce the eligibility
of recipients for relief. First among these was the parish-of-origin requirement for
relief eligibility mentioned above. Again, its focus had shifted - where it had
previously been used to discourage migration, it was now kept because it
provided a time-honoured way (and more importantly, one sanctioned by custom)
of denying relief to an increasingly large segment of the population. The 1840s
and 50s saw the introduction of public rewards (medals, etc.) for NOT going on
the dole, and the ultimate form of relief discouragement was the ticket system this was basically the Roundsman system, but convoluted with intentionally
11
This had some interesting consequences - farmers in this period tended to favour hiring
workers with large families, since it was far cheaper to pay their wages than to pay for the
maintenance of the family in the workhouse.
14
complicated paperwork and bureaucratic interventions, whose requirements
extremely difficult to properly fill.
This was, in effect, a way of legitimately
reducing legitimate claims for outrelief.
In short, throughout the 1840s, labour remained plentiful with respect to job
vacancies in the agricultural sectors, and farmers hired until marginal product
equaled marginal cost, laying off workers as needed. The farmer was "in duty
bound to see as much labour employed on his estates as possible without
positive loss to himself or his tenants"12. The nature of poor relief had changed,
and it was now geared towards keeping those who were capable of productive
work at a subsistence standard of living, and minimizing costs by ensuring that
non-traditional non-workers (traditional ones being widows, orphans, the sick and
elderly, etc.) did not obtain relief.
All this changed with the coming of the railroads.
Building them in the
1840s caused a drain on labour. Winter employment was still scarce at this time,
but hay-time and harvest saw a lack of workers. In the 1850s, the completion of
the railway system worsened the trend by making migration to towns cheap, fast
and easy (this eliminated one of the causes for the marginal labour shortage in
the pre-Napoleonic period). The peak of agricultural employment in England was
in 185113, and ten years later, virtually ALL of the surplus labour from agriculture
had been absorbed by industry. In 1860, the first ads for farm hands appeared in
the papers, offering 'good' (read: competitive) wages and cottages14.
The taboo against self-sufficiency of the worker had been broken, since
there was widespread recognition that it was now impossible to restrict the
mobility of labour. With the introduction of the railroad, the farmers had to face a
new, competitive reality, in which their labourers had free choice between the
12
B. Almack, On the Agriculture of Norfolk, Journ. Roy. Agric. Soc. Eng. V (1845), 345., quoted in
Jones, 1964.
13
Jones
15
fields or manufacturing. Hence, they had to offer competitive wages, and living
amenities not inferior to those found in the manufacturing centres. Cash wages
rose, and farmers were expected to give their workers good cottages, allotments
and schooling.
In summary, the removal of workers during the Napoleonic wars turned
Britain's marginal labour shortage into a real one.
Increased demand for
agricultural products and rising wages led to the implementation of labour-saving
innovations, such as machine threshing versus the traditional flail. When the
servicemen returned to the workforce after the war, they found an agricultural
sector in the final stages of adjustment to functioning with less labour. Massive
unemployment resulted. In the presence of surplus labour, farmers began to hire
until marginal product equaled marginal cost, and changed the focus of poor
relief from immobilizing labour to cost minimization. With the arrival of railroads
in the 1850s, migration costs were greatly reduced, and labourers now had an
almost free choice between field and factory. Farmers saw themselves forced to
offer competitive wages and fringe benefits, such as housing and allotments, to
attract the labourers they needed for the hay-time/harvest peak periods. The
focus of farmers' labour-hiring tactics had gone full circle, from disincentives and
barriers to emigration, to incentives for arrival in the country.
Conclusion
Whirlwind though the tour was, I hope that I've been able to convey a
general sense of the factors that operated in bringing about the change of British
farmers from a pseudo-feudal rural aristocracy in pre-Napoleonic England to fullfledged competitors in a two-sector economy in the 1860s. A frustrated Domarian
ruling class immobilized its marginally scarce labour as best it could, and was hit
in close succession by a real labour shortage, which encouraged implementation
of labour-saving innovation, and a labour surplus, causing it to shift its focus
14
Ibid.
16
towards cost-minimization. A further shock was the introduction of the railroad
system, which drastically reduced costs of migration to the industrial centres, and
forced the farmers to offer competitive wages and non-relief-based benefits to
attract workers, removing the final traces of the original semi-serfdom in the hirerlabourer relationship.
Queen's University, Kingston
1998
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Abbreviations:
EEH = Explorations in Economic History
EHR,2 = Economic History Review, 2nd Series
JEH = Journal of Economic History
SH = Social History
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G. Bittle and T. Lane, Inflation and Philanthropy in England: A Re-Assessment of
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M. Blaug, The Myth of the Old Poor Law and the Making of the New, JEH 23, pp.
151-184 (1963).
M. Blaug, The Poor Law Report Reexamined, JEH 24, pp. 229-245 (1964).
17
G.R. Boyer, An Economic History of the English Poor Law, 1750-1850,
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G. Boyer, The Old Poor Law and the Agricultural Labor Market in Southern
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18
M. Huberman, Invisible Handshakes in Lancashire: Cotton Spinning in the First
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M. Huberman, The economic origins of paternalism: Lancashire cotton spinning
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