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UBC Theses and Dissertations

A critical reassessment of the evidence of long swings in residential construction in Great Britain,… Olesen, Richard Mogens 1971

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A CRITICAL REASSESSMENT OF THE EVIDENCE OF LONG SWINGS IN RESIDENTIAL CONSTRUCTION IN GREAT BRITAIN, 1860-1914. WITH SPECIAL EMPHASIS ON THE LOCAL EXPERIENCE IN LANCASHIRE AND SOUTH WALES by RICHARD MOGENS OLESEN A.B., U n i v e r s i t y o f C a l i f o r n i a , 1969 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n t h e Department o f Economics We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA June, 19 71 In present ing th i s thes i s in p a r t i a l f u l f i lmen t of the requirements for an advanced degree at the Un ivers i ty of B r i t i s h Columbia, I agree that the L ibrary sha l l make i t f r ee l y ava i l ab le for reference and study. I fu r ther agree that permission for extens ive copying of th i s thes i s fo r scho la r l y purposes may be granted by the Head of my Department or by his representat ives . It is understood that copying or pub l i ca t i on o f th i s thesis- f o r f i nanc i a l gain sha l l not be allowed without my wr i t ten permiss ion. Department of The Un ivers i ty o f B r i t i s h Columbia Vancouver 8, Canada Date ^)\J^j H % 1 ABSTRACT T h i s t h e s i s examines t h e e v i d e n c e o f l o n g swings i n B r i t i s h h o u s e - b u i l d i n g from 1860 t o 1914. The c e n t r a l i s s u e o f t h e p r e s e n t i n q u i r y c o n c e r n s t h e e x i s t e n c e o f c y c l i c a l f l u c t u a t i o n s i n r e s i d e n t i a l c o n s t r u c t -i o n and t h e n a t u r e o f t h e c a u s a l mechanisms by w h i c h t h e s e phenomena mi g h t be e x p l a i n e d . A g e n e r a l a n a l y s i s o f t h e s t r u c t u r e o f t h e h o u s i n g m a rket and t h e i n s t i t u t i o n a l p e c u l i a r i t i e s w h i c h g i v e r i s e t o t h e l a g g e d a d j u s t m e n t p r o c e s s by w h i c h changes i n demand a r e t r a n s l a t e d i n t o changes i n t h e s u p p l y o f h o u s i n g accommod a t i o n s u g g e s t s t h a t t h e a p p r o p r i a t e l e v e l a t w h i c h t o a n a l y z e t h e b e h a v i o r o f h o u s e - b u i l d i n g i s t h e r e g i o n a l o r l o c a l l e v e l The i m p o r t a n c e o f s p e c i f y i n g r e l a t i o n s h i p s whose u n d e r l y i n g b e h a v i o r a l i m p l i c a t i o n s a r e c o n s i s t e n t w i t h t h e l e v e l o f a g g r e g a t i o n , i s s t r e s s e d . W i t h t h i s i n mind, a g e n e r a l r e g i o n a l model o f house-b u i l d i n g a c t i v i t y i s d e v e l o p e d and i t s t h e o r e t i c a l s o l u t i o n s e x p l o r e d . T h i s p r o v i d e s a c o n c e p t u a l a n a l y t i c a l framework used s u b s e q u e n t l y t o s t u d y t h e r e g i o n a l (and l o c a l ) house-b u i l d i n g e x p e r i e n c e o f South Wales and S o u t h - e a s t L a n c a s h i r e . These d i s a g g r e g a t e d r e g i o n a l s t u d i e s show l o c a l p a t t e r n s o f r e s i d e n t i a l c o n s t r u c t i o n t o e x h i b i t a wide range o f v a r i a t i o n . O p e r a t i v e c a u s a l mechanisms found t o e x i s t a t t h i s l e v e l o f a n a l y s i s d i s c l o s e s i g n i f i c a n t r e g i o n a l d i f f e r e n c e s w h i c h s e r i o u s l y q u e s t i o n t h e v a l i d i t y o f t h e m a c r o - c a u s a l r e l a t i o n s h i p s w h i c h have been o f f e r e d t o e x p l a i n f l u c t u a t i o n s i n B r i t i s h h o u s e - b u i l d i n g . The l i m i t s o f t h e p r e s e n t a n a l y s i s and t h e t e n t a t i v e n a t u r e o f o u r c o n c l u s i o n s a r e emphasized. W i t h t h i s i n mind, t h e r e a r e s u g g e s t e d a number o f a r e a s w h i c h r e q u i r e f a r more i n t e n s i v e s t u d y t h a n t h e y have r e c e i v e d i n t h e p a s t . O n l y when we l e a r n more about t h e i n t e r - r e l a t i o n s h i p s i n t h e p a t t e r n o f r e g i o n a l development w i l l we be a b l e t o more f u l l y u n d e r s t a n d t h e mechanisms o f t h e l o n g s w i n g s . TABLE OF CONTENTS Page LIST OF TABLES v i i LIST OF FIGURES x ACKNOWLEDGEMENT x i i C h a p t e r I. INTRODUCTION 1 I I . FLUCTUATIONS IN BUILDING ACTIVITY: EVIDENCE OF LONG SWINGS IN RESIDENTIAL CONSTRUCTION . . . . . . . 6 A. A Measure o f B u i l d i n g A c t i v i t y 6 B. The Time-Path o f R e s i d e n t i a l C o n s t r u c t i o n i n G r e a t B r i t a i n , 1860-1914 19 C. The Course o f R u r a l H o u s e - B u i l d i n g i n G r e a t B r i t a i n , 1860-1914 25 I I I . THE CAUSES OF LONG SWINGS IN HOUSE-BUILDING 31 A. The S t r u c t u r e o f t h e Hous i n g Market . . . 32 B. M a j o r S o u r c e s o f I n s t a b i l i t y i n t h e Housi n g S e c t o r o f t h e Economy 46 C. Why t h e Long Swings i n B r i t i s h House-B u i l d i n g from 1860 t o 1914 57 IV. THE PROBLEM OF AGGREGATION: REGIONAL AND LOCAL BUILDING CYCLES 9 3 i v V Page A. R e g i o n a l and L o c a l D i f f e r e n c e s i n t h e Course o f H o u s e - B u i l d i n g A c t i v i t y 9 3 B. A R e g i o n a l Model o f H o u s e - B u i l d i n g . . . 9 7 C. I m p l i c a t i o n s o f t h e R e g i o n a l Model f o r t h e Course o f H o u s e - B u i l d i n g a t t h e N a t i o n a l L e v e l 107 V. RESIDENTIAL CONSTRUCTION IN THE SOUTH WALES COALFIELD 114 A. A R e g i o n a l Index o f H o u s e - B u i l d i n g i n South Wales 114 B. D i f f e r e n c e s Between t h e Course o f H o u s e - B u i l d i n g i n G r e a t B r i t a i n and t h e South Wales C o a l f i e l d 118 C. H o u s e - B u i l d i n g and t h e Economic Development o f South Wales 120 D. Demographic F a c t o r s and t h e Course o f H o u s e - B u i l d i n g i n South Wales: F u r t h e r E v i d e n c e o f t h e Absence o f R e g i o n a l Long Swings i n R e s i d e n t i a l C o n s t r u c t i o n 148 E. V a r i a t i o n s i n t h e Course o f House-B u i l d i n g a t t h e l o c a l L e v e l : South Wales 161 V I . RESIDENTIAL CONSTRUCTION IN SOUTH-EAST LANCASHIRE 19 6 A. A R e g i o n a l Index o f H o u s e - B u i l d i n g i n S o u t h - E a s t L a n c a s h i r e 19 6 v i Page B. D i f f e r e n c e s Between t h e Course o f H o u s e - B u i l d i n g i n G r e a t B r i t a i n and S o u t h - E a s t L a n c a s h i r e 200 C. H o u s e - B u i l d i n g and t h e Economic Development o f S o u t h - E a s t L a n c a s h i r e . . 202 D. Demographic F a c t o r s and t h e Course o f H o u s e - B u i l d i n g i n S o u t h - E a s t L a n c a s h i r e 237 E. V a r i a t i o n s i n t h e Course o f House-B u i l d i n g a t t h e L o c a l L e v e l : South-E a s t L a n c a s h i r e 248 V I I . SOME CONCLUSIONS AND THEIR IMPLICATIONS FOR FURTHER STUDY OF HOUSE-BUILDING IN VICTORIAN BRITAIN 266 BIBLIOGRAPHY 274 APPENDICES 281 I . 281 I I . 289 I I I . 298 LIST OF TABLES T a b l e Page I . LONG CYCLES IN BUILDING ACTIVITY IN GREAT BRITAIN 22 I I . CHANGES IN URBAN AND RURAL HOUSING STOCK IN ENGLAND AND WALES 1851-1911 . . . . 28 I I I . GROWTH OF PRODUCTION AND EXPORT OF COAL, UNITED KINGDOM 1860-1914 125 IV. PROPORTION OF TOTAL COAL EXPORTS FROM PRINCIPLE DISTRICTS OF THE UNITED KING-DOM 1860-1900 127 V. SAILING AND STEAM TONNAGE ENTERED WITH CARGO AND IN BALLAST AT PORTS IN THE UNITED KINGDOM 129 V I . LIMITED COMPANIES (COAL MINING) RE-GISTERED IN SOUTH WALES AND THE AVERAGE SELLING PRICE PER TON OF STEAM COAL F.O.B. CARDIFF (1860-1875) 133 V I I . NET GAIN OR LOSS THROUGH MIGRATION: ENGLAND, SCOTLAND AND WALES, DECENNIALLY, 1861-1911 150 V I I I . INTERNAL MIGRATION BALANCE: WALES DECENNIALLY, 1861-1911 153 IX. MIGRATION BALANCES IN ENGLISH AND WELSH COLLIERY REGIONS, DECENNIALLY 1861-1911 157 v i i v i i i T a b l e Page X. POPULATIONS OF THE MERTHYR AND ABERDARE VALLEYS, DECENNIALLY 1861-1891 186 XI. LOCATION OF THE COTTON INDUSTRY IN ENGLAND AND WALES, 1835-1921 204 X I I . CHANGES IN THE NUMBER OF FACTORIES, POWER-LOOMS, SPINDLES AND PERSONS EMPLOYED IN THE COTTON INDUSTRY OF ENGLAND AND WALES, 1858-6 8 210 X I I I . RELIEF EXPENDITURES BY THE GUARDIANS AND RELIEF COMMITTEES 1860-1965 . . . . . . . 215 XIV. NUMBER AND NOMINAL CAPITAL OF LIMITED LIABILITY COTTON MILLS PROJECTED IN 1873-1884 XV. NATIONAL INDICES OF BUILDING ACTIVITY IN GREAT BRITAIN, 1860-1914 XVI. NET INCREASES IN THE HOUSING STOCK AND THE NUMBER OF HOUSES BEING CONSTRUCTED ON CENSUS DAY IN ENGLAND AND WALES, 1861-1911 287 XVII. HOUSE-BUILDING DATA FOR SELECTED TOWNS IN SOUTH WALES 292 i x T a b l e Page X V I I I . INDICES OF HOUSE-BUILDING FOR SELECTED TOWNS IN SOUTH-EAST LANCASHIRE 1860-1913 299 XIX. NATURAL INCREASE AND MIGRATION POPULATION AGED 20-44, LANCASHIRE AND CESHIRE 1870-1910 305 XX. TOTAL NUMBER OF HOUSES ASSESSED AND NOT ASSESSED TO DUTY 306 LIST OF FIGURES F i g u r e Page 1. NATIONAL INDICES OF BUILDING ACTIVITY, GREAT BRITAIN 1860-1914 10 2. NET INCREASE IN URBAN, RURAL AND TOTAL HOUSING STOCK IN CENSUS DECADES ENGLAND AND WALES 1861-1911 . . . 29 3. THE HOUSING AND MORTGAGE MARKET 41 4. HOUSE-BUILDING INDICES FOR GREAT BRITAIN AND SOUTH WALES 116 5. INDICES OF LONG SWINGS IN WALES AND THE "ATLANTIC ECONOMY", 1860-1914 . . . . 121 6. INDICES OF HOUSE-BUILDING AND THE GROWTH OF INDUSTRY AND TRADE IN SOUTH WALES 140 7. DECENNIAL NET GAIN OR LOSS THROUGH MIGRATION: ENGLAND, WALES AND SCOTLAND 1861-1911 151 8. DECENNIAL TRENDS IN HOUSE-BUILDING AND MIGRATION: SOUTH WALES, ENGLAND AND SCOTLAND, 1861-1911 1 5 8 9. INDICES OF HOUSE-BUILDING FOR SIXTEEN TOWNS IN SOUTH WALES 1860-1914 165 x x i F i g u r e Page 10. HOUSE-BUILDING INDICES FOR GREAT BRITAIN AND SOUTH-EAST LANCASHIRE 199 11. INDICES OF ECONOMIC DEVELOPMENT IN SOUTH-EAST LANCASHIRE 219 12. MIGRATION, NATURAL INCREASE AND HOUSE-BUILDING IN LANCASHIRE 1871-1913 240 13. MARRIAGE AND BIRTH RATES (PER 1000 POPULATION) ENGLAND AND WALES 1860-1910 246 14. INDICES OF HOUSE-BUILDING FOR SELECTED TOWNS IN SOUTH-EAST LANCASHIRE 1860-1914 250 15. HOUSE-BUILDING IN GREAT BRITAIN ANNUALLY AND IN ENGLAND AND WALES ON CENSUS DAY, 1860-1911 . . . . 288 ACKNOWLEDGEMENT I have i n c u r r e d many d e b t s i n the c o u r s e o f p r e p a r i n g t h i s s t u d y . I am e s p e c i a l l y i n d e b t e d t o my t h e s i s a d v i s o r C h a r l e s K. H a r l e y . T h i s paper has bene-f i t e d g r e a t l y from h i s i n v a l u a b l e c r i t i c i s m and i n s i s t e n c e t h a t I s t a t e more p r e c i s e l y my own i d e a s . Many h e l p f u l comments have a l s o been g i v e n by Drs. James Rae, James Shepherd and Rona l d S h e a r e r . I n a d d i t i o n , much o f what I u n d e r s t a n d about p a r t i a l d i f f e r e n t i a l e q u a t i o n s and t h e s o l u t i o n o f systems o f s i m u l t a n e o u s e q u a t i o n s I owe t o f r e q u e n t d i s c u s s i o n s w i t h my f e l l o w s t u d e n t s Masako Darrough, L o u i s C h r i s t o f i d e s and Robbie J o n e s . The knowledge o f e c o n o m e t r i c s I have a c q u i r e d w h i l e p r e p a r i n g t h i s t h e s i s has pr o v e n t o be i n v a l u a b l e i n t h e f o r m u l a t i o n o f my i d e a s . Here, t h e t i m e s p e n t by R o b i n H a n v e l t on my b e h a l f l e a v e s me d e e p l y i n h i s d e b t . I would a l s o l i k e t o t a k e t h i s o p p o r t u n i t y t o acknowledge a v e r y s p e c i a l d e b t t o t h e l a t e E. Bruce H u r t . As a f r i e n d and i n s p i r i n g t e a c h e r Bruce h e l p e d k i n d l e my i n t e r e s t i n European economic h i s t o r y . I hope t h i s t h e s i s i s a t r i b u t e w o r t h y o f him. x i i x i i i My o f t e n i l l e g i b l e s c r a t c h i n g s were t r a n s -formed i n t o t h e f i r s t d r a f t by my w i f e K e r r y and L i l l i a n Turchenek. The f i n a l d r a f t was t y p e d by M a r i e R e s a n o v i c , who i n s p i t e o f numerous d i f f i c u l t i e s was a b l e t o m a i n t a i n h e r good humor t h r o u g h o u t t h e e n t i r e o r d e a l . F i n a l l y , I would l i k e t o thank my w i f e , K e r r y , whose p a t i e n c e and encouragement were perhaps more t h a n one c o u l d r e a s o n a b l y e x p e c t . CHAPTER I INTRODUCTION Any a n a l y s i s o f h o u s e - b u i l d i n g must o f n e c e s s i t y be a complex u n d e r t a k i n g by v i r t u e o f t h e phenomena i t seeks t o e x p l a i n . T h i s h o l d s a f o r t i o r i i f t h e a n a l y s i s a l s o happens t o be h i s t o r i c a l . O r i g i n a l l y , t h i s paper was p r o -j e c t e d as an e c o n o m e t r i c s t u d y o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n from 1860 t o 1914. However, as I l e a r n e d more about e c o n o m e t r i c s and t h e p e c u l i a r s t r u c t u r e o f t h e h o u s i n g m a r k e t , i t became i n c r e a s i n g l y a p p a r e n t t h a t t h i s was an i n a p p r o p r i a t e way t o approach t h e s u b j e c t o f t h i s p a p e r . The p r o p e r s p e c i f i c a t i o n o f an e c o n o m e t r i c model w h i c h i s t o be used f o r t h e purpose o f a n a l y z i n g an h i s t o r i c a l p r o b l e m , r e q u i r e s t h a t i t s u n d e r l y i n g b e h a v i o r a l i m p l i c a t i o n s be c o n s i s t e n t w i t h h i s t o r i c a l f a c t . T h i s c o n s i d e r a t i o n t o o k me t o t h e a v a i l a b l e l i t e r a t u r e on t h e c o u r s e o f B r i t i s h house-b u i l d i n g i n t h e n i n e t e e n t h c e n t u r y . A s u r v e y o f what p r o v e d t o be a n o t t o o e x t e n s i v e body o f knowledge, b u t w h i c h i n -c l u d e d t h e few d i s a g g r e g a t e d s t u d i e s o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n t h a t have o n l y r e c e n t l y appeared, has con-v i n c e d me t h a t f a r more i n t e n s i v e s t u d y i s r e q u i r e d a t t h e r e g i o n a l and l o c a l l e v e l t h a n has h i t h e r t o been u n d e r t a k e n . 1 2 The h o u s i n g market by i t s v e r y n a t u r e , i s a l o c a l m a r ket, and t h e mechanism o f t h e b u i l d i n g c y c l e can be p r o p e r l y e x p l a i n e d o n l y i n t h e c o n t e x t o f a l o c a l o r r e -g i o n a l economy. T h i s i s t h e c e n t r a l i s s u e o f t h e p r e s e n t paper. There a r e t i m e s when n a t i o n a l o r i n t e r n a t i o n a l f a c t o r s such as f o o d p r i c e s , i n t e r e s t r a t e s , war, e t c . , have a f a v o r a b l e o r u n f a v o r a b l e i n f l u e n c e on h o u s e - b u i l d i n g t h r o u g h o u t t h e c o u n t r y . Y e t , i n t h e f i n a l a n a l y s i s " t h e r e can be no n a t i o n a l b u i l d i n g boom w i t h o u t t h e r e b e i n g a t l e a s t one l o c a l boom, and t h e j u s t i f i c a t i o n f o r a l o c a l boom must l i e i n l o c a l need.""'' H e r e i n l i e s t h e a p p a r e n t l y i n s u r m o u n t a b l e d i f f i c u l t y f a c i n g t h e e c o n o m e t r i c i a n . A t t e m p t s t o r e l a t e t h e a g g r e g a t e l e v e l o f b u i l d i n g a c t i v i t y t o n a t i o n a l i n d i c e s o f income, r e n t , p o p u l a t i o n and b u i l d i n g c o s t s may g i v e a good f i t , b u t i f t h e r e a l b e h a v i o r a l r e l a t i o n s h i p s a r e i n c o n s i s t e n t w i t h t h e l e v e l o f a g g r e g a t i o n , t h e n o ur p e r c e p t i o n o f t h e o p e r a t i v e mechanisms g i v i n g r i s e t o l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n may be s e r i o u s l y m i s g u i d e d . A s i m p l e example w i l l i l l u s t r a t e J . P a r r y L e w i s , " B u i l d i n g C y c l e s : A R e g i o n a l Model and i t s N a t i o n a l S e t t i n g " , Economic Journal, V o l . LXX (September, 1960), p. 533. 3 2 t h e p roblem. C o n s i d e r a c o u n t r y c o n s i s t i n g o f two c l e a r l y d e f i n e d r e g i o n s , where i n t e r n a l m i g r a t i o n i s such t h a t one r e g i o n i s e x p e r i e n c i n g a n e t i n f l o w o f p o p u l a t i o n ; t o t a l n a t i o n a l p o p u l a t i o n r e m a i n i n g unchanged. Assume f u r t h e r t h a t t h e e x p a n d i n g r e g i o n undergoes an upswing i n house-b u i l d i n g a c t i v i t y i n r e s p o n s e t o t h e g r o w i n g demand f o r h o u s i n g accommodation, w h i l e t h e b u r den o f empty houses i n t h e d e c l i n i n g r e g i o n causes a l o c a l d e p r e s s i o n i n t h e b u i l d -i n g i n d u s t r y t h e r e . An a g g r e g a t i v e model must now e x p l a i n t h e n a t i o n a l c o u r s e o f h o u s e - b u i l d i n g a c t i v i t y i n terms o f s t a t i o n a r y t o t a l p o p u l a t i o n d a t a and perhaps o t h e r v a r i a b l e s . I t m i g h t v e r y w e l l e x p l a i n t h e i n f l u e n c e o f t h e s e o t h e r v a r i a b l e s , b u t i t s f a i l u r e t o a c c o u n t f o r t h e i n t e r n a l r e d i s -t r i b u t i o n o f p o p u l a t i o n w i l l i n e v i t a b l y f a l s i f y our i n t e r -p r e t a t i o n o f what i s h a p p e n i n g . A n o t h e r problem c o n c e r n s t h e a v a i l a b i l i t y o f d a t a a t t h e l o c a l l e v e l . I f we had i n f o r m a t i o n on p o p u l a t i o n s t r u c t u r e , v a c a n c i e s , i n t e r e s t r a t e s , b u i l d i n g c o s t s , r e n t s and incomes f o r each r e g i o n , we c o u l d e s t i m a t e r e g i o n a l models. T h i s would a l l o w us t o a c c o u n t f o r d i f f e r e n t r e g i o n a l b e h a v i o r a l assump-t i o n s , and s u b j e c t them t o r i g o r o u s t e s t i n g . The d i f f i c u l t y h e r e i s t h a t a l m o s t a l l o f our d a t a i s i n t h e form o f a g g r e -g a t e n a t i o n a l s e r i e s . There i s v e r y l i t t l e i n f o r m a t i o n l e t T h i s example i s drawn from L e w i s , pp. 532-3. 4 a l o n e c omplete s t a t i s t i c a l s e r i e s on l o c a l r e n t l e v e l s , v a c a n c i e s , incomes o r p o p u l a t i o n . We a r e t h u s f a c e d w i t h f u r t h e r g r i m p r o s p e c t s f o r t h e c o n s t r u c t i o n o f r e g i o n a l o r l o c a l e c o n o m e t r i c models o f h o u s e - b u i l d i n g a c t i v i t y . The p u rpose o f t h e p r e s e n t paper i s t o s t u d y i n g r e a t e r d e t a i l t h e r e g i o n a l h o u s e - b u i l d i n g e x p e r i e n c e o f South Wales and S o u t h - e a s t L a n c a s h i r e and t h e i r r e l a t i o n s h i p t o t h e na-t i o n a l p a t t e r n . I n C h a p t e r I I we s u r v e y t h e c o u r s e o f house-b u i l d i n g i n G r e a t B r i t a i n from 1860 t o 1914. S p e c i a l a t t e n t i o n i s d e v o t e d t o t h e t i m e - s h a p e o f b u i l d i n g a c t i v i t y and i n p a r -t i c u l a r t h e e v i d e n c e o f l o n g swings i n r e s i d e n t i a l c o n s t r u c -t i o n . C h a p t e r I I I d i s c u s s e s a t some l e n g t h t h e causes o f l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n . C h a p t e r IV i s c o n c e r n e d w i t h t h e p r o blem o f a g g r e g a t i o n and t h e n e c e s s i t y o f a n a l y z i n g b u i l d i n g c y c l e s w i t h i n t h e i r n a t u r a l i . e . l o c a l o r r e g i o n a l , s e t t i n g . A g e n e r a l r e g i o n a l model o f h o u s e - b u i l d i n g i s o u t l i n e d and i t s i m p l i c a t i o n s f o r t h e n a t i o n a l p a t t e r n d i s c u s s e d . The r e g i o n a l c o u r s e o f h o u s e - b u i l d i n g i n South Wales i s t h e s u b j e c t o f C h a p t e r V. Our emphasis i s on d e f i n i n g t h e r e l a t i o n s h i p s between h o u s e - b u i l d i n g and t h e economic and de-mographic development o f t h e r e g i o n a l economy. We a l s o d i s c u s s 5 the long swing and l o c a l v a r i a t i o n s i n b u i l d i n g patterns within the region. Chapter VI i s a s i m i l a r study of house-building i n South-east Lancashire. Again we stress the course of re-gional development and i t s impact on r e s i d e n t i a l construction. A concluding statement w i l l be found i n Chapter VII. CHAPTER I I FLUCTUATIONS IN BUILDING ACTIVITY: EVIDENCE OF LONG SWINGS IN RESIDENTIAL CONSTRUCTION A MEASURE OF BUILDING ACTIVITY An i n d e x o f f l u c t u a t i o n s i n p r i v a t e b u i l d i n g a c t i v i t y was r e q u i r e d as a b a s i s f o r t h e p r e s e n t s t u d y . A w e a l t h o f i n f o r m a t i o n on r e s i d e n t i a l b u i l d i n g was o r i g i n a l l y c o l -l e c t e d by m u n i c i p a l a u t h o r i t i e s , p r i m a r i l y t o s a t i s f y t h e r e q u i r e m e n t s o f l o c a l b u i l d i n g b y - l a w s . And a l t h o u g h much o f t h e h i s t o r i c a l r e c o r d has f a i l e d t o s u r v i v e t h e t e s t o f t i m e and b u r e a u c r a t i c p r o c e d u r e , a good many l o c a l r e g i s t e r s r e m a i n i n t a c t and i t was t o t h e s e t h a t B e r n a r d Weber^" and J . 2 P a r r y L e w i s t u r n e d t o c o n s t r u c t t h e i r i n d i c e s o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n . These r e c o r d s p r o v i d e t h e most 3 s a t i s f a c t o r y d a t a upon w h i c h t o base such an i n d e x . B e r n a r d Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n and Long C y c l e s i n H o u s e - B u i l d i n g i n G r e a t B r i t a i n , 1838-1950", Scottish Journal of P o l i t i c a l Economy3 V o l . I I , (June, 1 9 5 5 ) , pp. 104-132. 2 J . P a r r y L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g i n t h e Man-c h e s t e r C o n u r b a t i o n , South Wales and G r e a t B r i t a i n , 1851-1913", Scottish Journal of P o l i t i c a l Economy, V o l . V I I I , ( F e b r u a r y , 1961), pp. 148-156. 3 John R. Riggleman, " B u i l d i n g C y c l e s i n t h e U n i t e d S t a t e s , 1875-1932", Journal of the American S t a t i s t i c a l Association, V o l . X X V I I I . , (June, 1933), pp. 131-153. We might c o n c l u d e w i t h Mr. Riggleman t h a t " i n s p i t e o f t h e ... l i m i t a t i o n s , how-e v e r , i t i s q u i t e p r o b a b l e t h a t few i n d u s t r i e s have a b e t t e r i n d e x o f a c t i v i t y o v e r a l o n g p e r i o d o f t i m e t h a n t h e b u i l d i n g i n d u s t r y has i n b u i l d i n g p e r m i t s . " B u i l d i n g p e r m i t s i n t h e U.S. a r e , o f c o u r s e , t h e c o u n t e r p a r t o f approved b u i l d i n g p l a n s and e r e c t i o n s i n G r e a t B r i t a i n . 6 7 G e n e r a l l y , b e f o r e a b u i l d i n g c o u l d be c o n s t r u c t e d , i t was n e c e s s a r y f o r t h e b u i l d e r t o submit b u i l d i n g p l a n s t o t h e C i t y S u r v e y o r o r E n g i n e e r f o r a p p r o v a l . The l o c a l o f f i c i a l approved t h e p l a n s i f t h e y conformed t o t h e r e -q u i r e m e n t s o f t h e b u i l d i n g b y - l a w s . Records were k e p t n o t o n l y on approved p l a n s , b u t i n some c a s e s on houses a c t u a l -l y e r e c t e d . These r e c o r d s a r e , however, s u b j e c t t o many l i m i t a t i o n s . F o r example, as urban b o u n d a r i e s changed b u i l d i n g s e r i e s a p p l i e d p r o g r e s s i v e l y t o l a r g e r and l a r g e r a r e a s . A l t h o u g h t h i s r a i s e s t h e i s s u e o f d i s c o n t i n u i t i e s i n t h e s e r i e s , Weber c l a i m s t h a t " i n s p e c t i o n o f t h e b u i l d i n g s e r i e s i n y e a r s i n w h i c h some o f t h e l a r g e r e x t e n s i o n s o c c u r r e d i n d i c a t e s , 4 moreover, no o b v i o u s d i s c o n t i n u i t i e s . " A n o t h e r problem c o n c e r n s t h e d e f i n i t i o n o f a "house". T h i s p r o b a b l y n o t o n l y d i f f e r e d from r e g i o n t o r e g i o n , b u t a l s o was s u b j e c t t o change o v e r t h e h a l f c e n t u r y w i t h w h i c h we a r e c o n c e r n e d . The g e n e r a l t e n d e n c y , however, t h a t we f i n d b e f o r e 1914 was t o f o l l o w t h e Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n " , p. 108. Weber a l s o n o t e s t h a t i n a s t u d y o f o v e r f i f t y boundary changes i n more t h a n a dozen U.S. c i t i e s , C D . Long f a i l e d t o f i n d e v i d e n c e t h a t such changes s e r i o u s l y a f f e c t e d t h e u n i f o r m i t y o f b u i l d i n g p e r m i t d a t a . C D . Long, Building Cycles and the Theory of Investment, (1940), p. 97. 8 d e f i n i t i o n used by the Census of Population. Other data problems r e f e r s p e c i f i c a l l y to the nature of the b u i l d i n g industry. An approved plan places the b u i l d e r under no o b l i g a t i o n to complete the b u i l d i n g for which the plan was approved. Work may never take place under some approved plans, due to d i f f i c u l t i e s such as those that often occur i n a period of depression. Also, i f b u i l d -ing by-laws are expected to change-to become more r i g i d -then builders may have a large number of plans approved hoping to use them l a t e r to construct buildings under the older l i b e r a l regulations. There i s also a time-lag between the approval of plans and the time when construction begins on the actual house. Thus, there are a number of reasons why b u i l d i n g plan s t a t i s t i c s overstate the amount of actual b u i l d i n g . In constructing the b u i l d i n g index presented i n Figure 1, Weber adjusted for many of the problems mentioned above i n the following way: " In order to render comparable the data r e l a t i n g to houses a c t u a l l y erected and the data of plans i t has been assumed that i t took s i x months to b u i l d a house and that plans approved i n a given year were implemented i n the year ending six months l a t e r . It was further assumed that 10 per cent of the annual b u i l d i n g plans f a i l e d to be executed, t h i s per-centage being an estimate formed from inspection of the s t a t i s t i c s of plans 9 and c o m p l e t e d houses f o r a few towns f o r w h i c h b o t h a r e a v a i l a b l e o v e r a p e r i o d o f y e a r s . F i n a l l y , a l l s e r i e s g i v e n i n f i n a n c i a l y e a r s were c o n v e r t e d t o c a l e n d a r y e a r s " . * Weber c o m p i l e d s e r i e s o f s t a t i s t i c s f o r 34 towns. Twenty-s i x o f t h e s e r e f e r t o "houses e r e c t e d " w h i l e t h e r e m a i n i n g 18 r e f e r t o t h e number o f houses on approved b u i l d i n g p l a n s . These were t h e n used t o c o n s t r u c t an i n d e x o f h o u s e - b u i l d i n g a c t i v i t y i n G r e a t B r i t a i n from 1856 t o 19 50. T h i s i n d e x , f o r t h e y e a r s 1860 t o 1914, i s p r e s e n t e d g r a p h i c a l l y as t h e b u i l d -i n g c u r v e (A) i n F i g u r e 1. The a c t u a l number o f houses e r e c t e d i n G r e a t B r i t a i n was t h e n e s t i m a t e d on t h e b a s i s o f t h i s i n d e x . The i n t e r e s t e d r e a d e r w i l l f i n d a b r i e f summary o f t h e methods employed by Weber i n c o n s t r u c t i n g h i s i n d e x i n Appendix I o f t h e p r e s e n t paper. One f u r t h e r l i m i t a t i o n o f t h e s e s t a t i s t i c s s h o u l d be men-t i o n e d , a l t h o u g h i t i s q u i t e o b v i o u s . The i n d e x i s based on urban a r e a s and f a i l s t o t a k e i n t o a c c o u n t b u i l d i n g on farms and i n s m a l l r u r a l v i l l a g e s . Weber, however, d e v o t e s a s e c -t i o n o f h i s p a p e r ^ t o t h e c o u r s e o f r u r a l h o u s e - b u i l d i n g . He argues t h a t by a p p l y i n g a s l i g h t c o r r e c t i o n f a c t o r t o t h e i n d e x 5Ibid ,p. 109 6 Ibid,pp. 119 -122. F i g u r e 1 10 NATIONAL INDICES OF BUILDING ACTIVITY GREAT BRITAIN 1860-1914 (A) Weber i n d e x o f h o u s e - b u i l d i n g i n t h i r t y - f o u r towns, 1860-1914. 1900-09=100. See T a b l e XV, Appendix I . (B) L e w i s Weighted i n d e x o f h o u s e - b u i l d i n g a c t i -v i t y i n G r e a t B r i t a i n , 1860-1914. 1901-11=100. See T a b l e XV, Appendix I . (C) C a i r n c r o s s i n d e x o f t h e volume o f r e s i d e n t i a l b u i l d i n g i n G r e a t B r i t a i n , 1870-1914. 19 0 7=100. See T a b l e XV, Appendix I . (D) I n h a b i t e d house-duty s t a t i s t i c s ; a n n u a l i n -c r e a s e i n t h e number o f p r e m i s e s ( i n 000's) a s s e s s e d and n o t a s s e s s e d t o d u t y i n G r e a t B r i t a i n , 1875-1914. See T a b l e XV, Appendix I . (E) Net i n c r e a s e i n h o u s i n g s t o c k as r e p o r t e d i n t h e d e c e n n i a l census o f p o p u l a t i o n , E n g l a n d and Wales, 1861-1911. 1901-11=100. See T a b l e X V I , Appendix I . 50 1860 1870 1880 1890 1900 1910 12 i n t h e p e r i o d 1891-1913, i t can be made b r o a d l y r e p r e s e n t -a t i v e o f t h e c o u r s e o f t o t a l n a t i o n a l h o u s e - b u i l d i n g a c t i -v i t y . The e x i s t e n c e o f d a t a was t h e p r i m a r y f a c t o r determ-i n i n g t h e r e g i o n a l r e p r e s e n t a t i o n o f t h e b u i l d i n g s e r i e s . However, "most o f t h e major g e o g r a p h i c a l a r e a s , such as Lan-c a s t e r , Y o r k s h i r e , S c o t l a n d , Wales, t h e M i d l a n d s , and t h e South a r e i n some way r e p r e s e n t e d , a l t h o u g h some a r e under-7 r e p r e s e n t e d w h i l e o t h e r s a r e perhaps o v e r - w e i g h t e d . " I have i n c l u d e d i n Appendix I a l i s t o f t h e towns whose house-b u i l d i n g s t a t i s t i c s were used i n c o n s t r u c t i n g Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n . The b e s t a l t e r n a t i v e measures o f b u i l d i n g f l u c t u a t i o n s i n G r e a t B r i t a i n i n t h e l a t e V i c t o r i a n p e r i o d have a l s o been p r e s e n t e d i n F i g u r e 1. Curve (B) i s a w e i g h t e d average o f f o u r r e g i o n a l i n d i c e s o f b u i l d i n g a c t i v i t y c o n s t r u c t e d by g J . P a r r y L e w i s . The r e g i o n a l i n d i c e s a r e based n o t o n l y on t h e s t a t i s t i c s c o m p i l e d by Weber, b u t a l s o on d a t a f o r towns n o t i n c l u d e s i n Weber's s t u d y t h a t have been c o l l e c t e d s i n c e 19 55. These were t h e n combined u s i n g w e i g h t s r e p r e s e n t i n g t h e p r o p o r t i o n o f t h e n e t n a t i o n a l i n c r e a s e i n t h e h o u s i n g 1 Ibid, p. 110. g L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g " , pp. 148-149. From a l l t h e a v a i l a b l e d a t a , the f o l l o w i n g " r e g i o n a l " i n d i c e s were c o n s t r u c t e d ; t h e M a n c h e s t e r C o n u r b a t i o n i n d e x , t h e South Wales i n d e x , t h e London i n d e x , and an a g g r e g a t e i n d e x o f " a l l o t h e r towns". 13 s t o c k from 1901-1911 c o n t r i b u t e d by each i n d i v i d u a l r e g i o n . The w e i g h t s c a l c u l a t e d by L e w i s were: London, 16.3; South Wales, 5.5; Man c h e s t e r C o n u r b a t i o n , 8.6; and "Other Towns", 69.6. A c o m p a r i s o n o f c u r v e s (A) and (B) i n F i g u r e 1 i n d i -c a t e s t h a t t h e i n c o r p o r a t i o n o f new b u i l d i n g d a t a and t h e use o f r e a s o n a b l e a l t e r n a t i v e w e i g h t i n g t e c h n i q u e s does n o t a p p r e c i a b l y a l t e r t h e time-sh a p e o f r e s i d e n t i a l c o n s t r u c t i o n o r i g i n a l l y e s t a b l i s h e d by Weber's i n d e x . Curve (C) i s an i n d e x o f t h e volume o f r e s i d e n t i a l b u i l d -i n g c o m p i l e d by A.K. C a i r n c r o s s f o r h i s s t u d y o f home and g f o r e i g n i n v e s t m e n t i n G r e a t B r i t a i n from 1870 t o 1913. F o r t h e y e a r s 1870 t o 1900 he r e l i e d h e a v i l y on t h e I n h a b i t e d House Duty s t a t i s t i c s . U s i n g bench mark e s t i m a t e s o f t h e number o f houses b u i l t i n E n g l a n d and Wales i n 1871 and 1891, t h e n e t i n c r e a s e i n h o u s i n g s t o c k between r e v a l u a t i o n y e a r s as i n d i c a t e d by t h e I n h a b i t e d House Duty s t a t i s t i c s f o r E n g l a n d , Wales, and S c o t l a n d was "smoothed ... i n o r d e r t o make t h e changes from y e a r t o y e a r conform t o t h e o t h e r e v i d e n c e . " " ^ F o r t h e y e a r s 1901 t o 1914, a base s e r i e s o f 9 A.K. C a i r n c r o s s , Home and Foreign Investment 3 1870-1913, (Cambridge: U n i v e r s i t y P r e s s , 1953), pp. 152-158. ^Ibid3 p. 155. 14 houses e r e c t e d was c o n s t r u c t e d from d a t a on G r e a t e r London and t h e f o r t y l a r g e s t m u n i c i p a l a r e a s i n E n g l a n d and Wales. To o b t a i n an e s t i m a t e o f a l l houses b u i l t i n u r b an a r e a s o u t s i d e London, t h e d a t a on m u n i c i p a l a r e a s was m u l t i p l i e d by a f a c t o r o f 21/2. C a i r n c r o s s t h e n added a c o n s t a n t 20,000 d w e l l i n g s a y e a r f o r r u r a l a r e a s and i n c r e a s e d t h e t o t a l s e r i e s by o n e - e i g h t t o a c c o u n t f o r S c o t l a n d . The f i n a l s e r i e s o f new houses b u i l t i n G r e a t B r i t a i n from 1870 t o 1914 was c o n v e r t e d t o t h e i n d e x (1907=100) graphed i n F i g u r e 1. A g a i n , t h e b a s i c shape o f the b u i l d i n g c u r v e w i t h i t s l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n i s c o n f i r m e d . I n 1851 t h e window t a x was r e p e a l e d i n G r e a t B r i t a i n and r e p l a c e d by t h e I n h a b i t e d House Duty l e v i e d on d w e l l i n g houses whose a n n u a l " r e n t a l " v a l u e was twenty pounds s t e r -l i n g o r more. From 1875 t o 1914 t h e I n h a b i t e d House Duty r e c o r d s a l s o i n c l u d e d a t a on houses n o t c h a r g e d w i t h d u t y as w e l l as "messuages and tenements n o t used as dwellings."''""'' F o r t h e p r e s e n t s t u d y I have c o n s t r u c t e d a s e r i e s r e p r e s e n t i n g t h e t o t a l number o f houses c h a r g e d and n o t c h a r g e d t o d u t y from 1875 t o 1914. By t a k i n g f i r s t d i f f e r e n c e s o f t h e e s t i m -a t e s i n t h i s s e r i e s , a new s e r i e s m e a s u r i n g th e a n n u a l i n c r e a s e s J o s i a h Stamp, B r i t i s h Incomes and Property, (London: P.S. K i n g and Son, L t d . , 1927), p. 141. 15 i n t h e h o u s i n g s t o c k was d e r i v e d . T h i s i s p r e s e n t e d as Curve (D) i n F i g u r e 1. The I n h a b i t e d House Duty s t a t i s t i c s have been used i n numerous s t u d i e s o f b u i l d i n g f l u c t u a t i o n s y e t o f t e n i n a p p r o p r i a t e l y . I t i s i m p o r t a n t t o keep i n mind a number o f l i m i t a t i o n s w h i c h may s e r i o u s l y r e duce t h e i r u s e f u l n e s s . 12 13 B oth M i t c h e l l and Weber have drawn a t t e n t i o n t o t h e f a c t t h a t t h e f i g u r e s i n t h e IHD r e c o r d s a r e n e t q u a n t i t i e s and c o n s e q u e n t l y much new h o u s e - b u i l d i n g i s n o t a c c o u n t e d f o r because o f d e m o l i t i o n s . T h i s p a r t i c u l a r p r o b lem c o u l d be overcome i f we had adequate i n f o r m a t i o n on t h e a n n u a l r a t e o f d e m o l i t i o n o r c o u l d r e a s o n a b l y assume i t t o be a r e l a t i v e l y c o n s t a n t p e r c e n t a g e o f t h e h o u s i n g s t o c k . T h i s , however, i s p r e s e n t l y n o t p o s s i b l e . What l i t t l e e v i d e n c e t h e r e i s on d e m o l i t i o n s l e a d s one t o c o n c l u d e t h a t t h e y v a r i e d s i g n i f i c a n t l y o v e r t i m e and were n o t c l e a r l y r e l a t e d t o t h e l e v e l o f h o u s i n g s t o c k o r b u i l d i n g f l u c t u a t i o n s i n any s y s t e m a t i c way. A n o t h e r p r o b l e m t h a t a r i s e s from t h e IHD s t a t i s t i c s c o n c e r n s t h e i n f l u e n c e o f p e r i o d i c r e a s s e s s -ments. The r e a s s e s s m e n t y e a r s f o r London were 1876, 1881, B.R. M i t c h e l l , Abstract of B r i t i s h H i s t o r i c a l S t a t i s t i c s 3 (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1962), p. 233. 13 Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n " , p. 106. 16 1887, 1892, 1897, 1902, 1907 and 1912; f o r t h e r e s t o f E n g l a n d and Wales t h e y were 1876, 1879, 1882, 1885, 14 1888, 1893, 1898. I n S c o t l a n d t h e p r o c e s s o f r e a s s e s s -ment i n e f f e c t t o o k p l a c e each y e a r . I n c r e a s e s i n r e n t were a c c o u n t e d f o r o n l y i n r e a s s e s s m e n t y e a r s w h i l e r e -d u c t i o n s were a d j u s t e d f o r a n n u a l l y . T h i s d i s s i m i l a r t r e a t m e n t o f r e n t i n c r e a s e s and d e c r e a s e s c r e a t e d a down-ward b i a s i n f i g u r e s o f a n n u a l v a l u a t i o n f o r i n t e r - a s s e s s -ment y e a r s . F o r t h e s t a t i s t i c s on the number o f houses t h i s o n l y c a u sed a p r o b l e m i n so f a r as i t l e d t o a c o n t i -nuous s h i f t o f b u i l d i n g s from one c a t e g o r y t o a n o t h e r . These l i m i t a t i o n s r e n d e r t h e House Duty s t a t i s t i c s a r e l a t i v e l y p o o r measure o f a n n u a l changes i n h o u s e - b u i l d -i n g . However, we may agree w i t h Thomas t h a t " t h i s does no t n e c e s s a r i l y r u l e them o u t as an i n d i c a t i o n o f t h e t i m e -15 shape o f h o u s e - b u i l d i n g . " To t e s t t h e i r r e l i a b i l i t y i n t h i s r e s p e c t I have superimposed b u i l d i n g c u r v e (D) i n F i g u r e 1 on a c u r v e w h i c h r e p r e s e n t s Weber's e s t i m a t e s o f t h e number M i t c h e l l , B r i t i s h H i s t o r i c a l S t a t i s t i c s , p . 236. 15 B r i n l e y Thomas, "Demographic D e t e r m i n a n t s o f B r i t i s h and A m e r i c a n B u i l d i n g C y c l e s " , p aper p r e s e n t e d t o MSSB C o n f e r e n c e on B r i t i s h Economic H i s t o r y h e l d a t E l i o t House, H a r v a r d , Sept. 1-3, 19 70. F o r t h c o m i n g i n Studies in a Mature Economy: B r i t a i n after 1840, (London, Methuan, 1971). 17 ( i n thousands) o f houses e r e c t e d i n G r e a t B r i t a i n . The e f f e c t o f t h e p e r i o d i c r e a s s e s s m e n t s i s s t r i k i n g . Y e t t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n r e v e a l e d by Weber's e s t i m a t e s a r e c l e a r l y r e f l e c t e d i n t h e g e n e r a l t r e n d o f t h e I n h a b i t e d House Duty s t a t i s t i c s . The o n l y r e m a i n i n g s o u r c e o f i n f o r m a t i o n on b u i l d i n g a c t i v i t y i n G r e a t B r i t a i n i s t h e Census o f P o p u l a t i o n . Here we f i n d d a t a on t h e number o f i n h a b i t e d and u n i n h a b i t e d houses on Census day as w e l l as t h e number o f houses t h e n c u r r e n t l y under c o n s t r u c t i o n . The Census was t a k e n e v e r y t e n y e a r s b e g i n n i n g i n 1801. I t i s t h u s p o s s i b l e t o c a l -c u l a t e t h e n e t i n c r e a s e s i n t h e s t o c k o f houses f o r each d e c e n n i a l p e r i o d from t h e d a t a i n t h e R e t u r n s . T h i s has been done (see T a b l e XVI, Appendix I) and t h e n e t i n t e r -census i n c r e a s e s were t h e n c o n v e r t e d i n t o t h e i n d e x (19 01-11=100) p r e s e n t e d as Curve (E) i n F i g u r e 1. The u s e f u l n e s s o f i n f o r m a t i o n on b u i l d i n g a c t i v i t y e x t r a c t e d from t h e Census o f P o p u l a t i o n i s l i m i t e d f o r a number o f r e a s o n s . Changes i n t h e d e f i n i t i o n o f a house may g i v e r i s e t o d i s c o n t i n u i t i e s i n t h e d a t a t h a t a r e u n d i s c e r n i b l e . I t i s a l s o p r o b a b l e t h a t t h e e n u m e r a t i o n o f u n i n h a b i t e d houses was n o t c o n s i s t e n t from one census t o t h e n e x t . Of c o u r s e t h e major problem c o n c e r n s t h e absence o f d a t a f o r t h e i n t e r c e n s u s y e a r s w h i c h 18 p r e c l u d e s t h e i d e n t i f i c a t i o n o f major peaks and t r o u g h s i n r e s i d e n t i a l c o n s t r u c t i o n , l e t a l o n e m i nor movements. I n s p i t e o f t h e s e l i m i t a t i o n s , t h e s t a t i s t i c s on h o u s e - b u i l d i n g p r o v i d e d by t h e Census o f P o p u l a t i o n g i v e s a r e a s o n a b l e , i f however, rough i n d i c a t i o n o f t h e c o u r s e o f b u i l d i n g a c t i -v i t y o v e r v e r y l o n g p e r i o d s o f t i m e . The number o f houses i n t h e c o u r s e o f c o n s t r u c t i o n on Census day a r e a l s o p r e -s e n t e d i n T a b l e X V I , Appendix I . They p r o v i d e a f u r t h e r check on Weber's d a t a i n Census y e a r s and have been p l o t t e d i n F i g u r e 15 (Appendix I ) . The a v a i l a b l e d a t a t o w h i c h we p r e s e n t l y have a c c e s s appear t o c o n f i r m t h e time-shape o f h o u s e - b u i l d i n g m a n i f e s t e d i n Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n . The s t u d y by L e w i s shows t h a t t h e i n c o r p o r a t i o n o f new d a t a on towns t h a t had p r e v i o u s l y n o t been s t u d i e d and t h e use o f a l t e r n -a t i v e w e i g h t i n g t e c h n i q u e s does n o t s i g n i f i c a n t l y a l t e r t h e shape o f t h e b u i l d i n g i n d e x . We m i g h t c o n c l u d e w i t h L e w i s t h a t "the o b j e c t o f c o l l e c t i n g more d a t a must now be t h a t o f f a c i l i t a t i n g r e g i o n a l a n a l y s i s r a t h e r t h a n o f i m p r o v i n g t h e n a t i o n a l s e r i e s - w h i c h i s s t i l l r e m a r k a b l y c l o s e t o t h e one p r o d u c e d by C a i r n c r o s s ' s c r u d e c o m p u t a t i o n s and en-16 v i a b l e i n t u i t i o n . " Thus, i n t h e c o u r s e o f t h e p r e s e n t " ^ J . P a r r y L e w i s , Building Cycles and B r i t a i n s Growth, (London: M a c M i l l a n and Company, L t d . , 1965), p. 307. 19 s t u d y when we r e f e r t o a n a t i o n a l b u i l d i n g i n d e x , we w i l l s p e c i f i c a l l y have i n mind the Weber i n d e x o f r e -s i d e n t i a l c o n s t r u c t i o n . THE TIME-PATH OF RESIDENTIAL CONSTRUCTION IN GREAT BRITAIN,  1860-1914. The o u t s t a n d i n g c h a r a c t e r i s t i c o f Weber's i n d e x o f b u i l d i n g a c t i v i t y i s t h e p r e s e n c e o f major f l u c t u a t i o n s o r what have v a r i o u s l y been r e f e r r e d t o as "major c y c l e s " , "long s w i n g s " o r "long"waves" l a s t i n g f o r a p e r i o d o f about two decades. I n f a c t , each o f t h e i n d i c e s p r e s e n t e d i n F i g u r e 1 e x h i b i t s t h e s e phenomena t o a g r e a t e r o r l e s s e r e x t e n t w i t h o n l y s l i g h t v a r i a n c e , i f a t a l l , i n t i m i n g . F o r t h e purpose o f t h e p r e s e n t s t u d y , we w i l l be p r i m a r i l y con-c e r n e d w i t h t h e c o u r s e o f h o u s e - b u i l d i n g as m a n i f e s t e d i n Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n . The t r e n d i n b u i l d i n g a c t i v i t y was g e n e r a l l y r i s i n g from 1860-61 t o t h e peak o f t h e f i r s t l o n g c y c l e i n 1876. There a r e two minor f l u c t u a t i o n s i n t h i s p e r i o d , t h e f i r s t and most i m p o r t a n t o f w h i c h r i s e s t o a peak i n 1863. New h o u s e - b u i l d i n g d e c l i n e s f o r t h e n e x t two y e a r s b u t from t h e t r o u g h i n 186 5-66 t h e i n d e x r i s e s s t e a d i l y t o t h e peak o f t h e second m i n o r f l u c t u -a t i o n i n 1872. The e n s u i n g d e c l i n e l a s t s o n l y a y e a r and 20 i s f o l l o w e d by a s h a r p r i s e i n r e s i d e n t i a l c o n s t r u c t i o n c u l m i n a t i n g i n t h e m ajor peak o f 1876. H o u s e - b u i l d i n g f a l l s o f f d r a m a t i c a l l y from 1877 t o 1879. T h i s s t e e p d e c l i n e i s f o l l o w e d by s i x t e e n y e a r s o f d e p r e s s e d b u i l d i n g a c t i v i t y . There a r e , however, minor f l u c t u a t i o n s w i t h t h e i n d e x e x h i b i t i n g a s l i g h t upward t r e n d a f t e r 1886. The i n d u s t r y b e g i n s t o r e c o v e r i n t h e f i n a l decade o f t h e n i n e t e e n t h c e n t u r y . Weber's i n d e x t u r n s up s h a r p l y i n 189 5, r i s i n g i n e x o r a b l y t o the d o u b l e peak i n 189 8 and 190 3 o f t h e second l o n g c y c l e . The magnitude o f t h e boom i n r e s i d e n t i a l c o n s t r u c t i o n t h a t t a k e s p l a c e a t t h e t u r n o f t h e c e n t u r y was u n p r e c e d e n t e d i n B r i t i s h b u i l d i n g h i s t o r y , and so a l s o was t h e downswing t h a t f o l l o w e d . B u i l d i n g a c t i v i t y d e c l i n e d p e r s i s t e n t l y f o r o v e r a decade. There were minor u p t u r n s i n 1906 and 1913 b u t by t h e b e g i n -n i n g o f t h e F i r s t W o rld War, b u i l d i n g had sunk t o a l e v e l l o w e r t h a n a t any t i m e s i n c e t h e e a r l y 1860's. The d i s r u p -t i o n o f t h e d o m e s t i c economy d u r i n g t h e war y e a r s and t h e e x i g e n c i e s o f t h e m i l i t a r y e f f o r t a g a i n s t t h e D r e i b u n d r e -i n f o r c e d t h e downward t r e n d i n r e s i d e n t i a l c o n s t r u c t i o n and by 1918 h o u s e - b u i l d i n g had been r e d u c e d t o a l m o s t z e r o . The t u r n i n g p o i n t s o f the m ajor f l u c t u a t i o n s i n Weber's 21 i n d e x o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n a r e g i v e n i n T a b l e I . T u r n i n g p o i n t s f o r t h e i n d i c e s c o n s t r u c t e d by L e w i s and C a i r n c r o s s as w e l l as t h e s e r i e s d e r i v e d from th e I n h a b i t e d House Duty s t a t i s t i c s a r e a l s o g i v e n f o r t h e purpose o f c o m p a r i s o n . The b a s i c o u t l i n e o f t h e l o n g swings i n b u i l d i n g a c t i v i t y i s q u i t e s i m i l a r f o r a l l f o u r i n d i c e s . There a r e , however, some minor d i f f e r e n c e s i n t i m i n g and am-p l i t u d e . Weber and L e w i s b o t h l o c a t e t h e peak of t h e f i r s t l o n g c y c l e i n 1876, b u t t h e i n t e n s i t y o f t h e b u i l d i n g boom d e s c r i b e d by L e w i s i n d e x i s much g r e a t e r t h a n t h a t o u t l i n e d by Weber. The b e h a v i o r o f t h e i n d u s t r y d u r i n g t h e b u i l d i n g d e p r e s s i o n o f t h e 1880's and e a r l y 1890's t r a c e d o u t by t h e s e i n d i c e s i s a l s o s l i g h t l y d i f f e r e n t . W h i l e Weber's i n d e x d e p i c t s b u i l d i n g a c t i v i t y as r e l a t i -v e l y c o n s t a n t o v e r t h i s p e r i o d w i t h o n l y m i n or f l u c t u a t i o n s and a low p o i n t r e a c h e d i n 1886, t h e i n d e x c o n s t r u c t e d by L e w i s e x h i b i t s a g e n t l y d e c l i n i n g t r e n d t o t h e major t r o u g h y e a r 1890 w i t h r a t h e r more e x a g g e r a t e d m inor f l u c t u a t i o n s about t h i s t r e n d . B o t h i n d i c e s l o c a t e t h e d o u b l e peak o f t h e second l o n g c y c l e i n 189 8 and 1903. From 1890 t o 189 8 t h e number o f new houses e r e c t e d r i s e s c o n s i s t e n t l y , TABLE I LONG CYCLES IN BUILDING ACTIVITY IN GREAT BRITAIN Phase o f M a j o r W e b e r L e w i s C a i r n c r o s s IHD C y c l e Turn from d e c l i n e t o r i s e R i s e Turn from r i s e t o d e c l i n e D e c l i n e Turn from d e c l i n e t o r i s e I I . R i s e T urn from r i s e t o d e c l i n e D e c l i n e 1860-61 1861-1876 1876 1877-1886 1886 1887-1898 1898-1903 1904-1914 1860 1861-1876 1876 1877-1890 1890 i 1891-1898 1898-1903 1904-1914 1877 1878-1885 1885 1886-1899 1899 1900-1914 1876 1877-1893 1893 1894-1899 1899-1905 1906-Source: See T a b l e XV, Appendix I . 23 b u t because 1890 i s a major t r o u g h i n L e w i s ' i n d e x , t h e r i s e i n b u i l d i n g a c t i v i t y from t h a t y e a r t o 1895 i s some-what more pronounced t h a n t h a t i n d i c a t e d by Weber's i n d e x . The r a p i d d e c l i n e i n new h o u s e - b u i l d i n g a f t e r 1903 i s c a p t u r e d i n b o t h i n d i c e s , a l t h o u g h t h e minor u p t u r n s i n 1906 and 1913, a p p a r e n t i n Weber's i n d e x do n o t show up i n L e w i s ' w e i g h t e d i n d e x . These d i f f e r e n c e s between the two i n d i c e s t h a t we have d e s c r i b e d a r e p r i m a r i l y a t t r i b u t -a b l e t o t h e d i f f e r e n t w e i g h t i n g t e c h n i q u e s employed i n t h e i r c o n s t r u c t i o n , as w e l l as t h e i n c o r p o r a t i o n o f new h o u s e - b u i l d i n g d a t a i n t o t h e i n d e x o f h o u s e - b u i l d i n g a c t i v i t y c a l c u l a t e d by L e w i s . The i n d e x c o n s t r u c t e d by C a i r n c r o s s i s i n b r o a d a g r e e -ment w i t h t h o s e o f Weber and L e w i s . He p l a c e s t h e peak o f t h e f i r s t l o n g c y c l e a y e a r l a t e r i n 1877 and t h a t o f t h e second i n 1899 w i t h a minor peak i n 1903. The g r a d u a l d e c l i n e t h a t began i n 1878 i s r e v e r s e d i n 1885 by a minor f l u c t u a t i o n t h a t peaks i n 1889. A t h r e e y e a r slump i s f o l l o w e d i n 189 3 by a s t e a d y r i s e t o t h e peak i n 1899 o f th e second l o n g wave i n r e s i d e n t i a l c o n s t r u c t i o n ( t h i s a l s o i s a y e a r l a t e r t h a n t h a t i n d i c a t e d by t h e i n d i c e s o f Weber and L e w i s ) . The downward t r e n d i n h o u s e - b u i l d i n g a f t e r 1903 d e s c r i b e d by C a i r n c r o s s ' i n d e x f o l l o w s c l o s e l y 24 t h a t o u t l i n e d by L e w i s f o r t h e same p e r i o d . I t s h o u l d a l s o be n o t e d t h a t a l t h o u g h t h e l o w e s t l e v e l o f b u i l d i n g a c t i v i t y d u r i n g t h e d e p r e s s i o n y e a r s o c c u r s i n 1885, t h e c h o i c e o f t h i s d a t e as opposed t o 189 2 as t h e major t r o u g h i s somewhat a r b i t r a r y . The i n d e x f a i l s , however, t o a c c o u n t f o r many o f t h e minor f l u c t u a t i o n s i n b u i l d i n g a c t i v i t y ; t h e r e a s o n f o r t h i s i s found i n t h e methods 17 employed i n c o n s t r u c t i n g t h e i n d e x . E a r l i e r we d i s c u s s e d t h e e f f e c t s o f p e r i o d i c r e v a l -u a t i o n s on t h e I n h a b i t e d House Duty s t a t i s t i c s and t h e consequent i m p o s s i b i l i t y o f u s i n g a s e r i e s c o n s t r u c t e d from t h i s d a t a (by t a k i n g f i r s t d i f f e r e n c e s o f t h e a n n u a l e s t i m a t e s , f o r example) as a measure o f a n n u a l changes. The l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n a r e c l e a r l y r e v e a l e d i n t h e House Duty s t a t i s t i c s , y e t t h e numerous l i m i t a t i o n s t o w h i c h t h e s e s t a t i s t i c s a r e s u b j e c t make i t i m p o s s i b l e t o a c c u r a t e l y i d e n t i f y major t u r n i n g p o i n t s . Thus, t h e e s t i m a t e s found i n T a b l e I s h o u l d o n l y be con-s i d e r e d v e r y rough a p p r o x i m a t i o n s t o t h e a c t u a l t u r n i n g p o i n t s . See page 13 above. 25 There can be l i t t l e doubt t h a t t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n a r e r e a l and f u n d a m e n t a l . But i n t h e f o l l o w i n g s e c t i o n we w i l l see t h a t t h e y were e s s e n -t i a l l y an u r b an phenomenon. THE COURSE OF RURAL HOUSE-BUILDING IN GREAT BRITAIN, 1860-1914. The p r e s e n t s t u d y i s c o n c e r n e d p r i m a r i l y w i t h r e s i -d e n t i a l c o n s t r u c t i o n i n urban a r e a s . However, i t i s i m p o r t a n t t o have some u n d e r s t a n d i n g o f t h e e x p e r i e n c e i n t h e c o u n t r y s i d e . I n t h i s s e c t i o n we r e l y h e a v i l y on t h e r e s e a r c h e s o f Weber and L e w i s i n an a t t e m p t t o show t h a t t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n d e s c r i b e d e a r -l i e r were e s s e n t i a l l y an urban and n o t a n a t i o n a l ( i n t h e sense o f b e i n g b o t h u rban and r u r a l ) phenomenon. Records s i m i l a r t o t h o s e a v a i l a b l e f o r u r b an a r e a s from w h i c h a n n u a l e s t i m a t e s o f h o u s e - b u i l d i n g can be d e r i v e d do n o t e x i s t f o r t h e c o u n t r y s i d e . The o n l y a v a i l a b l e e v i d -ence t h a t g i v e s some i n d i c a t i o n o f t h e c o u r s e o f r u r a l house-b u i l d i n g i s f o u n d i n t h e Census o f P o p u l a t i o n . E a r l i e r we d i s c u s s e d e s t i m a t e d changes i n t h e t o t a l h o u s i n g s t o c k de-r i v e d from d a t a i n t h e Census R e t u r n s f o r E n g l a n d and Wales, T h i s d a t a was c o l l e c t e d on t h e b a s i s o f R e g i s t r a t i o n D i s t r i c t s . 26 By c l a s s i f y i n g t h e s e D i s t r i c t s as b e i n g p r i m a r i l y u r b a n o r r u r a l , we may o b t a i n e s t i m a t e s o f t h e d e c e n n i a l changes i n t h e r u r a l h o u s i n g s t o c k . F o r t h i s p u r pose Weber d e f i n e d a r u r a l d i s t r i c t as one t h a t i n 1891 d i d not i n c l u d e a town w i t h a p o p u l a t i o n o f 20,000 o r more. A few words o f m e t h o d o l o g i c a l c a u t i o n a r e h e r e i n o r -d e r . The taxonomy employed by Weber and l a t e r by L e w i s do n o t g i v e an a c c u r a t e d i v i s i o n o f r u r a l and urban a r e a s . The r e s u l t i n g e s t i m a t e s o f t o t a l h o u s i n g s t o c k i n r u r a l d i s t r i c t s i n c l u d e houses l o c a t e d i n s m a l l towns, w h i l e t h e o p p o s i t e i s t r u e f o r urban d i s t r i c t s . A n o t h e r p r o b l e m i s a s s o c i a t e d w i t h changes i n t h e b o u n d a r i e s o f R e g i s t r a t i o n D i s t r i c t s . S m a l l changes were made f r e q u e n t l y b u t had a n e g l i g i b l e e f f e c t on t h e l o n g r u n t r e n d i n r u r a l house-18 b u i l d i n g . L a r g e changes were r e l a t i v e l y more i m p o r t a n t b u t f a r l e s s f r e q u e n t . F o r t u n a t e l y , t h e Census p r o v i d e s t h e n e c e s s a r y i n f o r m a t i o n so t h a t a d j u s t m e n t s c o u l d be made where n e c e s s a r y t o ens u r e c o m p a r a b i l i t y . One f i n a l p r o b lem t h a t we have e n c o u n t e r e d b e f o r e , c o n c e r n s t h e i m p o s s i b i l i t y Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n " , p. 121. 27 o f i d e n t i f y i n g major t u r n i n g p o i n t s . T h i s , however, as w i l l soon become e v i d e n t , i s o n l y o f minor i m p o r t a n c e i n a s t u d y o f r u r a l h o u s e - b u i l d i n g . The f o l l o w i n g t a b l e c o n t a i n s e s t i m a t e s o f t h e h o u s i n g s t o c k i n r u r a l and u r b an R e g i o n a l D i s t r i c t s o b t a i n e d from 19 t h e Census o f P o p u l a t i o n as w e l l as d e c e n n i a l changes. Columns ( 4 ) , (5) and (6) o f T a b l e I I a r e graphed i n F i g u r e 2. H o u s e - b u i l d i n g i n R u r a l D i s t r i c t s c l i m b e d g r a d u a l l y t o a h i g h p o i n t on o r n e a r 1871. T h i s i s f o l l o w e d by a g e n t l e d e c l i n e f o r a p p r o x i m a t e l y two decades. I n t h e 1890's and 1900's t h e t r e n d i n r u r a l h o u s e - b u i l d i n g r i s e s s i g n i f i c -a n t l y , y e t t h e most s a l i e n t c h a r a c t e r i s t i c o f t h e d a t a on r u r a l v a r i a t i o n s o v e r t h e e n t i r e h a l f c e n t u r y i s t h e marked absence o f l o n g swings s i m i l a r t o t h o s e e x p e r i e n c e d by t h e urban d i s t r i c t s . Thus t h e h i g h l y c o r r e l a t e d movement o f urban and n a t i o n a l changes i n h o u s i n g s t o c k a p p a r e n t i n F i g u r e 2 a r e e x p l a i n e d by: a) t h e absence o f any s i g n i f i c a n t t r e n d i n t h e r u r a l s e c t o r , p r i m a r i l y b e f o r e 1890, and Data from t h e Census of P o p u l a t i o n i n S c o t l a n d have been e x c l u d e d because an o f f i c i a l change i n t h e d e f i n i t i o n o f a house i n 1881 r e n d e r t h e subsequent e s t i m a t e s i n c o m p a r a b l e w i t h t h o s e o f e a r l i e r census'. TABLE I I CHANGES IN URBAN AND RURAL HOUSING STOCK  IN ENGLAND AND WALES 1 8 5 1 - 1 9 1 1 2 0 (000's) (1) (2) (3) (4) (5) . (6) Year T o t a l Housing Housing I n c r e a s e I n c r e a s e I n c r e a s e Housing S t o c k S t o c k i n i n i n Stock I n Urban I n R u r a l C o l . (1) C o l . (2) C o l . (3) Reg. D i s t . Reg. D i s t . 