In 1742, shortly after large-scale manufacturing began in the mid-eighteenth century, the Lombe brothers established a giant mill in England. Daniel Defoe, author of Robinson Crusoe, described the incredible interior of that vast six-story building, with its “26,586 Wheels and 97,746 Movements, which work 73,726 Yards of Silk-Thread every time the Water-Wheel goes round, which is three times in one minute.” Defoe failed to mention that the children who worked in such mills “tended the machines round the clock for twelve to fourteen hours at a turn . . . [and] were boarded in shifts in barracks where, it was said, the beds were always warm.”1 Those children were as young as five years of age, but in the eighteenth century that was more likely to be considered a sign of progress than exploitation. Writing to the US Congress in 1789 about the economic advantages of British textile mills, Secretary of the Treasury Alexander Hamilton proposed the enactment of policies to encourage the construction of large manufacturing facilities in America. In addition to the material wealth created by industrial factories in Britain, Hamilton cited the advantage of “employment of persons who otherwise would be idle and, in many cases, a burden on the community. . . . It is worthy of particular remark that, in general, women and children are rendered more useful, and the latter more early useful, by manufacturing establishments, than would otherwise be. Of the number of persons employed in the cotton manufacturies of Great Britain, it is computed that four-sevenths, nearly, are women and children, and many of them of a tender age.”
To spur American economic growth and military security, Hamilton thus advocated the establishment of William Blake’s “dark, satanic mills” in America—and was more than willing to pay the price in terms of child labor. When the ever-economizing Hamilton saw young American children playing on their parents’ farms, he saw underutilized factors of production who could be employed more “usefully.” In distinction, his lifelong rival, humanist Thomas Jefferson, saw such children as potentially virtuous, self-sufficient citizens in need of an education to prepare them for democratic participation in their communities. By and large, Hamilton’s view would prevail in America and Britain over the subsequent century.
Britain, circa 1800
The mid-eighteenth-century introduction of such laborsaving devices as James Hargreaves’s spinning jenny, Richard Arkwright’s water frame, and Samuel Crompton’s spinning mule greatly reduced the time it took to spin thread from cotton and to make it into cloth, functions previously performed at home by women using distaffs and spindles and, later, spinning wheels. By 1800, cotton cloth would be more efficiently mass-produced in gigantic mills far larger even than the one Defoe had described six decades earlier. The effect of industrialization on Britain’s economic and social order was staggering. By 1816, machines were spinning cotton, wool, flax, and silk into thread and turning out millions of yards of cloth annually. The productivity of those mills created vast wealth for their owners and for the British nation. In that year, it was estimated that the machines in one enormous mill produced the labor equivalent of eight million women spinning at home. John Quincy Adams, while a member of the House of Representatives, estimated that, during the War of 1812, machines in Britain had produced the equivalent of the labor of two hundred million people. A dozen years later, another member of Congress calculated that, even if such estimates were inflated by a factor of two, “every British workman, on the average, has but forty inorganic slaves to help him.”2 Consider the numbers: in 1769, Britain had exported only about £212,000 worth of cotton goods per year; in 1829, over £37 million was exported. New, efficient methods also were developed for making iron and steel, and steam-driven machines were substituted for animal and human power in other industries as well. The net effect of the Industrial Revolution was to transform Britain into the wealthiest and most militarily powerful nation on the globe.
It is thus easy to understand why Hamilton’s view of British industrialism had been so benign: he wanted America to have the mother country’s wealth and power. What he failed to anticipate were two terrible consequences of the Industrial Revolution: the growth of large cities and the creation of slums within them. As British workers left the farmlands where their forefathers had toiled for generations, they made their way to cities such as Manchester, where jobs awaited them in the new mills. In the early 1840s German expatriate Friedrich Engels (Karl Marx’s co-author, friend, and patron) managed a cotton mill in Manchester owned by his father, where he observed what he and Marx would later call the “immiseration” of the men, women, and children who labored in factories like his father’s. In his classic 1845 analysis The Condition of the Working Class in England, Engels meticulously documented how Manchester’s mill workers and their families lived, often six to ten huddled in one small, filthy, unsanitary, unheated room without the benefit of running water. Most wore rags, many suffered from tuberculosis, all breathed foul air and endured the stench of open sewers. They were paid subsistence wages on which they could afford only meager meals of bread, the occasional piece of mutton, and a mug of cheap gin. The little food they had was often as contaminated as the water they drank. In the mills, men and women labored twelve hours a day under horrendous conditions alongside children, often “of a tender age.” Those children—typically orphans living in workhouses—slept on straw and, like cattle, were fed from troughs. Engels noted with disapproval that such conditions existed at the very time Britain was experiencing the greatest increase in wealth, and the largest outpouring of scientific advancement and technological invention, in the history of the human race.
Enter Robert Owen
Thirteen years after Hamilton issued his report to Congress, and forty years before Engels wrote his own report drawing quite different conclusions, a British industrialist with a Jeffersonian philosophical bent observed the terrible conditions in Manchester’s mills and then asked himself how he could make manufacturing pay without dooming his workers to misery and degradation.3 That manufacturer, Robert Owen, famously succeeded in doing just that between 1800 and 1824. Yet despite his example, over the next century only a handful of industrialists in Britain and America saw fit to adopt Owen’s practices—in effect turning their backs on methods manifestly more profitable and more virtuous than their own. In exploring the mystery of why they chose to act as they did, we discover that in numerous ways the last two hundred years of business history reads like a sequel to the puzzling story of Robert Owen’s New Lanark textile mills.
