To reduce the costs in the mills which remained, a new system of weaving was tried in 1919/30 which enabled weavers to watch up to 8 looms, being given help in non-weaving duties. This was opposed by the Weavers, as it threatened to reduce the number of jobs at a time of high unemployment. The result was a lock-out, which ended on February 14, 1931.
There was a sharp financial crisis later in the year, which brought in a National Government, and increased unemployment in Blackburn to 24,000. There were 1,000 empty houses and 166 empty shops - Blackburn was starting to lose her population. The slump continued, being intensified in Blackburn by a further increase in Indian duties. The Lancashire Cotton Corporation, which had been formed in 1929, started to acquire mills in Blackburn, in most cases closing them down and scrapping the machinery. The Government felt that much of the lost trade would never be regained, so encouraged the formation of the Cotton Corporation, which was given the task of buying up cotton mills, retaining the ones which were efficiently run or could be modernised, and scrapping the machinery in the rest.
As the 8-loom system was not working, employers started to cut wages in an endeavour to bring down costs. The Textile Federation, representing the weavers, gave notice of strike against the cuts, from August 27, 1932. The dispute was settled on September 24, but wage cuts were restarted at some mills soon afterwards.