Innovate or Falll Behind. A Cautionary Tale - England and the Industrial Revolution

The Rocket - Famous Steam Locomotive

England, more than any country, started the Industrial Revolution in the late 1700s. And for over 150 years, England continued to discover new products and technologies. Yet England eventually fell behind the United States and Germany in industrial technology, commercial innovation, production efficiency, and economic growth. What happened?

The seeds of England’s relative economic decline were there right at the beginning. Producing cotton cloth was England's first big industry. But millwrights, mechanics with specialized knowledge of how to build wool and cotton mills and their machinery, felt frustrated because they seldom became part owners and couldn’t find financing to start their own mills. Some illegally emigrated to the United States and France. Much of the early American textile mill technology was due to English immigrants and English technology. The first cotton spinning mills were designed by an English millwright financed by a Providence, Rhode Island merchant. 

 

The rapid mechanization of the textile industry displaced British exports as British firms failed to switch from the jenny or mule to the new, faster and cheaper technique of ring-spinning. By the end of the 19^th century, the average American cotton spinning mill’s labor productivity was 30% higher than the average English mill. England would eventually lose one of its largest export industries.

 

The inability to constantly improve machinery and production processes were part of England's long term problem. An English company named Platt's invented and produced an automatic loom for weaving cloth. Platt's failed to find buyers in the home market but exported the new automatic looms to Japan and other countries. A new Japanese company named Toyoda bought Platt's looms and began improving their design. By 1930, Toyoda had improved Platt’s technology to the point where Toyoda was exporting power looms to England. Toyoda later changed its name to Toyota.  

England (actually, a Scot named James Watt) developed a much more efficient steam engine. A further improvement. the high pressure steam engine, was developed at almost the same time in England and the United States (by Oliver Evans). This engine was critical for the development of railroad locomotives, steamboats, and later steamships. Steam engines were quickly adopted in the U.S. to propel steamboats on the Hudson River (Robert Fulton) and the vast Mississippi River system.

The first general purpose railroad was developed in

England in 1830. An American observer sent over by an American company interested in starting a railroad in America was present. The first railroad locomotives in America were imported from England. Within two years, American engineers and mechanics were modifying the English locomotive, making it more flexible and powerful. American railroad companies developed cheaper and faster ways to lay track. By 1860 over half the world’s track was in the United States and America was exporting railroad expertise and equipment.

 

Coal mining was a major industry in England but productivity began to fall until output per head in British coal mining was only half of that found in the American coal industry by 1914.

 

           Richard J. Evans, The Pursuit of Power:  Europe 1815-1914, 

          300.

Into the 20th century, English mines still used picks and axes to get at the coal. American companies had adopted mechanical cutting machines. To get the coal out of the mines, English companies mostly used horse-drawn wagons; one mine was still using horses in the 1970s when it closed. American mines had switched over to electric trams to get the coal out.

Already in the 1850s, English engineers were alarmed by superior American production techniques, including the new technology of interchangeable parts. They called it "the American System of Manufacturing." It would lead the way to American mass production of sewing machines, typewriters (which greatly increased the productivity of office information processing), bicycles, and automobiles. 

England began to fall behind the United States and Germany in the 1870s, at the start of the “Second Industrial Revolution.” Part of the problem was the inability of England to stay ahead in the new industries it helped to create.

England invented the two ways to produce large amounts of cheap steel. But rather than just building steel mills, the inventors licensed the processes to both American and other foreign companies. One purchaser was Andrew Carnegie, a Scottish immigrant in America. Within thirty years, America was the world’s low-cost producer of steel and produced over half the world’s steel. Germany produced about the same amount of steel as England, France and Russia combined by 1910.

This had profound economic consequences. Large amounts of cheap steel were crucial to the development of better machine tools, better machinery, better railroads including steel rails, skyscrapers and automobiles. Also military consequences; at the beginning of World War I, German companies including Krupp were the world's largest producer of heavy artillery.

An English chemist (Perkin) discovered the first synthetic dye for cloth. But the development of the synthetic dye industry occurred in Germany. It was the basis for the world dominant German chemical industry. German companies went on to discover and develop new chemical products, including high explosives that gave Germany a decided edge in artillery at the beginning of World War I.