Among the business leaders profiled in these pages, none has been written about more than Robert Owen.4 Yet despite all the ink devoted to analyzing his beliefs and actions, no consensus has emerged on how history should evaluate his significant, albeit odd, career. To some observers he was a thoughtful, benevolent, farsighted manager and thinker whose pioneering reforms at the New Lanark mills addressed the worst by-products of the Industrial Revolution, thus demonstrating that capitalism need not be exploitative. Yet to Marx and Engels, Owen was a profit-mongering capitalist who exploited his own workforce. To others, he was an insane, utopian socialist dedicated to the abolition of capitalism, a radical free thinker hell-bent on the destruction of traditional societies, and a dotty, impractical do-gooder in the mode of Dickens’s Mrs. Jellyby. To his admirers he was an infidel, to his critics a prophet. The British historian and politician Thomas Macaulay described Owen as “a gentle bore” from whom he “fled at the first sound of his discourse,” but prominent scientists, philosophers, monarchs, and presidents considered him a valued friend. Especially, he was much loved by those who knew him best: the workers and schoolchildren of New Lanark.5 He was, in short, a most unusual man.
Owen was born in Wales in 1771, the sixth of seven children in a lower-middle-class family that, unusually for the era, had the wherewithal to send Robert and his siblings to the village school. Owen’s first four years of childhood were passed at home with his loving family (at roughly the time Adam Smith was furiously penning The Wealth of Nations in Edinburgh). Beginning at age five, Owen attended the school taught by a certain Mr. Thickness, whose improbable Dickensian name was an accurate description of his mental capabilities. Despite schoolmaster Thickness’s shortcomings, Owen proved himself to be something of a prodigy, learning to read, write, and do arithmetic sums by the time he was seven. As incompetent as Thickness was, he nonetheless was capable of recognizing talent, and thus enlisted Owen—before the latter was eight years old—to serve as his assistant teacher, instructing younger children in the three Rs. Over the next two years, Owen “acquired the itch to learn and still more the itch to teach.” In his own words, “I thus acquired the habit of teaching others what I knew,” a habit that would serve him for both good and ill in his subsequent career.6 Socially awkward, he compensated by mastering the art of dancing, a “habit” he acquired at age seven.
At age nine, realizing he had no more to learn from Thickness, Owen dropped out of school to work in a draper’s shop. At ten, he borrowed forty shillings from his father—the last financial support he would receive from his parents—and set off to London to make his fortune. But after only six weeks at his brother’s home in the British capital, he again was off by carriage, this time to Stamford, a small town in Lincolnshire where he apprenticed himself for three years to Mr. McGuffog, a lace maker with another marvelously Dickensian moniker. Many years later, Owen wrote that he had been “fortunate in obtaining such a man for my first master,” for McGuffog was “thoroughly honest, and a good man of business—very methodical, kind, liberal and much respected by his neighbors and customers.”7 From his experience working for McGuffog, Owen concluded that ethical business practices could create satisfied customers, and treating employees well could foster a productive, loyal workforce. Indeed, as a young employee, Robert Owen was exceptionally well looked after by McGuffog, who allowed his apprentice to spend as many as five hours a day reading in his extensive library.
At the end of the apprenticeship, Owen returned to London, where he went to work as an assistant in a drapery house. There the thirteen-year-old worked long hours, often from eight in the morning until two a.m., seven days a week (on Sundays there was a welcome break for a good dinner, the only meal during the week Owen didn’t take while standing and working). At fifteen he decided he’d had enough of such treatment—in that era, not only factory workers labored under bad conditions—so he quit and moved to Manchester, where for the next three years he worked in decent circumstances for a successful draper. There, Owen’s workday was short enough to allow him to continue his self-education, and he used the spare time to read widely, if not deeply. Manchester was then, along with London and Edinburgh, a prime center of Enlightenment thinking. During the seventeenth and eighteenth centuries Europe had given birth to that intellectual movement predicated on the assumption that humans could find knowledge and happiness—and advance civilization—through the application of reason. Two luminaires of the Enlightenment, John Locke and Jean-Jacques Rousseau, reasoned that, because existing political, social, and economic constructs had been created by humans, ergo, humans had the power to change them. As Rousseau famously argued in The Social Contract, God did not create social classes, nor were those in the lowest classes inherently inferior to their “betters” (contrary to what aristocrats and popes had long claimed). Hence, the fact that most extremely poor people at the time didn’t bathe, couldn’t read, lived in hovels, and demonstrated little ambition was due not to their nature but their nurture, to use the modern lexicon. Locke’s and Rousseau’s writings encouraged subsequent generations of men and women to attempt to change the unjust structure of society through either reform or revolution. Those ideas were in the smoky air of late-eighteenth-century Manchester, and Robert Owen absorbed them.
But Owen’s mind at the time was more attuned to business than philosophy. On the job, he quickly mastered most aspects of business from bookkeeping to the ins and outs of the fabric trade. Manchester in 1789 was the Silicon Valley of its time, and Owen found himself at the innovative center of the Industrial Revolution. Not surprisingly, he wanted to play a part in the exhilarating technological and business changes going on around him. By the time he was eighteen, he was junior partner in a firm that manufactured the latest technologies of the era—such as Arkwright’s water frame, Hargreaves’s spinning jenny, Crompton’s mule, and Edmund Cartwright’s power loom—all used in the production of high-quality cotton cloth. He soon went off on his own and established himself as a successful self-employed businessman. But he was ambitious, and when he read a notice soliciting applicants for the post of factory manager at a large mill, he applied. He went in person to meet the mill’s owner, a wealthy merchant and manufacturer named Drinkwater. Taking one look at Owen, Drinkwater curtly said, “You are too young.” Owen explained that he might look young for his age, but he had years of business experience. Drinkwater then asked, “How often do you get drunk in the week?” Owen indignantly replied, “I was never drunk in my life.” That apparently impressed Drinkwater, who asked what salary Owen was looking for, as recounted by the latter’s eldest son, Robert Dale Owen:
“Three hundred a year” [around $200,000 in today’s dollars].
