Modern history

CHAPTER II

ECONOMIC CHANGE AND GROWTH

Even in Britain the Industrial Revolution was not all over by 1830; nor were the agricultural and transport revolutions. Some ways of growing, making, and moving commodities had undergone changes worthy of being deemed revolutionary, especially by Frenchmen. The problems of capital accumulation, of assembling and managing a labour force, of marketing an expanding output, of banking and business practice, and of coping with such phenomena of the business cycle as had been revealed by the boom and collapse of the mid-’twenties were all calling for changes in organisation, methods, voluntary association, and state policies. Thus the economic shape of things to come was clearly visible, provided one looked in the right places, especially in Great Britain. Yet even there nothing was finished, and over the rest of the panorama the picture was one of slow motion or still life.

Apart from the railway, 1830 was no great divide. During the next forty years the methods and organisation already developed were improved, supplemented, or supplanted by important innovations, and spread more widely over western Europe and North America. During the first two decades the pace of expansion and change was at times too fast to be maintained, the consequent depression deep and prolonged, and the transition disastrous to those whose skill was being rendered obsolete. After 1850, however, the new or remodelled institutions worked somewhat better, great new areas of natural resources and of new technology were opened up, while political and social tensions eased after the tumults of 1848. By 1870 the population of Europe was 30 per cent larger than in 1830; that of North America had trebled; and those peoples who could take advantage of the changes in production, transport, and trade had substantially improved their standard of living.

By 1830 agriculture, Europe’s largest occupation, was shaking off the worst effects of its painful transition from war to peace. Prices had recovered somewhat; costs had been trimmed by the reduction of rents and interest rates; and land that was hard to till or low in yield had reverted to pasture or waste. The complex story of the next forty years is perhaps best told by examining three aspects: the increasingly commercial character of farming, improvements in methods, and greater dependence on capital.

The pull of the market grew stronger as the number of consumers rose in four decades by almost a third in Great Britain and probably by a quarter in western Europe (excluding France); as the town-dwelling percentage of them climbed from 46 to 55 in England and Wales (if we take 2000 inhabitants as the rural/urban boundary line) and to 30 per cent or more in France, Germany, the Low Countries, Austria, Sweden, and Switzerland; and as improved transport facilities combined with the lowering or removal of tariffs to ease the farmer’s way to domestic or foreign markets. Until well after 1850 the European farmer had these markets almost to himself, as imports from other continents were complementary rather than competitive. Often he was not merely pulled to market. He was pushed there by the need to raise money for taxes, rent in regions where tenancy prevailed (for example, in the British Isles), or the annual instalments that were the price of his conversion from serf to emancipated peasant proprietor (for example, in Denmark, south-western Germany, and, after 1861, Russia).

The supply of farm produce was increased by extending settlement and cultivation over the plains of Hungary, Roumania, and southern Russia; by turning expanses of waste land into fertile soil in many western parts of the Continent; but chiefly by raising the productivity of farms already in full use. In the two latter developments British landlords and enterprising farmers played an active part. The former poured money into the improvement of estates or the operation of model farms. They exchanged information through the meetings or the Journal of the Royal Agricultural Society (founded in 1838) and of kindred county societies, or in many other publications which described advances in the alliance of ‘science with practice’. On the Continent the noteworthy improvers were the large landlords in Germany east of the Elbe, in Denmark, Hungary, and Italy. These men produced grain, livestock, and fine wool for market on what was the counterpart or descendant of the manorial domain. The post-war depression hit them hard, depriving four-fifths of the Prussian Junkers of at least part of their estates; but when it lifted, they resumed the study and imitation of British improvement, and sometimes were pioneers rather than followers.

From the peasant one could expect little innovation and only slow imitation. His holding was too small and scattered for mechanical cultivation. His income left little surplus for capital accumulation, and any spare cash was hoarded or spent in buying more land rather than improving what he had. Borrowing was anathema because of usurious interest rates, and it was not until 1862 that Raiffeisen showed a way of escape by organising his first co-operative bank in a Rhineland village. The little man might change his ways, when it was obviously advantageous but not expensive, within the bounds of the petite culture or animal husbandry that he practised and of the unpaid labour supply of the family farm. While such changes may have been more numerous than are recorded in print, it was on the larger farming units that the noteworthy steps were taken to improve agricultural methods.

The first step was the completion in England and the great extension in Germany of the enclosure of open arable fields, common pastures, and waste lands. Most English land worth enclosing had been dealt with before 1830, and by 1870 the redrawing of the rural map was virtually finished. There were now about 250,000 compact farms, nine-tenths of them occupied by tenants and more than half so large that they employed a million labourers, an average of about seven apiece. In Prussia nearly 40,000,000 acres were ‘separated ’, consolidated, and removed from common exploitation between 1821 and 1870, mostly in the eastern region of large estates.

The second step was to build up and maintain soil fertility by using a new effective method of deep drainage and drawing on a better understanding of the function of fertilisers. Drainage ‘laid dry’ old farms and waste-lands alike. On the former, fields dried out earlier in spring, ploughing and seeding could be done sooner, and manure was no longer washed away. In the latter, whole regions ceased to be worthless when the drains came—fens in Lincolnshire and East Anglia, mosslands in south Lancashire and Scotland, peat bogs and swamps in northern Holland or along the coasts of Germany and the Bay of Biscay. The wastes were then ploughed deeply, heavily manured, and planted. Though the cost of this ‘second creation’ ran high, rich harvests of grain, roots, and grass justified the outlay, especially when the land was within easy reach of such crowded markets as Lancashire, southern Scotland, or London.

In this making of new fields and improvement of old ones, the use of fertilisers became an exercise in applied science (cf. ch. III, p. 65). Even before Liebig published his Organic Chemistry in Its Relation to Agriculture and Plant Physiology (1840) some farmers were using bone dust, Peruvian guano, Chilean nitrates, or ‘new and improved artificial manure’. Liebig’s list of chemicals present in plants and animals, and hence of essential soil ingredients, was not the last word on the subject, nor, as Lawes and Gilbert at Rothamsted and many others showed by experiments in laboratory or experimental plot, was it always the right one. But it stimulated the use of chemical fertilisers and the vigorous search for supplies. Imports of nitrates and guano mounted rapidly, while potassium salt deposits, found in the Harz Mountains (1852), Alsace, and other parts of Europe, nourished many areas of poor soil, especially in Germany.

Science was less successful in solving the problems of agricultural medicine. Farmers in 1870 were still wellnigh helpless against plagues of sheep foot-rot, hoof and mouth disease, swine fever, and other animal ailments. The turnip crop was ruined by flies in the ’thirties and later; the potato blight of the ’forties was only more severe in Ireland than elsewhere; oidium reduced the French vintage by two-thirds in the ’fifties, and phylloxera began its ravages in the ’sixties. Veterinary science made little real progress until Davaine, Pasteur, Lister, and Koch made possible the bacteriological approach, and the benefits of their work were not enjoyed till after 1870 (cf. ch. III, pp. 65-6). The same is true of those which came from research on the causes of plant disease.

The third step, the improvement of farm equipment, was taken chiefly in Britain and North America. Labour was relatively scarce or costly there, the fields were large enough to be worked by machinery, and inventive ingenuity overflowed from industry to agriculture. At banquets Scots farming enthusiasts drank to the memory of ‘that great philosopher and most excellent man, James Watt’. Some of them used steam engines to pull ploughs. The Scots threshing machine moved south to be the target for destruction in the English labourers’ uprisings of 1830. Though the Scots harvester found little favour at home, the four models sent to the United States may have caught the eye of Americans looking for something better than a sickle, scythe, or cradle. McCormick patented his reaper in 1834, began to make it in quantity in 1846, exhibited it at the Great Exhibition in 1851, and in field demonstrations convinced English farmers that it could be economically employed. During the next twenty years European and American implement makers offered improved tools and machines for every kind of farm work.

