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Transactions, standardisation andcompetition: Establishing uniform sizesin the British wire industry c.1880Aashish Velkar aa London School of Economics , London, UKPublished online: 18 Mar 2009.
To cite this article: Aashish Velkar (2009) Transactions, standardisation and competition:Establishing uniform sizes in the British wire industry c.1880, Business History, 51:2, 222-247, DOI:10.1080/00076790902726582
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Transactions, standardisation and competition: Establishing uniform
sizes in the British wire industry c.1880
Aashish Velkar*
London School of Economics, London, UK
When science could not provide a solution to transaction problems in the Britishwire industry c.1880, market groups had to negotiate a business solution. Thisinvolved converging towards a ‘one-size-fits-all’ standard: a process requiringcompromises and cooperation between competitive firms, and solving coordina-tion failure through state intervention. This paper demonstrates how differentgroups held different notions of ‘ideal’ standards depending on the incentives theyfaced. Reconciling these differences was an institutional, rather than atechnological, process. The paper also analyses why, historically, dominantproducers cooperated to set industry standards when faced with an imminentlock-in on ‘wrong’ standards imposed on the industry.
Keywords: standardisation; competition; strategy; transactions; iron and steel;coordination failure; state intervention; mechanical engineering; technology;nineteenth century
Introduction
The wire industry uses a system of standard numbers to express the thickness ofwires used in a variety of applications – wire ropes, electrical conductors,telecommunication cables, precision instruments, hypodermic needles, etc. Beforestandardisation in c.1880, each manufacturer used a different system of wirenumbers, and hence different wire gauges. These gauges differed such that wireostensibly of the same number on any two gauges would actually differ in thethickness when measured in inches. The industry faced major transaction problemsarising from non-uniform wire sizes and gauges. In 1856, Joseph Whitworth claimedthat ‘different wire and other gauges differ so considerably that the [customer] has tosend a sample of what he wants [to the manufacturer], there being no means ofcorrectly expressing its size’ (Whitworth, 1882, p. 38).
At first glance, the solution to this transaction problem appears obvious: tostandardise sizes and use measuring instruments of greater precision. However, thereare an infinite number of possible wire sizes, each size different from the next size byan infinitesimal degree, and each size was capable of being practically and veryprecisely measured. In this industry, problems erupted c.1878 when from this infinite
*Email: [email protected]
Business History
Vol. 51, No. 2, March 2009, 222–247
ISSN 0007-6791 print/ISSN 1743-7938 online
� 2009 Taylor & Francis
DOI: 10.1080/00076790902726582
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set of sizes a finite number of sizes were to be selected and combined to form astandard set of sizes. The issue here was one of designing an appropriate set of sizesthat suited all. Standardisation involved synchronising the individual sets of‘desirable’ wire sizes that various market groups preferred. No notion of true, orideal, sizes based on abstract, or scientific, principles could dominate the practicaland economic principles by which the various groups evaluated rival proposals. Thetransaction problem was also not solved through a metrological solution of makingmeasurements more precise; for example by using decimal sub-divisions of the inchrather than fractional divisions. The transaction problem and its standardisationsolution required strategic manoeuvring by the market groups; in short, a businessapproach to the industry’s problems, rather than a technological one.
Standardising wire sizes was complicated by the entrenched interests of variousbuyer and producer groups. These interests stemmed from different incentives: forinstance, the buyers desired sizes that enabled them to use wire products moreeffectively in their applications, whereas the producers desired sizes that economisedtheir production costs. A clash of interests and different conceptions of ‘desirable’wire sizes resulted in a stalemate around c.1880 with individual groups unwilling toaccept any other group’s notion of reliable wire sizes. Resolving this stalematerequired cooperation between highly competitive firms, which when it could not besecured by market institutions – producer associations, chambers of commerce andbuyer associations – required state intervention: the Board of Trade was asked toarbitrate between the various industry groups. Eventually a uniform wire gauge wasintroduced in 1882, which had legal sanction and which formed a part of theImperial measures.
From this particular case of standardisation of wire sizes, three interestingobservations emerge. First, after c.1880 the industry converged towards a standard‘one-size-fits-all’ wire gauge that all market groups agreed to. Second, such astandardisation required a negotiated settlement, and some market groups gained atthe expense of others or made compromises in order to standardise. Third, firms hadto cooperate in order to agree on an industry standard implying that cooperationwas considered to be an effective strategy to compete. The historical and conceptualimportance of these observations becomes relevant when we consider the existingliterature on the wire industry in particular and on standardisation in general.
Existing literature on the wire industry is inadequate to tease out the dynamicsunderlying the standardisation of the wire gauges. No serious historical account ofthis industry exists that covers the nineteenth century; it is limited to descriptiveaccounts of industry associations (Bullen, 1992; Stones, 1977), histories of individualfirms (Janes, 1956; Seth-Smith, 1973), or histories of specific technologies (Blake-Coleman, 1992; Thomas, 1949). Literature on the standardisation of wire gauges issimilarly too sketchy to be useful in understanding the historical and conceptualissues involved. Dickinson and Rogers (1943, p. 93) remarked that standardisationof wire gauges was ‘more a commercial than a technical matter’, but did notelaborate why or what were the commercial issues involved. Poll (1999, p. 54) claimsthat ‘increasing industrialisation and international trade forced authorities todenominate a standard’, and that this process ‘illustrates the struggle betweenhistory, old habits, science and reality.’ But this account also fails to highlight whythe struggle was necessary, who was involved in the struggle, and who the‘authorities’ were that imposed a standard on the industry. Blake-Coleman (1992,pp. 181 ff.) ascribes an important role to the telegraph engineers in driving the
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standardisation of the gauges, but fails to appreciate the resistance of the producersand their influence on the eventual standard.
This paper contributes to the historiography of the wire industry in two ways.Historically, it explores the business issues facing producers during a highlycompetitive period around c.1880, when the British engineering industry faced severeinternational competition. Standardisation of wire sizes is considered against thebackdrop of such business issues. Conceptually, the paper explores the competitiveposition of British firms vis-a-vis German firms and analyses the standardisation ofthe wire gauge in the context of competitive strategies of producers. This isparticularly relevant in understanding the ‘compete or cooperate’ positions ofmanufacturing firms and in understanding how the coordination failure between theproducers and buyers was overcome. The standardisation of wire sizes is alsoconsidered within the broader context of the engineering sector in the late nineteenthcentury, the nature of Victorian markets, and the relationship between standards andcompetitive strategy.
An influential view emerging from the historiography on technological change isthat, in the nineteenth century, technologies employed along vertical dimensions indifferent productive activities converged towards similar skills, techniques andfacilities in a process of ‘technological convergence’. This process was especiallyapparent in metalworking and machinery industries, which involved the cutting ofmetal into precise shapes and forms (Rosenberg, 1963, p. 423). This was a transitionfrom each workshop having its own set of technical standards to the industryadopting interchangeable manufacturing, a technique that had originated in the statearmouries of eighteenth century France (Alder, 1997; Hounshell, 1984; Sinclair,1969; Whitworth, 1882).
Although the standardisation of the wire gauge (and hence sizes) was probably apart of this convergence process, I hesitate to propose technological convergence oradoption of interchangeable manufacturing to be a reason for standardisation. Iftechnologies were converging, it created the need for complementarities andinterdependencies between different firms, particularly in industries with higherdegrees of specialisation (Rosenberg, 1976). Governance issues became especiallyimportant as organisational interdependencies had to be managed alongsidetechnological ones. Also, technological convergence reinforced the need for a givenfirm to develop new knowledge, new skills and new firm capabilities synchronous toother firms. Many of these new skills and capabilities developed alongside traditionalor artisanal skills and shaped the manner and extent to which technologies matured(Alder, 1998; Gordon, 1988; Mokyr, 1992). Industry ‘architectures’ influencedmaturing technologies, through a combination of market processes, collectivebodies, governmental policies and political action. This co-evolution of technology,organisations and institutions was a complex process requiring coordinated actionsat various levels and between different groups (Jacobides, Knudsen, & Augier, 2006;Nelson, 1995).1
If we take this view that standardisation, in the sense of convergence towards auniform standard, depended upon industry institutions and firm capabilities, thenthe competitive environment and the manner in which firms sought competitiveadvantages becomes relevant. On the one hand, national factor endowments affectthe competitive (or comparative) advantage that firms secure, while on the other,market structure, managerial capability and firm-level behaviour are cruciallyimportant in determining who benefits from a given advantage (Porter, 1985; Teece,
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1986). British engineering capabilities were surely influenced by the increasingcompetition from other industrialising nations such as Germany and the UnitedStates. The degree to which British industry adopted manufacturing of standardisedparts was a result of the competitive response by British producers to the rise ofGerman and American engineering industries and the manufacturing standards thatthey used (e.g. Allen, 1979; Floud, 1974; Landes, 1979; Saul, 1967). Nevertheless, theissue of competitive advantages is more complex than the factor endowment or firmcapability explanations and was heavily influenced by the structure of the industryitself (Nelson, 1995). The set of ‘rules’ that governed an industry architecture notonly defined the value creation and division of labour, i.e. who could do what, butalso how that value was to be appropriated and divided, i.e. who got what (Jacobideset al., 2006). We can then argue that division of labour and value appropriationdepended as much upon interdependencies as distinguishing oneself from others;competitive advantages could be derived from conformity as well as differentiation.
