Tuesday, 29 May 2012

North & South - Groupwatch and Interpretation

Servetus has a wonderful and personal analysis of North & South and each episode in detail on her blog, which is an excellent preparation for the collective viewing organized by Fanny/iz4blue.
More details about the  
collective North & South watch
1st / 2nd / 3rd of June, 2012
(e.g. times and preparations) can be found on her specially created blog ArmitageWatch.

When I read Servetus' analysis, I wondered, why I agreed in so many aspects and often even in points which were determined by personal experience or background.
So I was quite surprised to discover that I disagree in a whole part of her interpretation of North & South, when I did go along for all the other parts, so far.

As I made such a lot of notes, when reading Servetus interpretation, I just did not want to take over her blog with my unending discussion and points and so decided to do an own blog-post, as I already planned to write something about North & South to remind everyone of the coming group watch on 1st/2nd/3rd of June, 2012.
But now, with part 4 a-2, I seem to have a separate interpretation, which is certainly coloured by my individual experiences, which in so many aspects are so similar to Mr. Thornton's.

(I will not reveal all too many comparisons to my own experiences, because I don't want to bore you with my business. Just may it be sufficient here to say, that his way, his struggle between personal interest and risk management, care for his surrounding, his moral values and his place in society, all in all seem very similar to the struggles I went through the last years and am still fighting. To clarify, I don't do 'idiot money schemes'. I can't and I won't and even if it means my going under, which by the way is quite likely anyway.

What I also should warn you about before I start with my post is, that I will eventually be more political or better politically inconvenient than I normally am here on this blog.)

Why I interpret Mr. Thornton and his economic decisions differently to Servetus:

Risky money schemes, especially since about 100 years earlier through the South Sea Bubble, had a very bad reputation in England. Cautious estimations see less than 10% of offered speculations, some even less than 5% indeed win the money back which was invested and in addition being able to pay out success rates.
So by standard comparison, I would say that Mr. Thornton in the common opinion of his time is certainly doing the 'right' thing.
Speculation, especially a risky speculation likely to give him the needed capital, would be very risky and playing with the misfortune of others. Normal investments give slow growing income rates, but those won't help Mr. Thornton in his dire situation, as the one thing he does not have due to the strike, is time.

His contracts with customers, if he can't meet the agreed upon delivery time, and a previously agreed upon delay period, will have the option to chose another producer and most likely will never do business with him again - without asking questions or any chance that they will accept his reasons as sufficient explanation. They want delivery fast, cheap and without problems. Mr. Thornton risks to loose everything (not only money, but also his business reputation) because of the delay caused by the strike.

I don't condemn Mr. Thornton for not wanting to do money schemes as much as Servetus does, especially considering a 10/1 or in case of Margaret's winning investment initiated by Mr. Bell, who invested in the speculation of Fanny's husband, 20/1 investment payout.
Such margins are not realistic and mostly were results of highly speculative and unlikely railway or mine speculations in South America, where lots of people lost all their invested money in the first half of the 19th century, because their well meant investments for supposedly realistic projects were well spent by the money collectors and not in any way connected to a realistic project, which in good time would refund and pay back the investment.

As Mr. Thornton already has a banker, I think a 'normal' way of investing his earnings is already part of his managing of the mills.
Also binding the money in machinery from his viewpoint is a sensible, as well as morally sound decision.
  • It is the only way that allows him to regain income, as he sees machinery as a means to produce, whereas his banker sees it as an investment not directly gaining money, a holdup, binding and annihilating money. Only if used and his products well sold, Mr. Thornton's machinery earns money and this normal course is prevented by the strike.
  • But I also see the new machinery as a morally valuable decision of Mr. Thornton, as it means, he can employ more workers (compensate the burned down mill, eventually get jobs for the new workers from Ireland, though he mentions that most left and went back to Ireland, and still take on large parts of his old workers after the strike.
    Though from the banker's perspective, it has the opposite effect to Mr. Thornton's finances. He does not only have to pay for the burdensome machinery, but also for more workers, this way speeding up his own process of slipping into bankruptcy, though it also is the only way he might have a chance to keep his signed contracts in place. He takes a risky decision, which, under the circumstances of the time, was a sensible and sound decision, as his contract book was full. This he states, when the banker draws his decision into question. Mr. Thornton is right, he made a sound decision, only he could not predict the future and the strike, which changed the outcome of his decision.
The situation for the other mill owners is not in the same dire state, as they have not lost a mill so shortly before the strike. They have space and capacity to fill their orders and eventually don't have such full order books.
In Mr. Thornton's case, even the full order book is a means to get him faster into bankruptcy, as it necessitates him to do large investments to get the products manufactured, while he gets paid long after the products are delivered and his work is done. (Though I think this economic phenomenon that a successful company can go down because of its own success, was only discovered in the 20th century.)