“Three hundred a year! Why, I’ve had I don’t know how many others after the place here, this morning; and all their askings together wouldn’t come up to what you want.”
“Whatever others may ask, I cannot take less. I am making three hundred a year by my own business.”
“Can you prove that to me?”
“Certainly. My books will show.”8
Owen got the job, and within a year he had turned Drinkwater’s underperforming mill into a highly profitable enterprise employing five hundred workers.
About that time, Owen joined the prestigious Manchester Literary and Philosophical Society, where he became friends with the chemist John Dalton (originator of atomic theory), the poet Samuel Taylor Coleridge, and the American inventor Robert Fulton. (Owen briefly shared quarters with Fulton, who borrowed £160 from him to finance his fledgling “steamboat project.” Fulton later repaid Owen £100, then neglected to remit the remainder.) Based on how Owen conducted himself in debates with the great minds of the society, they dubbed him “the reasoning machine.”9 He delivered at least one well-received learned paper there, which indicates that these distinguished men accepted him as their social and intellectual equal. His extensive reading had thus equipped him not only with a sound education but with social mobility unusual for that era. He was now widely accepted as “a gentleman.”
The New Lanark Mills
Among other gentlemen in Manchester at that time were many who were growing rich thanks to booming industrialization. Those with money to spare were eager to invest in promising business ventures. Thus, when the twenty-seven-year-old Owen heard of a large, unprofitable mill for sale in New Lanark, Scotland, he had little trouble raising the capital to buy it. Nonetheless, the mills’ owner, David Dale, could not believe such a young manager had the wherewithal to make a major financial investment of £60,000 (perhaps $60 million now). Furthermore, the cheeky lad had the temerity to ask Dale not only to sell him the mills but, in the next breath, also for the hand of his daughter, Caroline, in marriage. Dale was not amused. He was a wealthy, socially well positioned Scottish Presbyterian of the strictest Calvinist sect, and no lover of the English (or the Welsh, for that matter). In addition, he was a rabid Tory who believed poverty was the consequence of working-class vice and sloth. He saw in Owen a moderately well-off social upstart, a Welsh deist who, although not active politically at that time, had evident Whig leanings. It had taken Dale little time to discover that the core of Owen’s social and political philosophy was his conviction that Britain’s social and economic structure needed to be changed, and all the prayers and sermons advocated by all the Dales of the world would not help a bit. Finding Owen an improper match for either his mills or his daughter, Dale rejected both of the young man’s proposals.
Ah, but money has a way of overcoming seemingly immovable obstacles. Dale was in such deep financial debt that, much to the surprise of Owen and his financial backers, when he learned that the £60,000 offer for the mills was real, he made a quick about-face and accepted it. (Owen’s personal capital contribution was only £3,000.) Owen then spent time getting to know Dale, and the latter surprised himself by growing not only to like the former but also willing to let him marry his daughter. A cynic might conclude that Robert Owen then simultaneously relieved David Dale of two sources of continuing financial drain.
In January 1800 Robert Owen took possession of the New Lanark mills and the company town in which they were situated on the falls of the river Clyde, a day’s carriage ride from either Edinburgh or Glasgow. While David Dale had a well-deserved reputation for being a kind and good man, Owen found little evidence of such benevolence when, for the first time, he toured his new possessions. What he found was a village in which drunkenness was strife, theft common, and fighting in the streets a regular occurrence. According to Owen, “They were a very wretched society: every man did that which was right in his own eyes, and vice and immorality prevailed to a monstrous extent. The population lived in idleness, in poverty, in almost every kind of crime; consequently, in debt, out of health, and in misery.”10
The workers’ homes, the village streets, and the water-powered mills themselves were disgustingly filthy. Of the 1,700 people then living in New Lanark, about 400 were pauper children who had been assigned to work there by public agencies seeking to free themselves of the burden of feeding and housing them.11 The well-intentioned Dale had believed he was doing the children—“foundlings” like Oliver Twist—a favor by getting them out of overcrowded almshouses where they likely would have been abused and underfed. Hence, children as young as six found themselves employed in the New Lanark mills, where they stood at their tasks for eleven hours a day in eighty-degree heat, all the while breathing unhealthy cotton dust.12
Owen was appalled by the conditions in both the village and the mills, but he did not blame Dale for what he found. His father-in-law had been an absentee owner, leaving management of New Lanark in the hands of others. Initially, Owen attempted to work with those managers, trying to convince them of the need for reform. He quickly learned that the old guard had no interest in changing their methods, so he relieved them of their duties and began to institute a series of reforms. His first actions at New Lanark were to end the practice of hiring pauper apprentices, and to cease employing child labor, in general. Instead, he placed all the village preteens in a school that he provided. At the same time, he took actions to remove filth from the village and mills, ordering the streets to be swept daily and the garbage neatly piled, collected, and properly disposed of. He “debugged” the pestilence-ridden community, paved its streets, and constructed a second story on workers’ homes to reduce overcrowding. Almost from the day he arrived in New Lanark, Owen seems to have been resolved to create a model mill town where workers and their families would be provided with clean, decent housing in a community free of controllable disease, crime, and gin shops. Schooling was at the top of his reform agenda. He built a new schoolhouse, a spacious, well-heated and -lighted building that even by today’s standards is an inviting learning environment (it still stands as a museum). There he invented preschool, day school, and a progressive philosophy of education based on making learning a pleasurable experience (the school may have been the first in Britain to abolish “the rod”). He also started the world’s first adult night school.