1851 3432 1784 1648 1861 3924 2175 1749 492 394 98 1871 4520 2658 1862 596 483 113 1881 5218 3264 1954 698 605 93 1891 5824 3788 2036 606 521 85 1901 6710 4517 2193 886 729 157 1911 7550 5116 2434 840 599 241 Source: J . P a r r y L e w i s , Building Cycles and B r i t a i n s Growth, (London: M a c m i l l a n and Company, L t d . ) 1965, p. 332. "The f i g u r e s d i v e r g e s l i g h t l y from t h e i n c r e a s e i n c o l s . (2) and (3) r e s p e c t i v e l y . C o l s . (2) and (3) r e l a t e t o e n t r i e s i n t h e a c t u a l Census y e a r s whereas c o l s . (5) and (6) were o b t a i n e d by t a k i n g i n c r e a s e s i n comparable a r e a s between one Census and a n o t h e r . " L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g " , p. 332. F i g u r e 2 NET INCREASE IN URBAN, RURAL AND TOTAL HOUSING STOCK IN CENSUS DECADES ENGLAND AND WALES 1861-1911 (000 1 S ) 800 700 600 500 400 (A) (B) 300 200 (C) 100 1860 1870 1880 1890 1900 1910 (A) Net i n c r e a s e i n t o t a l housing stock (B) Net i n c r e a s e i n housing s t o c k of urban r e g i s t r a t i o n d i s t r i c t s (C) Net i n c r e a s e i n housing stock o f r u r a l r e g i s t r a t i o n d i s t r i c t s 29 30 b) t h e e x t e n t t o w h i c h urban house-b u i l d i n g c o n s t i t u t e d a g r e a t e r p r o p o r t i o n o f t h e n a t i o n a l t o t a l . The d i v e r g e n c e o f t h e two c u r v e s a f t e r 1890 n e c e s s i t a t e s t h e a d j u s t m e n t mentioned e a r l i e r r e q u i r e d t o r e n d e r Weber's Index o f r e s i d e n t i a l c o n s t r u c t i o n r e p r e s e n t a t i v e o f t h e n a t i o n as a whole. CHAPTER I I I THE CAUSES OF LONG SWINGS IN HOUSE - BUILDING I n h i s p a t h b r e a k i n g s t u d y S e c u l a r Movements i n P r o d u c t i o n and Prices,"*" p u b l i s h e d i n 19 30, Simon K u z n e t s p r e s e n t e d e x t e n s i v e e v i d e n c e o f t h e e x i s t e n c e o f s e c u l a r f l u c t u a t i o n s o f 16 t o 22 y e a r s d u r a t i o n i n numerous s t a t i s t i c a l measures r e l a t i n g t o t h e volume o f economic a c t i v i t y . These l o n g swings appear t o be a p r o m i n e n t c h a r a c t e r i s t i c o f b u i l d i n g a c t i v i t y i n g e n e r a l and r e -2 s i d e n t x a l c o n s t r u c t i o n i n p a r t i c u l a r . S i r W i l l i a m Beverage was t h e f i r s t a u t h o r i t y t o s u g g e s t t h e e x i s t e n c e o f l o n g swings i n b u i l d i n g i n t h e U n i t e d Kingdom, b a s i n g h i s argument on a d e t a i l e d a n a l y s i s o f unemployment s t a t i s t i c s . 3 There soon f o l l o w e d t h e s t u d i e s o f Riggleman (1933), 4 5 Burns (1934) and Newman (1935) , a l l on t h e b u i l d i n g i n d u s t r y Simon K u z n e t s , Secular Movements in Production and Prices, (New Y o r k : Houghton M i f f l i n , 1930). 2 W.H. Beverage, Unemployment - A Problem of Industry, (London: 19 3 0 ) . 3 Rigglema n , " B u i l d i n g C y c l e s i n t h e U n i t e d S t a t e s , 1875-1932". 4 A r t h u r F. B u r n s , Production Trends in the United States Since 1870, (New Yo r k : N a t i o n a l Bureau o f Economic Res e a r c h , 1 9 3 4 ) . ^W.H. Newman, "The B u i l d i n g I n d u s t r y and B u s i n e s s C y c l e s " , Journal of Business of the University of Chicago, Volume 8 ( J u l y , 1935) . 31 32 i n t h e U n i t e d S t a t e s , and a l l c o n f i r m i n g the l o n g swing. I n t h i s c h a p t e r we w i l l l o o k b r i e f l y a t t h e s t r u c t u r e o f t h e h o u s i n g s e c t o r , and t h e f o r c e s w h i c h combine t o d e t e r m i n e t h e c o u r s e o f r e s i d e n t i a l c o n s t r u c t i o n . The b a s i c r e l a t i o n s h i p s a r e p r e s e n t e d below i n a s t o c k - f l o w model o f t h e h o u s i n g and mortgage m a r k e t s . I n t h e second s e c t i o n we c o n s i d e r the l a g s t r u c t u r e o f t h e s e r e l a t i o n -s h i p s , and t h e g e n e r a l i n s t i t u t i o n a l arrangements w h i c h a r e t h e major s o u r c e s o f i n s t a b i l i t y i n t h e a d j u s t m e n t p r o c e s s by w h i c h changes i n demand a r e t r a n s l a t e d i n t o changes i n t h e s u p p l y o f h o u s i n g accommodation. F i n a l l y , we w i l l l o o k b r i e f l y a t t h e v a r i o u s e x p l a n a t i o n s o f t h e c o u r s e o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n from 1860 t o 1914. THE STRUCTURE OF THE HOUSING MARKET The r a t e o f c o n s t r u c t i o n o f r e s i d e n t i a l h o u s i n g may be d e t e r m i n e d by a l a r g e number o f f a c t o r s i n t e r a c t i n g i n a c o n c i e v a b l y wide range o f complex p a t t e r n s . I n a comprehensive paper on t h e d e t e r m i n a n t s o f r e s i d e n t i a l c o n s t r u c t i o n , Leo G r e b l e r and Sherman J . M a i s e l l i s t t h e f o l l o w i n g f a c t o r s as t h o s e commanding t h e g r e a t e s t a t t e n t i o n ( w i t h v a r y i n g degrees o f emphasis) o f most s t u d e n t s o f t h e 33 b u i l d i n g c y c l e . 1. Changes i n p o p u l a t i o n a) I n c r e a s e s i n p o p u l a t i o n b) Changes i n t h e age-sex c o m p o s i t i o n c) Change i n t h e number, t y p e and s i z e o f h o u s e h o l d s d) I n t e r n a l m i g r a t i o n and i m m i g r a t i o n . 2. Changes i n income and employment a) T o t a l d i s p o s a b l e p e r s o n a l income b) Income d i s t r i b u t i o n c) Employment and unemployment 3. Consumer a s s e t h o l d i n g s and t h e i r d i s t r i b u t i o n , e s p e c i a l l y l i q u i d a s s e t h o l d i n g s and t h e i r e q u i t i e s i n e x i s t i n g houses. 4. Changes i n t h e p r i c e s o f h o u s i n g a) The p r i c e e l a s t i c i t y o f h o u s i n g r e l a t i v e t o o t h e r p r i c e s . b) The shape o f t h e c o n s t r u c t i o n s u p p l y and c o s t c u r v e s . 5. R e l a t i o n s h i p between occupancy c o s t s and p r i c e s o f d w e l l i n g s a) C r e d i t a v a i l a b i l i t y and t h e c o s t o f c r e d i t b) D e p r e c i a t i o n c) Imputed c o s t s o f e q u i t y funds 6. Consumer t a s t e s and p r e f e r e n c e s Leo G r e b l e r and Sherman J . M a i s e l , " D e t e r m i n a n t s o f R e s i d e n t i a l C o n s t r u c t i o n : A Review o f P r e s e n t Knowledge", Impacts of Monetary Policy, R e s e a r c h S t u d i e s p r e p a r e d f o r t h e Commission on Money and C r e d i t (Englewood C l i f f s , N.J: P r e n t i c e H a l l , 1 9 6 3), pp. 476-477. 34 7. Net r e p l a c e m e n t demand f o r d w e l l i n g u n i t s d e m o l i s h e d o r o t h e r w i s e removed from t h e i n v e n t o r y l e s s n e t c o n v e r s i o n s and mergers o f e x i s t i n g u n i t s . 8. C o n d i t i o n s i n t h e e x i s t i n g h o u s i n g s u p p l y a) U t i l i z a t i o n o f t h e h o u s i n g i n v e n t o r y 1. V a c a n c i e s 2. I n t e n s i t y o f occupancy b) P r i c e s and r e n t s f o r e x i s t i n g d w e l l i n g u n i t s c) Q u a l i t y , l o c a t i o n 9. R e a c t i o n s t o changes i n demand a) B u i l d e r s ' o r g a n i z a t i o n and p r o f i t e x p e c t a t i o n s b) I n v e s t o r s o r g a n i z a t i o n and p r o f i t e x p e c t a t i o n s c) M a rket s t r u c t u r e and market i n f o r m a t i o n T h i s l i s t and t h e f a c t t h a t i t i s n o t comprehensive g i v e s some i n d i c a t i o n as t o t h e c o m p l e x i t y o f any a n a l y s i s w h i c h seeks t o a d e q u a t e l y e x p l a i n b e h a v i o r i n t h i s s e c t o r o f t h e economy. Many o f t h e s t u d i e s t h a t have been u n d e r t a k e n t o d a t e have p r o c e e d e d by c o n c e n t r a t i n g on o n l y a few o f t h e p o t e n t i a l l y l a r g e number o f f a c t o r s t h a t can e x e r t a d e c i -s i v e i n f l u e n c e on t h e volume o f b u i l d i n g a c t i v i t y . The emphasis has g e n e r a l l y been on e s t i m a t i n g t h e s t r u c t u r a l r e l a t i o n s h i p s between t h e number o f h o u s i n g s t a r t s (or t h e volume o f e x p e n d i t u r e on r e s i d e n t i a l c o n s t r u c t i o n ) and a few s e l e c t e d e x p l a n a t o r y f a c t o r s . F o r example, s t u d i e s by 35 A l b e r t s and G u t t e n t a g have a t t e m p t e d t o d e f i n e t h e r e l a t i o n s h i p between t h e r e s i d e n t i a l c o n s t r u c t i o n c y c l e and changes i n c r e d i t c o n d i t i o n s . Models r e l a t i n g h o u s i n g s t a r t s t o t h e l e v e l o f house r e n t s , income and 9 demographic f a c t o r s have been c o n s t r u c t e d by T m b e r g e n , C h a w n e r , ^ and D e r k s e n . A number o f s t u d i e s have t r i e d t o r e l a t e t h e volume o f new h o u s i n g s t a r t s t o t h e o p e r a t i o n 12 o f t h e h o u s i n g market as a whole and a t l e a s t one s t u d y has a t t e m p t e d t o d i s a g g r e g a t e t h e market i n t o i t s s i n g l e and m u l t i p l e d w e l l i n g u n i t s e c t o r s and e x p l a i n t h e i n f l u e n c e 13 o f monetary f a c t o r s on t h e b e h a v i o r o f t h e s e s e c t o r s . The s p e c i f i c n a t u r e o f t h e s e and o t h e r s t u d i e s i s t o a l a r g e 7 W i l l i a m W. A l b e r t s , " B u s i n e s s C y c l e s , R e s i d e n t i a l Cons-t r u c t i o n C y c l e s , and t h e Mortgage M a r k e t " , Journal of P o l i t i c a l Economy, Volume 70, (June, 1962) pp. 263-281. p J . G u t t e n t a g , "The S h o r t C y c l e i n R e s i d e n t i a l C o n s t r u c t i o n " , American Economics Review, Volume 51, (June, 1961), pp. 275-298. 9 J . T i n b e r g e n , S t a t i s t i c a l Testing of Business Cycle Theo-r i e s , (League o f N a t i o n s , Geneva, 1939). " ^ L . J . Chawner, Residential Building, U.S. N a t i o n a l R e sources Committee (Washington, D.C. Government P r i n t i n g O f f i c e , 1939). ''""'"J.B.D. D e r k s e n , "Long C y c l e s i n R e s i d e n t i a l B u i l d i n g " , Econometrica, V o l . 8 ( A p r i l , 1 940), pp. 97-116. 12 See Sherman M a i s e l , "A Theory o f F l u c t u a t i o n s i n R e s i d e n t i a l C o n s t r u c t i o n S t a r t s " , The American Economic Review, V o l . L I U , (June, 1 9 63), pp. 359-383. 13 Lawrence B. S m i t h , "A Model o f t h e Canadian Housing and Mortgage M a r k e t s " , Journal of P o l i t i c a l Economy, V o l . 77, (September, 1969), pp. 795-816. 36 e x t e n t governed by t h e a v a i l a b l e d a t a and t h e e x i g e n c i e s o f s t a t i s t i c a l c o n v e n i e n c e and economy. A c r i t i c a l s u r v e y o f t h i s l i t e r a t u r e i s o u t s i d e t h e 14 scope o f t h e p r e s e n t p a p e r . I t may be u s e f u l , however, t o q u o te a t some l e n g t h t h e c o n c l u s i o n drawn by G r e b l e r and M a i s e l i n a r e v i e w o f p r e s e n t knowledge o f t h e h o u s i n g s e c t o r : "The s t a t i s t i c a l - e c o n o m e t r i c approach l e n d s i t s e l f t o more c o m p l e t e , i n c l u s i v e , and q u a n t i t a t i v e s t a t e m e n t s w i t h more d e f i n i t e t i m e d i m e n s i o n s and e s t i m a t e s o f l e a d s and l a g s . But b o t h i n t e r n a l a n a l y s i s o f t h e e c o n o m e t r i c models and comprehensive t e s t s o f t h e i r r e s u l t s - t h e f i r s t t e s t s under-t a k e n i n t h i s f i e l d - r e v e a l e d t h e p o t e n t i a l advantages t o be l a r g e l y i l l u s i o n a r y ... None o f t h e e x i s t i n g s t u d i e s was i n a f i n i s h e d enough s t a t e t o use i t f o r a f u l l a n a l y s i s o f th e market o r f o r p r e d i c t i n g t h e impact o f any p a r t i c u l a r v a r i a b l e . They l a c k e d c o m p l e t e -n e s s , a c c u r a t e measurement o f p a r a m e t e r s , and f r e q u e n t l y even t h e n e c e s s a r y assumed form o f t h e r e l a t i o n s h i p between a v a r i a b l e and c o n s t r u c t i o n s t a r t s o r e x p e n d i t u r e s . I f th e a b i l i t y t o p r e d i c t i s used as a c r i t e r i o n o f " s u c c e s s " o f e c o n o m e t r i c models, t h e r e s u l t s a r e f a r from f l a t t e r i n g t o t h i s method. Most o f t h e e c o n o m e t r i c models d i d worse i n t h i s r e s p e c t t h a n t h e " n a i v e " f o r e c a s t o r judgement p r o j e c t i o n s w h i c h o u r t e s t s employed f o r comparison"15 Fo r a c r i t i c a l s u r v e y o f a n a l y s e s see C.E.V. L e s e r , " B u i l d i n g A c t i v i t y and Housing Demand", Yorkshire B u l l e t i n of Economics and Social Review, V o l . 3 ( F e b r u a r y , 1951), pp. 131-149 and G r e b l e r and M a i s e l , " D e t e r m i n a n t s o f R e s i d e n t i a l C o n s t r u c t i o n " , p a s s i m . " ^ G r e b l e r and M a i s e l , " D e t e r m i n a n t s o f R e s i d e n t i a l C o n s t r u c t i o n " , p. 603. 37 In l i g h t o f t h e s e c r i t i c i s m s and i n view o f t h e d a t a problems (which assume g a r g a n t u a n p r o p o r t i o n s ) a s s o c i a t e d w i t h t h e a v a i l a b l e s t a t i s t i c s f o r t h e p e r i o d under c o n s i d e r a t i o n , we w i l l , i n what f o l l o w s , b r i e f l y o u t l i n e t h e s t r u c t u r e o f t h e h o u s i n g market i n g e n e r a l q u a l i t a t i v e t e rms. T h i s w i l l p r o v i d e an a p p r o p r i a t e p r e l u d e t o t h e subsequent d i s c u s s i o n o f i n s t a b i l i t y i n t h e h o u s i n g s e c t o r . The h o u s i n g market i s n o t a w e l l d e f i n e d "market" i n t h e t r a d i t i o n a l sense. "A h o u s i n g market a r e a i s t h e p h y s i c a l a r e a w i t h i n w h i c h a l l d w e l l i n g u n i t s a r e l i n k e d t o g e t h e r i n a c h a i n o r s u b s t i t u t i o n ... I n a b r o a d s e n s e , e v e r y d w e l l i n g u n i t w i t h i n a l o c a l h o u s i n g market may be c o n s i d e r e d a s u b s t i t u t e f o r e v e r y o t h e r u n i t . Hence, a l l d w e l l i n g u n i t s may be s a i d t o form a s i n g l e m a r k e t , c h a r a c t e r i z e d by i n t e r a c t i o n s o f occupancy, p r i c e s and r e n t s . However, t h i s v i e w can be m a i n t a i n e d o n l y f o r t h e most g e n e r a l a n a l y s i s and even t h e n w i t h g r e a t d i f f i c u l t y " . 16 The c h a i n o f h o u s i n g s u b s t i t u t e s i s c i r c u m s c r i b e d by t r a v e l t i m e ( p r i m a r i l y t o and from w o r k ) . Thus, h o u s i n g m arkets a r e of n e c e s s i t y , l o c a l m a r k e t s . T h i s i s an i m p o r t a n t C h e s t e r R a p k i n , L o u i s W i n n i c k and D a v i d M. B l a n c k , Housing Market Analysis 3 (Housing and Home F i n a n c e Agency, 1953), pp. 9-10. 38 o b s e r v a t i o n , t h e i m p l i c a t i o n s o f w h i c h a r e n o t always f u l l y a p p r e c i a t e d . I n r e a l i t y t h e h o u s i n g market i s a s e r i e s o f o v e r -l a p p i n g s u b m a r k e t s , each c o m p r i s i n g a c o h e s i v e c o l l e c t i o n o f s u b s t i t u t e s and d i s t i n g u i s h e d by a s p e c i f i e d c h a r a c -t e r i s t i c mix i n terms o f t e n u r e , n e i g h b o r h o o d , t y p e o f s t r u c t u r e , number o f rooms, l o c a t i o n , q u a l i t y , i n t e r i o r d e s i g n and so on. The c h o i c e o f d e f i n i t i o n i s somewhat a r b i t r a r y and d i f f e r e n t t y p e s o f submarkets c o u l d be s e p a r a t e d by c h a n g i n g t h e s p e c i f i c a t i o n o f t h e c h a r a c t e r i s t i c mix. The v a r i o u s submarkets a r e " i n f l u e n c e d by d i f f e r e n t i n s t i t u t i o n a l c o n s i d e r a t i o n s and t h e b e h a v i o r o f p a r t i -c i p a n t s i n t h e s e submarkets o f t e n d i f f e r s c o n s i d e r a b l y , making i t d e s i r a b l e t o d i s a g g r e g a t e t h e h o u s i n g market as 17 much as p o s s i b l e . " Thus, a t w o - f o l d c l a s s i f i c a t i o n by t e n u r e and t y p e o f s t r u c t u r e m ight d e f i n e t h e f o l l o w i n g s u b m a r k e t s : t h e s i n g l e f a m i l y f e e market, t h e m u l t i p l e d w e l l i n g f e e m a r k e t , t h e s i n g l e f a m i l y r e n t a l market and t h e m u l t i p l e d w e l l i n g r e n t a l market. Such a d i s t i n c t i o n i s d e s i r a b l e because i t i s argued t h a t houses b u i l t f o r s a l e Lawrence B. S m i t h , "A Biseatoral Model of the Canadian Housing and Mortgage Markets," A p r e l i m i n a r y u n p u b l i s h e d r e s e a r c h p aper f o r t h e Bank o f Canada. 39 t o owner o c c u p i e r s s h o u l d be a n a l y z e d i n much t h e same way as consumer d u r a b l e s , w h i l e d w e l l i n g u n i t s b u i l t f o r r e n t a l p u r p o s e s a r e more c l o s e l y r e l a t e d t o t h e mar-k e t f o r income p r o p e r t i e s . ^ The g e n e r a l s t r u c t u r e o f t h e h o u s i n g market i s o u t l i n e d i n t h e s t o c k - f l o w model o f t h e h o u s i n g and 19 mortgage markets p r e s e n t e d i n F i g u r e 3. The model i s o f n e c e s s i t y , s i m p l i f i e d , and i s used h e r e t o demons-t r a t e b a s i c r e l a t i o n s h i p s . A t a g i v e n p o i n t i n t i m e t h e s t o c k o f h o u s i n g i s made up o f a number o f u n i t s o f each o f a wide range o f t y p e s o f d w e l l i n g s . I t w i l l be h e l p -f u l t h e n t o t h i n k o f t h i s s t o c k i n terms o f a j o i n t d i s -t r i b u t i o n o f numbers o f houses by s i z e o f u n i t , age, t e n u r e , l o c a t i o n , number o f u n i t s p e r b u i l d i n g , c o n d i t i o n and o t h e r v a r i o u s q u a l i t y d i m e n s i o n s . The demand f o r each t y p e o f d w e l l i n g i n t h i s h e t e r o g e o u s s t o c k w i l l depend on a s i m i l a r d i s t r i b u t i o n o f h o u s e h o l d c h a r a c t e r i s t i c s i n terms o f income, f a m i l y c o m p o s i t i o n , a s s e t h o l d i n g s , e t c . , as w e l l as t h e p r i c e s o f t h i s and D a v i d M. B l a n k and L o u i s W i n n i c k , "The S t r u c t u r e o f t h e Ho u s i n g M a r k e t " , Quarterly Journal of Economics, V o l . L X V I I , May, 1953, p. 185. 19 T h i s model i s based on s i m i l a r models c o n s t r u c t e d by S m i t h , "A Model o f t h e Canadian H o u s i n g and Mortgage M a r k e t s . " , p. 4; and M a i s e l , " F l u c t u a t i o n s i n R e s i d e n t i a l C o n s t r u c t i o n S t a r t s " , p. 362. 40 F i g u r e 3 The H o u s i n g and Mortgage M a r k e t Symbols HS Housing S t a r t s RC E x p e n d i t u r e s on R e s i d e n t i a l C o n s t r u c t i o n 'D G,S Permanent D i s p o s a b l e Income P r i c e s o f A l t e r n a t i v e Goods and S e r v i c e s CC C o n s t r u c t i o n C o s t s MT NRC N o n r e s i d e n t i a l C o n s t r - MR u c t i o n N Average E a r n i n g s o f BSC Labour i n C o n s t r u c t i o n I n d u s t r y M B u i l d i n g M a t e r i a l MC C o s t s F C o s t o f Temporary SMC F i n a n c i n g L C o s t o f Land RA Vg Vacancy R a t e s : P E x i s t i n g D w e l l i n g s VT,„ Vacancy R a t e s : New D w e l l i n g s P r i c e o f Houses EB HS H L e n d i n g Terms Mortgage Rates Mortgage C r e d i t G e n e r a t e d by B u i l d i n g S o c i e t i e s F low o f Mortgage C r e d i t (non-BSC) S t o c k o f I n s t i t u t i o n a l Mortgage H o l d i n g s Y i e l d and Terms on A l t e r n -a t i v e Investment S i z e and D i s p o s i t i o n o f I n s t i t u t i o n a l I n v estment P o r t f o l i o s B u i l d e r s E x p e c t a t i o n s S p e c u l a t i v e F a c t o r s R Rents HHF Household F o r m a t i o n THE HOUSING A N D MORTGAGE MARKET MT MR r I 1 i BSC SMC RA PG,S M C FOREIGN SECTOR & EXOGENOUS FACTORS L_ DEMOGRAPHIC & EXOGENOUS FACTORS EB HHF PH R H S M N T EXISTING HOUSE-HOLDS vs V H S cc NRC STOCK OF DWELLINGS REPLACEMENTS NET ADDITIONS RC J 42 each a l t e r n a t i v e form of housing accommodation, the p r i c e s of o t h e r goods and s e r v i c e s and f i n a l l y the c o s t 20 and a v a i l a b i l i t y of c r e d i t . These v a r i o u s elements are r e p r e s e n t e d on the l e f t hand s i d e of F i g u r e 3 . Together, the housing supply and demand m a t r i c e s ( d i s t r i b u t i o n s ) determine a m a t r i x of vacancy r a t i o s and a m a t r i x of p r i c e s and r e n t s the i n d i v i d u a l elements of which p r e v a i l i n the v a r i o u s sub-markets. I t i s important to p o i n t out t h a t the d i f f e r e n t segments of the housing market c h a r a c t e r i z e d by d i f f e r e n t k i n d s of housing are somewhat i n s u l a t e d from one another because f a m i l i e s w i t h d i f f e r e n t c h a r a c t e r i s t i c mixes are i n the d i f f e r e n t submarkets. " In the absence of a channel between t sab] markets, t h a t i s , a group of f a m i l i e s who s e r i o u s l y c o n s i d e r more than one submarket as a p l a c e of r e s i d e n c e , upward or downward p r i c e movements can p e r s i s t i n d e p e n d e n t l y i n d i f f e r e n t p a r t s of the market f o r c o n s i -21 d e r a b l e p e r i o d s . " To f u l l y a p p r e c i a t e the market pr o c e s s and changes i n v a l u e and occupancy r a t e s under v a r i o u s c i r -cumstances, one must have some understanding not o n l y of the James S. Duesenberry, Business Cycles and Economic Growth, (New York: McGraw-Hill, 1958), p. 136. 21 W i l l i a m G. G r i g s b y , Housing Markets and Public Policy, ( P h i l a d e l p h i a : U n i v e r s i t y of P e n n s y l v a n i a P r e s s , 1963), p. 47. 43 t y p e s o f sub m a r k e t s , c l a s s i f i e d a c c o r d i n g t o d w e l l i n g c h a r a c t e r i s t i c s , b u t a l s o o f t h e t y p e s o f f a m i l i e s t h a t move i n t o and o u t o f t h e s e submarkets. I t i s a l s o im-p o r t a n t t o i d e n t i f y t h e causes o f h o u s e h o l d movement, because i f f o r example " n o n - p r i c e " m o t i v a t e d movement i s l a r g e r e l a t i v e t o demographic s h i f t s i n r e s p o n s e t o d i f f e r e n c e s i n p r i c e and q u a l i t y among v a r i o u s markets and s u b m a r k e t s , t h e n t h e r e may be no l o n g r u n tendency 2 2 toward market e q u i l i b r i u m . On t h e r i g h t hand s i d e o f F i g u r e 3, t h e r a t e o f h o u s i n g c o n s t r u c t i o n (HS) depends on t h e p r i c e o f l a n d (L) and t h e c o s t s o f c o n s t r u c t i o n (CC). C o n s t r u c t i o n c o s t s , i n t u r n , depend upon t h e average e a r n i n g s o f l a b o u r i n t h e c o n s t r u c t i o n i n d u s t r y ( N ) , m a t e r i a l c o s t s (M), t h e c o s t o f b r i d g e o r i n t e r i m f i n a n c i n g d u r i n g F.G. Pennance, Housing Market Analysis and Policy, ( I n s t i t u t e o f Economic A f f a i r s , 1969), p. 19. Our d i s c u s s i o n i n t h i s s e c t i o n a v o i d s many dynamic c o n s i d e r a t i o n s w h i c h w i l l be d i s c u s s e d i n f u r t h e r d e t a i l i n t h e f o l l o w i n g s e c t i o n . However, i t i s i m p o r t a n t t o r e c o g n i z e t h a t t h e r a t e o f r e s i d e n t i a l c o n s t r u c t i o n i s d e t e r m i n e d by t h e i n t e r a c t i o n s o f t h r e e dynamic p r o c e s s e s : a) The a d j u s t m e n t o f p r i c e s and r e n t s t o the demand and s u p p l y o f houses. b) The a d j u s t m e n t o f t h e r a t e o f c o n s t r u c t i o n t o r e n t s , d w e l l i n g p r i c e s and c o n s t r u c t i o n c o s t s . c) Changes i n s u p p l y r e s u l t i n g from new cons-t r u c t i o n and d e m o l i t i o n . 44 a c t u a l c o n s t r u c t i o n (F) and t h e c u r r e n t l e v e l o f r e s i -d e n t i a l (RC) and n o n r e s i d e n t i a l (NRC) c o n s t r u c t i o n a c t i v i t y r e l a t i v e t o t h e i r r e s p e c t i v e p r o d u c t i o n c a -p a c i t i e s . B u i l d e r s e x p e c t a t i o n s (EB) w i t h r e s p e c t t o c u r r e n t and f u t u r e market c o n d i t i o n s may e x e r t an e n t i r e l y i n d e p e n d e n t i n f l u e n c e on t h e r a t e o f c o n s t r u c -t i o n . A t t h e bot t o m o f F i g u r e 3 t h e f l o w o f mortgage c r e d i t (MC) g e n e r a t e d by f i n a n c i a l i n s t i t u t i o n s o t h e r t h a n b u i l d i n g s o c i e t i e s , has a d i r e c t i n f l u e n c e on l e n d i n g terms (MT) and mortgage r a t e s (MR). The demand f o r mortgage c r e d i t depends on much t h e same f a c t o r s a f f e c t i n g t h e demand f o r h o u s i n g accommodation. The s u p p l y o f mortgage c r e d i t (MC) however, depends on t h e s t o c k o f i n s t i t u t i o n a l mortgages h o l d i n g s (SMC), t h e s i z e and d i s p o s i t i o n o f i n s t i t u t i o n a l i n v e s t m e n t p o r t -f o l i o s (P) and t h e y i e l d and terms on a l t e r n a t i v e i n -vestments (RA). The s u p p l y o f mortgage c r e d i t made a v a i l a b l e t h r o u g h t h e f o r m a t i o n o f b u i l d i n g s o c i e t i e s (BSC) a c t s as an i n d e p e n d e n t c o n s t r a i n t ( i n f l u e n c e ) , a l o n g w i t h t h e mortgage c r e d i t s u p p l i e d by f i n a n c i a l i n s t i -t u t i o n s , on t h e volume o f h o u s i n g s t a r t s . T h i s s t o c k f l o w model o f t h e h o u s i n g and mortgage markets o u t l i n e s o n l y b a s i c r e l a t i o n s h i p s and i s t h u s an 45 o v e r s i m p l i f i c a t i o n o f t h e r e a l c o m p l e x i t i e s w h i c h cha-r a c t e r i z e t h i s s e c t o r o f t h e economy. I t i s u s e f u l , however, i n i l l u m i n a t i n g a number o f problems w i t h w h i c h any a n a l y s i s o f t h e h o u s i n g market must come t o g r i p s , b u t w h i c h a r e a l l t h e o f t e n i g n o r e d . By now i t s h o u l d be a p p a r e n t t h a t t h e c o m p l i c a t e d i n t e r - r e l a t i o n s h i p s w h i c h c o n s t i t u t e t h e market a r e "not e a s i l y r e d u c e d t o q u a n t i t a t i v e t e r m s , much l e s s combined i n t o a s i n g l e l i n k o f c o e f f i c i e n t . The m a t r i x [ o r submarkets] i t s e l f i s i n a c o n s t a n t p r o c e s s o f change, as t h e exogenous v a r i a b l e s whose i m p a c t on the market we seek t o t r a c e have t h e added e f f e c t o f p e r m a n e n t l y a l t e r i n g t h e market s t r u c t u r e 23 i t s e l f . " The s t r u c t u r e o f t h e h o u s i n g market a l s o has i m p o r t a n t i m p l i c a t i o n s f o r t h e l e v e l o f a g g r e g a t i o n a p p r o p r i a t e t o h o u s i n g market a n a l y s i s . The p a t t e r n o f r e l a t i v e p r i c e s and r e n t s w i t h i n and between v a r i o u s markets may have an i m p o r t a n t i n f l u e n c e on t h e p a t t e r n o f r e s i d e n t i a l c o n s t r u c -t i o n . T h i s may be l o s t i n t h e c o n s t r u c t i o n o f an a g g r e g a t e r e n t i n d e x . C o n s e q u e n t l y any n a t u r a l tendency t o e x p l a i n G r i g s b y , Housing Markets and Public Policy, p. 43 46 th e c o u r s e o f house b u i l d i n g i n terms o f the r e n t 24 a g g r e g a t e may l e a d t o " u t t e r l y e r r o n e o u s c o n c l u s i o n s . " T h i s p r o b l e m w i l l be d i s c u s s e d a t g r e a t e r l e n g t h i n Ch a p t e r IV. F i n a l l y , any a n a l y s i s w h i c h seeks t o e x p l a i n t h e b e h a v i o r o f r e s i d e n t i a l c o n s t r u c t i o n must c o n s i d e r t h e l a r g e number o f exogenous economic and demographic f o r c e s w h i c h have an im p a c t on t h i s s e c t o r o f t h e economy. T h i s i s , i n p a r t , r e q u i r e d by t h e a b s o l u t e magnitude and i m p o r t a n c e o f t h e h o u s i n g s e c t o r and by i t s i n t e r d e p e n d e n c e w i t h o t h e r a r e a s o f t h e economy. MAJOR SOURCES OF INSTABILITY IN THE HOUSING SECTOR OF THE  ECONOMY The s t r u c t u r e o f the h o u s i n g - s e c t o r o f t h e economy and t h e n a t u r e o f t h e d u r a b l e good s u p p l i e d and demanded i n t h i s s e c t o r a r e such t h a t l o n g swings i n b u i l d i n g a c t i -v i t y t e n d t o a r i s e q u i t e n a t u r a l l y . I n t h i s s e c t i o n we w i l l d i s c u s s some o f t h e more i m p o r t a n t s o u r c e s o f i n s t a -b i l i t y w h i c h a r e i n s t r u m e n t a l i n g e n e r a t i n g t h e s e c y c l i c a l J . P a r r y L e w i s , " B u i l d i n g C y c l e s : A R e g i o n a l Model and i t s N a t i o n a l S e t t i n g " , Economic Journal, V o l . LXX (September, 1960), p. 533. 47 phenomena. There a r e a g r e a t many f a c t o r s t h a t c o n t r i b u t e t o i n s t a b i l i t y i n t h e h o u s i n g s e c t o r and t h u s g i v e r i s e t o major f l u c t u a t i o n s i n c o n s t r u c t i o n a c t i v i t y . Though i n most c a s e s i t i s n o t p o s s i b l e f o r us t o measure t h e d i f f e r e n c e s i n t h e i n f l u e n c e s t h e s e f o r c e s e x e r t , i t i s p o s s i b l e t o i d e n t i f y some o f t h e more i m p o r t a n t ones. Changes i n f a m i l y income a r e o f c e n t r a l i m p o r t a n c e , b u t t h e s p e c i f i c i m p a c t p a t t e r n i n terms o f d i r e c t and i n d i -r e c t i n f l u e n c e s may be h i g h l y complex. Household form-a t i o n i n g e n e r a l and f a m i l y f o r m a t i o n t h r o u g h m a r r i a g e s i n p a r t i c u l a r a r e a f f e c t e d by income l e v e l s and e x p e c t e d f u t u r e incomes, s i n c e r i s i n g incomes e n a b l e young p e o p l e t o e s t a b l i s h t h e i r own h o u s e h o l d s . As t h e f i n a n c i a l c a -p a c i t y o f f a m i l i e s improves t h e r e i s a tendency f o r t h o s e who have been s h a r i n g h o u s i n g accommodation because o f unemployment o r low e a r n i n g s , t o undouble and e s t a b l i s h 2 6 s e p a r a t e h o u s e h o l d s . 25 Cf. A r t h u r F. B u r n s , "Long C y c l e s i n R e s i d e n t i a l C o n s t r u c t i o n " , Economic Essays in Honor of Wesley C. Mit-c h e l l , (New Y o r k : Columbia U n i v e r s i t y P r e s s , 1935); A.H. Hansen, F i s c a l P o l i c y and Business Cycles, (New Y o r k : W.W. N o r t o n and Co., 1941), pp. 21-23; J a n T i n b e r g e n and J . J . P o l a k , The dynamics of Business Cycles, ( C h i c a g o : U n i v e r s i t y o f C h i c a g o P r e s s , 1942), pp. 241-246; C.E.V. L e s e r , " B u i l d i n g A c t i v i t y and Hous i n g Demand", pp. 131-149. 2 6 L e s e r , " B u i l d i n g A c t i v i t y and Housing Demand", p. 143 48 Perhaps t h e most i m p o r t a n t e f f e c t o f a s e c u l a r r i s e i n incomes i s t h e d e s i r e o f a l l income groups t o improve t h e i r h o u s i n g c o n d i t i o n . E x p e n d i t u r e s o f a l l t y p e s , i n c l u d i n g h o u s i n g , i n c r e a s e w i t h income and t h i s h e l p s t o a c c e l e r a t e t h e f i l t e r i n g p r o c e s s , t h a t i s t h e downward movement o f d w e l l i n g s between f a m i l y income l e v e l s . The demand f o r b e t t e r accommodations adds t o t h e demand f o r new d w e l l i n g s i n t h o s e submarkets where new c o n s t r u c t i o n i s n o r m a l l y i n t r o d u c e d . A n o t h e r major f a c t o r c o n t r i b u t i n g t o c y c l i c a l f l u c -t u a t i o n s i n h o u s e - b u i l d i n g i s t h e g e o g r a p h i c a l s h i f t i n g o f p o p u l a t i o n . Thus, an upswing i n economic a c t i v i t y i n a p a r t i c u l a r r e g i o n accompanied by an i n c r e a s e i n employment o p p o r t u n i t i e s and r i s i n g f a m i l y incomes i s n o t o n l y f a v o r a b l e i n and o f i t s e l f i n s t i m u l a t i n g cons-t r u c t i o n , b u t a l s o by a t t r a c t i n g new f a m i l i e s who w i s h t o t a k e p a r t i n t h e l o c a l p r o s p e r i t y . Thus p o p u l a t i o n s h i f t s w i t h i n a c o u n t r y w h i c h a c c e l e r a t e t h e r a t e o f house-h o l d f o r m a t i o n i n p a r t i c u l a r r e g i o n s w i l l s t i m u l a t e h o u s i n g demand and encourage an upswing i n b u i l d i n g a c t i v i t y even though t h e t o t a l p o p u l a t i o n o f t h e c o u n t r y remains unchanged. The c e n t r a l i m p o r t a n c e o f demographic f a c t o r s i n t h e demand f o r h o u s i n g accommodations has been emphasized w i t h m i n o r r e s e r v a t i o n s by A . J . C a i r n c r o s s : 49 "Now i t i s no doubt t r u e t h a t the most powerful i n f l u e n c e on the s i d e of de-mand has g e n e r a l l y been p o p u l a t i o n growth; and t h a t , i n the long run, i f the s i z e o f the p o p u l a t i o n shows a steady t r e n d upwards or downwards the l e v e l o f b u i l d i n g a c t i v i t y w i l l be a f f e c t e d i n the c o r r e s p o n d i n g d i r e c t i o n . " P o p u l a t i o n growth, and the f l u c t u a t i o n s t o which i t i s s u b j e c t are not the o n l y important i n f l u e n c e on the s i d e of demand. Changes i n the l e v e l o f r e n t s r e l a t i v e t o o t h e r elements i n the c o s t df l i v i n g as w e l l as the r e l a t i o n s h i p between r e n t s and the l e v e l of income have an important i n f l u e n c e on the demand f o r house space. Changes i n the standar d of housing are a l s o s i n g l e d out by C a i r n c r o s s as a major source of i n s t a b i l i t y i n th housing s e c t o r . "New houses may o f f e r a m e n i t i e s not a v a i l -a b l e i n e x i s t i n g houses or be l o c a t e d i n p l a c e s more convenient t o e x i s t i n g house-h o l d e r s . S i n c e o n l y a s m a l l number of new houses are e r e c t e d a n n u a l l y i n r e l a t i o n t o the e x i s t i n g s t o c k , the r e s u l t of any r a p i d change i n a m e n i t i e s ( f o r example, the i n -t r o d u c t i o n of bathrooms a f t e r 1880) or i n f a c i l i t i e s ( f o r example, the development of suburban t r a n s p o r t through tramways and e l e c t r i c r a i l w a y s ) may be a marked a c c e l e r -a t i o n i n new r e s i d e n t i a l c o n s t r u c t i o n . " 28 C a i r n c r o s s , Home and Foreign Investment, 1870-1913} Ibid., p. 14. 50 The p o t e n t i a l d e s t a b i l i z i n g i n f l u e n c e o f changes i n t h e r a t e o f d e m o l i t i o n a r e a l s o n o t e d w i t h r e f e r e n c e t o t h e c l e a r i n g f o r p r o v i s i o n o f r a i l w a y f a c i l i t i e s i n t h e major towns d u r i n g t h e l a t t e r p a r t o f t h e N i n e t e e n t h c e n t u r y . C a i r n c r o s s c o n c l u d e s t h a t i n t h e l o n g r u n "we s h o u l d e x p e c t f l u c t u a t i o n s i n r e s i d e n t i a l b u i l d i n g t o r e f l e c t changes i n t h e demand f o r house-room ( s u b j e c t t o any s i m u l t a n e o u s changes a f f e c t i n g e x i s t i n g d w e l l i n g -houses e i t h e r by way o f d e m o l i t i o n , improvement, o r con-v e r s i o n t o o t h e r p u r p o s e s ) . We might a l s o f i n d t h a t i n the c i r c u m s t a n c e s examined, t h e dominant i n f l u e n c e on 29 demand was p o p u l a t i o n g r o w t h . . . . " The d u r a b l e n a t u r e o f d w e l l i n g s i s o f c e n t r a l i m p o r t -ance t o t h e t i m e p a t t e r n o f a d j u s t m e n t i n t h e h o u s i n g s e c t o r . U n l i k e many o t h e r p r o d u c t s , t h e o u t p u t o f t h e c o n s t r u c t i o n i n d u s t r y cannot be i d e n t i f i e d w i t h t o t a l s u p p l y , b u t i s e q u a l t o t h e i n c r e a s e i n s u p p l y , a f t e r a c c o u n t i n g f o r demo-l i t i o n s and c o n v e r s i o n s . The v e c t o r o f house p r i c e s and r e n t s w i l l be d e t e r m i n e d by t h e b a l a n c e o f a g g r e g a t e demand i n r e l a t i o n t o t h e e x i s t i n g s t o c k , r a t h e r t h a n t h e c u r r e n t s u p p l y w h i c h r e p r e s e n t s o n l y a s m a l l p o r t i o n o f t h e t o t a l s t o 2 9 TV, -A 51 T r a d i t i o n and l o n g term c o n t r a c t u a l a r r a n g e m e n t s , among o t h e r f a c t o r s , combine t o g i v e house p r i c e s and r e n t s a c e r t a i n i n e r t i a . Changes i n demand and s u p p l y c o n d i t i o n s i n t h e h o u s i n g market b r i n g about changes i n p r i c e s and r e n t s o n l y a f t e r a c o n s i d e r a b l e l a g . I n t h e s h o r t r u n t h e a d j u s t m e n t o f s u p p l y t o demand t a k e s p l a c e v i a changes i n t h e i n t e n s i t y o f u t i l i z a t i o n o f t h e c u r r e n t i n e l a s t i c s t o c k o f houses. E x c e s s demand l e a d s t o d o u b l i n g up and p a r t l e t t i n g o f e x i s t i n g accommodations, w h i l e e x c e s s s u p p l y r e s u l t s i n u n o c c u p i e d houses. S e v e r a l y e a r s may be r e q u i r e d t o e l i m i n a t e an e x c e s s s u p p l y o r demand a t e x i s t i n g p r i c e s by way o f a d j u s t m e n t s i n c u r r e n t p r o -d u c t i o n . The b u i l d i n g i n d u s t r y , i t s e l f , i s a major s o u r c e o f i n s t a b i l i t y . I t has been o b j e c t e d t h a t h o u s e - b u i l d i n g as a l o o s e l y i n t e g r a t e d p r o c e s s h a r d l y j u s t i f i e s t h e term " i n d u s t r y " . ^ The r e s i d e n t i a l c o n s t r u c t i o n i n d u s t r y i s i n d e e d p e c u l i a r i n a number o f i m p o r t a n t r e s p e c t s . F o r example, t h e p r o d u c t i o n o r f a b r i c a t i o n p r o c e s s t a k e s p l a c e a t t h e s i t e where t h e b u i l d i n g i s t o be used. C o n s e q u e n t l y a l l t h e v a r i o u s m a t e r i a l s , o p e r a t i o n s and f a c t o r s must be b r o u g h t t o t h e p r o d u c t , r a t h e r t h a n t h e p r o d u c t p a s s i n g R i c h a r d U. R a t c l i f f , Urban Land Economics} (New Y o r k : M c G r a w - H i l l Book Company I n c . , 1949), p. 200. 52 t h r o u g h a s e r i e s o f p r o d u c t i o n s t a g e s w i t h i n a f a c t o r y . D w e l l i n g s a r e n o t w e l l s u i t e d t o mass p r o d u c t i o n . The w i d e s p r e a d g e o g r a p h i c a l d i s p e r s i o n o f t h e p r o -d u c t i o n p r o c e s s i s a major o b s t a c l e t o r a t i o n a l i z i n g t h e a d j u s t m e n t o f t h e s u p p l y o f new h o u s i n g t o changes i n demand. "The pr e d o m i n a n t t y p e o f b u i l d i n g o r g a n i z a t i o n i s s m a l l , o f t e n a one man o u t f i t , w i t h l i t t l e c a p i t a l , l i m i t e d t e c h n i c a l s k i l l , and no i n c l i n a t i o n , t i m e o r 31 money t o c o n d u c t r e s e a r c h i n methods and m a t e r i a l s . " The p r e v a l e n c e o f a l a r g e number o f s m a l l f i r m s u n a b l e t o t a k e advantage o f t h e economies o f l a r g e s c a l e p r o d u c t i o n t e n d s t o l o w e r t h e volume o f p r o d u c t i o n , t h u s l e n g t h e n i n g t h e l a g s i n t h e i n d i v i d u a l r e s p o n s e sequence. The l a c k o f a w e l l d e f i n e d i n d u s t r i a l s t r u c t u r e i s i n p a r t t h e r e a s o n why t h e r e i s a marked tendency f o r many \ f i r m s t o d i s a p p e a r d u r i n g a b u i l d i n g slump and t o p r o l i -f e r a t e d u r i n g booms. T h i s p r o p e n s i t y toward d i s s o l u t i o n and r e v i v a l i s i m p o r t a n t i n e x p l a i n i n g t h e l a g g e d market a d j u s t -ment mechanis on t h e s i d e o f s u p p l y . A r e s u r g e n c e o f demand may p e r s i s t f o r s e v e r a l y e a r s b e f o r e t h e r e i s any s i g n i f i c a n t Ibid., p. 176. 53 i n c r e a s e i n c o n s t r u c t i o n a c t i v i t y among b u i l d e r s . Houses a r e among the most d u r a b l e o f goods. " E x i s t i n g s t r u c t u r e s can be made t o s e r v e w i t h a l i t t l e c r o w d i n g , a l i t t l e p a t -c h i n g h e r e and r e n o v a t i o n t h e r e , f o r a c o n s i d e r a b l e p e r i o d o f t i m e b e f o r e t h e need f o r new houses becomes s u f f i c i e n t l y a c u t e t o push r e n t a l v a l u e s h i g h e r and d e f i n i t e l y s t i m u l a t e 32 t h e slow-moving cumbersome, s c a t t e r e d o p e r a t o r s , " many o f whom l e f t t h e i n d u s t r y d u r i n g t h e p r e v i o u s d e p r e s s i o n . The r e s p o n s e o f s u p p l y i s d e l a y e d f u r t h e r by t h e l o n g g e s t -a t i o n p e r i o d i n r e s i d e n t i a l c o n s t r u c t i o n . In t h e N i n e t e e n t h c e n t u r y i t g e n e r a l l y t o o k between s i x months and a y e a r t o c o m p l e t e an average s i z e house i n G r e a t B r i t a i n . The a t o m i s t i c c h a r a c t e r o f t h e b u i l d i n g i n d u s t r y r e n d e r s i t e s p e c i a l l y p rone t o e r r o n e o u s e s t i m a t e s o f e x c e s s demand and s u p p l y . I t i s n o t s u r p r i s i n g , t h e r e f o r e , t h a t t h e r e has d e v e l o p e d a t r a d i t i o n o f s p e c u l a t i v e o v e r b u i l d i n g w h i c h t e n d s t o e x a g g e r a t e and p r o l o n g u e t h e c y c l i c a l f l u c t u a t i o n s 33 t y p i c a l o f h o u s e - b u i l d i n g a c t i v i t y . The e x i s t e n c e o f Norman J . S i l b e r l i n g , The Dynamics of Business, (New Y o r k : M c G r a w - H i l l Book Company, I n c . , 1943), p. 191. 33 F o r a v e r y good d i s c u s s i o n o f s p e c u l a t i v e and c y c l i c a l a s p e c t s o f u r ban l a n d development see: E r n e s t M. F i s h e r , " S p e c u l a t i o n i n Suburban Land", American Economic Review, V o l . X X I I I (March, 1933), pp. 154-163; Homer Hoyt, One Hundred Years of Land Values in Chicago, ( C h i c a g o : U n i v e r s i t y o f C h i c a g o P r e s s , 1933), pp. 383-389; an i n t e r e s t i n g l i t t l e book on t h e r o l e o f b u s i n e s s c o n f i d e n c e i n a n i m a t i n g c y c l i c a l be-h a v i o r i s F. L a v i n g t o n , The Trade Cycle, (London: P.S K i n g and Son, L t d . , 19 2 2 ) . 54 s p e c u l a t i v e p r o m o t i o n and r e a c t i o n i n t h e h o u s e - b u i l d i n g s e c t o r r e f l e c t s a fu n d a m e n t a l s t r u c t u r a l p r o blem i n p a r t caused by t h e absence o f adequate market i n f o r m a t i o n . T h i s i s p e r h a p s n o t t e c h n i c a l l y an " i m p e r f e c t i o n " i n t h e market, b u t i t i s a major f a c t o r c o n t r i b u t i n g t o g e n e r a l i n s t a b i l i t y . The p o t e n t i a l f o r o v e r - e x p a n s i o n i s a g g r a v a t e d by t h e f i n a n c i a l r e q u i r e m e n t s o f t h e b u i l d i n g i n d u s t r y . I n c o n t r a s t t o r e l a t i v e l y s m a l l f i x e d c a p i t a l r e q u i r e m e n t s b u i l d i n g f i r m s c o n f r o n t t h e b a n k i n g system and b u i l d i n g s o c i e t i e s w i t h r a t h e r l a r g e demands f o r b r i d g e f i n a n c i n g ( i . e . , w o r k i n g c a p i t a l r e q u i r e m e n t s d u r i n g t h e p e r i o d o f c o n s t r u c t i o n ) . " I t t h e r e f o r e becomes a p o t e n t i n s t r u m e n t f o r e x p l o i t i n g t h e i n f l a t i o n a r y / d e f l a t i o n a r y p o t e n t i a l o f a f r e e b a n k i n g system w h i c h can v a r y e i t h e r t h e cash r e s e r v e r a t i o o r i t s Advances/ I n v e s t m e n t s r a t i o i n r e s p o n s e t o changes i n t h e demand f o r 35 bank advances." The meaning o f market i m p e r f e c t i o n s i s d i s c u s s e d by George S t i g l e r , " I m p e r f e c t i o n s o f t h e C a p i t a l M a r k e t " , Journal of P o l i t i c a l Economy, V o l . 75 (June, 1967), pp. 287-292. 35 D.J. Coppock, "The Causes o f B u s i n e s s F l u c t u a t i o n s " , Manchester S t a t i s t i c a l Society, (December, 1959), p. 14; F o r a good d i s c u s s i o n o f t h e b a n k i n g system and t h e i n f l a t i o n a r y t endency o f " s h o e s t r i n g " f i n a n c i n g , see H e r b e r t D. Simpson, " R e a l E s t a t e S p e c u l a t i o n and t h e D e p r e s s i o n " , American Economic Review, V o l . X X I I I (March, 1933), pp. 164-176; Hoyt, op. c i t . , pp. 385-387; S i l b e r l i n g , Dynamics of Business, pp. 180-182. 55 I n a g e n e r a l s t u d y o f b u i l d i n g c y c l e s and i n v e s t m e n t , Duesenberry has f o c u s e d on p r i c e changes and h i n t e d a t t h e r o l e p l a y e d by v a c a n c i e s i n an i n t u i t i v e l y a p p e a l i n g des-c r i p t i o n o f t h e dynamic r e s p o n s e mechanism i n r e s i d e n t i a l c o n s t r u c t i o n . "Whenever e x c e s s demand a p p e a r s , p r i c e s w i l l e v e n t u a l l y r i s e h i g h enough t o i n d u c e a r a t e o f b u i l d i n g s u f f i c i e n t l y h i g h t o e l i m i n a t e t h e e x c e s s demand. That r e q u i r e s a r a t e o f b u i l d i n g i n e x c e s s o f t h e r a t e o f growth o f demand. A t t h e moment when e x c e s s demand i s e l i m i n a t e d and p r i c e s s t o p r i s i n g , t h e r a t e o f b u i l d i n g i s h i g h e r t h a n t h e r a t e o f growth o f demand, and b u i l d i n g w i l l n o t slow down u n t i l enough e x c e s s s u p p l y has d e v e l o p e d t o l o w e r p r i c e s o r reduce t h e r a t e of s a l e o f houses. That i m p l i e s t h a t t h e r a t e o f con s -t r u c t i o n must a g a i n f a l l t o a l e v e l below t h e r a t e o f growth o f demand u n t i l e x c e s s demand has a g a i n d e v e l o p e d , so t h a t t h e c y c l e r e p e a t s . " 36 I t may now be h e l p f u l t o summarize our d i s c u s s i o n o f s o u r c e s o f i n s t a b i l i t y by t r a c i n g o u t t h e r e s p o n s e p a t t e r n o f what might be r e f e r r e d t o as a p u r e b u i l d i n g c y c l e . Assume an i n i t i a l i n c r e a s e i n t h e number o f f a m i l i e s d e s i r i n g accom-modation o r a r i s e i n incomes o r b o t h . The growth o f demand r e s u l t s i n a r e d u c t i o n o f e x i s t i n g v a c a n c i e s as new f a m i l i e s D u e s e n b e r r y , Business Cycles and Economic Growth, p. 158. 56 buy houses o r , i n r e s p o n s e t o i n c r e a s e d p u r c h a s i n g power, f a m i l i e s undouble o r seek t o improve t h e i r h o u s i n g s t a n d a r d . E v e n t u a l l y r e n t s and p r i c e s r i s e b u t because o f i n e r t i a ( s t i c k i n e s s ) and t h e l a g g e d r e s p o n s e o f t h e b u i l d i n g i n d u s t r y an i n v e n t o r y o f e x c e s s demand i s c r e a t e d . The e v e n t u a l r e s p o n s e o f s u p p l y may be encouraged by i n c r e a s i n g l y easy c r e d i t and t h e e x p e c t a t i o n o f h i g h e r p r o f i t from i n v e s t m e n t i n r e a l e s t a t e . As t h e b u i l d i n g boom g e t s underway i n c r e a s e d e x p e n d i t u r e s g e n e r a t e f u r t h e r i n c r e a s e s i n income and h o u s i n g demand t h r o u g h t h e f a m i l i a r m u l t i p l i e r p r o c e s s . E v e n t u a l l y , o v e r - c o n f i d e n c e and unfounded e x p e c t a t i o n s l e a d t o s p e c u l a t i v e o v e r b u i l d i n g . The appearance o f an i n c r e a s e i n v a c a n c i e s and r e d u c e d house s a l e s may n o t have a r e t a r d i n g i n f l u e n c e on t h e r a t e o f c o n s t r u c t i o n u n t i l t h e b u i l d - u p o f e x c e s s s u p p l y e x e r t s a downward p r e s s u r e on p r i c e s and r e n t s . Banks become c o n s e r v a t i v e and c r e d i t c o n t r a c t s . The r e s p o n s e o f t h e cons-t r u c t i o n i n d u s t r y i n d u c e s a d e c l i n e t h r o u g h t h e m u l t i p l i e r p r o c e s s . A c o i n c i d e n t b u s i n e s s d e p r e s s i o n may a c c e l e r a t e t h e downward t r e n d , l e a d i n g t o o u t m i g r a t i o n , d e f e r r e d m a r r i a g e s , and d o u b l i n g up. Depending on t h e degree o f p e s s i m i s m and t h e e x t e n t o f o v e r e x p a n s i o n i t may t a k e y e a r s f o r t h e b u i l -d i n g i n d u s t r y t o r e c o v e r , b u t e v e n t u a l l y t h e e x c e s s s u p p l y 57 becomes an e x c e s s demand and t h e p r o c e s s r e p e a t s . Thus, a c a s e has been made f o r t h e e x i s t e n c e o f a tend e n c y t o w a r d s y s t e m a t i c c y c l i c a l movement i n h o u s e b u i l d i n g a c t i v i t y . However, owing t o t h e v e r y l a r g e number o f f o r c e s t o w h i c h t h i s s e c t o r o f t h e economy i s s u b j e c t we mi g h t ex-p e c t t h e a c t u a l p a t t e r n o f r e s i d e n t i a l c o n s t r u c t i o n t o d i f f e r s i g n i f i c a n t l y from t h a t i m p l i e d by t h e s i m p l e model d e v e l o p e d h e r e . WHY THE LONG SWINGS IN BRITISH HOUSE-BUILDING FROM 1860  TO 1914? The l o n g swings i n b u i l d i n g a c t i v i t y i n G r e a t B r i t a i n o u t l i n e d i n t h e p r e v i o u s c h a p t e r have a t t r a c t e d much a t t e n t i o n i n t h e p a s t few decades f o r a v a r i e t y o f r e a s o n s . B u i l d i n g , as a l a r g e and w i d e l y d i f f u s e d i n d u s t r y , has a marked impact on t h e g e n e r a l l e v e l o f employment and t r a d e t h r o u g h o u t t h e economy o f any c o u n t r y . The v i o l e n t n a t u r e o f f l u c t u a t i o n s i n r e s i d e n t i a l c o n s t r u c t i o n r a i s e s i m p o r t a n t q u e s t i o n s c o n c e r n i n g the maintenance o f s t a b i l i t y i n t h e g e n e r a l F o r f u r t h e r e l a b o r a t i o n o f t h e dynamic f o r c e s w h i c h i n t e r a c t t o c r e a t e b u i l d i n g c y c l e s see L i o n e l Needleman, The Economics of Housing, (London: S t a p l e s P r e s s , 1965), pp. 147-15' 58 l e v e l o f economic a c t i v i t y . And w h i l e b u i l d i n g i s one o f t h e most i m p o r t a n t f a c t o r s i n t h e t r a d e c y c l e , one f i n d s a d r a m a t i c d i f f e r e n c e o f p e r i o d and a m p l i t u d e between t h e c y c l e s i n b u i l d i n g and t h o s e i n t r a d e i n G r e a t B r i t a i n . V i g o r o u s d e bate has c e n t e r e d on t h e c a u s a l mechanisms by w h i c h t h e s e l o n g swings i n B r i t i s h c o n s t r u c t i o n a c t i v i t y m i g h t be e x p l a i n e d . There a r e t h o s e who c o n t e n d t h a t e x t e r n a l c o n s i d e r a t i o n s were o f p r i m a r y i m p o r t a n c e i n d e t e r m i n i n g t h e p a t t e r n o f d o m e s t i c i n v e s t m e n t i n h o u s i n g . I t i s argued t h a t t h e " r e g i o n a l " economies o f G r e a t B r i t a i n and A m e r i c a i n t e r a c t e d t h r o u g h a p a t t e r n o f i n v e r s e c y c l e s i n i n v e s t m e n t , m i g r a t i o n and t r a d e f o r about 20 y e a r s . C o n v e r s e l y , o t h e r s have c o n c l u d e d t h a t t h e c o u r s e o f r e s i d e n t i a l c o n s t r u c t i o n was l a r g e l y d e t e r m i n e d by f a c t o r s s p e c i f i c t o t h e d o m e s t i c h o u s i n g market. They agree t h a t e x t e r n a l i n f l u e n c e s may have p l a y e d some p a r t a t t h e m a r g i n , b u t f i n d t h a t i n v e s t m e n t i n t h e d o m e s t i c h o u s i n g s t o c k was n o t a r e s i d u a l a c t i v i t y w h i c h a c c e l e r a t e d o n l y when i n v e s t m e n t o p p o r t u n i t i e s abroad seemed u n a t t r a c t i v e . I n an a r t i c l e on t h e Glasgow b u i l d i n g i n d u s t r y , p u b l i s h e d i n 19 35, P r o f e s s o r A.K. C a i r n c r o s s s u g g e s t e d a l i k e l y r e l a t i o n -s h i p between h o u s e - b u i l d i n g i n G r e a t B r i t a i n and t h e waves 59 o f e m i g r a t i o n and i n v e s t m e n t o v e r s e a s : " T h i s e m i g r a t i o n was c h i e f l y t o t h e c o u n t r i e s t o w h i c h B r i t i s h c a p i t a l was f l o w i n g : i t was a c t i v e when f o r e i g n i n v e s t m e n t was a c t i v e , d e p r e s s e d when f o r e i g n i n v e s t m e n t was d e p r e s s e d ... D u r i n g t h e s e pauses t h e r e was s i m u l t a n e o u s -l y p r e s s u r e on house-accommodation and a s u r f e i t o f cheap money; when t h e game began a g a i n , t h e need f o r houses and t h e funds f o r t h e i r c o n s -t r u c t i o n v a n i s h e d t o g e t h e r . Moreover t h e v e r y c e s s a t i o n o f f o r e i g n i n v e s t m e n t , by b r i n g i n g t o t h i s c o u n t r y d i s t r e s s s a l e s o f raw m a t e r i a l s and f o o d s t u f f s , d r o v e more and more o f t h e a g r i c u l t u r a l w o r k e r s t o t h e towns and i n c r e a s e d t h e p u r c h a s i n g power o f t h e i n d u s t r i a l p o p u l a t i o n ; t h e b u i l d i n g i n d u s t r y p r o s p e r e d a t t h e expense o f c o l o n i a l development."^° C a i r n c r o s s d i d n o t t h e n s u g g e s t any c a u s a l mechanism; e l a b o r -a t i o n o f t h i s i d e a was t o f o l l o w 18 y e a r s l a t e r w i t h t h e p u b l i c a t i o n o f h i s Home and Foreign Investment. A s t u d y o f b u i l d i n g i n B r i t a i n and t h e U n i t e d S t a t e s l e d 39 E.W. Cooney t o o u t l i n e a l i m i t e d e x p l a n a t i o n o f t h e f o r c e s u n d e r l y i n g t h e r e c i p r o c a l r e l a t i o n s h i p i n t h e c o u r s e o f r e s i -d e n t i a l c o n s t r u c t i o n between t h e two c o u n t r i e s . R e c o g n i z i n g t h a t b u i l d i n g i s b a s i c a l l y a l o c a l i z e d i n d u s t r y w i t h a l o c a l A.K. C a i r n c r o s s , "The Glasgow B u i l d i n g I n d u s t r y " , Review of Economic Studies, V o l . I I (1934-35) p. 14. 39 E.W. Cooney, " B u i l d i n g i n B r i t a i n and t h e U.S.A. 1856-1914", Economica, (November, 19 4 9 ) . 60 e q u i l i b r i u m , no d i r e c t c o n n e c t i o n can be made w i t h a n o t h e r c o u n t r y ' s economy. But a c o m p a r i s o n o f D o u g l a s ' s e s t i m a t e s o f B r i t i s h c a p i t a l e x p o r t s w i t h t h e two b u i l d i n g i n d i c e s s u g g e s t s t h a t " i t was c a p i t a l e x p o r t s from t h e U.K. w h i c h l i n k e d b u i l d i n g i n London and t h e U.S.A. i n t h e way a l r e a d y 40 d e s c r i b e d . " Cooney s u p p o r t s t h i s h y p o t h e s i s by d r a w i n g 41 42 on t h e o b s e r v a t i o n s o f C a i r n c r o s s and Rostow t h a t d u r i n g p e r i o d s when r e t u r n s on f o r e i g n i n v e s t m e n t s were r e l a t i v e l y l ow, t h e r e was a n a t u r a l t e n d e n c y f o r t h e B r i t i s h i n v e s t o r t o t u r n t o p r o p e r t y as a s a f e o u t l e t f o r h i s i n v e s t m e n t f u n d s . Thus, a r e d u c t i o n i n c a p i t a l e x p o r t s and e m i g r a t i o n t e n d e d t o r a i s e b o t h t h e demand f o r new c o n s t r u c t i o n and t h e e x p e c t -a t i o n o f h i g h e r p r o f i t s by s a t i s f y i n g t h e demand. "London b u i l d i n g was r a t h e r t h e p o o r and somewhat d u l l r e l a t i o n i n t h e n i n e t e e n t h c e n t u r y f a m i l y o f i n v e s t m e n t o p p o r t u n i t i e s . I t was, however, l i k e many d u l l t h i n g s , f e l t t o be s a f e , and when th e b r i l l i a n t p r o m i s e o f f o r e i g n i n v e s t m e n t was p e r i o d i c a l l y 43 f a l s i f i e d by e v e n t s , t h e B r i t i s h i n v e s t o r t u r n e d t o p r o p e r t y " . Ibid, p. 350. 41 C a i r n c r o s s , "The Glasgow B u i l d i n g I n d u s t r y " , p. 13, F o o t -n o t e 7. 42 W.W. Rostow, "The B r i t i s h Economy o f t h e N i n e t e e n t h C e n t u r y " , ( O x f o r d : O x f o r d U n i v e r s i t y P r e s s , 1948). 4 3 C o o n e y , " B u i l d i n g i n B r i t a i n and t h e U.S.A.", p. 352-53 61 The f i r s t c omprehensive s t u d y o f i n v e s t m e n t i n B r i t i s h r e s i d e n t i a l c o n s t r u c t i o n from 1870 t o 1913 was u n d e r t a k e n 44 by C a i r n c r o s s w i t h i n t h e framework o f a b r o a d a n a l y s i s o f f l u c t u a t i o n s i n home and f o r e i g n i n v e s t m e n t g e n e r a l l y . H i s s t u d y f o c u s e s a t t e n t i o n on t h e fun d a m e n t a l i m p o r t a n c e o f th e r o l e o f i n v e s t m e n t , m i g r a t i o n , and t h e terms o f t r a d e i n t h e e x p l a n a t i o n o f i n d u s t r i a l f l u c t u a t i o n s i n V i c t o r i a n B r i t a i n . The l e v e l o f income and employment u l t i m a t e l y depended upon t h e l e v e l and d i s p o s i t i o n o f home and f o r e i g n i n v e s t m e n t , b o t h o f w h i c h , i n t u r n , were l a r g e l y d e t e r m i n e d by t h e terms o f t r a d e . ^ Changes i n f o r e i g n i n v e s t m e n t and t h e a s s o c i a t e d move-ments o f p o p u l a t i o n r e a c t e d on t h e b u i l d i n g i n d u s t r y t h r o u g h b o t h t h e a v a i l a b i l i t y o f c a p i t a l f o r i n v e s t m e n t p u r p o s e s and s h i f t s i n t h e demand f o r h o u s i n g accommodation: "The more f o r e i g n c o u n t r i e s borrowed, t h e more men we s e n t them t o c a r r y o u t t h e work o f new c o n s t r u c t i o n f o r w h i c h B r i t i s h c a p i t a l was wanted. The e m i g r a t i o n o f t h e s e men l e f t houses empty i n t h i s c o u n t r y . There was t h u s l e s s c e r t a i n t y o f f i n d i n g t e n a n t s f o r newly b u i l t h o u s e s , and more d i f f i c u l t y i n l e t t i n g houses a t customary r e n t s . The d e c l i n e i n demand n a t u r a l l y h i t t h e b u i l d i n g i n d u s t r y . S i m u l t a n e o u s l y , b u i l d e r s had o f t e n A.K. C a i r n c r o s s , Home and Foreign Investment. 