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EC120 Lecture 08
Todays Lecture: The Industrial Revolution. Agricultural Revolution. Finance. Technological Innovation. Consumption and Trade. Regional Variation. Social Aspects.

Reading
Cameron and Neal, Chapter 7. Hudson, P. (1992) The industrial Revolution NY: Arnold. Chapters 3,5,6. Jones, E. (1977) Environment, agriculture and industrialisation in Europe, Agricultural History, 491. Landes, The Wealth and Poverty of Nations Chapters 13-14 Landes, The Unbound Prometheus, Chapter 1.

The Industrial Revolution

A misnomer? No sudden change, but gradual process (small improvements by trial and error). But profound changes. Timing uncertain (1760?-1820), decades of experiment precede given innovation. By the beginning of 18th century, in several regions in Western Europe significant concentrations of rural industry (textiles).

The Industrial Revolution

Proto-industrialisation: prelude to fully developed factory system. Characteristics of proto-industrial economy: Dispersed (usually rural) workers organised by urban merchant-manufacturers. They supply the workers with raw materials and sell their output in distant markets. Primarily consumer goods industry (textiles).

The Industrial Revolution

Main difference between pre-industrial and modern industrial society is diminished role of agriculture (increased productivity of modern agriculture). Industrialisation: rise of the secondary sector (mining, manufacturing and construction) in proportion of the labour force employed and output.

The Industrial Revolution

Characteristics of modern industry: Substitution of mechanically powered machinery for human effort. Introduction of new inanimate sources of power (fossil fuels). Widespread use of synthetic materials and use of new and more abundant raw materials. Larger scale of enterprise in most industries.

The Industrial Revolution

Substitution of coal for wood and charcoal as fuel and the introduction of the steam engine for use in mining, manufacturing and transportation. The use of coal and coke in the smelting process of metals reduced the cost of metals. Application of chemical science created new synthetic materials. Industrial revolution as uneven process, destroyed old while building new.

The Industrial Revolution

In the 18th scientific knowledge was too slender and weak to be applied directly to industry. But methods of science (observation and experiment) were relevant. large proportion of major innovations made by mechanics, engineers etc. Trial and error rather than experimental method.

The Industrial Revolution

Why in the 18th century? Accumulation of knowledge. Growing autonomy of intellectual inquiry (from Church). Invention of Invention (routinisation of research and its diffusion).

The Industrial Revolution

Main Industries: Cotton textiles. Iron Industry. Mining (Coal). Manufacture of pottery. Chemical industry (soap, paper, glass, paints, dyes).

Agricultural Revolution
In England increase in agricultural productivity. Only 60% of workers involved in food production. Proportion declined steadily to about 36% at the beginning of the 19th century To about 22% in the mid-19th century.

Agricultural Revolution
Increase in productivity by trial and error with new crops and new crop rotations. Turnips, clover, and other fodder crops introduced from the Netherlands in the 16th century and diffused in the 17th century. Development of husbandry: alternation of field crops with temporary pastures.

Agricultural Revolution
Advantage of restoring fertility of the soil: improved rotations and larger number of livestock (more manure for fertiliser, more meat, dairy produce, wool). Other innovations: Selective breeding of livestock and manuring . Floating of water meadows. Marsh drainage.

Agricultural Revolution
Light soil areas of the South and East adapted most easily to the new techniques, (Norfolk, Suffolk, Lincolnshire and Northumberland). Important pre-condition for those innovations: enclosures. Under the traditional open field system difficult to obtain agreement on the introduction of new crops or rotations and to manage selective breeding.

Agricultural Revolution
Gradual tendency towards larger farms. By 1851 1/3 of the cultivated acreage in farms larger than 300 acres. Capitalistic tenant farmers, rented their land and hired agricultural labourers. New techniques associated with enclosures might have increased the demand for labour.