Most of these improvements required heavy investment of fixed or operating capital. The British drainage schemes, for example, cost on an average £4 per acre; the complete conversion of waste-land into fertile farms trebled this figure; and the tenant farmer’s operating capital needs were estimated at £4-£8 an acre in 1850. Where the capital came from, how much was taken from the purse or ploughed back from the income of landlord and farmer, and how much was borrowed there is no way of estimating. Drainage projects could be financed by long-term loans from the government or from companies which did the work; but in general no British institutions emerged specifically to supply rural credit. On the Continent the Prussian Landschaften continued to provide mortgage loans for the landlord members of these co-operative societies of borrowers. They obtained funds by selling bonds which, being backed by the entire property of all the members, enjoyed the low interest rate of a gilt-edged security. The plan was copied after 1830 in other central European states and found a joint-stock state-subsidised variant in the French Credit Fonder, launched in 1852. But for small landowners and peasants there was virtually no organised aid.

With every improvement in transport and reduction of customs barriers the farmer’s market widened. An early picture of a freight-train (1833) shows trucks full of cattle, sheep and pigs. By 1840 eighty steamships were pouring an almost daily stream of Irish livestock, meat, poultry and eggs into British ports. The Belgian farmer followed most closely on the heels of his British counterpart in getting good rail service, but the French farmer had to wait, in some regions till nearly 1870. Only for milk was the farmer slow in gaining access to distant customers. Until about 1870 the railways regarded its long-distance carriage as too troublesome to merit attention. Meanwhile the effect of tariff changes became evident in Germany after the formation of the Zollverein, and in Britain when the customs amendments of 1842, 1846, 1853 and 1860 removed prohibitions, then whittled away duties on foreign animal products. The per capita import of these foods in 1870 was about four times that of 1840. While most of the early supplies came from the Continent, the United States jumped into the market in 1842, steadily expanded the volume of shipments, eliminated the early defects of quality, and by 1870 dominated the British import trade in bacon, ham, and cheese.

The marked expansion of animal husbandry did not reduce Europe’s dependence on the grains needed for bread and beer. France, Belgium, and England, for example, devoted more than a third of their farm lands to meeting that need. Each country sought to be self-sufficing or took steps to ensure that imports did not depress the domestic price too much. By the early ’thirties these Com Laws were assuming a common pattern, with a sliding scale of duties. As the home price advanced the duty descended, reaching a nominal figure or even vanishing when famine threatened. In reverse the duty climbed as the price fell, becoming prohibitive long before the price touched an unprofitable level.

The international grain trade was therefore chiefly concerned with supplying the normal deficiency of some countries and the abnormal dearth of others. Belgium and Holland were regular net importers, Denmark and Prussia net exporters, while France oscillated between exports and imports with the size of her harvest. In Britain improved cultivation, when favoured by such good seasons as 1833-6, made the country virtually self-sufficing at moderate prices. But in the bad years 1838-42 bread was scarce and in 1845-7 so also were potatoes. In those ‘hungry ’forties’ the gap between home production and demand was becoming too wide. Hence Peel’s more liberal sliding scale of 1842 and his repeal of the Com Laws in 1846 were inevitable (cf. ch. XIII, pp. 342-4).

When British farmers defended their costs and corn laws they asked whether free traders wished to force them down to ‘that standard which regulates the wages paid to German boors, Polish serfs, and Russian slaves’. These lowly workers produced most of the grain that went into international trade, with Hamburg as the chief outlet for the Elbe basin farms, Danzig for the large harvests of the Vistula valley, and Odessa, supplemented by Taganrog, for the rapidly mounting volume of wheat, wool, leather, and salt beef from the southern Russian farming frontier. By 1840 the Black Sea ports were shipping almost as much grain as Danzig, chiefly to Mediterranean consumers. During the next three decades Russia’s total exports more than trebled, establishing her supremacy in the intra-continental trade.

All discussions about com laws voiced the hope, or fear, of a flood of cheap grain from North America. That continent had come to Europe’s aid when famine prices were high enough to cover the heavy land and ocean freights and the low duty; but each wave of imports quickly subsided when better harvests reduced prices and raised the tariff. The abolition of the duties in 1846 made little difference to this violently oscillating pattern until after 1870. The waves went higher in the ’sixties, the descent was more gradual, but the troughs were as deep as ever. American wheat was not yet normally abundant or cheap. True, forces were at work to make it both, but they had not yet achieved the necessary combination of large output on cheap or free virgin soil with low inland and ocean freight rates.

The western European farmer, with his high overhead charges and operating expenses, could therefore enjoy that wave of higher prices and prosperity which swept the countryside between 1850 and 1873. Though grain prices rose far less than did those of animal products, the higher yield per acre and the increased number of acres under cultivation produced a satisfactory net income. The price of meats and dairy produce went up between a quarter and a half, and that of wool about three-quarters in spite of a fivefold increase in the supplies from Australia, New Zealand, South Africa, and South America. At scarcely any point did the European farmer have cause in 1870 to fear damaging competition from the outer continents. In one market he was the dangerous competitor, for the spread of beet-sugar production presented a serious challenge to the cane-sugar regions of the world. In 1850 beet fields and sugar factories were spread from northern France to Russia, and may have contributed a seventh of the world’s sugar production. By 1870 the output had quadrupled, the fraction was one-third, and both figures were rising rapidly. The price had declined somewhat, while others were rising. Sugar was becoming a necessary for all but the very poor, and the British per capita consumption, having trebled in thirty years, reached nearly one pound a week.

‘Cotton was the single industry into which industrial revolution had cut really deep by the ’twenties.’ During the next four decades the cuts went deeper and wider as more industries in western Europe and North America were influenced by the introduction or improvement of machinery, the harnessing of water or steam power, the enhanced ability to produce metals, the use of coal, and the application of physics or chemistry. New developments were more significant in the heavy capital goods industries—mining, metallurgy, and mechanical engineering—than in those producing lighter consumer goods. Yet the textile industry still loomed large because of the great demand for its products and the large army of people engaged in making them. The textile mill was therefore everywhere the first evidence of the new industrialism.

It was usually a cotton spinning mill, equipped with the jennies, frames, or mules which had revolutionised yam-making during the half-century before 1830. Thereafter the mules became self-acting, spindles revolved more rapidly, the hourly output per operator nearly trebled, and the labour cost per pound of yam was at least halved. A wet flax-spinning process invented in 1825 was quickly adopted by Belfast linen-makers; wool-combing ceased to be a manual task in the ’fifties; and by 1860 waste silk could be made into good yam. Meanwhile the power loom gradually displaced the hand loom. In 1830 it was efficient and economical only for weaving coarse cottons. By 1850 it would turn out much finer fabrics, was invading the worsted mills in force, but did not fully capture high-grade woollen production till the ’seventies.

The diffusion of British technique did not await the lifting of the bans on emigration of skilled workers (1824) and export of machinery (1843). Some French and Belgian spinning mills were well equipped by 1830, using water power in Alsace and Normandy or small engines in Belgium and northern France where coal was available. In Alsace the power loom had by 1860 almost ousted the hand loom from that most progressive of continental textile regions. Elsewhere, in Switzerland, Germany and Russia, for example, there was similar introduction of spinning machines and importation of cheap British yams until local production became adequate. In the United States the cotton industry, protected by a tariff that shut out cheap fabrics, grew fivefold between 1830 and 1860. In the latter year it was converting about a fifth of the country’s cotton crop into coarse and medium-quality cloths.

