Carr’s of Carlisle

Howard Muson former Editor of Family Business magazine in the USA, writes about management issues and specialises in corporate histories. He is also affiliated with Lansberg Gersick & Associates, consultants to family businesses.

In Margaret Forster's book, Rich Desserts and Captain's Thin, she raises the issue of the effect of religion on a family business. Did spiritual values account for the smooth successions at Carr's of Carlisle through four generations and the staunch loyalty of its workforce?

"The death of a family business is a very strange death," writes novelist and biographer Margaret Forster in her history of Carr's of Carlisle, Rich Desserts and Captain's Thin. "There is no corpse to grieve over. It is all a matter of spirit, and in Carlisle that spirit is strong. All that was good about Carr's is recalled, all that was less good barely remembered."

Forster, who was born and grew up in Carlisle, writes affectionately about Carr's biscuit works, the small city where it was located and the people who lived and worked there. She does not, however, let nostalgia blind her to what was "less good" about Carr's.

Founded in 1831 by the Quaker Jonathan Dodgson Carr, Carr's of Carlisle grew from a factory in a corner of northwest England into the biggest biscuit maker in the country. Its sweet biscuits, packed in attractive tins, came in a seemingly endless variety of shapes and flavours with names such as Rich Desserts, Balmorals and Café Noir. For 133 years, Carr's was under the control of one family. Although now owned by McVities, part of the United Biscuit empire, many still think of it as a family company.

Carr's was inspired and, to a great extent, guided by spiritual values. A deeply religious man, JD Carr was a believer in Quaker virtues of modesty, honest dealing and service. His initial goal was "to make good, cheap bread to feed the poor". Tall and strongly built, a gentle giant, he devoted his life to alleviating poverty as well as making profits. In the grim early years of the Industrial Revolution – the era of Blake's "dark, satanic mills" – Carr's of Carlisle stood out in  treating its workers with decency.

But there was a certain ambivalence at the heart of JD's mission. George Fox, founder of the Society of Friends, had preached against "the deceitful ways of merchants". The pursuit of profit was not regarded as evil, notes Forster, but a Quaker was expected to know when he had made enough money and to avoid seeking greater wealth for its own sake.

Margaret Forster's book, first published in 1997, raises many questions about the evolution of family businesses inspired by spiritual values. Is religion a positive or negative influence? How long before spiritual values are overwhelmed by competitive forces in the marketplace and demands in later generations for increased payouts?

Rich Desserts and Captain's Thin also offers clues to another family business mystery. Some family firms seem to be able to pass the torch from one generation to another peaceably without any evident succession planning at all. Carr's of Carlisle did it for four generations. What kind of family is able to pull that off?

The founder's emergence
Growing up in the town of Kendal, at the gateway to Britain's lake district, JD Carr regularly attended Quaker meetings with his parents. As Forster describes him, he was a pleasant, sensible young man who showed genuine concern for others. Almost nothing in his early makeup suggested the fire and genius of the entrepreneur he was to become.

While his brother went into the grocery business like their father, JD decided to apprentice to a local baker – hardly a wise career choice, it seemed, in a tiny town that already had 26 bakers. JD opened his own shop but soon struck out for Carlisle 43 miles away, which he had heard, probably at district Quaker meetings, was a "coming place" for business. Legend has it he walked the whole way.

At first, he set up a bake shop in the small city of about 20,000 people. Then, with a bank loan, he embarked on a more ambitious vision. He bought land beside a canal in the desperately poor Caldewgate section of the city. He was going to build a new factory that would bake ship's biscuits, commonly known as Captain's Thin, as well as bread. His plan was to pack the biscuit tins in boats and float them down the canal to Port Carlisle, where they could be loaded onto larger vessels for shipment to major cities. To ensure a steady supply of flour for his bread and biscuits, he would build his own mills.