45 C a i r n c r o s s does have a b i t o f t r o u b l e e x p l a i n i n g t h e r e a s o n why, d u r i n g t h e 1880's when c a p i t a l e x p o r t s were v e r y h i g h , t h e r e was a d e t e r i o r a t i o n i n t h e terms o f t r a d e . 62 t o p u t up w i t h worse terms o f c r e d i t ; o r i n v e s t o r s c e a s e d t o buy house p r o p e r t y a l t o g e t h e r and p u r c h a s e d f o r e i g n bonds i n s t e a d . " 4 6 As t h e wave o f f o r e i g n i n v e s t m e n t s u b s i d e d , c a p i t a l was once a g a i n c h a n n e l e d i n t o t h e d o m e s t i c mortgage market and hence made a v a i l a b l e t o b u i l d i n g s o c i e t i e s . The d e c l i n e i n e m i g r a t i o n improved t h e demand f o r h o u s i n g accommodation. As t h e r e a l r e t u r n t o i n v e s t m e n t abroad ( i n t h e form o f i n -c r e a s e d s u p p l i e s o f cheap raw m a t e r i a l s and f o o d p r o d u c t s ) e x e r t e d downward p r e s s u r e on p r i c e s i n Europe, r e a l wages r o s e i n t h e towns. T h i s n o t o n l y made i t p o s s i b l e f o r c i t y d w e l l e r s t o improve t h e i r l i v i n g c o n d i t i o n s by moving t o more d e s i r a b l e accommodation, b u t a l s o i n c r e a s e d h o u s i n g demand by a t t r a c t i n g l a b o u r t o t h e towns from d e p r e s s e d a g r i c u l t u r a l r e g i o n s . C a i r n c r o s s a r g u e s , w i t h r e s p e c t t o h o u s e - b u i l d i n g i n Glasgow (which f o l l o w e d a p a t t e r n v e r y s i m i l a r t o t h a t i n G r e a t B r i t a i n as a w h o l e ) , t h a t "the b u i l d i n g c y c l e was l i t t l e 47 more t h a n a m i g r a t i o n c y c l e i n d i s g u i s e . " The upswing i n e m i g r a t i o n t h a t g o t underway i n t h e m i d - s e v e n t i e s b r o u g h t t h e f i r s t l o n g swing i n house b u i l d i n g t o a c l o s e . "The r e v e r s a l o f t h i s f l o w i n t h e n i n e t i e s gave t h e second most o f 46 47 Ibid, pp. 219-20 Ibid, p. 25 63 i t s i m p e t u s . When the o u t f l o w s t a r t e d a g a i n , on such a s c a l e as t o a r r e s t t h e p o p u l a t i o n a l m o s t c o m p l e t e l y , t h e 48 second boom, t o o , p e t e r e d o u t . " M i g r a t i o n , b o t h i n t e r n a l and e x t e r n a l , was an i m p o r t a n t f a c t o r d e t e r m i n i n g t h e c o u r s e o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n . C a i r n c r o s s shows t h a t t h e tremendous growth i n p o p u l a t i o n i n t h e 1890's was accompanied by a s i g n i f i c a n t i n c r e a s e i n t h e movement o f p o p u l a t i o n from one l o c a t i o n t o a n o t h e r w i t h i n t h e c o u n t r y . "The b u i l d i n g booms o f V i c t o r i a n B r i t a i n seem t o have depended n o t o n l y on an i n c r e a s e i n t h e a g g r e g a t e demand f o r house room, b u t a l s o upon changes i n 49 t h e i n c i d e n c e o f t h i s demand." T h i s , among o t h e r t h i n g s , h e l p s t o e x p l a i n t h e p r o l o n g a t i o n o f t h e b u i l d i n g boom i n t h e 1890's and 1900's. 50 B u i l d i n g on t h e work o f C a i r n c r o s s , B r m l e y Thomas has a n a l y z e d t h e l o n g waves o f m i g r a t i o n and i n v e s t m e n t w i t h i n t h e c o n t e x t o f an " A t l a n t i c economy". There i s , however, a marked d i f f e r e n c e i n emphasis between t h e two s t u d i e s . C a i r n c r o s s sees t h e terms of t r a d e as b e i n g the major d e t e r m i n i n g f a c t o r Ibtd. 4 9 I b i d . , p. 219 50 B r i n l e y Thomas, Migration and, Economic Growth, (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1954). 64 i n t h e d i s t r i b u t i o n o f i n v e s t m e n t between home and f o r e i g n a l t e r n a t i v e s ; Thomas v i e w s movements i n t h e terms o f t r a d e as consequences o f u n d e r l y i n g changes r a t h e r t h a n as a c a u s a l f o r c e . Drawing on a wide range o f s t a t i s t i c a l e v i d e n c e , Thomas o u t l i n e s t h e b e h a v i o r a l r e l a t i o n s h i p s w h i c h l i n k e d t h e v a r i o u s s e c t o r s o f t h e " A t l a n t i c economy". A home c o n s t r u c t i o n s e c t o r and an e x p o r t s e c t o r w i t h i n each r e g i o n ( i . e . t h e U n i t e d S t a t e s and G r e a t B r i t a i n ) compete f o r r e s o u r c e s w h i l e t h e r e g i o n s t h e m s e l v e s compete f o r t h e r e s o u r c e s o f t h e economy t h e y make up. I m p o r t a n t i n t e r - r e g i o n a l d i f f e r e n c e s e x i s t e d between t h e r e l a t i v e s i z e and c y c l i c a l b e h a v i o r o f t h e home c o n s t r u c t i o n and e x p o r t s e c t o r s . There were a l s o major d i f f e r e n c e s i n r e s o u r c e endowments: G r e a t B r i t a i n b e i n g r e l a t i v e l y c a p i t a l abundant, t h e U n i t e d S t a t e s b e i n g r e l a t i v e l y w e l l endowed w i t h n a t u r a l r e s o u r c e s . The key t o t h e e x p l a n a t i o n o f l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n i s found i n t h e r o l e o f i n t e r n a t i o n a l m i g r a t i o n . "A major i n f l u x o f p o p u l a t i o n accompanied by c a p i t a l i m p o r t s , i n d u c e s a boom i n c o n s t r u c t i o n i n t h e U n i t e d S t a t e s ; meanwhile t h e u p t u r n o f e m i g r a t i o n and f o r e i g n i n v e s t m e n t i n G r e a t B r i t a i n i s accompanied a f t e r a s h o r t l a g by a f a l l i n t h e 51 volume o f b u i l d i n g " . 51Ibid, p. 177 65 Thomas t h e n a r g u e s t h a t t h e U n i t e d S t a t e s has a s t r o n g p r o p e n s i t y t o spend i t s borrowed funds on B r i t i s h c a p i t a l goods, t h u s r e s u l t i n g i n a boom i n t h e B r i t i s h e x p o r t s e c t o r a t t h e expense o f home c o n s t r u c t i o n . But t h e wave o f o u t - m i g r a t i o n g i v e s r i s e t o changes i n o t h e r f a c t o r s w h i c h a r e a d v e r s e t o h o u s e - b u i l d i n g . The r e d u c t i o n o f i n t e r n a l m o b i l i t y t h a t accompanies i n c r e a s e d e m i g r a t i o n , t h e t e n d e n c i e s f o r t h e number o f v a c a n c i e s t o r i s e and f o r r e n t s t o d e c l i n e , a l l have a d e p r e s s i n g e f f e c t on t h e l e v e l o f d o m e s t i c b u i l d i n g a c t i v i t y . D u r i n g t h i s phase o f t h e l o n g s w ing t h e d e p r e s s i o n i n home c o n s t r u c t i o n more t h a n o f f s e t s t h e boom i n e x p o r t p r o d u c t i o n , t h u s l e a d i n g t o a g e n e r a l d e c l i n e i n r e a l income p e r c a p i t a ( r e l a t i v e t o t r e n d ) . I n t h e U n i t e d S t a t e s t h e i n f l a t i o n a r y e x p a n s i o n o f home c o n s t r u c t i o n draws l a b o u r and r e s o u r c e s from t h e e x p o r t s e c t o r . T h i s r e s u l t s i n r e l a t i v e p r i c e changes: d o m e s t i c goods p r i c e s r i s e most, f o l l o w e d by e x p o r t p r i c e s ; i m p o r t p r i c e s r i s e l e a s t . The m i n o r change i n i m p o r t p r i c e s r e s u l t s from the a b i l i t y o f t h e B r i t i s h e x p o r t s e c t o r t o draw f a c t o r s from t h e d e p r e s s e d home c o n s t r u c t i o n i n d u s t r i e s w i t h l i t t l e o r no i n c r e a s e i n c o s t s . "Booming e x p o r t s accompanied by d e p r e s s e d c o n s t r u c t i o n a l a c t i v i t y y i e l d a more moderate e x p a n s i o n t h a n booming c o n s t r u c t i o n a l a c t i v i t y accompanied 66 by d e p r e s s e d e x p o r t s . " C o n s e q u e n t l y , t h e n e t b a r t e r terms o f t r a d e t u r n a g a i n s t G r e a t B r i t a i n . A downturn i n t h e U n i t e d S t a t e s i s accompanied by a f a l l i n c a p i t a l i m p o r t s and i m m i g r a t i o n . I n G r e a t B r i t a i n t h e r e d u c t i o n o f f o r e i g n i n v e s t m e n t and c a p i t a l e x p o r t s f r e e s l a b o u r and l o a n a b l e funds f o r employment i n t h e e x p a n d i n g d o m e s t i c c o n s t r u c t i o n s e c t o r . The d e c l i n e i n e m i g r a t i o n and t h e i n c r e a s e i n i n t e r n a l m o b i l i t y l e a d t o a s w e l l i n g o f t h e u r ban p o p u l a t i o n , a r e d u c t i o n i n v a c a n c i e s and r i s i n g house p r i c e s and r e n t s — a l l f a v o r a b l e t o i n c r e a s e d b u i l d i n g a c t i v i t y . "The e x p a n s i v e f o r c e o f t h i s i n d u c e d i n v e s t m e n t i s more p o t e n t t h a n t h e d e p r e s s i n g e f f e c t o f t h e f o r e i g n t r a d e m u l t i p l i e r ; hence a r i s e i n r e a l income a head r e l a t i v e t o . , „53 t r e n d . The e x p a n s i o n o f p r o d u c t i v e c a p a c i t y t h a t t o o k p l a c e i n t h e U n i t e d S t a t e s d u r i n g t h e upswing i n house c o n s t r u c t i o n r e s u l t e d i n a s u b s t a n t i a l i n c r e a s e i n t h e s u p p l y o f raw m a t e r i a l s and f o o d p r o d u c t s e x p o r t e d o v e r s e a s a t " f a l l i n g o r s l o w l y r i s i n g p r i c e s " . Thus, t h e n e t b a r t e r terms o f t r a d e s h i f t i n f a v o r o f G r e a t B r i t a i n . 52 B r i n l e y Thomas, Economies of International Migration, (London: M a c M i l l a n and Co. L t d . , 1958) p. 178. 53 Thomas, Migration and Economic Growth, p. 178. 67 T h i s , t h e n , i s t h e p a t t e r n o f t h e A t l a n t i c economy, " d i v i d i n g a common fun d o f i n c r e m e n t a l e n e r g i e s between i t s r e g i o n s i n v a r y i n g p r o p o r t i o n s from t i m e t o t i m e ... whether a v i l l a s h o u l d go up i n H u d d e r s f i e l d d e c i d e d , o r depended on, 54 whether a frame house went up i n Iowa." 55 P.J. O'Leary and W. A r t h u r L e w i s s e r i o u s l y q u e s t i o n t h e e x i s t e n c e o f any s y s t e m a t i c i n t e r - r e l a t i o n s h i p s between t h e development o f t h e U n i t e d S t a t e s and G r e a t B r i t a i n . The ebb and f l o w o f c a p i t a l a c r o s s t h e A t l a n t i c , f r e e d p e r i o d i c a l l y by a s u r f e i t o f B r i t i s h home i n v e s t m e n t , i s d i s m i s s e d as a p o s s i b l e l i n k w i t h t h e argument t h a t , " f o r w h i l e i t i s t r u e t h a t t h e U.S.A. was i m p o r t i n g c a p i t a l , i t s c a p i t a l i m p o r t s were so s m a l l i n r e l a t i o n t o i t s own s a v i n g s - a v e r a g i n g between 1874 and 189 5 l e s s t h a n a h a l f o f one p e r c e n t o f g r o s s n a t i o n a l p r o d u c t - t h a t i t i s i m p o s s i b l e t o h o l d t h a t c a p i t a l f o r m a t i o n i n t h e U.S. was a t t h i s t i m e dependent on U.K. l e n d i n g ..."^ T h i s a l s o l e a d s t o t h e c o n c l u s i o n t h a t "the U.S. governed i t s own f o r t u n e s i n t h e n i n e t e e n t h c e n t u r y , E.H. P h e l ps-Brown, i n a r e v i e w o f Migration and Economic Growth, Economic Journal, V o l . LXIV (December, 1954) p. 820. ' 55 P.J . O'Leary and W. A r t h u r L e w i s , " S e c u l a r Swings i n P r o d u c t i o n and T r a d e , 1870-1913", Manchester School, V o l . X X I I I (May, 1955) r e p r i n t e d i n R.A. Gordon and L.R. K l e i n , Readings in Business Cycles (Homewood, 111: R i c h a r d D. I r w i n , I n c . , 1965) pp. 546-574. Ibid, p. 556. 68 and i f any a d j u s t m e n t had t o be made i t was made on t h e 57 o t h e r s i d e o f t h e A t l a n t i c . " The t h e o r y t h a t m i g r a t i o n was an i m p o r t a n t l i n k con-d i t i o n i n g t h e i n v e r s e p a t t e r n o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n and t h e U n i t e d S t a t e s i s t r e a t e d w i t h s u s p i c i o n , f o r " e m i g r a t i o n r a t e s made l e s s t h a n a q u a r t e r o f one p e r c e n t 5 8 d i f f e r e n c e t o t h e a n n u a l r a t e o f growth o f p o p u l a t i o n . " I f t h e r e was any s y s t e m a t i c i n t e r a c t i o n between t h e two economies a f t e r 1870, L e w i s and O'Leary would be p r e -d i s p o s e d t o a mechanism i n w h i c h t h e B r i t i s h b u i l d i n g c y c l e was t i m e d t o f i t i n w i t h t h a t i n t h e U.S. M e d i a t i o n would t h e n t a k e t h e form o f B r i t i s h i n v e s t o r s s h i f t i n g f u n d s between f o r e i g n and d o m e s t i c p o r t f o l i o s i n r e s p o n s e t o changes i n r e l a t i v e r e t u r n s . They a r e s k e p t i c a l , however, c o n c l u d i n g t h a t , "we cannot even r u l e o u t t h e p o s s i b i l i t y t h a t t h e a l t e r n a t i o n o f t h e U.S. and U.K. b u i l d i n g c y c l e s was a s h e e r a c c i d e n t , s p r i n g i n g perhaps from t h e d i f f e r e n t e f f e c t s w h i c h t h e N a p o l e o n i c Wars may have had upon t h e p r o g r e s s o f r e s i -d e n t i a l b u i l d i n g i n t h e two c o u n t r i e s . The c a s e f o r t h i n k i n g i t may have been an a c c i d e n t l i e s i n t h e f a c t t h a t i f t h e two c y c l e s had c o i n c i d e d , t h e r e would have been no mechanism t o Ibvd. ^ Ibid. 69 59 make them a l t e r n a t e . " T h i s l a s t p o s i t i o n has been d i s c o u n t e d by a number o f a u t h o r i t i e s , n o t a b l y B r i n l e y Thomas and A.R. H a l l . Thomas c o u n t e r s : " O b v i o u s l y i f you e x p r e s s m i g r a t i o n and c a p i t a l f l o w s as a p r o p o r t i o n o f p o p u l a t i o n growth and g r o s s n a t i o n a l p r o d u c t r e s p e c t i v e -l y , you w i l l n e a r l y always g e t r i d i c u l o u s l y s m a l l p e r c e n t a g e s ; b u t t h e s e p e r c e n t a g e s a r e i r r e l e v a n t . I t i s s u r e l y t h e m a r g i n t h a t c o u n t s . " 60 He a l s o s t r e s s e s t h a t t h e r o l e o f c a p i t a l t r a n s f e r s s h o u l d n o t be c o n s i d e r e d i n d e p e n d e n t l y o f t h e r e d i s t r i b u t i o n o f p o p u l a t i o n . B r i t i s h f o r e i g n l e n d i n g was an i m p o r t a n t f a c t o r i n e n a b l i n g i m m i g r a n t s t o be absorbed i n t h e d e v e l o p i n g a r e a s o f t h e w o r l d . T h e i r combined impact a t t h e m a r g i n had a p r o f o u n d i n f l u e n c e on t h e p a t t e r n o f home i n v e s t m e n t . Thus: "A slump i n e m i g r a t i o n meant (a) an i n c r e a s e i n p o p u l a t i o n c o n c e n t r a t e d i n t h e house-s e e k i n g age group, and (b) a s u b s t a n t i a l i n c r e a s e i n i n t e r n a l m i g r a t i o n t o t h e i n d u s -t r i a l a r e a s s t i m u l a t e d by t h e r i s e i n home i n v e s t m e n t ; b o t h t h e s e f a c t o r s had a d i r e c t b e a r i n g on t h e demand f o r h o u s i n g . Moreover, a d e c l i n e i n e m i g r a t i o n was accompanied by a r i s e i n t h e volume o f l o a n a b l e funds a v a i l -a b l e a t home." 6 1 ^Ibid, p. 557. 6 0 Thomas, Economics of International Migration, p. 10. ^Ibid, p. 11. 70 L e w i s and O'Leary c l a i m , w i t h o u t s u b s t a n t i a t i o n , t h a t c o n t r a c y c l i c a l l o n g swings i n h o u s e - b u i l d i n g a c t i v i t y i n t h e 6 2 U n i t e d S t a t e s and G r e a t B r i t a i n can be t r a c e d from t h e 18 20's. Thomas d a t e s t h e i n v e r s e p a t t e r n from 1847, c i t i n g as e v i d e n c e Shannon's i n d e x o f b r i c k p r o d u c t i o n t o 1849, r a i l w a y m i l e s added from 1843 t o 1868, and C a i r n c r o s s ' s b u i l d i n g 6 3 i n d e x from 1870 t o 1914. I n a s t i m u l a t i n g a r t i c l e on t h e 64 causes o f i n d u s t r i a l f l u c t u a t i o n s , D.J. Coppock c r i t i c i z e s b o t h o f t h e s e p o s i t i o n s , a r g u i n g t h a t t h e r e i s no e v i d e n c e o f t h e r e h a v i n g been l o n g b u i l d i n g c y c l e s i n t h e U n i t e d K i n g -dom b e f o r e 1870. The volume o f B r i t i s h e x p o r t s f o l l o w e d c l o s e l y t h e U.S. t r a n s p o r t - b u i l d i n g c y c l e from 1840 t o 1870. T h i s i s r e f l e c t e d i n t h e m i n or s e c u l a r swings i n t h e d e v i a t i o n s from t h e t r e n d o f t h e Hoffman i n d e x o f i n d u s t r i a l p r o d u c t i o n . These f l u c t u a -t i o n s were moderated by t h e t e ndency f o r h o u s e - b u i l d i n g i n G r e a t B r i t a i n t o a l t e r n a t e w i t h r a i l r o a d c o n s t r u c t i o n i n t h e decades 1830-60. I n t h e U.S. t h e y swung t o g e t h e r . " S i n c e i n v e s t m e n t i n t h e two i n d u s t r i e s must have dominated B r i t i s h home i n v e s t m e n t around t h i s t i m e we can say t h a t i f a g g r e g a t e O'Leary and L e w i s , " S e c u l a r Swings i n P r o d u c t i o n and T r a d e " , p. 126 6 3 Thomas, Migration and Economic Growth, pp. 175-6, 325. 64 D.J. Coppock, "The Causes o f B u s i n e s s F l u c t u a t i o n s " Trans-actions of the Manchester S t a t i s t i c a l Society , (December,1959) pp. 1-42 71 home investment d i d not swing i n phase wi t h U.S. investment 65 i t c e r t a i n l y d i d not swing i n v e r s e l y . " The volume of e m i g r a t i o n from the U n i t e d Kingdom f l u c t u a t e d i n phase w i t h the U.S. t r a n s p o r t - b u i l d i n g c y c l e d u r i n g these y e a r s , but was not l a r g e enough t o cause an i n v e r s e domestic b u i l d i n g c y c l e . The o r i g i n o f the i n v e r s e long swings i n r e s i d e n t i a l c o n s t r u c t i o n , a c c o r d i n g t o Coppock, i s found i n the indu s -t r i a l developments which took p l a c e i n the 15 years f o l l o w i n g the American C i v i l War. Both the U n i t e d S t a t e s and Great B r i t a i n e x p e r i e n c e d an upswing i n b u i l d i n g a c t i v i t y i n the l a t e 1860's. T h i s was accompanied by a boom i n B r i t i s h e x p orts and e x t e r n a l m i g r a t i o n . F e v e r i s h overexpansion l e d to a downturn i n 1871-72, a f t e r which r a i l w a y c o n s t r u c t i o n and h o u s e - b u i l d i n g i n the U.S. f e l l o f f r a p i d l y . B r i t i s h e x p orts peaked i n the same years and then d e c l i n e d ( r e l a t i v e t o t r e n d ) . The outward movement o f p o p u l a t i o n was a r r e s t e d i n 1873. T h i s , i t i s argued, gave a f i l l i p t o the domestic demand f o r housing, thus pushing the b u i l d i n g boom to a peak i n 1876. The i n v e r s e phasing r e s u l t e d from "the extreme-l y r a p i d r e v e r s a l of the U.S. b u i l d i n g c y c l e t o g e t h e r w i t h 5 Ibid, p. 29. 72 a r i s e i n B r i t i s h n e t e m i g r a t i o n t o l e v e l s p r e v i o u s l y 6 6 u n a t t a i n e d e i t h e r a b s o l u t e l y o r p e r c a p i t a . " Between 1871 and 1881, t h e n e t d e c e n n i a l r a t e o f o u t - f l o w was seven p e r thousand p o p u l a t i o n . T h i s i n c r e a s e d t o 2 3 p e r thousand i n t h e n e x t decade and t h e n f e l l t o two p e r thousand i n t h e 1890's. The added impetus t o t h e d o m e s t i c r a t e o f p o p u l a t i o n (urban) growth c o n t r i b u t e d t o t h e b u i l d i n g boom o f t h e 1890's w h i c h c o i n c i d e d w i t h a down-swing i n t h e U.S. t r a n s p o r t - b u i l d i n g c y c l e s . "Thus i t seems t h a t L e w i s and O'Leary may have been c o r r e c t i n s u g g e s t i n g t h a t t h e a l t e r n a t i o n o f t h e U.K. and U.S. B u i l d i n g C y c l e s "was a s h e e r a c c i d e n t " though t h e causes o f t h i s a c c i d e n t d i d not l i e , as t h e y s u g g e s t , i n t h e e f f e c t s o f t h e Napo-l e o n i c Wars, b u t r a t h e r i n t h e d i f f e r e n t demographic, t e c h n i c a l and s p e c u l a t i v e de-t e r m i n a n t s o f t h e b u i l d i n g c y c l e s i n t h e two c o u n t r i e s around t h e 1870's."67 Once o u t o f phase, t h e two o p p o s i n g b u i l d i n g c y c l e s were l i n k e d by t h e waves o f m i g r a t i o n a c r o s s t h e A t l a n t i c . Coppock o u t l i n e s a c a u s a l mechanism based on t h e a s s u m p t i o n t h a t t h e b u i l d i n g c y c l e i n G r e a t B r i t a i n was dependent upon t h t r a n s p o r t - b u i l d i n g c y c l e i n t h e U n i t e d S t a t e s . T h i s a s s u m p t i o n Ibid, p. 30 Ib%d. 73 j u s t i f i e d f o r t h e f o l l o w i n g r e a s o n s : F i r s t , l o n g swings i n U.S. b u i l d i n g a c t i v i t y a r e e v i d e n t as e a r l y as t h e 1830's. Second, t h e waves o f i m m i g r a t i o n w h i c h c o i n c i d e d w i t h and c o n t r i b u t e d t o t h e b u i l d i n g c y c l e s i n t h e U.S. had t h e i r o r i g i n i n many European c o u n t r i e s . " I t i s e a s i e r t o see t h e e m i g r a t i o n waves from t h e U.K. as p a r t o f a g e n e r a l r e s p o n s e t o t h e p u l l o f t h e U.S. boom t h a n as t h e f a c t o r w h i c h g e n e r a t e d t h e U.S. boom and so made p o s s i b l e t h e 6 8 e m i g r a t i o n waves from o t h e r European c o u n t r i e s . " W i t h t h i s , t h e n , h o u s e - b u i l d i n g i n G r e a t B r i t a i n r e sponded p r i -m a r i l y t o s h i f t s i n p o p u l a t i o n , s t i m u l a t e d by waves o f r a i l w a y c o n s t r u c t i o n and h o u s e - b u i l d i n g o v e r s e a s . A l t h o u g h Coppock does n o t d i s c u s s t h e r o l e o f c a p i t a l and f o r e i g n i n v e s t m e n t i n t h e d e t e r m i n a t i o n o f B r i t i s h house-b u i l d i n g , he does r a i s e an i m p o r t a n t i s s u e , w i t h o u t r e a l i z i n g i t , w i t h r e s p e c t t o consumption and t h e c a p i t a l t r a n s f e r , and t h e i r combined p o t e n t i a l i m p a ct on t h e h o u s i n g s e c t o r . The d e c l i n e i n home i n v e s t m e n t d u r i n g an upswing i n b u i l d i n g o v e r s e a s r e l e a s e s p o t e n t i a l s a v i n g s f o r f o r e i g n i n v e s t m e n t . "But c a p i t a l e x p o r t must be e f f e c t e d v i a t h e b a l a n c e o f payments Ibid, p. 24. 74 70 and p o t e n t i a l s a v i n g s w i l l v a n i s h i f t h e U.K. economy be-69 comes s e r i o u s l y d e p r e s s e d . " The B r i t i s h e x p o r t booms accompanying t h e l o n g swings i n o v e r s e a s i n v e s t m e n t h e l p e d t o e f f e c t t h e t r a n s f e r . I t i s i m p o r t a n t t o r e c o g n i z e t h a t t h e s e c u l a r swings i n B r i t i s h i m p o r t s and consumption i n phase w i t h home i n v e s t m e n t a l s o eased t h e c a p i t a l t r a n s f e r A t t h e same t i m e , however, a d e c l i n e i n consumption expen-d i t u r e s must have had a d e p r e s s i n g e f f e c t on t h e demand f o r house s p a c e , t h u s i n t e n s i f y i n g t h e d e p r e s s i o n i n b u i l d i n g c o i n c i d e n t w i t h a wave i n o v e r s e a s i n v e s t m e n t . A second c o n t r i b u t i o n t o t h e s t u d y o f l o n g swings i n B r i t i s h h o u s e - b u i l d i n g was made by Cooney i n an a r t i c l e p r e s e n t i n g new d a t a on l a t h w o o d i m p o r t s w h i c h s u g g e s t e d t h a t p r i o r t o t h e 1860's " t h e r e were no major f l u c t u a t i o n s o f g r e a t e r l e n g t h t h a n t h e b u s i n e s s c y c l e i n B r i t i s h b u i l d i n g 71 a c t i v i t y . " The 1870's a r e v i e w e d as a major t u r n i n g p o i n t i n B r i t i s h economic development. The most s i g n i f i c a n t change i s t h e g r o w i n g i m p o r t a n c e o f f o r e i g n i n v e s t m e n t i n g o v e r n i n g t h e c o u r s e o f d o m e s t i c h o u s e - b u i l d i n g . Ibid, p. 23 70 Lewis and O'Leary, " S e c u l a r Swings i n P r o d u c t i o n and Trade" p. 124-5. 71 E.W. Cooney, "Long Waves i n B u i l d i n g i n t h e B r i t i s h Eco-nomy o f t h e N i n e t e e n t h C e n t u r y , Economic History Review, V o l . X I I I (December, 1960), pp. 257-269. 7 5 M a j o r f l u c t u a t i o n s i n r e s i d e n t i a l c o n s t r u c t i o n r e s u l t from v a r i a t i o n s i n t h e s u p p l y of c a p i t a l caused by s e c u l a r swings i n t h e volume o f f o r e i g n i n v e s t m e n t . B u i l d i n g f i n a n c e s u f f e r e d from i n v e s t o r p r e f e r e n c e f o r r e a d i l y n e g o t i a b l e f o r e i g n government and r a i l r o a d bonds. D u r i n g p e r i o d s o f e x p a n s i o n t h i s p r e f e r e n c e was dominated by t h e e x p e c t a t i o n s o f g r e a t e r p r o f i t s from i n v e s t m e n t abroad. A n o t h e r f a c t o r c o n t r i b u t i n g t o d e p r e s s e d b u i l d i n g a c t i v i t y d u r i n g a f o r e i g n i n v e s t m e n t boom was t h e i n a b i l i t y o f t h e c o n s t r u c t i o n i n d u s t r y t o s u c c e s s f u l l y compete w i t h an e x p a n d i n g e x p o r t s e c t o r f o r l a b o u r and m a t e r i a l s . I n c r e a s e d e m i g r a t i o n f u r t h e r r e d u c e d t h e s u p p l y o f l a b o u r t o t h e b u i l d i n g i n d u s t r y . Cooney emphasizes t h e r e l a t i o n s h i p between home and f o r e i g n i n v e s t m e n t and i n t e r n a l m i g r a t i o n and e m i g r a t i o n o u t l i n e d by C a i r n c r o s s . F u r t h e r , he s t r e s s e d t h e i m p o r t a n c e o f l o n g waves i n t h e economic development of A m e r i c a i n g o v e r n i n g t h e t i m e - s h a p e o f B r i t i s h b u i l d i n g . M i n o r e x c e p t i o n t o t h i s i n f l u e n c e i s t a k e n w i t h r e s p e c t t o t h e g r e a t b u i l d i n g boom c e n t e r e d on 1900. S e v e r a l i n d e p e n d e n t f a c t o r s a r e r e -c o g n i z e d as h a v i n g a m p l i f i e d t h i s major f l u c t u a t i o n , i n c l u d i n g t h e i n t r o d u c t i o n o f e l e c t r i c i t y , development o f m u n i c i p a l tramways, and t h e r i s e i n r e a l incomes between 1880 and 1900. " I t would be d i f f i c u l t t o argue t h a t t h e s e , even t a k e n t o g e t h e r , a r e more l i k e l y t h a n t h e o v e r s e a s i n f l u e n c e t o a c c o u n t f o r t h e 76 p a r t i c u l a r t i m i n g of the b u i l d i n g boom of 189 5 to 1905 but 72 they s u r e l y added a good d e a l t o i t s amplitude." The f i r s t d i s a g g r e g a t e d study of h o u s e - b u i l d i n g i n 73 Great B r i t a i n from 1890 t o 1914 l e d S.B. S a u l to s e r i o u s l y q u e s t i o n the s e n s i t i v e r e a c t i o n s of the b u i l d i n g i n d u s t r y i m p l i e d by the f o r e i g n i n v e s t m e n t - b u i l d i n g c y c l e l i n k i n the s y s t e m a t i c o p e r a t i o n of an " A t l a n t i c economy." Basing h i s a n a l y s i s on the s t a t i s t i c s of houses e r e c t e d and house p l a n s approved i n a l a r g e number of towns s i g n i f i c a n t d i f f e r e n c e s i n the a c t u a l p a t t e r n o f b u i l d i n g a c t i v i t y are shown t o e x i s t between d i f f e r e n t p a r t s of the c o u n t r y . T h i s r a i s e s the s e r i o u s q u e s t i o n of how the i n t e r n a t i o n a l investment migra-t i o n mechanism i s t r a n s m i t t e d t o the h e a r t of the b u i l d i n g i n d u s t r y , i . e . , the l o c a l market. Saul's answer i s t h a t i n -vestment i n housing was l a r g e l y determined by f a c t o r s s p e c i -f i c t o the l o c a l housing market. Accounts i n contemporary t r a d e l i t e r a t u r e s t a t e t h a t the l e v e l of v a c a n c i e s i s o f t e n used by b u i l d e r s as a guide t o market c o n d i t i o n s . I n f o r m a t i o n from the B r i t i s h censuses of 1901 and 1911, and what l i t t l e fragmentary evidence e x i s t s on empty houses i n v a r i o u s towns, appears t o i n d i c a t e t h a t 12Ibid3 p. 267 73 S.B. S a u l , "House B u i l d i n g i n England", Economic H%story Review, V o l . XV (August, 1962) , pp. 119-137. 77 t h e r e was wide l o c a l v a r i a t i o n i n t h e l a g g e d r e s p o n s e o f 74 t h e b u i l d i n g i n d u s t r y t o t h i s i n d i c a t o r . The q u e s t i o n r a i s e d h e r e w i l l o n l y be r e s o l v e d by more i n t e n s i v e s t u d y o f l o c a l market c o n d i t i o n s , p a r t i c u l a r l y , t h e r o l e o f empty p r o p e r t y . U n f o r t u n a t e l y , l i t t l e i n f o r m a t i o n on v a c a n c y r a t e s i s a v a i l a b l e . Perhaps t h e most i m p o r t a n t l o c a l f a c t o r c o n t r i b u t i n g t o t h e d e t e r m i n a t i o n o f h o u s e - b u i l d i n g p a t t e r n s i n G r e a t B r i t a i n was t h e e s s e n t i a l l y s p e c u l a t i v e c h a r a c t e r o f t h e h o u s e - b u i l d i n g i n d u s t r y . From r e g u l a r r e p o r t s on b u i l d i n g a c t i v i t y i n Birmingham, p u b l i s h e d i n t h e Building S o c i e t i e s ' Gazette, S a u l has assembled v a l u a b l e e v i d e n c e o f t h i s i n -d u s t r i a l p r o p e n s i t y : "The f i r s t i n t e r e s t i n g f e a t u r e i s t h e con-s i d e r a b l e amount o f s p e c u l a t i v e b u i l d i n g r e p o r t e d d u r i n g t h e e a r l y n i n e t i e s des-p i t e t h e f a c t t h a t r e n t s were v e r y low and s t i c k y , and c o s t s h i g h ... I t was n o t so much a q u e s t i o n o f "want" f o r houses as an o p p o r t u n i t y made a v a i l a b l e by l a n d owner and s p e c u l a t o r . By 189 5 s p e c u l a t i v e b u i l d i n g was "never so rampant" and t h e c o r r e s p o n d e n t argued t h a t "no doubt th e p l e t h o r a o f money i s e n c o u r a g i n g t h e b u i l d i n g f e v e r , f o r p r i -v a t e mortgages a r e o b t a i n e d b e f o r e t h e s e c u -r i t i e s a r e f i n i s h e d , t h e c o m p e t i t i o n f o r i n v e s t m e n t s b e i n g h e a v i e r t h a n e ver."75 74 75 Ibid, pp. 126-129 Ibid, p. 130. 78 In many c a s e s r e n t s may have p l a y e d o n l y a minor r o l e i n t h e d e c i s i o n t o b u i l d . I n Birmingham, f o r example, t h e y began t o i n c r e a s e r a p i d l y o n l y a f t e r 189 7, b u t t h e h o u s i n g boom g o t underway w e l l b e f o r e t h e n . A g a i n , o u r knowledge o f l o c a l r e n t l e v e l s and t h e i r i n f l u e n c e on t h e c o u r s e o f h o u s e - b u i l d i n g i s v e r y l i m i t e d . S a u l r e c o g n i z e s t h e p o t e n t i a l i n f l u e n c e o f t h e age and m a r i t a l s t r u c t u r e o f e m i g r a n t s on t h e demand f o r h o u s i n g ; a l s o t h e i m p o r t a n c e o f i n t e r n a l m i g r a t i o n i n r e i n f o r c i n g t h e p r e s s u r e on urban h o u s i n g s u p p l i e s when e m i g r a t i o n was low. But he c o n c l u d e s t h a t , " i t i s h a r d t o b e l i e v e t h a t m i g r a t i o n o f i t s e l f c o u l d a c c o u n t f o r more t h a n a s m a l l p a r t 76 o f t h e wide f l u c t u a t i o n s i n house c o n s t r u c t i o n . " I n s u p p o r t o f t h i s s t a t e m e n t s t a t i s t i c s a r e c i t e d showing s i m i l a r f l u c t u a t i o n s a f f e c t i n g a l l t y p e s o f hous e s , w h i l e t h e g r e a t m a j o r i t y o f e m i g r a n t s were from t h e w o r k i n g c l a s s . F u r t h e r -more, he argu e s t h a t i n t e r n a l m i g r a t i o n responded t o s p e c i f i c d o m e s t i c c o n d i t i o n s i n t h e c o a l , w o o l l e n and e n g i n e e r i n g i n -d u s t r i e s and i n no way was t h i s "an i n d i c a t i o n t h a t h o u s i n g r esponded t o changes i n p o p u l a t i o n b r o u g h t about by any 77 i n t e r n a t i o n a l p a t t e r n o f b e h a v i o r . " ^^Ibid, p. 131. 11Ibid, p. 132 79 W i t h r e s p e c t t o c a p i t a l , i t i s p o s s i b l e t h a t t h e mort-gage market s u f f e r e d from the r a p i d growth o f a l t e r n a t i v e i n v e s t m e n t o p p o r t u n i t i e s i n a d o m e s t i c f i n a n c i a l market w h i c h was q u i c k l y d i v e r s i f y i n g . However, no e v i d e n c e can be f o u n d t o s u p p o r t t h e v i e w t h a t booms i n h o u s e - b u i l d i n g came t o an end because c a p i t a l was d i v e r t e d t o o t h e r uses (eg. f o r e i g n i n v e s t m e n t ) : " A l l t h i s , and t h e wide d i f f e r e n c e s i n ex-p e r i e n c e between one a r e a and a n o t h e r , make i t d i f f i c u l t t o escape from t h e v i e w t h a t b u i l d i n g was i n t e r n a l l y and p o s i t i v e l y d e t e r m i n e d ... by t h e s l a t e o f demand and by t h e n a t u r e o f t h e o p e r a t i o n o f t h e t r a d e i t s e l f . " 7 8 I n t h e a f o r e m e n t i o n e d Coppock s t u d y , t h e B r i t i s h t r a d e c y c l e a f t e r 1870 i s c o n s i d e r e d a h y b r i d c y c l e whose p e r i o d i -c i t y and a m p l i t u d e a r e e x p l a i n e d by t h e i n v e r s e p h a s i n g o f l o n g swings i n d o m e s t i c h o u s e - b u i l d i n g and e x p o r t p r o d u c t i o n . T h i s v i e w has been c h a l l e n g e d by H.J. Habakkuk i n an e x h a u s t -i v e a r t i c l e on f l u c t u a t i o n s i n B r i t i s h h o u s e - b u i l d i n g i n t h e N i n e t e e n t h c e n t u r y : " I t was t h e l o n g swings w h i c h were t h e e p i -phenomena and t h e t r a d e c y c l e s t h e r e a l i t y , i n t h e sense t h a t when t h e c h a r a c t e r o f t h e i n d i v i d u a l c y c l e s has been e x p l a i n e d t h e r e i s no r e s i d u e w h i c h needs t o be a t t r i b u t e d 1 t o t h e b e h a v i o r o f a l o n g c y c l e . " 8 0 Ibid, pp. 134-35-36. 79 Coppock, "Causes o f B u s i n e s s F l u c t u a t i o n s " , p. 12 80 H.J. Habakkuk, " F l u c t u a t i o n s i n H o u s e - B u i l d i n g i n B r i t a i n and t h e U n i t e d S t a t e s i n t h e N i n e t e e n t h C e n t u r y " , Journal of 80 R e s i d e n t i a l b u i l d i n g i n G r e a t B r i t a i n b e f o r e t h e 1860's f l u c t u a t e d w i t h t h e t r a d e c y c l e , and t h u s d i d n o t e x h i b i t t h e 20 y e a r swings t y p i c a l o f t h e t r a n s p o r t - b u i l d i n g c y c l e i n t h e U n i t e d S t a t e s . The appearance o f major s e c u l a r f l u c t u a t i o n s i n B r i t i s h house b u i l d i n g , i n v e r s e t o t h o s e i n t h e U.S., i s e x p l a i n e d n o t o n l y by s t r u c t u r a l changes i n t h e c h a r a c t e r o f B r i t i s h b u i l d i n g c y c l e s b u t a l s o by t h e f a c t t h a t t h e " t r a d e c y c l e s i n G r e a t B r i t a i n no l o n g e r came t o 81 a v i o l e n t end b u t t h e A m e r i c a n ones o f t e n d i d . " Habakkuk s t r e s s e s t h e i m p o r t a n c e o f d o m e s t i c f a c t o r s i n e x p l a i n i n g why t h e r e l a t i o n between t h e t r a d e c y c l e and f l u c t u a t i o n s i n b u i l d i n g s h o u l d have changed. D u r i n g t h e second h a l f o f t h e N i n e t e e n t h c e n t u r y many o f t h e i n f l u e n c e s w h i c h had f o r m e r l y s t i m u l a t e d house c o n s t r u c t i o n i n t h e i n i t i a l s t a g e s o f t h e t r a d e c y c l e were weakened. I n t e r n a l m i g r a t i o n became l e s s r e s p o n s i v e t o t h e e x p a n s i o n and c o n t r a c t i o n phases o f t h e t r a d e c y c l e . One r e a s o n f o r t h i s was t h e i n -c r e a s e d number o f m i d d l e - c l a s s m i g r a n t s . S t r u c t u r a l changes i n t h e c a p i t a l market imposed f u r t h e r r e s t r a i n t s on t h e ex-p a n s i o n o f h o u s e - b u i l d i n g d u r i n g a t r a d e c y c l e upswing. The Economic History3 V o l . ^Ibid} pp. 205, 213. X X I I I (June, 1962), p. 212. 81 p r o l i f e r a t i o n o f f i n a n c i a l i n s t r u m e n t s had an a d v e r s e impact on t h e . d e s i r e o f i n v e s t o r s t o h o l d mortages. "Moreover, t h e development o f j o i n t - s t o c k b a n k s , w h i l e i t may have made i t e a s i e r f o r b u i l d e r s t o o b t a i n advances, a l s o made t h e 8 2 bank d e p o s i t an a l t e r n a t i v e a s s e t t o t h e mortgage." Of c o u r s e , i n c r e a s e d incomes g e n e r a t e d d u r i n g t h e t r a d e boom had a f a v o r a b l e i n f l u e n c e on t h e demand f o r h o u s i n g . The v a r i o u s changes mentioned above had t h e e f f e c t o f i n c r e a s i n g t h e l a g g e d r e s p o n s e o f t h e b u i l d i n g i n d u s t r y t o changes i n demand, t h u s a l l o w i n g a b a c k l o g o f e x c e s s demand t o b u i l d up and r e s i d e n t i a l c o n s t r u c t i o n t o p e r s i s t a f t e r t h e down-t u r n i n t h e t r a d e c y c l e . O t h e r f a c t o r s a s s o c i a t e d w i t h t h e downturn a l s o h e l p e d t o s u s t a i n t h e boom i n h o u s e - b u i l d i n g . "The g r o w i n g s t a b i l i t y o f t h e b a n k i n g system a f t e r m i d - c e n t u r y and t h e i n c r e a s e i n t h e range o f a s s e t s a v a i l a b l e , w h i l e t h e y r e d u c e d t h e power o f b u i l d i n g t o compete f o r funds d u r i n g a boom, g r e a t l y improved i t s p o s i t i o n d u r i n g a d e p r e s s i o n . The downturn c e a s e d t o be accompanied by a g e n e r a l c o m m e r c i a l and f i n a n c i a l c o n v u l s i o n ... "83 "Absence o f a c o m m e r c i a l p a n i c a f f e c t e d n o t o n l y t h e a v a i l a b i l i t y o f f i n a n c e f o r b u i l d i n g , b u t a l s o e f f e c t i v e demand f o r houses. The p o i n t 2Ibid, pp. 207-08. 2Ibid, p. 208. 82 i s n o t m e r e l y t h a t s t r i n g e n c i e s o f t h e boom meant t h e r e was an u n s a t i s f i e d de-mand f o r houses a t t h e l e v e l o f income p r e v a i l i n g d u r i n g t h e c y c l i c a l boom, b u t t h a t t h e l e v e l o f income was b e t t e r s u s -t a i n e d d u r i n g t h e d e p r e s s i o n . " 8 4 That t h e s e changes p r o d u c e d l o n g swings i s e x p l a i n e d by th e g r a d u a l " s h i f t i n t h e b a l a n c e o f f a v o r a b l e and u n f a v o r a b l e 8 5 f o r c e s . " Thus, t h e r e was a g r o w i n g number o f r e g i o n a l l o n g c y c l e s o u t o f phase w i t h one a n o t h e r . The i n c r e a s e d i m p o r t -ance o f suburban b u i l d i n g w h i c h p e r s i s t e d f o r l o n g e r p e r i o d s a l s o c o n t r i b u t e d t o t h e l o n g waves i n B r i t i s h b u i l d i n g a c t i -v i t y . Habakkuk d e v o t e s c o n s i d e r a b l e space t o a d i s c u s s i o n o f v a r i o u s p o s s i b l e i n f l u e n c e s t h a t v a r i a t i o n s i n t h e p a t t e r n o f m i g r a t i o n and c a p i t a l f l o w s m i g h t have had on t h e c o u r s e o f d o m e s t i c h o u s e - b u i l d i n g . He s u g g e s t s t h a t i n v e r s e b u i l d i n g c y c l e s may, i n p a r t , have been t h e r e s u l t o f s e c u l a r swings i n e m i g r a t i o n o n l y i n s o f a r as t h i s worked t h r o u g h a change i n i n t e r n a l m i g r a t i o n l e a d i n g t o i n c r e a s e s i n t h e r a t e o f u r b a n -i z a t i o n . The o u t f l o w o f p o p u l a t i o n was governed by f l u c t u a t i o n s i n t h e p r o s p e r i t y o f d e v e l o p i n g r e g i o n s o v e r s e a s . These r e -g i o n s , by b o r r o w i n g l a r g e r sums r e l a t i v e t o B r i t i s h d o m e s t i c i n v e s t m e n t t h a n e v e r b e f o r e and by i s s u i n g s e c u r i t i e s comparable 4 Ibid, ^ Ibid. p. 209 83 to and c o m p e t i t i v e w i t h housing f i n a n c e , tended t o f u r t h e r reduce the supply of funds f o r b u i l d i n g i n the upswing of the t r a d e c y c l e . These i n f l u e n c e s , however, are r e p e a t e d l y underplayed i n the course of Habakkuk's argument. The f i r s t long swing i n B r i t i s h b u i l d i n g a c t i v i t y i s e x p l a i n e d p r i m a r i l y by the f a c t t h a t the t r a d e c y c l e boom of the l a t e 1860's and e a r l y 1870's was not f o l l o w e d by a f i n a n c i a l c r i s i s , and t h a t i n d u s t r i a l a c t i v i t y c o n t i n u e d a t a r e l a t i v e l y h i g h l e v e l a f t e r 1873. The boom i n r a i l w a y c o n s t r u c t i o n and h o u s e - b u i l d i n g abroad may have had some i n -f l u e n c e but not i n the d i r e c t way i m p l i e d by the working of an " A t l a n t i c economy". The b u i l d i n g d e p r e s s i o n which s e t i n a f t e r 1876 was ex-c e p t i o n a l l y p r o l o n g e d , spanning as i t d i d not one but two t r a d e c y c l e s . Habakkuk suggests t h a t one reason why a b u i l d i n g boom f a i l e d t o g a i n momentum i n the l a t e 1880's was t h a t the prominent i n d u s t r i e s (exports and s h i p b u i l d i n g ) which dominated the t r a d e r e v i v a l i n those years were l o c a t e d i n areas where t h e r e was excess c a p a c i t y and h i g h unemployment. Thus, l a r g e i n c r e a s e s i n output c o u l d be ac h i e v e d w i t h r e l a -t i v e l y l i t t l e i n t e r n a l m i g r a t i o n . The main e x p l a n a t i o n , however, i s found i n the unprecedented waves of development overseas i n the U n i t e d S t a t e s , A u s t r a l i a , A s i a and South America. High l e v e l s of e m i g r a t i o n and f o r e i g n investment were s u s t a i n e d f o r 84 a longer period than ever before. "This i s the only occasion on which foreign influences c l e a r l y deflected B r i t i s h b u i l d -ing fluctuations from the course they would otherwise have 8 6 taken." The primary l i n k was through emigration. But even here, the rate of outflow of population was p a r t l y determined by domestic factors. The a g r i c u l t u r a l depression of the la t e 1 8 8 0 ' s provided a strong push element i n the r u r a l out-flow. C a p i t a l flows played a part but were "pushed abroad rather than pul l e d . " Low i n t e r e s t rates and the d i f f i c u l t i e s b u i l d i n g s o c i e t i e s experienced i n loaning funds are c i t e d as evidence of a dearth of investment opportunities at home. The f i n a l decade of the Nineteenth century opened with f i n a n c i a l c r i s e s i n Argentina, and South America, and the Baring C r i s i s at Home. This made investment overseas less a t t r a c t i v e and helped d i v e r t funds to the home market. Thus, i t i s claimed that an abundant supply of loanable funds "allowed the b u i l d i n g boom of the nine t i e s to develop on a larger scale 8 7 than might otherwise have been the case." But the most important factors determining the bu i l d i n g boom i n the late 1 8 9 0 ' s were domestic i n o r i g i n . The i n d u s t r i a l booms that took place i n that decade were concentrated i n new industries located i n areas where there was no s i g n i f i c a n t excess supply S6Ibid, p. 2 2 4 . ^Ibid, p. 2 2 6 . 85 of l a b o u r . Consequently, a r e v i v a l i n tr a d e l e d t o c o n s i d -e r a b l e i n t e r n a l m i g r a t i o n and u r b a n i z a t i o n . An added impetus t o the upswing i n b u i l d i n g a c t i v i t y was p r o v i d e d by the i n c r e a s e i n suburban b u i l d i n g r e s u l t i n g from the a p p l i c a t i o n o f e l e c t r i c i t y t o t r a n s p o r t a t i o n i n Great B r i t a i n . The U n i t e d S t a t e s began u s i n g e l e c t r i c a l t r a n s p o r t -a t i o n systems i n the 1880's, t h i s b e i n g one reason why t h e r e was a h i g h l e v e l o f b u i l d i n g a c t i v i t y i n America d u r i n g t h a t p e r i o d . "Thus the a l t e r n a t i o n of American and B r i t i s h housing a c t i v i t y i n the e i g h t i e s and n i n e t i e s p a r t l y r e f l e c t s the d i f f e r e n t r a t e a t which e l e c t r i c i t y was a p p l i e d t o t r a c t i o n i n the two c o u n t r i e s . T h i s i s , i n the p r e s e n t c o n t e x t , almost 8 8 c e r t a i n l y f o r t u i t o u s . " The aggregate i n d i c e s of h o u s e - b u i l d i n g i n Great B r i t a i n f a l l o f f a f t e r 190 3. T h i s , however, c o n c e a l s the c o n s i d e r a b l e d i f f e r e n c e s t h a t e x i s t e d i n the l o c a l p a t t e r n s . The b u i l d i n g boom j u s t ended was mainly i n f l u e n c e d by the i n t e r n a l r a t e o f m i g r a t i o n . T h i s , on the o t h e r hand, was not so much caused by the s u b s i d i n g wave of e m i g r a t i o n , but r a t h e r by changes i n the d i s t r i b u t i o n o f B r i t i s h i n d u s t r i a l a c t i v i t y . Ibid, p. 227. 86 "There i s no need t o i n v o k e f o r e i g n i n f l u e n c e s , and i f t h e y a r e i n v o k e d i t can be argued t h a t t h e demand o f t h e p r i m a r y p r o d u c i n g r e g i o n s f o r E n g l i s h goods i n t h e s e y e a r s d i d more t o s t i m u l -a t e b u i l d i n g i n E n g l a n d t h a n t h e i r demand f o r m i g r a n t s and funds d i d t o s u p p r e s s i t . " 8 9 The s c e p t i c i s m o f L e w i s and O'Leary, S a u l and Habakkuk w i t h r e s p e c t t o t h e s y s t e m a t i c s e t o f i n t e r - r e l a t i o n s h i p s i m p l i e d by t h e h y p o t h e s i s o f a w o r k i n g i n t e r n a t i o n a l economy, i s n o t s h a r e d by A.R. H a l l . Though H a l l i s n o t s p e c i f i c a l l y c o n c e r n e d w i t h i n v e s t m e n t i n r e s i d e n t i a l c o n s t r u c t i o n , t h i s i s seen as a major component o f t o t a l d o m e s t i c i n v e s t m e n t whose f a t e was governed by t h e development o f a w o r l d economy a f t e r 18 70. Thus, t h e p a t t e r n o f home i n v e s t m e n t (and con-s e q u e n t l y h o u s e - b u i l d i n g ) i s i n f l u e n c e d by e v e n t s abroad as w e l l as f a c t o r s o f s p e c i f i c l o c a l o r i g i n . T h i s l e a d s t o a r e j e c t i o n o f t h e h y p o t h e s i s t h a t t h e c e n t r a l l o c u s o f economic s t i m u l u s w i t h i n t h e w o r l d economy was c o n t i n u o u s l y l o c a t e d i n one r e g i o n . " I t c o u l d and d i d s h i f t from r e g i o n t o r e g i o n among the a r e a s o f r e c e n t s e t t l e m e n t and between t h o s e r e g i o n s , r e -g a r d e d as a s i n g l e e n t i t y , and Europe and w i t h i n Europe t o 90 B r i t a i n i n p a r t i c u l a r . " 89 9 0A.R. H a l l , The Export of Capital from B r i t a i n , 1870-1914, (London: Methuen, & Co. L t d . , 1968), p. 9. 87 The case f o r a s i n g l e - c a u s e e x p l a n a t i o n of the dynamic r e a c t i o n p r o c e s s g i v i n g r i s e t o s e c u l a r swings i n the volume o f economic and demographic a c t i v i t y i s , a c c o r d i n g to H a l l , a weak one. Inverse p h a s i n g of r e g i o n a l investment c y c l e s cannot simply be a t t r i b u t e d t o changes i n the expected r a t e o f r e t u r n on new investment, or the n a t u r a l rhythm of i n t e r n -a t i o n a l m i g r a t i o n , or s h i f t s i n the terms of t r a d e , or changes i n the w i l l i n g n e s s of B r i t i s h i n v e s t o r s to l e n d abroad. "... i t depended on the c o m p l i c a t e d i n t e r -p l a y of a l l these v a r i a b l e s , and numerous o t h e r s . Changes i n any one of them r e a c t e d on the o t h e r s but not i n any simple way. The n a t u r e of the r e a c t i o n t o any one i n -g r e d i e n t was not always i d e n t i c a l because the c o n j u c t u r e of o t h e r f a c t o r s when such changes o c c u r r e d was not always the same." Thus, g r e a t emphasis i s p l a c e d on the m u l t i p l i c i t y of i n t e r - r e l a t i o n s h i p s t h a t l i n k e d Europe t o the New World. The flow of goods and s e r v i c e s (items of i n v i s i b l e trade) as w e l l as c a p i t a l , l a b o u r and technology a l t e r e d demand and supply r e l a t i o n s h i p s i n product and f a c t o r markets around the world. T h i s tended t o lengthen the p r o c e s s of expansion w e l l beyond the p e r i o d t h a t would have e x i s t e d had these changes not occur-r e d . I n t e r n a t i o n a l f i n a n c i a l s t a b i l i t y , r e s u l t i n g from a smoothly f u n c t i o n i n g g o l d s t a n d a r d , h e l p e d to f a c i l i t a t e the adjustment p r o c e s s . Ibid, p. 10. 88 An e x t e n s i v e and i n f o r m a t i v e study of b u i l d i n g f l u c t u a -t i o n s i n Great B r i t a i n i s J . P a r r y Lewis' Building Cycles and Britain's Growth. Drawing h e a v i l y on h i s t o r i c a l f a c t and the u n p u b l i s h e d r e s e a r c h m a t e r i a l of the l a t e Bernard Weber, a number of c a u s a l r e l a t i o n s h i p s are p r e s e n t e d , not as a t h e o r y of the b u i l d i n g c y c l e , but r a t h e r as a "theory of b u i l d i n g c y c l e s i n the p l u r a l , i n which a l t e r n a t i v e p o s s i b i -92 l i t i e s a re allowed to o p e r a t e . " The elements of the t h e o r y are d e r i v e d from the works of Jevons, Hawtrey, C a i r n c r o s s , Thomas, and F r i s c h , a l l on v a r i o u s aspects of c y c l i c a l b e h a v i o r i n the course of economic development. P o p u l a t i o n , c r e d i t and shocks are of c e n t r a l importance, and i t i s i n r e g a r d t o the l a s t mentioned f a c t o r t h a t Lewis' major c o n t r i b u t i o n t o the study of b u i l d i n g c y c l e s i s t o be found. Contemporary s t a t i s t i c a l a n a l y s i s a l l o w s f o r shocks by adding them t o r e l a t i o n -s h i p s as " e r r o r s " . These e r r o r s " r e p r e s e n t e v e r y t h i n g about 93 which we do not know enough t o have a measure", and are assumed t o be w e l l behaved i n a t y p i c a l Gaussian f a s h i o n . What Lewis has taken p a i n s t o emphasize i s t h a t shocks s t r i k e d i r e c t -l y a t the f o u n d a t i o n s of the s t r u c t u r a l r e l a t i o n s h i p s on which they are assumed t o have no i n f l u e n c e . Rather than a d d i t i v e J . P a r r y Lewis, Building Cycles and Britains Growth^. 213. 9 3 T, . , 8 9 w i t h z e r o mean, t h e y may be more a p p r o p r i a t e l y t r e a t e d as m u l t i p l i c a t i v e w i t h c u m u l a t i v e e f f e c t s . In any c a s e , shocks s h o u l d be s t u d i e d w i t h i n t h e i r c o n t e x t as perhaps t h e most 9 4 i m p o r t a n t dynamic f a c t o r i n t h e p r o c e s s o f s t r u c t u r a l change. O p e r a t i n g t h r o u g h h a r v e s t s o r o t h e r f a c t o r s t h a t a f f e c t t h e f o o d s u p p l y , shocks w i l l a l t e r r e a l incomes and d i r e c t l y a f f e c t t h e p o p u l a t i o n t h r o u g h n a t u r a l i n c r e a s e and t h e d e c i s i o n t o e m i g r a t e . H o u s e - b u i l d i n g i s shown t o be i n f l u e n c e d by a f a r g r e a t e r number o f complex f o r c e s t h a n has h i t h e r t o been r e c o g n i z e d . The impact may work t h r o u g h changes i n age-s p e c i f i c m a r r i a g e and b i r t h r a t e s a l t e r i n g t h e a g e - s t r u c t u r e o f t h e p o p u l a t i o n . Economic f a c t o r s a f f e c t i n g t h e volume o f m i g r a t i o n , though n u m e r i c a l l y s m a l l compared t o t o t a l p o p u l a t i o n , may have a p r o f o u n d i n f l u e n c e i n t h e i r e f f e c t on i t s age and sex s t r u c t u r e o r i t s i n d u s t r i a l c o m p o s i t i o n . These changes a r e no t o n l y i m p o r t a n t f o r t h e i r immediate e f f e c t s b u t may have a c o n s i d e r a b l e l a g g e d i m p act (for as l o n g as a g e n e r a t i o n o r more) on t h e demand f o r h o u s i n g accommodation, t h e s u p p l y o f l a b o u r ( t h r o u g h echo e f f e c t s ) and t h e d i s t r i b u t i o n o f income. Shocks a l s o work t h r o u g h t h e monetary s e c t o r i n t h e i r i n -f l u e n c e on h o u s e - b u i l d i n g . F o r i n s t a n c e , how and t o what e x t e n t L e w i s p r o p o s e s t o do t h i s , w i t h t h e a i d o f a computer, i n t h e development and t e s t i n g o f a s i m u l a t i o n model o f house-b u i l d i n g a c t i v i t y . Perhaps t h e n e g l e c t o f t h i s p r o b l e m i s one r e a s o n why t h e e c o n o m e t r i c models o f t h e h o u s i n g s e c t o r t h a t have been t e s t e d have p r o v e d so u n s a t i s f a c t o r y . 90 i s the a v a i l a b i l i t y o f c r e d i t f o r c o n s t r u c t i o n a f f e c t e d by the impact of h a r v e s t s on the b a l a n c e of payments? Again, the importance of c o n s i d e r i n g shocks i n t h e i r c o n t e x t i s s t r e s s e d : "When c r e d i t i s s t r a i n e d , a 'bad' shock i s v e r y l i k e l y t o p r e c i p i t a t e a c r i s i s , w h i l e a 'good' one may, i f 9 5 i t i s o f the r i g h t k i n d . " P o p u l a t i o n and c r e d i t are l i n k e d i n Lewis' t h e o r y through t h i s type of c o n s i d e r a t i o n . As young people e n t e r the l a b o u r f o r c e and b e g i n to earn incomes, they c o n s t i t u t e a p o t e n t i a l demand f o r housing. The p o s s i b i l i t y of r e a l i z i n g t h i s demand i s enhanced i f a shock t h a t r a i s e s r e a l incomes takes p l a c e when c r e d i t i s abundant. 96 B r m l e y Thomas r e c e n t l y addressed h i m s e l f t o the argu-ments of Habakkuk and S a u l i n a r e g i o n a l study of p o p u l a t i o n and h o u s e - b u i l d i n g i n the Midlands, the c o u n t r i e s surrounding London, the North West of England, Y o r k s h i r e , Northern England, South Wales and Monmouthshire, and London. The p o p u l a t i o n data used i n t h i s study were c o l l e c t e d from census r e c o r d s , and the I n h a b i t e d House Duty s t a t i s t i c s p r o v i d e d a b a s i s f o r r e g i o n a l b u i l d i n g e s t i m a t e s . I t was assumed t h a t the age group 20-44 c o n s t i t u t e d the "vast m a j o r i t y of the house-seeking s e c t i o n of 9 7 the community." The purpose of the a n a l y s i s was t o determine ^^Ibid,, p. 221. 96 B r i n l e y Thomas, Demographic Determinants, passim. l o t a , p. 6 . 91 the r e l a t i o n s h i p between changes i n the p o p u l a t i o n aged 20-44, s e p a r a t i n g the e f f e c t s of both n a t u r a l i n c r e a s e and mi-g r a t i o n , and net changes i n the housing stock. The r e s u l t s l e d Thomas t o conclude: "... n a t i o n a l l y and r e g i o n a l l y the swing i n h o u s e - b u i l d i n g f o l l o w s w i t h a l a g the swing i n the p o p u l a t i o n aged 20-44 as determined by m i g r a t i o n ... The i n v e r s e r e l a t i o n between i n t e r n a l and e x t e r n a l m i g r a t i o n i s c l e a r l y shown. When i n t e r n a l m i g r a t i o n was h i g h , e m i g r a t i o n was low; and i t was i n those years t h a t b u i l d i n g , w i t h a l a g , expanded; the op-p o s i t e o c c u r r e d when i n t e r n a l m i g r a t i o n was low and e m i g r a t i o n was h i g h . The swings i n h o u s e - b u i l d i n g conform t o the swings i n the migration-dominated curve of p o p u l a t i o n c h a n g e . " 9 8 Drawing on the r e c e n t r e s e a r c h e s of Burnham Campbell on b u i l d i n g f l u c t u a t i o n s and demographic changes i n the U n i t e d S t a t e s , Thomas r e a f f i r m s the c o n c l u s i o n s of Migration and Economic Growth. The mechanism of the m i g r a t i o n c y c l e i s the major determinant i n the p r o c e s s of i n t e r a c t i o n between the economies o f Great B r i t a i n and the U n i t e d S t a t e s . The e x i s t e n c e of a r e a l b u i l d i n g c y c l e determined by mi-g r a t i o n c o n t r a d i c t s Habakkuk's c l a i m t h a t the o n l y r e a l c y c l e was the t r a d e c y c l e . The r e l a t i v e s i m i l a r i t y of r e g i o n a l Ibid, p. 17. 99 Burnham 0. Campbell, Population Change and Building Cycles, (Bureau of Economic and B u s i n e s s Research, 1970). 