The cotton industry was everywhere exceptional in the pace of its growth, its technical change, and its expanding supply of cheap raw material as the United States yield grew from a million bales in 1830 to nearly five million in 1860, and as India and Egypt became minor exporters. Other fabrics felt the fierce competition of cheap cottons, but the woollen manufacturers fought back gamely. They combined cotton warps and fine combed wool to make ‘mixed stuffs’, light in weight yet ‘fancy’, approaching good cottons in price and silks in appearance.

A survey of the changes in other industries would be a long catalogue. If the innovation was mechanical it might be an American response to the scarcity of labour, especially skilled, and to the demands of a rapidly expanding domestic market. Sometimes it was an ingenious machine, or a whole battery of them, each designed to turn out a standardised part of a revolver, clock, lock, harvester, sewing machine, door or window frame. British observers in 1853-4 noted the American’s ‘eager resort to machinery wherever it can be applied’, the prevalence of factories in industries still largely served by outworkers and handicraftsmen in Britain, and the ‘special purpose machines’ for shaping parts in wood or metal. Meanwhile Germany, France and Switzerland were adding their quota to industrial chemistry. British judges at the Paris Exhibition of 1867 were as impressed and alarmed by this fact as by the ‘wonderful display’ of foreign machines and woollens.

Behind those who used the machines were the men who built them. By the ’thirties the mechanical engineers had heavy-and light-duty machine tools which gave a new degree of speed and precision to metal work. London and Birmingham made a great variety of machines, Manchester was the chief producer of textile equipment, Newcastle of locomotives, and Glasgow of marine engines. In Belgium the Cockerill plant at Seraing was a comprehensive integration of coal mines, blast furnaces, rolling mills, and shops for making engines and equipment of many kinds. In France Le Creusot was a second-rate Seraing, but Germany did not have even a third-rate one till about mid-century. After 1850 the industry made great strides, aided by an increasing supply of lubricants, equipped with better methods for assuring precision, and influenced by the American cult of standardisation.

Behind the machine-makers were the iron-masters. The following table, though based on estimates for the first two lines, gives a rough measure of their achievement.

Output of iron (tons) 1830-70

 

U.K.

France

Germany

U.S.A.

World

1830

680,000

270,000

46,000

180,000

1,600,000

1850

2,250,000

400,000

215,000

560,000

4,470,000

1870

5,960,000

1,180,000

1,400,000

1,690,000

12,260,000

This increase in output, about 70 per cent each decade, reflected the improvement and spread of what the French called le systeme anglais. That system comprised the use of coke in place of charcoal for smelting ore and producing brittle iron suitable for castings; then the puddling of liquid cast iron to change it into tough wrought iron which would bend without breaking. Thus equipped, the British industry had quadrupled its output between 1800 and 1830, and its product was the cheapest in Europe. In 1828 Neilson, a Clydeside iron worker, blew hot air instead of cold through the furnace, thereby reducing the fuel bill by a third. This economy, combined with larger furnaces and the tapping of iron deposits in Cumberland and around Middlesbrough, helped to raise production nearly ninefold between 1830 and 1870. Though the price of iron fluctuated with the business curve and the demands of war and railways, the trend was downward, from over £10 per ton in 1825 to £3 in 1866.

Transferred to the Continent, these methods proved most useful where coal and ore could be brought together cheaply, as at Seraing and Le Creusot. In many French regions the ore and coal were so far apart and remote from markets that the industry had to await cheaper transport facilities. When these came about 1850 French output trebled in two decades, yet was insufficient to meet all demands. In these same decades Germany made up for a late start by bounding ahead, thanks to abundant cheap fuel from the new Ruhr mines and the railways’ need for iron. In the United States the shift to coke made it possible to treble iron production between 1830 and 1850, then to treble it again by 1870.

During those latter years the prospect of cheap abundant steel suddenly grew bright. In 1850 steel was almost a semi-precious metal. Its production was terribly voracious of fuel, slow, and small-scale; hence its use was limited to cutlery, tools, jewellery, and other small articles. The world’s output was estimated at 80,000 tons, of which Britain made half. Bessemer’s method (1856) offered cheap mass-production. By blowing air through a converter containing liquid iron a ton (or more) of metal could be turned into steel, without using any fuel, in a quarter of an hour. Iron-masters eagerly adopted the process, only to discover that iron containing any trace of phosphorus resisted treatment, and the elimination of that hostile element defied all efforts till 1878. Yet there was sufficient ore of ‘Bessemer grade’ to permit a rapid expansion in steel production during the ’sixties. In 1870 output was at least eight times the estimate for 1850, and there was a glimpse of the Steel Age as manufacturers put the new metal to all kinds of uses, from railways and ships to milk cans and saucepans.

In 1830 the world’s production of coal was probably about 30,000,000 tons, four-fifths of it from British mines. For 1870 the figure was about 220,000,000 tons, of which Britain contributed half, the United States a fifth, and Germany, France, and Belgium together a quarter. The sevenfold increase was at about the same rate as that for iron—between 60 and 70 per cent per decade. The pattern of the market had become clear by 1870. Iron-masters consumed a third of the British output, and manufacturers a quarter. Gas-works and domestic grates burned another quarter, an eighth was exported, while one-twentieth went as fuel to railways and steamships. The British industry was unique in having five coastal coalfields which could deliver their product almost straight into vessels for shipment to such domestic markets as London or for export as ballast and make-weight. Hence exports mounted from 500,000 tons in 1830 to nearly 14,000,000 in 1870.

The exploitation of inland seams depended on cheap water carriage, then on railways, whether to get the coal to market or to bring in raw materials for industries that were best located near the mines. In 1830 Britain and Belgium had the best waterways and by 1850 the best railways. France had more difficulty in providing water and rail services, so that foreign coal was still cheaper to the buyers of a third of her consumption in 1870. In the United States Pennsylvania’s anthracite fields were worthless until ‘coal and navigation companies’ provided canals to the seaboard cities around 1830; but her bituminous coal outcropped on the high banks of streams flowing into the Ohio. It was not only easily mined but could be sent by boat down into the expanding market of the Mississippi valley, or be combined with local supplies of ore and limestone to produce iron in the Pittsburgh area.

Given accessible markets, mines multiplied in such old regions as Belgium and north-east England. New coal beds were discovered, for example, in Pennsylvania and the Donetz basin. During the ’thirties and ’forties a method of sinking shafts through water-logged strata made possible the search for much deeper seams. This search was successful in Britain, the Nord and Pas de Calais, Belgium, and the Ruhr, where the first pit was opened near Essen in 1841. While mining engineers did little to convert coal-hewing from a pick and shovel job to a mechanical operation, they had plenty of other problems: how to free the underground from the menace of flood, suffocation, explosion, and falling roofs; how to extract a larger fraction of the coal; and how to improve its haulage to the surface.

Their achievements were substantial. They made the occupation relatively more productive and less hazardous, for the number of British fatalities remained steady from the mid-’fifties to the early ’seventies, though output rose by four-fifths and the number of miners by three-fifths. But capital and operating costs rose as mines went deeper, while the demand grew rapidly in prosperous times. Consequently the price of coal rose more than the general price level during the third quarter-century and more than doubled when the boom of 1869-73 created a coal famine. In those years productive capacity was hurriedly expanded, as it was in the iron and other heavy industries. By the time the new mines were ready the boom had burst, and the industry faced a serious depression bedevilled by excess capacity.