It took six years for the factory to rise from the muddy site, but when it was finished it quickly became a popular place to work in Carlisle. The steam-powered assembly line imposed long hours and a strict discipline; the noise of machines was deafening. But the new plant was airy and spacious with large windows. JD paid wages probably a little higher than in most other plants. As long as an employee came to work sober every day and did his work, he had a job for life.

JD knew every phase of the operation: he circulated on the factory floor offering advice, never yelling. He was like a father to his employees. He knew all of them by name and cared about their well-being. In time he installed a swim bath for recreation, a schoolroom and a library. And every summer the Carrs took the entire work force with their families into the country by train for a day-long outing.

Outside the business, JD was gaining a reputation as a social reformer. He campaigned for repeal of the Corn Laws that imposed tariffs on wheat imports and put the price of bread beyond the reach of the poor. Aware that many of his workers went home every night to crowded and unhealthy dwellings, he helped organise a co-operative to build clean, low-cost housing in Carlisle. He also spurred the creation of the Caldewgate West End Total Abstinence and General Improvement Society, with a reading room to promote literacy.

Dutiful and disputatious sons
Despite his Quaker modesty, JD the businessman proved to be a clever and aggressive marketer. In 1841, he secured a Royal Warrant from Queen Victoria to be the biscuit supplier-of-choice to the Court. Margaret Forster is not sure how a relatively obscure manufacturer like Carr was able to secure this "amazing coup". The company immediately began trumpeting the royal endorsement on its letterhead and in its advertising.

Carr's continually invented biscuits with new names and 'personalities' to satisfy the consumer's need for novelty. It had great success with its Kennel assortment, engraved with the heads of 12 dogs, from Labrador to greyhound. Moreover, the Duke of Wellington, Queen Victoria and Shakespeare all had their portraits etched on a biscuit.

A number of the recipes were cooked up in Jane Nicholson Carr's kitchen, with the six Carr children joining in the baking experiments. From an early age, the Carr children – four sons and two daughters – were encouraged to think of the factory and the people who worked there as part of their wider family. On frequent visits to the plant, they were introduced to the foremen and workers so they could learn all their names.

The workers knew perfectly well, says Forster, that one of the boys – Henry, George, Thomas or James – would some day succeed JD as their "father", so all four were "treated carefully". JD never did anything, however, to groom his sons to take over the business. He made all the decisions himself; he was not good at delegating. But the four sons did not show much initiative or enthusiasm for the business either.

Of the four, George was considered the ablest and looked most like JD. He was also the most independent and, after studying to become a doctor, chose farming as a career with his father's support. Henry and James, more dutiful and unassertive, entered the business and gradually rose to responsible positions: Henry became supervisor of biscuit production and James was in charge of grain buying.

The interests of both brothers lay elsewhere, however. Henry and James were religious zealots more passionate about saving souls than running a business. They believed in the literal truth of the Bible and engaged in constant doctrinal arguments with their Quaker brethren. "To James", Forster writes, "the whole world was evil and it was his duty to try to reform it." He gave terrifying sermons at local racetracks; at home, he frightened his own children with his religious fervor.

Henry's marriage to a woman from a Congregationalist family led to the final expulsion of the contentious brothers from the Society of Friends ("marrying out" was a Quaker taboo). Though this event was embarrassing for JD, by then a pillar of the Quaker community, he and Jane Carr resigned from the Friends in solidarity with their sons, joining instead a small sect called the Brethren. After this break from the community, most of the rest of the Carr family ceased to be Quakers, too.

A five-way split in ownership
With two such disputatious scions, one might have foreseen disaster looming on the horizon. Happily, Carr's was able to survive its next generation of leaders. The family also managed to surmount a potentially fractious division in ownership that split the company's ordinary (controlling) shares five ways.

In 1884, JD suffered a stroke and died at the age of 77. Henry succeeded him, unchallenged by James or Thomas, who had joined the company after a stint as a farmer with George. JD's will left equal shares of the company to his widow and their four sons. The will instructed the family to work together for the well-being of the company – "My desire being that all the members of my family shall assist each other in maintaining and keeping the business which has cost so much care and expense in developing."

