In whatever direction we survey the industry and commerce of England during the last half of the eighteenth century, we see extension and development. The annual produce of its land and labour was most certainly greater in 1800 than in 1750, its industry more flourishing, and its trade more extensive. This was due to a series of developments, which have become known as the Industrial Revolution. The central fact here discussed is the effect of one of these elements-the effect of steam-power, sold by an exceptionally highly organized business house. It is often asserted that there would have been an industrial revolution had the mechanical revolution never taken place ; and it may be true that industry, by simply following traditional lines, was developing a capitalist organization without assistance from science. In support of this, the enclosure movement and growth of large farms, the gradual increase in the size of the clothier capitalists, and the beginning of mills worked by water-power, are deduced. It may all be true, but it seems unimportant and rather futile to argue about what would have happened if something else had not done so.
The invention of the steam-engine as an industrial machine remains the central fact of eighteenth- century history, and not only is its direct influence on industry important, but the development of the firm which put it on the market is almost equally so.
By the year 1800 the steam-engine had not made such a transformation in industry as is often imagined, nor, on the other hand, was it so defective as to be relatively unimportant.1 It was the new industries, cotton manufacture, engineering, and mining, and the new businesses that were setting up in the old industries, that first used the steam- engine, and all these new firms were free to select their own sites, and they fixed them to a very large extent on the coal-fields. This leads us to the second important fact in eighteenth-century history: the presence in England of large coal deposits and the development of their working by means of steam-power. This unlocking of the British coal seams changed Britain from " a small, poor, backward, and stagnant nation," into a great manufacturing state. The inter-dependence of the various movements of the mechanical revolution is very obvious.
The steam-engine provided power to drain the coal-mines, which supplied coal for the new methods of smelting iron ; which, in turn, provided the additional supplies of metal for the construction of engines and machinery. By 1800, industry had reached its modern stage mechanically there is no radical difference between the methods of 1800, and those of 1900. The old industries and methods were dying out and new ones were growing. The passing of the iron industries of Hampshire and the Weald, and the decay of the woollen industries of Norfolk and the West Country, are witnesses to it.
The Industrial Revolution, though impossible to separate from the mechanical changes involved in the introduction of the steam-engine, yet meant other and greater alterations in the structure of industry; these are social and economic changes In the position and relations of capital and labour. In mere volume, both capital and labour had Increased tremendously during the century. The capital of the country had more than doubled itself since 1740, while the population had increased by nearly 50 per cent.
The increase in population had been made possible by the enclosure movement that added greatly to our production of food, and by the improvement In transport, resulting from the development of canals and the increase of turnpike roads, which enabled more produce to be brought to the market. The actual causes of the rapid increase in population are obscure and complicated, but are probably bound up with increased food supply, improved transport, and earlier marriages as a result of earlier wage-earning.
The increase in capital was due, in first place, to the presence of constructive ideas in the minds of the people living in England. Professor Marshall has stressed the great importance of the " idea," and the relative unimportance of the actual " things we possess," as a result of the idea.
Secondly, the century had seen the transformation of England from an agricultural state, adding to its capital chiefly by the produce of the land (especially wool), to an industrial state, developing capital from its coal and iron-fields. While, lastly, the improvement in the means of collecting and using capital, in the shape of banks and insurance companies, had greatly added to the facilities for increasing capital. Moreover, the increase in population and the new steam-power reacted on tile increase of capital, the progress of the latter being impossible without the progress of, at least, one of the other-two. The mechanical revolution was then accompanied by a rapid increase in both capital and labour (population), and deeply affected the relation of the two factors in production, and also their individual internal development.
As a result of the increase in population and the progress of the enclosure movement, large numbers of the labouring classes lost their stake in the land, and at one fell swoop were not only released from ties that held them in one place, but also lost the security, which a share in the common land had previously given them, against unemployment. They were forced into industry in large numbers and they were unskilled. It was fortunate for this new large proletariat that industry was ready to receive them. Tile development of machine industry, especially in the textiles, had created a demand for large numbers of unskilled hands, who could easily learn the simple duties attached to watching a machine. This meant that the class which lost by enclosure was forced to specialize in industry, just as the class that benefited by it had to specialize in agriculture.