By 1830 the western world knew the benefits—and the high cost—of good roads, improved river channels, canals, and river steamboats. On the main British turnpikes, now mostly ‘macadamised’, passengers, mail, and parcels moved at almost ten miles an hour. Though wagons still went at the walking pace of horses, the walking was easier except on the inferior local roads. France, Saxony, Belgium, Switzerland, and north Italy also had good main highways, but poor second-and third-class roads.

In England and the Low Countries, where few places were far from a canal or navigable river, the cost of moving heavy materials had been halved, the volume of traffic increased greatly, and prices tended to become equalised between regions. France was trying to complete its northern network of waterways as well as the links needed in the heart of the country to connect the tributaries or upper reaches of the chief rivers; but the long distances, difficult terrain, defective river courses, great cost, and lack of funds made progress slow and results only moderately satisfactory. In North America the Erie Canal, completed in 1825, and in smaller measure the Canadian canals round the St Lawrence rapids and across the Niagara peninsula, had given a continuous route from the Atlantic to the regions around the Great Lakes.

Finally, the steamboat had revealed its ability to operate on lakes, as well as to carry passengers, mail, and fine cargo on rivers, even upstream against the current. While it was thereby giving new value to the Rhine, Elbe, Vistula, and middle Danube, its greatest promise of service was to the settlers swarming into the vast region drained by the 16,000 miles of the Mississippi and its tributaries.

During the next two or three decades work on roads and waterways continued. German engineers extended the range of river navigation, so that steamboats could go from Rotterdam to Basle by 1840; introduced the steam-tug to haul heavily laden barges; and linked rivers by canals, thereby complementing the natural north-south flow of traffic with an east-west route. The international commission established by the Treaty of Paris in 1856 set out to dredge the Danube, give it a better mouth, and regulate its traffic. French waterways received more attention, though much remained to be done in 1871. In the United States the number of steamboats plying the Mississippi rose from two hundred in 1830 to over a thousand in 1860, thus intensifying the north-south flow of goods.

The opening of the Liverpool-Manchester Railway on 15 September 1830 wed the locomotive to the railed road, with consequences that were in some respects unexpected but mostly encouraging. Passenger traffic became surprisingly heavy, and at twenty miles an hour seemed to abolish time and space. Coal and other freight were moved from one terminus to the other within three hours, in contrast to thirty-six on the waterways. Earnings yielded a steady 8-10 per cent dividend, despite the large capital outlay—over £800,000—and the heavy wear and tear on the early engines.

Given such a lead, there were eager followers in Britain and elsewhere, in fact too many during the little railway boom of 1835-7 and the gigantic one of 1845-7. The following table shows the growth of operating mileage during four decades:

 

1830

1840

1850

1870

Europe

60

1,800

14,000

65,000

North America

2,800

9,000

56,000

Asia

200

5,100

South America

1,800

Africa

1,100

Australasia

1,000

World total

60

4,600

23,200

130,000

By 1850 Great Britain had acquired some main and many minor lines. Belgium in 1844 completed the core of its railway plan, with one track from Ostend to the Prussian frontier and another from Antwerp, crossing it at Malines, en route for the French border. The French Organic Law of 1842 authorised nine main lines, and by 1850 some parts of them were finished. In the German states about 5000 miles of track were in service. In the United States a boom in the mid-’thirties linked some coastal cities, pushed a few spurs inland, then shared in the general collapse of ‘internal improvement’ schemes. As the country spent much of the ’forties repairing its damaged credit rating, railway building was largely limited to New England.

During those two decades the railway revealed the kind of service it could render as a common carrier, and the problems of construction, operation, and cost that had to be faced. Passenger service immediately became so popular that the British lines collected two-thirds of their revenue therefrom. This business forced them to increase speed, and by 1850 the best trains were running at 35-40 miles an hour; to expand and improve the cheapest kinds of accommodation; to seek better brakes, signalling and other safety devices; to provide stations, some of them ‘ornamental structures of a costly character’, and to open refreshment rooms which to those who knew the coaching inns were ‘magnificent salons, luxuriously furnished, warmed, and illuminated’. By 1850 fares were less than two-fifths those formerly charged by the coaches, and the duration of journeys had been reduced by two-thirds. Meanwhile the railways had developed fast movement of mail, parcels, livestock, and fish, and were moving heavy materials at rates which not only ruined the road carriers but competed with the waterways.

By 1850 the railway world had explored all ways—private, public, and mixed—of getting its lines built and operated. Private enterprise was the British method, partly because it was the only possible way of financing an innovation, partly because the record of the early companies stimulated sufficient investment, with a heavy over-layer of speculation in boom times, to ensure that capital was forthcoming. There were, however, very few other places where private enterprise was feasible. Distances might be too great, traffic too light, and capital too scarce. Strategic routes might not coincide with trade channels, and in the New World the rails might have to precede settlement, with a long waiting period before traffic developed. Hence governments had to decide whether to build and operate railways themselves, borrowing for construction and meeting deficits out of public revenue; to subsidise private enterprise; or to do both.

Belgium chose public ownership in 1834, as did Austria a little later. France decided on a mixture in 1842. The state would provide the land, prepare the road-bed, and lease it for thirty or forty years to companies. They would raise the construction and operating capital, run the service, borrow from the government if their income was insufficient to pay interest on the bonds, and surrender the lines to the state, when the lease expired, at a fair valuation. North America tried every policy. A few states, chiefly southern, built and operated railroads. Virginia provided two-fifths, later three-fifths of the capital, and claimed the same fractional share of seats on the governing boards. But the commoner practice was the purchase of railroad securities by states, cities, even counties. Massachusetts, for instance, put $5,000,000 into a line that would give Boston a connection with Albany and points west. Then in 1850 Congress made its first railway land grant, and the way was opened for vast subsidies from the public domain.

After mid-century railway construction quickened in Europe and North America and spread to other continents. In the United Kingdom capital, mileage, and net receipts more than doubled. France, having completed its trunk lines by 1859, planned a network of branches. Germany’s mileage trebled, that of Austria-Hungary mounted, Italy, Holland, Switzerland, Spain, and Russia entered the picture. Some of this development was stimulated by a French investment bank, the Credit Mobilier, founded in 1852 to raise capital for railways, banks, and other expensive ventures at home or abroad. It secured concessions, including a monopoly and perhaps a subsidy in case revenue was inadequate, from governments which desired railways but lacked funds. Its early successes in France and Austria provoked the Rothschilds to establish the Creditanstalt fur Handel und Gewerbe in Vienna (cf. ch. XX, p. 535), and other competitors entered the apparently profitable field.

In the United States rails penetrated beyond the Mississippi, and one line spanned the continent in 1869. Trade could now flow between east and west. Canada got its Grand Trunk fine, stretching from east of Quebec to western Ontario, also connecting Montreal with the ice-free harbour of Portland, Maine. Australia acquired its first thousand miles during the ’sixties, chiefly in lines running from the capital cities towards the pastoral or grain lands. In Asia, India was the first land to get railways, and in 1870 still almost the only one.

By then the world had built one-sixth of the railways it was eventually to possess. It was the most important sixth, for it transformed the transport system in thickly settled parts of the Old World and showed what benefits railways could confer on large inland continental regions. While strengthening old trade routes, it had carved out new ones, linking regions hitherto disconnected into larger market areas. It had emphasised industrial concentration in favoured spots, and stimulated long-range distribution from railway hubs, whether such old centres as London or such new ones as Chicago. Its construction had been a major influence on capital markets and the movements of the business cycle. In private hands it developed characteristics of monopoly or of competition that was ‘imperfect’. There its practices were arousing so much clamour in depressed times against seemingly excessive charges, discriminating treatment of customers, and unsafe or unsatisfactory services, that state regulation was becoming inevitable. In public hands the railway’s map and services were influenced by strategic considerations, concepts of national growth or welfare, the pressure of sectional or class interests, the optimism of new countries, and the moods of bond buyers. It had also become a vigorous builder of the national debt.

