1. The Dawn of the Industrial Revolution in Britain

2. Economic Innovation Changes in Structure and Performance:
Performance – measured by output; generally identified through per capita productivity.
Structure – characteristics that support performance (laws, tax policies, technology, population, etc.)

3. Adam Smith
Smith criticized both guild and mercantile-based economic systems as restraining.
Promoted liaise-faire (i.e. classical liberalism) ideology in The Wealth of Nations (1776).
Free market economy based on division of labor and the fewest government restrictions as possible

4. Why Britain? Large supplies of coal and iron.
Navigable waterways and access to the sea. Expansion of roads.
Merchants had surplus capital from commercial revolution for investment.
Gov’t policies favorable to merchants (property rights, taxes, banking system)
Cultural innovation and free market ideas.
High standard of living; growing population driving demand.

5. Cotton
Demand for cheap cotton goods at home and abroad made textiles the first to industrialize.
Cotton was cheap (slave labor) and durable.
“Putting-out” system could not keep up with demand (lack of organization, distance between workers); this required new system

6. Factory System
The organization of labor in one location allowed for increased production.
The location of factories near rivers and/or seaports allowed for the transportation of goods to be easier and provided power supplies.
Location in urban areas provided cheap labor supply.
Introduction of machines increased per capita production.

7. Inventions 1733, John Kay: flying shuttle
1764, James Hargreaves: spinning jenny
1769, Richard Arkwright: water frame, which improved thread spinning.
1780s, Edmund Cartwright: steam engine to power looms; factory production of textiles.
1793, Eli Whitney, cotton gin

8. The Steam Engine 1700 – Thomas Savery invents steam pump.
1712 – Thomas Newcomen built steam engine to pump water from mines.
1769 – James Watt creates more efficient steam engine.
By 1800, steam power was being used to power looms in factories.