Henry's first act as successor was to call together all employees and ask them to join him in praying for their souls – perhaps not the best way for a new leader to inspire confidence. However, with James as his ally, Henry surprised everybody by moving boldly to prove he was up to the challenge. He built a new, four-storey factory, one of the first to be lit by electricity. He expanded Carr's product lines. He also went ahead with the construction of the modern flour mill that JD had planned to build at Silloth, the closest port connected to Carlisle by rail. "They wanted to show what they could do", says Forster about these suddenly motivated successors.

By the time Henry took charge, Carr's had 2,000 workers, about half of them women. Despite its large size, the company retained its caring, family atmosphere. "Even the factory cats were well looked after", writes Forster, "all 14 of them."

Unfortunately, the brothers discovered that JD's costly investments in his last years, plus their own initiatives, had stretched Carr's bank credit to breaking point. Under pressure from the Clydesdale Bank to pay back an overdraft, the brothers agreed to convert Carr's into a limited liability company. While the family retained ownership of the controlling shares, common stock was sold to 200 investors in a public offering – a betrayal of the founder's wishes. The family business was now Carr & Co Ltd.

A rising star in the third generation
Henry followed his father's model of one-man rule, confiding only in James. Like JD, he apparently did very little to bring members of the next generation into the decision-making or to plan for succession. Two of Henry's sons, Laurence and Frank, were on the board of directors along with two of Thomas's sons, Bertram and William Theodore. After the deaths of Thomas, James and George around the turn of the century, Henry seems to have had intimations of his own mortality. He conferred the mantle not on one of his sons but on his nephew Theodore (as he was known), whose "keenness was apparent to all". Henry let the 37-year-old Theodore chair a board meeting – symbolic of his anointment. Not long after, in 1902, Henry was dead.

Perhaps anticipating that Theodore and his more outgoing and suave brother Bertram were the likely successors, George gave his two nephews an extra­ordinary gift. The brothers each owned only 15 shares of all the controlling shares, while their stepmother had inherited 374 shares from Thomas. To bolster their position, George, before his death, divided his own shares between Theodore and Bertram, giving them 54 more each.

In Theodore, Carr's was fortunate to have a leader who appeared to reflect the best in the gene pool. From his days as a small boy touring the plant with his grandfather, Theodore was in love with machines, building them, taking them apart, pestering plant foremen with questions. He became an engineer but he also displayed his grandfather's vision, organisational skills and business acumen.

Soon after taking over from Henry, Theodore discovered the company's books were in disarray and that Carr's was deeply in debt, largely because of its unprofitable milling operations. Instead of shutting down the mills, the new managing director obtained a UK£40,000 bank loan to expand the Silloth mill. He created a separate company, Carr's Flour Mills Ltd, so the mills could pursue business on their own without being tied too closely to the biscuit works. These proved to be shrewd moves.

Theodore was a big, heavy-set man like all the male Carrs, with a bellowing laugh. Unlike his calm grandfather, he was volatile under pressure and could lose his temper. However, he brought new energy to the business and modernised it. He replaced horse-drawn delivery wagons with touring cars and vans in smart green and gold livery bearing the company name. He also developed a machine for icing biscuits in one-tenth of the time it took to do it by hand. Moreover, he created the famous Table Water Biscuit, a larger, thinner version of the basic Captain's Thin.

Although he largely followed the model of one-man rule at Carr's, Theodore was freer than his predecessors about sharing details of the business. He held regular meetings with plant foremen and employees. To promote team spirit at the plant, he organised sports competitions among employees and started a peppy company newsletter, The Topper Off. He set up a Workers' Advisory Committee that enabled elected representatives to air employee complaints before management, including Theodore himself.

His brother Bertram, meanwhile, travelled the globe most of his life as Carr's export manager, expanding sales as far afield as India – a 'Mr Outside' to Theodore's 'Mr Inside'. Despite fierce competition, the company prospered, and by 1914, Margaret Forster explains, "there was the impression that Carr's was invincible". Domestic sales boomed during World War I as well; the factory could barely keep up with demand.