92 b u i l d i n g p a t t e r n s , ( e x c l u d i n g London and South W a l e s ) , does n o t s u p p o r t Habakkuk's c o n j e c t u r e about l a c k o f s y n c h r o n i z a t i o n between r e g i o n a l f l u c t u a t i o n s . The debate t h a t has grown up around t h e pr o b l e m o f house-b u i l d i n g i n G r e a t B r i t a i n d oes, t o a l a r g e e x t e n t , i n v o l v e s u b s t a n t i v e i s s u e s . Y e t one cannot h e l p b u t be aware o f t h e l i m i t a t i o n s imposed by t h e c h o i c e o f a unique p o i n t o f d e p a r t -u r e . Thomas i s s u r e l y c o r r e c t i n e m p h a s i z i n g t h e r o l e o f p o p u l -a t i o n and l o n g waves i n i n t e r n a t i o n a l and i n t e r n a l m i g r a t i o n , b u t a m i g r a t i o n c y c l e cannot be t a k e n as a datum. P e o p l e a r e not lemmings, t h e y move from one a r e a t o a n o t h e r f o r a wide v a r i e t y o f r e a s o n s ; many a r e economic, b u t some a r e n o t . I m p l i c i t i n t h e debate i s t h e q u e s t i o n o f why m i g r a t i o n , b o t h e x t e r n a l and i n t e r n a l , t o o k p l a c e ; i t i s a t t h i s j u n c t u r e t h a t more l i g h t needs t o be shed. From t h i s b r i e f d i s c u s s i o n i t i s c l e a r t h a t t h e mainstream o f d e b a t e o v e r p r o f f e r e d e x p l a n a t i o n s o f t h e l o n g swings i n B r i t i s h h o u s e - b u i l d i n g from 1860 t o 1914 has c e n t e r e d around a few p r o m i n e n t f a c t o r s . V e r y l i t t l e a t t e n t i o n has been d i r e c t e d t o some o f t h e more i m p o r t a n t i n s t i t u t i o n a l problems r a i s e d i n t h e p r e v i o u s s e c t i o n . To some e x t e n t t h i s may be owing t o a d e a r t h o f i n f o r m a t i o n . Y e t one s u s p e c t s t h a t t h e r e a l r e a s o n i s t h a t t h e s e i n s t i t u t i o n a l problems r e q u i r e more c o n c e n t r a t e d s t u d y a t t h e l o c a l l e v e l . CHAPTER IV THE PROBLEM OF AGGREGATION: REGIONAL AND LOCAL BUILDING CYCLES REGIONAL AND LOCAL DIFFERENCES IN THE COURSE OF HOUSE-BUILDING ACTIVITY V a r i o u s aspects of the b u i l d i n g i n d u s t r y i n Great B r i t a i n have become the s u b j e c t of much r e s e a r c h and de-bate among economic h i s t o r i a n s i n the p a s t f i f t e e n y e a r s . Of s p e c i a l i n t e r e s t , as we have seen, i s the r o l e t h i s i n d u s t r y p l a y e d not o n l y i n the development of the domestic economy, but a l s o i n the f u n c t i o n i n g of what we, f o l l o w i n g o t h e r s , have r e f e r r e d to as the " A t l a n t i c economy". In response to the growing i n t e r e s t i n aggregate a n a l y s i s a number of s t u d i e s have produced n a t i o n a l i n d i c e s of b u i l d -i n g c o s t s and house rents.''" The g r e a t e s t a t t e n t i o n , how-ever, has c e n t e r e d around the appearance of long swings i n the course of B r i t i s h h o u s e - b u i l d i n g a f t e r 1860. Much of See, f o r example, K. Maywald, "An Index of B u i l d i n g Costs i n the U n i t e d Kingdom, 1845-1938", Economic History Review, V o l . VII (1954), pp. 187-203: H.W. S i n g e r , "An Index of Urban Land Rents and House Rents i n England and Wales, 1845-1913", Econometrica, V o l . IX ( J u l y - O c t o b e r , 1941); A.K. C a i r n c r o s s , Home and Foreign Investment, pp. 212-216; B. Weber, "A New Index of House Rents f o r Great B r i t a i n , 1874-1913", Scottish Journal of P o l i t i c a l Economy, V o l . VII (February, 1960), pp. 232-237. 93 94 the d i s c u s s i o n i n Chapter I I was concerned w i t h t h i s phenomenon and the most important attempts t h a t have been made t o c o n s t r u c t a n a t i o n a l measure of f l u c t u a t i o n s i n b u i l d i n g a c t i v i t y . In the l a s t c h apter we b r i e f l y s u r -veyed the v a r i o u s hypotheses t h a t have been put forward t o e x p l a i n t h i s b e h a v i o r . In g e n e r a l these e x p l a n a t i o n s have been fo r m u l a t e d i n h i g h l y a g g r e g a t i v e terms. There are, however, a number of m e t h o d o l o g i c a l problems t h a t become v e r y important and of which one must be f u l l y aware when t h i s a g g r e g a t i v e approach i s used f o r a n a l y t i c a l pur-poses. The housing market i s a l o c a l market and t h e r e f o r e has a l o c a l e q u i l i b r i u m . In Chapter I we s t r e s s e d the importance of a n a l y z i n g the course o f h o u s e - b u i l d i n g a t a l e v e l (of aggregation) where the u n d e r l y i n g b e h a v i o r a l i m p l i c a t i o n s were c o n s i s t e n t w i t h h i s t o r i c a l f a c t . T h i s i s a c r i t i c a l p o i n t . To attempt an e x p l a n a t i o n of the b e h a v i o r o f an aggregate index of r e s i d e n t i a l c o n s t r u c t i o n by comparing i t to o t h e r aggregate measures such as, f o r example, a n a t i o n a l r e n t index, the net annual i n c r e a s e i n t o t a l p o p u l a t i o n , or perhaps some i n -dex of the c o s t of c r e d i t e.g. the y i e l d on 21/2% C o n s o l s , e t c . , 95 i s a hazardous e x e r c i s e and may be s e r i o u s l y m i s l e a d i n g . A p l a u s i b l e r e l a t i o n s h i p suggested a t t h i s l e v e l of a n a l y s i s may d i f f e r s i g n i f i c a n t l y from t h a t e x i s t i n g i n many of the i n d i v i d u a l towns or r e g i o n s i n c l u d e d i n the aggregate h o u s e - b u i l d i n g index. T h i s w i l l be e s p e c i a l l y t r u e i f t h e i r e x i s t c o n s i d e r a b l e d i f f e r e n c e s i n l o c a l and 2 r e g i o n a l h o u s e - b u i l d i n g p a t t e r n s . T h i s problem has not gone without r e c o g n i t i o n . I t 3 has been d i s c u s s e d ( a l l too b r i e f l y ) by C a i r n c r o s s and 4 Derksen among o t h e r s ; y e t as Lewis p o i n t s out "some o f those who have made i t have proceeded t o i g n o r e i t , o r 5 minimize i t s importance." S a u l , "House-Building i n England, 1890-1914", p. 122; Lewis, " B u i l d i n g C y c l e s : A Re g i o n a l Model and i t s N a t i o n a l S e t t i n g " , p. 520. A good example was pr e s e n t e d i n Chapter I, where i n a one country, two r e g i o n model i n t e r n a l mi-g r a t i o n was assumed t o be c a u s i n g a dramatic d i v e r g e n c e of r e g i o n a l h o u s e - b u i l d i n g p a t t e r n s . In t h i s case an a n a l y s i s i n aggregate terms would be i n c a p a b l e of p r o v i d i n g an a c c u r a t e e x p l a n a t i o n of the o p e r a t i v e c a u s a l mechanism i n the course of r e s i d e n t i a l c o n s t r u c t i o n a t e i t h e r the n a t i o n a l o r r e g i o n a l l e v e l . 3 C a i r n c r o s s , Home and Foreign Investment, p. 11. 4 Derksen, "Long C y c l e s i n R e s i d e n t i a l C o n s t r u c t i o n : An E x p l a n a t i o n " , p. 100. 5 L e w i s , " B u i l d i n g C y c l e s : A Regiona l Model",p. 520. 96 In r e c e n t y e a r s a number o f noteworthy s t u d i e s by 6 7 8 9 Richards and Lewis, Kenwood, Saul and Lewis have pro-duced a c o n s i d e r a b l e volume of l o c a l evidence i n d i c a t i n g s u b s t a n t i a l d i f f e r e n c e s i n l o c a l and r e g i o n a l h o u s e - b u i l d -i n g p a t t e r n s . A steady r e c o v e r y o f the b u i l d i n g i n d u s t r y i n S t o c k p o r t a f t e r 189 5 c o i n c i d e d w i t h a sharp downswing i n Crewe, i n t e r u p t e d by o n l y minor r e v e r s a l s . From 1900 t o the F i r s t World War h o u s e - b u i l d i n g a l s o d e c l i n e d i n S h e f f i e l d , w h i l e Coventry e x p e r i e n c e d a major upswing a f t e r 1902. The p e r i o d 1875 t o 1900 w i t n e s s e d an almost p e r f e c t i n v e r s e r e l a t i o n s h i p between the c o t t o n town of Rochdale and the B r i s t o l Channel c o a l and i r o n p o r t of C a r d i f f . London had a minor downswing from 1867 t o 1872 and then proceeded t o r i s e t o a major peak i n 1880; a steady d e c l i n e t o 1886 was f o l l o w e d by a prolongued trough i n b u i l d i n g a c t i v i t y ending f i n a l l y i n the upswing t h a t got underway i n 1896. Glasgow, on the o t h e r hand, e x p e r i e n c e d a boom i n J . Hamish Ric h a r d s and J . P a r r y Lewis, "House-Building i n the South Wales C o a l f i e l d , 1851-1913", Manchester School, V o l . XXIV (September, 1956), pp. 289-301. 7 A.G. Kenwood, " R e s i d e n t i a l B u i l d i n g A c t i v i t y i n North E a s t e r n England, 1853-1913", Manchester School, V o l . XXXI (May, 1963) pp. 115-128. 8 S a u l , " H o u s e - B u i l d i n g i n England, 1890-1914", pp. 120-121. Q Lewis, Building Cycles and Britains Growth, passim. 97 h o u s e - b u i l d i n g from 1865 to 1876; a p r e c i p i t o u s f a l l over the next f i v e y e a r s was f o l l o w e d by a ve r y long g r a d u a l r e c o v e r y t o the double peak o f 189 8-190 2. There were, of c o u r s e , towns t h a t f o l l o w e d q u i t e s i m i l a r c o u r s e s . Both S a l f o r d and Birmingham r e v e a l the same c y c l i c a l p a t t e r n t r a c e d by Glasgow a f t e r 1874. The d i s t i n c t c o n t r a s t b e t -ween many towns, however, (the above l i s t i s o n l y a s m a l l sample) p o i n t s t o the need f o r and importance of more i n -t e n s i v e study o f the r e g i o n a l or l o c a l h o u s e - b u i l d i n g ex-p e r i e n c e . A REGIONAL MODEL OF HOUSE-BUILDING The model p r e s e n t e d below i s used here o n l y t o i l l u s t r a t e b a s i c r e l a t i o n s h i p s t h a t may be expected t o e x i s t a t the l o c a l o r r e g i o n a l l e v e l . , The s t r u c t u r e o f the r e l a t i o n s h i p s has not been s p e c i f i e d , a l t h o u g h some i n d i c a t i o n o f expected forms w i l l f o l l o w i n the d i s c u s s i o n . Many of the id e a s ex-p r e s s e d here can be found i n a very i n t e r e s t i n g a r t i c l e by J . P a r r y Lewis'^ i n which a s i m p l i f i e d , l i n e a r r e g i o n a l model of housing c y c l e s i s developed. We b e g i n by d e f i n i n g a housing market area the boundaries Lewis, " B u i l d i n g C y c l e s : A Regiona l Model", passim. 98 o f w h i c h a r e d e t e r m i n e d by t h e d i s t a n c e p e o p l e a r e w i l l i n g t o t r a v e l t o work. T h i s may be a s i n g l e town o r a r e g i o n (e.g. v a l l e y ) i n w h i c h a number o f communities a r e l o c a t e d . C a p i t a l and l a b o u r a r e employed i n two l o c a l i n d u s t r i e s . The p r i m a r y i n d u s t r y e m p l o y i n g t h e m a j o r i t y o f l o c a l c a p i t a l and l a b o u r p r o d u c e s a commodity w i t h a l a r g e e x t e r n a l demand component. Examples m i g h t be c o a l f o r e x p o r t o r c o t t o n t e x t i l e s . The second i n d u s t r y i s h o u s e - b u i l d i n g . The commun-i t y i m p o r t s f o o d and o t h e r goods and s e r v i c e s . A l l p r i c e s a r e f i x e d w i t h t h e e x c e p t i o n o f r e n t s ( t h e p r i c e o f h o u s i n g accommodations) and t h e p r i c e o f t h e commodity p r o d u c e d by th e p r i m a r y i n d u s t r y . F o r c o n v e n i e n c e , t h e l a t t e r commodity w i l l be r e f e r r e d t o as c o t t o n t e x t i l e s . The demand f o r c o t t o n t e x t i l e s (D ) i s assumed t o be a f u n c t i o n o f i t s p r i c e (p) and e x t e r n a l f a c t o r s summarized by t h e v a r i a b l e ( X ) . Thus, D C = f j j (p,X) (1) where d f ^ / d p < 0 and d f ^ / d X > 0. The r a t e a t w h i c h c o t t o n t e x t i l e s a r e s u p p l i e d (S ) c c depends on t h e amount o f l a b o u r (n ) and c a p i t a l (k ) em-p l o y e d i n t h e c o t t o n t e x t i l e i n d u s t r y : 99 S C = ( n C , k C ) (2) The r a t e a t which the supply of labour a v a i l a b l e t o * c the c o t t o n t e x t i l e i n d u s t r y i s changing (n ) depends on c b the l e v e l of wages i n the two i n d u s t r i e s , (w ) and (w .) as w e l l as the way i n which the t o t a l l a b o u r f o r c e (P) i s changing. T h i s may be r e p r e s e n t e d as * c n , c b ,... n = g (w , w , P) (3) where dg£/d w C > 0, dg£/d w b < 0 and dg^/d P > 0. Although i t i s m a t h e m a t i c a l l y messy, i t should be r e c o -g n i z e d t h a t the adjustment of the la b o u r supply i n the p r o d u c t i o n o f c o t t o n t e x t i l e s i n response t o a change i n r e l a t i v e wage r a t e s may i n v o l v e a c o n s i d e r a b l e l a g . T h i s would be e s p e c i a l l y t r u e i f the mechanism r e q u i r e d a change i n P, through m i g r a t i o n , f o r example. The l e v e l of wages i n the primary i n d u s t r y i s assumed to be some f u n c t i o n o f the p r i c e o f output ( p ) : w C = h^ (p) (4) where d h^/d p > 0. T h i s assumption may be r a t h e r d i f f i c u l t t o support as an a c c u r a t e d e s c r i p t i o n o f the d e t e r m i n a t i o n of wages i n c o t t o n t e x t i l e s . On the o t h e r hand, i t does conform 100 c l o s e l y t o t h e p r o c e s s i n t h e c o a l m i n i n g i n d u s t r y , as we s h a l l see i n t h e n e x t c h a p t e r . I n any c a s e , i t may n o t be a l l t h a t much a t r a v e s t y o f t h e f a c t s . Changes i n t h e s u p p l y o f c a p i t a l f o r c o t t o n t e x t i l e p r o d u c t i o n depend on r e l a t i v e r a t e s o f r e t u r n t o c a p i t a l employed i n t h e p r i m a r y i n d u s t r y ( r ) and t h e c o n s t r u c t i o n i n d u s t r y ( r ) , as w e l l as t h e b e h a v i o r o f t h e t o t a l c a p i t a l s u p p l y ( K ) . T h i s may be w r i t t e n k c = g k ( r C , r b , K) (5) where d g k / d r C > 0, d g k / d r b < 0 and d g k / d K > 0 c c c The r a t e o f r e t u r n ( o r r a t e o f p r o f i t a b i l i t y ) i n t h e c o t t o n t e x t i l e i n d u s t r y depends on t h e p r i c e o f t h e o u t p u t and t h e l e v e l o f wages. Thus r c = h£ (w°, p) ( 6 ) and d h^/d w C < 0, d h^/d p > 0. The p r i c e o f c o t t o n t e x t i l e s depends on t h e s t a t e o f t h e m a r k e t ; p r i c e changes a r e r e l a t e d t o t h e l e v e l o f e x c e s s demand o r s u p p l y . We w r i t e p = hP ( D c , S C) (7) 101 where d h p / d f d > 0 and d h p / d f s < 0. c c c c We now c o n s i d e r the housing s e c t o r . The t o t a l demand f o r houses (D ) i s r e l a t e d t o p o p u l a t i o n (P), i . e . , our labour f o r c e v a r i a b l e , r e n t s (R) and incomes. For convenience, changes i n income are i d e n t i f i e d w i t h changes i n i n d u s t r i a l wage r a t e s . T h i s may be w r i t t e n D b = f £ (P, R, wC, w b) (8) where d f£/d P > 0, d f£/d R < 0, d f ^ / d w C> 0 and d f^/d w b> 0. The t o t a l stock of houses i s r e p r e s e n t e d by (S ), thus the c u r r e n t r a t e of supply (S ) i s assumed to be a f u n c t i o n ID b of the amount of l a b o u r (n ) and c a p i t a l (k ) engaged i n h o u s e - b u i l d i n g : S b = f£ ( n b , k b ) (9) w i t h d f£/d n b > 0 and d f£/d k b > 0. The r a t e a t which the supply of h o u s e - b u i l d e r s changes •b (n ) depends, as i n the case o f c o t t o n t e x t i l e s , on the l e v e l o f wages i n the two i n d u s t r i e s as w e l l as exogenous changes t a k i n g p l a c e i n the t o t a l l a b o u r f o r c e . Thus "b n , b c *. /~i f\\ n = g b (w , w , P) (10) and d gJVd w b > 0, d gP/d w C <' 0, and d gJJ/d P > 0. 102 Here a l s o , we can assume a lagged response of b u i l d i n g em-ployment to i n d u s t r y requirements. T h i s i s , i n p a r t , a d i r e c t consequence of an a d d i t i o n a l assumption t h a t b u i l d -i n g wages are i n s t i t u t i o n a l l y (exogenously) determined. Thus, to some exte n t the l e v e l of b u i l d i n g a c t i v i t y i s con-s t r a i n e d by the l e v e l of p r o d u c t i o n i n the primary i n d u s t r y , assuming f u l l employment. The supply o f c a p i t a l a v a i l a b l e to the b u i l d i n g i n d u s t r y (k b) w i l l depend on the r e l a t i v e r a t e s of r e t u r n i n the two i n d u s t r i e s , the b e h a v i o r of the t o t a l c a p i t a l stock (K) and an independent supply of c a p i t a l generated through the form-a t i o n of b u i l d i n g s o c i e t i e s (B). Changes i n t h i s r a t e of c a p i t a l supply may be expressed as f o l l o w s : k b = K - k C + B (11) The r a t e of r e t u r n to c a p i t a l employed i n the supply of new houses (r ) i s assumed to be a f u n c t i o n of r e n t a l r a t e s (R) and the c o s t s of c o n s t r u c t i o n , here r e p r e s e n t e d by (w b); r b = h£ (R, w b) (12) where d h£/d R > 0 and d h j / d w b < 0. 103 The l e v e l of r e n t s i s r e l a t e d t o the c o n d i t i o n s o f supply and demand i n the housing market as a whole. Chan-ges i n t h i s l e v e l w i l l depend on the extent to which t h e r e i s an excess demand f o r or supply o f housing accommodation and f o r how lo n g t h i s has p e r s i s t e d . The degree t o which r e n t s are s t i c k y w i l l i n l a r g e measure determine the l e n g t h the l a g i n the b u i l d i n g i n d u s t r i e s response t o changes i n demand. Thus R = h£ ( D b, S b) (13) where d h^/d f£ > 0 and d h^/d f£ < 0. These t h i r t e e n e quations make up our r e g i o n a l model. Of the 18 v a r i a b l e s , 5 are exogenously determined: X, P, K, B, w . Assuming the s t r u c t u r a l s p e c i f i c a t i o n s of the model r e s u l t s i n 13 independent and c o n s i s t e n t e q u a t i o n s , i t i s p o s s i b l e through s u c c e s s i v e e l i m i n a t i o n of the endogenous v a r i a b l e s t o d e r i v e a s i n g l e e q u a t i o n e x p r e s s i n g h o u s e - b u i l d i n g as a f u n c t i o n of p o p u l a t i o n and the o t h e r f o u r exogenous v a r i a b l e s : V n ~rT + + V I = F (X,P,B,K,wb) (14) dt where V, ... V are a l g e b r a i c f u n c t i o n s of the s t r u c t u r a l 104 p a r a m e t e r s and n i s d e t e r m i n e d by t h e s p e c i f i c a t i o n o f th e model. T h i s e x p r e s s i o n c a p t u r e s t h e v a r i o u s f o r c e s , b o t h i n t e r n a l and e x t e r n a l , t h a t come t o b e a r on t h e h o u s i n g t h s e c t o r , i n a s i n g l e n o r d e r d i f f e r e n t i a l e q u a t i o n . There a r e s i x p a r t s t o i t s s o l u t i o n . One component i s d e r i v e d from t h e c h a r a c t e r i s t i c e q u a t i o n o b t a i n e d by s e t t i n g t h e l e f t hand s i d e e q u a l t o z e r o . d h s b dsb v n ~yr + • • • + v i at - = 0 ( 1 5 ) d t We can e x p e c t t h i s e q u a t i o n t o have a t l e a s t one r e a l r o o t w h i c h may be e x p l o s i v e o r damped. I t i s u n l i k e l y t h a t a l l n r o o t s w i l l be r e a l , however; t h u s , a s o l u t i o n w i l l p r o b a b l y g i v e r i s e t o c y c l e s . These, a l s o , may be damped o r e x p l o s i v e . I n a d d i t i o n t o t h e component a r i s i n g o u t o f t h e cha-r a c t e r i s t i c e q u a t i o n , t h e r e a r e f i v e a d d i t i o n a l components, each d e r i v e d from one o f t h e exogenous v a r i a b l e s on t h e r i g h t s i d e o f t h e e q u a t i o n . I f any one o f t h e s e f a c t o r s i s s u b j e c t t o c y c l i c a l b e h a v i o r , t h e n t h i s w i l l be r e f l e c t e d ''""'"The f u n c t i o n F w i l l c o n t a i n one o r more d e r i v a t i v e s o f each o f t h e exogenous v a r i a b l e s . 105 on h o u s e - b u i l d i n g a c t i v i t y . F o r example, t h e e x i s t e n c e o f t r a n s p o r t - b u i l d i n g c y c l e s o v e r s e a s i n d e v e l o p i n g coun-t r i e s w i t h a h i g h m a r g i n a l p r o p e n s i t y t o i m p o r t c o t t o n t e x t i l e s ( o r c o a l , e t c . ) may g e n e r a t e s i m i l a r f l u c t u a t i o n s i n d o m e s t i c r e s i d e n t i a l c o n s t r u c t i o n t h r o u g h changes i n X. Depending on t h e s t r e n g t h o f t h e s e l i n k a g e s and t h e l a g s t r u c t u r e o f o u r model, t h e s e f l u c t u a t i o n s may f o l l o w c l o s e l y o r i n v e r s e l y t h e p a t t e r n abroad. Our p o p u l a t i o n v a r i a b l e may a l s o be a s o u r c e o f i n s t a -b i l i t y . I f t h e r e i s a n a t u r a l m i g r a t i o n c y c l e , o r i f de-v elopments abroad cause waves o f e m i g r a t i o n ( i n d e p e n d e n t o f any s p e c i f i c r e g i o n a l f a c t o r s ) , t h e s e movements w i l l be r e f l e c t e d i n l o c a l b u i l d i n g c o n s t r u c t i o n . I t m i g h t be more r e a l i s t i c t o argue t h a t r a t e s o f e m i g r a t i o n a r e r e l a t e d t o i n t e r r e g i o n a l as w e l l as i n t e r - n a t i o n a l wage d i f f e r e n t i a l s . The r a t e o f i n c r e a s e o f t o t a l p o p u l a t i o n (P) c o u l d t h e n have an exogenous component p l u s a component r e l a t e d t o such wage d i f f e r e n t i a l s . The r e g i o n a l model (as opposed t o s i m p l y a n a t i o n a l model) w i t h i n t h e c o n t e x t o f o t h e r r e g i o n s making up a n a t i o n , i s s u b j e c t t o two i m p o r t a n t demographic i n f l u -e n c e s : one i s t h e f l o w o f p o p u l a t i o n between r e g i o n s , t h e o t h e r 12 i s . t h e f l o w between n a t i o n s . 12 I n a d d i t i o n , t h e p o p u l a t i o n c u r v e may have a n a t u r a l growth component as w e l l as a superimposed o s c i l l a t o r y growth component. These c h a r a c t e r i s t i c s would t h e n a l s o be p r e s e n t i n t h e b u i l d i n g c u r v e . 106 A l t h o u g h t h e o t h e r exogenous v a r i a b l e s a r e a p o t e n t i a l s o u r c e o f c y c l i c a l i n f l u e n c e , we can e x p e c t c o n d i t i o n s o f e x t e r n a l demand (X) and p o p u l a t i o n b e h a v i o r (P) t o be t h e most i m p o r t a n t v a r i a b l e s w o r k i n g t h r o u g h th e f u n c t i o n F. The c a p i t a l f a c t o r (K) f o r example, might be s u b j e c t t o f l u c t u a t i o n s r e s u l t i n g from movements i n t h e b a l a n c e o f pay-ments, b u t b e f o r e t h i s c o u l d be d e t e r m i n e d i t would be ne-c e s s a r y t o d e f i n e more c l e a r l y what t h e v a r i a b l e (K) r e p r e -s e n t s . C a p i t a l made a v a i l a b l e t o t h e c o n s t r u c t i o n i n d u s t r y t h r o u g h t h e a c t i v i t i e s o f b u i l d i n g s o c i e t i e s m i g h t r e a s o n a b l y be e x p e c t e d t o f o l l o w changes i n t h e r e g i o n a l p o p u l a t i o n . Thus, a wave o f i n - m i g r a t i o n would r e s u l t i n t h e f o r m a t i o n o f new b u i l d i n g s o c i e t i e s o r i n c r e a s e d s a l e s o f s u b s c r i p t i o n s t o e x i s t i n g ones i n o r d e r t o t r a n s f o r m t h e i n c r e a s e d h o u s i n g need i n t o a c t u a l c o n s t r u c t i o n . The r e g i o n a l p a t t e r n o f b u i l d i n g a c t i v i t y g i v e n by t h e s o l u t i o n o f e q u a t i o n (14) w i l l have s i x a d d i t i v e components w h i c h may be summarized as f o l l o w s : a) A component r e s u l t i n g from t h e i n t e r n a l s t r u c t u r e o f t h e r e g i o n a l economy, w h i c h may be damped o r e x p l o s i v e , and w h i c h may be c y c l i c a l . b) A component a r i s i n g o u t o f p o p u l a t i o n movements, w h i c h may r e f l e c t b o t h growth and c y c l e s . 107 c) A component due to f l u c t u a t i o n s i n e x t e r n a l demand. d) P o t e n t i a l c y c l i c a l components r e s u l t i n g from the b e h a v i o r of K. B. and w . Endogenous c y c l e s i n h o u s e - b u i l d i n g generated by the simple model developed by Lewis were found to be h e a v i l y damped. "... heavy damping seems t o be more p l a u s i b l e course of events i n an economy o f the k i n d we are c o n s i d e r -i n g when l o o k i n g a t t h i s c h a r a c t e r -i s t i c e q u a t i o n . With a c o n s t a n t p o p u l a t i o n and e x t e r n a l demand i t does not seem l i k e l y t h a t workers w i l l move t o and from c o a l to b u i l d -i n g w i thout s e t t l i n g down t o some approximate e q u i l i b r i u m long b e f o r e e i g h t e e n years have passed. I f t h e r e i s t o be an undamped r e g i o n a l long c y c l e i n house-b u i l d i n g , i t w i l l p r o b a b l y be a consequence of r e c u r r e n t d e s t a b i l i z i n g f l u c t u a t i o n s i n the exogenous components. IMPLICATIONS OF THE REGIONAL MODEL FOR THE COURSE OF HOUSE- BUILDING AT THE NATIONAL LEVEL. In t h i s c h a p t e r we have emphasized the importance of a n a l y z i n g the b u i l d i n g c y c l e r e g i o n a l l y or l o c a l l y . Two Lewis, " B u i l d i n g C y c l e s : A Regional Model", p. 531. 108 important reasons have been g i v e n i n support o f t h i s me-t h o d o l o g i c a l p o s i t i o n . F i r s t , t h e r e i s e x t e n s i v e empi-r i c a l e vidence t h a t the course o f h o u s e - b u i l d i n g d i f f e r e d s i g n i f i c a n t l y among many d i f f e r e n t towns. Second, the housing market i s by i t s v e r y nature a l o c a l market, and "the mechanism of the b u i l d i n g c y c l e can be p r o p e r l y de-termined o n l y by t h i n k i n g o f r e g i o n a l or l o c a l c y c l e s i n 14 t h e i r n a t u r a l s e t t i n g . " T h i s , o f course, does not imply t h a t aggregate a n a l y s i s based on n a t i o n a l b u i l d i n g data i s of l i t t l e o r no v a l u e . A p e r i o d o f o v e r - r i d i n g n a t i o n a l p r o s p e r i t y may have a very f a v o r a b l e e f f e c t on r e g i o n a l and l o c a l c o n d i t i o n s throughout the coun t r y . We might thus f i n d the course o f h o u s e - b u i l d i n g i n a wide range of areas t o be f o l l o w i n g r e l a t i v e l y s i m i l a r p a t t e r n s . During such p e r i o d s the n a t i o n a l t o t a l of h o u s e - b u i l d i n g w i l l i n a l l p r o b a b i l i t y be h i g h e r than a t o t h e r times. Under such c i r c u m s t a n c e s , broad g e n e r a l i z a t i o n s based on the a n a l y s i s of aggregate measures may be both meaningful and i l l u m i n a t i n g . A problem a r i s e s , however, when the p a t t e r n o f response t o d i s s i m i l a r (as w e l l as s i m i l a r ) economic c o n d i t i o n s i s s i g -n i f i c a n t l y d i v e r s e on a r e g i o n a l o r l o c a l b a s i s . An argument Ibid, p. 533. 109 i n a g g r e g a t i v e terms w i l l now i n e v i t a b l y r e s u l t i n con-c l u s i o n s t h a t a r e m i s l e a d i n g . L e t us c o n s i d e r a c o u n t r y i n w h i c h t h e r e e x i s t two o r more r e g i o n s d e f i n e d a l o n g t h e l i n e s i n d i c a t e d a t t h e b e g i n n i n g o f t h e l a s t s e c t i o n . We can r e p r e s e n t each o f t h e s e r e g i o n s w i t h a s e t o f e q u a t i o n s s i m i l a r t o t h o s e l i s t e d above, a l t h o u g h w i t h d i f f e r e n t p a r a m e t e r s and s t r u c t u r a l s p e c i f i c a t i o n s . Thus, i n each r e g i o n b u i l d i n g a c t i v i t y may be d e s c r i b e d by an e q u a t i o n o f t h e form S b = f ( t ) + F(X,P,B. ... ) where f ( t ) i s t h e endogenous p a r t o f t h e s o l u t i o n determ-i n e d by t h e i n t e r n a l s t r u c t u r e o f t h e r e g i o n a l economy and d e r i v e d from t h e c h a r a c t e r i s t i c e q u a t i o n . The F f u n c t i o n r e p r e s e n t s t h a t p a r t o f t h e s o l u t i o n a r i s i n g from t h e exogenous components. To t h e e x t e n t t h a t t h e r e i s i n t e r -r e g i o n a l t r a d e , m i g r a t i o n o r c a p i t a l f l o w s , e t c . , t h e b e h a v i o r o f t h e exogenous v a r i a b l e s i n one r e g i o n w i l l a f f e c t t h e b e h a v i o r o f t h e same v a r i a b l e s i n o t h e r r e g i o n s . A more e l a b o r a t e model c o u l d be s p e c i f i e d t o t a k e i n t o a c c o u n t t h e s e i n t e r - r e g i o n a l f l o w s . The l a b o u r f o r c e v a r i a b l e ( P ) , f o r example, would t h e n have an endogenous 110 component r e l a t e d t o , say, i n t e r - r e g i o n a l wage d i f f e r e n t i a l s , as w e l l as an exogenous component. I t might be argued t h a t wage r a t e s overseas are a r e l e v a n t f a c t o r i n the d e c i s i o n to emigrate. T h i s c o u l d be allowed f o r by i n c o r p o r a t i n g the f o r e i g n wage r a t e i n t o the exogenous component of the la b o u r f o r c e v a r i a b l e . There are c l e a r l y an i n f i n i t e number of models t h a t c o u l d be s p e c i f i e d . We are simply c o n s i d e r i n g here, f l u c t u a t i o n s i n r e s i d e n t i a l b u i l d i n g as p r i m a r i l y go-verned by changes i n l o c a l c o n d i t i o n s of supply and demand however they may come about. At times t h e r e w i l l be c o n s i d e r a b l e l o c a l d i f f e r e n c e s i n the course o f h o u s e - b u i l d i n g . In terms o f our model, the v a r i o u s r e g i o n a l b u i l d i n g - s u p p l y equations w i l l e x h i b i t c y c l e s , the phasing, amplitude and p e r i o d of which, w i l l a l l be d i f f e r e n t . I t i s not d i f f i c u l t to imagine a case i n which s e v e r a l r e g i o n a l p a t t e r n s t h a t are out o f phase are m a i n t a i n i n g an aggregate b a l a n c e i n terms of volume changes. T h i s may show up as a p l a t e a u i n a n a t i o n a l b u i l d i n g index. One or more of these r e g i o n a l p a t t e r n s may have an e x p l a n a t i o n i n terms of the n a t i o n a l demand f o r l i g h t manufactured goods, o t h e r s i n terms of the ex p o r t demand f o r c o a l , and s t i l l o t h e r s i n terms o f changes s p e c i f i c t o the c o t t o n t e x t i l e i n d u s t r y . The s t a b l e b e h a v i o r o f the aggregate index f a i l s I l l t o i n d i c a t e these d i f f e r e n c e s . To hazard an e x p l a n a t i o n of the n a t i o n a l p a t t e r n by comparing the aggregate b u i l d -i n g index t o o t h e r aggregate economic and demographic mea-sures w i l l , under these c i r c u m s t a n c e s , i n v a r i a b l y r e s u l t i n c o n c l u s i o n s t h a t are to some ex t e n t erroneous ( i . e . do not have g e n e r a l a p p l i c a b i l i t y ) . F or t h i s reason alone i t i s d e s i r a b l e t o look i n g r e a t e r d e t a i l a t the course o f h o u s e - b u i l d i n g a t the l o c a l l e v e l . At o t h e r times, s e v e r a l r e g i o n a l upswings i n r e s i d e n t i c o n s t r u c t i o n may c o i n c i d e . T h i s may be due t o f o r t u i t o u s events o f a s p e c i f i c l o c a l c h a r a c t e r t h a t are f a v o r a b l e to h o u s e - b u i l d i n g , o r a wave of n a t i o n a l p r o s p e r i t y ( r e s u l t i n g perhaps, from a f a v o r a b l e s h i f t i n the terms of trade) t h a t l e a d s t o s i m i l a r movements of comparable v a r i a b l e s a c r o s s a l l r e g i o n s . In e i t h e r case a n a t i o n a l b u i l d i n g boom w i l l r e s u l t . But as Lewis p o i n t s out, t h i s p e r i o d o f g e n e r a l l y h i g h b u i l d i n g a c t i v i t y may come t o an end i n two d i f f e r e n t ways. " I t may be t h a t i n s e v e r a l o f the r e g i o n s the v a r i o u s l o c a l demands become q u i c k l y s a t i s f i e d so t h a t t h e r e are fewer and fewer r e g i o n s o f h i g h a c t i v i t y . T o t a l demand f a l l s because l o c a l demands have become exhausted f o r q u i t e n a t u r a l and p o s s i b l y d i f f e r e n t reasons. On the o t h e r hand t h e r e may be so many l o c a l booms of i n t e n s i t y t h a t e v e n t u a l l y the s t r a i n 112 on n a t i o n a l r e s o u r c e s becomes t o o g r e a t . There a r e n o t enough men, m a t e r i a l s , o r c r e d i t t o a l l o w t h e boom t o c o n t i n u e . " 1 5 Now, i f i t i s p l a u s i b l e t o speak o f a l i m i t o r c e i l i n g on t h e n a t i o n a l l e v e l o f b u i l d i n g a c t i v i t y imposed p r i m a r i l y by t h e a v a i l a b i l i t y o f s c a r c e n a t i o n a l r e s o u r c e s f o r employ-ment i n t h e c o n s t r u c t i o n o f d w e l l i n g s , t h e n i t m i g h t be p o s s i b l e t o d i s t i n g u i s h between major f l u c t u a t i o n s i n house-b u i l d i n g t h a t have l o c a l o r r e g i o n a l o r i g i n s ( i . e . l i e below t h e c e i l i n g ) and t h o s e t h a t have t h e i r e x p l a n a t i o n i n t h e l i m i t a t i o n s imposed by the s u p p l y o f n a t i o n a l r e s o u r c e s ( i . e . r e a c h t h e c e i l i n g ) . I f such a d i s t i n c t i o n i s p o s s i b l e i t would i m p l y t h a t each major downturn s h o u l d be s t u d i e d s e p a r a t e l y . I t would be a m i s t a k e t o a p p l y t h e e x p l a n a t i o n s o f t h o s e w i t h l o c a l o r r e g i o n a l o r i g i n s t o a l l major downturns. T h i s , t h e n , i s a n o t h e r r e a s o n f o r e x a m i n i n g more c l o s e l y t h e r e g i o n a l and l o c a l components o f a g g r e g a t e h o u s e - b u i l d i n g i n d i c e s . I n t h e f o l l o w i n g c h a p t e r s we p r o p o s e t o do t h i s f o r t h e c o a l m i n i n g r e g i o n o f South Wales and t h e c o t t o n t e x t i l e r e -g i o n o f S o u t h - e a s t L a n c a s h i r e . The i d e a s u n d e r l y i n g t h e ge-n e r a l r e g i o n a l model o u t l i n e d i n t h i s c h a p t e r p r o v i d e a Ibid. I 113 u s e f u l c o n c e p t u a l framework f o r these r e g i o n a l s t u d i e s of h o u s e - b u i l d i n g a c t i v i t y i n Great B r i t a i n . S p e c i f i c a l l y , we w i l l focus on those demographic and economic f a c t o r s a r i s i n g out o f the i n t e r n a l s t r u c t u r e of the r e g i o n a l economy as w e l l as e x t e r n a l f o r c e s which t r a n s c e n d r e -g i o n a l boundaries t o determine the r e g i o n a l p a t t e r n of h o u s e - b u i l d i n g a c t i v i t y . CHAPTER V RESIDENTIAL CONSTRUCTION IN THE SOUTH WALES COALFIELD A REGIONAL INDEX OF HOUSE-BUILDING IN SOUTH WALES B e r n a r d Weber p u b l i s h e d h i s a g g r e g a t e i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n i n 1955. The f o l l o w i n g y e a r , a c omprehensive s t u d y o f h o u s e - b u i l d i n g i n a p a r t i c u l a r r e g i o n -South Wales, was u n d e r t a k e n by Hamish R i c h a r d s and J . P a r r y Lewis.''" The d e t a i l s o f p l a n s approved and houses e r e c t e d c o n t a i n e d i n t h e r e g i s t e r s o f numerous l o c a l a u t h o r i t i e s were 2 t h e b a s i s o f t h i s s t u d y . In t h i s c h a p t e r we w i l l l o o k i n some d e t a i l a t t h e c o u r s e o f h o u s e - b u i l d i n g i n South Wales as m a n i f e s t e d i n t h e r e g i o n a l i n d e x o f R i c h a r d s and L e w i s . A f t e r comparing t h e s e r e s u l t s w i t h t h e n a t i o n a l (urban) p a t t e r n r e f l e c t e d i n Weber's i n d e x we w i l l p r e s e n t a t e n t a t i v e e x p l a n a t i o n o f t h e r e g i o n a l e x p e r i e n -c e , p l a c i n g s p e c i a l emphasis on i n d u s t r i a l and demographic f a c t o r s Hamis R i c h a r d s and J . P a r r y L e w i s , " H o u s e - b u i l d i n g i n t h e South Wales C o a l f i e l d , 1851-1913", Manchester School, V o l . XXIV (September, 1956), pp. 289-301. 2 E a r l i e r we n o t e d t h a t t h e e nforcement of B u i l d i n g By-Laws imposed c e r t a i n r e s p o n s i b i l i t i e s on l o c a l a u t h o r i t i e s . L o c a l b y - l a w s g e n e r a l l y f o l l o w e d t h e g u i d e l i n e s i s s u e d by t h e Cen-t r a l Board o f H e a l t h under t h e H e a l t h A c t o f 1848. B e f o r e c o n s t r u c t i o n c o u l d b e g i n b u i l d i n g p l a n s had t o be approved by a Town S u r v e y o r and/or a l o c a l b o a r d t h a t was s e t up a f t e r a c e r t a i n degree o f u r b a n i z a t i o n had been r e a c h e d . 114 115 u n i q u e t o South Wales. Our f i n a l t a s k i s t o embark on a more e x t e n s i v e e x a m i n a t i o n o f t h e l o c a l components o f t h e r e g i o n a l i n d e x t h a n has p r e v i o u s l y been u n d e r t a k e n . The many problems t h a t c o n f r o n t e d Weber i n h i s ana-l y s i s o f h o u s e - b u i l d i n g s t a t i s t i c s , p r i m a r i l y t h o s e a s s o c i a t e d w i t h boundary changes, t h e g e s t a t i o n p e r i o d i n c o n s t r u c t i o n , t h e l a g between p l a n a p p r o v a l and a c t u a l c o n s t r u c t i o n and t h e v a r i a t i o n i n t e r m i n a l d a t e s f o r i n d i v i d u a l s e r i e s were a l s o r e l e v a n t c o n s i d e r a t i o n s i n t h e c o n s t r u c t i o n o f a r e g i o n a l i n d e x . The a d j u s t m e n t s f o r t h e s e v a r i o u s f a c t o r s d i f f e r e d i n method from t h o s e employed by Weber. I have t h u s d e v o t e d some space t o a d i s c u s s i o n o f t h i s p r o b l e m i n Appendix I I . The r e g i o n a l i n d e x o f h o u s e - b u i l d i n g i n South Wales i s p r e s e n t e d j u s t below Weber's i n d e x o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n i n F i g u r e 4. From a peak i n 1858, house-b u i l d i n g a c t i v i t y i n t h i s r e g i o n f e l l s t e a d i l y t o a major t r o u g h i n 186 3. I n t h e f i f t y y e a r s t h a t f o l l o w e d t h e i n d e x n e v e r a g a i n f e l l t o a p o i n t t h i s low. The t r o u g h i n t h e e a r l y 60's, t h e m i n or upswing t h a t f o l l o w e d , and t h e t r o u g h c e n t e r e d on 1870 r e f l e c t t h e s i m i l a r e x p e r i e n c e s o f Swansea, Newport, A b e r d a r e and M e r t h y r - T y d f i l . The major peak i n t h e F i g u r e 4 116 HOUSE-BUILDING INDICES FOR GREAT BRITAIN AND SOUTH WALES 0 1860 1870 1880 1890 1900 1910 SOURCE: Great B r i t a i n , 1860-1914 - See Table XV, Appendix I South Wales, 1860-1913 - See Tabl e XVII, Appendix I I 117 m i d - s e v e n t i e s , however, i s e x p l a i n e d p r i m a r i l y by t h e v e r y h i g h a c t i v i t y i n Swansea, C a r d i f f , Newport, Aber-d a r e , M e r t h y r T y d f i l , and L l a n e l l y M.B. The downswing i n t h e r e g i o n a l i n d e x from 1876 t o 1879 r e s u l t s from s h a r p d e c l i n e s i n a l l o f t h e towns mentioned above e x c e p t C a r d i f f . The 1880's saw a s u b s t a n t i a l i n c r e a s e i n r e s i d e n t i a l c o n s t r u c t i o n . I t has been argued t h a t t h e development o f new c o l l i e r i e s i n t h i s p e r i o d gave t h e i n d u s t r y s u f f i c i e n t momentum t o s a f e l y absorb t h e t r a d e c y c l e t h a t t u r n e d down 3 a f t e r 1885. A minor t r o u g h i n 1888 i s f o l l o w e d by an i n e x o r a b l e r i s e i n t h e r e g i o n a l i n d e x t o the u n p r e c e d e n t e d peak o f 189 7. T h i s i s e x p l a i n e d n o t o n l y by t h e c o n t i n u e d growth o f new c o l l i e r y towns, b u t a l s o by major b u i l d i n g booms i n Swansea, C a r d i f f , Newport, Mo u n t a i n Ash, and Rhondda. H o u s e - b u i l d i n g f e l l p r e c i p i t o u s l y a f t e r 1897 t o a major t r o u g h i n 1900. T h i s b e h a v i o r i n t h e r e g i o n a l i n d e x r e f l e c t s a g e n e r a l t r e n d w i t h m ajor d e p r e s s i o n s i n a l l t h e towns r e p r e s e n t e d i n F i g u r e 9 e x c e p t L lwchwr, Ebbw-vale, A b e r d a r e , and an u n u s u a l b u i l d i n g s p r e e i n M e r t h y r T y d f i l c e n t e r e d on 1900-01. R i c h a r d s and L e w i s , " H o u s e - B u i l d i n g i n t h e South Wales C o a l f i e l d " , p. 296. 118 The f i r s t decade o f t h e T w e n t i e t h C e n t u r y w i t n e s s e d a wide v a r i e t y o f l o c a l p a t t e r n s . But t h e r e g i o n a l i n d e x f o l l o w e d a d i s t i n c t and i m p r e s s i v e c o u r s e . A s h a r p r i s e i n t h e f i r s t t h r e e y e a r s t h a t j u s t m i s s e d r e c o v e r i n g t h e t o t a l l o s s i n t h e p r e v i o u s t h r e e y e a r s was f o l l o w e d by a m i n o r r e v e r s a l i n 190 4, w h i c h l a s t e d o n l y two y e a r s . The r e c o v e r y w h i c h t u r n e d i n t o a m ajor boom pushed t h e r e g i o n a l i n d e x t o an u n p r e c e d e n t e d h i g h i n 1910. The South Wales i n d e x d e c l i n e s t h e r e a f t e r , r e f l e c t i n g a g e n e r a l d e p r e s s i o n i n b u i l d i n g a c t i v i t y i n most towns b e f o r e t h e F i r s t W o rld War. DIFFERENCES BETWEEN THE COURSE OF HOUSE-BUILDING IN GREAT  BRITAIN AND THE SOUTH WALES COALFIELD A c o m p a r i s o n o f t h e c o u r s e o f h o u s e - b u i l d i n g i n South Wales w i t h t h a t r e f l e c t e d i n Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n l e a d s t o some i n t e r e s t i n g c o n c l u s i o n s . I n 186 3, when h o u s e - b u i l d i n g i n South Wales had f a l l e n t o an e x c e p t i o n a l l y low l e v e l , Weber's i n d e x shows a m i n o r peak. The m i n o r peak i n 1867 and t h e t r o u g h c e n t e r e d on 1870 a r e r o u g h l y matched by a minor t r o u g h and s t e a d y upswing, r e s p e c t i v e l y i n Weber's s e r i e s . The m ajor b u i l d i n g boom o f t h e m i d - s e v e n t i e s i s a p r o m i n a n t phenomenon 119 r e f l e c t e d i n b o t h i n d i c e s . The downswing t h a t f o l l o w s r e a c h e d bottom sooner i n t h e r e g i o n a l i n d e x t h a n i n Weber's n a t i o n a l i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n . Weber's s t u d y conveys t h e i m p r e s s i o n t h a t f o r a l m o s t a g e n e r a t i o n a f t e r 1879 , t h e B r i t i s h b u i l d i n g i n d u s t r y was i n a p r o t r a c t e d s t a t e o f d e p r e s s i o n . But t h i s was c l e a r l y n o t t h e e x p e r i e n c e o f South Wales. The 1880's were marked by a f l u c t u a t i n g b u t d e f i n i t e r i s e i n house-b u i l d i n g a c t i v i t y . T h i s , however, was o n l y a p r e l u d e t o th e m ajor b u i l d i n g boom o f t h e 1890's t h a t l e d t h e n a t i o n a l boom by h a l f a decade. The major t r o u g h i n t h e r e g i o n a l i n d e x , c e n t e r e d between t h e peak y e a r s o f 1897 and 1903, c o r r e s p o n d e d t o a m i n o r d i p i n what o t h e r w i s e were y e a r s o f e x t r a o r d i n a r i l y h i g h n a t i o n a l b u i l d i n g a c t i v i t y . The s t e a d y d e c l i n e i n Weber's i n d e x from 1903 i s n o t p a r a l l e l e d i n South Wales u n t i l a f t e r 1910. A s l i g h t two-year d e c l i n e a f t e r 1903 i s f o l l o w e d by an u n i n t e r r u p t e d r i s e i n t h e r e -g i o n a l i n d e x f o r t h e n e x t f i v e y e a r s . The a v a i l a b l e e v i d e n c e p o i n t s t o s i g n i f i c a n t d i f f e r e n c e s i n t h e c o u r s e o f h o u s e - b u i l d i n g i n South Wales and o t h e r p a r t s o f G r e a t B r i t a i n . We w i l l now l o o k i n some d e t a i l a t th e e x t a n t i n f o r m a t i o n on growth and f l u c t u a t i o n s , b o t h i n d u s t r i a l and demographic, i n - South Wales i n an at t e m p t t o r e l a t e t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n n o t 120 o n l y t o t h e r e g i o n a l p a t h o f i n d u s t r i a l g r o w t h , b u t a l s o t o t h e p a t t e r n o f development i n t h e whole o f G r e a t B r i t a i n and t h e " A t l a n t i c economy" as d e s c r i b e d i n Chap-t e r I I I . HOUSEBUILDING AND THE ECONOMIC DEVELOPMENT OF SOUTH WALES There a r e no a v a i l a b l e s t a t i s t i c s on income and i n v e s t m e n t i n Wales f o r t h e p e r i o d under r e v i e w . But t h e o u t p u t o f c r u d e s t e e l from 1879 and t h e volume o f c o a l e x p o r t s from South Wales p o r t s from 1860 p r o v i d e r e l a t i v e -l y good i n d i c e s o f i n d u s t r i a l growth. There a l s o e x i s t s a c o n t i n u o u s s e r i e s o f t h e average p r i c e o f steam c o a l v a l u e d f . o . b . C a r d i f f t h a t may be c o n s i d e r e d a r e a s o n a b l e a p p r o x i m a t i o n t o f l u c t u a t i o n s i n income. The i n d u s t r i a l p r o g r e s s o f South Wales may be t r a c e d i n F i g u r e 5 where we have a l s o r e p r o d u c e d t h e p r i m a r y i n -d i c a t o r s o f l o n g swings i n t h e " A t l a n t i c economy". The p a t t e r n o f development i s by now a f a m i l i a r one. F l u c t u a -t i o n s i n h o u s e - b u i l d i n g and r a i l w a y c o n s t r u c t i o n i n t h e U n i t e d S t a t e s were h i g h l y c o r r e l a t e d w i t h B r i t i s h f o r e i g n i n v e s t m e n t and me r c h a n d i s e e x p o r t s . D u r i n g t h e e x p a n s i o n phase o f t h e l o n g c y c l e , where t h e r e was e x t e n s i v e i n v e s t -ment i n c a p i t a l equipment i n N o r t h A m e r i c a , t h e e x p o r t F i g u r e 5 121 INDICES OF LONG SWINGS IN WALES AND THE "ATLANTIC ECONOMY", 1860-1914 (A) M i l e s o f Railway t r a c k added i n the U n i t e d S t a t e s , 1860-1913. Source: Simon S. Kuznets, Secular Movements in Production and Prices, (New York: Augustus M. K e l l y , 1967), pp. 526-27. (B) Index of t o t a l new b u i l d i n g i n the U n i t e d S t a t e s , 1860-1914. Source: C D . Long, Building Cycles and the Theory of Investment, ( P r i n c e t o n : P r i n c e t o n U n i v e r s i t y P r e s s , 1940), pp. 228-29. (C) Index o f U.K. c a p i t a l e x ports (1865=100) 1866-1912. Source: P a u l H. Douglas, "An Est i m a t e o f the Growth of C a p i t a l i n the U.K. 1865-1909", Journal of Economic and Business History, (August, 1930), p. 680. (D) Volume of t o t a l e x p o r t s from the U n i t e d Kingdom 1860-1913. ( O r i g i n a l data as percentage o f t r e n d ) . Source: B r i n l e y Thomas, Migration and Economic Growth (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1954), p. 292. (E) South Wales C o a l E x p o r t s , 1860-1913. Source: F i n l a y Gibson, The Coalmining Industries of the United Kingdom, ( C a r d i f f , 1921), p. 84. (F) South Wales Crude S t e e l output 1879-1913. Source: B r i n l e y Thomas, The Welsh Economy, Studies in Expansion, ( C a r d i f f : U n i v e r s i t y of Wales P r e s s , 1962), p. 22. (G) Occupied immigrants to the U n i t e d S t a t e s from Wales, 1875-1914. Source: B r i n l e y Thomas, Migration and Economic Growth, p. 272. 10000 122 A 5000 123 s e c t o r i n G r e a t B r i t a i n e x p e r i e n c e d a boom i n economic a c t i v i t y . The p a t t e r n o f i n d u s t r i a l f l u c t u a t i o n s i n South Wales i s i n g e n e r a l agreement w i t h t h e b e h a v i o r o f t h e B r i t i s h e x p o r t s e c t o r . There were, however, p e r i o d s , t h e e a r l y s e v e n t i e s f o r example, when t h e s e r i e s moved i n v e r s e l y . The p r i m a r y r e a s o n f o r t h e f a l l i n c o a l ex-p o r t s r e l a t i v e t o t r e n d i s found i n t h e s t r a i n on i n d u s -t r i a l r e l a t i o n s t h a t c o i n c i d e d w i t h t h e m ajor boom i n t h i s p e r i o d . The r a p i d development o f t h e r e g i o n a l eco-nomy c r e a t e d s e v e r e s t r e s s e s t h a t u l t i m a t e l y became prime s o u r c e s o f d i s p u t e . Among t h e s e were t h e e f f o r t s o f t h e c o l l i e r y owners t o c r u s h t h e f i r s t g e n e r a l t r a d e u n i o n movement i n t h e c o a l f i e l d and a l s o t h e i r a t t e m p t s t o l o w e r t h e wage r a t e s t h e y p a i d t o t h e l e v e l o f t h o s e p a i d by t h e i r o n m a s t e r s , who were becoming p o w e r f u l c o m p e t i t o r s i n t h e c o a l m a r k e t , t o t h e i r c o l l i e r s . These v a r i o u s c i r -cumstances u l t i m a t e l y e x p l o d e d i n t h e l a r g e s c a l e i n d u s t r i a l s t o p p a g e s o f t w e l v e weeks i n 1871, t h r e e months i n 1873, 4 and f i v e months i n 1875. The i n d u s t r i a l development o f South Wales d u r i n g t h e p e r i o d from around 1860 t o t h e o u t b r e a k o f t h e F i r s t World J.H. M o r r i s and L . J . W i l l i a m s , The South Wales Coal Industry, ( C a r d i f f : U n i v e r s i t y o f Wales P r e s s , 1958) p. 254. 124 War i s dominated by one i m p o s i n g f a c t o r , t h e e x p a n s i o n o f t h e c o a l i n d u s t r y . F o r t h e B r i t i s h t r a d e s e c t o r as a w h o l e , c o a l became t h e s i n g l e most i m p o r t a n t commodity e x p o r t i n t h e l a s t h a l f o f t h e N i n e t e e n t h C e n t u r y . The i n c r e a s e i n c o a l p r o d u c t i o n i n t h e m i d d l e o f t h e c e n t u r y was p r i m a r i l y i n r e s p o n s e t o t h e g r o w i n g needs o f an e x p a n d i n g d o m e s t i c i r o n i n d u s t r y . But as V i c t o r i a n E n g l a n d matured, t h e most i m p o r t a n t i n f l u e n c e s c o n d i t i o n i n g t h e development o f t h e c o a l i n d u s t r y assumed i n t e r n a t i o n a l d i m e n s i o n s . The a p p l i c -a t i o n o f steam power i n i n d u s t r y , i n r a i l and ocean t r a n s p o r t -a t i o n around t h e w o r l d c r e a t e d an i n s a t i a b l e demand f o r c o a l . I n a comprehensive s t u d y o f t h e growth and d i r e c t i o n o f t h e B r i t i s h c o a l t r a d e , D.A. Thomas s t a t e s : "Between 1850 and 1900, w h i l e t h e q u a n t i t y o f c o a l p r o d u c e d i n t h e U n i t e d Kingdom and r e t a i n e d f o r home consumption has r a -t h e r more t h a n t r e b l e d , o r , p e r c a p i t a , a l i t t l e more t h a n d o u b l e d , t h e e x p o r t , i n c l u d i n g c o a l s h i p p e d f o r t h e use o f steamers engaged i n t h e f o r e i g n t r a d e , has grown f i f t e e n f o l d , and i n c r e a s e d from a p r o p o r t i o n o f 6.8 p e r c e n t t o one o f 26 p e r - c e n t o f t h e t o t a l o u t p u t . In v a l u e i t p r o g r e s s e d from about 2 p e r - c e n t o f t h e t o t a l o f e x p o r t s i n 1850 t o o v e r 16 p e r -c e n t i n 1900... " 5 D.A. Thomas, "The Growth and D i r e c t i o n o f our F o r e i g n Trade i n C o a l d u r i n g t h e L a s t H a l f C e n t u r y " , Journal of the Royal S t a t i s t i c a l Society, V o l . LXVI- (September, 1903), p. 440. TABLE I I I GROWTH OF PRODUCTION AND EXPORT OF COAL UNITED KINGDOM 1860-19 00 Year U.K. c o a l p r o d u c t i o n ( M i l l i o n s o f t o n s ) E x p o r t o f c o a l , coke and bunker ( M i l l i o n s o f t o n s ) %age o f e x p o r t s t o prod. V a l u e o f a l l E x p o r t s V a l u e o f c o a l E x p o r t s %age o f c o a l v a l u e t o t o t a l e x p o r t v a l u e ( M i l l i o n s ( M i l l i o n s o f pounds) o f pounds) 1860 80.0 8.4 10.5 135.8 3.7 2.7 1870 110.4 14.1 12. 8 199 .6 6.7 3.4 1880 147.0 23.9 16. 3 223.0 10. 8 4.8 1890 181.6 38.7 21.3 263.6 23.9 9.0 1900 225. 2 58.4 25.9 291.2 48.3 16.6 Source: D.A. Thomas, "The Growth and D i r e c t i o n o f Our F o r e i g n Trade i n C o a l D u r i n g t h e L a s t H a l f - C e n t u r y , " Journal of the Royal S t a t i s t i c a l Society, V o l . LXVI (September, 1903), p. 440. 126 T a b l e I I I shows c l e a r l y t h e g r o w i n g c o n t r i b u t i o n c o a l made t o t h e t o t a l volume o f U.K. e x p o r t s . I t i s e v i d e n t t h a t o v e r t h e e n t i r e p e r i o d , n o t o n l y t h e volume o f c o a l e x p o r t s r o s e s t e a d i l y , b u t a l s o t h e p r o p o r t i o n o f c o a l e x p o r t s t o t o t a l c o a l p r o d u c t i o n . The r a p i d development o f t h i s e x p o r t b a s e d i n d u s t r y i s an i m p o r t a n t , y e t o f t e n o v e r l o o k e d f a c t o r e x p l a i n i n g why t o t a l e x p o r t s o f t h e U n i t e d Kingdom i n c r e a s e d a t a l l i n t h e l a s t q u a r t e r o f t h e c e n t u r y . South Wales p l a y e d a major r o l e i n t h e e x p a n s i o n o f t h e c o a l m i n i n g i n d u s t r y . I n 1860, t h i s r e g i o n p r o d u c e d 10 m i l l i o n t o n s o f c o a l , w h i c h was 12.8 p e r c e n t o f t h e t o t a l o u t p u t o f t h e c o u n t r y ; by 1913 t h i s had i n c r e a s e d t o 56 m i l l i o n t o n s w h i c h t h e n c o n s t i t u t e d a l m o s t 20 p e r c e n t o f t o t a l n a t i o n a l o u t p u t . ^ T h i s i n c r e a s e b o t h i n volume and i n s h a r e i s s i g n i f i c a n t b u t f a i l s t o d i s c l o s e t h e g r o w i n g i m p o r t a n c e o f South Wales c o a l p r o d u c t i o n i n s u p p l y i n g an e x p a n d i n g w o r l d market. The f o l l o w i n g t a b l e shows t h a t by 1880, t h i s r e g i o n was t h e c h i e f c o a l - e x p o r t i n g d i s t r i c t i n t h e U n i t e d Kingdom. In 1860 t h e N o r t h - e a s t c o a s t e x p o r t e d H. S t a n l e y J e v o n s , The B r i t i s h Coal Trade, (London: Kegan P a u l T r e n c h T r u b n e r & Co., L t d . , 1915), p. 116. TABLE IV PROPORTION OF TOTAL COAL EXPORTS FROM PRINCIPLE DISTRICTS OF THE UNITED KINGDOM 1860-19 00 Othe r South Wales N o r t h N o r t h P o r t s E a s t West Year B r i s t o l Channel West E a s t Humber on S c o t l a n d S c o t l a n d E a s t C o a s t 1860 24.4 8.6 53. 5 3.4 .9 5.8 3.4 1870 31.2 4.9 46.9 4.5 .4 7.5 4.6 1880 39 .0 3.4 39.5 6.7 .6 7.8 3.0 1890 43.6 2.1 31.1 7.7 .5 11.4 3.6 1900 41.9 1.6 29.7 9.5 .6 13.1 3.6 Source: D.A. Thomas, "The Growth and D i r e c t i o n o f Our F o r e i g n Trade ... ",p. 49 8. 128 53.5 p e r c e n t o f t h e t o t a l amount o f c o a l s h i p p e d from t h e U.K., and t h e South Wales p o r t s 24.4 p e r c e n t . By 1881, t h e B r i s t o l c h a n n e l had g a i n e d a g r e a t e r p e r c e n t a g e t h a n t h e n o r t h - e a s t , i n c r e a s i n g t h e i r l e a d p r o g r e s s i v e l y t h e r e a f t e r . C a r d i f f became the most i m p o r t a n t c o a l - e x p o r t i n g p o r t i n t h e w o r l d . The r e v o l u t i o n i n s h i p p i n g t h a t t o o k p l a c e i n t h e e i g h t e e n - s i x t i e s and s e v e n t i e s was a p a r t i c u l a r l y f a v o r a b l e development f o r t h e c o a l m i n i n g i n d u s t r y o f South Wales. The amount o f s a i l tonnage c o n s t r u c t e d i n 1860 was a l m o s t t w i c e t h e amount o f steam tonnage. Ten y e a r s l a t e r , i n 1870, t h e steam tonnage added t o L l o y d ' s R e g i s t e r was t h r e e t i m e s 7 t h e s a i l tonnage. The f o l l o w i n g t a b l e g i v e s some i n d i c a t i o n o f t h e g r o w i n g i m p o r t a n c e o f steam t e c h n o l o g y i n o v e r s e a s s h i p p i n g . C e r t a i n Welsh c o a l s by' b e i n g v i r t u a l l y smokeless were h i g h l y s u i t e d f o r s t e a m s h i p s . T h i s was e a r l y r e c o g n i z e d by t h e Cunard, P e n i n s u l a r , and O r i e n t a l s h i p p i n g companies, and by 1872 t h e o f f i c i a l p o s i t i o n o f H.M. Navy was t o f a v o r g South Wales o v e r " N o r t h c o u n t r y " c o a l . W i t h i n easy r e a c h o f t h e s e a , t h e Welsh c o a l f i e l d s were i d e a l l y s i t u a t e d t o d e v e l o p a b r i s k e x p o r t t r a d e . The J.F. Rees, Studies in Welsh History, ( C a r d i f f : U n i v e r s i t y o f Wales P r e s s , 1 9 4 7 ) , p. 140. g M o r r i s and W i l l i a m s , The South Wales Coal Industry,^. 40. TABLE V SAILING AND STEAM TONNAGE ENTERED WITH CARGO AND IN BALLAST AT PORTS IN THE UNITED KINGDOM (OOO'S TONS) Year S a i l i n g Steam T o t a l S a i l as g, t> T o t a l Steam as % T o t a l 1860 9 ,624 2 ,549 12,173 79 21 1870 10 ,678 7,435 18,113 59 41 1880 10 ,765 18,310 29,075 37 63 1890 6,231 30,605 36,836 17 83 1900 4 ,054 45,168 49,222 8 92 Source: D.A. Thomas, "The Growth and D i r e c t i o n o f Our F o r e i g n Trade p. 478. 130 heavy i n v e s t m e n t i n r a i l r o a d s p r i o r t o 1860 and t h e subsequent p r o v i s i o n and e x p a n s i o n o f p o r t f a c i l i t i e s a t C a r d i f f , P e n a r t h , Newport, Swansea, L l a n e l l y , and most i m p r e s s i v e l y B a r r y l a t e r i n t h e c e n t u r y , were a l l j u s t i f i e d by t h e g r o w i n g volume o f t r a d e i n w h i c h t h e e n t i r e c o a l f i e l d came t o p a r t i c i p a t e . In t h e l a t t e r p a r t o f t h e c e n t u r y , however, " i t was t h e steam c o a l s o f t h e Rhondda w h i c h were s e n t i n growing q u a n t i t i e s 9 a l l o v e r t h e w o r l d . " The e x p a n d i n g e x p o r t t r a d e and t h e a c c e s s i o n o f steam t r a n s p o r t a t i o n was by f a r t h e most i m p o r t a n t b u t not t h e o n l y s o u r c e o f e f f e c t i v e demand f o r t h e c o a l o u t p u t o f South Wales. " I n 1875, o v e r t w o - t h i r d s o f t h e U n i t e d Kingdom's t i n - p l a t e w o r k s , and h a l f o f t h e i r copper s m e l t i n g p l a n t s , were i n t h i s r e g i o n , and consumed t h e c o a l t h a t was mined l o c a l l y ... These i n d u s t r i e s , however, were l a r g e l y e x p o r t o r i e n t e d . The a v a i l a b l e e v i d e n c e l e a d s us. t o c o n c l u d e t h a t t h e South Wales i n d u s t r i a l s e c t o r was more dependent on f o r e i g n demand t h a n any s o u r c e a s s o c i a t e d p r i m a r i l y w i t h t h e d o m e s t i c m arket, and t h a t i n t h e c o u r s e o f t h e l a s t h a l f o f t h e N i n e t e e n t h c e n t u r y Rees, Studies in Welsh History, p. XX L e w i s , Building Cycles and B r i t a i n s Growth, p. 113. 