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Numerous historians of deindustrialization argue that industries went into decline because established manufacturers moved production to cheaper locales to escape unions and high wages. A different pattern of decline occurred in the New England cotton textile industry, where downsizing began in the 1920s. Rather than fleeing their home area to build facilities elsewhere, most New England manufacturers were driven out of business by lower-cost competitors in the American South. Southerners founded, managed, and financed a heavy majority of the textile companies in their region. Although some New England firms did set up Southern plants, this was a defensive reaction to changing market realities. New competitors have brought about deindustrialization in other core U.S. industries. Recognizing this trend is important for a full understanding of the political economy of modern capitalism.
The demise of traditional manufacturing, or "deindustrialization," has been a central feature of American economic life in the late twentieth century. Modern episodes of industrial decline have inspired historians to investigate earlier examples of the phenomenon. The resulting literature illuminates a lengthy record of deindustrialization in the United States.1 As early as the 1920s important industrial sectors were downsizing in areas where they had originally flourished. By the 1950s manufacturing cities across the Northeast and Midwest were experiencing the "hollowing-out" of their economic base.
A vital issue, and one that numerous historians have touched on, is why deindustrialization takes place. How is it that well-established industries, often with a long record of growth and profit, plunge into ruin, often with great rapidity? In this article I address the question by considering one of the best-known early cases of deindustrialization, the decline of cotton textiles in New England, which began in the 1920s and continued after World War II.
Factory production of cotton goods started in New England at the end of the eighteenth century, spearheading the American industrial revolution. By the 183Os Lowell, Massachusetts, the site of many of the largest and most modern mills, had become one of the leading manufacturing centers in the country. The cotton textile industry of New England expanded steadily for almost a century thereafter, with capacity and employment peaking just after World War I. Despite considerable diversification of the regional economy, cotton manufacturing remained the single largest industry...