The new working-class was composed largely of men who had no trade, and had no place in the .traditional organization of industry. The demand for labour was for skilled and unskilled men during the last fifty years of the century. The industries, largely non-textile, which needed skilled labour, were gradually educating sufficient men for their purpose, and laying the foundations of the strong Section of labour which made the unions of engineering and iron trades so important in the succeeding century. In the other trades, especially the textiles, it was generally true that the better the machine, the less intelligent the labour which was needed to look after it. The change which had come over industry was the origin of the unceasing complaint that workmen are less skilled, that has come down to us to-day. Previously, all artistic and technical skill had depended on the individual workman, and the skill of one generation might be lost in the next ; but with the introduction of machinery and its gradual improvement, all advances became cumulative, the point attained by one generation, was the starting-point for the next. Machinery also meant an increase of speed; instead of every screw having to be made separately,2 machines made them in hundreds ; Adam Smith's pin factory tells the story of this increase in the speed of production. Moreover, better roads and canals increased the rapidity of transport, then followed rapid growth of industry, quick returns to capital invested, and quick growth of the newly rich.
Moreover, both in textiles and non-textiles, division of labour and specialization was rapidly penetrating, and this development was immensely hastened by the invention of specialized machines. The state of the cotton mills, at the beginning of the nineteenth century, has been a reproach to the capitalist system ever since, and it has been blamed by humanitarian reformers and writers for the unspeakable conditions of the mills. However, it seems rather difficult to accuse the new capitalists of deliberately treating their employees as they are reputed to have done. There are some excuses to be made.
In the well-established trades, and those that continued their evolution normally with the assistance of steam-power, the paternal nature of the employers' duties was still realized. The separation of classes had become more and more complete as the amount of capital required to start in business increased. In 1750 there were few intermediaries between employer and employed, the capitalist still combined the functions of foreman, employer, and merchant.
The number of different processes carried on by one large employer, and the increase in the ground to be covered in supervision, made the introduction of wage-earning foremen and managers essential. This movement developed outside the textiles, but owing to the rapid rise of even the smallest capitalist, soon became, of necessity, an integral part of the textile organization. This was, in a sense, an unsatisfactory development for the work man, for it meant that special qualities of intelligence or skill often only obtained a slightly superior post for their owner, who instead of rising to the class of master, merely exercised his skill for the large capitalist.
The separation of functions was still going on, the industrial capitalist was becoming merely an organizer, his function as foreman and manager had descended to wage-earners, and further economic classes had been evolved. This is the story of the end of the eighteenth century, and for the textiles It had disastrous results. The cotton mills contained collections of unskilled machine-tenders lacking any traditional organization, and having no relations with their employers save the weekly cash payment. The employers, in many cases, were illiterate, and careless of their responsibilities, but their carelessness was not wilful, they had never realized that they had any responsibilities, and it was natural that the only discipline to be imposed was Imposed to further the immediate good of the trade.
The increased separation of employer and employed, closer book-keeping, the separation of classes, and the development of competitive economics, were inevitable causes of the misery of the next years. In the industries where the paternal character of the employer gradually evolved a decentralized system of control over his works, no such bad effects are seen. But even in long-established manufactures, the new-comers were greedy of quick-returns, and the field of labour was treated as the earliest American settlers did the new lands they found they robbed the soil, got all they could out of it, and then moved on to virgin tracts. To the capitalists of the early nineteenth century, there seemed an unlimited supply of labour, and they did not notice the wastage.
The outlook of the century alters as it progresses through the Industrial Revolution. The economic, as opposed to all the other motives, takes the lead in moving men's actions. The development of free competition meant the development of disregard for motives of religion, patriotism, and sentiment. Logically such a result was to be expected, and so was unavoidable. Wars are delayed because nations have insured themselves.3Arms and goods are sold to opponents,4 the enemies' ships are insured,5and the dictates of humanity are disregarded in relations with work-people.
The competitive spirit, while it made great improvements, also brought with it a dead weight of abuses. The self-interest it aroused begot and increased the quarrels of the various trades against protection. The quarrels between the producers and users of raw material, and between the consumers and producers of various commodities, with regard to duties and bounties, proved the impracticability of a protected system. Moreover, the economic survival of the strongest, that was becoming the usual story of industrial success, made men afraid. It was among the employers and capitalists that this fear first showed itself : it was a fear of natural causes and of other men ; they were not yet accustomed to the longer waits that were becoming necessary before complete returns came to reward the risker of capital. This fear was countered by insurance and combinations of employers for various purposes. Manufacturers tried to get control of tile supply of raw material, while the producers of raw materials endeavoured to control the market for their produce. On both these points, the history of tile Cornish copper mines and their struggle with those of Anglesea, and the subsequent efforts of Boulton in the matter of his contract for a copper coinage, are typical of a much more general movement. The organization of Chambers of Commerce is another effect of the same cause.