In the mills themselves, workers would come to enjoy relatively short working hours, a grievance procedure, guaranteed employment during economic downturns, and contributory health, disability, and retirement plans—all unprecedented and, for all intents and purposes, unimaginable at the time. He made certain the mills were well ventilated in summer and heated in winter, and that not a speck of cotton was to be found on the factory floors. Although Owen was resident manager of the mills, his absentee senior partners did not grant him free rein in its “government.” As Owen wrote many years later, “I say government for my intention was not to be a mere manager of cotton mills, as such mills at this time generally [were] managed, but to . . . change the conditions of the people who, I saw, were surrounded by circumstances having an injurious influence upon the character of the entire population of New Lanark.”13 Unfortunately, Owen’s partners had other ideas: they had bought the mills to make a handsome profit, not to conduct a social experiment. Thus, from 1800 to 1809, Owen was forced to introduce reforms slowly, quietly, and without seeming to challenge accepted practices of the era: “The changes were to be made gradually, and to be effected by the profits of the establishment.”14
From a twenty-first-century perspective, it is surprising to learn that Owen’s employees also resisted his efforts to improve their working and living conditions. As he introduced new laborsaving machinery, the workers interpreted his actions as a traditional manufacturing speedup despite the fact that he reduced their working hours while keeping their pay at previous levels. According to Owen, the untrusting workers “were systematically opposed to every change which I proposed, and did whatever they could to frustrate my object.”15 Determined to improve a system he described as “wretchedly bad,” Owen set out to win the trust of his workforce: “I therefor sought out the individuals who had the most influence among them from their natural powers or position, and to those I took great pains to explain my intentions for the changes I wished to effect. . . . By these means I began slowly to make an impression upon the least prejudiced and most reasonable among them; but the suspicions of the majority, that I only wanted to squeeze as much gain out of them as possible, were long continued.”16
The workers were finally won over in 1806, when an American-imposed trade embargo on British goods led to the closing of mills throughout Britain. Owen’s partners insisted that the New Lanark mills also shut down for the duration of the embargo. He agreed on the condition that all workers were retained and paid to keep the factory’s machinery in good working condition until business conditions improved. During that four-month period, New Lanark’s workers were paid a total of £7,000, the equivalent of several million dollars today.17
A Force of Nurture
In the several books he wrote, Owen outlined the philosophy that influenced all his actions at New Lanark, the core of which was what today would be called human development. “Man’s character is made for, not by him,” he wrote, believing that character is formed by way of nurture and not nature—that is, by education and opportunity. He believed a primary purpose of his mills was not simply to make cloth and money but to form the characters of the men and women who worked in them by providing an environment in which, because their bodies and minds were cared for, their better natures would be encouraged to grow.18 He believed it wrong to blame the poor for the miserable lives they led; instead, he argued, it was better to provide them with an environment in which they could become industrious, prosperous, virtuous, and happy.19 And better not only for the workers but also for the mills’ owners, and for society in general. In 1816 Owen summarized his philosophy in four essays on “the formation of character”: “Any general character, from the best to the worst, from the most ignorant to the most enlightened, may be given to any community, even the world at large, by the application of proper means: which means are to a great extent at the command and under the control of those who have influence in the affairs of men.”20
In essence, Owen thought the workplace was where the foundation of a just and reasonable social order could be laid. His commitment to human development stemmed from the same Enlightenment-era sources that had inspired Jefferson, forty years earlier, to propose a right to the pursuit of happiness. In granting that right to his workers, Owen also anticipated the modern economic concept of “human capital.” A major application of that concept is a calculation of returns on investment in education, along with the overall savings to society, of having a workforce productively employed, as opposed to being on the dole or engaged in crime. As Owen asked his fellow industrialists,
Will you continue to expend large sums of money to procure the best devised mechanism of wood, brass, or iron; to retain it in perfect repair; and to save it from falling into premature decay? Will you also devote years of intense application to understand the connection of the various parts of these lifeless machines, to improve their effective powers? And when you estimate time by minutes, and the money expended for the chance of increased gain by fractions, will you not consider whether a portion of your time and capital would not be more advantageously applied to your living machines?21
Although Owen sought to improve the lives of his workers, he was also a practical businessman determined to make the mills profitable. Thus he proceeded with due economic deliberation as he introduced his reforms: “These changes were to be made gradually and to be effected by the profits of the establishment. . . . I found it necessary . . . to make the establishment not only self-supporting, but also productive of sufficient surplus profit to enable me to effect the changes of the improved conditions which I contemplated.”22
Nonetheless, Owen’s partners grew impatient with his investments in the company school and improvements to the lot of its workforce. Owning eight-ninths of the company, they had ultimate control of its purse strings; in 1809, they decided to tighten them. Owen was presented with an ultimatum: either pay out more of the company’s earnings to its owners, or buy them out. Owen chose the latter, and his partners walked away having doubled their investment over nine years. Owen immediately entered into a second partnership, which proved as problematic as the first. His new partners soon criticized him for investing too much in peripheral activities they claimed reduced their profits, expressing “disapproval of the mixture of philanthropy and business.” They were, as one Owen biographer noted, “men who wanted not merely a moderate return on their money, but the largest return that could be expected in those halcyon days of low wages, high profits, and rapid accumulation of capital.”23 Even though they were making handsome profits, the partners calculated how much more they could be making if Owen would quit mollycoddling workers with benefits no competitors had any intention of matching.