In this scenario, ‘compete versus cooperate’ firm strategies become important inunderstanding the significance of standards and standardisation in an industry. Theeconomics of standardisation suggests several benefits as well as drawbacks toconvergence towards uniform standards. Standards improve perceptions of quality,expand the user base, reduce search costs, and act as carriers of information, i.e.create network effects. However, they also raise anti-trust concerns, increase cost ofcompliance, reduce variety and choice, and create entry barriers (Antonelli, 1994;Axelrod, Mitchell, Thomas, Bennett, & Bruderer, 1995; Metcalfe & Miles, 1994;Swann, Temple, & Shurmer, 1996; Teece & Sherry, 2003). In this view,standardisation is seen as a double edged sword and firms tend to use it as astrategic choice variable. In industries where entry barriers are weak and networkeffects are strong, smaller firms prefer to establish compatible standards as this helpsto expand user base and make price competition less aggressive. On the other hand,dominant firms tend to resist uniformity and strive to make their standards non-compatible to protect market share (Besen & Farrell, 1994; Cusumano, Mylonadis,& Rosenbloom, 1992; Katz & Shapiro, 1985; Koski & Kretschmer, 2005).
However, network effects alone do not ensure standardisation. This literaturedoes argue for public policy intervention to correct market failures (i.e. failure todevelop de facto standards) or to emphasise the ‘public good’ aspect ofstandardisation (David & Greenstein, 1990, p. 29 ff.; Koski & Kretschmer, 2004,p. 21 ff.).2 From a historical perspective, this means that standardisation in thenineteenth century must be placed firmly in the context of the Victorian markets,which were far from being the ‘neutral arena for competitive exchange’. ManyVictorians considered the ‘untrammelled market forces’ to be dangerous unlesslinked to a source of ‘unquestioned authority’ that adjudicated when ‘moralityclashed with market principles’ (Searle, 1998, p. 256; cf. Gambles, 1999; Johnson,2006). The depth of the state’s involvement in removing transactional barriersthrough standardisation becomes significant in this regard. Historical markets werenot abstractions of neo-classical markets. Rather, market groups could, and did,appeal for state involvement in order to strengthen their respective positions in themarket and the state could, and did, choose to get involved or retreat from marketregulation (Daunton, 1995, pp. 271 ff.).
Thus, the convergence of the wire industry towards a uniform wire gauge and thedecision of firms to cooperate need to be considered in the context of theforegoing discussion. The issue of importance is not why the convergence occurred
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when it did: this question is important in itself, and understanding the transactionalproblems will shed light on why the industry sought a standardisation solution.From a broader historical perspective, the issues of greater relevance from this caseare understanding how the differing notions of ‘desirable’ sizes held by variousmarket groups were reconciled, and how the heterogeneous groups agreed on a ‘one-size-fits-all’ solution. Also, as we will see, dominant manufacturers cooperatedbetween themselves to ‘lock’ the industry into a single standard. This appears to becontrary to the view presented in the literature on standards and competition and isworth exploring. This paper also contributes to our understanding of historical casesof standardisation more generally, which had become an integral part of the overallVictorian landscape, and the role of institutions and industry associations in thiscontext (Brackenborough, Mclean, & Oldroyd, 2005; Chattaway, 1907; Connor,1987; Ferguson, 1980; Fleischman & Macve, 2002; Forrester, 1931; Gooday, 1995;Hunt, 1994). The issue of standardisation was important enough for the Board ofTrade in the UK to have a Standards Department by the 1860s, and by the early1900s the British Engineering Standards Association was formed.
Methodologically, the paper presents the nature of transactional problems thatthe industry faced and the various groups involved in seeking a standardisationsolution to those problems. The different notions of desirable sizes that the differentgroups held is analysed in some detail, including the origin of those different notions.The paper also analyses the path-dependency issues that producers faced in terms ofstandardisation and presents the extent of negotiation and compromise required bythe various groups. It investigates the issue of why producer firms agreed tocooperate with each other rather than compete on different standards. Finally, itconsiders the role of institutions and industry/professional associations instandardisation. The records of the Standards, Weights and Measures Departmentof the Board of Trade, and the archives of various industry associations are theprimary data sources used for this research. Archives of individual firms for thisperiod are difficult to locate, and where they exist (e.g. Nettlefolds in Birmingham)do not contain information relevant to this case of standardisation. This limitation isovercome by reconstructing the debates between producers and buyers and betweenproducers themselves, from other sources such as Ironmonger and Metal TradesAdvertiser (hereafter Ironmonger), an important trade journal of the period, andfrom the papers of the associations and the Board of Trade.
This paper is organised as follows. The next section describes the nature of thetransactional problems facing the industry, and the following section puts these inthe perspective of the intense competitive environment. The section after thatconstructs a narrative around standardisation efforts and highlights the intenserivalry between market groups to get their preferred standards adopted legally. Thearticle then analyses the various business issues involved and how they explain therivalry between the groups, and why dominant firms agreed to cooperate to set auniform industry standard. The penultimate section briefly reviews the impact ofstandardising wire sizes and the concluding section draws together the mainhistorical and conceptual arguments made in this paper.
Multiple gauges and sources of transactional issues
In the latter half of the nineteenth century, Yorkshire, the West Midlands andLancashire had emerged as the major wire manufacturing centres. Estimates of
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market size c.1880 in terms of output are difficult to locate. They range from as lowas 40,000–80,000 tons to as much as half a million tons a year (Bell, 1886, p. 23;Thomas, 1949, p. 10). My own estimates, making a broad assumption that outputper person between 1870 and 1890 was about 13–15 tons, suggest that domesticwire production c.1881 was very likely to be between 120,000 and 140,000 tons(Table 1).3
Wire was produced from wire rods (approximately a quarter inch in diameter),which were drawn or pulled by wire drawers through a perforated surface calleddrawplates. The perforations on the drawplate corresponded with wire numbers thatranged from Nos. 1–20 for thicker wires, and from Nos. 20–50 for finer wires – theincreasing numbers signifying smaller wire diameters.4 The cost of making wireincreased with each successive draw so that finer wire was costlier to manufacturethan thicker wire (Stones, 1977, see price list from 1884, pp. 12–13). The perforationson the drawplate corresponded with the slots on the wire gauge – each slot indicatinga specific wire number. Thus, No. 1 hole on the drawplate corresponded with No. 1size on the wire gauge used in a workshop and No. 23 hole on the drawplatecorresponded with No. 23 size on the same gauge (Figure 1).
Wire gauges were most likely introduced into England from Germany in thesixteenth century. The gauges measured sizes in fractions of the English inch, and asthe number of sizes increased and became cumbersome to denote in terms offractions they were collected into a series of numbers (Dickinson & Rogers, 1943;Hughes, 1879). There exists a relationship between the breaking strength of each wireand the friction within the drawplate while drawing wire (Clark, 1878b, p. 338). The
Table 1. Domestic production and exports of wire.
No. of WireDrawers
Annual Output (tons)
UK Exports(tons)
Exportsas % ofProd.
Assuming10 tons
per worker
Assuming13 tons
per worker
Assuming15 tons
per worker
1871 7914 79,140 102,882 118,710 21,000* 20%1881 9243 92,430 120,159 138,645 75,000 62%1891 11,175 111,750 145,275 167,625 62,000* 43%
Sources: No. of wire drawers from Census of 1871, 1881 and 1891. UK exports as reported in Thomas(1949, Appendix VIII).
