It came from Newcastle

An article by Robert Allen on why the Industrial Revolution was British. He argues that Britain boostrapped its way into the Industrial era. I have excerpted heavily below, while trying to point out the main points.

First, success in trading Woollen textiles with Europe, and later Asia and America

In the late sixteenth and early seventeenth centuries a European-wide market emerged. England took a commanding position in this new order as her wool textile industry out competed the established producers in Italy and the Low Countries. England extended her lead in the late seventeenth and eighteenth centuries by creating an intercontinental trading network including the Americas and India.

As London grew, the price of wood soared and houses began to burn coal; thanks to this coal, Britain had the cheapest energy in the world

As London grew after 1500, the price of wood fuels rose and by the end of the sixteenth century, charcoal and firewood were twice the price of coal per unit of energy. With that premium, consumers began to substitute coal for wood. Instead of a wood burning hearth in the middle of a large central room, houses were built with narrow fireplaces and chimneys to burn coal. The coal burning house was invented. It then paid to mine coal in Northumberland and ship it down the coast to London. The coal trade began. On the coal fields (in Newcastle, for instance), Britain had the cheapest energy in the world. Energy was more expensive on the European continent and particularly expensive in China (Figure 2).

The growth of trade and maufacturing led to increased demand for labour, and soon the British had the highest wages and living standards in the world

After the Black Death in the mid-fourteenth century, the standard of living of workers everywhere was high; they typically earned three or four times subsistence. In the ensuing centuries, population growth in Europe and Asia led to falling real wages, so that most workers ended up in the eighteenth century earning just enough to purchase the subsistence standard of living. The only countries to avoid that fate were Britain and the Low Countries. Their populations, in fact, grew more rapidly than those elsewhere, but this effect was offset by the booms in their economies due to international trade. Workers in London and Amsterdam did not, however, buy four times as much oatmeal as they needed for subsistence. Instead they upgraded their diets to beef, beer, and bread, while their counterparts in much of Europe and Asia subsisted on quasi-vegetarian diets of boiled grains with a few peas or lentils. Workers in northwestern Europe also had surplus income to buy exotic imports like tea and sugar as well as domestic manufactures like books, pictures, watches, and better clothes.

Thus it made sense to look for technology which could substitute capital (cheap energy) for labour; the demand for innovation led to supply.

High wages and cheap energy created a demand for technology that substituted capital and energy for labour. These incentives operated in many industries. Pottery, for instance, was manufactured in both England and China. The design of the kilns differed greatly, however. English kilns were cheap to build but very fuel inefficient; much of the energy from the burning fuel was lost through the vent hole on the top (Figure 4). The typical Chinese kiln, on the other hand, was more expensive to construct and, indeed, required more labour to operate. Figure 5 shows how heat was drawn into the chamber on the left and then forced out a hole at floor level into a second chamber. The process continued through many chambers until the air, by then denuded of most of its heat, finally exited up a chimney. In England, it was not worth spending a lot of money to build a thermally efficient kiln since energy was so cheap.

These technologies made sense only because energy was so cheap in Britain

The French government was very active in trying to promote advanced British technology in the eighteenth century, but its efforts failed since the British techniques were not cost effective at French prices. James Hargreaves perfected the spinning jenny, the first machine that successfully spun cotton, in the late 1760s. In 1771, John Holker, an English Jacobite who held the post of Inspector General of Foreign Manufactures, spirited a jenny into France. Demonstration models were made, but the jenny was only installed in large, state supported workshops. By the late 1780s, over 20,000 jennies were used in England and only 900 in France. Likewise, the French government sponsored the construction of an English style iron works (including four coke blast furnaces) in Burgundy in the 1780s. The raw materials were adequate, the enterprise was well capitalised, and they hired outstanding and experienced English engineers to oversee the project. Yet it was a commercial flop because coal was too expensive in France.

With time, energy efficiency improved to the point where others could adopt these technologies

The Industrial Revolution was confined to Britain for many years, because the technological breakthroughs were tailored to British conditions and could not be profitably deployed elsewhere. However, British engineers strove to improve efficiency and reduced the use of inputs that were cheap in Britain as well as those that were expensive. The consumption of coal in steam engines, for instance, was cut from 45 pounds per horse power-hour in the early eighteenth to only 2 pounds in the mid-nineteenth. The genius of British engineering undermined the country’s technological lead by creating ‘appropriate technology’ for the world at large. By the middle of the nineteenth century, advanced technology could be profitably used in countries like France with expensive energy and India with cheap labour. Once that happened, the Industrial Revolution went world wide.

Marvellous stuff: read the whole thing.