Clarks: Made to Last

by Mark Palmer

  it would take long to trace out the causes of the losses … much was due to inefficient management, leading to heavy accumulation of unsaleable stock. The reduction of capital through the withdrawals … led to constant difficulties in meeting the liabilities of the firm.

  The firm’s accountant, James Holmes, did not help matters. He managed to ‘lose’ the stock accounts at the end of 1859, and when the books were retrieved a year later it was discovered there had been a net loss over two years of £2,679. 17s. 10d. Holmes would become a divisive figure over the next couple of years. Cyrus thought him indispensable; James regarded him as a liability.

  Under the terms of the brothers’ partnership, any withdrawals from capital were allowed only if both men agreed to them. As it turned out, every single withdrawal from 1849 – except for one – was made without joint agreement. Furthermore, taking a lead perhaps from his superiors, Holmes, who had negotiated a 5 per cent share in profits in addition to his salary, set about making withdrawals for himself in anticipation of any future profits. Closer to home, Alfred, Cyrus’s son, was also receiving 5 per cent of expected profits after he joined the company as a travelling salesman.

  It was becoming hard to see where growth could be forthcoming.

  Trade to Australia and other colonial countries had dipped – but the partners persisted with their battle to win over Australia. In the early 1850s, the Clarks had sent footwear to Sydney, Adelaide, Melbourne and Brisbane, with positive results, especially in children’s ankle-strap shoes and women’s slippers. But by 1857, shipments had ceased completely and would not pick up again until 1859. Samples were sent to New Zealand in the hope that this would become a new frontier, particularly in Canterbury, where wealthy colonists were arriving ‘cabin-class’ rather than ‘steerage’ as had been normal for other immigrants. But results here were also disappointing. Consignments were dispatched to South Africa in 1861, but were not repeated and trade with America and Canada was proving difficult because of the restrictive tariffs. A goloshed boot with fur on the inside was made especially for Canada in 1859, but its rubber component was subject to 25 per cent import duty, making the price unattractive to Canadian consumers.

  Financial imperatives at home meant that Clarks refused to offer extra credit to its customers in Australia, who in turn cancelled their orders. Australia had always been an outlet for surplus stock and Cyrus and James were keen to keep this market going for as long as they could. ‘We do not quite like giving up altogether – it is buying experience,’ said James, while admitting that trade with Australia was ‘disastrous in the extreme’.

  It was not promising in the UK either. In 1858, output was cut dramatically following overproduction during the two previous years. Staff were laid off and it would prove tough to replace them once business finally began to improve in 1864. Wages were rising, partly because other shoe companies were offering inducements to Street workers if they moved to a different part of the country. In a letter to a fellow shoemaker in 1860, James observed: ‘We do not find our workpeople as tractable as they were 10 years ago, especially with any new work’.

  On another occasion, company documents concluded that:

  … since the introduction of sewing machines and riveting there has been such an increase in competition that the shoe trade has not been in a very satisfactory state.

  But Cyrus and James remained steadfast in their commitment never to compromise on standards, striving, as James put it, to ‘keep up the quality of our goods to make such as a bespoke shoe need not be ashamed of’. Producing ready-made shoes that had the look and feel of made-to-measure footwear was a fundamental plank of their strategy.

  Consequently, Clarks showcards emphasised craftsmanship and tradition. One of the earliest, designed by Cyrus’s eldest son, John Aubrey Clark, in around 1849, shows the factory as a theatre stage, framed by elaborate curtains and stone masonry taken from a parish church. ‘Sewing of Every Pair WARRANTED’ is the strap-line, with ‘warranted’ in bold and in capitals. Another, two years later, features a prosperous middle-class drawing room, complete with roaring fire and grand over-mantel mirror. Well-dressed ladies watch intently as a young boy has his feet measured, a second child waiting his turn. Their mother holds a shoe in her hand as if admiring a precious piece of jewellery. The showcard names all the provincial towns where the Clarks’ shoes are sold by ‘respectable dealers’ – 77 of them in total. In London alone, there were 32 shops selling the Clarks’ footwear.

