'The white slavery of the motor world': Opportunism in the interwar road haulage industry

Abstract

Subcontracting has been an important feature of British industrial development. External (inter-firm) subcontracting, common in the building trades, transport and engineering, has been represented as an alternative to large-scale direct management. Meanwhile internal subcontracting to skilled artisans has historically constituted an important alternative to wage labour in a wide range of industries such as clothing and textiles, coal mining and quarrying, iron and steel, engineering and the metal goods trades. Understanding this form of subcontracting is central to explanations of changes in the labour process, industrial relations and gender divisions of labour in these sectors. A considerable literature stretching from the nineteenth century has questioned the possible exploitative consequences of such contractual arrangements. While both forms of subcontracting declined from the late nineteenth century, as firms sought to internalize production and management, external subcontracting continued to be important in several sectors such as construction, transport and some engineering-related trades. It is in these industries that subcontracting established its recognizable modern form, with medium and large businesses delegating tasks to smaller firms or individuals. The last two decades have witnessed a renaissance of subcontracting, in the context of corporate moves towards reducing costs by fostering greater labour market flexibility’. The British road haulage industry was transformed between the wars from a primarily short distance service to a major competitor to the railways, due to technological developments and measures that reduced the immediate cost of vehicle acquisition. As an essentially ‘new’ industry in which subcontracting became a key feature, it provides an excellent illustration of the development of subcontracting relations. The industry’s growth was facilitated by freight clearing houses which subcontracted haulage to individual vehicle owners. These intermediaries were crucial in negating barriers to entry in the haulage trade, by arranging hire purchase (HP) for vehicle purchases and co-ordinating payloads. Such inducements attracted considerable numbers of subcontractors into the sector. While recognizing these potential advantages, virtually all commentators on the industry have stressed the highly exploitative effects of its subcontracting relations. The industry’s trade journal The Commercial Motor frequently highlighted abuses, arguing that while ‘responsible’ clearing houses existed, they were in a minority. Most were said to exploit their powerful position over hauliers, especially those drivers who became tied to their services, driving down their rates with ‘a wonderful compound of cynicism and pretended helplessness’. Contemporary and historical academic analysis of road haulage during this period has generally offered a similar verdict without examining subcontracting in any great detail. This article re-examines this conclusion by explicitly focusing upon the relations between clearing houses and hauliers. It uses the framework of transactions cost analysis to explain how clearing houses were able to push down subcontractors’ rates by exploiting privileged information, while using HP arrangements and other contractual obligations to monopolize the subcontractors’ services. Such practices generated persistently low incomes for hauliers, who found it necessary to work excessively long hours in an attempt to stave off business failure. These problems were exacerbated by overcapacity within the sector, which can be partly attributed to the reduced barriers to entry arising from clearing house incentives. In addition, some clearing houses capitalized upon the potential for opportunism provided by contemporary HP contract law, engineering subcontractor default on HP payments to regain possession of vehicles. The article begins by outlining the emergence and form of subcontracting in road haulage. It then discusses the nature and impact of opportunism in the sector, explaining why independent hauliers enjoyed limited earning opportunities outside their dealings with the clearing houses, the significance of their contractual obligations and the role played by HP commitments. The analysis also considers why exploitative subcontracting relations were able to persist for many years, despite being widely recognized by well-informed observers. In conclusion the article briefly comments on the wider relevance of opportunism for the analysis of subcontracting in other sectors.