This development of competitive economics concentrated the attention of the country on money. Money was wealth,6 gain was everything, and industrial gain was the nearest and commonest way of becoming wealthy.
The development of large scale enterprise and big businesses needed the use of improved credit facilities, and innovations and developments were made gradually by optimistic and reliable business men in cooperation with liberal-minded bankers. The end of the eighteenth century had its period of speculation, but it differed from the madness from the South Sea Bubble, in that it was speculation in "industrials"; canals and public works were desirable stocks on 'change. Money, instead of being invested in commerce, was invested in manufacture, and the return seems to have been increasingly great. Industrial investments soon became more important than commercial, and the banks spread into the provincial towns. There had been scarcely a bank outside London in 1750. In 1800 Manchester alone possessed some seven or eight.7The manufacturers no longer needed to go to Amsterdam for capital, as had been Boulton's fate in the earlier stages of the capitalization of the steam-engine firm. The bankers collected the money in London, and lent it out into the industries their organization was more complex, and the services they rendered became more important, and if the realization of the power of the credit system was followed by its abuse, the abusers perished and bequeathed their experience to their successors.
Both in banking and industry an advance in business organization took place, accuracy began to take the place of the old rough-and-ready methods. In fact, accuracy was the third important development of the century. Accurate machinery for industrial purposes was accompanied by a development of accurate machinery for office work. Book keeping became a science, and Watt's copying machine supplied a pre-existing want.8
Side by side with this development of capitalist, industry, and organization, came an alteration in, or, at least, an extension of the classes who possessed capital. The erection of the national debt and the rapid increase in the number of joint-stock companies, accompanied by a growth in the total amount of capital, must have greatly extended the number of security holders, and after the half dozen generations that had elapsed since the Bank of England had been established, many people in humble stations must have been owners of scrip. The system of investment was already well established, and was beginning to cut across the lines of separate development that were being followed by capital and labour. The ownership of capital was rapidly ceasing to mean direct control over industry. This was partly due to the length of time over which return to capital was spread. The earlier joint-stock companies had had as their objects a comparatively short commercial voyage, in which the capital and interest were soon repaid9 but the establishment of the national debt meant that many people invested money in war, and were well paid for so doing. During the eighteenth century the type of capital changed. From being commercial, a preponderating amount of it became industrial ; and from being a floating circulating capital, the development of machinery, especially steam-power, caused it to become increasingly a fixed capital invested in certain definite things, from which it could rarely be released. This increase in the amount of fixed capital is one of the developments which was carried on by the advent of the steam- engine.10 It became necessary that if a firm was to compete in the open market, it needed to use the power that its competitors used, and the first necessity for many industries became its power unit. Boulton told Boswell that he sold what an men desire-power. The increase in the amount of fixed capital made investments permanent, and the regularity of the income derived from them became important.
The great increase in vested interests following this development made Parliament the scene of many industrial quarrels; moreover, the permission of Parliament was necessary before many under -takings could be begun. Politics are becoming increasingly dependent upon economics, and the influence of industrial capitalists is rapidly increasing in the House of Commons. In fact, the industrial element, represented by men like Whitbread and Peel, was an increasing factor in the lower House and even among the Peers, many of whom were Interested in industry because they themselves possessed coal-mines or rights in them ; instead of petitioning the House of Commons, as had been the method previously, industry began to influence- if not control-the representative assembly. That the direct representation of industry in the House remained small, at least up to 1860, is probably due to the increasing interest in trade of the land owning party.11
Political economy, too, had become a subject of almost universal interest among the capitalist class ; rarely have so many pamphlets on a subject been issued as those on questions of political economy, between 1770 and 1820. Amidst the welter of a chaos of economic misconceptions, men were gradually beginning to realize that the economic organization of a country was an organism, and that its development was, to a very large extent, beyond their control, due to the lack of certain know ledge of economic truths, a lack which persists to-day. A movement may be undesirable or even dangerous in the eyes of those whom it will affect, but unless they have sufficient knowledge, any efforts at control or diversion may be nugatory.