In 1812, when Owen’s second group of partners prohibited him from erecting a new school building, he resigned as manager. The partners promptly put the mills up for sale at auction. While they were preparing for the sale, Owen traveled to London, where he formed a third partnership with a group of wealthy Quakers and other prominent churchmen willing to invest in the mills on the understanding they would earn 5 percent interest annually on their capital investments—all profits beyond that would be reinvested in the business and the school. Owen arrived back in Scotland in the midst of protracted bidding for the mills. He then shocked his former partners by offering the winning bid at the auction: an astonishing £114,000. At the same time, it pleased them greatly to have realized a handsome profit on the £84,000 they had invested four years earlier.24 On his return to New Lanark, he was greeted at the outskirts of town by a parade and band that escorted him home to the cheers and hurrahs of the mills’ normally dour Scottish workforce.
Until 1808 Owen and his wife, Caroline, lived in a modest house in New Lanark as their family grew, but the arrival of their seventh child necessitated leasing a larger home in the country about a quarter mile from the mills. Owen’s relations with his own children were as affectionate as his interactions with the village children. He seemed to have a natural rapport with all children, and to be more comfortable with them than in the company of adults. Indeed his oldest son, Robert Dale Owen, described him as an affectionate, indulgent father emotionally closer to his children than was their stern mother. The Owens might well have had a perfect family life if it weren’t for one topic that, over time, would create great distance between Caroline and Robert: religion. Throughout her life, Caroline Dale Owen would remain a faithful adherent to her father’s strict Calvinist beliefs, while her husband would grow more and more adamant in his deism (which to her, and to most of society, was tantamount to atheism). Robert Dale reported a conversation he once had with his mother: “‘Pray to God, my child,’ she would say, ‘that he will turn your dear father’s heart from the error of his way and make him pious like your grandfather.’ Then, with tears in her eyes, ‘O, if he could only be converted, he would be everything my heart could desire; and then when we die he would be in heaven with us all.’”25
Over the years, as Owen grew increasingly obsessed with the need to propagate his ideas, he paid less and less attention to his wife. With regard to his relationship with Caroline, historian Margaret Cole wrote, “Owen was not so much neglectful as apt to forget she existed at all.”26 Nonetheless, Caroline Owen supported her husband’s reform efforts until the bitter end—and, the end turned bitter, indeed.
In 1813, however, all seemed right with the world as Owen found himself free for the first time to run the mills as he believed they ought to be managed. When he initially arrived in New Lanark, the adult mill workers had been laboring as long as fifteen hours a day, often standing for the entire duration. As time progressed, Owen reduced the workday to ten and three-quarter hours, the lowest in the world at the time. He ended the practice of summary dismissal, and provided job security (the only people he fired were cruel supervisors and chronic drunks). As the company town grew to a population of three thousand, he provided free showers and baths for all, established a credit union, and opened a company store that sold healthy food at a 25 percent discount (although a teetotaler himself, he recognized that his business was, after all, in Scotland, and thus permitted the sale of quality whisky—albeit in wee quantities). Because most of the women in the village worked in the mills, it was difficult for them to prepare good meals for their families, so Owen opened a communal kitchen where everyone was provided with healthy food. He also established a retirement home for aged workers. Farsightedly, Owen built parks for the community, thus becoming a proto-environmentalist and town planner whose efforts to beautify the village anticipated the much later greenbelt and garden city movements in Britain and the United States.
Inside the factory, Owen improved physical conditions and “extinguished government by fear” by prohibiting corporal punishment of workers and retraining their supervisors in the arts of humane disciplinary practices.27 He believed that education, moral suasion, and peer pressure were more powerful disciplinary tools than physical force. Loathing punishment, Owen sought to establish discipline in the mills by way of his system of “silent monitors.” At each worker’s station he hung a block of wood painted a different color on each side. Depending on the worker’s conduct, the plant superintendent would turn the block to the appropriate color: black for bad, blue for mediocre, yellow for good, and white for excellent. If the worker disagreed with the superintendent’s ranking, he or she had the right to appeal to Owen. Significantly there were neither rewards nor punishments attached to the rankings; nonetheless, peer pressure, along with the innate human desire to please, apparently were effective in changing worker behavior. As Owen explained, “At the commencement of this new method of recording character, the great majority were black, many blue, and a few yellow; gradually the black diminished and were succeeded by the blue, and the blue were succeeded by the yellow, and some, but at first very few, were white.”28 This method may strike the modern reader as paternalistic, but we should recall that a large part of the New Lanark workforce consisted of teenage labor.
Owen extended his ethical practices to his other business constituencies, as well: “It was Owen’s habitual practice that when he foresaw a fall in the price of yarn [he asked] his customers whether they would not wish any orders which might be in hand to be deferred so that they might take advantage of the lower prices; and in the same way, he would write to his correspondents before a [price] rise, and urge them to buy.”29
Owen initially sought to win his fellow industrialists over to his practices with appeals to their self-interest. He argued that well-treated workers were not only more productive but, if they also were better paid, would be better customers for the products sold by their employers: “No evil ought to be more dreaded by a master manufacturer than low wages of labor. . . . [Workers], in consequence of their numbers, are the greatest consumers of all articles, and it will always be found that when wages are high the country prospers; but when they are low all classes suffer from the highest to the lowest, but more particularly the manufacturing interest.”30
Owen thus anticipated by a hundred years Henry Ford’s famous rationale for paying his autoworkers the then-unheard-of sum of $5 a day: it gave them the wherewithal to buy his and other manufactured goods.
