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Subject Area: Political Theory

Factory Regulation and Vested Interests - Leonard P. Liggio, Literature of Liberty, July/September 1979, vol. 2, No. 3 [1979]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Factory Regulation and Vested Interests

Howard P. Marvel

  • Ohio State University

“Factory Regulation: A Reinterpretation of Early English Experience.” The Journal of Law and Economics 20 (October 1977): 379–402.

Evidence suggests that Lord Althorp's Factory Act actual purpose was not industrial regulation to protect children, but rather an early example of industry leaders using the law to regulate their competitors.

As a legislative landmark in the history of industrial regulation, Lord Althorp's Factory Act of 1833 prohibited the employment of children younger than 12 years of age in Britain's textile mills. In current textbook literature, Althorp's Factory Act established government's right to intervene in industry to protect the economically and socially exploited. Historians have come to view the social welfare scope of the Factory Act as the beginning of modern economic regulation.

The Act was clearly a precedent for subsequent social and economic legislation, but its purpose is open to debate. Rather than intending it to protect young laborers, the authors of the Factory Act designed it to promote the interests of technologically superior cloth manufacturers by driving from business the more numerous but less sophisticated manufacturers who depended on the labor of children.

Before the Reform Act of 1832, a factory bill might well have embodied such humane reform proposals as those of Michael Sadler. However, the Reform Bill's extending of the franchise (and the reconstitution of Britain's electoral districts) hurt the reformers' political base and shifted the new power in Parliament to large manufacturing districts. Resulting factory legislation thus represented the interests of textile magnates rather than the socially-minded country gentry.

Traditionally dependent on water power for their mills, manufacturers had built rural factories away from major centers of population. The steam engine changed much of this. The urban steam mills with their greater power facilitated the greater use of labor-saving machines, which in turn diminished the need for child labor. By shifting political power to the cities, the Reform Bill allowed steam-using manufacturers to apply law to industry rivals.

In effect, the Act decreased the supply of cloth and increased price, and the additional revenues accrued to the plants controlling the largest measure of product unaffected by the Act. Moreover, the penalties for continued employment of children fell most heavily on the mills dependent on water. These penalties placed an additional burden on the competitors of steam-powered plants, thus enhancing the capacity of steam operators to control cloth manufacturing.