In 1830 steam vessels were plying on rivers, lakes, and coastal routes or across channels and narrow seas. Their builders were constructing larger ships and improving marine engines, thereby increasing the speed and the certainty with which voyages were performed, lowering operating costs, reducing the fraction of the hull occupied by the power plant and fuel, and expanding that available for passengers and cargo. By mid-century it was elbowing the sailing ship off short runs, especially for the carriage of passengers, livestock, and goods whose bulk was small in proportion to their value. By 1870 it was taking over the short-haul carriage of bulky cargoes as well.

On long ocean routes the steamship faced more serious problems. It must be made as safe as the sailing vessel—not a very high standard; carry sufficient fuel; have enough revenue-earning space to defray heavy construction costs and the high price of ‘bought wind’; and do all this in face of the improving and expanding British and American merchant fleets of sailing ships.

The American fleet was especially formidable. Its building costs were far below those of British vessels, thanks to the abundant supply of cheap timber. It had ships for every purpose. The packet liners maintained regular transatlantic services throughout the year, carrying cabin passengers for ‘thirty guineas, wines included’, fine freight at £2 a ton, mail and bullion, but few steerage passengers. Below them were ‘regular traders’, which shuttled back and forth laden with general cargoes and often crowded with immigrants on the westward run; great bluff-bowed flat-floored freighters designed especially for the cotton traffic; and hundreds of tramps ready to go anywhere. In 1845 there was added the clipper, stream-lined, speedy, and welcome wherever a quick passage was wanted—to California gold in 1849, Australian gold in 1851, then the Crimea in the war years. It was the most brilliant product of that golden age of the American wooden sailing ship which saw the total tonnage grow fourfold between 1830 and 1860.

It was also the last product, for the golden age was ending. The advantage of cheap timber was vanishing with the coastal forests; some labour, operating, and overhead costs rose; and few clippers made any profit. Meanwhile Quebec and the Canadian maritime provinces learned to make their cheap timber into serviceable vessels. In Europe ship-builders improved designs, some of them using cheap iron for the hull’s frame, then for its shell. Finally, the steamship burst out of its narrow range of operations. By 1838 the question no longer was whether any steamship could cross the North Atlantic at one jump, but which would be the first to do it. On 23 April the Sirius and the Great Western reached New York; by the year’s end there had been ten such arrivals; and all made the crossing in about half the time taken by the best packets.

These journeys were, however, only the end of the beginning. For at least a decade the steamship had a poor record for safety. Its crew was large, its revenue-earning space small. Its construction cost might equal that of three or four large packets, yet it delivered only as much service— six transatlantic round trips if all went well—as did two of them. Consequently a regular service, even on a fortnightly time-table, needed a line of at least four vessels. Cunard was able to establish such a line between Liverpool, Halifax, and Boston in 1840 only because of a generous mail subsidy. Until he started his second service, from Liverpool to New York, in 1848, the packets still ran the only regular traffic to that port. In 1856 less than 4 per cent of the passengers arriving there came by steamship.

During the ’fifties and ’sixties the steamship became more safe, efficient, and economical. As iron hulls gained in popularity larger vessels could be built. The propeller supplemented, then supplanted, the paddle-wheel. The compound engine reduced coal consumption by half, thereby increasing the available cargo space and making the ocean-going cargo steamship a potential commercial success. Meanwhile passenger vessels improved at every point: in size and horse-power, speed, cargo capacity, cabin and steerage accommodation. By 1870, therefore, the sailing ship had lost the cream of the North Atlantic traffic and was losing it on all other ocean routes except the Australian. It still dominated the long hauls of heavy crude cargoes, of which there was so much that the world’s sailing tonnage did not begin to decline till about 1880.

While every advance in transport made postal services quicker, government action made them cheaper. The British reforms of 1840 set a worldwide pattern: a uniform low charge for delivery in any part of the country, paid by the sender instead of the recipient through purchase of a stamp. Within a quarter of a century most countries had followed this lead, and a series of international conferences led to the establishment of the International Postal Union (1874). Meanwhile domestic and international telegraph services developed from the pioneer work of British and North American railways and telegraph companies in the ’forties. In 1851 a cable from Dover to Calais provided the first of many links with the Continent, where private or state telegraphic services quickly spread as far as Moscow and the Mediterranean. A wire spanned North America in 1861. Ocean cables reached New York in 1866, Calcutta in 1870, and Australia in 1871.

The economic results of improved communications were far-reaching. After a big initial increase, the number of letters delivered in the United Kingdom rose 5 per cent year after year. For those engaged in distant trade the long wait for letters which had bedevilled the making of decisions was reduced by half or more with the coming of the railway and steamship, then almost abolished once wires were available. Shipping movements, demand, supply, prices, and prospects could be known almost instantaneously. The Dover-Calais cable allowed the London and Paris stock exchanges to compare prices hour by hour. Liverpool could keep an eye on Bombay, New York, New Orleans, and Chicago, and they on it. For stocks and the great staple commodities a world market was in the making; so was a world ocean freight market once tramp-ships could be directed by a cabled message to their next port of call.

The total effect of improved transport and communication was an enhanced mobility of persons and goods. Meanwhile the general trend of national policies lowered or removed those obstacles which lay across the paths of international commerce. Inter-state free trade, guaranteed by the federal constitution, continued to be an incalculable boon to the expansion of settlement and trade inside the United States. Its benefits soon became evident in Germany, when the Zollverein merged seventeen states and more than 20,000,000 people into a customs union. Its attraction was not overlooked in the discussion that led to Canadian confederation in 1867.

The fate of international trade policies was in the hands of three countries: the United Kingdom, which is estimated to have accounted for a third of the world’s exports and imports in 1840; France with about 10 per cent; and the United States with 8 per cent. Any liberalisation of their policies depended on a politically overpowering will for it, and on the ability to afford the loss of customs revenue or to find a substitute. France lacked the will and probably the ability. Manufacturers and farmers unitedly opposed all legislative attempts to lower tariffs, and Napoleon III got his Anglo-French commercial treaty in 1860 only by using his treaty-making power in secret negotiations.

In the United States the northerners’ will to high protection had overreached itself in the Tariff of Abominations (1828). The ‘Compromise Tariff’ of 1833 therefore inaugurated a vacillating trend toward lower duties which lasted till the Civil War. As revenue, especially from land sales, mounted rapidly, there was less need for customs receipts. In the booming ’fifties protectionist sentiment was so torpid that the few Americans and Canadians who desired a reciprocal treaty got their way (1854). For a dozen years the products of forest, farm, fishery, and mine passed across the border as if it were not there.

It was Britain’s changes in policy that were most important to the world’s economy. There the popular will was deeply divided, especially when the depression of 1837-42 drove men into organised offensive or defensive campaigns. While merchants and many manufacturers demanded free trade, farmers clung to protection—though some landlords were deserting them—shipowners to the Navigation Laws, the colonial interests to the preferences on grain, lumber, and sugar. The government, heavy-laden with national debt and faced with seventeen deficits in twenty-eight years (1815-42), was in no position to make heroic cuts in customs duties, which contributed 38 per cent of the revenue, or in excise levies on domestic products, which contributed 37 per cent.