So unusual were Owen’s methods, and so great the profits reaped, that the story of New Lanark was met with near-universal disbelief. At the time, the conventional wisdom was that it was impossible to do good and earn a profit. That apparent conundrum drew twenty thousand visitors to New Lanark between 1815 and 1824 to see for themselves how Owen turned the trick. Among those who signed the mills’ guest book were leading politicians and industrialists from Britain, America, and the Continent, including the future czar of Russia. For a while, Owen’s work was admired by the British aristocracy and nobility, who disdained the rising class of “uncouth” manufacturers—that is, Owen’s competitors, who viewed him as their bête noir (illustrating the truth of the adage “the enemy of my enemy is my friend”). The Duke of Kent, Queen Victoria’s father, was Owen’s greatest champion, having become convinced by what he observed at New Lanark that capitalism should, and could, be humanized. Owen’s ideas gained further traction with the founding of the Economist in 1821, which was first published as an Owenite newspaper.31 The mills’ fame spread so widely that Owen was certain other industrialists would follow his example, and thus the long era of mass poverty would end in general prosperity. He asked: “What then remains to prevent such a system from being immediately adopted into national practice? Nothing, surely, but a general distribution of the knowledge of the practice.”32
Owen’s Critics
When Owen wrote those words in his forties, everything he could foresee pointed to the dawning of a new age of humane and effective industrial practices. Indeed, had he then continued to concentrate his efforts on running the mills, it seems possible that the practices he pioneered might have been adopted by at least a few other industrialists. But his optimism proved misplaced, and the outcome he so desired was not to be. Instead of diffusion of the knowledge he created, he was met with a barrage of criticism from left and right and, ultimately, near total public rejection. Owen was attacked as a socialist by his fellow industrialists, on the grounds that he broke two sacred laws of economics: profit maximization and the iron law of wages. Nonetheless, he was, in fact, a believer in Adam Smith’s free market, arguing, “The natural course of trade, manufactures and commerce should not be disturbed except when it interferes with measures affecting the well-being of the whole community.”33 Acting on that belief, he twice led the efforts of British industrial free-traders to put an end to mercantilist tariffs. And as far as business management was concerned, a prominent historian who examined the New Lanark mills’ records concluded, “Owen was an extraordinarily good organizer and businessman; and he made of his mills a model of business efficiency.”34 Under Owen’s management, the New Lanark mills earned a reputation for producing the highest-quality goods on the market, and as Owen practiced what came to be called “the economy of high wages,” his workers became more and more productive, and the mills ever more profitable. The record shows they may have become the most profitable mills in Britain. The most famous of Owen’s partners, utilitarian philosopher Jeremy Bentham (much admired by today’s libertarians), called the New Lanark venture his “only successful investment.” In all, Owen seems personally to have accumulated a fortune of at least £60,000 over the quarter century he managed it. But those facts didn’t stop critics who claimed that the quirky and often self-absorbed Owen “hardly cared a rap whether he made money or not.”35
In fact, Owen’s fellow industrialists actually despised him for publicly challenging them to follow his lead, for showing them up by having a more profitable business than their own, and for criticizing the way they treated their workers. By all accounts, Owen was a courteous man with a gentle disposition—yet he was supremely confident that his beliefs were correct and that those who disagreed with him were ill-informed. Thus, when challenged, he would repeat his arguments slowly and clearly until his interlocutors “saw the light” and accepted them. That approach worked well with New Lanark’s children, but his fellow industrialists found it patronizing.
During the first fifteen years of his New Lanark reforms, Owen had kept a relatively low public profile. But as word of his efforts spread, and important political figures increasingly took notice of what he was doing, he became more and more evangelical about the need for industrial reform. He might have been more successful in that endeavor had he limited his appeals to his fellow industrialists’ self-interest, stressing that the New Lanark mills’ enormous profits of some £15,000 annually were due to its readily replicable practices. Instead, Owen ill-advisedly made a well-publicized tour in 1816 to examine the working conditions in British factories, where he documented that children as young as five were working twelve- to fourteen-hour days in sordid conditions. He then made his manufacturer peers look bad by publishing those findings. By thus going public, Owen built resistance among the very men he hoped to convert to his way of thinking. Even an Owen admirer had to admit he was a “political lunatic.”36 His actions led his business peers to make outrageous claims: the inordinate success of Owen’s mills was the by-product of the unique air at New Lanark; the mills were productive thanks to the unusual Scottish work ethic; and it was impossible to replicate the Lanark plant site.
When it became clear that his fellow industrialists had no intention of adopting his methods, Owen grew frustrated and turned to Parliament in a badly managed attempt to win legislation designed to end the use of child labor. Had the bill passed, it would have banned employment of children younger than ten, provided thirty minutes of education each day for workers under the age of eighteen, abolished night shifts for all children, shortened their workdays to ten and a half hours, and been enforced by government inspectors in factories. That prospect so alarmed Britain’s industrialists that they fired back with their own parliamentary lobbying, claiming that there was a lack of scientific evidence that it was injurious for children to work night shifts, stand for twelve hours a day at their tasks, eat their meals while standing, go out into the cold night thinly clad after laboring all day in a hot factory, and continually breathe air heavy with cotton fluff. They prevailed in getting the bill scuttled.