Powerful forces were transforming Carr's family culture, however. JD Carr had foreseen that a small family firm with quality products might one day see its niche nibbled away by larger and more diversified competitors. Carr's was now part of a wider marketplace beyond Carlisle, with many more biscuit companies to compete with at home and abroad. Trade, Theodore told a convention of millers, was now "like warfare itself". 

Things were changing among the employees, too. In 1915, Theodore was forced to conciliate 500 women in the packing department who went on strike. But their protest was against a bullying works matron; they weren't demanding higher wages or shorter hours that might cut into profits. Though he cared about his employees, Theodore was not prepared to accept unions. In this new business climate, Theodore was focused on making money. Profits had become the driving force at Carr's. "Not for one moment had Theodore ever believed that his duty as head of Carr's was to serve, rather than to work for gain".

To some extent, Forster suggests, the "family feeling" that had pervaded the company for so long had always been a "cleverly created illusion". JD had been a benevolent despot. His successors did their best to keep the workers happy, so long as it didn't jeopardize profits. Nonetheless, Forster says: "There was no denying that all the workforce felt they somehow belonged when they worked in Carr's; they really did feel part of a family, and they liked this feeling."

The spirit of Carr's
The pressures to increase profits mounted after Carr's became a public company in 1927, even though the controlling shares remained in family hands. The tension between profit and service continued into the next generation.

Theodore died suddenly on a business trip to London in 1931, leaving family mem­bers wonder­ing who would succeed him, as his oldest son and likely successor, Stanley, had been killed in World War I. The immediate solution was a temporary one – two surviving members of the third generation, Theodore's youngest brother, Harold, and his cousin Frank served several years as an interim regime. Then, fourth-generation member Ronald Carr, youngest son of James and also a war hero, rose to leadership of the biscuit works, while Theodore's second son, Ivan, became head of the flour mills.

Ivan Carr was the last staunch defender of the service ethic. He believed passionately in the value of family ownership and, according to Forster, deplored what he saw as his cousin Ronald's ruthless pursuit of profit. "Carr's existed to serve the customer," he lectured his cousin. "I do not care a fig for [the] Unilevers… We are unique… It is for you to cherish and safeguard our reputation for uniqueness, not to throw it away and turn us into a company just the same as thousands of others, each with its dreary, commonplace, parrot cry…' We are in business to make a profit'".

But Ivan was fighting a losing battle. The milling company stayed in family hands after the sale of the biscuit factory in the 1960s. Before retiring in 1997, Ivan passed the leadership to his cousin Ian, a grandson of Henry, even though Ian looked upon the service motive as a quaint, absurd relic. By then, the Carr family's holdings in the business were insignificant. The Carr Milling Company was now also a public company.

A long, distinguished run
Was Carr's demise as a family firm inevitable? Probably. To survive in most industries, family-owned companies must be prepared to continually reinvent themselves to keep up with the times and evade the forces of creative destruction. That's a formidable challenge for any company. Family owners often face the necessity of having to transform their company into the kind of large-scale, corporate enterprise they have neither the heart – nor the skills – to manage.

The Carrs had a long and distinguished run, partly because they were never derailed by family squabbles. Quaker traditions of modesty and service very likely had a lasting impact, keeping egos and greed under control. Widows who inherited large blocs of stock never interfered in the management of the business – at least Margaret Forster's book presents no evidence they did. In difficult times, the Carrs pulled together. They managed to "muddle through" leadership transitions.

Religion can be a handicap in business when it leads to rigidity and insular attitudes in dealing with family members, employees and the outside world. It was never an intrusive force at Carr's, even under the evangelical Henry and James. On the contrary, JD Carr's spiritual values created a culture of caring that imparted a larger meaning to his enterprise and surely contributed to its success. And that is why many still think of McVities in Carlisle as Carr's, a family business.