The dismantling of a system which combined protection, revenue and preference had to be done in instalments (see ch. XIII, pp. 342-5). Huskisson had made a good start in the ’twenties, but the rest had to be left to Peel and Gladstone. Peel found in the income tax (1842) a source of revenue that would partly replace the money lost by reducing duties. The Irish famine forced his hand on the Com Laws, and the Navigation Laws were suspended to let foreign ships bring emergency grain. In 1849 that suspension became permanent, except for coastal journeys, and these were thrown open in 1854. Gladstone carried on the cleaning of the slate so vigorously that by 1870 only seventeen dutiable imports remained, of which five (sugar, tea, wine, spirits, and tobacco) contributed nine-tenths of the customs revenue, as they had done in the ’thirties. Total net imports had risen about 400 per cent since the early ’thirties, but the revenue therefrom only 30 per cent. In the earlier period that revenue represented a levy of about 35 per cent on the imports; in the later it was below 10 per cent.

Though no other country went so far, there was much movement in the same direction. Some actions were unilateral; for example, the Belgian repeal of Com Laws in 1850 and the Dutch and Zollverein paring of tariffs after 1845. Others were reciprocal concessions embodied in a trade treaty, such as the Cobden-Chevalier pact of 1860. By this treaty Britain admitted virtually all French wares duty-free and cut hard the rates on wine and brandy. France swept away her prohibitions on some British goods and scaled down her rates. In addition, each signatory accorded ‘most favoured nation’ treatment to the other. If France by treaty granted more favourable terms to another nation than Cobden had secured, these would immediately be extended to British goods. As treaties signed by France with ten other European states and by Britain with seven contained some lower duties, the area of reduced tariffs spread wider with each pact.

Even without such tariff changes international trade would have expanded greatly, because of the spread of railway construction, the advancing industrialisation of France, Germany, and the United States, the rising tide of migrant capital and labour to the New World, and the opening of new areas of investment and enterprise on both sides of the Pacific. An international economy on a world-wide scale was in the making. The available statistics, though defective, suggest that world trade rose by 40 per cent during the ’thirties and a similar amount in the ’forties, then jumped 80 per cent in the ’fifties (partly because of a marked increase in prices) and nearly 50 per cent in the ’sixties. British commodity exports rose less than 25 per cent each decade until 1850, then jumped 90 and 60 per cent respectively during the next two. Imports behaved similarly, always exceeding exports, and the gap grew ever wider. But such invisible exports as the earnings of the merchant marine, commercial and banking houses, and overseas investments, made up the deficiency and left something over. This surplus was £7,000,000 or less per annum until the early ’fifties, but thereafter rose rapidly to nearly £40,000,000 in the late ’sixties, and almost twice that figure in the boom years 1868-73. By leaving it abroad, the British investment stake overseas was expanded from perhaps £110,000,000 in 1830 to £700,000,000 in 1870.

The new ways of making and moving goods called for far more capital in buildings and equipment than hitherto, in addition to more ‘floating capital’. Where the initial need was relatively small and subsequent accumulation possible, enterprise could remain in the hands of one-man businesses, family, or partnership firms. These units accounted for most of the expansion in manufacturing, mining, shipping, wholesale and retail trade, and fought a long, though often losing, battle in banking. Family resources were mobilised, active or silent partners sought, profits and interest ploughed back into the business. The task was not easy, as there was a big depression every decade with smaller ones in between. The price of failure ran high, since all the property of all partners in Britain and North America, but only of active partners in France, could be seized by creditors.

The alternative, corporate enterprise, had by 1830 shown its usefulness in raising the large sums needed at home for turnpikes, canals, docks, water and gas supplies, banks, insurance, and the pioneer railways, and for developing such faraway resources as land settlement and pastoral production in Australia. During the next forty years it continued along those lines. The promotion of joint stock companies and the underwriting of their securities became the special business of investment banks. Governments gave companies legal personality by decrees in France and Belgium, private acts in Britain, and legislative charters in the United States. After 1840 private incorporation was supplemented by general laws which allowed any group to form a company merely by registering a statement of its name, address, objective, capital structure, directors, and other relevant facts. Limited liability was offered soon afterwards, for instance in Britain by laws of 1856-62, to any company willing to publish certain financial statements.

Joint stock promotion came in waves with every up-swing of the business cycle, only to subside when the tide turned, leaving much wreckage and some evil odour. A third of the 5000 limited liability companies registered in London (1856-65) failed to come to life; a third of the others did not have a fifth birthday, and more than half vanished before their tenth. The continental creations in the ’fifties and ’sixties had a similar mixed record.

While a new breed of bankers concerned itself with long-term investment needs, the old school continued to receive deposits, transfer money from person to person, and make short-term commercial loans, chiefly by discounting bills of exchange. In rapidly expanding economies or periods many commercial banks of the early nineteenth century were far from adequate for their task. The search for stronger banks, for cautious policies, or for restraints on rash ones, therefore concerned bankers and governments alike.

In 1832 a British Rothschild declared: ‘This country is in general the Bank for the whole world. I mean that all transactions in India, in China, in Germany, in Russia, and in the whole world are all guided here and settled through this country.’ Yet during six of the next ten years parliamentary committees considered ways of improving the British banking system. Its base, consisting of hundreds of private banks in London and the provinces, was weakened by widespread failures in 1815 and 1825, then strengthened when acts of 1826 and 1833 permitted the establishment of joint-stock banks, such as flourished in Scotland. By 1841 there were over a hundred of these in England and Wales, some well supplied with capital and Scots managers; also over three hundred private ones, including such ancient firms as Child or Hoare, and such relative upstarts as Rothschild or Baring; and an increasing number of branches after the Scots pattern. During the next three decades branches multiplied, thus adding to the resources, the diversification of risks, the centralisation of reserves, and the belief, not always justified, that the soundness of a bank was proportionate to its size.

At the head of the ‘system’ was the Bank of England, which in 1826 had been given permission to set up provincial branches. Yet though here, as in London, it competed with old private or new joint-stock banks, it could not be just one among many. It gradually became a central bank, in which the others deposited funds and to which they could turn when the calls for credit exceeded their resources. In crises their need might be terribly urgent and the Bank their place of last resort. At such times the Bank might ration customers, discriminate between high-and low-grade collateral security, or refuse aid. In the ’forties it tried another device. It raised the ‘Bank Rate’ on loans—for example, from 3 1/2 per cent in early 1847 by five steps to 8 per cent in October, and later in the crises of 1857 and 1866 to 10 per cent. Any unseasonal raising of the rate was a warning, while a series amounted to an application of brakes and a change into reverse gear. Since the Bank had no monopoly of credit supply and no control over the harvest or the general behaviour of the national or world economy, it had to make the best of its power to cope with ‘hazards which the wisest cannot foresee nor the most unremitting attention prevent’ in a world where ‘there usually comes round every five or seven years a period of failing and distress which may produce loss’.

On the Continent commercial credit was provided by a few central banks, of which the Bank of France was the chief; by purely local institutions; and by that small group of powerful family banking houses—the Hopes, Rothschilds, Mallet freres, Hottinguers, Oppenheims, Foulds, and the like—which discounted bills, dealt in merchandise, and underwrote government loans from their strongholds in Paris, Amsterdam, Frankfurt, or Vienna. When the upheavals of 1848 wrecked many weak or over-ambitious banks, the need for better substitutes, then for investment banks, led to an outcrop of new joint-stock banks, especially in France. The Credit Mobilier and its rivals scattered similar banks over the Continent; for example, the Bank fur Handel und Industrie in Darmstadt (1853), which played a large part in the industrial and railway boom in Germany.