The introduction of steam-power rapidly increased the speed of development of many movements that had already begun at the time of its invention. Accumulation of capital, extension of the proportion of fixed capital, the organization of industry on the coal fields, the development of a landless, wage-earning proletariat, were all hastened by steam-power, and if some of them had unhealthy infancies, perhaps the fact of their being born out of clue season may be held to be, in some ways, the cause. It is commonly held that the Industrial Revolution dealt a fatal blow to the lingering economic organization of mediaeval Britain, with its isolated districts, its dispersed manufactures, its lack of specialization, and its paternal regulation of trade and industry. It seems easier to say that England was already half-way out of its mediaeval restrictions, and that tile mechanical revolution of the eighteenth century only hastened its emergence.
The inevitable character of many economic movements, however, does not answer other charges that have been levelled against those who took a leading share in the Commerce and Industry of the nineteenth century. " What commercialism has to answer is this : What have you done with the ideas of great men ? What have you accomplished with the weapons of science ? What have you to show in actual production in 1914 ; one hundred and forty-five years after James Watt took out his steam-engine patents, and eighty-five years after Geo. Stephenson ran his ' Rocket ' in the Rainhill Competition ?12and whether the world comes out of the inquiry with flying colours, or with shame and confusion, it seems impossible to blame the earliest pioneers in the field of modern industry for the tragedy and pain that follow in their track.
Utilitarianism was a practical philosophy in industry and business long before it was enunciated by Jeremy Bentham, and individuals, who were the authors of the Industrial Revolution, were seeking after their own happiness, and they did, in fact, in striving for this, confer great boons on their fellow-men. The failure of the State to recognize that utilitarianism alone was a hopeless philosophy for a nation, and the pre-occupation of the Government with foreign wars, allowed all the worst effects of the development of capital and capitalism to appear. Thus it was that philanthropic and honourable capitalists, like Wedgwood and Boulton, left to prosperity not only the improvements in production and the development of industry which had constituted their life's work, but also the burden of poverty, which rested heavily on the lower classes, and the doctrine of exploitation, which placed the lives of the poor in the hands of their economic over-lords.
In the year 1800 the steam-engine is on the verge of penetrating every department of industry, all the elements of progress are working, and the seeds of social unrest are as yet quietly underground ; the capitalist class already exists, and the machinery of industrial credit is working more smoothly as precedents accumulate and industry and banking unite ever more closely in the development of national resources.
In conclusion, it is worthy of notice that the innovations, introduced by a few energetic and capable men, fallen in fruitful soil, have done more to revolutionize the world than all the ideas of liberty, fraternity, and equality. Boulton has defeated Rousseau, the workmen of Soho and Etruria have a greater influence than the Paris mob, and the banking transactions of Lowe, Vere, & Williams assume a greater significance than the debates of the States General.
1 Knowles. Industrial and Commercial Revolutions. p. 73.
2 Watt to Hornblower, January 20, I777. Tangye MSS
3 Aris's Birmingham Gazette. March 23, 1778. " Though a French War is now deemed by all parties inevitable, yet it is said that a Declaration of it will not take place on the part of Great Britain for a fortnight to come, as it has been represented to administration that the French have entered into policies in the City to tile amount of near a Million which they will derive through their agents if we declare war before the first of April next."
4 Puritan Birmingham sold arms to the Pretender in 1745 but had refused Prince Rupert a hundred years before. Boulton traded with France white we were at war.
5 Essay on the Science of Insurance whether it be nationally advantageous to insure the ships of our foreign enemies, 1797. p. 7-61. During tile French War British insurance was made for the French West India commerce, which, as a consequence, they did not trouble to convoy.
6 Arthur Young, Political Arithmetic, Passim
7 L. Grindon, Manchester Banks and Banking, ch. i-v.
8 It is worth noting that only tile improvement in and development of administration made possible tile complicated social legislation of later centuries.
9 Scott, op. cit., Vol. I, Passim.
10 It is important to observe that much of the new capital was found by the profits of the industry concerned, and that the sums originally invested were strikingly small compared with the developed capital.
11 In Essays on Reform. Cracroft, Analysis of the House of Commons, p.164: " Tile mercantile manufacturing and shipping interest, including also owners of collieries, have . . . 122 members In the House. Half the peerage have mercantile and manufacturing interests " (p. 171).
12 Chiozza Money, The Future of Work, p22.