While the contracts and Mr. Thornton's sticking to them, once again shows his morally high standards. He wants to be as good as his word/signature under the contracts, though his circumstances prevent him to be.

The bank in contrast can patiently wait for the sure payment, as his production and money basis is secure every step of the way. Only the peak of production investment and delivery delay escalate at a bad timing, as the strike prevents a continuous manufacturing and fulfilment of the signed contracts.

  • The loss of the mill caused production delays, not only a loss of workers, which Mr. Thornton from a moral standpoint mourns, as he reacts emotionally and not economically calculating to the loss of his workers, though he has to fight the economic consequences.

  • The strike comes at a time when his contract books are full and he already struggles to produce fast enough to fulfil orders in time. He additionally invested in machinery, so he is at a money low, which alone and under normal circumstances would not cause a crisis, considering his full order book, but combined with the strike does.
As a mill tenant, he can't secure his own finances, as he like all entrepreneurs (except companies and holdings, who limit their risk and the compensation a customer / investor can expect) always is fully liable for his economic success and his every decision, even with his private possession, as an entrepreneur 'is' his company. All his possessions, no limitation possible, no part of his finances can be saved or secured.
Company forms with limited risks mostly are of later dates anyway and would not have helped Mr. Thornton. So I must admit, I don't see the moral standards violated in this case. He does not have any other option or any means to prevent the disaster that even can go so far as to lose his and his mother's home.
He saves Fanny in the only way possible, by extracting her form his own household by marrying her off. Otherwise even her fortune/dowry would have been part of the compensation for the bank, which gets its payment without risk, as loans only go as far as securities can be given or they expect to easily get hold of money.

I do see Mr. Thornton follow his principles, though I don't see them at a breaking point at that time. His investments were necessary to fulfil his work as well as his moral obligations. Though a banker would not follow him on a work-fulfilment nor on a moral justification basis. A banker only would see his full order book, which is the main argument Mr. Thornton gives in the only language a banker understands, money and orders mean payment and money.
I think Margaret's comment at the breakfast table in London gives the essential hint for the interpretation of Mr. Thornton. She would rather honestly earn money by her hands work than by speculation. And that in my opinion is the moral guideline, as speculation in all cases leaves losers on the way to the success of a few. Money never comes from nowhere, but from another's pockets, though bankers mostly don't make the connection (sorry if I offend someone with this - I know quite some bankers). Risky speculation robs someone who might not be immediately obvious, but in the end still is there and losing.
(Even the successful risky 'adventures' were projects where someone lost. e.g. as a very famous example the pirating projects of Queen Elizabeth were financially few of the very successful ones'. I would think Spain, Portugal and France might look at them quite differently ;o)

I even see the film version of "North & South" as quite a modern point of critique to the money market, though compared to the first half of the 19th century, some security measures are in place for some.
Some aspects still continue unchanged. The honest worker, who can't survive from his day's work, because of risky speculations and bankers only interested in large margins which have nothing to do with what work can realistically earn or gain, is a very contemporary problem, not only 19th century nostalgia.
Bankers as well as companies are speculating with the misfortune of others. Nothing has changed in that regard since the 19th century.

Mr. Thornton took risks, though he surely is no gambler and trusting friend like his father was. (Does he even have close friends? I think he understandably has a trust issue, where even his sister partially is not included in his inner circle of trust, but only his mother. And Margaret has a hard time to prove she is worthy to enter this close knit circle.)
Even in this aspect I feel closely connected to Mr. Thornton, as my 'friend' base suffered greatly through taking up a business, as people know you as long as they think they can get an advantage from a connection with you.
In a way, it is the comparison between the party of the Thorntons and the situation when Mr. Thornton sits alone with his mother when news breaks that the risky venture of Fanny's husband succeeded and Mr. Thornton still is deep in his financial troubles. Nobody of the party even thinks about visiting him in his problematic situation.