Agricultural Revolution
Increasing productivity in agriculture enabled England to sustain increasing population at rising standards of nutrition. From 1660 to 1760 England produced a surplus for export.

Agricultural Revolution
Links between changes in agriculture and industrial development: Relatively prosperous rural population provided a market for manufactured goods. Increase in productivity: release of labour provide a source of cheap labour for industry?

Agricultural Revolution
Long distance migration of population from agricultural to industrial regions was small and occurred in waves. Most migration between towns and their immediate hinterlands. Expansion of proto-industries and urban manufacturing production occurred outside commercialising agricultural regions. Industrial regions were often short of labour, incentives for innovation and mechanical substitutes.

Agricultural Revolution
Importance of English agriculture in supplying food for the expanding population and raw materials for industry (clothing, footwear, soap and candle making). Size and dynamism of the home market during Englands industrialisation: did agriculture play a role?

Agricultural Revolution
Possible consequences of agricultural change: rise in agricultural incomes which might be spent on manufactures, movement of workers out of agriculture into higher paid jobs, shifts in relative prices might encourage investment in industry.

Agricultural Revolution
But calculations suggests that those effects were modest (Hudson). Agriculture had role in providing revenue for central and local government and finance for industry, transport and urban developments. Land was the major security against which loans could be raised.

Finance
1720 Bubble act prohibited the formation of jointstock companies without the express authorisation of Parliament. Bubble act was repealed only in 1825. Most of industrial and other enterprises had to be partnerships or simple proprietorships. But remember that political institutions tended to favour wealth creation, property rights.

Finance
Remember Glorious revolution place public finances in parliaments control, reduced the cost of public borrowing and freed capital for public investment. Regressive system of taxation permitted the accumulation of capital for investment. But most industry financed by reinvested profits and Informal networks (family and friends), banks short-term loans. Capital contributed indirectly (infrastructure investments) to the process of industrialisation.

Technological Innovation
Rapid mechanisation and growth of cotton industries in the last two decades of 18th century. The process of smelting iron ore with coke rather than charcoal and the invention of the atmospheric steam engine replacing wind and water mills as inanimate sources of power.

Technological Innovation
Major technological innovation: The water frame (spinning machine patented in 1769 by Richard Arkwright). Heavy and expensive, direct link to factory system. Factories were built most often near streams in the country, they did not result in concentrations of workers in the cities.

Technological Innovation
Samuel Cromptons mule (combined elements of the jenny and the frame). The mule could spin finer, stronger yarn. It allowed large scale employment of women and children and favoured the construction of factories in cities where coal was cheap and labour plentiful.

Technological Innovation
Manchester only had two cotton mills in 1782, but 52 in 1801. Britain grew no cotton domestically Import figures for raw cotton: good indication of rapid development in the industry. Less than 500 tons at the beginning of the 18th century to 25,000 tons in 1800. Sources: initially India and Levant, but soon not enough to satisfy demand, so turned to Britains Caribbean Islands and Southern U.S.

Technological Innovation
Why mechanise cotton textiles? The growth of the textile industry was outstripping labour supply. Frustrated manufacturers turned away from Putting out system. Large workshops where spinners and weavers work is monitored (no shirking or embezzlement of raw materials for sale).

Technological Innovation
Problem: large plants need substantial capital investment in land and buildings plus machines (before all this was done in workers house). To make factory system competitive need power machinery, only then possible to compete against the cottage product. Workforce frequently formed by Women and Children (some conscripted from the poor houses).

Consumption and Trade

Sources of demand for manufactures: Consumer revolution People bought as never before. The spread of new consumption habits and tastes was result of wider changes in values and attitudes amongst the middle class.

Consumption and Trade

Increase in demand for manufactures rather than saving, food expenditure, luxury and/or imports expenditure. Why? Emulation, cultural change, marketing etc.. Decline in subsistence sector and increased income earning opportunities.

