According to the ‘gentlemanly capitalist’ thesis, throughout its history, the Lancashire textile industry's interests were ignored by politicians in favour of the City of London. It was for this reason that the gold standard had been at the centre of British policy towards India in the nineteenth century. Similarly, the Ottawa agreements of the 1930s were designed to underpin the financial obligations of dominion countries. Even so, until the 1960s, at least, as the previous chapter has shown, Lancashire had some significance at least insofar as its marginal constituencies could decide Westminster elections. Successive governments promoted industrial modernization and export industries to support the balance of payments. So, although the cotton industry was of dwindling significance even in Lancashire, and trade negotiations had broader strategic objectives, influenced by foreign policy and Commonwealth priorities, the combination of protection with a supportive industrial policy provided stable investment conditions for the remainder of the cotton industry.

These circumstances promoted vertical integration of cotton production in the 1960s and 1970s. As noted in previous chapters, critics of the industry argued that such a structure had been necessary for a long time. That remains a matter of debate, but the experience of the combines from the 1960s onwards, as shown in the last chapter, suggests that vertical structure and investment in the latest technology could promote financial success, at least for a time.

However, the changed circumstances of the mid-1970s posed new threats to the vertical model. Surplus capacity, which had plagued Lancashire since the slumps of the late nineteenth century and during the protracted interwar crisis, now became a problem impacting all advanced economies. Vertically integrated firms faced higher fixed costs and inflexibility, and therefore needed some guarantee of market share. The success of this strategy was, in part, therefore, a result of government protection, which reflected the evolving relationship between the USA and the European Economic Community (EEC), and also structural imbalances in the international economy. As trade policy was liberalized further after 1980, these imbalances became more acute, and the survival of textile production in advanced economies, including Britain, much more problematic.