I know that my interpretation is much more guided by circumstances and historic background of Mr. Thornton and his decisions, so I am not sure if it can give more argument to Servetus' own inerpretation or defence, but I hope at least to open a consoling option.
As much as I see Mr. Thornton betraying his principles for Margaret Hale, I don't see him doing the same or even struggling with his principles in this case. He follows his principles as far as he can, he does not want praise for his efforts, but is his only judge. He tries to do his duty and to fulfil his moral obligations. When all his duties collide, he for himself does not allow himself to expand his moral sense and allow himself more options to act. His main interest is to prevent hurting others any more than absolutely necessary.

Servetus, certainly brings out the radical in me ;o)

As my situation in a lot of aspects is very similar to the one of Mr. Thornton, it makes me more likely to defend him. But after all, I don't see him at fault in his economic decisions.
I don't see it as a sticking to principle which causes his downfall. He goes through these problems which he cannot prevent with his principles intact and not even put into question. The only thing one could accuse Mr. Thornton of is, that he is out of luck, but nobody can predict or guarantee his own luck. That strikes become a certainty one has to calculate into economic decisions, is not yet a thing Mr. Thornton seems to realise, though during the strike, he seems to have won that experience, as his comment at the Exhibition in London shows that he expects strikes to remain.
After my year 2011, I can very much sympathise with the out-of-luck aspect of Mr. Thornton ;o)

I wish all readers lots of luck with all their decisions, as care and planning is good, but luck with them is even better ;o)


  1. Agree..he has no luck in bizness..but..he is very fortunate in love. Future Mrs.Thornton has a small but decent fortune;) I'm sending hugs,wishing you all sorts of success:*

    1. I think 15,000 GBP was quite a significant sum at the time.

      A website that tries to measure relative value based on a few different economic indicators: http://www.measuringworth.com/ukcompare/relativevalue.php

      You can type in a year and amount and it gives several estimations based on different economic measures.

      The 'economic status' value of 15,000 GBP in 1850 vs 2010 comes out to around 16,900,000 GBP. So Margaret Hale was indeed an heiress!

    2. This feels like another gaffe of the series, especially when you consider that the series has him stating in episode 2 that they owe the bank 400 pounds. So, yeah, 15k would certainly solve his problems.

      I don't have my Norton Critical Edition of the novel to hand, but iirc this was a matter of dispute even in the original edition. There was apparently a type in the first edition (or the serialization?) that made the amount she was offering him look ridiculously small, which was then corrected in a later edition.

    3. @Joanna Thank you very much for your wishes and hugs! I wish you all the best and thank you for commenting! Hope to see you tomorrow at the European group watch.

    4. @UK Expat
      The amount of her fortune to spend was a thing that I wondered about in the film. For me the amount sounded enormous and it was so much downplayed in the film.
      Even my parents still can remember a time when the GBP was well over 20 DMarks, when even the DM still was worth something, so I estimated that here amount just lying around in a bank account must have been a significant sum.
      Thank you very much for the link to the conversion tool. I repeat it here to make it clickable:

  2. Interesting discussion on risks. There was a big difference between Watson and Thornton in the investment scheme. Thornton would've been gambling all he had and it was money he needed to pay his workers, while Watson likely only invested a relatively small amount of his portfolio.

    Thanks for the reminder of the North & South group watch. I plan to participate too!

    1. Thank you very much, bccmee.
      The difference between Watson and Thornton also astonished me, especially because of the fact that Mr. Thornton is the elected magistrate. I contributed it to the fact, that Mr. Thornton even among the mill owners is not an equal. Watson is 'old' money and has a comfortable fortune to gamble with in the mill business, while Mr. Thornton does it for a living and to provide his sister and mother with an adequate livelyhood and keeping up the required appearances for his business.

      I will join the European North&South watch tomorrow on Saturday, as the other times are in the middle of even my late nights. Hope to meet you in the chats!