In North America Congress wrecked the promise of a central bank by refusing to renew the charter of the Second Bank of the United States in 1836. As it made no provision for a national banking policy or note issue till 1863, service had to be provided by private bankers and merchant-bankers, or by banks incorporated under state laws which usually forbade the establishment of branches. The task of providing both short-term commercial and long-term mortgage credit was beyond the means of these ‘unit’ banks. They were damned if they did not provide both, but risked bankruptcy if they did. Emotionally and politically hostile attitudes toward ‘monopoly’, ‘money power’, ‘paper aristocrats’, and ‘Shylocks’ made the building of a good banking system a long labour of pain and sorrow on a foundation shaken by violent alternations of boom and depression.

In every western land there was concern over the tendency of banks to issue too many notes when making loans in prosperous times. Argument and bitter experience led to the decision that note issue should be concentrated in a central bank and strictly regulated. The Bank of France in 1848 regained that monopoly, with a maximum limit to its issue. Holland and Russia had never moved from a regulated monopoly. British policy was embodied in the Bank Charter Act of 1844. The issue of each bank (except the Bank of England) was frozen at its current figure and would be wiped out if the bank changed status, while no new bank could issue notes. The Bank of England would thus ultimately become the sole bank of issue. It could issue ‘fiduciary’ notes worth about £14,000,000 on the security of loans to the state; also some to replace a fraction of those which other banks forfeited; but beyond that potential £20,000,000 every note must be backed in full by precious metal.

This plan had the defects of its virtues. It was honest but inelastic. On three occasions—1847, 1857, and 1866—crisis could not be stemmed or controlled merely by raising the bank rate. Nor could panic-stricken clients be helped unless the government gave the Bank permission to break the law and issue unbacked notes. In 1847 and 1866 the news that permission had been granted was sufficient to allay the panic. But the crisis of 1857 hit so suddenly and so hard, with news of mutiny in India, of virtually every bank in the United States closed, and of disaster at almost every point in between, that illegal notes—less than £1,000,000 in all— had to be used. That venial sin saved some firms or postponed their doom, which was as much as could be expected in a moment when ‘all the bubbles, blunders, and dishonesties of five years’ European exuberance and experiments in credit were tested or revealed’.

While the business world wrestled with its problems, labour tried to adjust itself to changes in opportunities and conditions of employment. Of these the most noteworthy was the transfer to the factory of occupations hitherto carried on in or around the home. The textile industry was the outstanding example, because of the large number of men, women, and children it employed. In Great Britain, as perhaps in some continental lands, they comprised the third largest occupation, after agricultural labourers and domestic servants, accounting for more than 10 per cent of the working population in 1841 and 1851. In 1830 spinners, a few weavers, and most cloth-finishers were factory-employed. During the next forty years most of the remaining domestic processes were transferred to the mill in Britain, but the transition came later in many parts of the Continent.

Preoccupation with textiles obscures two other important aspects of the labour picture. In the first place, many occupations did not move far, even in Britain, from the home or small workshop. London, Paris, and every other large city swarmed with a vast variety of small producing units and outworkers. The clothing, footwear, baking, small metal-wares, and luxury goods industries were their strongholds. Birmingham, Sheffield, Solingen, the Lyons silk and Swiss watch regions were dominated by them. Prussia in 1843 had fewer apprentices and journeymen than masters, and three-fourths of France’s 5,000,000 industrial workers in 1850 were outside what was called la grande Industrie. If the ‘workers of the world’ in 1848 had answered Marx’s call to unite, only a small minority would have been factory proletarians. On the Continent that would still have been largely true in 1870.

In the second place, mining, smelting, building, shipbuilding, and occupations which used much power, fuel, or space for their stills, boilers, vats, and tanks never had been, and could not be, operated on the domestic plan. Now their centralised producing units grew in size and v. numbers; also in variety as new industries emerged to make machines, engines, iron ships, coal-gas, fertilisers, cement, rubber, paper, and heavy chemicals. As employers these occupations grew greatly in importance. The number of British coal-miners rose nearly threefold between 1841 and 1871, of iron producers nearly sixfold, of machine and engine builders tenfold. By 1871 the combined labour force in mining, quarrying, metal production, engineering, and ship-building almost equalled that of cloth-makers. It was virtually a male preserve, calling for new skills as well as old, earning higher wages than most other occupations, but more vulnerable to unemployment because of violent fluctuations in the demand for its products.

Wherever he worked, the wage-eamer’s material welfare was determined by the dwelling and environment in which he lived, the conditions under which he did his job, and the size, regularity, and purchasing power of his wages. There was little he could do about the first, whether he stayed in his birthplace or joined the stream of migrants moving from village or farm to town, from rural counties to mining and manufacturing regions, from country to country, or from Europe to America and the Antipodes. That migration accounted for nearly half the 16 per cent growth of population in ten English industrial counties between 1831 and 1841. Only half the adults living in London and Sheffield in 1851 had been born there, and only a quarter of those in Manchester, Glasgow, Liverpool, or Bradford. The Irish loomed large in the movement, comprising a tenth of the population of England and Wales in 1851. On the Continent seasonal or permanent migrations were also marked: of country weavers into Lille or Lyons, of Swiss, French, and Germans into the Mulhouse mills, of German peasants or handicraftsmen into Berlin or the Saxon, Rhineland, and Silesian towns. Beyond that was the great trek across the Atlantic, chiefly of British, German, and Scandinavian origin till the ’seventies.

In no country was the provision of homes regarded as a public duty, and few employers felt any obligation to house their workers. The job was left to private builders, who had to keep one eye on what the tenant could pay and the other on construction and maintenance costs, taxes, interest rates, and land rents. Scattered evidence suggests that rents in English industrial towns ranged between 2s. and 4s. 6d. for working-class houses. To get a reasonable net return from them a housing unit must not cost much more than £100. Given that limit and also the restricted supply of land, rows of back-to-back houses, courtyard dwellings, and blocks of tenements were the best that could be provided by an industry which lacked the economies of large-scale production, cheap credit, and public subsidies.

The wider problem of streets, sewers, water, and general public health was harder to solve. Large towns, and many small ones, had generally killed more men than they bred. Now there were more towns and some were much larger. Smoke was thicker and more acrid, streams and wells were more polluted, cesspools and privies more numerous, collection and disposal of sewage more difficult. The perennial summer outbreaks of typhus, dysentery, and other diseases were heavier in their toll, as were the cholera scourges of 1831-2, 1848, and later years.

The sanitary reform crusaders had plenty of ammunition. But since the problem could not be tackled by private enterprise, it was necessary to create a combination of public concern, new or improved methods, heavy fixed capital outlays, national policies, and local authorities endowed with adequate powers to plan, tax, and spend. Consequently public health had to jostle with many other issues for legislative attention, and was dealt with spasmodically. Though Britain took some steps in the ’forties and others in the ’fifties, little progress had been made by 1870, save in a few alert towns. The death-rate was about the same as in 1840 and in some towns was about twice that for the country at large. Conditions were no better in other lands, and improvements came slowly. In the New World, as in the Old, man made the city, but found it very hard to make a good job of it.

Working conditions, the second influence on the wage-earner’s welfare, became a topic of violent controversy in 1830 when Richard Oastler’s letters to the Leeds Mercury, denouncing the employment of children for long hours, started the agitation for a ten-hour working day. This demand hastened the next step beyond the rudimentary factory acts of 1802, 1819, and 1825. The law of 1833 covered nearly all textile mills, forbade the employment of children under nine, limited persons between nine and thirteen to a forty-eight-hour working week, and required some attendance at school; fixed a weekly maximum of sixty-nine hours for those between thirteen and eighteen years, with no night work; included some health and safety precautions; and appointed four full-time factory inspectors.

Each subsequent decade improved and widened the range of regulation (see ch. XIII). By 1870 there were few industrial establishments in which rules concerning minimum age, maximum hours for males under eighteen and all females, health and safety were not being enforced by inspectors.