*Export figures are for 1870 and 1890.
Figure 1. The Board of Trade Standard Wire Gauge (1884).Photo courtesy of Terry Sears (2008).
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wire number–size correspondence was empirically derived, i.e. based uponobservations of the breaking strength of wire of different metals. The originalgauges were based upon these correspondences, and were used as a verification toolto ensure that the wire drawn was of the expected size. They were also used as atemplate to replicate new drawplates once the older ones became worn out due torepeated use. This created a degree of interrelatedness between the drawplates, thegauges, and the number–size correspondences.
Before the mid-nineteenth century, virtually every workshop had its own wiregauge that was devised according to its experience of drawing wire and ‘guarded withgreat care [and] transmitted almost as heirlooms from father to son’ (Dickinson &Rogers, 1943, p. 88; cf. Smith, 1891, p. 55). Often, gauges themselves wereconstructed from wire samples that manufacturers maintained. Consequently, minorvariations in the sizes of wire inevitably crept into this practice of making wiregauges (Clark, 1878b, pp. 337, 341; Hughes, 1879, p. 12). Thomas Hughes (1879)narrates the following experience: ‘I saw a set of [some] standard patterns [consisting]of small pieces of iron wire, all sizes from No. 1 to 40; each size was kept in a box forpreservation. The owner had had them for about 50 years and made gauges for salewith them.’
Very likely, this resulted in the profusion of wire gauges as each workshop orregion developed its own gauge. There were several distinct gauges where thenumber–size correspondence differed significantly. The most widely known of thegauges was the Birmingham Wire Gauge (BWG), which was also used in otherlocations apart from Birmingham, such as Manchester and Sheffield. Internationally,the BWG was known in Germany and parts of the United States (Clark, 1878a,p. 332; Ironmonger, 14 February 1880, editorial note). The Stubs Lancashire gaugewas originally defined by Peter Stubs and was preferred in Warrington, Sheffield,Manchester and Canada. Apart from these, other gauges included the Rylandsgauge, the Cocker Steel gauge, the South Staffordshire gauge, etc. (Table 2).
Multiplicity of gauges was the source of various transaction problems within theindustry. Different wire numbers on two different gauges could refer to the samediameter of wire. Or, to put it differently, the same wire number as measured by twodifferent gauges could refer to different diameters of wire. Consider two separatewire gauges used in Warrington and Birmingham around 1879 (Figure 2).Comparing these gauges, we discover, for example, that No. 30 on the Warringtongauge was 0.0108 inches in diameter, whereas it was 0.014 inches on the Birminghamgauge. Similarly, No. 34 was 0.00575 inches on the Warrington gauge as opposed to0.0106 inches on the Birmingham one. Thus, wire drawn to No. 30 hole on theWarrington gauge would be approximately one-third smaller in diameter to thatdrawn on the No. 30 hole on the Birmingham gauge and wire drawn on No. 34 holeto the Warrington gauge would be almost half as thick as that drawn to the samehole on the Birmingham scale. The Birmingham No. 34 was actually closer to theWarrington No. 30 than the No. 34 on that gauge.
Latimer Clark (1878a), the eminent telegraph engineer, claimed that he waspersonally involved in a contract where the use of one gauge instead of anotherwould have made a difference of about £8000 to the contract value. The solution wasto specify the gauge number as well as the diameter of the wire, which only provedthe ‘uselessness of the present system’. Thomas Hughes (1879) wrote of an orderfrom New York for a No. 36 BWG, where ‘The [British manufacturers] rightlyconcluded the gauge intended was Stub’s, or Warrington Wire Gauge. [Had] this
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order been executed to the Birmingham gauge [the] difference in price [would havebeen] £28 per ton.’
By the 1880s, foreign buyers had become wary of these differences in gauge sizes.Muller, Uhlich & Co. wrote to the Iron Age, New York, that ‘the diversity in thegauges of wire, sheet iron etc, is the cause of much trouble, especially when ordersare sent from the United States’ (reprinted in Ironmonger, 12 March 1881, p. 345).
Apart from the confusion, both producers and buyers sought to profit from theasymmetry of information: a classic agency problem. Producers could supply
Table 2. Wire sizes according different gauges (sizes expressed in 1000th of an inch).
WireNo.
StubsGaugea BWGa
RylandsGauge (RG)a
CockerSteelGauge(CSG)b
SouthStafford-
shire Gauge(SSG)b
Variation as compared tothe Stubs gauge (%)
BWG RG CGS SSG
1 300 312.5 300 302.5 74 – 712 284 281 274 275.5 1 4 33 259 265 250 256.5 72 3 14 238 234 229 246 236 2 4 73 15 220 218 209 226 217 1 5 73 16 203 203 191 198 207.5 – 6 2 727 180 187 174 183 184.5 74 3 72 738 165 171 159 175 167.5 74 4 76 729 148 156.25 146 160 153 76 1 32 7310 134 140 133 136 134 74 1 71 –11 120 125 117 128 116.5 74 2 77 312 109 109 100 107 106.5 – 8 2 213 95 93 90 100 96.5 2 5 75 7214 83 78.125 79 92 89 6 5 711 7715 72 70 69 79 73 3 4 710 7116 65 62 62 70 60.5 5 5 78 717 58 54 53 63 54 7 9 79 718 49 46 47 57 49.5 6 4 716 7119 42 42 41 47 41.5 – 2 712 120 35 38 36 42 39 79 73 720 71121 32 34 31 34 76 3 7622 28 31.25 28 28.5 712 – 7223 25 28 26 712 7424 22 25 23 714 7525 20 22 19.5 710 326 18 19 16.5 76 827 16 17 15.5 76 328 14 15.625 14.5 712 7429 13 14.5 11 712 1530 12 13.5 10.5 713 1331 10 12.5 10 725 –32 9 11.5 9.5 728 7633 8 10.5 73134 7 9.5 73635 5 8.5 77036 4 7.5 788
aExtract from John Watkins, ‘A comparison of numbers and sizes of the new legal standard wire gauge. . .’(1888) British Library MS 1881.c.3 fo.10; BWG: Birmingham Wire Gauge.bIronmonger, ‘The BirminghamWire Gauge: Being a collection of better known versions. . .’ (1905), BritishLibrary 1882.d.2 fo.126.
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a thicker wire for a given wire number, which cost less to produce, but could stillcharge the buyers for the more expensive smaller size. For example, producers inBirmingham would charge for wire which was No. 22 according to the gaugenormally used in Birmingham, but actually make wire of No. 21 using another gauge(e.g. one used in Warrington, Liverpool, etc.). This made it cheaper by almost £4 or£5 per ton for the producer to make such wire. In other words, buyers inBirmingham would pay more compared to buyers in Warrington, Liverpool, etc. forwire of the same size, assuming all else remained the same except the gauges(Ironmonger, 1 January 1881, pp. 18–20).
Buyers too took advantage of this asymmetric information to gain a priceadvantage. Some buyers sought to obtain finer sizes of wire for the lower price ofthicker wire by claiming that they could obtain, say, No. 36 brass wire at the priceof No. 33, potentially saving as much as £84 per ton (Ironmonger, 1 January 1881,p. 1820). Hughes (1879, p. 12) narrates the following anecdote.
A maker [of wire gauges] told me that when a customer used certain sizes [frequently],the gauge made for him had those sizes made smaller [i.e. a lower size number] than theyshould be, to enable him to purchase wire cheaper. A case in point shortly after cameunder my observation. A customer used No. 25 wire largely; notch 24 on his gauge wasthe same size as No. 25 on any ordinary gauge; he thereby obtained wire No. 25 at theprice of No. 24, saving £4 10s per ton.
Large buyers purchasing wire from multiple manufacturers, overseas buyersacquiring wire from British manufacturers, buyers whose gauge did not match themanufacturers gauge and vice versa, etc., faced transaction problems arising fromnon-uniform wire sizes. On one hand, there were distinct advantages in making
Figure 2. Comparison of finer sizes across different wire gauges.Source: Based on wires sizes reported in Hughes (1879).