  3. I have to quibble that the early 1850s are just slightly early for the important railway speculations -- the big problems there that generated world economic crashes are still about twenty years off at this point. Also, I think that we're to some extent talking about different things here. I never criticized him for the actions he took, but rather for failing to consider how his attitude is affecting his actions.

    For instance, while I don't disagree about general awareness of the riskiness of certain kinds of investments in England since the South Sea Bubble (or indeed, before), my remarks did not condemn him for not engaging in *this particular* speculation or risky speculation in general. What I'm criticizing him for is not having engaged in a general investment strategy that would have allowed him to weather market ups and downs. If you read about the cotton industry in England, you know that this kind of boom / crash was entirely par for the course, though it was more severe about a decade after the series plays - but even so, manufacturers *had* to be aware of these problems in advance. His statement that he doesn't know what he should have done thus reflects his general unwillingness to be aware of certain particular circumstances that were clearly applicable to his situation and were made clear all the way through episode 2. When Latimer says, "more modern financial procedures," his next word is "investments." *Thornton* is the one who conflates "investments" with "speculations," and this jump to conclusions is a problem of attitude / prejudice that gets in the way of rational decisionmaking.

    Secondly, I did not criticize him for his choices regarding the specific business of the mill (buying machinery and raw materials in bulk -- these are normal operations, and indeed, at the beginning of the 1850s, he's standing at the cusp of a general technology boom that threatened to kill manufacturers who *didn't* upgrade, even if it didn't guarantee their success), but rather for his insistence that his knowledge of his particular trade should be sufficient for operating the mill, as opposed to managing his relationship to the market as well, which he seems to refuse to do (or there is absolutely no evidence from the series that he is actually doing it).

    Also, I think that on the whole (my students have this issue as well -- they *always* take Thornton's side, at least at first) we are way too willing to take Thornton's statements about his inability to pay more at face value. If he really wants to prevent a strike, because that is the thing that is most likely to make his mill go under, there were probably better ways to go than shutting down production completely and then doing something that was *guaranteed* to mess up production (importing unqualified scabs). Again, however, my point of criticism of him is not per se the action he takes in any situation, but the heavily inflexible worldview he displays, to his own ongoing detriment and ultimate downfall.

    1. I don't see us generally disagreeing, but think the only point we differ is, that I don`t see Mr. Thornton’s financial basis solid enough to allow him to ‘invest’ in anything or secure his situation more. For that one really needs a sound basis of money one needs no immediate access to.
      And here I see the crux for Mr. Thornton. He does need all the money he has and can get hold of and even has to lend money from the bank to keep his investments afloat. This runs smoothly as long as the production goes on and the orders are paid in time or only with calculable delays.
      In my opinion he is not yet well off enough to have enough spare money. I see that in his cloths, which are not new, but even his evening pair of trousers are repaired. Unfortunately one only sees that in the promotion shot with Margaret and I never realized that in the film itself.
      He struggled to repay his father’s debts, set up his mother and sister with an adequate surrounding and is operating the mill on a small money basis, where most of the operative money comes either from his contractors/last orders paying the new materials or from the bank. In this case I am still wondering, why Mr. Thornton's opinion of Mr. Bell is so bad. I never got to the ground of that. Is there an explanation for this in the book, as the film does not care to explain it at all, but takes it for granted.
      Mr. Thornton would need to loan money to do investments and that in my opinion is the basis which drove his father into ruin.
      Also, as an entrepreneur, the investment in his own enterprise is an investment as well. He could spread risk by investing in the business branches as well, but here I don’t see his money basis sound enough.
      Mr. Bell and well established mill owners depending on their old families fortunes can do that. Mr. Bell can even negligently spend the amount Mr. Thornton owes the bank, 500 GBP and spend it in the risky venture of Fanny's husband, risking to lose it all, without care for the loss.
      But I don’t see that Mr. Thornton has that option already.
      So I don't see him forced by his principles and unable to adjust, as you do, but forced by circumstances, which do not allow him to act differently. Acting differently and loaning more money from the bank to do investments would in my opinion be irresponsible of him.

