ABSTRACT
The governance structure of the Lancashire cotton textile industry that developed during the nineteenth century had far-reaching consequences for its performance in the twentieth century. This chapter examines the changes in governance structures and ownership that emerged in the industry during the pre-1914 period and analyses how this led to an over-commitment of financial and physical resources in the industry. It offers a new perspective on the decline of the Lancashire textile industry, by examining three neglected aspects in the current debate, capital ownership, capital structure, and capital markets. The important consequence of the industry's ownership structure was for the technological development of the industry. The consequences of the revised 1920 ownership structure for the industry were serious and made immediate recovery impossible. In the Lancashire case and in the general case it is sensible to consider the corporate governance structure as the ultimate constraint on the entrepreneur.