Consumption and Trade

The role of external trade: Growing English and continental demand for tea, coffee, sugar, raw cotton, spices etc. gave trading partners the purchasing power to buy English manufactures. British exports in the 18th and 19th centuries consisted overwhelmingly of manufactures. Export markets were important for manufacturing expansion also because they grew faster than domestic demand.

Consumption and Trade

Demand for manufactures in North America particularly important. Important legacy of 18th century foreign trade: commercial infrastructure (insurance companies, banks, the stock exchange etc.). Contribution of slavery and slave trade to the industrial revolution.

Consumption and Trade

Importance of investment of plantation and slavetrade profits in shipping, banking, insurance and industry. Average profit rates more modest, but large variation. But it is more relevant to look widely at the Atlantic economy. Sugar and tobacco made Britain the centre of re-export trade to continental Europe.

Consumption and Trade

West African market constituted a significant demand for British exports, so incomes generated by slave trade there were important. Also demand for manufactures in the Caribbean. Domestic demand represented a much larger market for goods and services. But foreign demand had strong effect on sectors involved in mass manufacture.

Regional Variation
Importance of the coalfields located mainly in the Northeast, the Midlands and Lancashire. London many consumer goods industries. South remained primarily agricultural: most fertile soil and most advanced agrarian organisation. Pastoral extreme North and Northwest lagged behind.

Regional Variation
In the latter part of the 18th century coalfields of South Wales basis for a large iron industry. Wales interior remained pastoral and poor: mountainous and infertile. Ireland failed almost entirely to industrialise.

Regional Variation
In mid-18th century Scotland was a poor and backward country (population in near-subsistence agriculture). Less than a century later Scotland industrialised. Inclusion in the British Empire after 1707 gave it access to English and Colonial markets. The countrys educational system: relatively literate population. Scotland banking system free from government regulation (easy access to credit and capital).

Regional Variation
Jones: The lay-out for Europes agriculture and early industrialisation is a consequence of natural resource endowments and topography. Differences in topography, soil and precipitation determined costs of crop production. Regions with comparative advantage in growing food crops and others with comparative advantage in pastoral husbandry and/or mining and/or cottage industry etc.

Regional Variation
European countryside gradually separated: one agricultural, the other proto-industrial both linked by trade. The transformation of proto-industrial regions into regions of mechanised industry was influenced by relative costs of available sources of power. different endowments of energy sources influenced where in the handicraft regions modern industry would evolve.

Social Aspects
Rapid rise in population. Hypothesis that birth rate rose because of earlier marriage (Mean age of first marriage fell from 26 to 23 years, proportion of women never marrying from 15% to 7.5%). Wrigley and Schofield study sample of 404 parish registers: average life expectancy at birth rose from 32.4 to 38.7 years between the 1680s and 1820s. Rising fertility contributed 2.5 times more to population growth than did mortality improvement.

Social Aspects
Links between proto-industry and decline in the age of marriage as it gave a source of independent income early in life. Also may not be responding to real wage improvements, but simply to greater availability of employment. The death rate declined (Vaccination, improvements in medical knowledge, rise in living standards).

Social Aspects
Agricultural progress greater abundance and variety of foodstuffs improving nutrition. Increased coal production home heating. Soap production and hygiene. Population growth provide stimulus for industrialisation through the supply of labour and through the demand it creates for food and manufactured goods.

Social Aspects
Internal migration: shift in density from the southeast to the northwest and increasing urbanisation Growth of cities, but sanitary facilities nonexistent, poor housing for working class families. Breeding ground for epidemic diseases. Rapid growth because of migration from the countryside. Bad sanitary conditions: the death rate exceeded the birth rate.

Social Aspects
Standard of Living debate: Some groups such as factory workers and skilled artisans improved their conditions, others not. Various quantitative studies failed to prove the existence of a major increase in real incomes for the mass of the population before the 1820s. Gradual improvement in standard of living in the century from 1750 to 1850. But the inequality of income distribution increased in the early stages of industrialisation.