Although he failed to win support for his reforms among industrialists, Owen continued to make farsighted changes at New Lanark. Between 1816 and 1824, he greatly improved working conditions in the mills, increased medical care for workers and their families, and expanded educational opportunities. If anything, Owen’s educational reforms were more progressive (even radical) than his industrial ones. In the early nineteenth century, the majority of Britons were illiterate, education a privilege largely enjoyed by the aristocracy and professional classes. Moreover, one historian argued that “the overwhelming majority of manufacturers resisted every attempt to educate [the working class], not merely because their fortunes were built on child labor, but on the deliberate ground that educated workers would be less docile.”37 Owen completely disagreed, believing that character could be molded, and that children were the clay of human development. He doted on the children of New Lanark, lavishing on them the benefits and attention he felt they needed and deserved in order to grow into healthy, civilized adults. He enrolled all New Lanark’s children under the age of twelve (starting at age one) in the school formally known as “The Institute for the Formation of Character.” He had colorful maps, paintings of animals, and other instructional materials made for use in the school, such as an engaging poster depicting competitions between General Noun, Colonel Adjective, and Corporal Adverb. All the children—boys and girls—were dressed in clean, lightweight classical tunics that kept them cool in summer and comfortable when the schoolhouse was heated in winter. When they performed Highland dances, they were costumed in tartans, the boys clad in kilts. The children were neither punished nor rewarded for how they fared in their lessons; instead, they were left to discover that learning is its own reward. All the children were instructed in reading, writing, arithmetic, history, and geography—and, unprecedented in that era, also in drawing, painting, music, and especially dance.
Owen loved dancing, encouraging not only New Lanark’s children but their parents as well to participate in his favorite pastime. This harmless eccentricity was used against him by some of his fellow manufacturers, who found a few disgruntled New Lanark employees willing to state publicly that Owen was a paternalistic tyrant in the guise of a benefactor, an employer who, according to one worker, “had got a number of dancing-masters, a fiddler, a band of music; that there were drills and exercises, and that [workers] were dancing together till they were more fatigued than if they were working.” Thus, Owen stood accused of abusing his workers by the inhumane method of excessive dancing!38
In 1822 the pious members of Owen’s third partnership decided they could no longer support a school in which religion was not taught; thus, they demanded that New Lanark’s children be instructed in the scriptures. They also called for an end to dancing and singing (except “psalmody”), and insisted that the boys wear trousers, and the girls, long, heavy dresses. When the matter came to a crisis in 1824, Owen lost managerial control of the mills. For all intents and purposes, his great New Lanark experiment then came to a whimpering end. Although Owen retained a minority financial interest in the mills until 1828, by then his partners had undone his reforms and reintroduced most of the accepted industrial practices of the era. In a matter of time, the mills were once again as unprofitable as they had been when Owen first arrived in New Lanark.
As if that weren’t enough, Owen’s critics on the left were claiming that his reforms were intended to divert the working class from achieving broader political aims. When he advocated a public works program for the chronically unemployed, radicals called his proposed worksites “a community of slaves.” Labor leaders sought to dismiss his reforms as mere paternalistic salve intended to preserve the status quo, one claiming that New Lanark was “really a capitalist enterprise with an infusion of business ethics and paternalism,” which, in many ways, it was.39 Years later, Marx and Engels attacked Owen for being a bourgeois capitalist who “acted with great injustice towards the proletariat.” Indeed, Owen was opposed to communistic “class struggles” and to the state ownership of the means of production. He felt that proletarian revolutions were not only morally wrong but unnecessary because societies had the power to enact progressive legislation that would end the growing antagonism between labor and capital. Engels countered that Owen profited to the tune of some $6 million during his time at New Lanark, which was true, arguing that the sum had been “expropriated” from the workers, which was false. Believing private property to be theft, Engels damned Owen for doing what capitalists had damned him for not doing: getting rich. Never mind that Engels himself was a wealthy capitalist who managed British mills owned by his German father.40
Marx and Engels doubtless were right to fear the spread of Owenism. With great prescience, Owen repeatedly warned his fellow industrialists that if they failed to reform, they would fuel nascent movements in Europe calling for proletarian revolutions. He predicted that if those radical movements ever were to succeed, their leaders would become tyrants. Alas, Europe’s capitalists failed to embrace Owen’s benign prescriptions for reform, thus allowing social conditions to fester to the point where, as he predicted, they eventually led to calls for Marxist revolutions.
A Sad, Bad End
Finding himself under attack on all fronts, a despairing Owen abandoned all hope that his fellow industrialists could be convinced to follow his lead, reluctantly accepting the fact the industrial reforms he sought would not occur in Britain during his lifetime: “I thought previous to experience, that the simple, plain, honest enunciation of truth, and its beautiful application to all the real business of life, would attract the attention and engage the warm interest of all parties; and that the reformation of the population of the world would be comparatively an easy task. But as I advanced I found superstitions and mistaken self interest . . . deeply rooted and ramified throughout society.”41
As opposition to his ideas grew over time, Owen became increasingly rigid in his thinking, unwilling to accept the smallest of compromises, ultimately refusing to accept reform in stages. He lost the support of the aristocracy—his last remaining advocates—when he blamed the ills of society on organized religion and became an outspoken champion of feminism, divorce, birth control, a graduated property tax, and universal suffrage—in an era when those causes were utterly unthinkable to the vast majority of British subjects. By the mid-1820s, he had turned away from industrial reform to champion the establishment of utopian, self-sufficient communities in which Britain’s countless unemployed would find useful work. Abandoning all elements of practicality in his schemes, he wholly embraced the ethereal realm of idealism by offering detailed plans for “villages of co-operation” in which five thousand people, their homes neatly arranged in parallelograms, would work communally and share equally in the fruits of their labor. Such impractical schemes only invited ridicule. As one critic famously wrote, Owen was “for establishing communities of paupers! . . . Wonderful peace, happiness, and national benefit are to be the result. How little matters of black eyes, bloody noses, and pulling of caps are to be settled, I do not exactly see.”42