Though men were still untouched by law, they were influenced indirectly wherever their work depended on female or juvenile co-operation, and by the increasing insistence on safety precautions. The shop assistant, farm labourer, industrial outworker, domestic servant, and office employee remained outside the pale long after 1870.

That was where most workers on the Continent and in North America were in 1870. The British agitation of the ’thirties stirred some interest and a little action there. A Prussian decree of 1839 ordered children out of mines and mills and fixed a ten-hour day for young persons; but no inspectors were appointed till 1853. None were appointed in France till 1883. In the United States half a dozen eastern states had by the early ’fifties fixed a minimum age and maximum hours, including a ten-hour day for men; but the laws were easy to evade or lacked machinery for enforcement. Only after the Civil War did Massachusetts in 1866 lead the way to better provisions.

Factory acts were intended to care for women and young people because they could not look after themselves. Men were supposed to be able to protect and advance their own welfare in selling their labour. That they might do this as members of a union was by 1830 regarded in Britain as inevitable, regrettable, and perhaps dangerous. The repeal of the Combination Laws (1824) and the amendment of 1825 had recognised that unions were not illegal; but they were not yet legal personalities with power to own property (including funds), and some of their actions, such as molesting, obstructing, and inducing breaches of contract, were still unlawful. Nearly half a century elapsed before laws of 1867-76 gave them legal personality and the right to do collectively things which would be legal if done by an individual. Elsewhere the ban on labour association was lifted later: in Massachusetts (1842), Saxony, the North German Federation, France, and Belgium during the ’sixties; but legal recognition and the right of peaceful picketing, or even of striking, were slow in coming.

Whatever the law, local societies, clubs, or unions of skilled workers existed in 1830, especially in Britain and the United States. During the ’thirties, when Messiahs stalked the western world preaching deliverance from long hours, middle-class governments, private property, competition, and alcohol, there were British plans for a nation-wide union of workers of every kind and occupation; but these collapsed because of impracticable programmes, bad leadership, lack of solidarity or discipline within, employers’ resistance, and the depression of 1836-42 (see ch. XIII).

After the uproars subsided the ‘New Model’ emerged with the Amalgamated Society of Engineers in 1851. It was a national fusion of more than a hundred local unions, or branches, of engineers, machinists, and other trained skilled metal-workers. Control of local finance and policy was put in the hands of the central executive. The officials were primarily administrators and organisers, whose task was to settle disputes peacefully wherever possible. The union was also a friendly society, giving aid in time of sickness and unemployment as well as industrial strife. It eschewed the secret-society methods of many earlier unions, welcomed publicity, and persistently reminded the public that it was a peaceful concern, with no desire for Utopia or class war.

The New Model worked well, was copied by other skilled crafts, dispelled some middle-class mistrust and gained some recognition from employers. By 1870 collective bargaining had in a few cases got as far as the use of conciliation and arbitration machinery. As the years 1850-73 were relatively prosperous, union membership in Britain rose from perhaps 100.000 in the ’forties to possibly more than a million in 1873. In the ’sixties the German ‘Radical’ unions, formed by Max Hirsch (1868), gathered in skilled artisans and pursued policies akin to those of the British model, while the first socialist unions appeared, devoted to more exciting programmes inspired by Lassalle or Marx. In the United States craft unions, already widely scattered over the industrial centres, grew in strength, joint action, and successful demands for the eight-hour day and the use of the union label on goods made by their members. But there, far more than in Europe, the collapse of the boom turned advance into rout.

By 1870, therefore, wage-eamers were on the right track. As wage-spenders they also were headed in the right direction. There had been lingering traces of utopianism in the objectives of the Rochdale Equitable Pioneers’ Society, founded in 1844; but none in such working principles as the provision of capital at a fixed rate of interest by the members, the sale of pure food for cash at market prices, and the return of any net surplus to the pocket from which it had come, as a dividend on purchases. This second New Model worked well as it went on from retailing groceries to milling flour, making clothes, and establishing a Co-operative Wholesale Society (1863) which supplied goods to more than a hundred retail societies in the northern industrial regions. By 1870 those societies had 80.000 members and the figure was rising rapidly.

Thus the industrial worker evolved institutions for his protection. But in 1870 they were still small in range, size, and geographical area, even in Britain, with unskilled and low-paid workers as yet untouched, and on the Continent their influence was negligible. Consequently the wage-eamer’s income was affected far more by his personal qualifications and conduct, by trends in production and productivity, and by changes in the demand for his labour, his money wages, and in price levels than they were by the things his union, his ‘co-op’, or even his government did for him.

Though the nature of some of these influences has already been examined, measurement of their effect is difficult for lack of satisfactory figures. Yet a few tentative conclusions emerge. In the first place, until western Europe could depend on substantial supplies of food from Russia and North America, harvest variations affected the general welfare directly through price movements and indirectly by their influence on the business cycle. Good seasons and lower food prices helped to pull the economy out of depression, bad ones did much to push it back. This factor was far from having lost its influence in 1870.

In the second place, the task of accumulating and maintaining an unprecedented amount of fixed capital equipment introduced a relatively new factor into the distribution and use of income. In an age that knew not planned investment, the ‘capitalist classes’, as Lord Keynes once remarked, ‘were allowed to call the best part of the [income] cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion.’ If labour received less cake than it could have consumed, capital ploughed back much of its share in further investment. This increased the demand for goods and labour, first to build and equip factories, railways, and ships, then to operate them. The growing population therefore found employment, and if the new plants were better equipped or organised, the expanded production and greater productivity were reflected sooner or later in lower prices or higher wages, or both.

This development was not painless. It destroyed enterprises which clung to old methods, organisation, or equipment, as hand-loom weavers and coach-drivers were well aware. Nor was it steady, for investment generated over-enthusiastic bouts of competitive energy followed by over-pessimistic lethargy and excess capacity. In intensity and duration the depression of 1836-42 competes with later rivals for the title of ‘the Great Depression’. The lamentations of those and other gloomy years have given the second quarter of the century an evil reputation. Yet the measurable achievements suggest that as a whole the period was ‘one of extraordinary development, perhaps the most rapid rate of development of domestic resources throughout the whole of Britain’s economic history’; and a similar reappraisal might be possible for Belgium, France, Germany, and the United States. Higher productivity raised British real wages between 1830 and 1850, though probably more by reducing prices than by lifting money payments.

The third quarter’s reputation is much better, perhaps too good. The demand for consumer goods and still more for capital goods rose high. In the first flush of gold rushes and new gold, it outran supply so much that prices rose far ahead of wages until the collapse of the boom in 1857 checked them. Thereafter wholesale prices oscillated around 25 per cent, and retail prices about 13 per cent, above the 1850 level. Wages caught up with prices by 1860, then continued to rise until 1873. Real wages therefore rose markedly after 1860: in Britain by 15 per cent in 1870 for those in full employment and by 25 per cent in 1873; and in France by 18 per cent in 1870.

It may not be true, in spite of Punch cartoons, that coal-miners drank champagne in 1871-3; but certainly many wage-earners were getting more cake as well as tea, cocoa, meat, sugar, rice, and fats. They might return home a little earlier for the evening meal, as trade union pressure was chipping the working week from sixty (or more) hours down toward fifty-five, with a Saturday half-holiday. If they lived in Britain the public health service was beginning to make their living environment a bit better; the factory inspectors had gained much experience in making the working place less unhealthy; parliament had given them a vote in 1867 and in 1870 it finally insisted that the children it had shut out of the factories must go to school. Things had moved since the Hungry ’Forties.

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