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standard sizes uniform. Equally, there were advantages to some groups inmaintaining an ambiguity between wire sizes and wire numbers. Transaction coststheoretically could be reduced by specifying the exact dimension of wire required foreach contract. The alternative was standardising the wire number–diametercorrespondence in a uniform wire gauge. By the late 1870s, orders for wires hadbegun to specify diameters in decimal divisions of the inch in addition to the wirenumbers. Producers had begun printing lists of wire sizes specifying the diameters foreach wire number (Hughes, 1879).5 As we shall see later, between 1878 and 1883, theindustry attempted to define a uniform wire gauge to establish a standard number–size correspondence. This was intended to alleviate transactional problems arisingfrom multiple gauges.
Competition in the wire industry, c.1880
The transactional problems due to multiple gauges need to be considered in thecontext of the competitive environment facing the British wire industry. Towards theend of the 1870s, the British wire industry was experiencing stiff competition fromforeign manufacturers, in its domestic as well as overseas markets. German wireproduction had nearly doubled between 1878 and 1882 and its exports of wireincreased sevenfold during the same period. In contrast growth in British productionand exports was quite modest (Table 3). If domestic production is assumed to beabout 120,000 to 140,000 tons c.1880 (Table 1), the export of wire from the UKformed around 55–60% of the annual production around this time. In comparison,German wire production increased from 179,000 tons in 1878 to 378,000 tons in 1882,being around 250,000 tons in 1881 (Ironmonger, 9 April 1881, p. 510; Bell, 1886,p. 23).6 The German manufacturers exported around 30% of their production in1878, which increased to about 60% by 1881–82. In fact, the market for wire productswas more important for German heavy industry compared to rails, whereas in Britainthe reverse was true. During the 1880s, the German firms exported more wireproducts than rails (Wengenroth, 1994, pp. 139–141, see Tables 15, 17, also p. 186).
By the 1880s, German wire was outselling British wire in the internationalmarkets by a factor of two to one. British firms were losing market share in the
Table 3. Wire exports from UK, Germany and US: 1870–1906 (000s).
UK Germany (wire) Germany (rods) US
1870 211877 51 32a
1878 44 571879 37 771880 59 1021881 75 1561882 87 2231883 63 176 281890 62 49 122 201895 42 87 114 271900 38 74 92 781906 95 174 146 174
aSeparate estimates for wire and rod exports between 1877 and 1882 are not reported in the source;Thomas (1949).
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North American, Russian, European and Australian markets. German wire was alsobeing imported into Britain during this time: ‘the great influx of German wire inEngland is beginning at last to tell upon the trade’ (Ironmonger, 3 January 1880, p.28). Even the British government placed an order for 1000 tons of ‘strand’ wire witha German firm ‘due to its cheapness’. Some British wire makers imported Germaniron rod to turn it into wire or purchased German wire to make wire products suchas screws, needles, and piano wire. Rylands was forced to purchase German rodswhen rod-making firms such as Pearson & Knowles found it difficult to compete withGerman firms. At least five other wire-rods mills closed down due to excessiveGerman competition. Also, pin makers, netting weavers, rope makers, etc. werepurchasing German wire in preference over English wire (Janes, 1956, p. 63;Ironmonger, 7 September 1878, pp. 929–930; 7 June 1879, p. 763; 3 January 1880,p. 28; 23 October 1880, p. 489; 3 November 1883, p. 651).
Although the ten largest British firms claimed to produce nearly 80–90% of thewire manufactured in Britain, individually they were smaller in scale compared to thelarge German firms. Richard Johnson & Nephew employed about 1000 workers,whereas Rylands Brothers and Co. produced about 700 to 800 tons of wire and wireproducts per week, and employed about 700 workers. Similarly, WhitecrossCompany Ltd employed between 800 and 1000 workers, made a variety of iron,steel and wire products, and was perhaps the largest and most integrated, diversifiedenterprise. The annual capacity of this firm was thought to be about 5000 tons ofropes and 5000 miles of netting and 1500 tons of nails (Smith, 1891, pp. 93–98).
In contrast, the major German firms were larger and more integrated comparedto British firms. Eisen – Industrie zu Menden made 70,000 tons of puddle and rolledbars, wire rods, drawn wire and nails. Westfalische Union, formed from anamalgamation of various older Westphalian firms in 1873, had an output of about100,000 tons annually, employed about 3000 workers, and made wire rods, drawnwire, wire strands and roping, nails, rivets, screws, besides large quantities of bariron, axles, sheet metal, etc. (Smith, 1891, p. 97).
A majority of the British firms, however, were numerous small workshopslocated in and around the major manufacturing centres. In Birmingham alone therewere about 70 wire manufacturers and about 40 wire weavers in 1875, which hadincreased from 5 in 1800 and 35 in 1866 (Aitken, 1866, p. 359; White, 1875).According to one estimate, wire drawers making jewellery wires in Birminghamemployed, on average, less than 150 people (Carnevali, 2004, p. 539).
There were several sources of Germany’s competitiveness in wire manufacturingby c.1880. German firms operated at or near full capacity compared to English firmswhose domestic capacity had increased faster than demand. In addition, Germanlabour productivity was higher compared to British manufacturers. The cost ofproducing a No. 20 iron wire from a No. 4 rod was 70 shillings per ton in Germanycompared to more than 130 shillings per ton in England. Lower wages, longerworking hours and cheaper raw material were proposed as the primary reasons forthe cost differentials (Ironmonger, 4 October 1878, p. 514; 4 November, 1882, p. 635;5 May 1883, p. 626). When Thewlis Johnson and George Bedson (of RichardJohnson and Nephew) visited Felten and Guilleaume’s wire works in Germany in1878, Johnson was ‘perturbed when he compared the financial structure ofGuilleaume’s wire production with his own at Bradford’ (Seth-Smith, 1973, p. 78).A similar report was made when another British manufacturer visited severalWestphalian wire works and reported that labour costs were about 40–50% lower in
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Germany; Thomas Morris, Four days in the Iron Wire Manufacturing District ofWestphalia, Germany’, Warrington Literary and Philosophical Society, as cited inThomas, 1949, pp. 23–24, Ironmonger, 27 April 1878, p. 305).
Another important factor was that German heavy industry was protected by tariffsand was able to dump iron and steel products in international markets. German pricesin their domestic markets for iron and steel products exceeded costs by 24%, butexport prices were only 92% of costs. The low price of raw materials in Germanycontributed to low selling prices. Also, German efficiency in iron and steelmanufacturing increased relative to Britain during the latter part of the nineteenthcentury. The resultant lower raw material price in Germany vis-a-vis Britain meantthat German firms found this policy of dumping steel and wire products overseas to besustainable (Allen, 1979, pp. 920, 928–929 and Table 8; Wengenroth, 1994).Additionally, railway freight rates in Britain were more than twice those of Germany,Holland and Belgium. For example, the cost of transporting one ton of packed wire byrailway from Birmingham to London was 24s, while according to German, Belgiumand Dutch tariff rates the same journey would have cost 10–11s, 8s 11d and 8s 2drespectively. In fact, Belgian wire was available at lower prices in London than wirefrom the Midlands (Bell, 1886, p. 108; Ironmonger, 7 June 1879, p. 763).7
A rather gloomy picture emerges of the British wire industry around 1800, one of‘slackening demand and increasing competition [and] the wire trade relapsing into [a]state of depression’ (Ironmonger, 31 July 1880, p. 130). Within this picture, thetransactional issues arising from multiple wire gauges take on a special significancefor the domestic industry.
Standardisation: a solution to transactional issues?
In 1847, Charles Holtzapffel made one of the earliest attempts at standardising thesystem of gauges used by the wire industry. He proposed an ‘easy and exact system’of wire sizes to remove the existing ‘arbitrary incongruous system’ by using thedecimal divisions of the inch to express wire sizes (Hotlzapffel, 1847, Appendix BM,p. 1011). Joseph Whitworth (1882) also proposed a decimal scale of sizes for the wiregauges in 1856. Between 1867 and 1869, Latimer Clark (1878a, 1878b) presented twopapers to the British Association wherein he proposed a scale based on decimaldivisions of the inch, where the wire diameters were arranged to a geometric scale.These proposals involved replacing existing methods to yield the desired wire sizes,either in terms of using decimal measurements or altering the numbers–diametercorrespondence. Whitworth’s (1882) proposal involved reversing gauge numberssuch that larger numbers signified larger diameters. Clark’s (1878a, 1878b) proposedsizes involved a uniform decrement in sizes, meaning that some of his thicker sizeswere larger than those actually in use. We lack any clear evidence how the industryreacted to these proposals, however, the use of multiple wire gauges persisted untilthe 1880s.
