From Empire to Europe: The Decline and Revival of British Industry Since the Second World War. Geoffrey Owen

provision of education for the mass of the population was poor, but the technologies which were being introduced did not depend on a highly educated labour force. Most of the necessary skills could be learned on the job. Where craftsmanship was called for, as in the metal-working industries, apprenticeship was the principal means of acquiring and transmitting skills. This system, adapted from the medieval guilds, suited employers because it was a cheap and efficient form of training which could be administered largely by the craftsmen themselves. It suited the craftsmen because it preserved their status as a highly paid group set apart from the growing mass of semi-skilled and unskilled workers. A distinctive feature of factory organisation in the first phase of the industrial revolution was the use of skilled workers as ‘internal contractors’, responsible for organising the work of less skilled employees.⁵

      The political and economic environment was highly conducive to entrepreneurship and the pursuit of wealth. Since the Glorious Revolution of 1688 Britain had been a peaceful, orderly society. The old conflicts between King and Parliament been resolved without the upheaval which engulfed France at the end of the eighteenth century. The King could not borrow or tax without the consent of the country’s wealth-holders, and, unlike France, Britain developed financial institutions which provided a secure basis for private commercial activity.⁶ The ruling élite was a landowning aristocracy which, far from resisting industrialisation, saw it as an opportunity for making themselves richer. Although the landowners were rarely entrepreneurs in their own right, they supported new businesses with patronage and money, and were eager to exploit the coal and iron ore that lay under their estates. Success in business was seen as a way in which ‘middling’ people from non-aristocratic backgrounds could lift themselves into a higher social category. A business career was particularly attractive for religious dissenters who were barred from politics and public service. But while this group supplied a large number of well-known industrialists, there was no special merit in being an outsider. Entrepreneurial talent came from a variety of sources, including foreign immigrants as well as the younger sons of the aristocracy.

      Industrialisation took place without direction or control from the state. The role of the government was to ensure that no obstacles were put in its way. The authorities maintained public order, guaranteed the security of property, and upheld a legal system which was helpful to entrepreneurs. Laissez-faire was the guiding principle in most areas of public policy well before Adam Smith published his Inquiry into the Nature and Causes of the Wealth of Nations in 1776. The major exception was in overseas trade, where Britain, like other European countries, had been committed since the seventeenth century to mercantilism. Under this doctrine domestic industry was protected by tariffs; trade with the colonies was reserved for British manufacturers and merchants; and the colonies produced only those commodities which the mother country wanted. These arrangements, providing secure markets for British-made goods, were helpful for British manufacturers in the seventeenth and early eighteenth centuries,⁷ but overseas trade was not the principal driver of the industrial revolution. It was not until the early decades of the nineteenth century that Britain’s leading industries came to depend on exports to maintain their rate of growth.

      By this time there was a range of commodities – textiles, coal, iron, machinery – of which Britain was the world’s largest and lowest-cost producer. In these circumstances mercantilist policies were not only unnecessary, but positively harmful to the continuing prosperity of exporters. They needed access to a wider range of markets than the colonies could provide, but this was only possible if the importing countries were free to export their food and raw materials to Britain. As long as British agriculture was protected against import competition, exports of British manufactures were held back. This conflict of interests formed part of the battle between manufacturers and landowners over free trade, culminating in the repeal of the Corn Laws in 1846.

      The free trade controversy marked the emergence of the urban middle class as a powerful force which had to be integrated into the political system. Henceforth the aristocrats, if they were to hold on to the reins of power, had to govern with the consent of the industrial bourgeoisie. Protection was abandoned because the ruling class accepted, or at least acquiesced in, ‘the middle-class view that one species of wealth, namely passive property in land, had no right to abuse its political power to exact a toll from another, namely active capital in industry and commerce’.⁸ Of the two main political parties, the Liberals were the vehicle through which manufacturers and merchants pursued their campaigns for free trade and parliamentary reform. But, once the argument over the Corn Laws issue had been settled, it was not long before the Conservatives, under Disraeli, came to terms with free trade.⁹ The principles on which the economy should be run were broadly accepted by both parties.

      A more serious threat to political stability came from the working class. As the shift of labour to the factory gathered pace, there was sporadic resistance from handloom weavers and other workers whose skills were being made obsolete. After the end of the Napoleonic wars working-class resentment over working conditions and the lack of political representation took a more violent form. The Chartists, whose influence was at its peak in the 1830s and 1840s, contained a faction which believed in physical force as a means of changing society. But Britain never came close to revolution. Timely concessions to labour interests (including legislation to improve working conditions in factories), together with the prosperity of the mid-Victorian age, helped to bring about what Harold Perkin has called a ‘viable class society’.¹⁰ The radicalism of the Chartists gave way to ‘New Model’ trade unions, formed by craftsmen and other skilled workers who constituted the so-called aristocracy of labour. In the industries where these unions gained a firm hold, such as textiles, iron-making and engineering, most employers came to accept that well-organised trade unions could contribute to the stability of the workplace. While disputes over wages and working conditions continued, union leaders and employers shared many of the same assumptions, including a belief in free trade. Both of them saw the Liberals as their natural allies.

      Thus, despite the social strains resulting from industrialisation, there was no political upheaval which might have halted the growth of British industry. Overseas, the long period of peace which followed the Battle of Waterloo allowed British manufacturers to consolidate their position in international trade. A rising proportion of British exports during this period went to the primary producing countries which supplied the food and raw materials that Britain needed. These links were strengthened by the financial, commercial and shipping services which Britain, through the merchants and traders of the City of London, was well equipped to provide. Britain was the world’s banker and clearing house as well as its workshop, and supplied most of the capital with which the primary producing countries built up their mines, their ports and their railways. Earnings from overseas investments and commercial services were essential to Britain’s prosperity, since they offset a growing deficit in goods.

      As a free-trading country Britain was the natural outlet for exports from other European countries, and to a lesser extent the US, as they built up their industries. For Richard Cobden, chief architect of the repeal of the Corn Laws, free trade was in everyone’s interests, not just those of Britain, and he tried to persuade other governments that the abolition of tariffs would create the conditions for an era of peace and prosperity in Europe.¹¹ But protectionist pressures, aggravated by the economic depression which began to affect most parts of Europe in the 1870s, proved too strong. Germany’s decision to raise its tariffs in 1879 was part of a general retreat into protectionism throughout Western Europe, which continued up to and beyond the First World War.

      In the 1870s Britain was still by far the largest exporter of industrial goods, accounting for about 40 per cent of world trade in manufactures, but competition was beginning to cause concern. The old rival, France, with its limited natural resources, slow-growing population, and predominantly agricultural economy, had slipped back, but a serious threat to British supremacy was coming from Germany and the US. A second industrial revolution was under way, and in some of the new fields – electricity, the internal combustion engine, organic chemistry – the newcomers, not Britain, were taking the lead.

      The Rise of American Industry

      In the US, as in Britain, the first factory-based industry was cotton textiles, based on