Germany and the United States developed the new technologies of electrical equipment with great companies like AEG in Germany and General Electric and Westinghouse in the United States. 

America dominated the global production of automobiles by 1913; America was the world's largest producer. While Henry Ford was developing the mass production of automobiles, the English car industry still concentrated on producing a small number of expensive automobiles for the wealthy. The work force, like in many English companies, was dominated by unions of skilled workmen. 

By 1900, the United States had replaced England as the largest economy in the world. Germany caught up by 1910; Germany was able to build a modern navy that challenged England's naval superiority.

The radio was invented and first exploited by an Italian immigrant in England (Marconi). Improvements were quickly made by American inventors. The radio industry's full commercial potential was developed in the United States by a Russian immigrant (David Sarnoff) using the financial resources and patents of four of America’s largest corporations. Using radio vacuum tubes, it was a short technological step to develop television and early computers. 

In World War I, England first developed and deployed the tank. But its further development, and a strategy for modern warfare built around the tank, was done in Germany. In 1927, the English army spend more money on hay for horses than fuel for tanks. In 1940, England paid the price as German tanks destroyed the English army and its inferior tanks.

Before and during World War II, England discovered or developed a host of important new technologies – penicillin, radar, computers, jet engines. But England did not have the resources or industrial technology to develop, improve and mass produce these products. Knowledge of all four was shared with American companies during World War II and became the basis for large new American industries and American companies like Boeing, IBM and Pfizer.

Losing technological leadership can have serious consequences for a country’s political and military power.

The structure of DNA was decoded in England. Yet there were no English equivalents of early developers of drugs based on the new knowlege like the American companies Amgen and Genentech. There are now hundreds of American biotechnology companies creating one of the dominant industries of the 21th century.

Inventing a new product or process does not lead to economic leadership or long-term economic growth if the country does not have the human, production, organizational, financial, and entrepreneurial resources to develop and continually improve them. England did not start engineering, scientific and technical schools on a scale as did the U.S. and Germany; there were no English equivalents of MIT or the German scientific research universities. Engineers (lumped together with mechanics) and entrepreneurs (often from dissenting religious groups or minority groups) were considered social inferiors, and “venture capital” (except for the railroad investment craze in the 1840s) went into trade and overseas investment.

English firms tended to be small or medium-sized without the most advanced capital equipment and strong labor unions interested in job security and protecting their members skills from disruptive technology. The sons of successful industrialists tended to go into high-status professions like law or politics or become members of England's leisure class. In America, labor unions were weaker, partly because much of the industrial workforce were immigrants from many countries and managers exploited national differences and antagonisms to limit solidarity.

England compensate for becoming less competitive in world markets by relying more on its vast empire. While professing free trade, England tended to trade with its colonial areas and use tariffs to close them off from foreign competition.

England's early successes helped to finance American industrialization. Profits were sent to English merchant banks which were lent and invested overseas. English capital helped finance America's canals and railroads. Much of the capital needed to finance the expansion of American industry came from England, funneled through America investment banks like J. P. Morgan.

Does this sound familiar? Substitute China for America and America for England. The analogy, of course, is not exact. But think how China acquired modern technology and management in the period after 1980. Now China is the world's leader in new technologies such as solar panels, battery storage, EVs, rare earth mineral refining, wind turbines, and older technologies like nuclear power plants, high-speed rail, and shipbuilding. Chinese manufacturing is greater than the United States and the industrialized countries of Europe combined.

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For an excellent introduction to the Industrial Revolution and England's industrial rise and relative fall, see the Great Courses video course Patrick Allitt, Industrial Revolution. Professor Allitt also has a course on How Railways Transformed the World. Both are on Amazon Prime. 

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Some related essays are:

The Beginning of the Industrial Revolution in England

Adam Smith's Pin Factory

Josiah Wedgwood, the Wedgwood Pottery Company, and the Beginning of the Industrial Revolution

The Beginning of the Industrial Revolution in America

China's Economy, Politics, and Demography