In contrast to the rather lukewarm response to the early standardisationattempts, the 1870s witnessed a flurry of activity within the trade, particularly after1878. During this period, the buyers made several attempts to establish a standardwire gauge. In May 1878, the Society of Telegraph Engineers (STE) appointed acommittee to consider the issue of the wire gauge. The committee proposed a BritishStandard Gauge (BSG), which was basically Latimer Clark’s geometric gauge of1867 (STE, 1879, p. 493). In October of the same year, the Birmingham Chamber of
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Commerce (BCC) canvassed the opinions of the principal dealers in metals and wire,jewellers, etc. to seek their opinion as to the desirability of a uniform gauge.8 On theinsistence of the BCC, the Associated Chambers of Commerce (ACC) appointed acommittee on wire gauges, which first met in October 1879.
The committee, chaired by T.R. Harding, a pin maker from Leeds, was unable toreport until 1882. This was attributed to the multiplicity of gauges proposed by‘individual members, [each] determined to have his own [accepted as the standardgauge]’.9 In fact, there were deep divisions within the ACC committee on this issue.The committee itself was composed of wire makers as well as buyers of wireproducts. Each group had its own distinct opinion on what constituted anappropriate standard (Ironmonger, 25 February 1882, pp. 268–269). In February1882, several wire manufacturers – Edelsten, Williams & Co., Rylands, RichardJohnson & Nephew, Nettlefolds, Whitecross, etc. – met with T.R. Harding and W.F.Haydon (from the BCC). The ACC had recently considered adopting Harding’sproposal as its preferred standard gauge. Virtually all the large manufacturers wereopposed to Harding’s proposal, accusing it to be a compromise and ‘theoreticallyimperfect’. Nevertheless, in March 1882, the ACC adopted Harding’s proposal asthe basis for their standard wire gauge.10
In March 1882, the ACC sent a memorial to the Board of Trade (BoT) presentinga case for the introduction of a legal gauge based on their proposal. Immediatelythereafter, in April 1882, the BoT circulated this proposed wire gauge to the rest ofthe industry, with minor modifications, asking for their reactions and opinions onthe proposal. The industry response to this was fairly mixed. The proposal wasapproved by the large users of wire products, especially cable wire users such as theGeneral Post Office and the telegraph companies. Several chambers of commercealso approved the BoT proposal, including the London, Birmingham, Leeds andWolverhampton chambers. Also, many Birmingham engineering and metal workingfirms approved the proposal.11
However, the large wire makers, who were opposed to the ACC proposal fromthe beginning, objected to the BoT proposal forming the only legal gauge. In May1882, they formed the Iron and Steel Wire Manufacturers Association (ISWMA).The association wrote to the Board of Trade stating that the ACC sizes werearbitrarily specified ‘without regard to the method of production’, and were differentfrom the sizes ‘most generally known to consumers’. The association came up withits proposed sizes that it preferred to use as standardised wire sizes.12 Although thewire sizes in the ACC and ISWMA proposals appear to be virtually identical, thedifference between the sizes seemed to be of material importance to the wiremanufacturers (Table 4).
The BoT decided to modify its proposal ‘to meet the views of the Warringtondistrict where most of the iron and steel wire [was] made.’ Consequently, the BoTcirculated a modified proposal in November 1882. The wire makers once againobjected to the Board’s proposal, and a further modified scale was proposed inFebruary 1883.13 The rivalry between the ACC and the ISWMA up to that point wascogently summarised by Claude Morris of Rylands, and the chairman of theISWMA:
On the one hand, [we have] a large & important trade petitioning the BoT against aproposed legislation, and on the other hand, [we have] the ACC [who is] supposed to berepresenting the trade [but is] actually endeavoring to force the government to establish
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as legal the sizes which the trade say will be ruin to them! (Ironmonger, 24 February1883, pp. 249–50 [Letters to the Editor]. Emphasis original)
Nevertheless, BoT’s February 1883 proposal appears to have met the views of allmarket groups, and eventually, in August 1883, an Order in Council was passedwhich introduced the Standard Wire Gauge (SWG) making it the only legallyrecognised wire gauge in Britain. The ISWMA felt that they could ‘Congratulate
Table 4. Standard Wire Gauge (SWG) compared to the ACC and ISWMA proposals.
Wire No. SWG (1000th of an inch)
Differences across gauges (1000th of an inch)
SWG & ACC SWG & ISWMA ACC & ISWMA
1 300 – – –2 276 70.4 0.6 103 252 70.8 0.2 104 232 70.8 0.2 105 212 70.8 0.2 106 192 70.8 0.2 107 176 70.4 0.1 58 160 70.4 – 49 144 70.4 70.1 310 128 70.4 70.2 211 116 70.4 70.1 312 104 70.4 0.4 813 92 70.4 0.2 614 80 70.4 – 415 72 – 0.2 216 64 – 0.2 217 56 – 0.2 218 48 – 0.2 219 40 – – –20 36 – – –21 32 – – –22 28 – – –23 24 – 70.10 7124 22 – 70.10 7125 20 – 70.10 7126 18 – 70.10 7127 16.4 0.04 70.06 7128 14.8 0.08 70.12 7229 13.6 0.06 70.14 7230 12.4 0.04 70.16 7231 11.6 0.06 70.14 7232 10.8 0.08 70.12 7233 10 0.10 70.10 7234 9.2 0.12 70.08 7235 8.4 0.14 70.06 7236 7.6 0.16 70.04 7237 6.8 0.18 70.02 7238 6.0 0.20 70.05 72.539 5.2 0.22 70.08 7340 4.8 0.28 70.07 73.5
Notes and sources: The measurements above, including the differences, are reported in 1000th of an inch.The SWG gauge of August 1833 is taken from The National Archives, BT 101/133; the ACC gauge ofMarch 1882 from BT 101/114; the ISWMA gauge of July 1882 from BT 101/116.
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themselves upon having impressed the Board of Trade [with] the weight of theirrepresentations [and which] considerably modified the proposal of the Board infavour of the wire trade generally’ (Stones, 1977, p. 4; also Thomas Hughes, Letter tothe Editor, Ironmonger, 17 March 1883, pp. 386 and 392).
In comparing the various proposals made by the different groups between March1882 and February 1883 the following picture emerges. The first BoT scale in April1882 was virtually identical to the ACC March 1882 proposal. The ISWMA’sproposal of July 1882 was considerably different from the BoT’s April 1882proposal, where the difference in diameters was of the order of two or three numberson the respective gauges. The BoT’s November 1882 proposal incorporated some ofthe ISWMA’s proposed sizes for the larger numbers, but kept the finer sizesunchanged. Although the ISWMA responded to this by modifying its proposal inJanuary 1883, the modifications were very slight and the diameters remained largelyunchanged. The BoT’s final proposal in February 1883, which would become theSWG, made significant changes over the 1882 proposals. The size differencesbetween the BoT and ISWMA proposals were decreased considerably by this scale,excepting for finer sizes (Figure 3 and Table 4).
The events narrated above suggest that there was vociferous, often acrimonious,debate on the issue and that the various groups could not coordinate betweenthemselves to agree on a single industry standard. With the industry unable to resolvethe issue by itself both groups sought an arbitrator. The Board of Trade acted as thearbitrator between the rival groups and solved the coordination problem.
Coordination, competition and cooperation
The initiative to establish a standard wire gauge in the 1870s came from associationssuch as the STE, ACC, etc., which represented mainly the buyers’ interests. It is only
Figure 3. Difference in sizes between the Board of Trade and ISWMA gauges.Source: The National Archives, BT 101.119, 101/133 (BoT proposals), BT 101/116, 101/123(IWMA proposals).
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after BoT’s decision to introduce the ACC proposal as the legal standard that wireproducers cooperated to suggest their own standard gauge in 1882. Why didISWMA oppose the ACC proposal and prefer its own set of standard wire sizes?Why did the dominant manufacturers cooperate in 1882 to form the ISWMA? Toanswer these questions we need to understand the sources of coordination failurebetween the buyers and producers and the competitive strategies that the producersadopted during this period.