131 t h e r e was an e x t e n s i o n and s t r e n g t h e n i n g o f t h e t r a d e l i n k -ages between t h i s r e g i o n and t h e A t l a n t i c and World economies. The e a r l y 1870's w i t n e s s e d a boom i n B r i t i s h f o r e i g n i n v e s t m e n t and e x p o r t s t h a t was c l o s e l y r e l a t e d t o t h e c o n s t r u c t i o n and r a i l w a y booms o v e r s e a s . We have a l r e a d y o b s e r v e d t h a t t h e w i d e s p r e a d t r a n s i t i o n t o a steam t e c h n o l o g y gave r i s e t o a d r a m a t i c i n c r e a s e i n t h e demand f o r i r o n and c o a l . The s h o r t -ages o c c a s i o n e d by t h e F r a n c o - P r u s s i a n war were n o t i n s i g n i f i -c a n t i n a d d i n g t o t h i s demand by C o n t i n e n t a l powers. The i r o n i n d u s t r y a l o n e used one t h i r d o f t h e n a t i o n s c o a l o u t p u t i n 1869."'""'' Two and o n e - h a l f t o n s were r e q u i r e d t o p r o duce one t o n o f p i g - i r o n . And though t h i s r e q u i r e m e n t was p r o g r e s s i v e l y r e -12 duced t h r o u g h t h e development o f improved p r o d u c t i o n t e c h n i q u e s , t h e i r o n i n d u s t r y e x p e r i e n c e d f r e q u e n t s h o r t a g e s . The c o a l i n d u s t r y was c h a r a c t e r i z e d by a l o n g g e s t a t i o n p e r i o d o f i n v e s t m e n t . I n t h e s h o r t r u n t h e r e were numerous o b s t a c l e s p r e v e n t i n g t h e f u l l a d j u s t m e n t o f c o a l s u p p l i e s t o meet changes i n demand. There were l i m i t s t o w h i c h s u p p l y c o u l d be expanded by w o r k i n g o v e r t i m e and o p e n i n g o u t new w o r k i n g P h y l l i s Deane and W.A. C o l e , B r i t i s h Economic Growth 1688-1959, (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1967), p. 219 12 A l a n B i r c h , The Economic History of the B r i t i s h Iron and Steel Industry 1784-1879, (London: Frank Cass and Co., L t d . , 1967) , p. 186. 132 p l a c e s . When t h e s e l i m i t s were r e a c h e d , f u r t h e r i n c r e a s e s i n s u p p l y c o u l d o n l y be a t t a i n e d by s i n k i n g new m i n e s , and d epending on how deep i t was n e c e s s a r y t o go, t h i s c o u l d t a k e 13 s e v e r a l y e a r s . T h i s b a s i c c h a r a c t e r i s t i c o f i n v e s t m e n t i n t h e c o a l i n d u s t r y i s p erhaps t h e most i m p o r t a n t f a c t o r i n e x p l a i n i n g t h e c o a l p r i c e a d j u s t m e n t mechanism. " F l u c t u a t i o n s i n demand were r e f l e c t e d i n p r i c e changes i n t h e s h o r t r u n , and i n s u p p l y changes i n a l o n g r u n so l o n g t h a t t h e a n n u a l f i g u r e s ( o f c o a l o u t p u t ) a r e a l m o s t f r e e o f any semblance o f 14 a c y c l e . " As r i s i n g demand drove up p r i c e s and, i n i t i a l l y , p r o f i t s i n t h e f a c e o f i n e l a s t i c s u p p l y , t h e volume o f i n v e s t -ment i n c o a l m i n i n g i n c r e a s e d . The f o l l o w i n g t a b l e shows t h e c o u r s e o f i n v e s t m e n t as measured by t h e f o r m a t i o n o f l i m i t e d c o a l m i n i n g companies i n South Wales. A c o a l p r i c e s e r i e s i s a l s o i n c l u d e d f o r t h e p u r p o s e o f c o m p a r i s o n . Contemporary r e p o r t s r e f e r f r e q u e n t l y t o t h e l a r g e p r o f i t s a s s o c i a t e d w i t h h i g h p r i c e s and t h e i r t e n dency t o encourage w i d e s p r e a d i n v e s t m e n t . I n 1853, f o r example, H. Mackworth, a mines i n s p e c t o r , n o t e d "the e x t r a o r d i n a r y and D.H. R o b e r t s o n , A Study of I n d u s t r i a l Fluctuations, (London: 1915), pp. 15-17. 14 L e w i s , Building Cycles and B r i t a i n s Growth, p. 110. TABLE V I LIMITED COMPANIES (COAL MINING) REGISTERED IN SOUTH WALES AND THE AVERAGE SELLING PRICE PER TON OF STEAM COAL F.O.B. CARDIFF (1860-1875) T o t a l Nominal Number o f Steam c o a l Y e a r C a p i t a l Companies s. P r i c e d 1860 62,500 3 8 3 1861 213,000 6 8 6 1862 147,100 6 8 7 1863 330,000 6 8 9 1864 948,000 9 8 9 1865 770,500 14 8 9 1866 310,000 8 8 6 1867 131,000 3 8 6 1868 136,000 4 8 0 1869 70,000 2 8 9 1870 105,000 3 9 3 1871 275,000 7 10 6 1872 1,057,300 13 19 3 1873 3,185,000 29 23 3 1874 2 ,210,000 27 16 11 1875 551,000 9 14 3 Source: J.H. M o r r i s and L . J . W i l l i a m s , The South Wales Coal Industry 1841-187 5, ( C a r d i f f : U n i v e r s i t y o f Wales P r e s s , 1958), pp. 81, 151. 134 sudden a c t i v i t y i n f u s e d by h i g h p r i c e s , a n d e x c e s s i v e demand, i n t o t h e c o a l t r a d e " , o f South Wales and a y e a r l a t e r drew a t t e n t i o n t o "the l a r g e number o f new s h a f t s and new c o l l i e -15 r i e s b e i n g opened w i t h i n my d i s t r i c t . " S i m i l a r r e p o r t s were s u b m i t t e d by mines i n s p e c t o r s i n t h e mid-1860's and a g a i n i n t h e boom y e a r s o f 1872-74 when an u n p r e c e d e n t e d upsurge i n a c t i v i t y l e d t o a d r a m a t i c i n c r e a s e 16 i n p r o d u c t i v e c a p a c i t y (as i n d i c a t e d by T a b l e V I ) . The i n v e s t m e n t d e c i s i o n s o f many c o l l i e r y owners, however, were governed more by t h e l o n g - t e r m upward t r e n d i n demand t h a n s h o r t term f l u c t u a t i o n s and t h u s l e n t some degree o f s t a b i l i t y t o t h e growth o f t h i s c a p a c i t y . Indeed, t h e s e d e c i s i o n s were n o t s i m p l y made w i t h t h e aim o f m a x i m i z i n g p r o f i t s i n t h e s h o r t o r medium-run, b u t a l s o t o m a i n t a i n o r i n c r e a s e ones s h a r e o f what was c l e a r l y an e x p a n d i n g market i n t h e l o n g r u n . " N e v e r t h e l e s s , t h i s growth i n p r o d u c t i v e power, a t t i m e s s t e a d y and a t t i m e s sudden-l y a c c e l e r a t e d , p r o d u c e d p e r i o d s o f low p r i -ces and p o o r p r o f i t s w h i c h l a s t e d u n t i l t h e e x c e s s c a p a c i t y was more t h a n absorbed by t h e p e r s i s t e n t upward t r e n d i n demand."-'-' 15 H. Mackworth, M%nes Inspector Report, 1853, p. 163; 1854, p. 119. C i t e d i n M o r r i s and W i l l i a m s , The South Wales Coal Industry, p. 79. "^The growth o f i n v e s t m e n t i n r e s p o n s e t o an u n p r e c e d e n t e d i n c r e a s e i n t h e demand f o r s t e a m . c o a l was g i v e n f u l l a t t e n t i o n i n t h e Mines I n s p e c t o r s R e p o r t s f o r 1874 and 1875. 17 M o r r i s and W i l l i a m s , The South Wales Industry, p. 80. 135 T h i s we w i l l see s u b s e q u e n t l y i s o f key i m p o r t a n c e i n under-s t a n d i n g t h e p a t t e r n o f f l u c t u a t i o n s i n t h e c o u r s e o f house-b u i l d i n g i n t h e South Wales c o a l f i e l d . E x p a n s i o n o f t h e c o a l m i n i n g i n d u s t r y meant an i n c r e a s e i n t h e d e r i v e d demand f o r l a b o u r as w e l l as c a p i t a l . The i n -a b i l i t y o f t h e e x i s t i n g p o p u l a t i o n t o meet t h e g r o w i n g demand by n a t u r a l i n c r e a s e s was r e f l e c t e d n o t o n l y i n g e n e r a l l y h i g h wage r a t e s , b u t a l s o i n s i g n i f i c a n t waves o f i n - m i g r a t i o n . T h i s l a t t e r a s p e c t o f t h e i n d u s t r i a l development o f South Wales 18 19 has been v e r y a b l y a n a l y z e d by T.M. Hodges and B r i n l e y Thomas. P r o f e s s o r Thomas c o n c l u d e s : "Three c o n s i d e r a b l e waves o f m i g r a t i o n a r e c l e a r l y d i s t i n g u i s h a b l e , and t h e y s y n -c h r o n i z e d w i t h t h e p e r i o d i c a l c y c l e s o f p r o s p e r i t y i n t h e m i n i n g i n d u s t r y ... [These f l u c t u a t i o n s ] , enhanced i n South Wales by t h e u n s u r p a s s e d q u a l i t y o f t h e commodity, were so e x t e n s i v e t h a t t h e m i n e r s e a r n i n g s ' c o u l d e a s i l y r e a c h a p o i n t a t w h i c h t h e y were d i s t i n c t l y s u -p e r i o r t o t h o s e o f o t h e r T r a d e s : hence t h e i n c u r s i o n o f such a l a r g e body o f l o n g d i s t a n c e m i g r a n t s . " 2 0 18 T. M a n s e l Hodges, "The P e o p l i n g o f t h e H i n t e r l a n d and P o r t o f C a r d i f f , 1801-1914", Economic History Review, V o l . X V I I , (1947), pp. 62-72. 19 B r i n l e y Thomas, "The M i g r a t i o n o f Labour i n t o t h e G l a m o r g a n s h i r e C o a l f i e d , 1861-1911, Economica, V o l . X, (November, 1930), pp. 275-294. 20Ibid, pp. 289-290. 136 The system o f wage d e t e r m i n a t i o n i n t h e c o a l m i n i n g i n d u s t r y o f South Wales may have had a c o n s i d e r a b l e i n f l u e n c e on t h e e x t e n t t o w h i c h l a b o u r was a t t r a c t e d t o t h e c o a l f i e l d s n o t o n l y from Welsh r u r a l a r e a s , b u t a l s o from d i s t a n t c o u n t i e s i n E n g l a n d . The l e v e l o f wages i n South Wales, i n s p i t e o f d i f f e r e n c e s from v a l l e y t o v a l l e y , was h i g h e r on t h e average t h a n i n any o t h e r B r i t i s h c o a l f i e l d . An i m p o r t a n t r e a s o n f o r t h i s i s t h e g e o g r a p h i c a l p o s i t i o n o f South Wales w h i c h makes i t more i s o l a t e d from c e n t e r s o f p o p u l a t i o n t h a n any o f t h e E n g l i s h c o a l f i e l d s . As new c o l l i e r i e s were d e v e l o p e d and s p a r s e l y p o p u l a t e d v a l l e y s b r o u g h t i n t o p r o d u c t i o n i t became i n c r e a s i n g l y n e c e s s -a r y t o o f f e r h i g h e r wages i n o r d e r t o a t t r a c t t h e n e c e s s a r y l a b o u r . Other r e a s o n s f o r t h e g e n e r a l l y h i g h l e v e l o f e a r n i n g s were u n d o u b t e d l y t h e s t r e n g t h o f t h e South Wales M i n e r s F e d e r -a t i o n and "the r e l a t i v e l y h i g h p r i c e o f t h e c o a l w h i c h i t s s u p e r i o r q u a l i t i e s command i n t h e w o r l d s m a r k e t s . These h i g h p r i c e s have made t h e t r a d e r e m u n e r a t i v e and have e n a b l e d c o l l i e -r y p r o p r i e t o r s t o open new min e s , even though t h i s c o u l d be 21 done o n l y by p a y i n g h i g h wages." J e v o n s , The B r i t i s h Coal Trade, p. 121. 137 These f a c t o r s , combined w i t h major l a b o u r d i s p u t e s i n t h e e a r l y 1870's l e d t o t h e a d o p t i o n i n May o f 1875 o f 22 t h e f i r s t " s l i d i n g s c a l e " wage agreement. A l t h o u g h t h i s agreement a p p l i e d o n l y t o t h e d e t e r m i n a t i o n o f wages o f t h o s e c o l l i e r s employed by members o f t h e Coalowner's A s s o -c i a t i o n , i t had a s t r o n g i n f l u e n c e on t h e wage p o l i c y o f non-member c o a l o w n e r s . The agreement i n t r o d u c e d a minimum wage r a t e t h a t "was t o be 5 p e r c e n t h i g h e r t h a n t h e r a t e p a i d a t t h e r e s p e c t i v e c o l l i e r i e s i n 1869 t o compensate t h e i n c r e a s e d c o s t o f l i v i n g s i n c e t h a t d a t e , " and t i e d t h e p e r -c e n t a g e change i n wages above t h e minimum t o t h e p r i c e o f c o a l (7.5 p e r c e n t f o r each complete s h i l l i n g change i n 23 p r i c e ) . The f u n c t i o n i n g o f t h e " s l i d i n g s c a l e " r e v e a l e d advantages t o b o t h l a b o u r and employer; i t e n a b l e d South Wales t o a v o i d t h e a d v e r s e e f f e c t s o f t h e c o a l d i s p u t e o f 24 189 3 t h a t had such a f a r - r e a c h i n g impact on t h e o t h e r c o a l m i n i n g r e g i o n s o f t h e U n i t e d Kingdom. The i m p o r t a n c e o f t h i s J.H. M o r r i s and L . J . W i l l i a m s , "The South Wales S l i d i n g S c a l e , 1876-79; An E x p e r i m e n t i n I n d u s t r i a l R e l a t i o n s " , Manchester School, V o l . X X V I I . , (May, 1960), p.164. 2 3 Ibid, p. 166; There was a c e i l i n g imposed c i a t e d w i t h p r i c e s o f 21s. f o r steam and 20 s. c o a l . I f p r i c e s r o s e above t h e s e l e v e l s , wages unchanged. T h i s p r o v i s i o n was a c o n c e s s i o n t o t o compensate f o r t h e minimum w a g e - r a t e . 24 C M . P e r c y , "The C o a l D i s p u t e o f 1893: I t s H i s t o r y , P o l i c y and Warnings", Economic Journal, V o l . I l l , (December, 1893), pp. 644-649. on wages, a s s o -f o r b i t u m i n o u s w o u l d remain t h e c o a l owners 138 i n s t i t u t i o n a l s o l u t i o n t o t h e problem o f wage d e t e r m i n a t i o n f o r o ur p u r p o s e s i s found i n i t s i n f l u e n c e on t h e movement o f l a b o u r i n t o t h e South Wales c o a l f i e l d and t h e consequent i n c r e a s e i n r e q u i r e d h o u s i n g accommodations. The r e l a t i o n s h i p between changes i n wage r a t e s and changes i n t h e numbers employed i n t h e c o a l m i n i n g i n d u s t r y 25 has been s t u d i e d by R.H. Hooker who c o n c l u d e d t h a t changes i n t h e l e v e l o f employment responded p r i m a r i l y t o upward movements i n wages, w h i l e f a l l i n g wages r a r e l y l e d t o sub-s t a n t i a l m i g r a t i o n o f m i n e r s o ut o f t h e r e g i o n . The men be-came c o n d i t i o n e d by t h e r e c u r r i n g c y c l e o f p r i c e s t o r e g a r d a p e r i o d o f low e a r n i n g s t o be f o l l o w e d " i n t h e n a t u r e o f t h i n g s " by a p e r i o d o f p r o s p e r i t y . I n d r a w i n g h i s c o n c l u s i o n s , Hooker p l a c e d g r e a t emphasis on t h e p e r v a s i v e i n f l u e n c e o f t h e s l i d i n g s c a l e . Because t h i s i n n o v a t i o n s u p e r s e d e d t h e f o r c e s o f s u p p l y and demand i n t h e l a b o u r market, employers were p r e c l u d e d from l o w e r i n g wage r a t e s when t h e r e was a l a r g e number o f p e o p l e s e e k i n g employment, u n l e s s o f c o u r s e , t h e p r i c e o f c o a l f e l l . "The a verage m i g r a n t , i f n o t i m p e l l e d by f o r c e o f c i r c u m s t a n c e s , would be p e r s u -aded t o t r y h i s l u c k by t h e i n f o r m a t i o n R.H. Hooker, "On t h e R e l a t i o n s between Wages and t h e Numbers Employed i n t h e C o a l M i n i n g I n d u s t r y " , Journal of the Royal S t a t i s t i c a l Society, V o l . L V I I (December, 1894) pp. 627-642. 139 r e a c h i n g him r e g a r d i n g money wages i n t h e c o a l f i e l d ... I t i s , t h e r e f o r e , c o n c e i v a b l e t h a t t h e r a t e o f wages i n t h e p i t s i n a g i v e n y e a r would p r o v e h i g h enough t o a t t r a c t d i s t a n t o u t s i d e r s , even though a t t h a t p a r t i c u l a r t i m e t h e r e was a l r e a d y a g e n e r a l o v e r - s u p p l y o f w o r k e r s . And even t h i s enhanced s u r p l u s would n o t n e c e s s a r i l y l o w e r t h e wage p e r -c e n t a g e ... " 2 6 There can be l i t t l e q u e s t i o n t h a t t h e h i g h wages r e s u l t i n g from t h e i n d u s t r i a l p r o s p e r i t y o f South Wales were a power-f u l magnet d r a w i n g l a b o u r i n c e s s a n t l y from t h r o u g h o u t t h e U n i t e d Kingdom. The i n e x o r a b l e growth o f t h e numbers employed i n t h e c o a l f i e d s o f South Wales can be t r a c e d i n F i g u r e 6. T h i s g e n e r a l t r e n d was r e f l e c t e d i n an e v e r g r o w i n g demand f o r h o u s i n g accommodations. Throughout t h e p e r i o d 1860 t o 1914, t h e r e e x i s t e d a s h o r t a g e o f h o u s i n g accommodations i n a l l o f t h e m i n i n g v a l l e y s o f t h e r e g i o n . O v e r c r o w d i n g and p a r t - l e t t i n g o f a v a i l a b l e house space was v e r y common. Indeed, one r e a s o n g i v e n f o r t h e h i g h wages i n t h e South Wales c o a l f i e l d was t h e f a c t t h a t c o l l i e r y companies r a r e l y p r o v i d e d f o r t h e h o u s i n g o f t h e i r w o r k e r s . I n N o r t h e r n E n g l a n d , t h e c o l l i e r y owners b u i l t houses w i t h t h e i r Thomas, " M i g r a t i o n o f Labour i n t o t h e G l a m o r g a n s h i r e C o a l f i e l d , 1861-1911", p. 291. F i g u r e 6 140 INDICES OF HOUSE-BUILDING AND THE GROWTH OF INDUSTRY AND TRADE IN SOUTH WALES (A) Average annual p r i c e of c o a l (F.O.B. C a r d i f f ) , 1860-1914. Mean of 1886-91 = 100. Source: F i n l a y Gibson, The Coal Mining Industries of the United Kingdom, ( C a r d i f f , 1921), p. 84. (B) Index of h o u s e - b u i l d i n g i n South Wales, 1860-1914. Source: J . P a r r y Lewis, " I n d i c e s of H o u s e - B u i l d i n g i n the Manchester Conurbation, South Wales, and Great B r i t a i n , 1851-1913", Scottish Journal of P o l i t i c a l Economy, V o l . V I I I (June, 1961) , pp. 51-52. (C) Numbers employed i n the c o a l mines of South Wales, 1864-1914, ( i n thousands). Source: B.R. M i t c h e l l , A b s t r a c t of B r i t i s h Historical S t a t i s t i c s , (Cambridge: Cambridge U n i v e r s i t y P r e s s , 1962) , pp. 118-119. (D) Output of C o a l i n the c o a l f i e l d s of South Wales, 1862-1913, (In 000,000's of t o n s ) . Source: B.R. M i t c h e l l , Abstract of B r i t i s h Historical S t a t i s t i c s , pp. 115-116. (E) C o a l e x p o r t s from the B r i s t o l Channel, 1860-1902, ( i n 000 ,000 1s of tons) . Source: D.A. Thomas, "The Growth and D i r e c t i o n of Our F o r e i g n Trade i n C o a l d u r i n g the L a s t H a l f Century", Journal of the Royal S t a t i s t i c a l Society, V o l . LXVI (September, 1903), p. 509. (F) Mean annual wage of C o l l i e r s , percentage of 1879 s t a n d a r d , 1880-1911. Source: B r i n l e y Thomas. "The M i g r a t i o n of Labour i n t o the Glamorganshire C o a l f i e l d (1861-1911), Economica, V o l . X, (November, 19 30), p. 2 81. 140(a) 141 own f u n d s and t h e n r e n t e d them t o t h e m i n e r s . I n t h e South o f Wales, o n l y a few employers i n t h e v a l l e y s o f Monmouthshire found i t t o t h e i r advantage t o p r o v i d e t h e m i n e r s w i t h c o t t a g e s and shops, b u t t h i s p r a c t i c e soon d i e d o u t and h o u s e - b u i l d i n g was l e f t l a r g e l y t o p r i v a t e b u i l d e r s and s o c i e t i e s . The i n c r e a s e i n numbers o f masons and c a r p e n t e r s r e -t u r n e d i n t h e d e c e n n i a l c e n s u s e s as w e l l as t h e i n c r e a s e d volume o f c o n s t r u c t i o n t i m b e r i m p o r t s e n t e r i n g t h e main B r i s t o l C hannel p o r t s a r e e v i d e n c e of t h e g rowing p r o d u c t i v e c a p a c i t y o f t h e d o m e s t i c c o n s t r u c t i o n i n d u s t r y . I n 1861 t h e r e were 629 0 such c r a f t s m e n r e t u r n e d ; by 1891 t h i s had grown t o 15,458. "Loads o f t i m b e r and d e a l s i m p o r t e d i n t o C a r d i f f r o s e from 27,761 i n 1861 t o 65,000 i n 1871, t o 85,599 i n 1881, and t o 129,796 i n 1 8 9 1 . " 2 8 But d e s p i t e t h e i n c r e a s e d volume o f r e s i d e n t i a l c o n s t r u c t i o n , (see t h e South Wales r e -g i o n a l h o u s e b u i l d i n g i n d e x ) h o u s e - b u i l d i n g f a i l e d t o keep pace w i t h t h e r e q u i r e m e n t s o f a g r o w i n g p o p u l a t i o n . I n t h e u r b a n a r e a s o f South Wales a l o n e , t h e number o f i n h a b i t e d houses i n 1901 was 103,980, o r 5.6 p e r s o n s p e r house. By J e v o n s , The B r i t i s h Coal Trade, p. 122. Hodges, " P e o p l i n g o f t h e H i n t e r l a n d " , p. 69. 142 1911 t h i s had grown t o 135,416 i n h a b i t e d h o u s e s , o r 6 29 p e r s o n s p e r house. F u r t h e r p o s s i b l e e v i d e n c e o f t h e g r o w i n g gap between s u p p l y and demand i s found i n what l i t t l e d a t a t h e r e i s a v a i l a b l e on p a r t - l e t houses. In 1901, t h e r e were 11,722 such houses i n t h e urban d i s t r i c t s , w h i c h c o n s t i t u t e d 11.2 p e r c e n t o f t h e t o t a l number o f i n -h a b i t e d houses. In 1911 t h e number was 16,724, o r 12.3 30 p e r c e n t . The i n e x o r a b l e growth i n demand r e s u l t i n g from t h e i n f l u x o f l a b o u r i n t o t h e c o a l f i e l d s o f Glamor-g a n s h i r e and Monmouthshire between t h e y e a r s 1860 and 1914 i s t h e s i n g l e most i m p o r t a n t f a c t o r e x p l a i n i n g t h e l o n g t e rm upward t r e n d i n t h e South Wales r e g i o n a l house-b u i l d i n g i n d e x . T h i s c o n c l u s i o n w i l l be r e i n f o r c e d by our a n a l y s i s o f p o p u l a t i o n movements i n t h e n e x t s e c t i o n . We must now, however, b r i e f l y l o o k a t t h e s t r u c t u r e o f t h e h o u s i n g s e c t o r and t h e n a t u r e o f i n d u s t r i a l i n v e s t -ment i n South Wales t o e x p l a i n t h e s h o r t term f l u c t u a t i o n s about t h e l o n g term t r e n d i n r e s i d e n t i a l c o n s t r u c t i o n . We have seen t h a t t h e i n d u s t r i a l development o f South Wales was c o n s t r a i n e d by s h o r t a g e s o f b o t h l a b o u r and c a p i t a l . T h i s p e r p e t u a l s c a r c i t y o f f a c t o r s had a d r a s t i c impact on Ibid, 3 0 T* . , Ibvd. p. 72 143 t h e d o m e s t i c c o n s t r u c t i o n i n d u s t r y , f o r b o t h i n d u s t r i e s , h o u s e - b u i l d i n g and c o a l - m i n i n g , were l o c a t e d i n t h e same a r e a s and competed w i t h one a n o t h e r , n o t o n l y f o r l a b o u r and c a p i t a l , b u t a l s o f o r m a t e r i a l s . A c a r p e n t e r c o u l d j u s t as e a s i l y c o n s t r u c t mine f a c i l i t i e s , s h o r e and r o o f s h a f t s as b u i l d houses. C o n s t r u c t i o n a l t i m b e r c o u l d be used f o r houses o r t o r e i n f o r c e mine t u n n e l s . The d i f f e r e n c e was t h a t t h e s t r e n g t h o f a g r o w i n g i n t e r n a t i o n a l demand f o r c o a l e n a b l e d t h e c o l l i e r y owners t o p a s s t h e h i g h e r wages, m a t e r i a l and c a p i t a l c o s t s on as i n c r e a s e d p r i c e s . A t a t i m e when p r i c e s and p r o f i t s as w e l l as wages (because o f t h e s l i d i n g s c a l e ) were r i s i n g i n t h e c o a l i n d u s t r y , c o n s t r u c t i o n l a n -g u i s h e d because o f i t s i n a b i l i t y t o compete f o r f a c t o r s . The h o u s e - b u i l d e r i n g e n e r a l , c o u l d n o t r a i s e p r i c e s and r e n t s t o c o v e r i n c r e a s e d f a c t o r c o s t s . The demand f o r new houses was h i g h l y e l a s t i c , p a r t l y because o f t h e range o f a l t e r n a t i v e s open t o t h e p o t e n t i a l h ouse-buyer. He c o u l d always choose t o d o u b l e up w i t h a n o t h e r f a m i l y , o r i n s t e a d o f b u y i n g a new house n e a r e r t h e c o l l i e r y , he c o u l d g e t up a c o u p l e o f h o u r s e a r l i e r and walk t o t h e mines. I t was n o t uncommon f o r c o l l i e r s t o w a l k many m i l e s , morning and n i g h t , t o and from t h e p i t s . The s e n s i t i v i t y o f h o u s i n g demand t h u s p l a c e d r e l a t i v e l y c l o s e l i m i t s on t h e e x t e n t t o w h i c h t h e p r i c e o f h o u s i n g accommodations c o u l d be r a i s e d 144 w i t h o u t s e r i o u s l y a f f e c t i n g t h e q u a n t i t y demanded. E a r l i e r we n o t e d t h e r e l a t i o n s h i p between t h e i n v e s t -ment boom i n t h e e a r l y 18 70's and t h e l a g g e d boom i n r e s i -d e n t i a l c o n s t r u c t i o n . We w i l l now p r o p o s e a t e n t a t i v e g e n e r a l i z a t i o n o f t h a t argument f o r t h e e n t i r e p e r i o d under d i s c u s s i o n . T h i s r e q u i r e s an i n d e x o f i n v e s t m e n t i n t h e 31 c o a l m i n i n g i n d u s t r y , w h i c h u n f o r t u n a t e l y does n o t e x i s t . There i s e x t a n t , however, a s e r i e s o f c o a l e x p o r t p r i c e s (F.O.B. C a r d i f f ) w h i c h may be c o n s i d e r e d a r e a s o n a b l y good i n d e x o f p r o f i t a b i l i t y f o r t h e i n d u s t r y . T h i s a s s u m p t i o n r e s t s on an argument p r e s e n t e d e a r l i e r i n t h i s s e c t i o n w h i c h , i n e s s e n c e , h e l d t h a t i n t h e f a c e o f i n e l a s t i c s u p p l y c o n d i -t i o n s i n t h e s h o r t r u n , i n c r e a s e s i n demand wo u l d be t r a n s -l a t e d i n t o a r i s e i n p r i c e s and p r o f i t s . The i n t r o d u c t i o n o f t h e s l i d i n g s c a l e does n o t s e r i o u s l y a f f e c t t h i s a s s u m p t i o n because t h e f u n c t i o n i n g o f t h e s c a l e was such t h a t wage ad-j u s t m e n t s l a g g e d p r i c e changes by a t l e a s t s i x months. The c o a l p r i c e s e r i e s (our i n d e x o f p r o f i t s i n t h e c o a l -m i n i n g i n d u s t r y ) i s p r e s e n t e d i n F i g u r e 6 a l o n g w i t h t h e The s e r i e s o f l i m i t e d c o a l m i n i n g companies r e g i s t e r e d i n South Wales p r e s e n t e d above on page 133 does n o t e x t e n d beyond 1875. Even i f i t d i d , however, t h e r e a r e numerous l e g i t i m a t e o b j e c t i o n s w h i c h would r e n d e r i t i n a p p r o p r i a t e as an i n d e x o f new i n v e s t m e n t a f t e r 1880, f o r our p u r p o s e s h e r e . 145 South Wales r e g i o n a l h o u s e - b u i l d i n g i n d e x . Keeping i n mind t h e f a c t t h a t t h e forme r i s o n l y a rough i n d i c a t i o n o f t h e l e v e l o f i n v e s t m e n t i n c o a l m i n i n g , and t h e e x t e n t t o w h i c h t h a t i n d u s t r y was d r a w i n g on a v a i l a b l e r e s o u r c e s , t h e r e does appear t o be a s i g n i f i c a n t i n v e r s e r e l a t i o n s h i p between t h e two c u r v e s . C o a l p r i c e s (and p r o f i t s ) t e n d e d t o move w i t h t h e r e g i o n a l i n d e x i n t h e i n i t i a l s t a g e s o f an upswing i n b u i l d i n g , w i t n e s s 1869-73, 1888-91, and 1900-01, b u t o n l y a f t e r p r i c e s and p r o f i t s i n c o a l m i n i n g began t o f a l l , d i d t h e s e b u i l d i n g booms r e a l l y g e t under way. There were, o f c o u r s e , f a c t o r s e x e r t i n g i n d e p e n d e n t i n -f l u e n c e s on t h e volume o f i n v e s t m e n t i n c o a l m i n i n g and h o u s e - b u i l d i n g . F o r example, t h e d e c l i n e i n h o u s e - b u i l d i n g a f t e r 1885 d u r i n g a p e r i o d when p r o f i t s and i n v e s t m e n t i n c o a l m i n i n g were d e p r e s s e d i s l a r g e l y a t t r i b u t a b l e t o t h e f r e q u e n t c o n s t r u c t i o n stoppages a s s o c i a t e d w i t h t h e wave o f new u n i o n i s m t h a t swept t h r o u g h South Wales, e s p e c i a l l y a f t e r 32 1888. D e s p i t e such m i n o r v a r i a t i o n s , t h e major f l u c t u a t i o n s i n t h e s e i n d i c e s convey t h e overwhelming i m p r e s s i o n t h a t t h e two i n d u s t r i e s d i d r e a c t on one a n o t h e r i n some s y s t e m a t i c way. L . J . W i l l i a m s , "The New U n i o n i s m i n South Wales, 1889-92", Welsh History Review, V o l . I (1963), pp. 413-429. 146 I n t h e o p i n i o n o f t h e p r e s e n t w r i t e r , t h e a v a i l a b l e e v i d e n c e appears t o s u p p o r t t h e h y p o t h e s i s t h a t t h e r e s i -d e n t i a l c o n s t r u c t i o n s e c t o r o f t h e economy o f South Wales was a r e s i d u a l b e n e f a c t o r o f t h e growth and p r o s p e r i t y o f th e d o m e s t i c c o a l m i n i n g i n d u s t r y . When c o a l p r i c e s and p r o f i t s f e l l i n v e s t m e n t i n r e s i d e n t i a l c o n s t r u c t i o n became more a t t r a c t i v e . Not o n l y was t h e r e a d i v e r s i o n o f f i n a n -c i a l c a p i t a l i n t o t h e mortgage market, b u t t h e accummulated s a v i n g s r e s u l t i n g f r om i n c r e a s e d incomes d u r i n g t h e i n d u s t r i a l boom c o u l d now be used t o p r o v i d e t h e c o l l i e r s f a m i l y w i t h t h e i r d e s i r e d h o u s i n g accommodations under more f a v o r a b l e c o n d i t i o n s . The e a s i n g o f c r e d i t c o n d i t i o n s i n t h e mort-gage m a r k e t , though s i g n i f i c a n t , i s perhaps n o t as i m p o r t a n t as i t a t f i r s t a p p e a r s . The r a t e o f r e t u r n on i n v e s t m e n t i n c o a l m i n i n g was p e r p e t u a l l y h i g h e r t h a n t h e r a t e p a i d o u t o f house r e n t s r e c e i v e d a t customary l e v e l s . Thus, even when t h e r e were changes i n t h e r e l a t i v e r a t e s o f r e t u r n t h a t f a v o r e d h o u s e - b u i l d i n g , t h e i n c r e a s e d a v a i l a b i l i t y o f mort-gage c a p i t a l was i n s u f f i c i e n t t o meet t h e p r e v a i l i n g demand. By and l a r g e t h e c o l l i e r s o f South Wales, i n c o n t r a s t t o t h o s e o f N o r t h e r n E n g l a n d , had t o p r o v i d e t h e i r own d w e l l -i n g s by f o r m i n g b u i l d i n g s o c i e t i e s and c l u b s . They p a i d f o r t h e i r houses by m o n t h l y i n s t a l l m e n t s . I t was n o t u n u s u a l , 147 t h e r e f o r e , f o r a c o l l i e r t o be p a y i n g about one pound a month i n c a p i t a l i n s t a l l m e n t s o r s u b s c r i p t i o n f e e s i n 33 a d d i t i o n t o r e n t o f 22s. t o 28s. p e r month. T h i s p r o v e d t o be an e f f e c t i v e means o f m o b i l i z i n g t h e s a v i n g s o f t h e community t o p r o v i d e h o u s i n g f o r i t s members. Changes i n r e l a t i v e r e t u r n s , t h e n p r o b a b l y had a more f a v o r a b l e i m p a c t on h o u s e - b u i l d i n g t h r o u g h t h e consequent e a s i n g o f s u p p l y c o n d i t i o n s i n t h e i n p u t markets from w h i c h b o t h i n d u s t r i e s drew. Any tendency t o o v e r p r o d u c t i o n i n t h e c o a l - m i n i n g i n d u s t r y t h a t gave r i s e t o an i n v e n t o r y downturn c o u l d r e l e a s e l a b o u r and m a t e r i a l s f o r use i n r e -s i d e n t i a l c o n s t r u c t i o n . I n summary, t h e n , we have seen ( r e f e r r i n g t o F i g u r e s 5 and 6) t h a t t h e movements o f South Wales c o a l e x p o r t s and s t e e l o u t p u t r e l a t i v e t o t r e n d , as w e l l as t h e f l u c t u a t i o n s i n h o u s e - b u i l d i n g were i n v e r s e t o t h o s e o f home i n v e s t m e n t and h o u s e - b u i l d i n g i n G r e a t B r i t a i n . The c o u r s e o f r e s i d e n -t i a l c o n s t r u c t i o n i n South Wales was l a r g e l y d e t e r m i n e d by t h e l o n g r u n e x p a n s i o n o f t h e c o a l m i n i n g i n d u s t r y , and by f l u c t u a t i o n s i n t h e e x p o r t s e c t o r , w h i c h t h r o u g h t h e p r i c e -p r o f i t mechanism d e t e r m i n e d t h e i n d u s t r i a l d i s p o s i t i o n and J e v o n s , The B r i t i s h Coal Trade, p. 122. 148 u t i l i z a t i o n of p r o d u c t i v e r e s o u r c e s . DEMOGRAPHIC FACTORS AND THE COURSE OF HOUSE-BUILDING IN SOUTH  WALES: FURTHER EVIDENCE OF THE ABSENCE OF REGIONAL LONG SWINGS  IN RESIDENTIAL CONSTRUCTION The l a s t s e c t i o n was p r i m a r i l y concerned w i t h the r e l a t i o n -s h i p between the i n d u s t r i a l development of South Wales and the course of h o u s e - b u i l d i n g i n t h a t r e g i o n . There we b r i e f -l y d i s c u s s e d the m i g r a t i o n of l a b o u r i n t o the c o a l f i e l d s and i t s importance i n c o n t r i b u t i n g to an a l r e a d y growing l o c a l demand f o r housing accommodations. We now t u r n t o a more d e t a i l e d a n a l y s i s o f m i g r a t i o n , both e x t e r n a l and i n t e r n a l , 34 based on the r e s e a r c h e s o f Thomas A. Welton, A.K. C a i r n -35 36 c r o s s , and B r i n l e y Thomas, as w e l l as the d e t a i l s con-t a i n e d i n the Census of P o p u l a t i o n . In Chapter I I I we drew a t t e n t i o n to the waves of t r a n s a t l a n t i c m i g r a t i o n which c a r r i e d a p a r t of the n a t u r a l i n c r e a s e of most European c o u n t r i e s Thomas A. Welton, "Note on Urban and R u r a l V a r i a t i o n s A c c o r d i n g to the E n g l i s h Census o f 1911", Journal of the Royal S t a t i s t i c a l Society, V o l . LXXVI, (February, 1913) , pp. 304-317; see a l s o by the same author, England's Recent Progress: An Investigation of the Statistics of Migration, Mortality, etc., in the Twenty Years from 1881 to 19Ol, as indicating Tendencies towards 'the Growth or Decay of Parti-cular Communities and of the Rural Portions of England and Wales, (London: Chapman & H a l l , L t d . , 1911). 35 . . . . A. K. C a i r n c r o s s , " I n t e r n a l M i g r a t i o n i n V i c t o r i a n En-g l a n d " , Manchester School, V o l . XVII, (January, 1949), pp. 67-87. 3 6 B r i n l e y Thomas, The Welsh Economy: Studies in Expansion, ( C a r d i f f : U n i v e r s i t y o f Wales P r e s s , 1962). 149 o v e r s e a s p r i m a r i l y t o t h e A m e r i c a s , b u t a l s o t o A s i a , A f r i c a , and A u s t r a l i a . The time-shape and a m p l i t u d e o f t h e l o s s e s f o r South Wales p r o v i d e us w i t h f u r t h e r e v i d e n c e on t h e growth and f l u c t u a t i o n s o f t h e r e g i o n a l economy. The n e t m i g r a t i o n r a t e s f o r E n g l a n d , S c o t l a n d , and Wales w i l l be found i n T a b l e V I I . The d e c e n n i a l e s t i m -a t e s o f net g a i n o r l o s s a r e d e t e r m i n e d by s u b t r a c t i n g t h e e x c e s s o f b i r t h s o v e r d e a t h s from t h e i n c r e a s e i n enumerated p o p u l a t i o n between t h e c e n s u s e s . When t h e e x c e s s o f b i r t h s o v e r d e a t h s exceeds t h e r e c o r d e d i n -c r e a s e i n p o p u l a t i o n , t h e r e was a n e t l o s s t h r o u g h o u t -m i g r a t i o n . I f , on t h e o t h e r hand, the n a t u r a l i n c r e a s e was l e s s t h a n t h e r e c o r d e d p o p u l a t i o n change, t h e r e was a n e t g a i n t h r o u g h i n - m i g r a t i o n . I t i s c l e a r from F i g u r e 7 t h a t t h e p a t t e r n o f m i g r -a t i o n f o r Wales d i f f e r e d s i g n i f i c a n t l y from t h o s e o f b o t h E n g l a n d and S c o t l a n d . The r a t e o f l o s s d e c l i n e d i n a l l t h r e e c o u n t r i e s i n t h e 1860's and e a r l y 1870's, b u t t h e i r d i v e r g e n t p a t h s i n t h e 1880's p r o v i d e a s t r i k i n g c o n t r a s t . The boom i n o v e r s e a s i n v e s t m e n t was accompanied by a l o n g wave i n t r a n s - A t l a n t i c m i g r a t i o n t o w h i c h E n g l a n d and S c o t -l a n d c o n t r i b u t e d s u b s t a n t i a l l y - . The o u t f l o w from Wales, on TABLE V I I NET GAIN (+) OR LOSS (-) THROUGH MIGRATION: ENGLAND, SCOTLAND AND WALES, DECENNIALLY 1861-1911 Year E n g l a n d Wales S c o t l a n d 1861-71 -7 -47 -44 1871-81 -5 -35 -28 1881-91 -23 -11 -58 1891-1901 -2 -5 -13 1901-11 -19 + 45 -57 Source: B r i n l e y Thomas, The Welsh Economy: Studies in Expansion, p. 7. Note: The n e t m i g r a t i o n f i g u r e s a r e e x p r e s s e d as a r a t e p e r 10,000 o f t h e mean d e c e n n i a l p o p u l -a t i o n t o a l l o w comparison o f t h e c o u r s e o f m i g r a t i o n f o r each c o u n t r y . F i g u r e 7 151 DECENNIAL NET GAIN OR LOSS THROUGH MIGRATION: ENGLAND, WALES AND SCOTLAND 1861-1911 Wales England S c o t l a n d 1860 1870 1880 1890 1900 1910 Source: See T a b l e VII 152 t h e o t h e r hand, w h i c h c o n t i n u e d t o f a l l o v e r t h e e n t i r e de-cade, was n e g l i g i b l e . The d i f f e r e n c e s i n t h e demographic e x p e r i e n c e s o f t h e s e c o u n t r i e s become even more pronounced i n t h e f i r s t decade o f t h e T w e n t i e t h c e n t u r y . A g a i n , t h e r e were l o n g waves i n o v e r s e a s e x p a n s i o n and European e m i g r a t i o n , w i t h t h e E n g l i s h and S c o t t i s h h i n t e r l a n d c o n t r i b u t i n g i t s s u r p l u s p o p u l a t i o n t o t h e p e o p l i n g o f t h e d e v e l o p i n g coun-t r i e s . But t h e e x p e r i e n c e o f Wales was u n i q u e i n t h a t she j o i n e d t h e r a n k s o f t h e i m m i g r a n t c o u n t r i e s , r e c e i v i n g peo-p l e a t an a n n u a l r a t e o f 45 per 10,000 p o p u l a t i o n . We now t u r n t o a more d e t a i l e d l o o k a t t h e i n t e r n a l mi-g r a t i o n b a l a n c e f o r Wales, c o n c e n t r a t i n g p r i m a r i l y on demo-g r a p h i c changes i n t h e South Wales c o a l f i e l d . The f o l l o w i n g t a b l e shows t h e p a t t e r n o f n e t r e g i o n a l change by m i g r a t i o n i n Wales f o r d e c e n n i a l p e r i o d s from 1861 t o 1911. U s i n g t h e n e t r a t e o f r e g i o n a l m i g r a t i o n as an i n d e x o f i n d u s t r i a l e x p a n s i o n , i t i s e v i d e n t from T a b l e V I I I t h a t t h e i n d u s t r i a l s e c t o r o f Wales ( i . e . , ) Glamorgan-Monmouth-s h i r e r e g i o n ) e x p e r i e n c e d h i g h r a t e s o f economic a c t i v i t y i n t h o s e decades (1881-91, 1901-11) when the i n d u s t r i a l s e c t o r s o f E n g l a n d and S c o t l a n d were r e l a t i v e l y d e p r e s s e d . The 1860's and 1870's w i t n e s s e d a s t e a d y o u t f l o w o f p o p u l a t i o n from t h e TABLE VIII INTERNAL MIGRATION BALANCE: WALES DECENNIALLY, 1861-1911 Areas 1861-71 1871-81 1881-91 1891-1901 1901-1911 Welsh r u r a l areas -58,967 -64,646 -106,087 -57,413 - 37,909 Glamorgan-Monmouth sh i r e C o l l i e r y area +11,033 +12,213 + 87,225 +40,326 +129,295 Wrexham C o l l i e r y area - 1,984 - 1,907 - 1,122 618 - 2,875 Llandudno and Rhyl areas - 2,268 + 2,339 + 2,190 + 8,289 + 5,715 Wales -63,005 -52,139 - 17,794 - 9,350 - 98,492 Source: T.A. Welton, "A Note on Urban and Rural V a r i a t i o n s " , and A.K. Cairncross, "Internal Migration i n V i c t o r i a n England"; compiled in Brinley Thomas, The Welsh Economy: Studies in Expansion, p. 15. 154 c o u n t r y s i d e i n Wales. A number o f new f o r c e s were b e g i n n i n g t o have an i n f l u e n c e on t h e r e g i o n a l economy and one conse-quence o f t h i s was a marked i n c r e a s e i n t h e m o b i l i t y o f r u r a l i n h a b i t a n t s . The E l e m e n t a r y E d u c a t i o n A c t o f 1870 had a d i s -r u p t i v e i m p a c t on t h e a g r i c u l t u r a l l a b o u r e r ' s s t a n d a r d o f 37 l i v i n g . The r e d u c t i o n i n f a m i l y e a r n i n g s o c c a s i o n e d by t h e r e s t r i c t i o n o f c h i l d l a b o u r tended t o make i t more l i k e l y f o r t h e a g r i c u l t u r a l l a b o u r e r t o m i g r a t e . I n an a t t e m p t t o s t r e n g t h e n t h e a g r i c u l t u r a l l a b o u r e r s b a r g a i n i n g p o s i t i o n , t h e L a b o u r e r ' s Union adopted a p o l i c y o f p r o v i d i n g f i n a n c i a l a s s i s t a n c e t o t h o s e r u r a l w o r k e r s who w i s h e d t o move t o t h e m i n i n g and m a n u f a c t u r i n g c e n t e r s . The d i s t u r b i n g i n f l u e n c e o f f a c t o r s such as t h e s e h e l p s e x p l a i n t h e g r o w i n g r u r a l exodus t h a t t o o k p l a c e w h i l e a g r i c u l t u r e was s t i l l a p r o s p e r o u s and p r o d u c t i v e e n t e r p r i s e . We r a i s e t h i s i s s u e p r i m a r i l y t o p o i n t o u t t h a t t h e r e were f o r c e s o p e r a t i n g i n t h e r u r a l economy t o e x p e l l a g r o w i n g s u r p l u s p o p u l a t i o n , and t h a t t h e l u r e o f h i g h e r wages i n t h e c o a l f i e l d s as w e l l as o v e r s e a s were n o t t h e o n l y o p e r a t i v e f a c t o r s l e a d i n g t o a r e g i o n a l and s e c t o r a l r e d i s t r i b u t i o n o f t h e w o r l d ' s p o p u l a t i o n . Indeed, t h e compa-r a t i v e l y s l ow growth o f t h e i n d u s t r i a l s e c t o r o f South Wales F. Musgrove, " P o p u l a t i o n Changes and t h e S t a t u s o f t h e Young i n E n g l a n d s i n c e t h e E i g h t e e n t h . C e n t u r y " , The Sociological Review, V o l . I I , ( 1 9 6 3 ) , pp. 80-81. 0 155 i n t h e s e two decades a l l o w e d o n l y 23,246 o r a p p r o x i m a t e l y 18 p e r c e n t o f t h e r u r a l o u t f l o w o f 123,613 p e r s o n s t o be a b s o r b e d i n t h e c o l l i e r y d i s t r i c t s o f G l a m o r g a n s h i r e and Monmouthshire. There was a s h a r p r i s e i n t h e n e t o u t f l o w from t h e r u r a l d i s t r i c t s i n t h e 1880's w h i c h was i n p a r t a r e s p o n s e t o t h e a g r i c u l t u r a l d e p r e s s i o n t h a t s e t i n a f t e r 1879. The r a p i d growth o f t h e South Wales c o a l i n d u s t r y e n a b l e d t h i s 3 8 r e g i o n t o absorb 82 p e r c e n t o f t h e r u r a l r e s i d u e s . (We a r e , o f c o u r s e , and have been s p e a k i n g f i g u r a t i v e l y : o f t h e 87,225 g a i n e d t h r o u g h m i g r a t i o n , many came from d i s t a n t c o u n t i e s i n E n g l a n d , S c o t l a n d and I r e l a n d ; what we a r e h e r e t r y i n g t o e s t a b l i s h i s t h e tremendous a b s o r p t i v e power o f t h e South Wales r e g i o n a l economy.) " i n t h i s decade [1880-1889] when e m i g r a t i o n from E n g l a n d was v e r y heavy, e m i g r a t i o n from Wales was n e g l i g i b l e . D u r i n g t h e n i n e t i e s , when E n g l a n d was h a v i n g a home-i n v e s t m e n t boom, t h e n e t a b s o r p t i v e capa-c i t y o f i n d u s t r y i n South Wales was l e s s t h a n h a l f o f what i t had been i n t h e p r e -v i o u s decade. However, t h e s p e c t a c u l a r growth o f new towns such as Llandudno and R h y l , and t h e s t r i k i n g f a l l i n s i z e o f t h e r u r a l s u r p l u s , e n a b l e d Wales t o r e t a i n a l m o s t t h e whole o f i t s n a t u r a l i n c r e a s e . S.B. L. Druce, "The A l t e r a t i o n i n t h e D i s t r i b u t i o n o f t h e A g r i c u l t u r a l P o p u l a t i o n o f E n g l a n d and Wales, between t h e R e t u r n s of t h e Census o f 1871 and 1881", Journal of the Royal A g r i c u l t u r a l ciety3 V o l . 21, (1885), p. 111. 156 A t no t i m e was t h e c o n t r a s t more e v i d e n t t h a n i n t h e decade 1901-11 when a n e t Welsh r u r a l exodus o f 38,000 was matched by a n e t a b s o r p t i o n o f 129,000 i n t h e ^g Glamorgan-Monmouthshire c o a l f i e l d ..." T h i s f i n a l wave o f m i g r a t i o n i n t o South Wales d u r i n g t h i s s t a g e o f h e r i n d u s t r i a l development r e f l e c t s n o t o n l y t h e un-p a r a l l e l e d growth o f t h e c o a l i n d u s t r y , though t h i s was by f a r t h e most i m p o r t a n t f a c t o r , b u t a l s o t h e p r o g r e s s i n educ-a t i o n , t r a n s p o r t a t i o n and communication w h i c h exposed more and 40 more p e o p l e t o t h e advantages o f town l i f e . The p e r s i s t e n c e o f a g r i c u l t u r a l d e p r e s s i o n was a l s o i m p o r t a n t i n l i m i t i n g t h e employment o p p o r t u n i t i e s i n r u r a l a r e a s , t h u s p r o v i d i n g a s t r o n g push element i n t h e r u r a l exodus. The i n d u s t r i a l and demographic e x p e r i e n c e o f South Wales d e p a r t e d d r a m a t i c a l l y from t h a t o f E n g l a n d and S c o t l a n d a f t e r 1870. The d i v e r g e n t p a t t e r n s a r e perhaps b e s t summarized i n T a b l e IX and F i g u r e 8. T a b l e IX c o n t a i n s t h e n e t m i g r a t i o n b a l a n c e s f o r t h e South Wales c o a l f i e l d and E n g l i s h c o l l i e r y r e g i o n s from 1861 t o 1911. Thomas, The Welsh Economy, p. 16. 40 B u t , perhaps n o t so c l e a r l y t h e d i s a d v a n t a g e s . As Hooker ("On t h e R e l a t i o n Between Wages and Numbers Employed . . . " o p . c i t . , p. 633) p o i n t s o u t , " I t i s n o t as a r u l e u n t i l t h e man has had e x p e r i e n c e o f t h e c o n d i t i o n s o f l i f e i n a new d i s t r i c t t h a t he a p p r e c i a t e s t h e d i f f e r e n c e between r e a l and money wages." TABLE IX MIGRATION BALANCES IN ENGLISH AND WELSH COLLIERY REGIONS, DECENNIALLY 1861-1911 NET GAIN (+) NET LOSS (-) South W a l e s a E n g l i s h c o a l * 3 Decade C o a l f i e l d R egions (000's) (000's) 1861-71 1871-81 1881-91 1891-1901 1901-11 + 11 + 12 + 87 + 40 + 129 + 82 + 74 + 4 + 45 - 12 Source: a) T a b l e V I I b) A.K. C a i r n c r o s s , Home and Foreign Investment, p. 86. F i g u r e 8 158 DECENNIAL TRENDS IN HOUSEBUILDING AND MIGRATION: SOUTH WALES, ENGLAND AND SCOTLAND 1861-1911 80 60 20 90 80 70 -I 0 _ -10 -30 --50 -South Wales C o a l f i e l d (A) E n g l i s h C o l l i e r y Regions (B) Net D e c e n n i a l i n c r e a s e i n Hous-i n g Stock Great B r i t a i n (000's) (C) England (D) S c o t l a n d (E) 1860 1870 1880 1890 1900 1910 Source: (A) and (B) T a b l e V I I I (C) T a b l e XVI, Appendix I (D) and (E) Tab l e VI 159 I t i s r e a d i l y a p p a r e n t from F i g u r e 8 t h a t t h e demo-g r a p h i c movements o f South Wales were i n v e r s e t o t h o s e o f t h e E n g l i s h c o l l i e r y r e g i o n s as w e l l as En g l a n d and S c o t l a n d i n t h e a g g r e g a t e . When t h e r e was an upswing i n t h e South Wales r e g i o n a l economy, t h e B r i t i s h e x p o r t s e c t o r was s i m u l t -a n e o u s l y e x p a n d i n g , w h i l e c a p i t a l c o n s t r u c t i o n , n o t a b l y h o u s e b u i l d i n g , a t home was d e p r e s s e d ( i . e . , 1880's and 1 9 0 0 ' s ) . The c o a l o u t p u t o f E n g l i s h c o l l i e r y r e g i o n s , i n c o n t r a s t t o South Wales p r o d u c t i o n , was consumed p r i m a r i l y on t h e home market and t h u s f l u c t u a t e d i n agreement w i t h t h e l o n g swings i n t h e r a t e o f d o m e s t i c c a p i t a l f o r m a t i o n . The r a p i d growth o f t h e South Wales c o a l f i e l d s a l l o w e d t h e r e g i o n a l , economy t o absorb a l a r g e p e r c e n t a g e o f t h e c o u n t r i e s n a t u r a l i n c r e a s e o r even t o a t t r a c t a n e t i n f l o w o f l a b o u r from o t h e r c o u n t r i e s , w h i l e t h e l a n g u i s h i n g home c o n s t r u c t i o n s e c t o r i n En g l a n d and S c o t l a n d l e d t o a s u b s t a n t i a l i n c r e a s e i n t h e p e r c e n t a g e o f t h e s u r p l u s r u r a l p o p u l a t i o n e m i g r a t i n g o v e r s e a s . A l t e r n -a t i v e l y , when e x p a n s i o n i n t h e South Wales c o a l f i e l d and t h e B r i t i s h e x p o r t s e c t o r were d e c l i n i n g r e l a t i v e t r e n d , B r i t i s h home i n v e s t m e n t , p a r t i c u l a r l y h o u s e b u i l d i n g , was moving ahead r a p i d l y . D u r i n g t h e s e p e r i o d s , t h e Welsh r u r a l exodus slowed up o r was p a r t i a l l y d i v e r t e d t o E n g l a n d where a booming home c o n s t r u c t i o n s e c t o r was c r e a t i n g a gr o w i n g demand f o r l a b o u r . 160 I n C h a p t e r I I I we drew a t t e n t i o n t o t h e f a c t t h a t t h e demographic movements i n E n g l a n d and S c o t l a n d ( f o r our p u r p o s e s h e r e , t h e n e t r a t e o f l o s s , o r g a i n , t h r o u g h m i -g r a t i o n ) were i n c o m p l e t e agreement w i t h t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n . The e v i d e n c e on demographic chan-ges i n Wales t h a t we have s u r v e y e d i n t h i s s e c t i o n , however, does not s u p p o r t t h e l o n g swing h y p o t h e s i s a t t h e r e g i o n a l l e v e l . The r a t e o f l o s s t h r o u g h m i g r a t i o n f o r Wales t r a c e d i n F i g u r e 8 d i v e r g e s s h a r p l y from t h a t o f h e r n e i g h b o r s . Our a n a l y s i s o f t h e i n t e r n a l m i g r a t i o n b a l a n c e w i t h p a r t i c u l a r emphasis on t h e e x p e r i e n c e o f t h e c o a l f i e l d s i n t h e s o u t h , p o i n t s t o a pronounced i n v e r s e r e l a t i o n s h i p between t h e p a t t e r n o f m i g r a t i o n f o r South Wales and t h a t f o r E n g l a n d and S c o t l a n d . We may c o n c l u d e t h a t any i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n f o r Wales as a whole would f o l l o w c l o s e l y t h e r e g i o n a l p a t t e r n f o r South Wales. T h i s i s j u s t i f i e d by t h e f a c t t h a t t h e r e g i o n a l economy so dominated t h e economic development o f Wales. I n any e v e n t , th e a v a i l a b l e demographic e v i d e n c e c o n f i r m s t h e d i v e r g e n t c o u r s e i n h o u s e b u i l d i n g i n South Wales. 161 VARIATIONS IN THE COURSE OF HOUSE-BUILDING AT THE LOCAL LEVEL: SOUTH WALES We now t u r n t o a c l o s e r e x a m i n a t i o n o f t h e v a r i o u s components o f t h e South Wales r e g i o n a l i n d e x . T h i s exam-i n a t i o n w i l l c o n c e n t r a t e on t h e h o u s e - b u i l d i n g s t a t i s t i c s f o r s i x t e e n towns p r e s e n t e d i n T a b l e I o f Appendix I I . F o r c o n v e n i e n c e , t h e raw d a t a on house p l a n s approved a n n u a l l y i n each o f t h e s e towns has been graphed i n F i g u r e 9. We must now p r o c e e d c a u t i o u s l y under t h e f o l l o w i n g c a v e a t . The c o n c l u s i o n s drawn from t h e f o l l o w i n g a n a l y s i s must be c o n s i -d e r e d t e n t a t i v e . I have been u n a b l e t o a c q u i r e t h e r e l e v a n t i n f o r m a t i o n ( i . e . , Town p o p u l a t i o n changes r e s u l t i n g from boundary a l t e r a t i o n s , m o n thly s u b t o t a l s o f t h e a n n u a l number o f p l a n s a p p r o v e d , e t c . , a l l d i s c u s s e d i n t h e Appendix) t h a t i s r e q u i r e d t o c o n v e r t t h e s e r i e s o f house p l a n s approved t o e s t i m a t e s o f a c t u a l houses b u i l t . The raw d a t a s e r i e s r e p r o -duced i n F i g u r e 9 a r e o n l y p r e s e n t e d as rough a p p r o x i m a t i o n s t o t h e a c t u a l c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l . A d m i t t e d l y , t h e s t a t i s t i c a l p roblems a s s o c i a t e d w i t h t h e method o f a n a l y s i s used i n t h e p r e s e n t paper do c a s t d a r k shadows o v e r t h e c o n c l u s i o n s s u b s e q u e n t l y drawn. T h i s t o some e x t e n t cannot be a v o i d e d . C o n f i d e n c e i n our r e s u l t s , 162 however, i s r e i n f o r c e d by c o n c l u s i o n s drawn from e a r l i e r s t u d i e s o f b u i l d i n g c y c l e s i n t h e U n i t e d S t a t e s . I t w i l l be r e c a l l e d t h a t R iggleman, i n a s t u d y c i t e d e a r l i e r i n C h a p t e r Two, found t h a t "... i t i s q u i t e p r o b a b l e t h a t few i n d u s t r i e s have a b e t t e r i n d e x o f a c t i v i t y o v e r a l o n g p e r i o d o f t i m e t h a n t h e b u i l d i n g i n d u s t r y has i n b u i l d i n g 41 p e r m i t s . " The problems o f c o m p a r a b i l i t y a s s o c i a t e d w i t h m u n i c i p a l boundary changes may be more a p p a r e n t t h a n r e a l . C D . Long, i n an i n t e n s i v e s t u d y o f b u i l d i n g c y c l e s and i n v e s t m e n t found t h a t "... e x a m i n a t i o n o f e f f e c t s o f more t h a n f i f t y a n n e x a t i o n s i n o v e r a dozen c i t i e s p r o d u c e d no e v i d e n c e t h a t boundary changes s e r i o u s l y i m p a i r u n i f o r m i t y 42 o f b u i l d i n g p e r m i t s d a t a . " The problems a s s o c i a t e d w i t h t h e g e s t a t i o n p e r i o d o f c o n s t r u c t i o n and t h e l a g between p l a n a p p r o v a l and a c t u a l c o n s t r u c t i o n i s n o t so e a s i l y surmounted. Riggleman was a b l e t o argue t h a t " w h i l e t h i s p o i n t must be k e p t i n mind when i n t e r p r e t i n g p e r m i t d a t a , t h e l a g i s n o t as i m p o r t a n t when d e a l i n g w i t h a n n u a l d a t a as w i t h m o nthly d a t a , s i n c e most o f R i ggleman, " B u i l d i n g C y c l e s i n t h e U n i t e d S t a t e s " , p. 54. 4^C.D. Long, Building Cycles and the Theory of Investment, ( P r i n c e t o n : P r i n c e t o n U n i v e r s i t y P r e s s , 1940) p. 97. 163 t h e p e r m i t s i s s u e d i n a g i v e n y e a r c o v e r c o n s t r u c t i o n com-43 p l e t e d w i t h i n t h a t y e a r . " The e v i d e n c e t h a t i s a v a i l a b l e , however, appears t o i n d i c a t e t h a t t h e c o n s t r u c t i o n p e r i o d f o r comparable d w e l l i n g u n i t s was somewhat l o n g e r i n G r e a t B r i t a i n t h a n i n t h e U n i t e d S t a t e s . T h i s f a c t a l o n g w i t h what l i t t l e i n f o r m a t i o n t h e r e i s a v a i l a b l e on t h e monthly d i s t r i b u t i o n o f p l a n a p p r o v a l s g i v e s us r e a s o n t o b e l i e v e t h a t t h e t i m e l a g s t r u c t u r e a p p r o p r i a t e t o t h e U n i t e d S t a t e s was somewhat 44 s h o r t e r t h a n t h a t i n G r e a t B r i t a i n . C o n s e q u e n t l y , t h e a d o p t i o n o f Riggleman's argument would be i n v a l i d f o r t h e con-v e n i e n c e o f t h e f o l l o w i n g a n a l y s i s . The problems r a i s e d by t h i s i s s u e a r e n o t so e a s i l y d i s m i s s e d . The f o l l o w i n g exam-i n a t i o n i s o n l y u n d e r t a k e n w i t h due c o n s i d e r a t i o n o f t h e l i m i t a t i o n s and q u a l i f i c a t i o n s o f t h e d a t a . Throughout t h i s a n a l y s i s , t h e l o c a l d a t a w i l l be k e p t i n t h e i r raw form,. There a r e s e v e r a l r e a s o n s why no smoothing t e c h n i q u e s have been a p p l i e d . F i r s t , t h e use o f a n n u a l d a t a c o n s t i t u t e s i n i t s e l f a s moothing-out o f t h e s m a l l e r f l u c t u a t i o n s t h a t o c c u r d u r i n g t h e y e a r . Second, a p p l i c a t i o n o f t h e method o f moving a v e r a g e s w o u l d have a l l o w e d random movements t o R iggleman, " B u i l d i n g C y c l e s i n t h e U n i t e d S t a t e s " , p. 54. J . P a r r y L e w i s , Building Cycles and B r i t a i n s Growth, p. 302. 