Chapter 13 Part 1 Development Chapter 2 Industrial Revolution 4

4 Obviously, an industrial economy can only grow beyond certain limits if it has enough capital, which is why, even today, steel production is the most reliable single indicator of a country's industrial potential.But it is also evident that, under conditions of private enterprise, this development is unlikely to be based on the same premises as the industrialization of the production of cotton textiles or other consumer goods, since most of this development required extremely high capital investment.For there was already a large market, at least potentially, for cotton and other consumer goods, for the food, clothing, and shelter of even the most barbaric state of the population.So the question is just how to push a sufficiently large market to merchants as quickly as possible.But there is no such market for cumbersome steel structures such as building steel frames, which emerged only gradually during (and not at any time) the Industrial Revolution.Even a fairly modest steel mill requires a very large investment (compared to a fairly large cotton mill), and those who bet on investing before the market shows up are likely to be speculators, adventurers, and dreamers, while Not a reliable businessman.In fact, there was a group of such speculative technical adventurers in France, and the Saint-Simon disciples played the main propaganda role for the industrialization of the production field that required large long-term investment.

These unfavorable factors are especially reflected in the metallurgical industry, and among them, the iron smelting industry is the most important.Iron-smelting was enhanced by a few simple technical innovations in the 1770s, such as the churning and rolling process.However, the demand for iron in the non-military field is still quite limited. Although from 1756 to 1815, because of a series of wars, the military demand increased happily, but after the battle of Waterloo (Waterloo). to decrease.Certainly the demand was not then great enough to make England a giant in the production of pig iron. In 1790, the iron production of Britain was only about 40% more than that of France. Even in 1800, the iron production of Britain was far less than half of the total iron production of the European continent, only reaching 250,000 tons. According to later standards, this is a Insignificant numbers.The fact that British iron production accounted for a significant proportion of the world was not seen until the next few decades.

Fortunately, these disadvantages are less pronounced in the mining industry, especially in coal mining.For the coal industry had the advantage not only that coal was the main source of industrial power in the 19th century, but also that it was an important type of household fuel, largely due to the relative scarcity of forest resources in England.Since the late 16th century, the development of cities, especially London, has led to the rapid development of coal mining.By the early 18th century it was practically a rudimentary modern industry, even using the earliest steam engines (designed for essentially the same purpose, primarily for the mining of non-ferrous metals in Cornwall) to pump water.Since then, the coal mining industry has undergone little or no major technological change during the period covered by this book.However, its production capacity is already very huge, measured by world standards, it has reached astronomical figures. In 1800, Britain's coal production had reached about 10 million tons, or about 90% of the world's total coal production. Britain's closest competitor, France, produced less than 1 million tons of coal.

This gigantic industry, though perhaps not fast enough for the truly large-scale industrialization of the modern age, was enough to drive the invention of the railroad, a fundamental creation that would transform the capital industries.Because the mining industry not only needs a large number of high-power steam engines, but also needs effective means to transport a large amount of coal from the coal mining field to the mine, especially from the mine mouth to the loading site.The "track" or "railway" on which the minecarts run is an obvious answer.Now that people are already trying to pull minecarts with fixed engines, it doesn't seem impossible to pull minecarts with moving engines.In the end, the cost of transporting large quantities of goods by road was so high that it likely persuaded inland mine owners to develop the short-distance transport they used into profitable long-distance transport.The railway from the inland coalfields of Durham to the coast was the first modern railway (Stockton to Darlington, 1825).From the perspective of technological development, the railway is the birth of the mining industry, especially the coal mining industry in the north of England.George Stephenson began his life as a Tyneside "engineer" and for many years the train drivers were virtually recruited from his coal mining district.

No innovation in the Industrial Revolution has captured the imagination as much as the railroad, as it has proved, the only fruit of nineteenth-century industrialization fully absorbed into the popular poetic and literary imagination.Before much of the western world made plans to build railways (although implementation of these plans was generally delayed), there was little workmanship to prove that building a railway in Great Britain (c. 1825-1830) was feasible. is profitable. In the United States in 1827, in France in 1828 and 1835, in Germany and Belgium in 1835, the first few short-distance railways were opened, and even Russia built railways in 1837.The reason is undoubtedly: no other invention has so dramatically demonstrated the power and speed of the new age to the world.Even the earliest railroads clearly reflect technological sophistication, and what is revealed is all the more surprising. (In the 1830s, for example, 60 miles per hour was no longer a problem. In fact, later steam trains did not make any fundamental improvements.) Railways dragged snake-like smoke tails across the country and across the continent at lightning speed.The cuttings, bridges and stations of the railways have formed public buildings. In comparison, the pyramids of Egypt, the aqueducts of ancient Rome, and even the Great Wall of China pale in comparison, with a rustic appearance.The railway is a symbol of humanity's great triumph through technology.

In fact, from an economic point of view, the enormous outlay required of the railway was its chief advantage.There is no doubt that in the long run, railways have the ability to open the doors of countries that were previously blocked from the world market due to high transportation costs. It has greatly increased the speed and quantity of people and goods transported by land. This is the railway. of significance.Before 1848 railways were of little economic importance as there were very few railways outside of Great Britain, and within Britain the transportation problems were far less problematic to deal with due to geography than in the vast landlocked countries . (Nowhere in Great Britain is more than 70 miles from the sea, and with one exception all important nineteenth-century industrial estates were either on the coast or within walking distance of the sea.) However, from the point of view of economic development researchers At this stage, the railroad's huge appetite for steel, coal, heavy machinery, labor, and capital investment took on even greater significance.For, if the capital industries were to undergo such a profound transformation as the cotton industry had already undergone, the railroads provided precisely the great demand that this transformation required.In the first 20 years of the railway era (1830-1850), British iron production rose from 680,000 tons to 2.25 million tons, in other words, iron production tripled.From 1830 to 1850, coal production also tripled, from 15 million tons to 49 million tons.The main reason for the rapid increase in production was the railways.For every mile of railway to be built requires an average of 300 tons of iron to lay the track.Industrial development made the mass production of steel possible for the first time, and industry naturally flourished in the coming decades as railroads were built in large numbers.