As criticism mounted, Owen grew increasingly deaf to the opinions of others, convinced he alone was possessed of truth. Even one of his greatest admirers, Harriet Martineau, once quipped that he was “not a man to think differently of a book for having read it.” His father-in-law, exasperated by Owen’s unwillingness to entertain ideas other than his own, once told him “Thou needst to be very right, for thou art very positive.”43 The philosopher R. H. Tawney, who shared Owen’s values, nonetheless described him as “an exacting, and at times imperious chief. Modest in manner and intransigent in beliefs, he claimed with a mild, impersonal arrogance, regardless of such trifles as majority votes, the obedience due to the voice of the inspired—or as he would have termed it, rational truth.”44
Owen’s son Robert Dale—who knew his father the most intimately, and whom Owen had trained to be his successor as manager of New Lanark—perhaps offered the fairest and most objective criticisms of the man he loved and respected. Bemoaning the influence of Jeremy Bentham’s utilitarian philosophy on his father’s thinking, Robert Dale concluded that Owen’s “mistakes as a practical reformer” resulted from his conviction that all rationally educated people would be honest, moral, and put the public interest above their own self-interest. He admired his father’s predilection to always assume the good in humankind, but he “over-zealously” embraced that notion and “ran to extremes” with it.45
After Owen left New Lanark, his countless failures and rejections appear to have totally unhinged him. He adopted more extreme views and offered them, unsolicited, to the likes of Napoleon, Santa Anna, and seven sitting, or former, US presidents. Utterly dejected, in 1824 Owen immigrated to America with his oldest children (tellingly, Caroline stayed put in Scotland, their marriage long since having become meaningless). There, Owen would lose 80 percent of his entire fortune in an unrealistic attempt to create a utopian community in New Harmony, Indiana. Purchasing twenty thousand acres of farmland from a religious sect, he invited all comers to join the commune in 1825; eight hundred did so in the first few months. Believing in the basic goodness of all humans, he failed to screen those to whom he granted plots of land, among whom were, alas, a few rascals, thieves, freeloaders, and others more than willing to cheat and bilk their naive benefactor. New Harmony ceased operating as a community in 1827. One bright spot of Owen’s American sojourn was his visit with eighty-year-old Thomas Jefferson at his farm in Monticello, where those two sons of the Enlightenment probably discussed their common faith in the efficacy of education.
Owen’s Legacy
Financially ruined and behaving in an increasingly eccentric manner, Owen returned to England in 1828, where he lived to see the rise of the violent anticapitalist sentiment he had feared. Fortunately for America, his son Robert Dale remained behind, where he became a prominent member of Congress best remembered for having introduced the bill in the House of Representatives establishing the Smithsonian Institution. Throughout his life in America, Robert Dale worked for the emancipation of slaves, and ended his distinguished public career as a diplomat representing the United States in Italy.46
His father spent the rest of his long life alone and occupied with a series of failed idealistic ventures. At age sixty-three, he helped to launch—and briefly chaired—the Grand National Consolidated Trades Union, a forerunner to the modern British trades union movement. In effect, he joined forces with those who had been vocal critics of his practices at New Lanark. Curiously, he then made the same appeal to industrial workers that he previously had made to their employers: “Men of industry, producers of wealth and knowledge, and all that is truly valuable in society! Unite your powers now to create a wise and righteous state of human existence—a state in which the only contest shall be, who shall produce the greatest amount of happiness for the human race.”47
Owen soon discovered that British workers were no more prepared than their bosses to create what he called a “New Moral World.” Owen and the unionists soon parted company. As Robert Dale noted, his father’s greatest legacy was one he never acknowledged: after the failure of New Lanark, a group of Owenites created the cooperative movement in Britain. Although Owen vaguely supported the movement during his dotage, he did not see it as an outgrowth of his philosophy. But in 1877, when Robert Dale learned there were over a thousand cooperatives in Britain, he had “sober second thoughts” leading him to conclude that cooperatives were, in fact, the most practical way to achieve the reforms in society his father had failed to achieve in large investor-owned industries.48 That legacy continues to this day, as we shall later see.
His dreams unfulfilled, Owen died in 1858 at the age of eighty-seven after a sad last few years in which he ruined what was left of his reputation by turning to the practices of spiritualism and phrenology. One of his earliest biographers concluded that “Owen’s good works had been interred even before his bones.”49
Today, New Lanark is a UNESCO World Heritage site. The mills, company store, workers’ houses, and the Owens’ modest first home have been restored to how they looked in the early 1820s. A few of the original water-propelled spinning mules have been returned to working order, and the mills now produce a small quantity of Scottish wool for sale to the thousands of tourists who visit New Lanark’s idyllic setting on the banks of the river Clyde in what has become a beautiful nature preserve. But long before that happened, Owen had died a defeated man. In Owen’s old age, Ralph Waldo Emerson asked him, “Who is your disciple? How many men possessed of your views will remain after you to put them into practice?” Owen answered, sadly, “Not one.”50
He was right at the time, but were he alive today, he doubtless would be pleased to learn that the practices he pioneered at New Lanark had been adopted, in one form or another, in several successful businesses founded in Britain and America over the next century and a half. Yet as we shall see, over that same long stretch of time most business leaders resisted his enlightened philosophy, for reasons ranging from ideological to practical, Owen’s ideas had been rejected in his day. Doubtless, human nature in the form of greed, ego, and honest self-interest played a part. John Stuart Mill (like Owen, a friend and disciple of Jeremy Bentham) wrote his famous treatise On Liberty in an effort to explain why the sensible ideas of “eccentrics” like Owen seemed always to be rejected by society. According to Mill, a part of the reason is that most men and women are satisfied with status quo and simply do not desire changes that will discomfit them. Simply put, Mill concluded that the “tyranny of custom” hinders, and in most cases prevents, useful social reforms—even new ideas that would benefit those who most oppose them.