164 i n f l u e n c e t h e peaks and t r o u g h s . Thus, t u r n i n g p o i n t s would o f t e n d i v e r g e from t h e y e a r s i n w h i c h t h e y a c t u a l l y t o o k p l a c e . By k e e p i n g t o t h e raw d a t a , i t i s i n p a r t p o s s i b l e t o d i s r e g a r d as t u r n i n g p o i n t s , y e t f u l l y a p p r e c i a t e t h e i m p act o f random movements, s o c i a l , and n a t u r a l u p h e a v a l s . A t h i r d problems i s t h a t minor f l u c t u a t i o n s a t t h e l o c a l l e v e l a r e h i g h l y i r r e g u l a r i n t i m i n g and a m p l i t u d e . T h i s makes t h e c h o i c e o f a p e r i o d f o r a moving average a r b i t r a r y and dangerous. The f o l l o w i n g w i l l o f n e c e s s i t y be a v e r y s u p e r f i c i a l t r e a t m e n t o f a p r o b l e m t h a t r e q u i r e s f a r more i n t e n s i v e s t u d y . The d e a r t h o f i n f o r m a t i o n i n N o r t h A m e r i c a on t h e demographic and economic h i s t o r y a t t h e l o c a l l e v e l i n South Wales r e n d e r s our t a s k p r i m a r i l y one o f i d e n t i f y i n g and i s o -l a t i n g the most s a l i e n t c h a r a c t e r i s t i c s i n t h e l o c a l p a t t e r n s o f h o u s e - b u i l d i n g a c t i v i t y . H o p e f u l l y , i n l i g h t o f our d i s -c u s s i o n i n C h a p t e r I V , we w i l l be a b l e t o say something m e a n i n g f u l about t h e r e l a t i o n s h i p between t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l and t h e b e h a v i o r o f t h e South Wales r e g i o n a l and Weber's n a t i o n a l i n d i c e s o f r e s i -d e n t i a l c o n s t r u c t i o n . A c l o s e r l o o k a t t h e h o u s e - b u i l d i n g c u r v e s r e p r o d u c e d i n F i g u r e 9 l e a d s t o t h e f o l l o w i n g o b s e r v a t i o n s : 165 F i g u r e 9 INDICES OF HOUSE-BUILDING FOR SIXTEEN TOWNS IN SOUTH WALES 1860-1914 So u r c e : T a b l e X V I I , Appendix I I 167 500 • 300 Newport 1860 1870 1880 1890 1900 1910 170 1860 1870 1880 1890 1900 1910 171 A. There was a wide range o f v a r i a t i o n i n t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l . B. The g e n e r a l p a t t e r n o f r e s i d e n t i a l c o n s t r u c t i o n as m a n i f e s t e d i n t h e r e -g i o n a l i n d e x i s r e f l e c t e d i n o n l y two o f t h e s i x t e e n towns s t u d i e d . C. V i o l e n t s h o r t r u n f l u c t u a t i o n s i n t h e l o c a l s e r i e s a r e l o s t i n t h e method o f a g g r e g a t i o n w h i c h r e s u l t s i n a s i g n i f i c -a n t l y smoothed r e g i o n a l b u i l d i n g c u r v e ( i n d e x ) . D. A l o n g swing i n r e s i d e n t i a l c o n s t r u c t i o n can be d i s t i n g u i s h e d i n o n l y f i v e o f t h e l o c a l s e r i e s . I n t h e y e a r s 1860-69 h o u s e - b u i l d i n g i n South Wales was a t a v e r y low l e v e l . T h i s was i n p a r t a consequence o f t h e o v e r - s u p p l y o f h o u s i n g accommodations r e s u l t i n g from the s p e c u l a t i v e b u i l d i n g boom i n t h e l a t e 1850's. The moderate amount o f m i g r a t i o n i n t h i s decade, compared w i t h l a t e r de-c a d e s , as w e l l as t h e d e p r e s s e d s t a t e o f t h e l o c a l economy, e s p e c i a l l y a f t e r 1866, were i m p o r t a n t f a c t o r s c o n t r i b u t i n g t o a r e d u c t i o n i n e f f e c t i v e demand f o r d w e l l i n g s . There were, however, s i g n i f i c a n t , i f o n l y m i n o r , upswings i n b u i l d i n g a c t i v i t y i n t h e towns o f Swansea (1863-67) and A b e r d a r e (1863-66) , w h i c h were r e f l e c t e d i n a m i n or f l u c t u a t i o n i n t h e South Wales 172 r e g i o n a l i n d e x , c e n t e r e d on 1867. From 1868 t o 1872 de-p r e s s i o n i n t h e c o n s t r u c t i o n i n d u s t r y p r e v a i l e d i n most of t h e towns f o r w h i c h we have d a t a , e x c e p t p e r h a p s , C a r d i f f and L l a n e l l y M.B. The decade o f t h e ' s e v e n t i e s w i t n e s s e d an u n p r e c e -d e n t e d i n c r e a s e i n r e s i d e n t i a l c o n s t r u c t i o n t h r o u g h o u t South Wales. F o r each o f t h e s e r i e s p r e s e n t e d i n F i g u r e 9, w h i c h e x t e n d s back t h r o u g h t h i s decade, a s i g n i f i c a n t boom i n h o u s e - b u i l d i n g can be i d e n t i f i e d . The most s p e c t a c u l a r i n c r e a s e s o c c u r r e d i n Swansea where t h e number o f house p l a n s approved jumped from 213 i n 1872 t o 820 i n 1875; and i n C a r d i f f where t h e i n c r e a s e was from 251 i n 1872 t o 648 i n 1875. In t h e p r e v i o u s s e c t i o n we d i s c u s s e d t h e r o l e p l a y e d by South Wales i n t h e g r e a t c o n s t r u c t i o n and r a i l w a y booms t h a t g o t underway t h r o u g h o u t t h e w o r l d around 1870. I n a t t e m p t i n g t o meet t h e r e q u i r e m e n t s o f an e x p a n d i n g w o r l d market f o r c o a l , i r o n , copper and t i n p l a t e , b o t h Swansea and C a r d i f f , as t h e major p o r t s on t h e B r i s t o l C h a n n e l , found t h e i r d o c k s , s t o r a g e and l o a d i n g f a c i l i t i e s t a x e d t o c a p a c i t y . Each o f t h e s e towns, as a major nexus between t h e h i n t e r l a n d and t h e markets o v e r s e a s became a f o c a l p o i n t f o r i n v e s t m e n t i n heavy i n d u s t r y and s o c i a l o v e r h e a d c a p i t a l . T r a n s p o r t a t i o n systems were e x t e n d e d and t h e p o r t s burgeoned w i t h a c t i v i t y . 173 D e c e n n i a l i n c r e a s e s i n town p o p u l a t i o n p r o v i d e a r e a s o n a b l y good i n d i c a t i o n o f t h e r e l a t i v e i n t e n s i t i e s o f economic a c t i v i t y a t t h e l o c a l l e v e l . In 1861 t h e p o p u l a t i o n o f Swan-sea was 41,000, by 1871 t h i s had grown t o 52,000, an i n c r e a s e 45 o f 25 p e r c e n t . The moderate growth o f t h e 1860's was f o l l o w e d by a wave o f i n - m i g r a t i o n o v e r t h e n e x t t e n y e a r s . A t t r a c t i n g newcomers n o t o n l y from Welsh r u r a l a r e a s b u t a l s o from d i s t a n t c o u n t i e s such as C o r n w a l l , Devon, G o u c e s t e r and Somerset i n E n g l a n d , t h e town p o p u l a t i o n s w e l l e d t o 76,000 by 1881, t h e n e t d e c e n n i a l i n c r e a s e b e i n g o v e r t w i c e t h a t i n t h e p r e v i o u s decade. C a r d i f f e x p e r i e n c e d a s i m i l a r demographic i n c r e a s e , h e r p o p u l a t i o n r i s i n g g r a d u a l l y from 33,000 i n 1861 t o 40,000 i n 1871, and t h e n e x p l o d i n g t o 83,000 by 1881. A p p r o x i m a t e l y 17,000 o f t h e 43,000 d e c e n n i a l i n c r e a s e i s a t t r i b u t a b l e t o changes i n m u n i c i p a l b o u n d a r i e s . I t s h o u l d be k e p t i n mind, however, t h a t o f t h e 17,000 p e r -sons added by boundary changes, a s u b s t a n t i a l p e r c e n t a g e were a l s o newly r e l o c a t e d m i g r a n t s from th e h i n t e r l a n d and d i s t a n t 46 c o u n t i e s . 45 B.R. M i t c h e l l , B r i t i s h H i s t o r i c a l S t a t i s t i c s , p. 115 ^Ibid, p. 24. 174 The upswing i n b u i l d i n g a c t i v i t y d u r i n g t h e 1870's m a n i f e s t e d i n t h e l o c a l h o u s e - b u i l d i n g s e r i e s f o r v a r i o u s towns i n South Wales i s i n g e n e r a l agreement w i t h t h e c o u r s e o f h o u s e - b u i l d i n g r e p r e s e n t e d i n b o t h t h e South Wales r e g i o n a l i n d e x and Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n . T h i s s i m i l a r i t y l e n d s c r e d e n c e t o t h e hy-p o t h e s i s t h a t l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n a r e the r e s u l t o f m ajor economic and demographic f o r c e s , e i t h e r n a t i o n a l l y o r i n t e r n a t i o n a l l y d e t e r m i n e d , w h i c h o v e r r i d e l o c a l o r r e g i o n a l c o n d i t i o n s t h a t might o t h e r w i s e be un-f a v o r a b l e t o i n c r e a s e d b u i l d i n g a c t i v i t y . I t i s d i f f i c u l t t o a c c e p t o r d i s m i s s such a p r o p o s i t i o n w i t h o u t a more i n -t e n s i v e s t u d y o f l o c a l h i s t o r i c a l r e c o r d s . On t h e o t h e r hand, i t i s e v i d e n t from F i g u r e 9 t h a t i n t h e y e a r s f o l l o w i n g t h e boom o f t h e 1870's t h e r e was a g r o w i n g d i v e r s i t y i n t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l . I t m i g h t be u s e f u l t o c o n c e n t r a t e b r i e f l y on t h e d i f f e r e n t e x p e r i e n c e s o f two p r o m i n e n t towns: Swansea and C a r d i f f . The i n d u s t r i a l base o f Swansea was f a r more b a l a n c e d t h a n t h a t w h i c h d e v e l o p e d i n t h e E a s t c o u n t r y ; t h e l a t t e r c o n c e n t r a t i n g a l m o s t e n t i r e l y i n t h e p r o d u c t i o n o f i r o n and m i n i n g o f steam c o a l . The advantages o f a c o a s t a l s i t e and f r e e a c c e s s t o c o a l 175 made Swansea i d e a l l y s i t u a t e d f o r t h e development o f v a r i o u s m e t a l l u r g i c a l i n d u s t r i e s , w h i c h e v e n t u a l l y came t o be con-c e n t r a t e d i n t h i s Western r e g i o n . The Ynyscedwyn and Y s t a l -y f e r a i r o n w o r k s , where t h e f i r s t s u c c e s s f u l use o f a n t h r a c i t e i n t h e s m e l t i n g o f i r o n had been a c h i e v e d by George Crane i n 1837, were l o c a t e d i n t h e Swansea V a l l e y . "By 1875, f i f t y -seven o f t h e s e v e n t y - s e v e n t i n p l a t e works i n t h e U n i t e d K i n g -dom were s i t u a t e d i n South Wales, m a i n l y on t h e c o a s t n e a r P o r t T a l b o t , Swansea, and L l a n e l l y . Of l e s s e r i m p o r t a n c e was t h e g r a v i t a t i o n o f a s u b s t a n t i a l p o r t i o n o f B r i t a i n s ' l e a d , z i n c , and s i l v e r s m e l t i n g i n d u s t r i e s towards t h e same 47 a r e a . " Copper s m e l t i n g was a l s o a major i n d u s t r y s i t u a t e d i n and around Swansea. I n 1876, 54 p e r c e n t o f t h e copper s m e l t i n g c a p a c i t y o f t h e U n i t e d Kingdom was c o n c e n t r a t e d i n t h i s a r e a . The amount o f c o a l consumed by t h e s e l o c a l i n -d u s t r i e s was so g r e a t t h a t t h e number o f c o l l i e r s employed i n t h e mines was as h i g h as t h e number o f men o c c u p i e d i n t h e w orks. A l l o f t h e s e i n d u s t r i e s p a r t i c i p a t e d i n t h e i n -ves t m e n t boom and p r o s p e r i t y o f t h e e a r l y 1870's o n l y t o f i n d t h e m s e l v e s f a r more v u l n e r a b l e t o t h e f l u c t u a t i o n s i n market M o r r i s pp. 47-48. and W i l l i a m s , The South Wales Coal Industry 3 176 c o n d i t i o n s t h a t were t o f o l l o w . By 1876, b o t h t h e copper and i r o n i n d u s t r i e s were w e l l beyond t h e i r peaks. I n t h e c o p p e r i n d u s t r y i t was becoming more e c o n o m i c a l t o s m e l t t h e copper o r e n e a r t h e mines. The boom i n i r o n p r o d u c t i o n i n 1871 and 1872 c r e a t e d by t h e abnormal con-d i t i o n s o f t h e F r a n c o - P r u s s i a n War superimposed on t h e r e q u i r e m e n t s o f heavy i n v e s t m e n t p r o j e c t s i n t h e Western hemisphere was a c y c l i c a l d e p a r t u r e from a t r e n d t h a t was p e r c e i v e d t o have been d e c l i n i n g from th e l a t e 1860's. There i s e v e r y r e a s o n t o b e l i e v e t h a t t h e c o u r s e o f h o u s e - b u i l d i n g i n Swansea was s i g n i f i c a n t l y i n f l u e n c e d by t h e a v a i l a b i l i t y o f c r e d i t as w e l l as s p e c u l a t i v e b u i l d e r s e x p e c t a t i o n s o f g r e a t e r p r o f i t s f o s t e r e d by abnormal i n -d u s t r i a l p r o s p e r i t y . E a r l i e r we n o t e d t h a t wages and i n -comes had r i s e n t o e x t r e m e l y h i g h l e v e l s i n t h e e a r l y 1870's. The i n c r e a s e d income a v a i l a b l e f o r e x p e n d i t u r e on h o u s i n g a c c o m o d a t i o n was supplemented by a g r o w i n g volume o f mort-gage c r e d i t , p r i m a r i l y f i n a n c e d by B u i l d i n g s o c i e t i e s . What l i t t l e a v a i l a b l e e v i d e n c e t h e r e i s i n d i c a t e s t h a t much o f t h e c r e d i t e x t e n d e d was i n v i o l a t i o n o f c e r t a i n d u t i e s and r e s t r i c t i o n s imposed on s o c i e t i e s i n c o r p o r a t e d under the B u i l d i n g S o c i e t i e s A c t o f 1874. The i n t e n d e d l i m i t on borrow-i n g was o f t e n i g n o r e d . I n Cole v. Swansea Cooperative 177 Building Society i t was s t a t e d t h a t "The S o c i e t y s t a r t e d i n 1875 and i m m e d i a t e l y exceeded t h e i r b o r r o w i n g powers, 48 a p o s i t i o n i n w h i c h t h e y have e v e r s i n c e c o n t i n u e d (1885)." The S t . H e l e n s B u i l d i n g S o c i e t i e s o f Swansea were a l s o found t o have v i o l a t e d t h e i r a u t h o r i z e d b o r r o w i n g l i m i t s by a 49 r a t h e r l a r g e sum o f £35,000. Easy money c o n d i t i o n s c e r -t a i n l y encouraged t h e boom i n h o u s e - b u i l d i n g . The p r e c i p i t o u s f a l l i n h o u s e - b u i l d i n g a c t i v i t y i n Swansea a f t e r 1875 was i n p a r t a l a g g e d r e s p o n s e t o t h e s e c t o r a l r e a d j u s t m e n t s o c c a s i o n e d by t h e i n d u s t r i a l c o l l a p s e o f 1873. W i t h t h e d e c l i n e o f t h e i r o n i n d u s t r y t h e r e was i n c r e a s e d unemployment as w e l l as re d u c e d demand f o r c o a l i n t h e West c o u n t r y , t h u s c r e a t i n g more unemployment i n t h e c o a l f i e l d s around Swansea. But s t a g n a t i o n i n t h e m e t a l u r g i c a l i n d u s t r i e s a f t e r 1873 was n o t t h e o n l y r e a s o n f o r t h e r e l a t i v e d e c l i n e i n t h e West. E x p e c t a t i o n s o f g r e a t e r p r o g r e s s were based l a r g e l y on t h e b e l i e f t h a t t h e steam r a i s i n g q u a l i t i e s o f a n t h r a c i t e would e n a b l e t h i s West l a n d s t a p l e t o g a i n a c c e s s t o wide m a r k e t s . The f a i l u r e o f a t t e m p t s t o f i n d new, more p r o d u c t i v e uses f o r a n t h r a c i t e c o a l soon p r o v e d t h i s b e l i e f t o be i n e r r o r . E . J . C l e a r y , The Building Society Movement3 (London: E l e k Books L t d . , 1965) p. 120. Ibid, p. 122 178 Though t h e more p r o s p e r o u s y e a r s came t o an end f o r t h e m e t a l u r g i c a l i n d u s t r i e s around Swansea w i t h t h e o n s e t o f d e p r e s s i o n i n 1873, t h e growth o f t h e " s a l e - c o a l " i n -d u s t r y was h a r d l y a f f e c t e d f o r i t s p r o g r e s s was now p r i m a r i l y d e t e r m i n e d by t h e s t a t e o f w o r l d demand f o r steam c o a l . T h i s demand grew s t e a d i l y w i t h t h e a p p l i c a t i o n s o f steam t e c h n o -l o g y i n i n d u s t r y and t r a n s p o r t a t i o n around t h e w o r l d . The c o r r e s p o n d i n g i n c r e a s e i n c o a l p r o d u c t i o n was d i s t r i b u t e d u n e v e n l y o v e r th e c o a l f i e l d . The r e g i o n s where m i n i n g a c t i -v i t y d e v e l o p e d most r a p i d l y were t h e v a l l e y s o f Rhondda and A b e r d a r e . The smokeless steam c o a l s mined i n t h e s e v a l l e y s f ound t h e i r way t o f o r e i g n markets t h r o u g h t h e p o r t s o f C a r d i f f and Newport. The growth o f C a r d i f f as t h e most im-p o r t a n t p o r t i n t h e c o a l e x p o r t t r a d e (the t o t a l volume o f c o a l shipments i n 1874 was 3,780,000 t o n s as opposed t o 768,000 t o n s f o r Swansea) o f South Wales i s i n no s m a l l p a r t due t o t h e p r o v i s i o n o f r a i l t r a n s p o r t f a c i l i t i e s , e s p e c i a l l y t h e T a f f V a l e R a i l w a y , w h i c h h e l p e d d e t e r m i n e t h e i n t e n s i t y as w e l l as t h e e x t e n t o f e x p l o i t a t i o n o f t h e v a l l e y s . A n o t h e r i m p o r t a n t f a c t o r c o n t r i b u t i n g t o t h e b r i s k t r a d e a t C a r d i f f was t h e e x p a n s i o n o f dock accommodations t o 9 71/2 a c r e s by 1875. I n t h a t y e a r , however, t h e c o a l r e s e r v e s o f t h e Rhondda v a l l e y were j u s t b e g i n n i n g t o be t a p p e d . In t h e f o l l o w i n g decade 179 t h e o p e n i n g up o f new c o l l i e r i e s and t h e e x t e n s i o n o f e x i s t i n g ones r a i s e d t h e a n n u a l p r o d u c t i o n o f t h e v a l l e y by 31/2 m i l l i o n t o n s . The phenomenal growth o f C a r d i f f i s r e f l e c t e d i n t h e h o u s e - b u i l d i n g s e r i e s p r e s e n t e d i n F i g u r e 9. I t s development a f t e r 1878 s t a n d s i n marked c o n t r a s t t o t h a t o f Swansea. The sh a r p upswing i n h o u s e - b u i l d i n g between 1873 and 1875 was f o l l o w e d by a f o u r - y e a r pause i n w h i c h t h e s e r i e s f l u c t u a t e s about a h i g h 600 l e v e l . These were y e a r s i n w h i c h house-b u i l d i n g f e l l o f f d r a m a t i c a l l y i n Swansea, L l a n e l l y M.B., and B l a e n a v o n . The t r o u g h i n t h e r e g i o n a l i n d e x i n 1879 c o i n c i d e s w i t h e x t r e m e l y low l e v e l s o f b u i l d i n g a c t i v i t y i n Swansea, M o u n t a i n A s h , Ebbw V a l e , B l a e n a v o n , M e r t h y r T y d f i l , A b e r d a r e and Newport. The decade o f t h e 1880's, i n w h i c h t h e c o n s t r u c t i o n i n d u s t r y i n G r e a t B r i t a i n (Weber's i n d e x ) was s e v e r e l y d e p r e s s e d , opened w i t h a d r a m a t i c i n c r e a s e i n h o u s e - b u i l d i n g i n C a r d i f f and P e n a r t h . The i n d u s t r y remained r e l a t i v e l y d e p r e s s e d i n Swansea u n t i l 1886 w h i l e C a r d i f f under-went a p r o l o n g e d boom i n h o u s e - b u i l d i n g , i n t e r r u p t e d o n l y i n th e y e a r s 1888-92 by s h o r t a g e s o f c a p i t a l and work s t o p p a g e s . F u r t h e r e v i d e n c e on t h e d i s s i m i l a r development o f Swansea and C a r d i f f i s found i n t h e d a t a on m u n i c i p a l p o p u l a t i o n changes. I n 1871, t h e p o p u l a t i o n o f Swansea was 52,000, by 1881 t h i s had 180 grown t o 76,000, by 1891 i t was 91,000 and by 1901 i t had i n c r e a s e d t o 9 5,000. The n e t d e c e n n i a l changes agree v e r y w e l l w i t h t h e c o u r s e o f h o u s e - b u i l d i n g . F o r example, t h e i n c r e a s e o f 24,000 p e o p l e i n t h e 1880's c o i n c i d e d w i t h an upswing i n r e s i d e n t i a l c o n s t r u c t i o n u n t i l 1890. But house-b u i l d i n g f e l l s h a r p l y a f t e r 1895 t o i t s l o w e s t l e v e l i n 1898-1900; i n t h i s decade t h e p o p u l a t i o n i n c r e a s e d by o n l y 4,000. The p o p u l a t i o n o f C a r d i f f on t h e o t h e r hand r o s e from 40,000 i n 1871, t o 83,000 i n 1881, 129,000 i n 1891 and 164,000 i n 1901. The b u i l d i n g booms o f t h e 1870's, 80's and 90"s c o r r e s p o n d c l o s e l y t o t h e l a r g e d e c e n n i a l i n c r e a s e s o f 43,000, 46,000 and 35,000 r e s p e c t i v e l y i n t h e u r b an po-p u l a t i o n . • The p e r i o d e x t e n d i n g from t h e 1880's u n t i l t h e o u t b r e a k of war i n 1914 w i t n e s s e s t h e appearance and growth o f many s m a l l towns t h r o u g h o u t t h e r e g i o n s o f t h e c o a l f i e l d . To some e x t e n t t h i s i s e v i d e n c e d by t h e g r o w i n g number o f l o c a l r e c o r d 51 on h o u s e - b u i l d i n g t h a t become a v a i l a b l e i n t h i s p e r i o d . An M i t c h e l l , B r i t i s h H i s t o r i c a l S t a t i s t i c s > pp. 24-27. 51 The H e a l t h A c t o f 1848 r e q u i r e d l o c a l h e a l t h b o a r d s t o be s e t up once a c e r t a i n degree o f u r b a n i z a t i o n had been r e a c h These b o a r d s were r e s p o n s i b l e f o r t h e enforcement o f B u i l d i n g By-Laws and t h e m a intenance o f r e c o r d s on approved house p l a n s 181 o u t s t a n d i n g c h a r a c t e r i s t i c o f t h e i n d u s t r i a l i z a t i o n o f South Wales i s t h e marked l a c k o f u n i f o r m i t y by w h i c h t h e l o c a l development o f b r o a d s e c t o r s o f t h e c o a l f i e l d p r o -ceeded. T h i s uneven growth was a r e s u l t o f t h e complex i n t e r a c t i o n o f numerous g e o l o g i c a l , t e c h n i c a l , p e r s o n a l , and economic f a c t o r s . A c o mplete e x p l a n a t i o n o f t h i s p r o c e s s l i e s beyond the scope o f t h e p r e s e n t p a p e r ; how-e v e r , t h e a v a i l a b l e e v i d e n c e on t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l i n South Wales s u g g e s t s t h a t a more p r o d u c t i v e approach t o t h e a n a l y s i s o f t h i s i n d u s t r y c o u l d be u n d e r t a k e n by c o n c e n t r a t i n g on t h e p r o g r e s s o f d e v e l o p -ment i n and f a c t o r s s p e c i f i c t o t h e i n d i v i d u a l v a l l e y s t h r o u g h o u t t h e e n t i r e r e g i o n . I f t h e South Wales r e g i o n a l i n d e x i s t o have any a n a l y t i c a l v a l u e w h a t s o e v e r , we must be a b l e t o r e l a t e i t i n some m e a n i n g f u l way t o t h e o p e r a t i v e f o r c e s c o n d i t i o n i n g t h e l o c a l p a t t e r n o f development. The g r o w i n g i n t e r n a t i o n a l demand f o r c o a l p r o v i d e d t h e impetus f o r r e g i o n a l development, b u t t h e e x t e n t and p r o g r e s s o f t h a t development can o n l y be u n d e r s t o o d by f u l l y a p p r e c i a t i n g t h e v a r i e t y o f f a c t o r s we so o f t e n r e f e r t o as l o c a l c o n d i t i o n s , and t h e n d i s m i s s from any a n a l y s i s . One i m p o r t a n t c h a r a c t e r i s t i c o f t h e i n d u s t r i a l d e v e l o p -ment o f South Wales was t h e growth o f c e r t a i n w e l l - d e f i n e d 182 urban a r e a s i n v a r i o u s p a r t s o f t h e h i n t e r l a n d . The t o p o -graphy of t h e c o a l f i e l d p l a y e d an i m p o r t a n t r o l e i n t h i s p r o c e s s o f u r b a n i z a t i o n . The e x i s t e n c e o f l o n g , narrow v a l l e y s s e p a r a t e d by i n t e r j a c e n t mountain ranges l a r g e l y d e t e r m i n e d t h e b o u n d a r i e s o f t h e s e new u r b an d i s t r i c t s . F o r t h e p u r p o s e s o f l o c a l a d m i n i s t r a t i o n , t h e new u r b a n a r e a s were f a r more s u i t a b l e , and soon r e p l a c e d t h e o l d c i v i l p a r i s h e s , each o f w h i c h had extended o v e r s e v e r a l o f t h e v a l l e y s . I n what f o l l o w s , we t r e a t t h e v a l l e y s as i n d i v i d u a l e n t i t i e s . By so d o i n g , we a r e a b l e t o t r a c e t h e c l o s e r e l a t i o n s h i p between development i n t h e c o a l i n d u s t r y , t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e l o c a l l e v e l , and p o p u l -a t i o n changes a t t h e a p p r o p r i a t e l e v e l o f a g g r e g a t i o n . Our p o p u l a t i o n d a t a a r e drawn p r i m a r i l y from Hodges f o r t h e f o l l o w i n g r e a s o n : "Without a l o c a l knowledge, i t i s a l m o s t i m p o s s i b l e t o compute an a c c u r a t e e s t i m a t e o f t h e p o p u l a t i o n o f t h e s e v a l l e y s from t h e Census f i g u r e s , s i n c e t h e v a r i o u s p a r i s h p o p u l a t i o n s g i v e n o v e r l a p i n t o s e v e r a l v a l l e y s . Thus i t i s o n l y by means o f many c r o s s - c a l c u l a t i o n s c o u p l e d w i t h l o c a l know-l e d g e o f t h e p l a c e s mentioned t h a t a p p r o x i m a t e v a l l e y t o t a l s can be computed."52 Hodges, " P e o p l i n g o f t h e H i n t e r l a n d " , p. 67. 183 E a r l y development of South Wales from around 1825 t o 1860 was c o n c e n t r a t e d i n Swansea, the immediate h i n t e r -l a n d west o f the V a l e of Neath and the Merthyr and Aberdare v a l l e y s i n the E a s t . The major i n d u s t r i e s i n t h i s p e r i o d were f i r s t i r o n and second c o a l p r o d u c t i o n . The v a l l e y s of Merthyr and Aberdare were major i r o n p roducing r e g i o n s t h a t had a c h i e v e d m a t u r i t y by the 1860's; and w i t h the d e c l i n e of i r o n p r o d u c t i o n a f t e r the e a r l y 1870's, the p o p u l a t i o n s o f these v a l l e y s remained r e l a t i v e l y unchanged from 1860 t o 1890. The s l i g h t d e c l i n e i n p o p u l a t i o n d u r i n g the 1870's and e a r l y 1880's was i n p a r t a consequence of the r a p i d development of the Rhondda and the p r e v a i l i n g wage d i f f e r -e n t i a l s between the v a l l e y s which a t t r a c t e d workers away from Merthyr T y d f i l , Aberdare, Mountain Ash, and the o t h e r s m a l l e r communities. T h i s r a t h e r l ong pause i n the i n d u s t r i a l and demographic development of the Merthyr and Aberdare V a l l e y s i s v e r y c l e a r l y r e f l e c t e d i n the l o c a l h o u s e - b u i l d i n g p a t t e r n s f o r the major urban areas of these r e g i o n s . In Merthyr T y d f i l , the annual number of house p l a n s approved f l u c t u a t e d around a very low l e v e l u n t i l a f t e r 1890. T h i s g e n e r a l time path was a l s o f o l l o w e d by Mountain Ash and Aberdare except f o r 184 r e l a t i v e l y h i g h l e v e l s o f b u i l d i n g a c t i v i t y i n t h e l a t t e r town from 1873 t o 1876. The e x p e r i e n c e o f t h e s e towns i s i n g e n e r a l d i s a g r e e m e n t w i t h t h e c o u r s e o f h o u s e - b u i l d i n g f o u n d i n t h e South Wales r e g i o n a l i n d e x . Yet i t may be argued t h a t Weber's n a t i o n a l i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n r e f l e c t s t h e l o c a l t r e n d s i n t h e decade o f t h e ' E i g h t i e s . We have seen t h a t when t h e b u i l d i n g i n d u s t r y i n G r e a t B r i t a i n was d e p r e s s e d i n t h e 1880's and e a r l y 1890's, Swan-sea and C a r d i f f were u n d e r g o i n g t h e most v i g o r o u s b u i l d i n g booms t h e y were t o e x p e r i e n c e i n t h e e n t i r e h a l f c e n t u r y w i t h w h i c h t h i s i n q u i r y i s c o n c e r n e d . O t h e r towns i n South Wales a l s o d e p a r t e d m a r k e d l y from t h e n a t i o n a l t r e n d . The r e c o r d e d number o f house p l a n s approved i n P e n a r t h and Llwchwr was r e l a t i v e l y h i g h i n t h e 1880's, f e l l o f f a f t e r 1887, and 1889 r e s p e c t i v e l y , and remained low f o r a decade t h e r e a f t e r . I n Newport, a b u i l d i n g boom i n t h e m i d - e i g h t i e s was i n t e r r u p t e d between 1889 and 1891 by l a b o u r u n r e s t and f r e -q uent work s t o p p a g e s . The a m i a b l e l a b o u r r e l a t i o n s t h a t f o l l o w -ed and t h e g r o w i n g i m p o r t a n c e o f Newport i n t h e c o a l e x p o r t t r a d e c o n t r i b u t e d t o an u n p r e c e d e n t e d b u i l d i n g boom i n t h i s town d u r i n g t h e 1890's. Growing economic a c t i v i t y and a d r a m a t i c i n c r e a s e i n r e q u i r e d h o u s i n g accommodations a r e r e -f l e c t e d i n t h e upsurge i n Newport's enumerated p o p u l a t i o n from 185 38,000 i n 1881 t o 67,000 i n 1 9 0 1 . 5 3 The Rhondda V a l l e y was r i c h l y endowed w i t h t h e f i n e s t q u a l i t y steam c o a l i n t h e U n i t e d Kingdom. As t h e w o r l d demand f o r t h i s commodity i n c r e a s e d , g r e a t e r energy was d i r e c t e d t o t h e e x p l o i t a t i o n o f t h e s u p e r i o r c o a l seams i n t h e v a l l e y . A t r a n s p o r t a t i o n network c o n n e c t i n g t h e upper r e a c h e s o f t h e Rhondda w i t h C a r d i f f had been c o m p l e t e d w e l l b e f o r e t h e mid-e i g h t e e n s i x t i e s . " I n t h e t e n y e a r s e n d i n g i n 1875, s i x t e e n new c o l l i e r i e s were opened t o t h e s e measures i n t h e Rhondda Fawr and f o u r i n t h e Rhondda Fach. Y e t d e s p i t e t h e s u b s t a n t i a l c o n t r i b u t i o n t h e y had a l r e a d y made t o t h e o u t p u t o f t h e v a l l e y t h e y were m o s t l y s t i l l i n t h e p r o c e s s o f b e i n g opened o u t . I n t h e n e x t decade t h e a n n u a l p r o d u c t i o n o f t h e v a l l e y was t o 54 r i s e by a f u r t h e r 31/2 m i l l i o n t o n s ..." T h i s , however, was o n l y t h e b e g i n n i n g o f t h e f u l l e x p l o i t a t i o n o f t h e c o a l r e s e r v e s i n t h e Rhondda. The Census o f P o p u l a t i o n p r o v i d e s us w i t h f u r t h e r e v i d e n c e on t h e p r o g r e s s o f i n d u s t r i a l d e v e l o p -ment i n t h e v a l l e y . I n 1881, t h e t o t a l p o p u l a t i o n o f t h e Rhondda V a l l e y was 81,895, by 1891 t h i s had grown t o 127,980 and i n M i t c h e l l , B r i t i s h H i s t o r i c a l S t a t i s t i c s , p. 27. 54 M o r r i s and W i l l i a m s , The South Wales Coal Industry, p. 115. TABLE X POPULATIONS OF THE MERTHYR AND ABERDARE VALLEYS, DECENNIALLY 1861-1891 Region 1861 1871 1881 1891 M e r t h y r V a l l e y 69,618 54,741 51,712 61,135 A b e r d a r e V a l l e y 37,487 38,637 38,137 43,314 Source: T. Mansel Hodges, "The P e o p l i n g o f t h e H i n t e r l a n d and P o r t o f C a r d i f f , 1801-1914," Economic History Review, V o l . X V I I , (1947), p. 5. 187 1914 i t stood a t 162,592. Throughout the p e r i o d 1880-1914, h o u s e - b u i l d i n g i n the Rhondda V a l l e y f a i l e d t o keep pace w i t h i n c r e a s e s i n p o p u l a t i o n . T h i s l e d t o a g e n e r a l l y h i g h l e v e l of b u i l d i n g a c t i v i t y i n the towns of the v a l l e y as evidenced by the b u i l d i n g s e r i e s f o r Rhondda and P o n t y p r i d d . The time-shape o f r e s i d e n t i a l c o n s t r u c t i o n i n these towns, however, bears a s t r o n g i n v e r s e r e l a t i o n t o the n a t i o n a l p a t t e r n . The number of house p l a n s approved i n the e a r l y 1890's was e x t r a o r d i n a r i -l y h i g h , but f e l l o f f i n the course o f the decade. A f t e r the t u r n o f the c e n t u r y , another tremendous boom i n h o u s e - b u i l d i n g g o t underway. T h i s l a t t e r upswing i n the f i r s t decade of the Twentieth c e n t u r y was not unique t o the towns of the Rhondda. I t was a common e x p e r i e n c e of many of the communities throughout South Wales, b e i n g most pronounced i n the towns of the Aberdare and Ebbw v a l l e y s . From h i g h or i n c r e a s i n g l e v e l s o f b u i l d i n g a c t i v i t y i n the 1890's, r e s i d e n t i a l c o n s t r u c t i o n i n each of these towns rose t o i t s h i g h e s t peak i n the f o l l o w i n g y e a r s : Ebbw V a l e , 1909 and A b e r t i l l e r y , 1909 both o f the Ebbw V a l l e y ; Hodges, " P e o p l i n g of the H i n t e r l a n d " , pp. 69,71. i 188 A b e r d a r e , 1906; M o u n t a i n Ash, 1905. O t h e r towns t h a t e x p e r i e n c e d d r a m a t i c i n c r e a s e s i n t h i s p e r i o d were T r e d e g a r ( a f t e r 19 02) , Rhymney, Llwchwr, L l a n e l l y , Newport, Swansea, and M e r t h y r T d y f i l , where a phenomenal r i s e a t t h e t u r n o f t h e c e n t u r y was f o l l o w e d by a n o t h e r boom a f t e r 1906. The p e r v a s i v e t r e n d i n r e s i d e n t i a l c o n s t r u c t i o n f o r t h e v a r i o u s s e c t o r s o f t h e r e g i o n a l economy i s i n marked c o n t r a d i s t i n c t i o n t o t h e p a t t e r n t r a c e d by t h e n a t i o n a l i n d e x . The w i d e - s p r e a d c o i n c i d e n c e o f l o c a l booms i n house-b u i l d i n g d u r i n g t h e f i f t e e n y e a r s b e f o r e 1914 i s i n p a r t e x p l a i n e d by t h e r e s p o n s e o f t h e r e g i o n a l economy t o t h e l o n g s w ing i n o v e r s e a s i n v e s t m e n t t h a t g o t underway around t h e t u r n o f t h e c e n t u r y . By t h i s t i m e t h e m a r r i a g e o f t h e South Wales c o a l i n d u s t r y t o t h e i n t e r n a t i o n a l economy was c o m p l e t e . The d e c l i n e o f i r o n and t h e o t h e r m e t a l u r g i c a l i n d u s t r i e s was accompanied by i n c r e a s e d s p e c i a l i z a t i o n i n c o a l p r o d u c t i o n and c o n s e q u e n t l y g r e a t e r dependence on and v u l n e r a b i l i t y t o t h e s t a t e o f i n t e r n a t i o n a l demand f o r c o a l . ^ F o r an a c c o u n t o f t h e d e c l i n e o f t h e m e t a l u r g i c a l i n d u s t r i e s o f South Wales see R.O. R o b e r t s , "The Development and D e c l i n e o f t h e N o n - f e r r o u s M e t a l S m e l t i n g I n d u s t r i e s i n South Wales", Transactions of the Honourable Society of Cymmrodarion, (1956), r e p r i n t e d i n W.E. M i n c h i n t o n , I n d u s t r i a l South Wales 17 50-1914, (London: F r a n k Cass and Co., L t d . , 1969), pp. 121-160. 189 I n t h e y e a r s f o l l o w i n g t h e F i r s t World War t h i s l a t t e r c h a r a c t e r i s t i c o f t h e r e g i o n a l economy became a c h r o n i c p r oblem. The s h r i n k i n g o f w o r l d m arkets and t h e c o n t r a c t i o n o f l o c a l i n d u s t r y i n South Wales l e d t o a l o s s o f 242,000 p e r s o n s by m i g r a t i o n between t h e Census o f 19 21 and t h a t o f 19 31. The volume o f m i g r a t i o n i n t h e f i v e y e a r s t h a t f o l l o w e d 19 31 was so h i g h t h a t t h e r e was an a b s o l u t e f a l l i n t h e r e -57 g i o n a l p o p u l a t i o n o f o v e r 100,000. We c i t e t h e s e f a c t s o n l y t o i l l u s t r a t e t h e e x t e n t t o w h i c h t h e l o c a l economy had become dependent upon e x t e r n a l economic f o r c e s . The most t e l l i n g e v i d e n c e o f t h e f a r r e a c h i n g p a r t i -c i p a t i o n o f t h e b r o a d s e c t o r s o f t h e South Wales r e g i o n a l economy i n t h e i n v e s t m e n t boom abroad i s t h e f a c t t h a t t h e tremendous m a g n e t i c a t t r a c t i o n o f 129,29 5 p e o p l e t o t h e c o l l i e r y r e g i o n s o f G l a m o r g a n s h i r e and Monmouthshire from 1901 t o 1911 t r a n s f o r m e d Wales i n t o an i m m i g r a n t c o u n t r y . T h i s d r a m a t i c demographic s h i f t c o u p l e d w i t h g r o w i n g p r o s p e r i t y i n l o c a l i n d u s t r y must have had a v e r y f a v o r a b l e impact on b u i l d e r s e x p e c t a t i o n s . Much g e n e r a l commentary on t h e g r o w i n g s p e c u l a t i v e n a t u r e o f t h e b u i l d i n g i n d u s t r y i n G r e a t B r i t a i n Rees, Studies in Welsh History, p. 147 190 can be found i n volumes of the Building Societies Gazette from the la t e 1890's and early 19 00"s. One speculative b u i l d i n g got underway i t was able to a t t r a c t some of the c a p i t a l flowing into the i n d u s t r i a l sector. This may have been an important factor contributing to the fev e r i s h b u i l d -ing booms throughout the South Wales c o a l f i e l d i n these two decades. In t h i s chapter we have studied i n some d e t a i l the course of house-building i n South Wales and i t s r e l a t i o n s h i p to the national trend f o r Great B r i t a i n . A tentative explan-ation of the behavior of the regional house-building index has been presented i n terms of economic and demographic fac-tors unique to South Wales. This, however, was undertaken at the regional l e v e l of aggregation. In the f i n a l section we focused greater attention on the course of house-building at the l o c a l l e v e l . There are two important reasons for t h i s . F i r s t , examination of aggregate indices alone, whether national or regional, may suggest patterns of behavior quite d i f f e r e n t from that e x i s t i n g i n any one of the towns included i n the indices. Second, we have found that the course of house-bu i l d i n g d i f f e r e d , not so much from town to town, within the same v a l l e y , but significantly'between towns of d i f f e r e n t v a l l e y s . This was i n large part due to the topography of the 191 c o a l f i e l d as w e l l as t h e i n t e r a c t i o n o f g e o l o g i c a l , t e c h -n i c a l , economic, and demographic i n f l u e n c e s t h a t were d i s -t r i b u t e d u n e v e n l y i n t i m e o v e r t h e e n t i r e c o a l f i e l d , b u t more u n i f o r m l y o v e r each v a l l e y . The e x i s t e n c e o f c o n s i d e r a b l e d i f f e r e n c e s i n t h e c o u r s e o f h o u s e - b u i l d i n g a t t h e town l e v e l r e n d e r s t h e t a s k o f ex-p l a i n i n g an a g g r e g a t e i n d e x h a z a r d o u s w i t h o u t e x a m i n i n g i t s l o c a l components. T h i s , however, i s n o t as c r i t i c a l a p r o b l e m a t t h e r e g i o n a l l e v e l as i t i s between t h e r e g i o n a l and n a t i o n a l l e v e l . I f t h e r e i s a r e g i o n a l upswing i n d e v e l o p -ment t h i s w i l l s t i m u l a t e a boom i n h o u s e - b u i l d i n g , and depend-i n g on t h e p u r p o s e of our a n a l y s i s i t may o r may n o t m a t t e r i f t h i s boom i s c o n c e n t r a t e d i n t h e Rhondda o r t h e M e r t h y r V a l l e y . On t h e o t h e r hand i f we a r e i n t e r e s t e d i n t h e c a u s a l mechanism o f t h e r e g i o n a l c y c l e , t h e n we would want t o con-s i d e r more c l o s e l y i n t r a - r e g i o n a l r e a c t i o n s , such a s , f o r example, demographic s h i f t s and t h e i r c a u s e s . There a r e a number o f i m p o r t a n t f a c t o r s i n f l u e n c i n g t h e c o u r s e o f house-b u i l d i n g t h a t we have n o t d i s c u s s e d , o r have mentioned o n l y i n p a s s i n g . T h i s has been th e u n f o r t u n a t e consequence o f n o t h a v i n g a c c e s s t o l o c a l r e c o r d s and o t h e r r e l e v a n t i n f o r m a t i o n . We have, f o r example, i n d i c a t e d t h e b r o a d changes i n p o p u l a t i o n f o r i m p o r t a n t v a l l e y s and towns, b u t i t would have been f a r more u s e f u l , f o r our p u r p o s e s , t o have been a b l e t o d e t e r m i n e 19 2 t h e r a t e o f h o u s e - h o l d f o r m a t i o n i n t h e c o a l f i e l d from a breakdown o f i n t e r n a l m i g r a t i o n d a t a , t h e m a r r i a g e r a t e , and o t h e r f a c t o r s . I t i s p o s s i b l e t h a t i n c r e a s e s i n po-p u l a t i o n o v e r a number o f y e a r s can be accompanied by changes i n t h e m a r r i a g e r a t e and - o r changes i n t h e sex and age d i s t r i b u t i o n o f t h e p o p u l a t i o n such t h a t t h e n e t r a t e o f h o u s e - h o l d f o r m a t i o n d e c l i n e s . Thus, because t h e r a t e o f h o u s e - h o l d f o r m a t i o n i s t h e a p p r o p r i a t e e x p l a n a t o r y v a r i a b l e i n a demand f u n c t i o n f o r h o u s i n g accommodation, one may f i n d an i n v e r s e r e l a t i o n s h i p between changes i n p o p u l a t i o n and the c o u r s e o f h o u s e - b u i l d i n g . F o r t h e South Wales c o a l f i e l d such c o n s i d e r a t i o n s a r e v e r y i m p o r t a n t . "The p e o p l e who went i n t o t h e c o a l f i e l d were m a i n l y young u n m a r r i e d men, and as a r e s u l t we f i n d t h a t i n t h e c o a l f i e l d p a r i s h e s , t h e number o f males g r e a t l y exceeds t h e number o f f e m a l e s ; n ote t h i s e s p e c i a l l y i n t h e d i s t r i c t s w h i c h have most r e c e n t l y d e v e l o p e d as d i d t h e Rhondda V a l l e y , where t h e f e m a l e s o n l y number about 84 p e r c e n t o f t h e males. I n 5 t h e p a r i s h e s o u t s i d e t h e c o a l f i e l d , t h e r e v e r s e i s t h e c a s e . " Such changes i n t h e c h a r a c t e r i s t i c mix o f t h e l o c a l p o p u l a t i o n A.E. Trueman, " P o p u l a t i o n Changes i n t h e E a s t e r n P a r t o f t h e South Wales C o a l f i e l d " , Geographical Journal, V o l . 53 , (June, 1919), pp. 410-419. 193 may h e l p e x p l a i n why i n some towns l i k e , C a r d i f f between 1901 and 1911, t h e h o u s e - b u i l d i n g i n d u s t r y s t a g n a t e d w h i l e t h e towns p o p u l a t i o n i n c r e a s e d from 164,000 t o 182,000 p e r -59 sons. C e r t a i n l y t h e o b s e r v a t i o n t h a t i n t h e v a l l e y s " n e a r l y e v e r y d w e l l i n g c o n t a i n e d i t s ' l o d g e r s ' , and such was t h e s h o r t a g e o f s l e e p i n g accommodation t h a t beds worked d o u b l e t i m e - d a y and n i g h t " ^ was prompted by t h e s p e c i f i c i n f l u e n c e o f such demographic f a c t o r s . The d e a r t h o f i n f o r m a t i o n on r e n t s and v a c a n c i e s h a s , o f n e c e s s i t y , c a u sed us t o c o n c e n t r a t e on o t h e r m a t t e r s . The a g g r e g a t e r e n t i n d i c e s o f Bowley, C a i r n c r o s s and Weber a r e c l e a r l y i n a p p r o p r i a t e . I f we a r e g o i n g t o d i s c u s s t h e i n f l u e n c e o f changes i n r e n t a l r a t e s on t h e l e v e l o f b u i l d i n g a c t i v i t y , t h e n t h e a n a l y s i s must c o n s i d e r r e n t s and b u i l d i n g i n a p a r t i c u l a r l o c a l i t y . I n t h e t h i r d s e c t i o n o f t h i s c h a p t e r we d e v o t e d some a t t e n t i o n t o b u i l d i n g c o s t s , r a t e s o f r e t u r n i n t h e b u i l d i n g i n d u s t r y and t h e i r r e l a t i o n s h i p t o t h e c o u r s e o f h o u s e - b u i l d i n g . T h i s , however, was i n t h e c o n t e x t o f our a n a l y t i c a l model and M i t c h e l l , B r i t i s h H i s t o r i c a l S t a t i s t i c s , p. 25. Hodges, " P e o p l i n g o f t h e H i n t e r l a n d " , p. 70. 19 4 r e q u i r e s much more e m p i r i c a l work a t t h e l o c a l l e v e l . We have d i s c u s s e d o n l y b r i e f l y , w i t h r e s p e c t t o house-b u i l d i n g i n Swansea and C a r d i f f , t h e r o l e o f c r e d i t and i n p a r t i c u l a r t h e a c t i v i t i e s o f b u i l d i n g s o c i e t i e s . V e r y l i t t l e i n f o r m a t i o n i s a v a i l a b l e on t h e s e f i n a n c i a l i n s t i t u t i o n s , w h i c h funded perhaps as much as 25 p e r c e n t o f t h e house-b u i l d i n g i n G r e a t B r i t a i n d u r i n g t h i s p e r i o d . T h i s i s s u e c o n c e r n i n g t h e s u p p l y o f c r e d i t , b o t h l o n g and s h o r t , i s a c o m p l i c a t e d one, and must be s t u d i e d f u r t h e r i f we a r e t o f u l l y u n d e r s t a n d t h e mechanism o f t h e b u i l d i n g c y c l e i n South Wales. In l i g h t o f t h e s e d i f f i c u l t i e s , we have a t t e m p t e d i n t h i s c h a p t e r t o o u t l i n e t h e b r o a d r e g i o n a l and l o c a l d i f f e r -ences i n t h e c o u r s e o f h o u s e - b u i l d i n g i n South Wales. The r e g i o n a l t i m e - s h a p e o f r e s i d e n t i a l c o n s t r u c t i o n i s c o n s p i c u o u s i n i t s g e n e r a l upward t r e n d and t h e absence o f t h e f a m i l i a r l o n g s w i n g s . Our a n a l y s i s o f c a u s a l mechanisms s u g g e s t s t h a t t h e c o u r s e o f r e s i d e n t i a l c o n s t r u c t i o n i n South Wales was l a r g e l y d e t e r m i n e d by t h e l o n g r u n e x p a n s i o n o f t h e c o a l m i n i n g i n -d u s t r y w h i c h n o t o n l y drew l a b o u r u n c e s s a n t l y from b o r d e r and d i s t a n t c o u n t i e s b u t a l s o l e d t o p e r i o d i c s h i f t s o f p o p u l a t i o n w i t h i n t h e r e g i o n . S h o r t r u n movements i n h o u s e - b u i l d i n g were 19 5 p r i m a r i l y a r e s u l t of r e s o u r c e s t r i n g e n c i e s a r i s i n g d u r i n g p e r i o d s of b r i s k expansion o f the primary s e c t o r . E a r l i e r we d e s c r i b e d how f l u c t u a t i o n s i n the export t r a d e worked through a p r i c e - p r o f i t mechanism to determine the i n d u s t r i a l d i s p o s i t i o n and u t i l i z a t i o n o f s c a r c e p r o d u c t i v e r e s o u r c e s . F i n a l l y , we have seen t h a t the long swing i s a m y t h i c a l concept a t the l o c a l l e v e l , where h o u s e - b u i l d i n g i s e s p e c i a l l y prone t o random movements and e x h i b i t s a wide v a r i e t y o f p a t t e r n s . We have perhaps r a i s e d more q u e s t i o n s than we have answered, but t h i s o n l y s e r v e s t o p o i n t out t h a t more study i s r e q u i r e d a t the r e g i o n a l l e v e l . CHAPTER V I RESIDENTIAL CONSTRUCTION IN SOUTH-EAST LANCASHIRE A REGIONAL INDEX OF HOUSE-BUILDING IN SOUTH-EAST LANCASHIRE E x t e n s i v e e x a m i n a t i o n o f S u r v e y o r ' s R e g i s t e r s and t h e r e c o r d s o f l o c a l H e a l t h O f f i c e r s f o r f i f t y towns i n S o u t h - e a s t L a n c a s h i r e produced a s i m i l a r number o f s t a t i s -t i c a l s e r i e s o f p l a n s approved and houses e r e c t e d w h i c h were used by J . P a r r y L e w i s t o c o n s t r u c t a r e g i o n a l i n d e x o f b u i l d i n g a c t i v i t y i n t h e Manchester c o n u r b a t i o n . ^ T h i s r e -g i o n i s o f s p e c i a l i n t e r e s t because i t was (and s t i l l i s ) t h e c e n t e r o f t h e c o t t o n i n d u s t r y i n G r e a t B r i t a i n . The approach t a k e n i n t h i s c h a p t e r i s i d e n t i c a l t o t h a t o f C h a p t e r V. We b e g i n by o u t l i n i n g t h e c o u r s e o f r e -s i d e n t i a l c o n s t r u c t i o n i n S o u t h - e a s t L a n c a s h i r e as r e f l e c t e d i n t h e r e g i o n a l h o u s e - b u i l d i n g i n d e x . A c o m p a r i s o n o f t h e r e g i o n a l e x p e r i e n c e w i t h t h e n a t i o n a l p a t t e r n (Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n ) w i l l be f o l l o w e d by a t e n t a t i v e e x p l a n a t i o n o f t h e c o u r s e o f h o u s e - b u i l d i n g i n t h i s a r e a . Here, once a g a i n , t h e emphasis w i l l be on demo-^"J. P a r r y L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g i n t h e Manchester C o n u r b a t i o n , South Wales and G r e a t B r i t a i n , 1851-1913". 19 6 197 g r a p h i c and i n d u s t r i a l f a c t o r s p e c u l i a r t o S o u t h - e a s t L a n c a s h i r e . F i n a l l y , we w i l l examine more c l o s e l y t h e b e h a v i o r o f t h e l o c a l components o f t h e r e g i o n a l i n d e x . The d a t a used f o r t h e c o n s t r u c t i o n o f t h e S o u t h - e a s t L a n c a s h i r e r e g i o n a l i n d e x were s u b j e c t t o t h e many problems e n c o u n t e r e d by R i c h a r d s and L e w i s i n t h e i r s t u d y o f house-b u i l d i n g s t a t i s t i c s f o r South Wales. The a d j u s t m e n t s r e q u i r e d t o t r a n s f o r m t h e raw d a t a i n t o a r e a s o n a b l e a p p r o x i m a t i o n o f t h e a c t u a l number o f houses b u i l t were v e r y much t h e same as t h o s e employed i n t h e f o r m e r s t u d y . (See A p p e n d i x I I ) . The r e g i o n a l i n d e x o f h o u s e - b u i l d i n g i n S o u t h - e a s t L a n c a s h i r e i s p r e s e n t e d i n F i g u r e 10 a l o n g w i t h Weber's i n d e x o f h o u s e - b u i l d i n g i n G r e a t B r i t a i n . From a t r o u g h i n 1857 h o u s e - b u i l d i n g a c t i v i t y i n t h i s r e g i o n c l i m b e d s t e a d i l y t o a m i n o r p l a t e a u i n 1862-63. The mid-1860's were y e a r s o f s e v e r e d e p r e s s i o n i n B o l t o n and A s h t o n - u n d e r - L y n e . T h i s i s r e f l e c t e d i n a s h a l l o w t r o u g h i n t h e r e g i o n a l i n d e x between 186 3 and 186 8. The major upswing t h a t g o t underway i n t h e l a t e 1860's was i n t e r r u p t e d b r i e f l y i n 1871-72, and t h e n c o n t i n u e d t o r i s e t o a major peak i n 1876-77. From a v a l u e o f 37.9 i n 1860, t h e r e g i o n a l i n d e x c l i m b e d t o i t s h i g h e s t l e v e l f o r t h e c e n t u r y , 169.7. T h i s boom i n r e s i d e n t i a l 198 c o n s t r u c t i o n r e f l e c t s t h e s i m i l a r e x p e r i e n c e s o f A l t r i n c h a m , A s h t o n - u n d e r - L y n e , S a l f o r d , Oldham, B u r y , B o l t o n and Roch-d a l e . H o u s e - b u i l d i n g f e l l p r e c i p i t o u s l y a f t e r 1877. By 1882 t h e r e g i o n a l i n d e x had p l u n g e d t o a low o f 51.7. C r i s i s i n t h e b u i l d i n g i n d u s t r y appears t o have p r e v a i l e d s i d e by s i d e w i t h c r i s i s i n t h e c o t t o n i n d u s t r y t h r o u g h o u t L a n c a s h i r e i n t h e l a t e 1870's. The d e p r e s s i o n i n r e s i d e n t i a l c o n s t r u c t i o n , however, was t o p e r s i s t f o r t e n y e a r s . A minor upswing i n 1883-85 was f o l l o w e d by s i x y e a r s i n w h i c h t h e r e was no s i g n i f i c a n t change i n t h e r e g i o n a l i n d e x . A l t h o u g h l o c a l h o u s e - b u i l d i n g p a t t e r n s were f a r from u n i f o r m , t h e c o n s t r u c t i o n i n d u s t r y i n S a l f o r d , Altirincham, Rochdale and Bury was e s -p e c i a l l y h a r d h i t . The second r e g i o n a l l o n g swing i n t h e p e r i o d 1860-1914 go t underway i n S o u t h - e a s t L a n c a s h i r e i n t h e mid-1890's. House-b u i l d i n g c l i m b e d t o a major peak i n 189 8. The upswing i n c o t t o n consumption d u r i n g t h e s e y e a r s b r o u g h t a wave o f p r o s -p e r i t y t o t h e c o t t o n towns o f L a n c a s h i r e , R o c h d a l e , Oldham, S a l f o r d , B u r n l e y and A l t r i n c h a m , a l l e x p e r i e n c e d a marked i n -c r e a s e i n i n d u s t r i a l a c t i v i t y , i n c l u d i n g h o u s e - b u i l d i n g . A s h a r p d e c l i n e i n t h e r e g i o n a l i n d e x a f t e r 189 8 was a r r e s t e d i n 1902 and r e s i d e n t i a l c o n s t r u c t i o n i n S o u t h - e a s t F i g u r e 10 199 HOUSE-BUILDING INDICES FOR GREAT BRITAIN AND SOUTH-EAST LANCASHIRE 1860 1870 1880 1890 1900 1910 Source: Great B r i t a i n 1860-1914 - See Table XV Appendix I South-East L a n c a s h i r e , 1860-1914 - See Tabl e XVIII, Appendix I I I . 200 L a n c a s h i r e remains a t a r e l a t i v e l y h i g h l e v e l u n t i l 1909. The r e g i o n a l i n d e x f a l l s o f f , t h e r e a f t e r , r e f l e c t i n g a g e n e r a l t r e n d i n a l l o f t h e l o c a l s e r i e s d u r i n g t h e f i v e y e a r s t h a t p r e c e e d e d t h e o u t b r e a k o f war i n Europe. DIFFERENCES BETWEEN THE COURSE OF HOUSE-BUILDING IN GREAT  BRITAIN AND SOUTH-EAST LANCASHIRE A c o m p a r i s o n o f t h e r e g i o n a l i n d e x of h o u s e - b u i l d i n g i n S o u t h - e a s t L a n c a s h i r e w i t h Weber's i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n G r e a t B r i t a i n p o i n t s up a number o f s t r i k i n g s i m i l a r i t i e s . I n g e n e r a l , t h e minor f l u c t u a t i o n s as w e l l as t h e l o n g t e rm t r e n d s i n t h e r e g i o n a l i n d e x a r e r e f l e c t e d i n t h e n a t i o n a l h o u s e - b u i l d i n g p a t t e r n from 1860 t o 189 8. I n 1862-63, when h o u s e - b u i l d i n g i n S o u t h - e a s t L a n c a s h i r e had r e a c h e d a minor p l a t e a u , Weber's i n d e x shows a minor peak. The t r o u g h i n t h e m i d - s i x t i e s was somewhat more p r o l o n g e d i n t h e c o t t o n r e g i o n t h a n a t t h e n a t i o n a l l e v e l . The upswing t h a t f o l l o w e d g a i n e d momentum f a s t e r i n S o u t h - e a s t L a n c a s h i r e t h a n t h e n a t i o n as a whole. A pause i n t h e r e g i o n a l i n d e x i n 1871 came two y e a r s b e f o r e t h e minor r e v e r s a l i n Weber's i n d e x t h a t i n t e r r u p t e d the f i r s t l o n g swing. The b u r s t o f h o u s e - b u i l d i n g a c t i v i t y t h a t f o l l o w e d , p u s h i n g t h e r e g i o n a l i n d e x t o i t s h i g h e s t p o i n t i n 1876 was f a r more i n t e n s e t h a n 201 i t s c o u n t e r p a r t i n t h e n a t i o n a l a g g r e g a t e . I n t h e l a t e ' s e v e n t i e s h o u s e - b u i l d i n g f e l l r a p i d l y b o t h a t t h e n a t i o n a l and r e g i o n a l l e v e l . The b u i l d i n g i n d u s t r y o f L a n c a s h i r e s h a r e d i n t h e n a t i o n a l d e p r e s s i o n o f t h e 1880's. The upswing t h a t f o l l o w e d , however, preceeded t h e n a t i o n a l upswing by n e a r l y two y e a r s . Both i n d i c e s c l i m b e d t o a major peak i n 189 8, b u t i n t h e o p e n i n g decade o f t h e T w e n t i e t h c e n t u r y , t h e i r c o u r s e s d e p a r t e d d r a m a t i c a l l y . A n a t i o n a l b u i l d i n g boom i n 1903 has no c o u n t e r p a r t i n t h e r e g i o n a l i n d e x . H o u s e - b u i l d i n g f e l l s h a r p l y i n S o u t h - e a s t L a n c a s h i r e between 189 8 and 1902. Y e t t h e s e were y e a r s o f e x c e p t i o n a l l y h i g h b u i l d i n g a c t i v i t y f o r G r e a t B r i t a i n as a whole. The r e g i o n a l i n d e x remained r e l a t i v e l y unchanged from 1902 t o 1909, w h i l e Weber's i n d e x f e l l s t e a d i l y a f t e r 1903. Only i n t h e f o u r y e a r s p r i o r t o t h e o u t b r e a k o f h o s t i l i t i e s i n 1914 d i d h o u s e - b u i l d i n g i n South - e a s t L a n c a s h i r e assume a c o u r s e s i m i l a r t o t h a t t r a c e d by t h e n a t i o n a l i n d e x . We w i l l now examine i n some d e t a i l t h e a v a i l a b l e e v i d e n c e on t h e i n d u s t r i a l and demographic h i s t o r y o f S o u t h - e a s t Lan-c a s h i r e . Our pu r p o s e h e r e (as i n C h a p t e r V) i s t o t r y t o r e l a t e t h e l o n g swings i n r e s i d e n t i a l c o n s t r u c t i o n t o t h e econo-mic development o f S o u t h - e a s t L a n c a s h i r e w i t h i n t h e c o n t e x t o f a d e v e l o p i n g n a t i o n a l economy w i t h c h a n g i n g commitments abroad. 202 HOUSE-BUILDING AND THE ECONOMIC DEVELOPMENT OF SOUTH-EAST  LANCASHIRE L a n c a s h i r e o f f e r e d a number o f n a t u r a l advantages f a v o r a b l e t o t h e development o f t h e c o t t o n i n d u s t r y . The raw m a t e r i a l s r e q u i r e d f o r m a n u f a c t u r e had t o be i m p o r t e d and much o f t h e f i n a l p r o d u c t was d e s t i n e d f o r f o r e i g n mar-k e t s . F o r t h i s p u r p o s e , L i v e r p o o l p r o v i d e d u n l i m i t e d s t o r -age and c o m m e r c i a l f a c i l i t i e s . The d o m e s t i c market was a l s o a major s o u r c e o f demand and Manchester as t h e c e n t r a l hub o f t h e i n d u s t r y was c o n v e n i e n t l y s i t u a t e d f o r t h e home t r a d e . I n a d d i t i o n t h e r e were cheap l o c a l s o u r c e s o f c o a l f o r power. Water was p l e n t i f u l f o r use i n b o i l e r s and t h e f i n i s h i n g p r o c e s s . The c l i m a t e i n L a n c a s h i r e i s p a r t i c u l a r -l y s u i t e d t o t h e p r o d u c t i o n o f c o t t o n goods. A i r c u r r e n t s blown i n o f f t h e A t l a n t i c c o n t a i n a h i g h p e r c e n t a g e o f m o i s t -u r e , and t h e g e n e r a l dampness makes t h e c o t t o n f i b r e s more f l e x i b l e and causes them t o c l i n g t o g e t h e r , t h u s r e d u c i n g b r e a k a g e s . Chapman argues t h a t t h e p r i m a r y r e a s o n s f o r t h e c o t t o n i n d u s t r y s e t t l i n g i n L a n c a s h i r e were " t h a t t h e w o o l l e n i n d u s t r y was a l r e a d y t h e r e , t h a t f o r e i g n e r s were k i n d l y r e c e i -2 v e d , and t h a t M a n chester was n o t a C o r p o r a t i o n . " These Sydney J . Chapman, The Lancashire Cotton Indus try} (Man-c h e s t e r U n i v e r s i t y P r e s s , 1904), p. 154. 203 f a c t o r s encouraged m a n u f a c t u r e and c o m m e r c i a l e n t e r p r i s e by t h e c o m p a r a t i v e freedom p r o v i d e d from l o c a l r e s t r i c t i o n s on i n d u s t r y and t r a d e . However, once t h e i n d u s t r y was e s -t a b l i s h e d , t h e n a t u r a l o r g e o g r a p h i c a l advantages became i m p o r t a n t i n d r a w i n g t h e m a n u f a c t u r e p r o g r e s s i v e l y t o Lan-c a s h i r e . The c o n c e n t r a t i o n o f t h e c o t t o n i n d u s t r y i n L a n c a s h i r e was a s t r a t e g i c f a c t o r i n r e a l i z i n g t h e advantages o f s p e c i a l i z a t i o n w h i c h te n d e d t o encourage s t i l l f u r t h e r t h e l o c a l i z a t i o n o f p r o d u c t i o n . T a b l e X I p r o v i d e s s t r i k i n g e v i d e n c e o f t h i s t r e n d . I n 1835, 59 p e r c e n t o f t h e c o t t o n o p e r a t i v e s employed i n E n g l a n d and Wales were l o c a t e d i n L a n c a s h i r e . T h i s had grown t o 87 p e r c e n t i n 1881 and by 1911 t h e p e r c e n t a g e o f t h e d o m e s t i c c o t t o n i n d u s t r y concen-t r a t e d i n L a n c a s h i r e and t h e b o r d e r a r e a o f C h e s h i r e had r e a c h e d i t s peak i . e . , 90 p e r c e n t i n terms o f employment. I n t h e c o u r s e o f t h e N i n e t e e n t h c e n t u r y t h e L a n c a s h i r e c o t t o n i n d u s t r y a c h i e v e d a degree of i n t e r n a l s p e c i a l i z a t i o n and d i v i s i o n o f l a b o u r unknown e l s e w h e r e . There a r e numerous t e c h n i c a l and c o m m e r c i a l r e a s o n s why, f o r example, s p i n n i n g and w e a v i n g became s e p a r a t e b r a n c h e s o f t h e i n d u s t r y a s s o c i a t e d w i t h r a t h e r d i f f e r e n t t y p e s o f f i r m s and t h e s e have been TABLE XI LOCATION OF THE COTTON INDUSTRY IN ENGLAND AND WALES, 1835-19 21 (000's) (A) Number engaged i n c o t t o n i n d u s -t r y i n L a n c a s h i r e and C h e s h i r e (B) Number engaged i n c o t t o n i n d u s -t r y i n E n g l a n d and Wales 1 8 3 5 MALE FEMALE TOTAL 1 8 8 1 MALE FEMALE TOTAL 1 9 1 1 MALE FEMALE TOTAL (A) as % (B) 1 9 2 1 MALE FEMALE TOTAL 200 328 528 229 367 596 89 So u r c e : W i l l i a m Page, Commerce and Industry, (London: C o n s t a b l e and Company, L t d . , 1919), p. 230. R. Robson, The Cotton Industry in B r i t a i n , (London: M a c M i l l a n & Co. L t d . , 1957), p. 35. £ 205 d i s c u s s e d e l s e w h e r e . The two o p e r a t i o n s a l s o t e n d e d t o be s e p a r a t e d g e o g r a p h i c a l l y w i t h i n S o u t h - e a s t L a n c a -s h i r e . Thus s p i n n i n g was l a r g e l y c o n c e n t r a t e d i n t h e s o u t h and i n t h e n o r t h e r n b o r d e r r e g i o n o f C h e s h i r e . But even w i t h i n t h i s a r e a t h e r e was f u r t h e r s p e c i a l i z a t i o n . The f i n e r y a r n s were spun i n t h e n e i g h b o r h o o d o f B o l t o n and M a n c h e s t e r , where t h e r e was a g r e a t demand f o r sewing t h r e a d . C o a r s e y a r n s were produced i n Oldham and t h e s u r r o u n d i n g towns. The weaving o p e r a t i o n s o f t h e i n d u s t r y were c h i e f l y c o n d u c t e d i n t h e N o r t h , and h e r e a g a i n t h e r e was a g e o g r a p h i c a l d i f f e r e n t i a t i o n o f p r o d u c t i o n s . F i n e and l i g h t f a b r i c s a r e produced i n P r e s t o n and C h o r l e y , w h i l e s h i r t i n g s and o t h e r goods p r i m a r i l y d e s t i n e d f o r t h e I n d i a t r a d e a r e m a n u f a c t u r e d i n B l a c k b u r n , Darwin and A l t r i n c h a m . B o l t o n i s t h e c e n t e r f o r f i n e q u i l t i n g s and f a n c y c o t t o n d r e s s goods. S p e c i a l i z a t i o n a l s o extended i n t o t h e v a r i o u s p r o c e s s e s f o l l o w i n g t h a t o f w e a v i n g , e.g., c a l i c o p r i n t i n g , 4 b l e a c h i n g , d y i n g , m e r c e r i z i n g and f i n i s h i n g . I n t r a - i n d u s t r y d i f f e r e n c e s i n t h e s t r u c t u r e o f p r o d u c t i o n See John Jewkes, "The L o c a l i z a t i o n o f t h e C o t t o n I n d u s t r y " , Economic History, V o l . I I , ( J a n u a r y , 1930), pp. 91-106; Chapman, Lancashire Cotton Industry, pp. 161-9. 