The cause of this sudden and essential development was evidently the irrational passion with which businessmen and investors threw themselves into the construction of the railways. In 1830, there were only a few dozen miles of railway lines in the world, mainly from Liverpool to Manchester.By 1840 there were more than 455 miles of railroad lines, and in 1850 more than 23,500 miles.Most of these routes were planned during the speculative frenzy known as "Railway Mania", which erupted in the years 1835-1837 and especially 1844-1847.Most of the railways were built with British capital, British steel, machinery and technology. (In 1848, one-third of French railway investment came from Britain.) This surge in investment is almost irrational, because in fact, railroads rarely bring investors more profits than other enterprises. Most of the railways have very limited profits, and many railways are completely unprofitable: in 1855, the average dividend of British railway investment was only 3.7%.There is no doubt that founders and speculators can get rich, but ordinary investors obviously do not.However, despite this, by 1840 and 1850, people were still full of hope, and the money invested in the railway was as high as 28 million and 240 million pounds respectively.

What is the reason?The basic fact prevailed throughout the first two generations of the British Industrial Revolution that the well-to-do and well-to-do classes accumulated incomes so rapidly and in such large quantities that they far exceeded the flowers they could find. money and investment opportunities. (In the 1840s, it is estimated that the balance available for investment was around £60 million a year.) The high society of the feudal aristocracy would have successfully squandered their fortunes on debauchery, luxurious buildings, and other in non-economic activities. (Of course, such extravagant spending can also stimulate the economy, but the effect is extremely poor, and it hardly pushes the economy in the direction of industrial development.) In England, the sixth Duke of Devonshire, his normal The income was large enough for him to spend extravagantly, and even then he left his heirs £1 million in debt by the middle of the 19th century. (He borrowed another £1.5 million to develop property and paid off all his debts.) The large middle class was the main investing public, but they were still collectors rather than spenders, despite arriving In 1840 there were many indications that they had felt sufficient means to both invest and spend.Their wives began to become "ladies," and around this time there was a surge in sales of etiquette manuals, which ladies used to learn good manners.They began rebuilding private chapels in churches, making these places magnificent, and they even imitated the Gothic and Renaissance styles, building terrible town halls and other urban monsters to celebrate their common the glory for which their city historians proudly record their enormous expense. (Some cities have the tradition of the 18th century and never stopped the construction of public buildings, but, like Bolton, Lancashire, a typical new industrial metropolis, it actually did not build any fancy non-utility buildings before 1847-1848. sexual buildings.)

Furthermore, a modern socialist society or welfare society will undoubtedly donate a part of the huge wealth accumulated for social purposes.But in the era in which this book is concerned, this is unlikely to happen.The taxation of the middle class is actually not too heavy, so they can continue to accumulate wealth among the hungry and cold masses, and the hunger of the people goes hand in hand with their accumulation of wealth.The middle class is not country folk, content to hoard their savings in wool stockings or turn money into gold bracelets, they must find profitable investments for them.But where to invest?Existing industry, for example, has become so cheap that it can absorb at best only a small part of the surplus funds available for investment, and even if we assume that the cotton industry doubles in size, its cost of capital can absorb only a fraction of this. part.All that was needed was a sponge big enough to hold all the spare funds. (McCulloch estimates the total capital—fixed and circulating—of the cotton industry at £34 million in 1833 and £47 million in 1845.)

Foreign investment is clearly a viable channel.The rest of the world—in the first place, most of the old regimes seeking to recover from the Napoleonic wars, while the new regimes, in their customary practice, borrowed recklessly for vague purposes—couldn't wait to acquire unlimited Loans, why not British investors!But South American lending, which looked so promising in the 1820s, and North American lending so promising in the 1830s, turned into worthless paper so quickly: foreign governments in 1818- Of the 25 loans accepted in 1831, as many as 16 (involving half of the roughly £42 million) were in arrears by 1831.According to regulations, they should repay investors with 7% or 9% interest, but in fact, investors only receive an average of 3.1% interest.There was such a thing in Greece: a loan at 5% interest in 1824-1825 was not repaid until the 1870s, and nothing was paid until then.Who could not be frustrated by a situation like Greece?Naturally, the capital that went abroad in the speculative frenzy of 1825 and 1835-1837 has since sought places of use which obviously do not disappoint.

The author John Francis reviewed the investment mania after 1851. He described the rich in this way: "For the industrial people, the rich found that the accumulation of wealth was always faster than the lawful and fair investment model. . . . See, in his youth money was invested in war loans, and the wealth accumulated in manhood was wasted in the mines of South America, where his money was spent in building roads, hiring labor, and expanding commerce. (Railway) Absorption The capital of the country, if it fails, is at least absorbed by the country that created the railroads. Investments in railroads are not like investment in foreign mines or foreign loans, and they are not left for nothing, or worthless." Whether investors will be able to find other forms of investment in the country - such as investment in construction - remains an open academic question.In fact, investors have found the investment channel of railways. Without this flood of investment, especially in the mid-1840s, we would certainly not be able to imagine the rapid and large-scale construction of railways. .It was a lucky moment, because the railways solved all the problems that Britain actually faced in the process of economic growth.