Background notes on the Industrial Revolution
Britain’s Industrial Revolution took place in roughly the period 1750-1830. Historians still do not agree on exactly what the Industrial Revolution was and what caused it, but some generally agreed-upon features are:
- An increase in the overall amount of stuff produced. (Everything from furniture to textiles to plates and cutlery to pins, nails and iron bars).
- A shift away from crafters working from home or from a small workshop, towards working in larger workshops and factories.
- A shift from self-employed workers owning their own tools and perhaps a workshop, to wage workers employed by a boss who owns the means of production (the workshop or factory, and the tools and/or machines).
- Increasing use of machines.
- Development of new technologies.
- A great increase in the amount of start-up money (capital) required to start a business in production or manufacture.
- The business owners / capitalists earned tremendous profits, and the GDP (gross domestic product) rose at an unprecedented rate.
The capital required for industrialization came directly from slavery/the triangular trade
Britain was accumulating great wealth from the triangular trade:
- Owners of sugar, tobacco and cotton plantations, using slaves to do the work, made huge profits selling their produce, and plantation owners often returned to Britain, bringing their wealth with them.
- The triangular trade: merchants and/or privateers from Britain bought slaves on the coast of Africa and sold them at a profit in North America and the Caribean, where they bought slave-produced goods (sugar, tobacco and cotton), then returned to Britain to sell these at another profit.
- Buying and selling human beings
- Buying and selling goods which were produced by slaves, on land whose original inhabitants had been massacred
- Piracy and privateering (privateers were essentially pirates who operated with a certain amount of legitimacy because they had a Letter of Marque from the king or queen giving them permission to do piracy against ships belonging to the enemies of the crown)
The new wealth pouring into Britain increased the demand for consumer items, and producers of all kinds of goods increased their rate of production to meet this new demand. Increasing production often required money up front (“capital” as the economists like to call it) for example to move to a bigger workshop, to hire more workers, or to buy more tools, machines, or materials. On a larger scale, wealthy investors paid for large projects such as constructing Manchester’s huge cotton factories, constructing a network of canals to make the transport of goods faster and cheaper, or funding the research and development of new technologies. The money for all of this came directly from the triangular trade, provided by plantation owners, slave traders, and exporters of slave-produced goods.
Merchants and international trade, and other euphemisms
When you read about England in the eighteenth century, you read a lot about merchants and international trade, but these innocuous-sounding terms mask a tremendous amount of violence. “Trade” meant the triangular trade, and the activities of merchants included:
The word “trade” implies a free exchange between equals which leaves both sides better off, but the triangular trade depended on warfare, on large-scale organised violence, on slavery, on colonisation and genocide.
The rapid increase in industrial production did not just require a lot of money, it required a lot of money to be brought together at a particular place at a particular time. For people living in 2014 it isn’t obvious why this might be a problem, since we can easily send money around the world with a few mouse clicks, but in the 1700s money was not a plastic card with a magnetic strip and a bank account balance displayed on a screen; it most often took the form of gold, silver, and copper coins.
The money required for a new project might be provided by several investors who might live in different places. They required safe and easy ways to move their money around. They required ways to spread their investments over multiple projects, so that if one project failed others might succeed, and the investor would still make a profit overall. They required ways to limit their risk of financial losses due to disasters such as, say, a warehouse fire, or a shipwreck. And they required new types of legal contracts to ensure that if a business venture failed, the men who had invested in that business would not be liable for its debts.
To meet these requirements, banking, insurance, and new forms of finance and contract law were developed in Britain during this time. These already existed in other parts of Europe, but they had not been much developed in Britain, until the wealth that poured in from the triangular trade directly led to the creation of new banking and finance institutions.
Some specific examples in banking
– The life of William Miles is a typical rags to riches story of this period. He started out in life poor, became an apprentice carpenter, then a ship’s carpenter, then a merchant plying the triangular trade. He grew wealthy and settled in Bristol where he set up sugar refineries and became even wealthier than before. He bought a leading partnership in the banking house of Vaughan, Barker and Company, which came to be known informally as “Miles’s Bank”.
– Thomas Leyland, one of Liverpool’s most active and most wealthy slave traders, co-founded the Leyland and Bullins Bank.
– The Heywood Bank of Liverpool was founded in 1773. Its founders were merchants, slave traders, and privateers.
– The Ship Bank was founded in Glasgow in 1750. One of its original partners was Andrew Buchanan, a wealthy tobacco merchant (tobacco, like sugar and cotton, was produced in plantations using slave workers).
– David and Alexander Barclay, co-founders of what later came to be known as Barclay’s Bank, were both engaged in the slave trade. David Barclay was also the owner of a great plantation in Jamaica who freed his slaves. (Possibly at this point the Jamaican plantation was no longer profitable in any case, due to increasing competition from more productive French sugar-producing colonies in the Caribean.)
Some specific examples in industry
– The money for James Watt’s workshop, equipment and other expenses during the long years he spent developing the steam engine was provided by the bank of Lowe, Vere, Williams and Jennings (which later became the Williams Deacons Bank, and still later became part of the Royal Bank of Scotland) and which had its money from the triangular trade.
– The industrialist Anthony Bacon had been a slave trader before setting up ironworks in Merthyr Tydfill, and later at Cyfartha. He was responsible for making Merthyr Tydfill a center of iron smelting in Britain. His business partner Gilbert Francklyn was a West Indian plantation owner.