This section is from the "Elementary Principles of Economics" book, by Richard T. Ely and George Ray Wicker. Also available from Amazon: Elementary Principles Of Economics: Together With A Short Sketch Of Economic History
1. Changes in Agriculture. During the eighteenth century there were great changes in English agriculture. High prices made possible more intensive farming, and with this greater application of capital, radical improvements in farming methods were developed. As a result of these changes, large farms supplanted the small ones. Also, the social and political prestige attaching to landownership tended to concentrate the ownership of farms into fewer hands. Thus these and other forces, which we need not stop to explain, rapidly dispossessed and drove away from the country districts multitudes of poor people whose only chance for a living now lay in moving to the growing towns and adding themselves to the increasing numbers of the "factory" population.
2. Changes in Manufacture.In 1769, while Adam Smith was writing the book which was to exert so profound an influence upon the economic thought of the future, a friend of his, James Watt by name, was preparing the way for a revolution of the world's industry by the invention of the steam-engine. When the " society of hammermen " of Glasgow refused to let Watt work at his trade there because he was not a member of their gild, permission was secured for him to set up his shop on the University grounds, outside the city's jurisdiction, and thus two of the greatest forces that created the Industrial Revolution were born close together in the shelter of a school of learning.
In the same year, too, there began a series of inventions which, during the next fifty years, completely revolutionized the textile industry, and gave cotton manufacture, instead of the manufacture of woollens, the first place in English industry. The invention of the spinning-jenny made possible a vast increase in the production of yarn for weaving, and since better goods could now be produced at a lower price than before, the demand for the goods was much increased, and weavers, still using the old hand-loom, were kept busy at higher wages than they had before received. But within a few years the power-loom for weaving had been invented and improved, and many of the weavers found themselves out of employment. As it was possible for a single person to tend four power-looms, three out of four of the workmen were thrown out of a job until the increased demand for the finished goods should increase the number of looms. Moreover, as weaving by the power-looms required deftness rather than strength, women and children came to be employed instead of men, because they could be hired at lower wages. Just at the close of the century the cotton industry was still further stimulated by Eli Whitney's invention of the cotton gin for mechanically clearing cotton of its seeds.
At the same time steam was rapidly taking the place of water power in manufacturing. The greatest change was wrought in the cotton-manufacturing industry, which since the introduction of steam has held one of the foremost places in English economic life ; but similar results attended changes in the manufacture of woollen, linen, and silk goods.
By the invention of the steam-engine, the output of English coal mines was vastly increased, since shafts could now be sunk deeper and the mines kept free from water. With increased supplies of coal, iron could be worked by the blast furnace, instead of by the old process of charcoal smelting, and the iron trade was therefore quickly revolutionized. The importance of this change may be understood when we remember that under modern conditions of industry those nations that surpass in the production and manufacture of iron and steel for their machinery hold the leadership of the world's trade.
3. Changes in Transportation. The great change in methods of farming and manufacturing naturally gave a new stimulus to the development of improved transportation facilities. The public highways were greatly improved under the direction of such engineers as Telford and Macadam, from whom our best methods of road construction have taken their names. New and longer canals were dug, and the movement would have gone much farther had it not been checked after 1825 by the development of the system of steam railways. Even before 1825, when the first railway was opened, steam had for some years been successfully applied to water transportation. Within a half-century, England became one vast network of railways, and it became possible to transport the bulkiest commodities from one end of the kingdom to the other more cheaply than they had been moved from one county to another with the old means of transport. Wheat can now be carried from our Western grain fields and laid down in the English markets more cheaply than it could be moved an average distance of from thirty to forty miles in the England of 1760.
4. Changes in Economic Legislation. With the passing of the old industrial methods came the demand for freedom from the old and vexatious restrictions. Whatever might have been said in justification of such restrictions in earlier days, the time for them had now passed, and they were destined to go.
The old laws were, of course, not repealed in a body. Such a thing never happens in England, and it is a rare occurrence in any country. Some laws were repealed, and some simply died. Thus, the law requiring seven years' apprenticeship before one could enter certain trades died during the latter part of the eighteenth century. Years afterward, at the beginning of the nineteenth century, in the labor troubles of the time, some workmen in desperation turned back to the old law and prosecuted employers for violating it. The result was that the law was at first suspended and later repealed as being plainly ill adapted to the new conditions of industry. Thus, little by little, the old laws were repealed or forgotten, and men were left free to bargain and manufacture as they pleased.
Labor Laws. Of the many laws regulating labor, it must be remembered that they were designed not so much to help the workmen as to check their growing power and aspirations. When Adam Smith declaims against labor laws, he has in mind laws aimed against labor, not laws like those of modern times which have been designed to benefit the laborer. Indeed, he says in one place that if any law chanced to be beneficial to labor, it was sure to be a just law. A striking instance of the unfairness of the old labor laws is seen in the case of the statutes against combinations. Although from the first capitalists were allowed to combine, workmen were forbidden to do so under severe penalties. Even after the laws bearing on apprenticeship, regulation of wages, and inspection of goods had been repealed or had lapsed, this law against workmen's combinations continued operative, and under it men who attempted to form labor-unions were at times severely punished. But eventually this law also was repealed.
Results of the Changes.1. Industrial Disturbance. The results of the great changes that constituted the Industrial Revolution have been startling. The area of the markets for various commodities was marvellously widened, and distance from the consumer no longer weighed heavily in the mind of the manufacturer in determining the location of his plant. The balance of convenience rather inclined toward concentrating industries in those places where they could be carried on to special advantage. Thus, there was first a concentration of industries near favorable water power, and later, in some cases, near facilities for the production of steam power. This change took place usually not by the removal of old plants and industries to new localities, but by the growth in favorable centres of such powerful rivals that the scattered factories were gradually forced to go out of business. Thus, not only were country artisans forced out of employment, but even certain towns were sacrificed to others that enjoyed a more favorable situation.
2. Growth of Cities. Another important result of the changes in the methods of industry, and particularly of the changes in the methods of transportation, was the growth of cities. While concentration of population has had many beneficent results, and promises still others in the future, the evils connected with such aggregations of people have formed one of the most serious problems that our generation has to face.
3. Fluctuations in Trade. One cause of the comparative simplicity of the old and slow-going system of manufacture and trade was its great regularity. One year was much like another. Producers could calculate the amount of their product that would be required, and could calculate also what would be the return to their labor. With the growth of national and international markets came increasing complexity of wants and increasing fickleness of fashion. It was no longer easy to know what things would be wanted or in what quantities goods would be taken by consumers when produced. A period of overcautious production would lead to unduly high prices. New capital would be tempted by the profits, and the old manufacturers would forget their caution. Then would come a glut, prices would fall disastrously, factories would be closed, and workmen would be thrown out of employment. But depriving a large section of the consuming public of its purchasing power its wages is not an ideal method of reviving industry. Thus times of plenty for the workmen would be succeeded by times of great want, with all the evil results upon character that uncertainty of life and work can produce.