The producers’ fierce objections to the ACC gauge were based on the fact that aswitch-over to that gauge involved altering the wire numbers the manufacturers usedfor drawing wire. This is because changing the correspondence between existing wirenumbers, which most manufacturers used, and the diameter of wire (in inches) wouldhave increased the number of draws required to make wire of a particular diameter.Also, changing any existing number–diameter correspondence implied arrangingnew wages with the wire-drawers, as their remuneration was based upon the numberof draws they made to manufacture wire of a certain size (Ironmonger, 2 December1882, p. 749). All of this would have increased the cost of manufacturing wire.
The alteration in wire number–diameter correspondences stemmed from the factthat the ACC wire numbers corresponded to larger diameter sizes (in inches) than theexisting numbers that most manufacturers used (Table 5). Thus, adopting the ACCgauge would have required manufacturers to draw wire to a smaller number –thereby increasing the number of draws – just to maintain the same diameter of wireas per existing gauges. For instance, switching from a Lancashire gauge to the ACCgauge implied changing the numbers in 13 of the 14 sizes between Nos. 6 and 18. It isthis change in numbers that increased the cost of producing wire. Production costsfor copper and brass wire of finer sizes (smaller than No. 30) were also expected toincrease anywhere between £18 and £56 per ton. Considering the price of copper wirewas a little more than 9s per pound or £84 per ton, this was a substantial increase inproduction costs.14
Table 5. Impact of switching from Lancashire gauge to ACC’s proposed gauge.a
Wire No. on theLancashire Gauge
Wire No. on theACC Gauge
Increase in cost ofproduction
(shillings per ton)Reference Price
(shillings per ton)b
6 7 10 47 8 5 48 9 10 59 10 15 510 11 – 511 12 10 612 13 10 713 14 10 814 15 15 815 16 15 1016 17 20 1317 18 25 1718 19 25 18
aThe table has been reproduced from estimates reported by Thomas Hughes in Ironmonger, 25 March,1882.bThe reference prices are from a price list from 1884 reproduced in Stones (1977), illustrations betweenpp. 12 and 13.
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But why would the production cost have increased if the number of drawsincreased? The primary reason for this was that the wire-drawer’s remuneration andother production costs, such as annealing, depended directly upon the wire numbersand the number of draws made (through the drawplate).15 There was a particularsequence of wire numbers through which wire had to be drawn in order to obtainwire of a particular size and quality. Such sequences were established empiricallythrough long usage. The skill of the wire drawer was to know such sequences. Forexample, if iron wire of No. 5 size was required:
The drawer [took] No. 1 annealed rod, [reduced] it, first hole to No. 3, second hole toNo. 4, and third hole to No. 5 [making] three draws. Were the wire annealed each drawthe reduction to No. 5 could be accomplished in two draws, but it would not be‘finished’ wire fit for the market, and the cost of repeated annealings would ruin themanufacturer. (Ironmonger, 26 February 1881, pp. 259–261)
Also, the wire drawer was required to know the wire number and not the actualdiameter of the wire being pulled. In other words, it was unimportant for the drawerto know that a No. 7 was 3/16 of an inch thick, or that a No. 10 was 0.14 inches (or9/64 of an inch) thick. As long as the drawer was familiar with the numbers and thedrawing sequences, wire of almost any diameter could be produced. Wire drawinginvolved a considerable degree of tacit knowledge, and skilled workers could makewire without even drawing it through the drawplate; they used the wire numbers as aguide, instead of the drawplates, to do this (Ironmonger, 26 February 1881, pp. 259–261). There was, thus, a strong economic and technical interrelatedness between thetechnique of drawing wire, the wire drawer’s wage, and the overall cost ofproduction. The large manufacturers objected to the ACC gauge as they felt thisswitch would ‘place the English wire trade at a material disadvantage at a time it[was] suffering severely from foreign competition’.16
While the producers’ notions of ‘desirable’ wire sizes were shaped by production-related concerns, the buyers’ notions of ‘desirable’ sizes were shaped by concerns ofquality, captured by the exactitude and consistency of wire diameters. Wire was virtuallyubiquitous in its use; one contemporary writer listed no fewer than 25 distinct uses,including cable and telegraph wires; wire ropes employed for marine, mining,agricultural, engineering uses; manufacture of pins and needles, nails, rivets; etc. (Smith,1891, p. 5). Small and medium sized buyers of wire products included pin manufacturers,spectacle makers, screw manufacturers, musical instrument makers, watchmakers,jewellers, etc. (Dane, 1973; Hughes, 1879; Landes, 1979; White, 1875; Ironmonger, 26February 1881, p. 261). Large wire buyers included the telegraph companies andconsortiums that required wire manufactured to fairly high and exacting specifications.Thomas Bolton & Co., Richard Johnson & Nephew and Webster & Horsfall hadsupplied large amounts of copper wire to the Atlantic Cable Company (cited in Blake-Coleman, 1992, p. 157). One of the initial orders required 119.5 tons of copper to bedrawn into 20,500miles of wire, which had to be laid into a strand 2500miles long. Otherlarge users were engineering companies involved in the construction of bridges and othercivil projects. Richard Johnson &Nephew had tendered for an order of 3400 tons of wireto form the main cables of the Brooklyn Bridge in the late 1860s. Makers of fencing wirewere other large users of wire products, while wire ropes were also used in miningoperations (Seth-Smith, 1973, p. 75; Smith, 1891).
Throughout the nineteenth century, technological developments in wireapplications changed the way in which buyers specified wire products they required.
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Contracts for wire began specifying wire in a sophisticated and exacting manner. Forexample, the introduction of automatic machines in the middle of the nineteenthcentury meant that there was now a demand for wire of greater precision in terms ofits diameter. ‘Much wire is in these days ordered quarter sizes, and even greaterdivisions, and is worked up by self-acting machines – such as screws, pins, rivets etc.Unless the wire is accurately drawn, the machine either makes an imperfect article orspoils it’ (Hughes, 1879, p. 19).
A contract for a submarine cable specified the core to be made of seven No. 22BWG copper wires with a total diameter equal to No. 14 BWG weighing 107 poundsper nautical mile (Blake-Coleman, 1992, p. 157; Ironmonger, 1 January 1881, pp. 18–21). Wire used in fine woven gauzes also had to be made to fairly exactingspecifications: some gauzes contained nearly 40,000 meshes per square inch in whichthe fineness of wire had to be accompanied by uniformity in its diameter (Dutton &Jones, 1983, p. 190; Smith, 1891, pp. 6–26; Ironmonger, 1 January 1881, p. 18). ‘Thewire manufacturers ingenuity [is] being strained to meet the [specialised] demand forwires of given diameters’, wrote one trade journal (Ironmonger, 1 January 1881,p. 18). Consequently, pin makers, telegraph companies and other buyers desired a setof wire sizes that could be uniformly defined and be ‘measured on a machine’(Hughes, 1879, p. 19).17 In this context, it is significant that the ACC’s proposal wasbased upon the gauge suggested by T.R. Harding, a pin-manufacturer from Leeds.
The producers were thus being pushed by the buyers to make two changes, as faras wire sizes were concerned. First, they were being compelled to adopt a uniform setof wire sizes, i.e. a standard wire gauge. Second, the producers were being compelledto adopt the ACC gauge as a particular set of uniform wire sizes. A switch to anystandard gauge, from the existing situation of multiple gauges, would have beencostly for the producers (David, 1985; Farrell & Saloner, 1985). The switching costswould have included costs of changing the drawplates and gauges they used,determining a new drawing sequence on the basis of the new gauge, re-negotiatingwages with the workers, etc. The producers were reluctant to switch to the ACCgauge, which was clearly very costly for them as Table 5 shows. But after 1882 theywere not reluctant to switch to a standard gauge that they considered to beappropriate. The desire to limit the switchover costs, by proposing their ownpreferred gauge, must be put in the context of cost-competitive strategies that wireproducers adopted in the highly competitive environment that they faced.