4 W i l f r e d S m i t h , An economic Geography of Great B r i t a i n , London: Methuen and Co. L t d . , 1949), pp. 474-8. 206 and t r a d e , i . e . , o p t i m a l s i z e o f f i r m s and c o m m e r c i a l o r g a n i z a t i o n , were o f t e n i m p o r t a n t f a c t o r s c o n t r i b u t i n g t o l o c a l v a r i a t i o n s i n p r o s p e r i t y and development. Weaving, f o r example, c o u l d be c o n d u c t e d p r o f i t a b l y on a s m a l l s c a l e , b u t s p i n n i n g g e n e r a l l y r e q u i r e d a g r e a t e r commitment o f f i x e d and w o r k i n g c a p i t a l . Because t h e r e were so few b a r r i e r s t o e n t r y (looms were cheap and c o u l d be p u t up a l m o s t anywhere) w e a v i n g was f a r more c o m p e t i t i v e t h a n s p i n n i n g , and p r o f i t s were, t h u s , more r a p i d l y e l i m i n a t e d . As a consequence, t h i s b r a n c h o f t h e i n d u s t r y t e n d e d t o r e s p o n d q u i c k l y t o changes i n market c o n d i t i o n s , w h i l e s p i n n i n g l a g g e d somewhat b e h i n d . To some e x t e n t t h i s d e r i v e d from t h e s t r u c t u r e o f t h e markets f a c i n g t h e two major b r a n c h e s o f t h e c o t t o n i n d u s t r y : s p i n n e r s had many markets i n w h i c h t o s e l l t h e i r goods, w h i l e t h e l a r g e number o f weavers had r e l a -t i v e l y few. The a p p l i c a t i o n s o f t e c h n i c a l i n n o v a t i o n s t o t h e v a r i o u s b r a n c h e s o f t h e c o t t o n i n d u s t r y a t d i f f e r e n t t i m e s o f t e n meant t h a t a wave o f p r o s p e r i t y i n t h e i n n o v a t i n g s e c t o r c o i n c i d e d w i t h p e r i o d s o f d e p r e s s e d a c t i v i t y i n o t h e r s e c t o r s . The e x p e r i e n c e o f Oldham and Ashton-under-Lyne i n t h e 1880's p r o v i d e a good example. 207 These towns "Were booming because t h e y had d e v e l o p e d t h e i r mule t w i s t b u s i n e s s . Mule was cheaper t h a n warps made from t h r o s t l e y a r n s . Keen c o m p e t i t i o n had reduced c o s t s b u t had a l s o r e d u c e d p r i c e s , and t h e manu-f a c t u r e r who made most c h e a p l y s u r v i v e d a t t h e expense o f t h e o l d f a s h i o n e d t h r o s t l e s p i n n e r s . These were l o c a t e d l a r g e l y i n B u r n l e y , R o s endale and Ro c h d a l e , and so we see t h o s e a r e a s e x p e r i e n c i n g l e s s happy t i m e s t h a n Oldham saw."5 Thus, d e s p i t e t h e h i g h l y l o c a l i z e d n a t u r e o f t h e i n d u s t r y and t h e more o r l e s s s t r o n g l i n k a g e s between t h e v a r i o u s s e c t o r s t h e r e a r e r e a s o n s t o e x p e c t t h a t t h e l o c a l p a t t e r n s o f development w i t h i n S o u t h - e a s t L a n c a s h i r e may have d i f f e r e d s i g n i f i c a n t l y . We w i l l r e t u r n t o t h i s i s s u e i n t h e f i n a l s e c t i o n o f t h i s c h a p t e r . By 1860 t h e c o t t o n i n d u s t r y o f L a n c a s h i r e and t h e b o r -d e r r e g i o n s t o t h e s o u t h and e a s t had grown t o i m p r e s s i v e d i m e n s i o n s . A t t h a t t i m e t h e r e e x i s t e d n e a r l y two thousand c o t t o n m i l l s e m p l o y i n g h a l f a m i l l i o n o p e r a t i v e s . The i m p o r t -a t i o n o f 139 0 m i l l i o n pounds o f raw c o t t o n k e p t no l e s s t h a n 300,000 power looms and 211/2 m i l l i o n s p i n d l e s o p e r a t i n g n e a r g c a p a c i t y . A v e r y l a r g e p e r c e n t a g e o f t h i s growth too k p l a c e J . P a r r y L e w i s , Building Cycles and B r i t a i n ' s Growth, p. 117. W^.O. Henderson, The Lancashire Cotton Famine, 1861-18 65, (New Y o r k , Augustus M. K e l l e y , 1969), p. 1. 208 i n the decade before 1860. Between 1850 and 1861 the number of looms i n the weaving sector of the cotton i n -dustry (U.K.) increased by 150,635 or 60 per cent. While the number of spindles added i n the spinning sector to-7 t a i l e d 9,410,450, an increase of 39.1 per cent. This tremendous expansion i n productive capacity, e s p e c i a l l y i n the years 1859-1861, made possible the production of far more cotton cl o t h than a v a i l a b l e markets were ready to absorb. The Lancashire cotton industry was highly dependent upon the Southern United States for her supplies of raw g cotton. The outbreak of the American C i v i l War and the imposition of the Blockade led to an abrupt curtailment of cotton shipments to Great B r i t a i n . In 1861 B r i t i s h cotton imports t o t a l l e d 1,261,400,000 pounds. A year l a t e r they had dropped by nearly 60 per cent to 533,100,00 pounds and i t was not before 186 5 that the former high 9 l e v e l was regained. There can be l i t t l e question that Thomas E l l i s o n , The Cotton Trade of Great B r i t a i n , (London: Frank Cass and Co. Ltd., 1886), p. 77 p B. E l l i n g e r , "The Cotton Famine of 1861-4", Economic History, Vol. I l l , (January, 1934), pp. 152-167. q Henderson, Lancashire Cotton Famine, p. 35. 209 t h e C o t t o n Famine c o n t r i b u t e d t o t h e d e p r e s s i o n i n t h e c o t t o n i n d u s t r y d u r i n g t h e p e r i o d 1861-186 4, however, t h e c r i s i s was n o t due e n t i r e l y t o t h e s h o r t a g e o f raw m a t e r i a l . We n o t e d above t h e marked i n c r e a s e i n the p r o d u c t i v e c a p a c i t y o f t h e U.K. c o t t o n i n d u s t r y from 1850 t o 1860. Data r e f e r r i n g s p e c i f i c a l l y t o the segment o f t h e i n d u s t r y l o c a t e d i n L a n c a s h i r e i s n o t a v a i l a b l e . However, i t may be r e c a l l e d t h a t t h e o p e r a t i o n s o f t h e i n d u s t r y a r e a l m o s t e n t i r e l y c o n f i n e d t o t h i s r e g i o n and t h u s t h e d a t a f o r E n g l a n d and Wales p r e s e n t e d i n T a b l e X I I may be c o n s i d e r e d r e a s o n a b l e a p p r o x i m a t i o n s t o a c t u a l changes i n t h e l o c a l i n d u s t r y . I n t h e y e a r s 1859 and 1860 t h e S o u t h e r n U n i t e d S t a t e s s u p p l i e d t h e w o r l d market w i t h f a r more c o t t o n t h a n was needed. At t h e same t i m e t h e r e was a s h a r p i n c r e a s e i n t h e demand f o r c o t t o n goods i n t h e F a r E a s t . With abundant s u p p l i e s o f raw c o t t o n b e i n g made a v a i l a b l e a t f a l l i n g p r i c e s and u n u s u a l l y f a v o r a b l e market c o n d i t i o n s , L a n c a s h i r e c o t t o n m a n u f a c t u r e r s responded by o p e r a t i n g t h e i r m i l l s a t c a p a c i t y and, as shown by T a b l e X I I , by i n v e s t i n g h e a v i l y i n new m i l l s and m a c h i n e r y t o i n c r e a s e t h e i r c a p a c i t y . Between 1858 and TABLE X I I CHANGES IN THE NUMBER OF FACTORIES, POWER-LOOMS, SPINDLES AND PERSONS EMPLOYED IN THE COTTON INDUSTRY OF ENGLAND AND WALES, 1858-6 8 FACTORIES PERCENTAGE POWER-LOOMS PERCENTAGE SPINDLES PERCENTAGE PERSONS PERCENTAGE CHANGE CHANGE CHANGE CHANGE 1858 2,046 275,590 25,818,576 341,170 32 33 10 20 1861 2,715 368,125 28,352,152 407,598 -11 -6 7 -12 1868 2,405 344,719 30,478,228 357,052 S o u r c e : K a r l Marx, Capital, V o l . I , ( C h i c a g o : C h a r l e s H. K e r r & Company, 1908), pp. 474-5. to i—1 o 211 1861, 669 new c o t t o n m i l l s were c o n s t r u c t e d , an i n c r e a s e o f 32 per c e n t . The number o f power looms i n o p e r a t i o n r o s e by one t h i r d , w h i l e t h e r e was a t e n p e r c e n t i n c r e a s e i n t h e number o f s p i n d l e s . The l a b o u r f o r c e s w e l l e d w i t h 66,428 new c o t t o n w o r k e r s . Many o f t h e s e were m i g r a n t s from a g r i c u l t u r a l r e g i o n s and b o r d e r c o u n t i e s . The growth o f t h e l a b o u r f o r c e added t o t h e demand f o r h o u s i n g accommod-a t i o n s and t h e p r o s p e r i t y o f t h e s e y e a r s made t h i s demand e f f e c t i v e . The h o u s e - b u i l d i n g i n d u s t r y p a r t i c i p a t e d i n t h e g e n e r a l r e g i o n a l c o n s t r u c t i o n boom t h a t g o t underway a f t e r 1857. The tremendous growth o f p r o d u c t i v e c a p a c i t y l e d t o c o n s i d e r a b l e o v e r - p r o d u c t i o n i n t h e c o t t o n i n d u s t r y and t h e a c c u m u l a t i o n o f m i l l i o n s o f pounds o f u n s o l d c o t t o n goods. To some e x t e n t t h e C o t t o n Famine p r o v i d e d r e l i e f from t h i s c o n d i t i o n by f o r c i n g a r e d u c t i o n i n o u t p u t . But wha t e v e r s h o r t - r u n b e n e f i t s were g a i n e d by a few m a n u f a c t u r e r s and b r o k e r s , t h e y were f a r outweighed by f o u r y e a r s o f de-p r e s s i o n i n t h e c o t t o n i n d u s t r y . And because t h i s i n d u s t r y dominated t h e r e g i o n a l economy o f L a n c a s h i r e , t h e c r i s i s was even more a c u t e . The impact o f t h e c r i s i s i s c l e a r from T a b l e X I I . Between 1861 and 1868, o v e r t h r e e hundred m i l l s c l o s e d t h e i r 212 d o o r s . The number o f power looms i n o p e r a t i o n s f e l l by 6 p e r c e n t , and though t h e r e was a s l i g h t i n c r e a s e i n the number o f s p i n d l e s , employment i n t h e i n d u s t r y as a whole d e c l i n e d by 12 p e r c e n t . But t h i s h a r d l y t e l l s t h e e n t i r e s t o r y . "At t h e c r i s i s o f t h e famine ( i n November, 1862) t h e r e were 247,230 o p e r a t i v e s o ut o f work, and 16 5,60 0 w o r k i n g s h o r t t i m e . I n t h e same month no l e s s t h a n 485,454 p e r s o n s , o r n e a r l y o n e - f o u r t h o f t h e en-t i r e p o p u l a t i o n o f t h e d i s t r i c t s a f f e c t e d , were i n r e c e i p t o f r e l i e f ... D u r i n g t h e c o u r s e o f t h e famine t h e l o s s e s o f t h e t r a d e amounted t o between £65,000,000 and £70,000,000, i n c l u d i n g from £28,000,000 t o £30,000,000 l o s s o f wages t o o p e r a t i v e s . Of t h e l a t t e r about o n e - f o u r t h was r e c o -v e r e d i n t h e form o f r e l i e f , o r i n wages f o r employment o n ' P u b l i c Works, e t c . Many m i l l owners a l s o r e g a i n e d a p o r t i o n o f t h e i r l o s s e s i n t h e shape o f p r o f i t s on s t o c k s h e l d a t t h e commencement o f t h e fa m i n e ; b u t a l a r g e number l o s t n e a r l y e v e r y t h i n g t h e y were w o r t h , w h i l e many were r e d u c e d t o b a n k r u p t c y . " 1 0 A c r i s i s o f such s e v e r i t y c o u l d n o t h e l p b u t have an a d v e r s e i n f l u e n c e on h o u s e - b u i l d i n g . The h i g h l e v e l o f unemployment r e s u l t i n g from t h e d i s l o c a t i o n o f t h e c o t t o n t r a d e prompted many o p e r a t i v e s t o l e a v e L a n c a s h i r e f o r o t h e r p a r t s o f E n g l a n d o r t o e m i g r a t e o v e r s e a s . The V i c t o r i a 10 E l l i s o n , The Cotton Trade,pp. 95-96 213 E m i g r a n t s ' A s s i s t a n c e S o c i e t y and t h e Manchester E m i g r a t i o n S o c i e t y were o n l y two o f many l o c a l e m i g r a t i o n s o c i e t i e s formed t o a s s i s t unemployed o p e r a t i v e s and t h e i r f a m i l i e s i n r e l o c a t i n g where work was a v a i l a b l e . Many o f t h o s e e m i g r a t i n g from L a n c a s h i r e found employment i n t h e w o r s t e d and w o o l l e n i n d u s t r i e s o f Y o r k s h i r e . I n a d d i t i o n t o o u t - m i g r a t i o n , t h e r e was an i n c r e a s e i n t h e s h a r i n g o f accommodations. Numerous r e p o r t s o f M e d i c a l O f f i c e r s and R e l i e f S o c i e t i e s c i t e t h e g r o w i n g tendency toward o v e r c r o w d i n g o f houses among the o p e r a t i v e c l a s s i n t h e c o t t o n d i s t r i c t s . " ' " " ' ' These v a r i o u s consequences o f t h e d e p r e s s i o n i n t h e c o t t o n i n d u s t r y s i g n i -f i c a n t l y r e d u c e d t h e demand f o r house room. But t h e r e were a l s o f a c t o r s on t h e s i d e o f s u p p l y t h a t d i d n o t f a v o r an i n c r e a s e i n h o u s e - b u i l d i n g a t t h i s t i m e . A s e r i e s o f bad h a r v e s t s i n 1860-62 n e c e s s i t a t e d l a r g e i m p o r t s o f f o o d . A t t h e same t i m e g o l d was w i t h d r a w n by t h e U n i t e d S t a t e s t o pay f o r t h e C i v i l War, and by F r a n c e f o r p u b l i c i n v e s t m e n t a t home. P r i o r t o 1861 G r e a t B r i t a i n had p u r c h a s e d t h e g r e a t m a j o r i t y o f h e r raw c o t t o n s u p p l i e s from t h e U.S. w i t h e x p o r t s o f m a n u f a c t u r e d goods, b u t d u r i n g See Rev. John B a i l l i e r , What I Saw in Lancashire, (1862); F i f t h Report of the Medical O f f i c e r of the Privy Council, (1862) , Appendix V, b o t h c i t e d i n Henderson, Lancashire Cotton Famine, p. 94. 214 t h e C o t t o n Famine she t u r n e d t o I n d i a , Egypt and B r a z i l f o r h e r s o u r c e s o f s u p p l y , p a y i n g p r i m a r i l y w i t h g o l d 12 and s i l v e r . The u l t i m a t e e f f e c t o f a l l t h e s e f a c t o r s was a d r a i n on o f f i c i a l r e s e r v e s and a g e n e r a l s t r i n g e n c y o f c r e d i t . The f i n a n c i a l c r i s e s o f 1864-66 and the u n c e r t a i n t y a s s o c i a t e d w i t h t h e f u t u r e o f t h e c o t t o n t r a d e a l s o had a g e n e r a l l y d e p r e s s i n g i n f l u e n c e on e x p e c t a t i o n s and c r e d i t c o n d i t i o n s . The f a l l o f Overend and Gurney i n May, 1866 o n l y s e r v e d t o compound a c r e d i t c r i s i s t h a t had been a p p a r e n t s i n c e e a r l y i n t h e y e a r . The Economist o b s e r v e d i n J u l y , " the p r i n c i p a l c e n t r e s o f c r e d i t - t h e banks and d i s c o u n t f i r m s - had done so much a p p a r e n t bad b u s i n e s s t h a t t h e t r u s t i n many o f them was weakened and a f a t a l p r e s s u r e 13 on a few o f them c r e a t e d . " Thus, t h e v i c i s s i t u d e s o f th e f i n a n c i a l market were u n f a v o r a b l e t o i n v e s t m e n t i n h o u s i n g s i n c e t h e y tended t o r a i s e t h e c o s t s o f f i n a n c i n g b o t h t h e p u r c h a s e and c o n s t r u c t i o n o f houses. The y e a r s i m m e d i a t e l y f o l l o w i n g t h e end o f t h e American C i v i l War w i t n e s s e d a marked improvement i n t h e w o r l d c o t t o n 12 A r t h u r S i l v e r , Manchester Men and Indian Cotton, (Man-c h e s t e r : M a n chester U n i v e r s i t y P r e s s , 1966), pp. 158-165. 13 Economist, J u l y 14, 1866, c i t e d i n Henderson, Lancashire Cotton Famine, p. 24. TABLE X I I I RELIEF EXPENDITURES BY THE GUARDIANS AND RELIEF COMMITTEES 1860-19 65 ( i n pounds s t e r l i n g ) 1860-61 1861-62 1862-63 1863-64 1864-65 G u a r d i a n s 191,101 231,322 660,531 577,368 392,076 R e l i e f Committees 809,167 563,287 188,012 T o t a l 191,101 231,322 1,469,698 1,140,655 580,088 Source: Thomas E l l i s o n , "The C o t t o n Trade o f G r e a t B r i t a i n " (London: F r a n k Cass and Co. L t d . , 1886), p. 96. Ta b l e X I I I does n o t i n c l u d e e x p e n d i t u r e s and d o n a t i o n s by m i l l o w n e r s and o t h e r p r i v a t e c i t i z e n s w h i c h p r o b a b l y amounted t o t h r e e o r f o u r m i l l i o n pounds. 216 t r a d e . B r i t i s h m a n u f a c t u r e r s responded by f e v e r i s h l y e x p a n d i n g p r o d u c t i o n and thus p r e c i p i t a t i n g a c r i s i s s i m i l a r t o t h a t o f 1860-61. I n f a c t , t h e r e was a s t r o n g t e n dency toward i n d u s t r i a l o v e r p r o d u c t i o n i n c o t t o n goods from 1865-1869. However, t h e s e were y e a r s o f i n c r e a s i n g employment and r i s i n g incomes, b o t h o f wh i c h c o n t r i b u t e d 14 t o a minor upswing i n h o u s e b u i l d i n g . The r e c o v e r y o f t h e c o t t o n t r a d e i n t h e l a t e 1860's c u l m i n a t e d , a f t e r a pause i n 1869, w i t h t h e e x c e p t i o n a l l y p r o s p e r o u s y e a r s o f 1870-72. I n many ways t h i s p e r i o d i s a w a t e r s h e d i n t h e h i s t o r y o f t h e L a n c a s h i r e c o t t o n i n d u s t r y . A c c o r d i n g t o E l l i s o n " I n t h a t season (1870-71) G r e a t B r i t a i n consumed 2 3.7 p e r c e n t , t h e C o n t i n e n t 20.1 p e r c e n t , and t h e U n i t e d S t a t e s 16.2 p e r c e n t , more t h a n t h e average o f t h e f i v e y e a r s , 1865-70. I t was i n f a c t a p e r i o d o f i n f l a t i o n , n o t i n c o t t o n o n l y , b u t i n e v e r y o t h e r a r t i c l e o f merchan-d i s e . There was a temporary i n t e r r u p -t i o n i n b u s i n e s s on t h e C o n t i n e n t d u r i n g t h e F r a n c o - P r u s s i a n war; b u t t h i s o n l y caused t h e i n f l a t i o n t o t a k e a more The t o t a l number o f o p e r a t i v e s employed i n t h e c o t t o n f a c t o r i e s o f t h e U n i t e d Kingdom f e l l from 451,600 i n 1862 t o 401,100 i n 1867; by 1870 employment had c l i m b e d back t o 450,100. See G.R. P o r t e r , The Progress of the Nation, (London: Methuen and Co. L t d . , 1912), p. 317 217 a g g r a v a t e d form a f t e r t h e war was o v e r . I n t h e meantime, the war, by w i t h d r a w i n g a m u l t i t u d e o f F r e n c h and German o p e r a t i v e s and a r t i s a n s from i n d u s t r i a l employment, l e d t o an abnormal demand f o r E n g l i s h Tex-t i l e s . " 1 5 Under such f a v o r a b l e c i r c u m s t a n c e s u n u s u a l l y h i g h p r o f i t s were n o t uncommon. Between 1867 and 1871 t h e d i r e c t o r s o f t h e Sun s p i n n i n g m i l l i n Oldham d e c l a r e d d i v i d e n d s r a n g i n g from 10 t o 40 p e r c e n t . E x c e p t i o n a l p r o f i t s and d i v i d e n d s s t i m u l a t e d t h e e x p a n s i o n o f p r o d u c t i o n n o t o n l y by p r o v i d i n g t h e n e c e s s a r y i n c e n t i v e , b u t a l s o by a t t r a c t i n g s a v i n g s f o r i n v e s t m e n t p u r p o s e s . T h i s was o f c r u c i a l i m p o r t a n c e not o n l y because i t e n a b l e d a major boom i n t h e c o n s t r u c t i o n o f c o t t o n m i l l s t o t a k e p l a c e , b u t a l s o because i t eased t h e c r e d i t c o n s t r a i n t on t h e s u p p l y o f mortgage f i n a n c e , t h u s c o n t r i b u t i n g t o a s i m i l a r boom i n h o u s e - b u i l d i n g . The wave o f e x p a n s i o n i n t h e 1850's was c o n c e n t r a t e d i n t h e weaving b r a n c h o f t h e c o t t o n i n d u s t r y , b u t i n t h e l a t e 1860's i n v e s t m e n t t o o k p l a c e p r i m a r i l y i n t h e s p i n n i n g s e c t o r . The g r e a t " f l o a t i n g mania" w h i c h c u l m i n a t e d i n 1875 w i t n e s s e d a d r a m a t i c i n c r e a s e i n t h e numbers o f j o i n t s t o c k companies r e g i s t e r e d i n t h e E l l i s o n , The Cotton Trade, pp 106-107. 218 E n g l i s h c o t t o n i n d u s t r y . T h i s i s shown i n F i g u r e 11. " I n t h e two y e a r s , 1874-75, about 3,000,000 s p i n d l e s were " f l o a t e d " i n Oldham a l o n e , w h i l e , i n c l u d i n g p r i v a t e f i r m s c o n v e r t e d i n t o l i m i t e d companies, 5,000,000 t o 6,000,000 more were " f l o a t e d " i n o t h e r towns and d i s t r i c t s o f L a n c a s h i r e . " " ^ Weaving, though n o t t h e c e n t e r o f i n v e s t m e n t a c t i v i t y , d i d p a r t i c i p a t e i n t h e g e n e r a l growth o f p r o d u c t i v e c a p a c i t y . The number o f power looms o p e r a t i n g i n G r e a t B r i t a i n i n c r e a s e d by 23,442 o r 5 p e r c e n t between 1870 and 1 8 7 4 . 1 7 The s t o r y o f t h e L a n c a s h i r e c o t t o n r e g i o n d u r i n g t h e s e y e a r s i s p a r t l y t o l d by F i g u r e 11. The upswing i n e x p o r t s o f c o t t o n m a n u f a c t u r e s and home consumption i n r e s p o n s e t o f a v o r a b l e market c o n d i t i o n s was accompanied by a r i s e i n incomes. The w o r k i n g c l a s s e s who s u f f e r e d so s e v e r e l y t h r o u g h t h e d e p r e s s i o n o f t h e s i x t i e s s h a r e d i n t h e p r o s -p e r i t y o f r e c o v e r y . From a m i nor t r o u g h i n 1869 t o w e e k l y wage o f c o t t o n o p e r a t i v e s r o s e t o a peak i n 1877. Not o n l y d i d wages r i s e , b u t employment r o s e as w e l l . I n 1867 t h e c o t t o n i n d u s t r y employed 401,064 p e r s o n s , by 1874 t h i s had 16Ibid, p. 134. 17 W i l l i a m Page, Commerce and Industry, (London: C o n s t a b l e and Company, l t d . , 1 919), p. 2 30. 219 F i g u r e 11 INDICES OF ECONOMIC DEVELOPMENT IN SOUTH-EAST LANCASHIRE (A) South-East L a n c a s h i r e H o u s e - B u i l d i n g Index. Source: T a b l e XVIII, Appendix I I I . (B) Number of J o i n t Stock Companies R e g i s t e r e d i n the E n g l i s h Cotton I n d u s t r y , 1861-1890. Source: D.A. F a r n i e , The English Cotton Industry, 1850-1986, M.A. T h e s i s : Manchester U n i v e r s i t y , C i t e d by J . P a r r y Lewis, Building Cycles and Britains Growth, p. 120. (C) Index of P r o f i t s i n the Cotton S p i n n i n g I n d u s t r y , 1886-1913, (1896-1905 = 100). Source: H. Campion, "Prewar F l u c t u a t i o n s o f P r o f i t s i n the C o t t o n - S p i n n i n g I n d u s t r y " , Journal of the Royal S t a t i s t i c a l Society, V o l . XCVII (1934), p. 629. (D) Average Weekly Wage of Cotton O p e r a t i v e s Employed i n F a c t o r i e s and as Hand-Loom Weavers, 1860-1906. Source: G.H. Wood, "The S t a t i s t i c s of Wages i n the N i n e t e e n t h Century. P a r t XIX. - The Cotton I n d u s t r y " , Journal of the Royal S t a t i s t i c a l Society, V o l . LXXIII (June, 1910), p. 599. (E) Home Cotton Consumption ( i n m i l l i o n s of pounds), 1860-1914. Source: R. Robson, The Cotton Industry in Britain, (London: M a c M i l l a n and Co. L t d . , 1957), pp. 332-333. (F) Exports of Cotton Manufactures ( i n m i l l i o n s of pounds s t e r l i n g ) , 1860-1914. Source: R. Robson, The Cotton Industry in Great Britain, p. 334. 221 grown t o 479,515. R i s i n g wages a t t r a c t e d l a b o u r from t h e b o r d e r c o u n t i e s and as t h e p o p u l a t i o n s o f t h e c o t t o n towns s w e l l e d , so a l s o d i d t h e demand f o r h o u s i n g accommod-a t i o n . The p e r s i s t e n t r i s e i n incomes a l l o w e d f a m i l i e s t h a t had crowded t o g e t h e r y e a r s b e f o r e , t o now undouble. R e l a t i v e l y low f o o d p r i c e s and t h e f a l l i n g p r i c e s o f m a n u f a c t u r e s , i n c l u d i n g c o t t o n goods, e s p e c i a l l y a f t e r 1873, r e l e a s e d e a r n i n g s f o r improvements i n t h e s t a n d a r d o f h o u s i n g . These f a c t o r s c o n t r i b u t e d t o a d e c l i n e i n v a c a n -c i e s and t h e w i d e s p r e a d appearance o f h o u s i n g s h o r t a g e s . By 1876, a l l o f t h e towns f o r w h i c h we have d a t a were e x p e r i e n c i n g a major boom i n h o u s e - b u i l d i n g . As t h e g r o w i n g p r o s p e r i t y o f t h e s t a p l e i n d u s t r y mul-t i p l i e d t h r o u g h t h e r e g i o n a l economy membership i n and s u b s c r i p t i o n s t o b u i l d i n g s o c i e t i e s burgeoned. "There a r e a l s o e x c e p t i o n a l towns and v i l l a g e s i n L a n c a s h i r e where l a r g e sums o f money have been saved by t h e o p e r a t i v e s f o r b u y i n g o r b u i l d i n g c o m f o r t a b l e c o t t a g e d w e l l i n g s . L a s t y e a r Padiham saved about f i f t e e n thousand pounds f o r t h i s p u r p o s e , a l t h o u g h i t s p o p u l -a t i o n i s o n l y about e i g h t thousand. B u r n l e y has a l s o been v e r y s u c c e s s f u l . The B u i l d i n g S o c i e t y t h e r e has s i x t h o u s a n d , s i x hundred i n v e s t o r s , who saved l a s t y e a r one hundred Ibid. 222 and s i x t y t housand pounds, o r an average o f twenty f o u r pounds f o r each i n v e s t o r . The members c o n s i s t p r i n c i p a l l y o f m i l l o p e r a t i v e s , m i n e r s , m e c h a n i c s , e n g i n e e r s , c a r p e n t e r s , stone-masons and l a b o u r e r s . They a l s o i n c l u d e women, b o t h m a r r i e d and u n m a r r i e d . Our i n -formant s t a t e s t h a t " g r e a t numbers o f t h e w o r k i n g c l a s s e s have p u r c h a s e d houses i n w h i c h t o l i v e . They have l i k e w i s e bought houses as a means o f i n v e s t m e n t ! " 1 9 There can be l i t t l e q u e s t i o n t h a t b u i l d i n g s o c i e t i e s p l a y e d a key r o l e i n t h e S o u t h - e a s t L a n c a s h i r e r e g i o n a l l o n g swing i n h o u s e - b u i l d i n g a c t i v i t y . M anchester a l o n e had o v e r one hundred b u i l d i n g s o c i e t i e s , and t h e 66 l o c a t e d 20 i n Oldham h e l d s u b s c r i p t i o n s t o t a l l i n g 800,000 pounds. The a c c u m u l a t e d s a v i n g s o f thousands o f t e x t i l e w o r k e r s , s p i n n e r s , e n t r e p r e n e u r s , e t c . , were m o b i l i z e d t h r o u g h t h e s e and o t h e r f i n a n c i a l i n s t i t u t i o n s f o r t h e purpose o f i n v e s t m e n t i n c o t t o n m i l l s and d w e l l i n g houses. By t h e end o f 1872 t h e c o t t o n t e x t i l e i n d u s t r i e s o f F r a n c e and Germany were b e g i n n i n g t o r e c o v e r from t h e war. The r e v i v a l o f C o n t i n e n t a l p r o d u c t i o n a t p r i c e s below t h e Samuel S m i l e s , T h r i f t , (New Y o r k : A.L. B u r t , 1874), pp. 123-24. 20 Seymour J . P r i c e , Building S o c i e t i e s : t h e i r Origin and Function, (London, 1958), p. 189. C i t e d i n J . P a r r y L e w i s , Building Cycles and B r i t a i n ' s Growth, p. 123. 223 i n f l a t e d B r i t i s h p r o d u c t s l e d t o a d e c l i n e i n demand and c o n s e q u e n t l y a f a l l i n t h e e x p o r t o f c o t t o n m a n u f a c t u r e s . (See F i g u r e 1 1 ) . I n t h e U n i t e d S t a t e s t h e f a i l u r e o f J a y Cooke and Company i n 1873 r e s u l t e d i n A m e r i c a n c o t t o n con-s u m p t i o n r e m a i n i n g s t a t i o n a r y f o r two y e a r s . F a l l i n g p r i c e s l e d t o an i n c r e a s e i n home consumption o f c o t t o n goods i n 1873-74. (See F i g u r e 11) B r i t a i n chose t o i n c r e a s e o u t p u t a t t h i s t i m e , as d i d F r a n c e and Germany. I t wasn't l o n g b e f o r e " the whole o f Europe's c o t t o n i n d u s t r y was burdened w i t h heavy s t o c k s and u n p r o f i t a b l e p r i c e s . I n v e s t -ment slowed down, o r even c e a s e d . I n 1875 t h e E a s t e r n t r a d e was d i s o r g a n i z e d by f i n a n c i a l f a i l u r e s , and when hopes and o u t p u t r e v i v e d i n 1876, gloom descended q u i c k l y 21 as bad h a r v e s t s and o t h e r f a c t o r s r e d u c e d demand." The b u i l d i n g boom i n m i l l c o n s t r u c t i o n t h a t t o o k p l a c e i n t h e e a r l y 1870's c r e a t e d an e x c e s s c a p a c i t y t h a t was t o be a s o u r c e o f r e c u r r e n t d i f f i c u l t i e s i n t h e y e a r s t h a t f o l l o w e d . The d e p r e s s i o n t h a t s e t i n a f t e r 1875 was accompanied by a s h a r p f a l l i n the number of j o i n t s t o c k companies r e -g i s t e r e d i n t h e E n g l i s h c o t t o n i n d u s t r y . Between 1878 and 1884 many o f t h e L a n c a s h i r e c o t t o n m i l l s were c l o s e d down. As p r i c e s c o n t i n u e d t o f a l l , p r o f i t s d i s a p p e a r e d and d i v i d e n d s L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g " , p. 121. 224 became a t h i n g o f t h e p a s t . M i l l owners responded by l o w e r i n g wages, w h i c h u s h e r e d i n a p e r i o d o f l a b o u r un-r e s t , t h u s f u r t h e r augmenting the i n d u s t r i a l c r i s i s . I n 1877 o p e r a t i v e s i n B o l t o n s t r u c k i n r e s p o n s e t o wage c u t s by l o c a l s p i n n i n g m i l l owners. The s t r i k e q u i c k l y e x h a u s t e d t h e t r e a s u r y o f t h e S p i n n e r s ' Amalgam-a t i o n and was l a r g e l y u n s u c c e s s f u l . The f o l l o w i n g y e a r w i t n e s s e d t h e " G r e a t S t r i k e " o f more t h a n 100,000 N o r t h L a n c a s h i r e o p e r a t i v e s a g a i n s t r e d u c t i o n s i n wages, l a s t i n g 23 n e a r l y two months. I n 1880 a s t r i k e by weavers f o r a r e t u r n t o pre-1878 wage l e v e l s p u t 30,000 B l a c k b u r n o p e r -a t i v e s o u t o f work. A y e a r l a t e r d o u b l i n g w o r k e r s i n Oldham d i d w i n a m i n or wage i n c r e a s e , b u t o n l y a f t e r a 24 s i x month s t r i k e . I n g e n e r a l , t h e s t r i k e s , combined w i t h i n c r e a s e d unemployment, s h o r t - t i m e and f a l l i n g wage r a t e s , l e d t o a d e c l i n e i n incomes as w e l l as a d e c l i n e i n t h e r a t e o f i n c r e a s e o f t h e l a b o u r f o r c e . These f a c t o r s had a v e r y d e p r e s s i n g i n f l u e n c e on the demand f o r h o u s i n g E l l i s o n , The Cotton Trade, p. 136. 2 3 H.A. T u r n e r , Trade Union Growth, Structure and Policy, (London: George A l l e n and Unwin, L t d . , 1962), pp. 124, 137, 150. 24 S i d n e y and B e a t r i c e Webb, The History of Trade Unionism, 1866-1920, (London: Longmans, 1920). 225 accommodations. R e p o r t s were not uncommon o f o p e r a t i v e s and t h e i r f a m i l i e s m i g r a t i n g t o o t h e r r e g i o n s " l e a v i n g s t r e e t s o f empty tenements and house s , many o f w h i c h were d i l a p i d a t i n g . So g r e a t was t h e combined e f f e c t o f s h a r i n g and m i g r a t i o n t h a t i n 1881 t h e number o f u n o c c u p i e d houses i n M a n c h e s t e r and S a l f o r d exceeded t h e number o f i n h a b i t e d 25 houses i n a d j a c e n t S t o c k p o r t . " The b u i l d i n g i n d u s t r y was d e a l t a c r i p p l i n g blow. H o u s e - b u i l d i n g f e l l p r e c i p i t o u s l y a f t e r 1876 i n t o a deep p r o l o n g u e d t r o u g h . (See F i g u r e 1 1 ) . These were t r o u b l e d y e a r s f o r b u i l d i n g s o c i e t i e s as d e p r e s s e d e a r n i n g s and w i d e s p r e a d p e s s i m i s m l e d t o w i t h -d r a w a l s o f funds and f a i l u r e t o make payments. S o c i e t i e s s u f f e r e d i n numerous c i r c u m s t a n c e s many o f w h i c h were e n t i r e l y beyond t h e i r c o n t r o l . I n O c t o b e r o f 1878, t h e C i t y o f Glasgow Bank f a i l e d . Rumours c i r c u l a t e d t h a t a number o f b u i l d i n g s o c i e t i e s i n and around M a n c h e s t e r , i n c l u d i n g t h e Queen's S o c i e t y (the f o u r t h l a r g e s t i n G r e a t B r i t a i n ) had b a l a n c e s a t t h e C i t y o f Glasgow Bank, and though t h e s e rumours had no j u s t i f i c a t i o n i n f a c t , t h e y d i d cause a r u n on many s o c i e t i e s . I n o n l y f o u r d a y s , 50,000 pounds s t e r l i n g A. Woodroofe F l e t c h e r , "The Economic R e s u l t s o f t h e S h i p C a n a l on Man c h e s t e r and t h e S u r r o u n d i n g D i s t r i c t " ; A paper p r e s e n t e d t o t h e Manchester S t a t i s t i c a l S o c i e t y , F e b r u a r y 10, 189 7, r e f e r e n c e i n L e w i s , " I n d i c e s o f House-B u i l d i n g " , p. 123. 226 was w i t h d r a w n from t h e Queens S o c i e t y . B u i l d i n g s o c i e t i e s a l s o became t h e i n n o c e n t v i c t i m s o f l a b o u r d i s p u t e s . The B u r n l e y S o c i e t y had i n t h e p a s t made l o a n s t o l o c a l m i l l - o w n e r s , some o f them d i r e c t o r s o f t h e s o c i e t y . When weavers s t r u c k a g a i n s t wage r e d u c -t i o n s i n 1878 t h e y w i t h d r e w t h e i r funds from l o c a l s o c i e t i e s , t h i n k i n g t h a t owners would t h e n be u n a b l e t o borrow money t o meet mortgage payments and o t h e r expenses d u r i n g the d i s p u t e . "No doubt s t r i k e r s w i t h d r a w i n g t h e i r s a v i n g s t o meet c u r r e n t e x p e n s e s , and t h e news o f e v e n t s i n M a n c h e s t e r , h e l p e d t o speed w i t h d r a w a l s . The r e s u l t was t h a t t h e B u r n l e y S o c i e t y ' s c a s h b a l a n c e o f £15,000 q u i c k l y d i s a p p e a r e d . N o t i c e s o f w i t h d r a w a l i n t h e l a s t two weeks o f O c t o b e r r o s e t o n e a r l y £50,000 and by December t h e y had c l i m b e d t o n e a r l y 27 £75,000 compared t o a normal f i g u r e o f £10,000." In t e s t i m o n y b e f o r e t h e R o y a l Commission o f 1885 one w i t n e s s s t a t e d t h a t t h e b u i l d i n g s o c i e t y movement had been so d i s r u p t e d by t h e e v e n t s o f the l a t e 1870's and e a r l y 1880's 2 8 t h a t i t would t a k e 20 y e a r s t o r e c o v e r . T h i s i s no doubt C l e a r y , The Building Society Movement, p. 127. Ibid. 2 8 L e w i s , " I n d i c e s o f H o u s e - B u i l d i n g " , p. 124. 227 an e x a g g e r a t i o n , b u t i t i s c e r t a i n l y t r u e t h a t t h e b u i l d i n g s o c i e t i e s f a c e d many d i f f i c u l t i e s , n o t t h e l e a s t o f wh i c h was a c r i s i s o f c o n f i d e n c e , and t h a t t h e s e c o n t r i b u t e d t o th e b u i l d i n g d e p r e s s i o n o f t h e 1880's. The e x c e s s s u p p l i e s o f y a r n and c o t t o n goods t h a t had acc u m u l a t e d i n t h e w o r l d ' s markets by t h e mid-1870's were e v e n t u a l l y a b s o r b e d d u r i n g t h e d e p r e s s e d y e a r s o f 1877-79. Between 1880 and 1883 t h e r e was a major upswing i n t h e p r o -d u c t i o n o f c o t t o n m a n u f a c t u r e s , e s p e c i a l l y i n G r e a t B r i t a i n and t h e U n i t e d S t a t e s . World c o t t o n consumption r o s e t o 9.6 m i l l i o n b a l e s p e r y e a r , compared t o t h e a n n u a l average o f 7.2 m i l l i o n i n 1878-79. B r i t i s h e x p o r t s o f c o t t o n goods and home consump t i o n i n c r e a s e d s h a r p l y . (See F i g u r e 1 1 ) . Enormous A m e r i c a n c r o p s , e s p e c i a l l y i n 1883, caused a s h a r p d e c l i n e i n raw c o t t o n p r i c e s , f u r t h e r s t i m u l a t i n g t h e m a n u f a c t u r i n g (weaving) b r a n c h o f t h e i n d u s t r y . The r e s u l t was r e m i n i s c e n t o f t h e e a r l y 1870's. T a b l e XIV g i v e s an a c c o u n t o f t h e number and n o m i n a l c a p i t a l o f " l i m i t e d " c o t t o n m i l l s f l o a t e d i n each o f t h e y e a r s 1873 t o 1884. Many o f t h e j o i n t s t o c k companies r e g i s t e r e d i n 1873-75 had been p r i v a t e f i r m s w h i c h were c o n v e r t e d t o l i m i t e d l i a b i l i t y o w n e r s h i p s . The companies formed i n 1881-84, on t h e o t h e r hand, were a l m o s t a l l new e n t e r p r i s e s . And because t h e y TABLE XIV NUMBER AND NOMINAL CAPITAL OF LIMITED LIABILITY COTTON MILLS PROJECTED IN 1873-1884 Year Number Nominal Capital Year Number Nominal Ca p i t a l Year Number Nominal Ca p i t a l 1873 40 1,784.600 1877 19 1,180.000 1881 25 1,742.000 1874 101 5,790.400 1878 10 328,500 1882 24 1,908.500 1875 84 3,992.700 1879 6 257,000 1883 24 1,580.000 1876 17 953,000 1880 23 867,000 1884 45 2,597.500 Total 242 12,520.700 58 2,632.500 118 7,828.000 Average C a p i t a l 51,740 45,390 66,340 per m i l l Source: Thomas E l l i s o n , The Cotton Trade of Great B r i t a i n , (London: Frank Cass and Co. Ltd., 1886), p. 303. 229 employed t h e l a t e s t m a c h i n e r y and t e c h n i q u e s "the 118 m i l l s r e p r e s e n t e d a g r e a t e r i n c r e a s e d power o f p r o d u c t i o n t h a n t h e 225 m i l l s p r o j e c t e d i n 1873-75. There can be no doubt t h a t what may be termed t h e abuse o f t h e L i m i t e d L i a b i l i t y A c t o f 1862, has l a r g e l y c o n t r i b u t e d t o b r i n g about the l o n g c o n t i n u e d 29 u n s a t i s f a c t o r y c o n d i t i o n o f t h e c o t t o n i n d u s t r y . " As o v e r p r o d u c t i o n once a g a i n weighed h e a v i l y on t h e L a n c a s h i r e c o t t o n i n d u s t r y unemployment r o s e and wages f e l l . I t wasn't l o n g b e f o r e looms began t o be t a k e n o u t o f p r o d u c t i o n " e i t h e r v o l u n t a r i l y , o r t h r o u g h b a n k r u p t c y , o r i n consequence 30 o f s t r i k e s a g a i n s t r e d u c e d wages." The f a t e o f t h e c o t t o n i n d u s t r y was s h a r e d n o t o n l y by t h e o p e r a t i v e s , b u t a l s o by t h e g e n e r a l p o p u l a c e , " t h e r e i s s c a r c e l y a p u b l i c a n , r a i l w a y 31 p o r t e r , p o l i c e m a n , o r shopkeeper who i s n o t a s h a r e h o l d e r . " Thus when p r o f i t s and d i v i d e n d s were n i l and s h a r e p r i c e s de-p r e s s e d , so a l s o were s a v i n g s . And i t was out o f t h e s a v i n g s E l l i s o n , The Cotton Trade, p.124. 30Ibid, p. 300. 31 R o b e r t Montgomery, "A Comparison o f Some of t h e Economic and S o c i a l C o n d i t i o n s o f M a n chester and t h e S u r r o u n d i n g D i s t r i c t i n 1834 and 1884", Manchester S t a t i s t i c a l Society Transactions, (November, 1884), p. 24. 230 o f o p e r a t i v e s and common f o l k t h a t much o f t h e f i n a n c i n g 32 o f c o t t o n m i l l s and c o t t a g e s was drawn. The 1880's and e a r l y 1890's were d i f f i c u l t y e a r s o f ad j u s t m e n t i n L a n c a s h i r e . The waning o f B r i t i s h economic hegemony had a d i r e c t impact on t h e d o m e s t i c c o t t o n i n d u s t r y . Between 1860 and 1870 t h e t o t a l i n c r e a s e i n c o t t o n consumption between t h e U n i t e d S t a t e s , G r e a t B r i t a i n and t h e C o n t i n e n t was v e r y e v e n l y d i s t r i b u t e d . But between 1871 and 1883 "the l i o n s s h a r e was t a k e n by t h e U n i t e d S t a t e s and t h e C o n t i n e n t , 33 l e a v i n g o n l y a s m a l l i n c r e a s e f o r G r e a t B r i t a i n . " Not o n l y d i d B r i t i s h c o t t o n e x p o r t s s u f f e r a t t h e hands o f U.S. and C o n t i n e n t a l c o m p e t i t o r s , b u t i n c r e a s i n g l y t h r o u g h t h e 1880's and 1890's t h e r e were c o m p l a i n t s o f t h e d e c l i n e i n t h e E a s t A f r i c a n and F a r E a s t e r n t r a d e as a r e s u l t o f c o m p e t i t i o n from 34 a g r o w i n g I n d i a n c o t t o n t e x t i l e i n d u s t r y l o c a t e d i n Bombay. These changes i n w o r l d market c o n d i t i o n s a r e r e f l e c t e d i n t h e c u r v e o f B r i t i s h c o t t o n good e x p o r t s p r e s e n t e d i n F i g u r e 11, as a g r a d u a l d e c l i n e from 1881 t o around 1897. T.S. A s h t o n , Economic and Social Investigations in Man-chester., 1833-1933, (London: P.S. K i n g and Son, L t d . , 1934), p. 109. 3 3 E l l i s o n , The Cotton Trade, pp. 102-3. 3 4 S e e The Economist, May 28,1885, p. 625; J u l y 3, 1866, pp. 831-832; December 18, 1886, p. 1573; O c t o b e r 5, 1889, pp. 1267-231 The average weekly wages of c o t t o n o p e r a t i v e s r e -mained r e l a t i v e l y low throughout the 1880's. A s e r i e s of poor h a r v e s t s and h i g h food p r i c e s combined w i t h depressed e a r n i n g s t o reduce demand f o r housing accommodation. E a r l i e r we mentioned the tendency o f f a m i l i e s t o double up, which had a s i m i l a r e f f e c t . H o u s e - b u i l d i n g remained depressed, as d i d the L a n c a s h i r e c o t t o n i n d u s t r y (except f o r a b r i e f upswing i n home consumption i n the l a t e 1880's) u n t i l the mid-1890's. The f i n a l decade of the n i n e t e e n t h c e n t u r y opened on a not too encouraging note f o r the L a n c a s h i r e c o t t o n t r a d e . A d e c l i n e i n exports and home consumption c o i n c i d e d w i t h a d e p r e s s i o n i n p r o f i t s . (See F i g u r e 11). Campions p r o f i t index f a l l s from a peak i n 1890 and shows l o s s e s i n c u r r e d between 189 2-4. D e s p i t e a f a l l i n L a n c a s h i r e ' s main e x p o r t demand f o r p i e c e goods and complaints of i d l e weaving machinery, home consumption i n c r e a s e d and p r o f i t s were 35 made i n 189 5. Trade condxtions were u n s e t t l e d i n 1896-7, but i n 189 8 annual t r a d e r e p o r t s i n d i c a t e " i n c r e a s e d s i g n s of A c t i v i t y induced by e x c e p t i o n a l l y low raw m a t e r i a l p r i c e s and the c o n v i c t i o n t h a t economic f o r c e s g e n e r a l l y were b r i n g i n g The Economist, A p r i l 13, 1895, p. 485. 232 about a r e a c t i o n a f t e r t h e l o n g p e r i o d o f d e p r e s s i o n . " E a r n i n g s r o s e t o t h e i r p r e v i o u s h i g h l e v e l s . "The l i m i t e d s o f South L a n c a s h i r e have d e c l a r e d l a r g e r p r o f i t s t h a n 37 a n t i c i p a t e d , and p a i d d i v i d e n d s t h a t were n o t e x p e c t e d . " The r e m u n e r a t i v e s t a t e o f t r a d e and t h e g e n e r a l p r o s p e r i t y t h a t s p r e a d t h r o u g h t h e r e g i o n a l economy l e d t o a boom i n m i l l and h o u s e - b u i l d i n g , t h e f o r m e r c o n c e n t r a t e d p r i m a r i l y i n t h e s p i n n i n g c e n t e r s o f t h e i n d u s t r y . S h o r t t i m e d i s a p p e a r e d and as employment r o s e i d l e m a c h i n e r y was b r o u g h t i n t o p r o d u c t i o n . The c o n d i t i o n o f t h e o p e r a t i v e c l a s s improved c o n s i d e r a b l y . To some e x t e n t t h i s as w e l l as t h e p r o g r e s s o f t h e i n d u s t r y , i s r e f l e c t e d i n t h e d e c l i n e o f l a b o u r u n r e s t i n t h e c o u r s e o f t h e decade. I n 1890 t h e r e were 135 r e c o r d e d d i s p u t e s i n t h e c o t t o n i n d u s t r y . T h i s r o s e t o 156 i n 1891 and t h e n f e l l t o 52 i n 1898 and 44 i n 1899. The d i s p u t e s r e c o r d e d a f t e r 1894 were a l l m i n o r , 3 8 i n v o l v i n g no more t h a n a few days i n t e r r u p t i o n o f p r o d u c t i o n . The t u r n o f t h e c e n t u r y b r o u g h t a d e c l i n e i n home J a n e t Blackman and E.M. S i g s w o r t h , "The Home Boom o f t h e 1890's", Yorkshire B u l l e t i n of Economics and Social Research, V o l . 17, (May 1965), p. 89. 37 The Economist, J u l y 2, 1898, p. 969. 3 8 H.A. C l e g g , A l l e n Fox and A.F. Thompson, A History of B r i t i s h Trade Unions since 1889, ( O x f o r d : C l a r e n d o n P r e s s , 1964), p. 119. 233 cons u m p t i o n , and i n 1903-04 raw c o t t o n p r i c e s r o s e s h a r p l y . T h i s was accompanied by a slump i n p r o f i t s . Campion's i n d e x shows l o s s e s i n 19 0 2-0 3. A renewed upsurge i n home con s u m p t i o n , however, and t h e tremendous r i s e i n c o t t o n good e x p o r t s (see F i g u r e 1 1 ) , a f t e r 1903 gave a s i g n i f i c a n t b o o s t t o t h e l o c a l economy. Changes i n market c o n d i t i o n s and i n d u s t r i a l o r g a n i z a t i o n gave r i s e t o a d r a m a t i c i n c r e a s e i n p r o f i t s and c o n t r i b u t e d t o a p e r i o d o f f e v e r i s h m i l l -39 b u i l d i n g . The Economist's c o r r e s p o n d e n t , i n L a n c a s h i r e w r o t e i n 19 04: "New c o t t o n s p i n n i n g m i l l s a r e b e i n g e r e c t e d on an e x t e n s i v e s c a l e i n v a r i o u s p a r t s o f L a n c a s h i r e ... What t h e B o l t o n t r a d e w i l l be when t h e s e f a c t o r i e s g e t t o work no one can t e l l , b u t i t l o o k s s i m p l y d i s a s t r o u s t h a t t h i s l a r g e i n c r e a s e o f s p i n d l e s s h o u l d t a k e p l a c e when t h e r e i s r e a l l y no demand f o r t h e m . " 4 0 But t h e t r a d e was b r i s k and i n 19 0 5 m i l l s went up i n Heywood, As h t o n - u n d e r - L y n e and t h e s u r r o u n d i n g d i s t r i c t s a d d i n g 41 5,000,000 new s p i n d l e s i n t h a t y e a r . I n 1908, 48 m i l l s See S.J. Chapmen and T.S. A s h t o n , "The S i z e s o f B u s i n e s s , M a i n l y i n t h e T e x t i l e I n d u s t r i e s " , Journal of the Royal Sta-tistical Society, V o l . LXXVII ( A p r i l , 1914), pp. 469-549. A l s o W. A s h w o r t h , "Changes i n t h e I n d u s t r i a l S t r u c t u r e : 1870-1914", Yorkshire Bulletin of Economic and Social Research, V o l . 17, (May, 1965) pp. 61-74. 4 0T/ze Economist, O c t o b e r 15, 1904, p. 87. 41 The Economist, O c t o b e r 14, 1905, p. 1623. 234 i n t h e c o u r s e o f c o n s t r u c t i o n . The r e a c t i o n f i n a l l y came i n t h e f o l l o w i n g y e a r . The d e c l i n e i n home consumption and e x p o r t s saw many o f t h e j o i n t s t o c k companies, f l o a t e d on i n a d e q u a t e c a p i t a l d u r i n g t h e boom, i n f i n a n c i a l d i f f i c u l t i e s . By t h e end o f 19 09 a number were a l r e a d y i n t h e p r o c e s s o f 42 v o l u n t a r y l i q u i d a t i o n . The r e g i o n a l boom o f t h e l a t e 1890's w i t n e s s e d a g r a d u a l i n c r e a s e i n t h e average w e e k l y wages o f o p e r a t i v e s . A somewhat s h a r p e r i n c r e a s e o c c u r e d a f t e r 1903. As e m i g r a t i o n o v e r s e a s s l a c k e n e d i n t h e 1890's, p e o p l e o f t h e h o u s e - s e e k i n g age group c o n s t i t u t e d a l a r g e r s h a r e o f t h e new i n c r e a s e i n p o p u l a t i o n . Many o f t h e s e p e o p l e were a t t r a c t e d t o t h e c o t t o n towns o f L a n c a s h i r e because o f employment o p p o r t u n i t i e s and t h e e x p e c t a t i o n s o f h i g h e r incomes. The p r o l o n g u e d b u i l d i n g d e p r e s s i o n o f t h e 1880's and e a r l y 1890's had a l l o w e d t i m e f o r v a c a n c i e s r e s u l t i n g from t h e p r e v i o u s p e r i o d o f o v e r - b u i l d i n g t o be re d u c e d . As p r o f i t s r o s e i n t h e c o t t o n i n d u s t r y c a p i t a l f l o w e d i n t o t a k e advantage o f t h e h i g h r e -t u r n s on i n v e s t m e n t i n t h e r e g i o n a l economy. T h i s eased l o c a l c r e d i t c o n d i t i o n s and f a v o r e d i n v e s t m e n t i n r e s i d e n t i a l con-s t r u c t i o n as w e l l . These were a l l i m p o r t a n t f a c t o r s c o n t r i b u t i n g The Economist, A p r i l 11, 1908, p. 777; A p r i l 17, 1909, p. 817. 235 t o t h e upswing i n b u i l d i n g a c t i v i t y w h i c h was a p r o m i n e n t f e a t u r e o f t h e home boom i n t h e 189 0's. The f i n a n c i a l s t r i n g e n c y a s s o c i a t e d w i t h t h e Boar War and t h e c r i s i s i n t h e c o t t o n i n d u s t r y w h i c h f o l l o w e d i n 1902-03 b r o u g h t h o u s e - b u i l d i n g down q u i c k l y . However, t h e upswing i n home consumption and t h e phenomenal r i s e i n e x p o r t s a f t e r 190 3 p r e c i p i t a t e d a wave o f h i g h l y s p e c u l a t i v e i n v e s t m e n t i n t h e L a n c a s h i r e c o t t o n i n d u s t r y w h i c h had a marked s p i l l o v e r e f f e c t i n h o u s e - b u i l d i n g . Incomes remained r e l a t i v e l y h i g h compared w i t h o t h e r r e g i o n s o f t h e c o u n t r y u n t i l d e p r e s s i o n descended i n 1908-09. B u i l d i n g f e l l o f f t h e r e a f t e r as poor h a r v e s t s caused f o o d p r i c e s t o r i s e and e x p e n d i t u r e s on h o u s i n g accommodation d e c l i n e d . We have a t t e m p t e d h e r e , t o b r i e f l y t r a c e t h e economic development o f L a n c a s h i r e , d r a w i n g a t t e n t i o n t o t h e i n t e r -r e l a t i o n s h i p s between r e g i o n a l i n d u s t r i a l development and t h e c o u r s e o f h o u s e - b u i l d i n g . We have seen t h a t i n v e s t m e n t i n r e s i d e n t i a l c o n s t r u c t i o n t e n d e d t o f o l l o w t h e f o r t u n e s o f t h e c o t t o n i n d u s t r y . T h i s c o n t r a s t , a t l e a s t i n t h e s h o r t r u n t h e e x p e r i e n c e o f South Wales. When p r i c e s and p r o f i t s r o s e i n t h e c o a l i n d u s t r y , i n v e s t m e n t t o o k p l a c e , b u t a t t h e expense o f h o u s e - b u i l d i n g . There a r e a number o f r e a s o n s f o r 236 t h e s e d i f f e r e n c e s . F o r one t h i n g t h e g e s t a t i o n p e r i o d o f i n v e s t m e n t i n c o a l m i n i n g i s much l o n g e r t h a n i n c o t t o n t e x t i l e p r o d u c t i o n . Looms can be s e t t o work i n a shed, b u t i t t a k e s y e a r s t o open o u t a new mine. The c a p i t a l r e q u i r e m e n t s o f i n v e s t m e n t i n c o l l i e r i e s a r e v e r y l a r g e r e l a t i v e t o most b r a n c h e s o f t h e c o t t o n i n d u s t r y . Y e t i t was t h e l a t t e r w h i c h e x p l o i t e d t o t h e f u l l e s t t h e ad-va n t a g e s o f l i m i t e d l i a b i l i t y , w h i l e t h e c o a l i n d u s t r y was dominated by p r i v a t e f a m i l y f i r m s . The c o t t o n o p e r a t i v e s o f L a n c a s h i r e , as w e l l as t h e b u t c h e r , t h e b a k e r and t h e c a n d l e s t i c k - m a k e r were " c a p i t a l i s t s " i n a v e r y i m p o r t a n t r e s p e c t : t h e i r s a v i n g s were h e l d as s h a r e c a p i t a l , e i t h e r i n j o i n t s t o c k c o t t o n m i l l s , banks o r b u i l d i n g s o c i e t i e s . F o r t h e s e r e a s o n s p e r i o d s o f p r o s p e r i t y i n L a n c a s h i r e had a more w i d e s p r e a d and i n t e n s e i m p a c t on t h e r e g i o n a l eco-nomy th a n t h e y d i d i n South Wales. We have n o t a t t e m p t e d t o g i v e a complete and r i g o r o u s a c c o u n t o f t h e c a u s a l mechanism by w h i c h r e g i o n a l b u i l d i n g c y c l e s have a r i s e n . F o r one t h i n g l i t t l e has been 237 s a i d about m i g r a t i o n and p o p u l a t i o n change; t h e s e w i l l be d i s c u s s e d i n t h e n e x t s e c t i o n . B e f o r e such a mechanism can be s p e c i f i e d more i n t e n s i v e s t u d y i s - r e q u i r e d . DEMOGRAPHIC FACTORS AND THE COURSE OF HOUSE-BUILDING IN  SOUTH-EAST LANCASHIRE We have e x p l o r e d b r i e f l y t h e i n t e r r e l a t i o n s h i p s i n t h e development o f t h e L a n c a s h i r e c o t t o n i n d u s t r y and t h e c o u r s e o f r e s i d e n t i a l c o n s t r u c t i o n r e f l e c t e d i n t h e So u t h -e a s t L a n c a s h i r e r e g i o n a l i n d e x o f h o u s e - b u i l d i n g a c t i v i t y . A t t e n t i o n was drawn t o t h e m i g r a t i o n o f l a b o u r i n t o and ou t o f t h e r e g i o n d u r i n g p e r i o d s o f p r o s p e r i t y and d e p r e s s i o n , and t h e e x t e n t t o w h i c h t h e s e demographic movements r e i n f o r c e d upswings o r a c c e l e r a t e d downswings i n r e s i d e n t i a l c o n s t r u c t i o n . I n t h i s s e c t i o n we w i l l l o o k c l o s e r a t t h e demographic ex-p e r i e n c e o f L a n c a s h i r e i n an at t e m p t t o r e l a t e changes i n t h e p o p u l a t i o n t o t h e p a t t e r n o f b u i l d i n g a c t i v i t y . A s t u d y o f t h e f l u c t u a t i o n s i n t h e r e g i o n a l p o p u l a t i o n , t h r o u g h b o t h n a t u r a l i n c r e a s e and m i g r a t i o n w i l l p r o v i d e g r e a t e r i n s i g h t i n t o t h e l o c a l mechanisms o f economic development. The d a t a used h e r e a r e drawn l a r g e l y from t h e I n l a n d Revenue l e d g e r s , t h e Census o f P o p u l a t i o n and t h e r e s e a r c h e s 238 o f C a i r n c r o s s and Thomas. Once a g a i n , t h e p r o b l e m o f a v a i l a b l e d a t a a t t h e a p p r o p r i a t e l e v e l o f a g g r e g a t i o n r a i s e d i t s u g l y head. U n f o r t u n a t e l y , comprehensive demo-g r a p h i c s t a t i s t i c s f o r a l l o f t h e towns i n c l u d e d i n t h e r e g i o n a l h o u s e - b u i l d i n g i n d e x do n o t e x i s t . The Census o f P o p u l a t i o n however, does c o n t a i n d e c e n n i a l e s t i m a t e s o f t h e p o p u l a t i o n i n each o f t h e l a r g e towns i n S o u t h - e a s t L a n c a s h i r e , as w e l l as f o r each c o u n t y i n G r e a t B r i t a i n . So t h a t t h i s d a t a m i g h t be used t o e x p l a i n f l u c t u a t i o n s i n t h e c o u r s e o f h o u s e - b u i l d i n g , Thomas c o n s t r u c t e d a r e g i o n a l i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n from t h e I n h a b i t e d House Duty s t a t i s t i c s f o u n d i n t h e I n l a n d Revenue l e d g e r s . These r e c o r d s c o n t a i n a n n u a l e s t i m a t e s o f t h e number o f houses a s s e s s e d t o d u t y on a c o u n t y - w i d e b a s i s . I n C h a p t e r I I we d i s c u s s e d a number o f t h e d i f f i c u l t i e s a s s o c i a t e d w i t h t h e s e s t a t i s t i c s , i n p a r t i c u l a r , t h e e f f e c t o f p e r i o d i c r e -v a l u a t i o n s . To overcome t h i s p r o b l e m Thomas has "averaged i n t e r - r e v a l u a t i o n y e a r s p l u s t h e r e v a l u a t i o n s y e a r f o l l o w i n g them; t h i s p r e v e n t s any m i s l e a d i n g i m p r e s s i o n t h a t t h e s e r i e s can be used f o r a n n u a l changes and a t t h e same time p r o v i d e s A.K. C a i r n c r o s s , " I n t e r n a l M i g r a t i o n i n V i c t o r i a n E n g l a n d " , Manchester School, V o l . X V I I , ( J a n u a r y , 1949), pp. 67-87. 44 B r i n l e y Thomas, "Demographic D e t e r m i n a n t s o f B r i t i s h and Am e r i c a n B u i l d i n g C y c l e s , 1870-1913". 239 an adequate i n d i c a t i o n o f t h e t i m e - s h a p e . " The I.H.D. r e g i o n a l i n d e x , c o n s t r u c t e d i n t h i s way, p r o v i d e s a n n u a l a p p r o x i m a t i o n s o f t h e number o f houses b u i l t i n t h e c o u n t i e s o f L a n c a s h i r e and C h e s h i r e from 1875 t o 1912. Because we do n o t have a c c e s s t o t h e o r i g i n a l d i s a g g r e g a t e d d a t a , i t i s n o t p o s s i b l e t o c o n s t r u c t an i n d e x more a p p r o p r i a t e f o r our own p u r p o s e s , i . e . o f L a n c a s h i r e a l o n e . The i n c l u s i o n o f C h e s h i r e on t h e o t h e r hand has o n l y a minor i n f l u e n c e on t h e f i n a l r e s u l t s . The I.H.D. i n d e x c o v e r s a r e g i o n t h a t i s somewhat l a r g e r t h a n t h a t r e p r e s e n t e d by t h e i n d e x graphed i n F i g u r e 10. In an at t e m p t t o d e t e r m i n e t h e e x t e n t t o w h i c h t h e I.H.D. i n d e x i s r e p r e s e n t a t i v e o f S o u t h - e a s t L a n c a s h i r e we have p r e s e n t e d b o t h i n d i c e s i n F i g u r e 12 a l o n g w i t h a n n u a l e s t i m a t e s o f h o u s e - b u i l d i n g i n L i v e r p o o l . The i n d i c e s f o r L i v e r p o o l and S o u t h - e a s t L a n c a s h i r e a r e , o f c o u r s e , t h e major "com-po n e n t s " o f t h e I.H.D. i n d e x . The peak o f 1878 i n t h e number o f houses e r e c t e d i n L i v e r p o o l i s i n c l o s e agreement w i t h t h e peak i n t h e I.H.D. i n d e x from 1877 t o 1879. The S o u t h - e a s t L a n c a s h i r e i n d e x r i s e s t o i t s peak one y e a r e a r l i e r , however, a sh a r p d e c l i n e 45 Ibid, p. 5. 