  Price lists and showcards were the ways by which Clarks kept in touch with customers. Showcards were designed to be on display in shops, advertising certain lines and alerting customers to what was new in the forthcoming season. The partners were clear about how they wanted to present their wares. While other Quaker firms – such as Cadburys and Frys – advertised in newspapers, C. & J. Clark never did. The partners thought newspapers represented the mass market and they did not wish to be spoken of in the same breath as chocolate or soap. The Clarks’ strategy was to appeal directly to consumers without appearing to do so. According to The Shocking History of Advertising by E. S. Turner:

  A showcard designed by John Aubrey Clark, Cyrus’s eldest son, in around 1849.

  They [companies such as C. & J. Clark] were quite certain that [advertising in newspapers] was ungentlemanly … the ideal, the traditional way to do business was to surround oneself with a circle of customers and to cultivate personal relations with them; excellence of goods and word of mouth recommendation would do the rest … the last thing to do was to chalk the firm’s name on the sides of quarries or to inset furtive little paragraphs in the newspapers, in the contaminating company of truss-mongers, snuff-sellers, pox-doctors, body snatching undertakers and cut-price abortionists.

  Good relations with those who sold Clarks footwear were given high priority, but at the same time the partners refused to budge on price, recognising the downward spiralling that comes when drawn into a price war. James made his position clear to shops in Scotland, when he wrote:

  We may lose by refusing to take off the 2.5 per cent they now want, but this course will soon make it a worthless trade and we think it would be wiser to come to an understanding if possible.

  There were also occasions when the partners were prepared to forgo a sale if they thought it would compromise their Quaker views. A business in Shepton Mallet received the following letter in October 1853:

  We are duly in receipt of yours … But we feel that we can not, with a clear conscience have anything to do with an article which we believe to be destructive to the morals and best interests of the people. You will therefore excuse our declining to execute any order for mops for your brewery.

  Guaranteeing the quality of shoes but offering them at much lower prices in comparison with bespoke footwear remained central to the partners’ plans. But there was still the issue of comfort. Bespoke, by definition, is custom-made. The shoe fits the foot because it is built around a unique, personalised last. The Clarks understood this and responded by offering a range of three fittings and half-sizes from one to seven. By 1855, all ladies’ boots came in this range of sizes and fittings.

  Style was important, too, with Clarks quick to pick up on what was proving fashionable and popular in Paris. The brothers were anxious to register specific designs with the Board of Trade and although other companies were allowed to copy them, they had to display the name C. & J. Clark prominently somewhere on the shoe. On a number of occasions, the full weight of the law would come down on companies failing to credit C. & J. Clark. In 1854, six Dublin firms were visited by solicitors on the suspicion of pirating C. & J. Clark’s registered designs.

  William S. Clark was consistent in his approval of his father’s and uncle’s stance on maintaining high standards, even in trying circumstances. As he wrote:

  The greatest care was taken that threads should be properly waxed, that there should always be four to five stitches to the inch and the wear of every shoe sent out was guarante
ed. In any case, a shoe that did not give fair wear was replaced by a new pair if sent back … The shoemaker’s number stamped in the waist was always a clue to the careless maker. It was this combination of solidarity and style that built up the reputation of the firm.

  There were serious and continual mismatches between output and sales. In 1855, for example, sales had been more than £2,000 greater than in the previous year, but output could not cope with demand. A year later, there was a further rise in sales but this time output had outstripped demand. The same thing happened in 1857, resulting in a surplus of stock worth £12,000. George Barry Sutton, in his book C. & J. Clark, 1833–1903: A History of Shoemaking, wrote: ‘The indications are that in producing large quantities of goods in anticipation of future orders Cyrus and James had not bargained for the recession in demand which hit them and the rest of the country in late 1857.’