The British producers responded to increasing competition by attempting torationalise production costs. In 1878, several large wire makers formed the SteelWire Manufacturers Association with the objective of setting a standard wage scalefor wire workers. The association met with the wire workers union and proposed areduction in wages. The ‘Thick Iron and Steel Wire Drawers Trade and BenefitSociety’ had been formed in 1868, however, trade union activity amongst the wireworkers was limited, and in fact union membership had decreased during the 1870s(Bullen, 1992, pp. 14–15). The wage-reduction proposals of 1878 resulted inindustrial action by the wire workers in many firms such as Whitecross, Rylands andothers. However, the strikes could not be sustained due to lack of union funds andby early 1879 they were called off, with many of the union members returning towork at reduced wages. A strike of wire drawers at the Bradford works of RichardJohnson and Nephew in December 1878 in protest at wage reductions was soondisbanded with virtually all wire drawers indicating their desire to return to work.Not all workers could be reinstated, however, and those that did return had to accept
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reduced wages. As soon as the wage cuts were made, the manufacturers’ associationwas disbanded. A second round of wage reductions was attempted again in 1883,with the same results: a general strike of wire workers, followed by the workersreturning to work in 1884 at substantially reduced wages (Seth-Smith, 1973, pp. 79–80; Stones, 1977, p. 5; Bullen, 1992, pp. 14–16). Thus, the manufacturers ‘werefortunate [in reducing wages] without which they [would have had to close their millson] account of the severity of Westphalian competition’ (Ironmonger, 10 April 1880,p. 494; 24 May 1884, p. 711).
Apart from reducing labour costs, there is little evidence that technologicalimprovement, such as continuous wire drawing, newer methods of cleaning,annealing and treating wire, etc. helped to improve overall British competitiveness(Seth-Smith, 1973, p. 82). The speed with which wire was drawn and the efficiency ofdrawing machines improved slowly and insignificantly throughout the nineteenthcentury; in fact production techniques had changed little from those used in theeighteenth century (Blake-Coleman, 1992, p. 83; Laman, 1959, p. 268). Although,the technique of continuous wire drawing was introduced in the late nineteenthcentury, this technology was relatively new and not generally adopted within theBritish industry until the late 1880s (Laman, 1959, p. 269; Thomas, 1949, p. 15).18
The exception to this was the Ambergate works of Richard Johnson & Nephew,where this technique was introduced in the early 1870s in cooperation withWashburn Co., an American wire manufacturer with which the Johnsons had hadlong ties. Nevertheless, continuous wire manufacturing was considered a newinnovation in 1880, implying that the trade was largely unfamiliar with suchtechnology (Ironmonger, 10 April 1880, p. 494).
Producers also tried to reduce input costs by substituting cheaper German wirerods to make wire and wire products, as we have seen earlier. There is little evidenceregarding the extent to which such strategies influenced the cost structures ofdomestic wire producers, however it did help firms producing wire products – asopposed to firms producing wire rods – to survive. Thus, attempts to rationalisemanufacturing costs by the producers included wage reduction (with considerablesuccess), substituting cheaper inputs into the production process (with some success),and improving production efficiencies (with limited success). Even so, undersellingwas reported to be quite common in the domestic market, creating an intenselycompetitive market environment (Ironmonger, 22 January 1881, p. 110).
Apart from cost rationalisation, some firms diversified into related productmarkets. For example, Edelston & Williams and Cornforth, makers of iron wire,began manufacturing steel wire for pianofortes – the traditional domain of firmssuch as Horsfall – in addition to making steel wire for ropes, cables, picture cords,etc. (Ironmonger, 7 June 1879, p. 763). Other firms such as Nettlefolds beganamalgamating or merging with other, smaller firms producing screws in Smethwick(Birmingham), Stourport (West Midlands), Manchester, etc. This increasedconcentration, reduced overcapacity and provided Nettlefolds with an assuredmarket for its wire products as well as an assured supply of inputs for its screw-making business (Ironmonger, 9 April 1881, p. 511; 3 November 1883, pp. 650–651;24 May 1884, p. 711).
Apart from individual firm strategies, cooperative action by manufacturers wasactually limited. The wire industry did not form combinations or cartels to tide overthis period of stagnant demand and high competition, such as those seen in theGerman industry, or the US industry in 1894–95 or even those that were formed in
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related British industries, such as pin manufacturing (Jones, 1973; Seth-Smith, 1973,p. 83; John Dewitt Warner, Steel & Wire, Letters, No. 12, New England Free TradeLeague).19 There is no evidence of any industry association during this period untilthe ISWMA was formed in 1882. Thus, British producers responded to a highlycompetitive environment by controlling costs, improving capacity utilisation throughdiversification, or amalgamating and merging, in order to protect domestic markets.
It is difficult to argue that producers sought to protect market share throughstandardisation (Besen & Farrell, 1994; Katz & Shapiro, 1985). The availableevidence remains inconclusive about the extent to which the decision of producers tostandardise wire sizes was a result of increased competition from foreignmanufacturers or increasing price competition between themselves. Nevertheless, itis difficult to ignore the fact that foreign wire was being manufactured tostandardised wire sizes from the late 1870s onwards. German wire makers hadearlier used a gauge known as the ‘Bergish’ with its own unique system of sizes thatwere expressed in terms of letters such as ‘K’, ‘GR’, ‘FR’ ‘GM’, ‘MM’, etc. Hughesdescribes one such gauge dated 1877, which he calls ‘Westphalian Common WireGauge’. By 1881, the German wire makers, like the French manufacturers, wereusing a millimetre gauge to express wire sizes (Ironmonger, 14 February 1880,Editorial, p. 209; Hughes, 1879).
Formerly, neither the French nor Germans had a standard wire gauge. A few years agothe French adopted a modification of their old gauge. To facilitate its acceptance theyretained the old numbers on one side, and the new numbers indicating the diameters inmillimetres, on the reverse. The Germans long discussed a standard wire gauge,ultimately deciding upon one similar to the French. (Ironmonger, 12 February 1881,p. 206)
Although no empirical evidence can be found, this situation must have had aconsiderable influence on the British producers’ decision to standardise wire sizes,particularly given the competitive scenario. However, there may be another, perhapsstronger, reason why producers acted to standardise wire sizes.
Until the late 1870s, 10 large manufacturing firms dominated the domestic wireindustry (Stones, 1977, p. 1).20 There is no evidence that these firms sought tostandardise wire sizes until 1878, when STE and ACC began developing proposalsfor a uniform wire gauge. Individual wire makers such as Thewlis Johnson (ofRichard, Johnson & Nephew) and Thomas Rylands (of Rylands Brothers & Co.)were involved in the early discussions with the telegraph engineers regardingstandard wire sizes. However, until a legal gauge seemed imminent there is noevidence of cooperation between the large wire makers as far as setting an industrystandard is concerned. The timing of the formation of ISWMA, in May 1882,suggests that it was formed to block the ACC gauge from becoming the legalstandard. Indeed, the ISWMA was formed with the specific purpose ‘to decide uponthe course to be taken [in] the matter of a standard wire gauge’ (Stones, 1977, pp. 1,12).21 It functioned as a lobby group to oppose the ACC proposals and to influencethe BoT to accept the sizes that most suited those manufacturers represented by theISWMA. Thus, the dominant wire manufacturing firms cooperated to prevent theindustry from being locked into what they considered to be the ‘wrong wire sizes’proposed by the ACC. Before 1882 it suited the manufacturers to use their ownseparate gauges. But after 1882, they preferred to make wire using a standard theyhad set rather than letting the industry get locked into the ‘wrong’ ACC standards.
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Even so, the ISWMA did not represent the opinion of all wire producers. Oneirate correspondent, presumably a wire maker from Birmingham, wrote: ‘Becausethe major quantity [of wire] is supposed to be drawn in Warrington all the othersmust submit to the Warrington wire gauge. [If] iron wire can be drawn to the BWG[in] Birmingham, Yorkshire, Wales, etc., why not in Warrington? (Ironmonger, 20May 1882, Letter to the Editor, pp. 686–687).
Within the ISWMA too there was difference of opinion regarding the response tothe BoT’s April 1882 proposal. The Yorkshire manufacturers, Frederick Smith &Company and Ramsden Camm & Company were actually in favour of the ACCproposal (Stones, 1977, p. 1). In order to overcome such differences amongstthemselves, the ISWMA firms agreed that all the iron and steel wire, and brass andcopper wire manufacturers of Birmingham and Yorkshire accept Lancashire sizes upto No. 20. In return all the Lancashire manufacturers would accept finer sizes belowNo. 21 that were set by the manufacturers of fine wire (Thomas Hughes, Letter to theEditor, Ironmonger, 25 March 1882).