  4. Yes, he is unlucky. But shocky cotton production markets were standard all through the nineteenth century, so a certain amount of unluck has to be planned for. How could he *not* be aware of this and be the highly skilled producer he claims to be? He clearly contributes to his own demise as manufacturer because he is so inflexible -- because, as Fanny puts it so accurately, he's "such a stick in the mud."

    As far as his liability goes, you are correct that Marlborough Mills wouldn't have qualified for limited liability until at least 1855 in England. (The book suggests obliquely that he has other arrangements -- he says to his mother that they won't ever be as poor as they were earlier.) It's also correct to say that in essence it doesn't matter because he equates himself with the mill. However: if the mill is *that* important to him, why is he so inflexible?

    re: Margaret -- I will say more about this in the section I write on the romance. I agree that the reason she decides she can marry him is that through her contact with the Higginses, she comes to the standpoint that honest work can make someone genteel, so that a manufacturer stops being a tradesman (something the book makes clearer than the series does). I would hesitate to conclude, however, that her ascriptions to him actually apply either to him, or to his vision of himself. While I think we can say implicitly that "he wants to do honest work," he doesn't ever actually say that of himself. His explicit statements are all about the efficiency of the mill as that relates to the livelihood of the workers. That's why he gets himself in trouble in the first place -- because his definition of efficiency is so poorly formulated and so "weltfremd" that it threatens to, and does in the end, outrun him.

    Again, I'm not saying that principle are ethics are wrong (I never said that in the post, and I do not believe that). What I said, and am saying, is that his inflexibility about these matters prevents him from developing an honest awareness of the world in which he operates.

    1. I think, Mr. Thornton is prepared to have ups and downs in markets and even have extraordinary risks to cover, e.g. the burned down mill. That is no small loss. What in my opinion is the disaster for him is, that the loss of the mill, material, full production and workers (I know it is phrased quite unconcerned in blank business terms and the workers come in last, as they are 'replaceable') and the strike come in a close range and in the combination extend the money he has as an emergency backing for such cases.
      It in my view is the combination of bad events (I don't think they had discovered Murphy's law at that time in the 19th century), which extend his negative prediction and security measures and which are the cause for him to go under.

      Regarding his work ethic, I agree. I don't see Mr. Thornton especially concerned to do 'honest work', but more in a sense (topic and problematic depicted in German literature of the late 19th century) do the work and do it right, whatever your share in it is.

      I think where we differ is, that I don't see his ethic principles at work, but his risk management in a clear business planning environment, where an accumulation of negative events hit him in an inconvenient moment, when he already had done investments and had touched his resources. This in combination does not leave him much of a choice but to pray, as he does, for a good payment moral of his debtors.
      That his ethical decision to install the ventilation out of consideration for the health of his workers, might have further enlarged the problem, but only in the combination with the other unlucky events lead to the disaster.

      I think your spreading the risk approach to his investment decisions is a rather modern approach. I don't think is was used in the 19th century by mill owners or business owners in general. They had their money in their own business and investing elsewhere to compensate own crises, is more an approach of Margaret Hale's social class, where money is invested elsewhere rather than used for an own trade / factory.

      Perhaps the combination between Margaret Hale and John Thornton is a good one in a business sense, not only because of her money, but because of her likely different approach to business investment. I hope they both in combination can withstand the upheavals of the money market and the industrial revolution.

  5. Thank you for your comments and please excuse my late joining in the discussion. I promise to come to it and respond today!
    I hope you all have a great group watch! I will join the date and time tomorrow (2nd of June), as it is a more convenient time for Europe. I hope to see, chat and meet you there as well!

  6. I've come even later to this discussion, but wanted to express my appreciation for your insightful interpretation and commentary on the 'cause and effect' aspects concerning the failure of Mr Thornton's mill.

    Perhaps I concur with your assessment and opinions, as well, through a similar lens of my own business experience. Indeed a perfect storm of misfortune through circumstance and timing, in which I agree with Mr Thornton, in that I don't see what he could/should have done differently, to have avoided what was clearly beyond his control, at the point of his meeting with Latimer.

    1. Thank you very much for your feedback and a warm welcome here on the blog, corrflutes.
      I hope your business runs well now and wish you all the best and lots of success !