  The yo-yo continued in 1858 when production fell by 23.5 per cent but sales did not dip by anything like as much. Consequently, opportunities were missed. And then in 1860, demand fell while production rose by 15 per cent. Evidently, the partners were finding it hard to judge the market. The start of 1860 had seen orders increase and it is likely that Cyrus and James developed an overly ambitious sense of where the trade was going. Suffice it to say that by the end of the year stocks were still rising. One explanation was that the partners wanted the factory to be working at full pace to avoid losing staff, who would be hard to replace. Another was that Cyrus and James were ‘unable or unwilling to exercise anything but a very loose degree of control over output levels’, as Sutton put it.

  This showcard with its calm air of urbane sophistication gives no hint of the financial turmoil that Clarks was going through in the 1860s.

  Other areas of the business were hardly thriving. The brothers’ farms, which had officially merged with C. & J. Clark, had been losing money consistently and chamois sales were too small to make a significant impact on the overall financial position. In fact, William S. Clark discovered that in 1862 only the sales of angoras, gloves and leggings (a new line) were showing a net profit. It was also onerous how the price of leather and other materials was rising year on year – and certainly faster than any increases in the price of the company’s shoes. James Clark wrote:

  We had great business troubles from the bad state of trade and shortness of capital. We passed through a time of great trial and were compelled to seek the help of our friends, who most kindly came forward to aid us in our difficulties.

  That was an understatement. The years 1860–63 brought C. & J. Clark to the brink of bankruptcy. There had been a profit of £3,034 in 1861, but that was not enough to offset a combined loss of £2,680 for 1859 and 1860 and a further loss of £656 in 1862. Bank loans had reached nearly £11,000 and Thomas Clark, the cousin who had become a sleeping partner between 1849 and 1854, once more lent a total of £5,500 from 1858 to 1862. By June 1863, Cyrus and James would have no capital in the business at all.

  Stuckey’s Banking Company had begun to take a firmer line in May 1860, when the bank’s secretary, Walter Bagehot – who went on to become the editor of The Economist and who wrote a celebrated book on the British constitution – received yet another request to increase the overdraft. His response was polite but clear:

  We can readily imagine that your trade has suffered from the circumstances you mention, and that your stock of manufactured goods is larger than usual at this season in consequence. This however is a contingency to which all business is liable and shows the necessity of a reserve of capital to meet it, as I have frequently taken the liberty of pointing out to you when we have been discussing freely the position of your concern.

  The partners did not appear to take much notice, prompting Bagehot to write again a few months later, pointing out that the company was continuing to disregard its maximum overdraft limit of £2,800. Such letters became more frequent. In March 1861, Stuckey’s Banking Company said it would lend the Clarks no more money unless current advances were addressed, although Bagehot went out of his way to be encouraging:

  In reply to your observations respecting the securities we hold, and the confidence we have hitherto placed in you we can only assure you that there is no change in our sentiments regarding you in any respect. We have quite the same confidence in you and the same disposition towards you as we have had hitherto but as we told you when you were here, the past course of your account for many years has determined us to definite restrictions regarding it in future.

  Today, it is common for firms to hire management consultants in moments of crisis. In 1863, Thomas Simpson, a cousin by marriage to Cyrus and James and a great friend of the family, was asked to carry out an independent investigation and compile a financial report on C. & J. Clark. Simpson had run a successful cotton-spinning business in Preston, Lancashire, and had moved back to Street on his retirement to live with his mother-in-law, Martha Gillett. He was to become an important business confidant to William – as he had been to Cyrus and James. Indeed, it was Simpson who urged the partners in 1850 to implement a new system of accounts, writing to James saying it was ‘the greatest want in your business’.

  Simpson liaised with Thomas Clark in his investigation, first soliciting a promise from the partners that they would ‘lay the full facts of their position before him’. It was to be an exacting and, at times, harrowing task. William wrote later how Simpson had intimated that had he known at the outset the full extent of the financial chaos he would have advised that the business be closed:

  While he looked on the case as almost hopeless he thought with the introduction of further capital and a complete change of management there was a possibility that the business might be saved … it was never suggested that there was any wilful concealment from him but it took time to get to the real meaning and value of many items in the balance sheet, and affairs were in so critical a position that a decision had to be come to at once whether to go on or to stop and call creditors together.

