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Richard Arkwright, entrepreneur: 1767-1792

By the 1780s, on the eve of the French Revolution, Britain is a society profoundly changed from a century earlier. The form of monarchy characterized by the Stuarts, and still practised by the Bourbon rulers in France, has given way to different structures. There is now political power in middle-class hands. And new opportunities are available in the developing Industrial Revolution.

There is no more striking example of this flexible society, in which merit can find its own rewards, than the career of Richard Arkwright. Born the youngest of seven children of a barber and wigmaker, he dies sixty years later immensely wealthy and a knight of the realm.

Arkwright begins his career travelling the country in his father's trade, buying hair for wigs and dying it by his own secret process. But soon he becomes interested in spinning. In 1767 he begins to construct a spinning machine. In 1769 he patents it and sets up a mill in Nottingham where his machine is worked by a horse.

Two years later Arkwright takes several steps of great significance. He raises capital to build an entirely new mill at Cromford, on the river Derwent in Derbyshire. He successfully adapts his spinning machine, making it work by the much greater power of the river and a mill wheel. And he builds cottages to house workers in the immediate vicinity.

Arkwright thus creates the factory environment. His industrial workers are a community centred on the factory - in strong contrast to the traditional working life of peasants, dependent on the fields and the seasons.

Within the factory, Arkwright's employees specialize in different tasks, each providing his or her own particular service for the relentlessly demanding machines. Discipline is essential if this system is to work, for the machines cannot be left untended. But it is no longer the variable discipline of sunrise and harvest. It is the inflexible and potentially harsh pressure of clock and overseer.

Arkwright's factory system works brilliantly - and in its early small-scale river-based form the environment of industry has considerable picturesque appeal, as Arkwright's surviving mill at Cromford still demonstrates.

Arkwright builds cotton mills on suitable rivers elsewhere in the country, as far away as Scotland. By 1782, just fifteen years after his first attempt to build a spinning machine, the great entrepreneur has a capital of some 200,000 and is employing 5000 workers. And British society welcomes this rapidly self-made man. In 1786 he receives a knighthood. In the following year he is appointed High Sheriff of Derbyshire.

Derby's great painter of the period, Joseph Wright, records features of this impressive story. In 1783 he paints a view of Cromford Mill by moonlight, contributing to a growing perception that industry and its processes provide a romantic subject. In 1789 Wright provides a portrait of the great industrialist. He sits alone, appearing prosperous but slightly gross, in a room decorated only by a model of his spinning machine.

In the following year Joseph Wright paints Arkwright's son, daughter-in-law and grandchildren in three group portraits. They look like the most elegant and refined of aristocrats, to the manner born - compelling evidence of the new flexibility of English society when William Pitt becomes prime minister.

Funds and tariffs: 1784-1786

If British industry is prospering when Pitt the Younger becomes prime minister in 1784, the same cannot be said of the national finances. After the expense of the war against the American colonies, the national debt stands at the extraordinarily high figure (in the currency of the time) of 250 million.

Pitt sets to work with a series of well-judged and effective measures of good housekeeping. He greatly simplifies the tax system, introducing new taxes in some areas but greatly reducing them in others while taking strong measures to end smuggling. (It is he who introduces income tax for the first time in England, at 10% on incomes over 200, but only as a temporary measure from 1799 to pay for the war against France.)

Pitt also rationalizes the administrative system of the exchequer. Tax revenues and government expenditure have until now flowed in and out of a confusing multiplicity of funds. He replaces this with a single 'consolidated fund' which introduces an element of clarity to the government's affairs (and which remains Treasury practice two centuries later).

The efficiency of Pitt's measures enables him to introduce another kind of fund to mend the nation's finances. This is the 'sinking fund' established in 1786. From that year he puts aside an annual 1 million of government money to form a fund, growing at compound interest, which can be used as a buffer against national debt.

In his policy on trade Pitt is up to date in following the ideas of Adam Smith. Rejecting the protectionism of mercantile economics, he attempts in 1785 to bring Ireland into a free-trade commercial union with Britain. In the following year he negotiates a treaty with France which gives both nations free access to each other's ports and a low tariff rate, instead of the restrictive measures which have prevailed during a century of intermittent warfare.

Both schemes are frustrated: the one with France because there is soon yet another war; and the Irish attempt because of the intractable complexity of Anglo-Irish relations.

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