ABSTRACT
Business and economic historians are in considerable disagreement about the performance of British industry in the inter-war years. This chapter attempts to explain and reconcile these somewhat conflicting trends and shows why voluntary liquidations were declining and births increasing in the early 1930s, but compulsory liquidations were relatively high. The numbers of liquidations and births per se are slightly misleading as they give little idea of the incidence of company failures or the likely impact of new firms. The profits expected from setting up a new firm may be linked to the average profitability of existing firms together with some variable proxying the number of potential opportunities for new businesses. The principal legislative change was, of course, the Companies Act in 1929, which distinguished between solvent and insolvent firms going into voluntary liquidation. Compulsory liquidations relate to companies which are forced into insolvency by the Court following a successful petition generally from one of the firm’s creditors.