The issue in c.1882 was no longer whether to standardise or not, but whichstandard gauge to switch to. Given the high switching costs as far as the ACC gaugewas concerned, the producers were agreeable to switching to a standard that limitedthe disruption to existing wire number–diameter correspondence and thereby limitedthe switching costs involved. Thus, standardisation involved solving coordinationfailures – between buyers and producers – as well as securing cooperation betweendifferent producers to develop a standard that all groups agreed to.
After standardisation
The legalisation of the Standard Wire Gauge was intended to remove the confusionsurrounding the wire sizes. The industry largely discontinued the use of older gaugessuch as the BWG.22 Vestiges of the old gauges survived in the use of the term BWG,which was often used interchangeably with the SWG or the Imperial Wire Gauge (asthe SWG also became known). Modern wire sizes are expressed using standardisedgauges, such as the American Wire Gauge or the Metric Wire Gauge. Productsderived from wire, such as hypodermic needles, use gauges to express sizes ratherthan measurements such as inches or millimetres (Poll, 1999).
Did the adoption of uniform wire sizes assist the British industry to regain itsdominant market position after 1883? British exports of wire remained more or lessstable between 1870 and 1910, except for a short increase during 1880–82 andafter 1900 (Table 3). In contrast, exports of German wire after 1880 and that of USwire after 1898 overtake those from Britain. Uniformity in wire sizes does notappear to have enabled British manufacturers to regain their dominance in theexport trade that they enjoyed before 1878. However, many of the large wiremanufacturers such as Rylands, Nettlefolds, Richard Johnson, etc. remaineddominant wire manufacturers, internationally as well as domestically, well into thetwentieth century
Following the standardisation of wire gauges, other trades attempted tostandardise gauges. For instance, in 1893 the Needle and Fish Hooks TradeAssociation unsuccessfully tried to standardise a gauge for needles.23 In a move tostandardise an international gauge for ‘flats and rounds’, the American Society ofMechanical Engineers proposed a collaborative association with the BoT in 1894; nosuch gauge is known to have emerged from this.24 The American industry, in fact,
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continued to use a variety of wire gauges until the early decades of the twentiethcentury (Adams, 1919, p. 292).
Conclusions
This paper has explored a case of standardisation as a solution to transactionalproblems in an important engineering sector in nineteenth century Britain.Standardising wire sizes required coordination at various levels; between individualfirms, between different market groups, between industry associations, and betweenthe state and the market. The involvement of the state highlights an interestingdimension of how Victorian markets sought state intervention. If we set aside theview of markets as neo-classical abstractions, then we can appreciate how markets inthis historical period depended upon the state to solve coordination failures thatmarkets could not solve. The appeal to the Board of Trade by various rival marketgroups must be considered in this context.
The state’s role as an arbitrator highlights how the state itself faces a problem ofinformation asymmetry, influencing the eventual outcome of the intervention. Thesizes as standardised were close to the producers’ preferred sizes, however, the initialproposal by the state set the sizes close to the buyers’ preferred sizes. That the statealtered its position on standard sizes as it obtained more information is reflected inthe changes the Board of Trade made to its proposals. This also indicates howporous the boundaries between the state and market were historically.
The paper also highlights another dimension of coordinating actions within themarket. If firm strategies are the ‘invisible hand’ coordinating market actions, the‘compete or cooperate’ decisions of the firms become important in understandinghow and why certain actions could be coordinated and others could not. The case ofthe wire sizes demonstrates that several market groups benefited from non-standardised sizes. These were not limited to seeking gains from asymmetricinformation, but in terms of the flexibility that different gauges accorded to both theproducers and the buyers; different sizes according to the metal, wire application,production techniques, etc. When the costs of transacting outweighed the benefits ofmultiple gauges different groups developed different notions of preferred standards.The notions were shaped by the incentives they faced, which directed individualstrategies of cooperation or competition. Dominant producers competed with eachother for a share of the market, but when they faced a threat not only from foreignsellers (for market share), but also from other industry groups – to lock the industryinto an ‘inappropriate’ standard – they chose to cooperate.
Such perspectives help to illustrate the complex nature of standardisation. At onelevel, market groups had to agree that a standard was required for an industry. Atanother level, groups had to agree on the configuration of that standard: the number–size correspondences. There was no one ‘true’ or ‘ideal’ set of correspondences that allgroups had to agree to. In this historical case, science could not coordinate, orarbitrate, between the differing notions of preferred standards. The solution totransactional problems was institutional rather than technological in nature.
Acknowledgements
This paper is based upon research that was done for a PhD thesis entitled ‘Markets, standardsand transactions: Measurements in nineteenth century British economy’ while at the LondonSchool of Economics. I acknowledge the generous help of the Carus-Wilson Graduate
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Research Studentship and the assistance of the project team of ‘How well do ‘‘facts’’ travel?’, aLeverhulme Trust/ESRC funded project (No. F/07004/Z) to make this possible.
Notes
1. ‘Industry architectures’ refers to different ways in which roles are distributed betweeninterdependent firms.
2. Austin and Milner (2001, p. 412), suggest that ‘firms select different strategies based ontheir competitive positions as well as competing political institutions.’ The public goodaspect of standards was first explored by Kindelberger (1983, p. 388). He was influencedby Samuelson’s characteristics of public goods, which are ‘non-rivalrous’ (see Samuelson,1954). In contrast, Romer (1990, pp. 73–74) contends that standards could be ‘non-pureprivate goods’ as they could be made non-rivalrous and excludable.
3. The per person output figures have been estimated using production figures from c.1907as given in the Final Report on the First Census of Production of the United Kingdom(1907), 1912, pp. 113–117. The detailed working of these estimates are available from theauthor upon request.
4. Sizes greater than No. 1 referred to wire rods.5. [T]he [N]ational [A]rchives, Board of Trade papers, BT 101/40, copy of advertisement of
W. & C. Wynn & Co.’s gauge.6. France, Belgium and the United States were also important wire-making countries.7. Cost of Belgian wire is reported on f.o.b. basis.8. TNA, BT 101/114, Report of the Associated Chambers of Commerce (hereafter ACC)
on Wire Gauge; Birmingham Chamber of Commerce, Council Minutes Books, CouncilPapers, Birmingham, MS 2299 Acc2000/127 Box 4, entries for October 23, November 20and December 18, 1878.
9. Ironmonger, January 29, 1881, p. 134; also, ACC, Executive Council Minutes: Vol. 3,Council Papers, London, Ms 14476/3, entries for March 6 and October 29, 1878.
10. Ironmonger, February 25, 1881, p. 281; ACC, Executive Council Minutes: Vol. 3,Council Papers, London, Ms 14476/3, entry dated March 1, 1882; TNA, BT 101/114.
11. NA, BT 101/114; BT 101/115; BT 101/116; BT 101/119.12. Stones, 1977, p. 1; TNA, BT 101/116, Letter from the ACC to the BoT dated July 7,
1882.13. TNA, BT 101/119, memo dated July 28, 1882; BT 101/123, letter dated January 5, 1883;
BT 101/124.14. Price of copper wire from Blake-Coleman, 1992, pp. 230–232; Thomas Hughes, Letter to
the Editor, Ironmonger, March 25, 1882; see also, Ironmonger, March 5, 1881, pp. 304–306 for a similar analysis by an anonymous correspondent.
15. Annealing is a process of softening the metal to make drawing easier.16. TNA, BT 101/116, Letter to the Board of Trade dated July 7, 1882.17. TNA, BT 101/124, notes on conference dated December 27, 1882.18. The Woods brothers from Manchester patented a continuous wiredrawing machine in
1871 that reduced the number of draws required. Also see Bullen, 1992, p. 12; Smith,1891, pp. 84–89.
19. There is mention of an association attempted in the 1860s (Stones, 1977, p. 1). Bullen(1992, p. 14) mentions an association formed around 1867.
20. Griffiths, 1883, lists 31 ‘principal’ firms.21. ISWMA was disbanded on June 21, 1884.22. TNA, BT 101/537; BT 101/538; BT 101/943, Letter from the Deputy Warden of
Standards.23. TNA, BT 101/346.24. TNA, BT 101/386.
Notes on contributor
Aashish Velkar is a Junior Research Fellow at the Institute of Historical Research and aVisiting Research Fellow at the Department of Economic History, London School ofEconomics.
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