240 F i g u r e 12 MIGRATION, NATURAL INCREASE AND HOUSE-BUILDING IN LANCASHIRE 1871-1913 (A) Houses E r e c t e d i n L i v e r p o o l , 189 2-1914. Source: J . P a r r y Lewis, Building Cycles and Bvitains Growth, pp. 334-7. (B) Index of H o u s e - B u i l d i n g i n South-East Lan-c a s h i r e (1901-11 = 100), 1860-1914. Source: Table XVIII, Appendix I I I . (C) I n h a b i t e d House Duty Index - Number of Houses B u i l t i n L a n c a s h i r e and C h e s h i r e , 1875-1912. (Inter-Reassessment Years Averaged). Source: T a b l e XX, Appendix I I I . (D) Change i n P o p u l a t i o n Aged 20-44, N a t u r a l Increase and M i g r a t i o n , Q u i n q u i n n i a l l y , 1871-1910. Source: T a b l e XIX. Em • Net I n - M i g r a t i o n Net O u t - M i g r a t i o n 241 242 t o the trough i n 1883-5 corresponds very n e a r l y with the p a t t e r n t r a c e d by the I.H.D. index. The downswing i n L i v e r p o o l i s more g r a d u a l but continuous w h i l e the o t h e r i n d i c e s remain a t a very low l e v e l u n t i l the second long swing gets underway i n 189 2-4. The boom i n the l a t e 1890's and the subsequent d e c l i n e i n South-east L a n c a s h i r e i s r e f l e c t e d w i t h a l a g i n the measure f o r L a n c a s h i r e - C h e s h i r e . The r e l a t i v e l y h i g h l e v e l of b u i l d i n g a c t i v i t y shown by the I.H.D. index between 1899 and 1903 r e f l e c t s a b a l a n c e b e t -ween the weakening boom i n South-east L a n c a s h i r e and the 46 c o n t i n u e d h i g h l e v e l of h o u s e - b u i l d i n g i n L i v e r p o o l . F i g u r e 12 conveys the i m p r e s s i o n t h a t h o u s e - b u i l d i n g i n South-east L a n c a s h i r e f o l l o w e d c l o s e l y the time-path o u t l i n e d by the I.H.D. index. To a l a r g e e x t e n t , t h i s i s e x p l a i n e d by the s i m i l a r i t y of the e x p e r i e n c e of L i v e r p o o l and South-east L a n c a s h i r e and the tremendous weight accorded these components i n the l a r g e r r e g i o n a l index. We might thus r e a s o n a b l y assume t h a t the demographic determinants of the course of h o u s e - b u i l d i n g i n South-east L a n c a s h i r e are b a s i c -a l l y the same as those o p e r a t i n g i n the broader r e g i o n of L a n c a s h i r e and C h e s h i r e . T h i s assumption u n d e r l i e s the a n a l y s i s ^^Ibidj p. 11 243 i n t h e r e m a i n d e r o f t h i s s e c t i o n . 47 48 F o l l o w i n g Thomas and F e m s t e i n among o t h e r s , we w i l l assume t h a t t h e age group 20-44 c o n s t i t u t e s t h e g r e a t m a j o r i t y o f t h e h o u s e - s e e k i n g segment o f t h e p o p u l -a t i o n . By s e p a r a t i n g t h e e f f e c t o f n a t u r a l i n c r e a s e and m i g r a t i o n on changes i n t h e r e g i o n a l p o p u l a t i o n aged 20-44, we can perhaps g a i n some u n d e r s t a n d i n g o f t h e r e l a t i v e i m p o r t a n c e o f t h e s e f a c t o r s i n e x p l a i n i n g t h e r e g i o n a l p a t t e r n o f h o u s e - b u i l d i n g a c t i v i t y . Thomas d e f i n e s " n a t u r a l i n c r e a s e " i n t h e age group 20-44 as "an e s t i m a t e o f t h e p o p u l a t i o n change w h i c h would have o c c u r r e d i n t h i s age group i n t h e two q u i n q u e n n i a f o l l o w i n g each c e n s u s , i f t h e r e had been no m i g r a t i o n i n 49 e i t h e r o f t h e s e p e r i o d s . " Such changes r e s u l t from v a r i a t i o n s i n t h e e x c e s s o f b i r t h s o v e r d e a t h s i n e a r l i e r p e r i o d s . The Census o f P o p u l a t i o n c o n t a i n s d e c e n n i a l t o t a l s i n q u i n a r y age groups f o r each c o u n t y i n G r e a t B r i t a i n . These Ibid, p. 6. 4 8 C H . F e i n s t e i n , Home and Foreign Investment 1870-1913, (Ph.D D i s s e r t a t i o n , U n i v e r s i t y o f Cambridge, 19 5 9 ) . 49 Thomas, "Demographic D e t e r m i n a n t " , p. 7. 244 figures are obviously the resultant of natural increase and net migration over a ten year period. Thomas has combined the census data with age s p e c i f i c figures on recorded deaths contained i n the Registrar-General's annual reports and decennial supplements to derive estim-ates of quinquennial changes i n the population aged 20-44, had migration not taken place. The difference between these estimates and the actual census t o t a l s represents the net migration for the decade. Information on the years in which p r o f i t income was r i s i n g contained i n the Inland Revenue records was used as a guide to a l l o c a t e the net decennial migratory flow between quinquennia. The quinquennial estimates of natural increase and migration for the population aged 20-44 in Lancashire and Cheshire can be found i n Table XIX,Appendix I I I . They are also presented g r a p h i c a l l y i n Figure 12. Table XX, Appendix III contains the I.H.D. series of houses assessed and not assessed to duty i n these tow counties. Turning now to F i -gure 12, there i s a strong c o r r e l a t i o n between the long swing i n house-building and the curve of population change. The shape of the l a t t e r i s l a r g e l y determined by "the swing i n 50 the balance of migration." Ibid, p. 13. 245 The e a r l y 1870's wit n e s s e d a very l a r g e net i n f l o w of p o p u l a t i o n i n t o South-east L a n c a s h i r e . T h i s , along w i t h a sharp r i s e i n the marriage r a t e (see F i g u r e 13) brought about a tremendous i n c r e a s e i n the demand f o r house room, thereby c o n t r i b u t i n g t o the major upswing i n b u i l d i n g a c t i v i t y d u r i n g t h i s p e r i o d . Between 1876 and 1880 , both the volume of i n - m i g r a t i o n and the marriage r a t e f e l l p r e -c i p i t o u s l y . No s i g n i f i c a n t i n c r e a s e i n e i t h e r i s apparent b e f o r e the mid-1890's. T h i s corresponds to a downswing and prolongued d e p r e s s i o n i n r e s i d e n t i a l c o n s t r u c t i o n . In the l a t e 1880's, t h e r e i s a sharp r i s e i n the curve of n a t u r a l i n c r e a s e . A c c o r d i n g to Thomas, "the quinquinnium 1890-5 saw the p o w e r f u l echo e f f e c t of the sharp i n c r e a s e i n the 51 b i r t h - r a t e t w e n t y - f i v e to t h i r t y y e ars b e f o r e . " T h i s bulge i n the p o p u l a t i o n aged 20-44 f a c i l i t a t e d a sharp r i s e i n the marriage r a t e when economic c o n d i t i o n s improved i n South-east L a n c a s h i r e a f t e r 1895. To t h i s was added a resurgence of net i n - m i g r a t i o n which f u r t h e r s w e l l e d the demand f o r housing accommodations. The boom i n h o u s e - b u i l d i n g f o l l o w e d w i t h a l a g the upswing i n the curve of p o p u l a t i o n . The net out-flow of p o p u l a t i o n i n the house-seeking age group a f t e r 1900 Ibid. F i g u r e 13 246 MARRIAGE AND BIRTH RATES (PER 10 00 POPULATION) ENGLAND AND WALES 186 0-1910 1860 1870 1880 1890 1900 1910 Source: Marriage Rate - England and Wales, 1860-1910, B.R. M i t c h e l l , Abstract of British Historical S t a t i s t i c s , pp. 45-46. B i r t h Rate - England and Wales, 1860-1910, B.R. M i t c h e l l , Abstract of British Historical S t a t i s t i c s , pp. 29-30. 247 and t h e f a l l i n t h e l e v e l o f n a t u r a l i n c r e a s e e v e n t u a l l y b r o u g h t a c o n t r a c t i o n i n t h e volume o f b u i l d i n g a c t i v i t y . T h i s was r e i n f o r c e d by a d e c l i n e i n t h e m a r r i a g e r a t e a f t e r 1899 . The e v i d e n c e appears t o i n d i c a t e t h a t demographic f a c t o r s were an i m p o r t a n t p a r t o f t h e mechanism w h i c h gave r i s e t o r e g i o n a l l o n g swings i n h o u s e - b u i l d i n g i n S outh-e a s t L a n c a s h i r e . The b e h a v i o r o f t h e s e f a c t o r s , however, i s l a r g e l y e x p l a i n e d by t h e c h a n g i n g f o r t u n e s o f t h e c o t t o n i n d u s t r y . Thus, f o r example, t h e p r o s p e r i t y o f t h e c o t t o n t r a d e i n t h e e a r l y 1870's (the cause o f w h i c h was d i s c u s s e d i n t h e l a s t s e c t i o n ) drew a tremendous number o f young a d u l t s t o L a n c a s h i r e . R i s i n g incomes and employment made i t e a s i e r t o marry and e s t a b l i s h a s e p a r a t e h o u s e - h o l d , as w e l l as s u p p o r t l a r g e r f a m i l i e s . I n t h i s s e n s e , t h e upswing i n n a t u r a l i n c r e a s e d u r i n g t h e 1890's and t h e b u i l d i n g boom w h i c h f o l l o w e d a r e p a r t i a l l y e x p l a i n e d by t h e p r o s p e r i t y o f t h e e a r l y 1870's and t h e i n a b i l i t y o f F r a n c e and P r u s s i a t o g e t a l o n g . 248 VARIATIONS IN THE COURSE OF HOUSE-BUILDING AT THE LOCAL  LEVEL: SOUTH-EAST LANCASHIRE We have seen t h a t h o u s e - b u i l d i n g i n South-east Lan-c a s h i r e f o l l o w e d c l o s e l y the n a t i o n a l p a t t e r n between 1860 and 1900. Was t h i s , however, the t y p i c a l e x p e r i e n c e of i n d i v i d u a l towns throughout the r e g i o n ? In t h i s s e c t i o n we r e s t r i c t o u r s e l v e s t o a d d r e s s i n g t h i s q u e s t i o n o n l y . The reason f o r t h i s i s t h a t we have access t o even l e s s i n f o r m a t i o n on the l o c a l demographic and economic h i s t o r y o f South-east L a n c a s h i r e than we d i d f o r South Wales. The i n f o r m a t i o n t h a t i s a v a i l a b l e w i l l be used, where r e l e v a n t , t o i n d i c a t e p o s s i b l e l o c a l b e h a v i o r a l r e l a t i o n s h i p s . We proceed by p a r t i a l l y d i s a g g r e g a t i n g the r e g i o n a l index. S t a t i s t i c a l s e r i e s f o r e l e v e n major towns i n c l u d e d i n the r e g i o n a l index w i l l be found i n T a b l e XVIII of Appendix I I I . Those f o r Ashton-under-Lyne, B o l t o n , A l t r i n c h a m , S a l f o r d , Oldham, S t o c k p o r t , Bury and Rochdale are i n the form of i n d i c e s of b u i l d i n g a c t i v i t y based on the average number of house p l a n s approved a n n u a l l y between 1901 and 1910 i n each town r e s p e c t i v e l y . The data f o r Burnley, P r e s t o n and Manchester are i n t h e i r raw form. The l o c a l r e c o r d s of house p l a n s approved i n Manchester between 1869 and 1890 249 have been l o s t o r d e s t r o y e d , w h i c h a c c o u n t s f o r t h e gap i n t h a t s e r i e s . The l o c a l i n d i c e s were c o n s t r u c t e d from raw d a t a on t h e number o f house p l a n s approved a n n u a l l y i n each town. Once a g a i n , i t i s i m p o r t a n t t o emphasize th e l i m i t a t i o n s o f t h e d a t a . T h i s was d i s c u s s e d i n t h e l a s t s e c t i o n o f t h e p r e v i o u s c h a p t e r as w e l l as i n Appendix I I , and need n o t d e t a i n us h e r e . I n l i g h t o f t h e s e d i f f i c u l t i e s , however, t h e s e r i e s can o n l y be c o n s i d e r e d rough approx-i m a t i o n s t o t h e a c t u a l c o u r s e o f b u i l d i n g , a c t i v i t y a t t h e l o c a l l e v e l . F o r ease o f r e f e r e n c e , t h e y have been graphed i n F i g u r e 14. T u r n i n g now t o F i g u r e 14 one i s s t r u c k by t h e d i v e r s i t y o f l o c a l b u i l d i n g p a t t e r n s . The s h o r t run f l u c t u a t i o n s o f t h e d i s a g g r e g a t e d s e r i e s p r o v i d e a s h a r p c o n t r a s t t o t h e r e l a t i v e l y smooth r e g i o n a l c u r v e o f h o u s e - b u i l d i n g i n South-e a s t L a n c a s h i r e . Our o b s e r v a t i o n s on t h e e x i s t e n c e o f l o n g swings a t t h e l o c a l l e v e l i n South Wales appear t o h o l d t r u e i n t h e p r e s e n t case as w e l l . Though r e c o g n i z a b l e i n a number o f t h e s e r i e s , t h e y h a r d l y d i s p l a y w i t h any degree o f u n i -f o r m i t y , t h e t i m e shape of t h e r e g i o n a l o r n a t i o n a l p a t t e r n . On t h e o t h e r hand, one does o b s e r v e a c o i n c i d e n c e o f r e l a t i v e l y 250 F i g u r e 14 INDICES OF HOUSE-BUILDING FOR SELECTED TOWNS IN SOUTH-EAST LANCASHIRE 1860 - 1914 Source: T a b l e XVIII, Appendix I I I ' 1 ' 1 I • 1860 1870 1880 1890 1900 1910 0..I ; ; ; ; -I860 1870 1880 1890 1900 1910 253 1860 1870 1880 1890 1900 1910 254 h i g h l e v e l s of c o n s t r u c t i o n a c t i v i t y i n a l l of the towns i n South-east L a n c a s h i r e d u r i n g the mid-1870's and a g a i n i n the l a t e 1890's. We have seen t h a t h o u s e - b u i l d i n g was r e l a t i v e l y de-p r e s s e d i n the mid-1860's. T h i s was e s p e c i a l l y t r u e i n B o l t o n and Ashton-under-Lyne. Manchester, however, ex-p e r i e n c e d a minor boom i n these y e a r s , w h i l e A l t r i n c h a m appears t o have f l u c t u a t e d around a r e l a t i v e l y c o n s t a n t l e v e l . The r e g i o n a l upswing i n the l a t e 1860's p r i m a r i l y r e f l e c t s the unusual e x p e r i e n c e of B o l t o n where a major peak i n both housing and i n d u s t r i a l b u i l d i n g came i n 1869. The h i g h l e v e l of i n - m i g r a t i o n s w e l l e d the urban l a b o u r f o r c e and added t o the demand f o r housing accommodation. Between 1861 and 1881, the p o p u l a t i o n of B o l t o n rose from 52 70,000 t o 105,000, and i n c r e a s e of 50 per cent. The 1870's w i t n e s s e d a tremendous i n c r e a s e i n b u i l d i n g a c t i v i t y throughout South-east L a n c a s h i r e . The pause i n the r e g i o n a l index i n 1871-2 r e s u l t s from minor r e v e r s a l s i n A l t r i n c h a m , Ashton-under-Lyne, B o l t o n and Oldham. A l l of the towns f o r which we have data i n t h i s p e r i o d were ex-p e r i e n c i n g a major boom i n r e s i d e n t i a l c o n s t r u c t i o n by 1875-6. M i t c h e l l , British Historical S t a t i s t i c s , pp. 24-25. 255 The most dramatic i n c r e a s e s o c c u r r e d i n Ashton-under-Lyne and Oldham between 1873 and 1877, i n S a l f o r d from 1872 t o 1875, i n Bury from 1875 to 1877, and i n Rochdale between 1869 and 1875. In the p r e v i o u s s e c t i o n we d i s c u s s e d b r i e f l y the s t r u c t u r e of the two main branches of L a n c a s h i r e c o t t o n i n d u s t r y and the tendency f o r the weaving or manufacturing branch to e x p e r i e n c e the p r o s p e r i t y of an upswing b e f o r e the s p i n n i n g branch. T h i s may, i n p a r t , e x p l a i n why the b u i l d i n g booms i n Oldham and Ashton-under-Lyne, which were p r i m a r i l y s p i n n i n g c e n t e r s , lagged somewhat the booms i n o t h e r towns. The e x p e r i e n c e of Oldham p r o v i d e s a remarkable example of l o c a l p a r t i c i p a t i o n i n the wave of expansion t h a t over-took the c o t t o n i n d u s t r y i n the decade of the ' s e v e n t i e s . The growth of p r o f i t s and d i v i d e n d s i n the l a t e 1860's and e a r l y 1870's s t i m u l a t e d an upsurge i n the f o r m a t i o n of j o i n t stock companies. Between 1873 and 1875, 60 companies r e -p r e s e n t i n g over 3,000,000 s p i n d l e s and a t o t a l nominal c a p i t a l 53 of 3,517,000 pounds were f l o a t e d i n Oldham. The working E l l i s o n , The Cotton Trade, pp. 134-5. 256 c l a s s e s both p a r t i c i p a t e d i n and promoted t h i s wave of investment. "Before 1873 the working c l a s s was e s t i m a t e d t o have owned a t l e a s t t h r e e - q u a r t e r s o f the c a p i t a l then i n v e s t e d i n the l o c a l s p i n n i n g companies ... There were hundreds of people e a r n i n g w e l l under h2 a week each w i t h hun-dreds of pounds i n v e s t e d i n t h e i r l o c a l m i l l s . By March, 1874, th e r e c o u l d not have been fewer than 10,000 persons h o l d i n g shares i n Oldham."54 The remarkable growth o f Oldham i s r e f l e c t e d i n her burgeon-i n g p o p u l a t i o n r e s u l t i n g not o n l y from n a t u r a l i n c r e a s e , but, as we have seen, from the heavy net i n f l o w of p o p u l a t i o n through i n t e r n a l m i g r a t i o n . In 1871 her p o p u l a t i o n stood a t 83,000; by 1881, t h i s had grown t o 111,000, an i n c r e a s e 55 of 34 per cent. There can be l i t t l e q u e s t i o n t h a t such a dramatic r i s e i n p o p u l a t i o n was an important f a c t o r con-t r i b u t i n g t o the b u i l d i n g boom of 1876-7. The c r i s i s o f the l a t e 1870's h i t the working c l a s s e s e s p e c i a l l y hard, not o n l y because of unemployment and reduced wages, but a l s o because of heavy c a l l s i n unpaid-up share c a p i t a l . Many workers l o s t t h e i r e n t i r e i n v e s t e d s a v i n g s . 54 D.A. F a r n i e , The English Cotton Industry, 1850-1896, (M.A. t h e s i s , Manchester U n i v e r s i t y , 1953), c i t e d i n Lewis, Building Cycles and B r i t a i n s Growth, p. 125. 55 M i t c h e l l , British Historical S t a t i s t i c s , pp. 26-27. 257 Working c l a s s savings were subsequently d i v e r t e d away from the c o t t o n i n d u s t r y to s a v i n g s banks and b u i l d i n g s o c i e t i e s . During the d e p r e s s i o n of the 1880's fewer than 10 per cent of m i l l workers h e l d shares i n l o c a l i n d u s t r y . Lewis d e s c r i b e s the r o l e working c l a s s savings p l a y e d i n the p a t t e r n of r e g i o n a l development as f o l l o w s : "We thus have the phenomenon o f workers s a v i n g , i n v e s t i n g i n t h e i r own i n d u s t r y , and drawing h i g h d i v i d e n s which were u s u a l l y r e i n v e s t e d . They s t i m u l a t e d not o n l y i n d u s t r i a l b u i l d i n g , but a l s o h o u s e - b u i l d i n g , more through m i g r a t i o n i n t o the area than through an income e l a s t i c i t y o f demand. When c a p a c i t y and b u i l d i n g had been overdone, and they l o s t both t h e i r jobs and t h e i r s a v i n g s , they m i g r a t e d , or moved t o g e t h e r , and l e f t s u r p l u s houses. But when b e t t e r times came they r e t a i n e d t h e i r t h r i f t y h a b i t s and now^g f a c i l i t a t e d h o u s e - b u i l d i n g by s u p p l y i n g funds." H o u s e - b u i l d i n g f e l l o f f s h a r p l y throughout South-east L a n c a s h i r e d u r i n g the t r a d e c r i s i s o f the l a t e 1870's. The 1880's opned w i t h a b u i l d i n g d e p r e s s i o n i n a l l of the towns f o r which we have data. As the decade u n f o l d e d , however, t h e r e was a growing d i v e r s i t y of l o c a l h o u s e - b u i l d i n g e x p e r i e n -c e s . Some towns such as A l t r i n c h a m and S a l f o r d f o l l o w c l o s e l y the r e g i o n a l and n a t i o n a l a c t i v i t y i n the 1880's and e a r l y 1890's, f o l l o w e d by an upswing i n 1894-5. T h i s , on the o t h e r Lewis, Building Cycles and B r i t a i n s Growth, p. 126. 258 hand, was i n sharp c o n t r a s t to the course of h o u s e - b u i l d i n g i n B o l t o n , Oldham and Ashton-under-Lyne. In the p r e c e d i n g s e c t i o n we noted the boom i n the mule t w i s t t r a d e d u r i n g the e a r l y 18 80's. The above towns were the primary c e n t e r s o f t h i s i n d u s t r y , and e x p e r i e n c e d a wave of investment i n s p i n n i n g m i l l s d u r i n g these years which was accompanied by 57 an upswing i n h o u s e - b u i l d i n g . R e v e r s a l s o c c u r r e d i n both Ashton-under-Lyne and Oldham a f t e r 1886, w h i l e B o l t o n , a f t e r a b r i e f pause i n 1886-7, c o n t i n u e d to climb to a minor peak i n 1890. Between 1891 and 1911, h o u s e - b u i l d i n g i n B o l t o n f l u c t u a t e d around a r e l a t i v e l y h i g h c o n s t a n t l e v e l . Recovery came e a r l y t o Rochdale and S t o c k p o r t w i t h upswings i n r e s i d e n t i a l c o n s t r u c t i o n g e t t i n g underway a f t e r 1885-6, and l e v e l i n g o f f a f t e r 1889. Bury on the o t h e r hand, e x p e r i e n c e d a l o n g e r p e r i o d of d e p r e s s i o n i n h o u s e - b u i l d i n g than any o t h e r town i n the r e g i o n , extending from 1878 to 1906. Her p o p u l a t i o n which stood a t 99,494 i n 1881, remained almost s t a t i o n a r y over the e n t i r e p e r i o d , c l i m b i n g to 102,103 i n 1891, 102,687 i n 1901 and then d e c l i n i n g i n the nextdecade T.S. Ashton, "The Growth of T e x t i l e B usinesses i n the Oldham D i s t r i c t , 1884-1924", Journal of the Royal S t a t i s t i c a l Society, V o l . LXXXIX, (May, 1926), pp. 568-9. 259 to 96,591 i n 1 9 1 1 . 5 8 R e s i d e n t i a l c o n s t r u c t i o n was r e l a t i v e l y depressed throughout South-east L a n c a s h i r e i n the e a r l y 1890's, but as the home boom gained momentum a f t e r 189 4-5, i t drew i n a l l o f the towns i n c l u d e d i n the r e g i o n a l index, w i t h the e x c e p t i o n of S t o c k p o r t , Bury and B o l t o n . The r e g i o n a l upswing i s dominated by the b u i l d i n g boom i n Manchester, where the number of houses e r e c t e d a n n u a l l y i n c r e a s e d sharp-l y from 687 i n 1893 to 2939 i n 1899. The towns p o p u l a t i o n rose from 890,622 i n 1891 to 1,011,605 i n 1901, a growth of 59 13.6 per cent. Major booms a l s o took p l a c e i n Altin c h a m , whose p o p u l a t i o n r o s e from 38,603 i n 1891 t o 43,122 i n 1901 (an i n c r e a s e o f 11.7 per c e n t ) , Ashton-under-Lyne where the i n c r e a s e was from 84,654 to 90,492 (6.9 per c e n t ) , Burnley whose p o p u l a t i o n climbed from 87,016 to 97,043 (11.5 per cent) and Rochdale where the i n c r e a s e was s l i g h t l y lower, from 76,161 to 83,114 (9.1 per c e n t ) . 6 0 Page, Commerce and Industry, p. 9. 59 Thomas A. Welton, "Notes on the Census Report (1901) f o r the County of L a n c a s t e r " , Manchester S t a t i s t i c a l Society transactions, (November, 1902), p. 2. 6 0 T J . , Ibid. 260 The c r i s i s which h i t the L a n c a s h i r e c o t t o n i n d u s t r y at the t u r n of the c e n t u r y was accompanied by a d e c l i n e i n home consumption, i n c r e a s e d unemployment and l a b o u r un-r e s t , f a l l i n g wages and incomes p l u s the appearance of o u t - m i g r a t i o n i n the house-seeking age group. T h i s c o i n -c i d e d w i t h a slump i n h o u s e - b u i l d i n g i n most of the towns f o r which we have data. There were, however, s i g n i f i c a n t l o c a l d i f f e r e n c e s i n t i m i n g and d u r a t i o n . R e s i d e n t i a l c o n s t r u c t i o n f e l l o f f s h a r p l y i n Burnley a f t e r 189 7 and remained i n the doldrums u n t i l an upswing got underway i n 1905. The d e c l i n e i n S a l f o r d began i n the same year, 1898, l e v e l i n g o f f somewhat i n the e a r l y 1900's, and i f the peak i n 19 0 8 i s c o n s i d e r e d a random shock, the t r e n d i s downward a f t e r 1905. The downswings i n Oldham a f t e r 189 8 and i n Rochdale a f t e r 1900 are m i l d compared t o the p r e c i p i t o u s d e c l i n e s i n B u r n l e y and Manchester. A trough o c c u r s i n 190 5, a f t e r which b u i l d i n g a c t i v i t y i n both towns r i s e s t o a minor peak i n 1908-9. A l t r i n c h a m , on the o t h e r hand, e x p e r i e n c e s a long f l u c t u a t i n g boom from 1894 to 1904, f a l l i n g t h e r e a f t e r u n t i l the outbreak of war i n 1914. S t o c k p o r t , i n much the same way as B o l t o n , enjoys r e l a t i v e l y h i g h l e v e l s of b u i l d i n g a c t i v i t y throughout the e n t i r e p e r i o d 1890 to 1912. I f the i s o l a t e d 261 peak i n 1903 f o r Ashton-under-Lyne i s i g n o r e d , then the l o c a l course of h o u s e - b u i l d i n g bears a c l o s e resemblance t o the r e g i o n a l p a t t e r n . The boom i n h o u s e - b u i l d i n g t h a t got underway i n most of the towns i n South-east L a n c a s h i r e d u r i n g the l a t e 1890's d i f f e r e d i n a number o f ways from the swing of the 1870's. In many cases i t was f a r l e s s i n t e n s e . The peak year, 189 8, i n Oldham saw l e s s h o u s e - b u i l d i n g than the minor boom of the mid-1880's, and was o n l y o n e - t h i r d of the amplitude of the major boom of 1876-7. In AltrLncham, on the o t h e r hand, the boom o f the 1890's overshadowed the long swing i n the 1870's, w h i l e i n Rochdale, t h e i r r e l a t i v e magnitudes were about the same. In g e n e r a l , however, the boom of the 1870's was f a r more dr a m a t i c , w i t h the p e r i o d of e x c e p t i o n a l l y h i g h b u i l d i n g a c t i v i t y spanning o n l y a few years i n the middle o f the decade. Our d a t a f o r the 1890's, which i n c l u d e s a number of new towns, d i s p l a y s f a r more v a r i a t i o n i n l o c a l p a t t e r n s over the e n t i r e p e r i o d 1890-1910, d e s p i t e the g e n e r a l tendency toward h i g h e r l e v e l s of b u i l d i n g c o n s t r u c t i o n i n the l a t e 1890's. T h i s not o n l y has the e f f e c t of r e d u c i n g the i n t e n s i t y of the second r e g i o n a l long swing, but a l s o lengthens i t s p e r i o d . In t h i s c h a p t e r we have seen t h a t the course of house-262 b u i l d i n g i n South-east Lancashire resembles c l o s e l y the national pattern before 19 00. May we thus assume that the causal mechanisms giving r i s e to long swings i n r e s i d e n t i a l construction were b a s i c a l l y the same at the national and regional level? Our analysis of the economic and demographic development of Lancashire suggests that such an assumption might be misleading. The national me-chanism holds that the cessation of foreign investment and emigration which was accompanied by a decline i n exports a f t e r 1873, released f i n a n c i a l c a p i t a l and labour for home investment. The decline i n emigration, primarily from the countryside into the c i t i e s , thus increasing the demand for housing accommodation. The relevant question to ask with respect to the experience of South-east Lancashire i s whether a regional boom would have taken place i n the absence of the i n t e r n a t i o n a l r e d i r e c t i o n of resources implied by the working of the A t l a n t i c economy. The evidence we have presented i n the course of t h i s regional analysis i s s u f f i c i e n t to venture a tentative answer to t h i s question. The l a t e 1860's and early 1870 1s were years of heavy foreign investment and emigration overseas. At the same time, the balance of i n t e r n a l migration i n favor of Lancashire was ex-c e p t i o n a l l y high. Foreign development imposed l i t t l e i f any 263 r e s t r a i n t on the i n d u s t r i a l r e c o v e r y of the r e g i o n a l economy, and i t s a b i l i t y t o a t t r a c t n ecessary s u p p l i e s of l a b o u r and c a p i t a l f o l l o w i n g the raw m a t e r i a l and c r e d i t c r i s e s of the e a r l y and mid-1860's. The ebb o f e x t e r n a l m i g r a t i o n a f t e r 1873 i s accompanied by a d e c l i n e i n i n t e r n a l m i g r a t i o n t o South-east L a n c a s h i r e . The evidence suggests t h a t changes i n the r e g i o n a l p o p u l a t i o n (the major determinant of housing demand) were p o s i t i v e l y r e l a t e d t o the development of the L a n c a s h i r e c o t t o n i n d u s t r y , and were not a r e s i d u a l i n f l u e n c e of overseas expansion. The e a r l y 1870's was undoubtedly one of the most p r o s p e r -ous p e r i o d s f o r the L a n c a s h i r e c o t t o n t r a d e . A world wide i n f l a t i o n c o n t r i b u t e d t o e x c e p t i o n a l p r o f i t s and d i v i d e n d s . The impact of the F r a n c o - P r u s s i a n war, which must be c o n s i d e r e d an exogenous shock i n t h i s c o n t e x t , gave a f i l l i p t o t h i s t r e n d . The working c l a s s shared i n the p r o s p e r i t y through i n c r e a s e d e a r n i n g s and employment. High p r o f i t s s t i m u l a t e d a wave of investment i n m i l l - b u i l d i n g and the i n c r e a s e d i n -comes and growing labou r f o r c e had a s i m i l a r i n f l u e n c e on h o u s e - b u i l d i n g . The market f o r c o t t o n goods s o f t e n e d somewhat a f t e r 1873, y e t p r o f i t s and d i v i d e n d s c o n t i n u e d to be d e c l a r e d u n t i l mid-1876 and wages o f o p e r a t i v e s c o n t i n u e d to r i s e u n t i l 1877. 264 The f a c t t h a t the b u i l d i n g boom con t i n u e d to 1876 i s perhaps b e s t e x p l a i n e d by the s t r u c t u r a l r e o r g a n i z a t i o n which took p l a c e i n the r e g i o n a l economy d u r i n g t h i s p e r i o d ( t h i s i s not to d i s m i s s many of the f a c t o r s d i s -cussed i n Chapter I I I , which a l s o p l a y e d a p a r t ) . R e g i o n a l c o n s t r u c t i o n was not e c l i p s e d by what i n the p a s t had be-come a t r a d i t i o n a l c r e d i t c r i s i s . The p r o l i f e r a t i o n o f j o i n t s t o c k companies and b u i l d i n g s o c i e t i e s p r o v i d e d a c r u c i a l supplement t o the e x i s t i n g banking system f o r the purpose of r e a l i z i n g the sav i n g s generated by the expansion of the r e g i o n a l economy. The c o n s t r u c t i o n o f c o t t o n m i l l s and co t t a g e s was by and l a r g e f i n a n c e d l o c a l l y out of the sa v i n g s of o p e r a t i v e s , c a r p e n t e r s , miners and mechanics, among o t h e r s . There i s l i t t l e q u e s t i o n t h a t the d e c l i n e i n f o r e i g n i n v e s t -ment and the d i v e r s i o n o f l o a n a b l e funds i n t o the domestic economy was an important f a c t o r e a s i n g c r e d i t c o n d i t i o n s a t 61 home. We are simply s u g g e s t i n g t h a t i t was not c r i t i c a l In 1876 the Economist observed, w i t h r e s p e c t t o the count r y as a whole t h a t "the g r e a t l y demand ( f o r wood) seems to be owing c h i e f l y t o the low p r i c e of money, and to the i n c l i n a t i o n on the p a r t o f c a p i t a l i s t s t o p r e f e r investments i n s u b s t a n t i a l p r o p e r t y i n England to f o r e i g n s t o c k s ... As long as money c o n t i n u e s c h e a p , t h i s r a t e of consumption may be mai n t a i n e d , although i t w i l l p r obably r e s u l t s i n b u i l d i n g beyond the requirements o f the p o p u l a t i o n " . The Economist Commercial History and Review, 1877, p. 19, quoted i n Lewis, Building Cycles and B r i t a i n ' s Growth, p. 199. 265 i n the mechanism of the r e g i o n a l long swing i n South-e a s t L a n c a s h i r e . At t h i s stage i t i s c l e a r t h a t we need more study o f the f u n c t i o n s of b u i l d i n g s o c i e t i e s and othe r r e g i o n a l f i n a n c i a l r e l a t i o n s h i p s b e f o r e a n y t h i n g more a s s e r t i v e can be s a i d . CHAPTER VII SOME CONCLUSIONS AND THEIR IMPLICATIONS FOR FURTHER STUDY OF HOUSE-BUILDING IN VICTORIAN BRITAIN Long swings i n r e s i d e n t i a l c o n s t r u c t i o n are found to be a prominent c h a r a c t e r i s t i c of the time-path t r a c e d by v a r i o u s aggregate measures of h o u s e - b u i l d i n g a c t i v i t y i n Great B r i t a i n from 1860 t o 1914. In g e n e r a l , these s e c u l a r f l u c t u a t i o n s of approximately twenty years d u r a t i o n have been e x p l a i n e d i n terms of macro-causal r e l a t i o n s h i p s , the most i n t r i g u i n g example o f which i s found i n the h y p o t h e s i s of an " A t l a n t i c economy". The p e c u l i a r i n s t i t u t i o n a l arrangements which c h a r a c t e r -i z e the housing market g i v e r i s e t o lagged response p a t t e r n s i n the p r o c e s s by which changes i n demand are t r a n s l a t e d i n t o changes i n the supply o f housing accommodation. A g e n e r a l a n a l y s i s o f housing market s t r u c t u r e suggests t h a t the a p p r o p r i a t e l e v e l a t which t o analyze the b e h a v i o r of r e s i -d e n t i a l c o n s t r u c t i o n i s the r e g i o n a l o r l o c a l level."'' The emphasis here i s on " r e g i o n a l " , although a number of s p e c i f i c l o c a l i t i e s , f o r example London or Birmingham whose p o p u l a t i o n s exceed those of many w e l l d e f i n e d r e g i o n s , r e -q u i r e s p e c i a l study. 266 267 Two of the reasons g i v e n f o r t h i s were, f i r s t , i t a l l o w s us t o i d e n t i f y and assess not o n l y those f o r c e s of a n a t i o n a l or i n t e r n a t i o n a l c h a r a c t e r which impinge on the housing market but a l s o those s t r u c t u r a l and i n s t i t u t i o n a l f a c t o r s o f s p e c i f i c l o c a l o r r e g i o n a l o r i g i n which combine to i n f l u e n c e the course o f h o u s e - b u i l d i n g a c t i v i t y . Second, t h e r e i s l e s s chance of s p e c i f y i n g c a u s a l r e l a t i o n s h i p s whose u n d e r l y i n g b e h a v i o r a l i m p l i c a t i o n s are i n c o n s i s t e n t w i t h the l e v e l o f a g g r e g a t i o n . We have r e p e a t e d l y emphasized the fundamental l o c a l c h a r a c t e r o f the market f o r housing accommodation. In a ver y r e a l sense, t h e r e i s no n a t i o n a l housing market. A house s t a n d i n g vacant i n Oldham can h a r d l y be c o n s i d e r e d a s u b s t i t u t e f o r a house demanded i n Glasgow. Yet, i t i s p r e c i s e l y t h i s p o i n t which has been o v e r l o o k e d i n so many of the s t u d i e s o f h o u s e - b u i l d i n g a c t i v i t y i n Great B r i t a i n . The e x i s t e n c e o f c o n s i d e r a b l e r e g i o n a l d i f f e r e n c e s i n the course of house b u i l d i n g renders the burden of g e n e r a l -i z a t i o n v ery hazardous. The enhanced p o s s i b i l i t y o f drawing s e r i o u s l y m i s l e a d i n g c o n c l u s i o n s by arg u i n g an aggregates suggests t h a t a more p r o d u c t i v e approach c o u l d be made a t the r e g i o n a l l e v e l . The p r e s e n t paper as one of the f i r s t few steps i n t h i s d i r e c t i o n lends s u b s t a n t i a l support t o 268 t h i s o p i n i o n . We have shown t h a t h o u s e - b u i l d i n g i n South Wales f l u c t u a t e d i n v e r s e l y t o t h a t of Great B r i t a i n as a whole, e s p e c i a l l y a f t e r 1880. The r e g i o n a l course of r e s i d e n t i a l c o n s t r u c t i o n was p r i m a r i l y determined by the long run ex-p ansion of the c o a l mining i n d u s t r y (the l a t t e r b e i n g a n a t u r a l response to overseas expansion and the a p p l i c a t i o n of a steam technology i n t r a n s p o r t a t i o n around the world) and by f l u c t u a t i o n s i n the export s e c t o r which, through the p r i c e - p r o f i t mechanism d e s c r i b e d i n Chapter V, determ-i n e d the i n d u s t r i a l d i s p o s i t i o n and u t i l i z a t i o n of p r o d u c t i v e r e s o u r c e s . The f a c t t h a t t h i s expansion was u n i n t e r r u p t e d , drawing l a b o u r c o n t i n u o u s l y to the c o a l f i e l d s and thereby c r e a t i n g a p e r p e t u a l housing shortage, h e l p s e x p l a i n the absence of r e g i o n a l long swings i n South Wales. In c o n t r a s t t o South Wales, h o u s e - b u i l d i n g i n South-e a s t L a n c a s h i r e f o l l o w e d c l o s e l y the n a t i o n a l p a t t e r n from 1860 to 1914. We have seen, however, t h a t the r e g i o n a l course of r e s i d e n t i a l c o n s t r u c t i o n was l a r g e l y determined by f o r c e s of l o c a l o r i g i n and the i n f l u e n c e of exogenous shocks. Important f a c t o r s of a r e g i o n a l or l o c a l nature were the growth of l i m i t e d l i a b i l i t y ownership, the p r o l i f e r a t i o n of b u i l d i n g s o c i e t i e s and^ i n g e n e r a l , the e v o l u t i o n of a more 269 " p e r f e c t " c a p i t a l market which p r o v i d e d the necessary f a c i l i t i e s f o r the r e a l i z a t i o n of sa v i n g s f l o w i n g from the i n c r e a s e d wages and e a r n i n g s generated d u r i n g an upswing i n the c o t t o n i n d u s t r y . I n t e r n a t i o n a l i n f l u e n c e s were p r i m a r i l y i n the form o f shocks which c o u l d h a r d l y be c o n s i d e r e d endogenous i n an i n t e r n a t i o n a l mechanism. The Cotton Famine and i t s aftermath had a d e p r e s s i n g i n f l u e n c e on the r e g i o n a l economy and l o c a l h o u s e - b u i l d -i n g , w h i l e the i n t e r r u p t i o n o f p r o d u c t i o n on the C o n t i n e n t o c c a s i o n e d by the F r a n c o - P r u s s i a n War gave a sharp boost to the L a n c a s h i r e c o t t o n t r a d e i n the e a r l y 1870's. There were a l s o shocks of a p r i m a r i l y domestic o r i g i n . The f a i l -ure o f the C i t y o f Glasgow Bank, and the rumours which l e d to a run on b u i l d i n g s o c i e t i e s i n L a n c a s h i r e were f o r t u i t o u s events i n the p r e s e n t c o n t e x t . B u i l d i n g s o c i e t i e s (and there-by, h o u s e - b u i l d i n g ) a l s o s u f f e r e d from the r e t a l i a t o r y t a c t i c s of labour unions i n t h e i r f i g h t t o r e g a i n wage c u t s . Withdrawals of funds and f a i l u r e t o make payments had a d i s r u p t i v e impact on the market f o r mortgage c r e d i t . These exogenous f a c t o r s p l a y e d an important r o l e i n the r e g i o n a l course o f h o u s e - b u i l d i n g a c t i v i t y . On the o t h e r hand, t h e r e were what might be r e f e r r e d t o as endogenous i n t e r n a t i o n a l f o r c e s which had a marked i n f l u e n c e 270 on the p a t t e r n of r e g i o n a l development, but i n a way q u i t e d i f f e r e n t from t h a t i m p l i e d by the A t l a n t i c economy h y p o t h e s i s . F o r example, the upswing i n f o r e i g n investment and the expansion of the B r i t i s h export s e c t o r i n the 1880's c o i n c i d e d w i t h a g r a d u a l d e t e r i o r a t i o n of the L a n c a s h i r e export t r a d e i n c o t t o n goods. The r e g i o n a l economy f a i l e d to p a r t i c i p a t e i n the expansion overseas because r a p i d l y growing c o t t o n t e x t i l e i n d u s t r i e s abroad were g a i n i n g g r e a t e r c o n t r o l of t h e i r own markets and s l o w l y undermining Lanca-s h i r e ' s hegemony i n the world c o t t o n t r a d e . I t i s p o s s i b l e t h a t t h e r e does not e x i s t any r e a l b e h a v i o r a l mechanism to e x p l a i n the aggregate volume of b u i l d i n g a c t i v i t y at the n a t i o n a l l e v e l . Indeed, the na-t i o n a l p a t t e r n may be o n l y a s t a t i s t i c a l c r e a t i o n w i t h no o t h e r e x p l a n a t i o n than, l e t us suppose, the i n d i v i d u a l , c o n s i s t e n t b e h a v i o r a l r e l a t i o n s h i p s g i v i n g r i s e t o " r e a l " r e g i o n a l h o u s e - b u i l d i n g p a t t e r n s . The n a t i o n a l p a t t e r n i n t h i s case would simply be a sum of the r e g i o n a l e x p e r i e n c e s w i t h no e x p l a n a t i o n independent of the i n d i v i d u a l r e g i o n a l e x p l a n a t i o n s . I f t h e r e e x i s t s an o p e r a t i v e s e t of macro-causal r e l a t i o n -s h i p s at the aggregate l e v e l , as c l a i m e d by Thomas, Cooney, 271 C a i r n c r o s s and o t h e r s , then i t should be p o s s i b l e t o r e l a t e these mechanisms to the l o c a l or r e g i o n a l exper-i e n c e . T h i s they have f a i l e d to do and i t i s here t h a t the p r e s e n t paper makes a p r i n c i p l e c o n t r i b u t i o n . We have seen t h a t the c a u s a l mechanisms g i v i n g r i s e t o the r e g i o n a l p a t t e r n of h o u s e - b u i l d i n g i n South Wales are b a s i c a l l y c o n s i s t e n t w i t h the i n t e r - r e l a t i o n s h i p s embodied i n the A t l a n t i c economy h y p o t h e s i s . T h i s , however, was not found t o be t r u e of the c e n t e r of the B r i t i s h c o t t o n i n d u s t r y . The r e g i o n a l e x p e r i e n c e of South-east L a n c a s h i r e i s e x p l a i n e d by c a u s a l r e l a t i o n s h i p s and exo-genous f a c t o r s which are i n d i r e c t disagreement w i t h the i m p l i e d mechanisms of the A t l a n t i c economy. I t has not been the purpose of t h i s study to p r e s e n t a t h e o r y of the long swing. Indeed, our c o n c l u s i o n s suggest t h a t f a r more r e s e a r c h i s r e q u i r e d b e f o r e such an ambitious t a s k c o u l d f r u i t f u l l y be undertaken. Our a n a l y s i s of house-b u i l d i n g i n South Wales and South-East L a n c a s h i r e , incomplete though i t may be, i n d i c a t e s t h a t the mechanism of the b u i l d -i n g c y c l e not o n l y v a r i e d between r e g i o n s but was f a r more complex than many students of the long swing have been w i l l i n g t o admit. In the course o f t h i s study we have attempted to o u t l i n e the o p e r a t i v e c a u s a l r e l a t i o n s h i p s behind the r e g i o n a l 272 p a t t e r n s o f h o u s e - b u i l d i n g a c t i v i t y i n South Wales and S o u t h - e a s t L a n c a s h i r e . They have n o t been p r o v e n t o be c o r r e c t i n any f o r m a l s e n s e , b u t r a t h e r , r e s t on o u r i n t e r p r e t a t i o n o f h i s t o r i c a l f a c t . I n t h i s r e g a r d , a comment by J . P a r r y L e w i s i s e s p e c i a l l y a p p r o p r i a t e : " T h i s i s n o t t o say t h a t h i s t o r i c a l p r o o f does n o t e x i s t . I t most c e r t a i n l y does. But i t needs a f a r g r e a t e r e x p e r t t o r e -c o g n i z e i t t h a n does a s t a t i s t i c a l p r o o f ; and on o c c a s i o n t h e e x p e r t must d e c l a r e t h a t he sees no p r o s p e c t o f p r o o f o r d i s -p r o o f , u n l e s s some u n s u s p e c t e d d a t a a r e r e v e a l e d . " 2 We have l e f t many s t o n e s u n t u r n e d . T h i s has been t h e u n f o r t u n a t e consequence o f n o t h a v i n g a c c e s s t o r e l e v a n t i n f o r m a t i o n as w e l l as b e i n g c o n s t r a i n e d by t i m e . I t i s c l e a r , however, t h a t f a r more work needs t o be done a t t h e r e g i o n a l l e v e l . The p r e s e n t p aper h a r d l y p r o v i d e s a b a l a n c e d a p p r o a c h t o t h e s t u d y o f r e g i o n a l h o u s e - b u i l d i n g p a t t e r n s i n a l l o f G r e a t B r i t a i n . O t h e r a r e a s i n w h i c h s i m i l a r r e s e a r c h m i g h t be c o n d u c t e d a r e t h e w o r s t e d and w o o l l e n r e g i o n o f Y o r k s h i r e (the West R i d i n g ) , t h e c o a l f i e l d s o f N o r t h - e a s t L e w i s , Building Cycles and B r i t a i n s Growth, p. 211. 273 England, the Birmingham c o n u r b a t i o n , the Glasgow con-u r b a t i o n and London ( i n c l u d i n g the towns i n the o u t e r r i n g ) . We a l s o need t o know more about the impact of i n -t e r n a l m i g r a t i o n and n a t u r a l i n c r e a s e on the r a t e of household f o r m a t i o n at the r e g i o n a l l e v e l . 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The Welsh Economy: Studies in Expansion. ( C a r d i f f : U n i v e r s i t y o f Wales P r e s s , 1962). Thomas, D. A. "The Growth and D i r e c t i o n o f our F o r e i g n T r a d e I n C o a l d u r i n g the L a s t H a l f C e n t u r y , " Journal of the Royal Statistical Society, V o l . LXVI (September, 1 9 0 3 ) , pp. 439-522. T i n b e r g e n , J . Statistical Testing of Business Cycle Theories. (Geneva: League o f N a t i o n s , 1939). , and J . J . P o l a k . The Dynamics of Business Cycles. ( C h i c a g o : U n i v e r s i t y o f C h i c a g o P r e s s , 1 9 4 2 ) . Trueman, A. E. " P o p u l a t i o n Changes i n t h e E a s t e r n P a r t o f t h e S o u t h Wales C o a l f i e l d , " Geographical Journal, V o l . 53 ( J u n e , 1 9 1 9 ) , pp. 410-419. T u r n e r , H. A. Trade Union Growth, Structure and Policy. (London: George A l l e n and Unwin L t d . , 1962). Webb, S i d n e y and B e a t r i c e . The History of Trade Unionism, 1666 - 1920. (London: Longmans and Co. L t d . , 1920). Weber, B e r n a r d . "A New Index o f House R e n t s f o r G r e a t B r i t a i n , " Scottish Journal of Political Economy, V o l . I l l ( 1 9 5 6 ) , pp. 232-237. . "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n and Long C y c l e s i n H o u s e - B u i l d i n g i n G r e a t B r i t a i n , 1838 - 1950," Scottish Journal of Political Economy, V o l . I I ( J u n e , 1 9 5 5 ) , pp. 104-132. 280 W e l t o n , Thomas A. "Note on Urban and R u r a l V a r i a t i o n s A c c o r d i n g t o the E n g l i s h Census o f 1911," Journal of the Royal Statistical Society, V o l . LXXVI ( F e b r u a r y , 1 9 1 3 ) , pp. 304-317. . England's Recent Progress: An Investigation of the Statistics of Migration Morality, etc. in the Twenty Years from 1881 to 1901, as indicating Tendencies Towards the Growth or Decay of Particular Communities and of the Rural Portions of England and Wales. (London: Chapman & H a l l L t d . , 1911). . "Notes on the Census R e p o r t (1901) f o r t h e County o f L a n c a s t e r , " Manchester Statistical Society Transactions... (November, 1 9 0 2 ) , pp. 1-48. W i l l i a m s , L. J . "The New U n i o n i s m i n South Wales, 1889 - 92," Welsh History Review, V o l . I ( 1 9 6 0 - 6 3 ) , pp. 413-429. Wood, G. H. "The S t a t i s t i c s o f Wages i n t h e N i n e t e e n t h C e n t u r y . P a r t X I X - The C o t t o n I n d u s t r y , " Journal of the Royal Statistical Society, V o l . L X X I I I ( J u n e , 1 9 1 0 ) , pp. 585-626. APPENDIX I The number of towns f o r which b u i l d i n g s t a t i s t i c s are a v a i l a b l e b e f o r e 1900 g r a d u a l l y decreases to s i x i n 1856. To c o n s t r u c t a g e n e r a l index of b u i l d i n g a c t i v i t y by combining an i n c r e a s i n g number o f s e r i e s i t was ne-c e s s a r y f o r Weber to v a r y a p p r o p r i a t e l y the number of towns i n the base p e r i o d (1900-09). "Thus the houses b u i l t i n the towns i n c l u d e d i n , say, 1856 were added up and the sums were expressed as r e l a t i v e s o f the average number o f houses e r e c t e d i n the same towns i n the base p e r i o d . As f u r t h e r towns were added, the average f o r 1900-09 was c o r r e s p o n d i n g l y r a i s e d by the average amount of b u i l d i n g i n the added towns.""'' London p r e s e n t e d a number of i n t e r e s t i n g problems. The course of h o u s e - b u i l d i n g i n the m e t r o p o l i s o f t e n v a r i e d c o n s i d e r a b l y from t h a t i n o t h e r r e g i o n s of Great B r i t a i n . Consequently, when i t was i n c l u d e d i n the index as d e s c r i b e d above, i t tended to have an exagerated i n f l u e n c e on the t r e n d i n b u i l d i n g a c t i v i t y . To a v o i d t h i s problem, a g e n e r a l index based on t h i r t y - t h r e e towns, e x c l u d i n g London, was Weber, "A New Index of Residential Construction", p. 109. 281 282 c o n s t r u c t e d and used t o e s t i m a t e the a c t u a l number o f houses b u i l t i n G r e a t B r i t a i n n o t i n c l u d i n g London. The o f f i c i a l s t a t i s t i c s o f a l l houses b u i l t i n G r e a t B r i t a i n from 19 24 t o 19 37 minus t h e houses c o n s t r u c t e d i n London were used as a base t o c o n s t r u c t t h e s e e s t i m a t e s . Data on h o u s e - b u i l d i n g i n t h e f o l l o w i n g towns were used t o c o n s t r u c t Weber's Index o f R e s i d e n t i a l c o n s t r u c t i o n 2 i n G r e a t B r i t a i n . The i n d e x o f houses under c o n s t r u c t i o n i n E n g l a n d and Wales on Census day (Column 4 i n T a b l e XVI) has been p l o t t e d i n F i g u r e 15. T h i s e v i d e n c e i s i n rough agreement w i t h t h a t p r o v i d e d by Weber's Index o f b u i l d i n g a c t i v i t y . A v a i l a b l e d a t a from t h e Census o f P o p u l a t i o n i n S c o t l a n d was e x c l u d e d from T a b l e XVI because o f a change i n t h e d e f i n i t i o n o f a house i n 1881 t h a t p r e c l u d e s c o m p a r a b i l i t y i n p r e v i o u s y e a r s . 2Ibid.} p. 129. B i r k e n h e a d , 1853-74 and 1895-1923 H u l l , 1853-92 and 1895-1923 Birmingham, 1859-1923 L e e d s , 1876-1923 B r a d f o r d , 1853-1923 L e i c e s t e r , 1892-1923 B r i g h t o n , 1894-1923 L i v e r p o o l , 1853-66 and 1872-1923 B r i s t o l , 1899-1923 London, 1856-1916 and 1920-23 B u r n l e y , 1887-1913 and 1921-1923 M a c c l e s f i e l d ,1894-1923 B u r t o n - o n - T r e n t , 1866-1923 M a n c h e s t e r , 1891-1923 C a r d i f f , 1882-1912 N e w c a s t l e , 1881-1923 C o v e n t r y , 1892-1923 Newport (Mon . )1855-1923 Crewe, 1876-1923 N o t t i n g h a m , 1882-89 and 1896-1923 Derby, 1886-1923 R o c h d a l e , 1878-1923 D o n c a s t e r , 1891-1923 S h e f f i e l d , 1887-1923 E x e t e r , 1868-1923 S t o c k p o r t , 1866-1923 Gat e s h e a d , 1900-1923 Swindon, 1871-1923 Glasgow, 1864-1923 S u n d e r l a n d , 1895-1923 G l o u c e s t e r , 1879-1923 W a k e f i e l d , 1878-1923 Gourock , 1896-1923 Wolverhampton, 1861-69, 1877-84, and 1887-1923 TABLE XV NATIONAL INDICES OF BUILDING ACTIVITY IN GREAT BRITAIN, 1860-1914 In h a b i t e d House Duty S t a t i s t i c s (6) Net Increase i n Housing-Stock (000's) WEBER (1) Year New Houses B u i l t (000's) (2) B u i l d i n g Index LEWIS (3) Weighted Index CAIRNCROSS (4) (5) 1900-09=100 1901-10=100 New Houses B u i l t (000 ' s) Volume o f R e s i d e n t i a l B u i l d i n g 1907=100 1860 45.2 34.6 37.9 1861 45.2 34.6 39 .3 1862 58.1 44.5 47.6 1863 64.4 49.3 52.1 1864 60.9 46.6 54.9 1865 53.6 41.0 48.7 1866 55.2 42. 3 51.4 1867 65.3 50.0 57.7 1868 70 .4 53.9 64.1 1869 77.0 59 .0 70.1 1870 85.9 65.8 75.2 78 54.4 1871 90.4 69 .2 77.1 83 58.2 1872 93.8 71.9 82.0 90 63.4 1873 81.7 62.6 75.0 92 65.1 1874 90 .9 69 .6 86.5 98 69 . 7 1875 120.3 92.2 108.0 103 73.6 116 1876 130 . 8 100.2 123.0 110 79 .0 128 1877 124.1 95.0 115.9 112 80 . 8 87 1878 106.5 81.6 99.4 108 78.3 125 1879 86.0 65.8 80.2 102 74.0 112 to 00 TABLE XV - Continued (2) NATIONAL INDICES OF BUILDING ACTIVITY IN GREAT BRITAIN, 1860-14 Year WEBER (1) New Houses B u i l t (000's) (2) B u i l d i n g Index LEWIS (3) Weighted Index CAIRNCROSS (4) (5) 1900-09=100 1901-10=100 New Houses B u i l t (000's) Volume of R e s i d e n t i a l B u i l d i n g 1907=100 In h a b i t e d House Duty S t a t i s t i c s (6) Net Increase i n Housing-Stock (000's) 1880 83.1 63.6 75.9 97 71.0 97 1881 79 .1 60.6 76. 8 95 69 .9 80 1882 81.9 62.7 73.1 91 67.3 105 1883 81.9 62.7 74.5 87 64.6 92 1884 82.4 63.1 74.2 82 61.2 76 1885 76.7 58.8 68.3 75 56.2 79 1886 75.1 57.5 65.4 78 58. 8 75 1887 78. 7 60.3 68.6 81 61.3 81 1888 79 .9 61.2 67.3 86 65.4 91 1889 79 .5 60.9 66.9 91 69 . 5 92 1890 75. 8 58.1 62.9 85 65.2 78 1891 79 .1 60.6 63.6 80 61.7 93 1892 84.0 64.3 68.0 76 58. 8 82 1893 85.9 65.8 76. 5 78 60. 7 59 1894 91.2 69.8 77. 8 83 64.8 89 1895 89 .8 68.8 79 .9 97 76.1 114 1896 107.1 82.0 94.6 119 93.8 132 1897 130.4 99 . 8 107. 8 148 117.2 112 1898 157. 7 120.8 129 . 8 169 134. 4 160 1899 156.2 119 .6 129.6 172 137.4 173 1900 139.7 107.0 118.7 152 121.9 161 TABLE XV - Continued (3) NATIONAL INDICES OF BUILDING ACTIVITY IN GREAT BRITAIN, 1860-1914 In h a b i t e d House WEBER LEWIS CAIRNCROSS Duty S t a t i s t i c s (1) (2) (3) (4) (5) (6) New Houses B u i l d i n g Weighted New Houses Volume of Net Increase Year B u i l t Index Index B u i l t R e s i d e n t i a l i n Housing-B u i l d i n g Stock (000's) 1900-09=100 1901-10=100 (000 ' s) 1907=100 (000's) 1901 139 . 7 107.0 115. 7 145 116. 8 146 19 0 2 153. 8 117.8 121.5 146 118.1 128 1903 156.9 120.2 124.2 148 120.2 162 1904 136.6 104.6 112.0 138 112. 6 149 1905 127. 4 97.6 112. 5 138 113.1 170 1906 130.6 100.1 99.3 130 107.0 137 1907 121. 3 92.9 92.2 121 100.0 116 1908 100.9 77. 3 81.0 105 87.1 112 1909 98.8 75.7 80.0 102 85.0 114 1910 86.0 65.9 71. 3 94 78.4 50 1911 67.5 51. 7 60.0 80 67.2 115 1912 53.4 40.9 48.4 70 59 .1 73 1913 54.2 41.5 43.1 69 58.5 74 1914 48. 3 37.0 65 55. 3 Sources: (1), (2) B. Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n and Long C y c l e s i n H o u s e - B u i l d i n g i n Great B r i t a i n , 1838-1950", Scottish Journal of P o l i t i c a l Economy, V o l . I I , (June, 1955). (3) J . Pa r r y Lewis, Building Cycles and Britains Growth, (London:Macmillan and Company, L t d , 19 65). (4), (5) A.K. C a i r n c r o s s , Home and Foreign Investment 1870-1913,(Cambridge: Cambridge U n i v e r s i t y P r e s s , 1953). (6) J . Stamp, B r i t i s h Incomes and Property,(London: P.S. King and Son,Ltd,1927) to 00 TABLE XVI NET INCREASES IN THE HOUSING STOCK AND THE NUMBER OF HOUSES BEING CONSTRUCTED ON CENSUS DAY IN ENGLAND AND WALES, 1861-1911 1 2 3 4 Y e a r Net I n c r e a s e Housing S t o c k (000's) C o l . (1) 1901-1911 = 100 Houses Under C o n s t r u c t i o n on Census Day C o l . 1901= ( = H 1851-61 492. 7 58.6 27,305 44. 1 1861-71 596. 3 70.9 37,803 61. 1 1871-81 697. 7 80.9 46,414 75. 0 1881-91 605.5 72.0 38,387 62. 0 1891-1901 886.1 105.4 61,909 100. 0 1901-11 840.6 100.0 38 ,178 61. 7 So u r c e : B, Weber, "A New Index o f R e s i d e n t i a l C o n s t r u c t i o n and Long C y c l e s i n H o u s e - B u i l d i n g i n G r e a t B r i t a i n , 1838-1950"., Scottish Journal of P o l i t i c a l Economy, V o l . I I , (June, 1955). 288 F i g u r e 15 HOUSE-BUILDING IN GREAT BRITAIN ANNUALLY AND IN ENGLAND AND WALES ON CENSUS DAY 1860 - 1911 100-(A) 50 000's of Houses (B) 100 50 1860 1870 1880 1890 1900 1910 (A) . Weber index of h o u s e - b u i l d i n g i n t h i r t y - f o u r towns, 1860-1914, 1900-09=100. (B) Number ( i n thousands) of houses e r e c t e d i n Great B r i t a i n 1860-1914. (+) Index o f houses under c o n s t r u c t i o n i n England and Wales on Census Day, 1861-1911, 1901=100 APPENDIX I I The r e g i o n a l i n d e x o f r e s i d e n t i a l c o n s t r u c t i o n i n South Wales c o n s t r u c t e d by L e w i s i s based p r i m a r i l y on raw d a t a s e r i e s o f house p l a n s approved. I t was n e c e s s a r y t o make a number of a d j u s t m e n t s so t h a t t h e s e s e r i e s c o u l d be t r a n s f o r m e d i n t o e s t i m a t e s o f a c t u a l houses e r e c t e d . Two i m p o r t a n t problems were t o d e t e r m i n e t h e p e r c e n t a g e o f house p l a n s approved t h a t were n e v e r r e a l i z e d and t h e t i m e - l a g b e t -ween p l a n a p p r o v a l and a c t u a l c o n s t r u c t i o n . E x t e n s i v e exam-i n a t i o n o f t h o s e l o c a l r e g i s t e r s where a l l t h e r e l e v a n t de-t a i l s were r e c o r d e d l e d L e w i s t o c o n c l u d e t h a t 85 p e r c e n t o f t h e houses p l a n n e d were e v e n t u a l l y b u i l t and t h e r e i n t e r v e n e d g e n e r a l l y a p e r i o d o f s i x months from t h e t i m e a p l a n was a p p roved u n t i l a c t u a l c o n s t r u c t i o n began. To a d j u s t f o r m u n i c i p a l boundary changes i t was assumed t h a t i f t h e p o p u l a t i o n i n c r e a s e d from X^ t o X^ as a r e s u l t o f t h e change, t h e n t h e number o f houses t h a t would have been b u i l t i n t h e e n l a r g e d a r e a b e f o r e t h e change was made would have been a p p r o x i m a t e l y t h e number f o r the s m a l l e r a r e a m u l t i -p l i e d by X^/X^. T h i s i s , o f c o u r s e , a v e r y n a i v e a d j u s t m e n t , prone t o o v e r e s t i m a t i o n i n some c a s e s and u n d e r e s t i m a t i o n i n o t h e r s . In an a t t e m p t t o a v o i d such r e s u l t s L e w i s s t u d i e d o l d maps where a v a i l a b l e and e x i s t i n g p o p u l a t i o n d a t a t o g e t some i d e a o f t h e t i m e - p a t t e r n o f development i n t h e annexed r e g i o n 289 290 b e f o r e i t was absorbed. Where a p p r o p r i a t e , the m u l t i p l i c a t i v e f a c t o r X^/Xy was m o d i f i e d by a time c o e f f i c i e n t t , which i n most cases i n c r e a s e d from X^/X^ to u n i t y . The a c t u a l a d j u s t -ment depended upon a d e t a i l e d study of each l o c a l i t y . Thus, a s e r i e s showing the " a c t u a l " course of h o u s e - b u i l d i n g i n the are a o f the most r e c e n t boundary change was c o n s t r u c t e d f o r each town i n South Wales. From these i n d i v i d u a l l o c a l s e r i e s the r e g i o n a l index was produced i n the f o l l o w i n g manner. " F i r s t an index f o r two towns c o v e r i n g the p e r i o d 1852-1913 was d e r i v e d , based on 1901-10=100. Then an index f o r f o u r towns, c o n s i s t i n g o f the p r e v i o u s two p l u s two o t h e r s , was computed f o r 1856-1913, based on a c t i v i t y i n these towns d u r i n g 1901-10. In 1856 the v a l u e of the two-town index was 73.1 w h i l e the v a l u e of the f o u r town index was 81.6. To o b t a i n a s i n g l e index f o r the p e r i o d from 1852 based on the max-imum amount of d a t a these two i n d i c e s were s p l i c e d by m u l t i p l y i n g the f i r s t t h r e e years of the two-town index by 81.6/73.1. T h i s procedure was c o n t i n u e d whenever a new town appeared i n the index."1 T h i s method of a g g r e g a t i o n has the advantage of a v o i d i n g the d i s c r e t e jumps i n the s e r i e s r e s u l t i n g from the a d d i t i o n o f J . P a r r y Lewis, " I n d i c e s of