  Simpson’s findings showed that over a fourteen-year period, Cyrus had withdrawn £17,890. 18s. 5d. and James £10,358. 3s. 2d. In James’s case, it meant that already by 1860 his capital in the business had shrunk to a mere £1,157, while Cyrus was in debt to the tune of just over £10,000, a figure that Simpson increased to nearly £12,000 once he had factored in a bank loan Cyrus had secured on the deeds of his house, Elmhurst.

  It was during this inquiry that Thomas Clark, who in 1863 was 69, was told that the firm was in no position to pay him the agreed 7.5 per cent on his loan. It would be reduced to 5 per cent with immediate effect. Thomas accepted the new rate and, with the encouragement of Simpson, supported the idea of persuading outsiders to loan capital to C. & J. Clark on a short-term basis. But there would be one clear proviso: Cyrus, James, and Cyrus’s son, Alfred, must relinquish all responsibility for the day-to-day running of the business. Furthermore, the brothers would only be allowed to withdraw a combined total of £500 from the business in any one year. It was decreed that Cyrus’s limit would be £200 a year and James’s would be £300.

  These strictures were long overdue. From 1849 to 1862, Cyrus, the worse culprit, withdrew on average £1,278 a year from the business when his average annual share of profits had been only £824. Such reckless behaviour meant it was harder for the partners to take a stronger line when the likes of James Holmes, the accountant, and Alfred, also sought to take money out of the business. As Sutton described it in C. & J. Clark, 1833–1903: A History of Shoemaking:

  In their financial affairs, the partners had displayed none of the qualities of determination and foresight which had characterised their achievements in the fields of production and marketing. Whilst devoting a great deal of time and energy to securing outside monetary help, they had exhibited no competence in, and little interest for, the day to day administration of finance.

  Simpson knew that only a complete change of management would throw C. & J. Clark a lifeline, and he knew that only the promise of new m
anagement would encourage friends and cousins to provide what is known today as a ‘bail out.’ And so, in addition to Thomas Clark, whose investment now stood at £13,000, seven other investors came forward, several of whom had helped rescue the company two decades earlier. George Thomas, a Quaker friend from Bristol, loaned £2,500 and Francis J. Thompson, who had helped Simpson in his financial review, offered £1,300. Thompson, an ironmonger from Bridgwater, was a first cousin of Cyrus and James. His brother, Alexander, agreed to invest £500. Further help came from Charles and Thomas Sturge, who both gave £500, as did George Palmer and his younger brother, William I. Palmer, who were first cousins once-removed of James and Cyrus.

  The Palmers, who came originally from Long Sutton, Somerset, were in the biscuit industry after joining forces with Thomas Huntley, their cousin by marriage. Huntley was born in 1803 in Swalcliffe, near Banbury in Oxfordshire. His father, Joseph Huntley, was a baker who moved to Reading in 1811 and established a bakery in 1822. George Palmer had, like James Clark, been to Sidcot School, leaving at the age of fourteen to be apprenticed to an uncle as a miller and confectioner.

  Thomas Huntley and George Palmer became business partners in 1841, operating out of a small shop in Reading’s London Road, directly opposite a posting inn where travellers waited to board their coaches or change horses. Huntley took care of the baking, while Palmer worked on developing the first continuously running machine for biscuit manufacturing. By the time the Clarks asked for financial assistance in 1863, Huntley & Palmer was producing 100 different varieties and the plant in Reading was the largest biscuit factory in the world.

  With just short of £20,000 worth of loans in the bank, Thomas Sturge insisted that a trust deed be drawn up, signed by all investors, confirming that Thomas Simpson and Francis J. Thompson be appointed inspectors of the business and given executive powers to safeguard the future.