These Tory Stories podcasts aim to act as counters to the universal Whig version of history, observing history and the world from the viewpoint of an 18th Century Tory. Their focus will be on the Industrial Revolution and the Tory achievements of 1660-1832. Tory Story VI – Why the Stuart Restoration Gave Us the Industrial Revolution Britain's Industrial Revolution, lifting the living standards and transformed the lives of everybody today, and as I have discussed that process began in the late 1760s, in the early years of George III. By that stage, however, it was clear to everybody that Britain’s society and economy were different from all other countries and that revolutionary change might well happen there. Today I am going to look at the process of making Britain different from other West European countries, which mostly happened about a century earlier, with the Restoration of 1660 and the succeeding years until the 1688 Revolution. I want to discuss in this podcast what made the Restoration period so special and what changes made Britain’s path deviate from that of other countries. Three things had already begun to differentiate Britain before the English Civil War broke out in 1642: Francis Bacon’s Scientific Method, the beginnings in the Great Tew circle of what later became Toryism and the immense movement of peoples across the Atlantic, to colonize the American mainland and the West Indies. The Scientific Method was propounded by Bacon in his 1620 Novum Organum Scientiarum, although other thinkers in several countries had got close to it. It showed practical technologists how they could perfect their machines using an iterative method of practical experimentation refined by theoretical reasoning, leading to further practical experimentation. This powerful methodology produced more sustained advances than had previously been possible and provided an intellectual paradigm that would prove key to the Industrial Revolution. Western European countries other than Britain had equal access to Bacon’s treatise (which was written in Latin and published in the Netherlands). They also had access to the research other great scientists of the time, only a minority of whom were British. But it was Britain where the Scientific Method took hold most firmly, and where the Restoration’s Royal Society gave scientific progress a central place in society. The French, in contrast, were before 1789 a bunch of dilettante theoreticians, trying to get Leonhard Euler to figure out fluid mechanics so their Navy could move faster, ignoring the weed on the bottom of the ships. The Great Tew circle was a group of mostly young gentry intellectuals led by Lucius Cary, 2nd Viscount Falkland, who met at his house in Great Tew, Oxfordshire. It included several people who would be important after the Restoration, including Edward Hyde, later Earl of Clarendon and the architect of the Restoration settlement. They opposed the absolutist rule of Charles I and Strafford and the narrow quasi-Catholic Anglicanism of Archbishop William Laud but remained staunchly committed both to the Church of England and the King as leader of the country. They differed from time to time on religion and other matters, but consciously took the view of Cicero and Erasmus that such differences should not mar an underlying friendship and might lead to truth. Economics was peripheral to the Great Tew group (although their limited economic ideas were to have lasting influence), but they strongly opposed the royal monopolies that hampered the economy under the early Stuarts and supported freedom of domestic trade. Since Great Tew’s thinkers objected to the state-imposed restrictions of the Tudor and early Stuart monarchy, they were pro-trade, at least domestically, and wanted to remove the remaining feudal restrictions on property transfer. Clarendon would develop these ideas during his time as Lord Chancellor. Overall, Great Tew was the birthplace of what I have called the Oxfordshire School of Economic Thought, pre-dating Adam Smith in its enthusiasm for free markets but without his enthusiasm for unilateral tariff abolition – I shall come back later to that school’s leader, Sir Dudley North. The East India Company had already established a foothold in India before 1642, but Britain’s North American and Caribbean expansion was on an altogether different scale. Jamestown was colonized in 1607, with the addition of the first African slaves in 1619. Plymouth was colonized in 1620. More significantly, a very well-backed settlement was established at Boston in 1630, including the first American college, Harvard, founded in 1636. By 1650, the settler population of the future United States was over 50,000, including about 400 African-Americans in Virginia, of whom 18,000 were in Massachusetts and 19,000 were in Virginia. There was especially rapid expansion of the North American settler population in the 1640s, when disgruntled Cavaliers fled from the authoritarian Puritan regime emerging at home. The colonies’ main export was tobacco from Virginia -- with under 400 slaves there before 1650, the main workforce was indentured servants from British convicts and the impoverished. In the West Indies, Bermuda was colonized from 1612 and Barbados from 1627, exporting sugar from the 1640s. Again, the primary workforce was British and Irish indentured servants, although a British workforce did not do well in the Caribbean climate. With the Bahamas also colonized in the 1640s, the total population of the British West Indies was over 40,000 by 1650. Although the revenues from North America and the Caribbean were modest before 1650, the level of investment and manpower there was already huge. The growth in population of Britain’s transatlantic colonies to almost 100,000 gave them a potential importance far greater than contemporary British investment in India, and greater than the Dutch had achieved despite their huge investment in their East and West India Companies. Britain’s transatlantic population also dwarfed that of France, which in 1650 was only around 2,000 in Canada and 5,000 in the Caribbean. The Interregnum from 1649 opened up the British political system to new groups beyond the Court aristocracy. Ministers from working-class or middle-class backgrounds had existed before – Thomas Wolsey and Thomas Cromwell were both humbly born – but the political system’s openness to new talent became general, rather than limited to a monarch’s accidental favourites. The Interregnum also introduced Dutch ideas about secure property rights. Property rights are the central pillar of a free society and essential to a functioning economy – without them no fortune is safe, nothing can be built up except by the shabbiest short-term speculation, and long-term creation of a substantial business becomes impossible. Their importance had been recognized by Great Tew, but the Interregnum rulers had the first chance of putting this innovation into practice, albeit imperfectly. Property rights under the Tudors and early Stuarts were more secure than they had been – in the Middle Ages any local lord with a band of thugs could dispossess you – but they were still subject to the whims of the monarch – as the monastic orders discovered under Henry VIII. The Dutch beginning around 1580 were the first in Europe to discover that secure property rights made all kinds of new enterprises possible and made themselves rich with this discovery. In the Interregnum, Britain finally learned the same overwhelmingly important lesson, and after 1660 it was codified into law and became the centrepiece of British commercial wealth and eventually industrial growth. Thomas Newcomen could not have spent the ten years 1702-12 and a large portion of his income as an ironmonger in perfecting his steam engine, if he had not been confident that his ironmongery would be secure and his invention would be protected, albeit under Thomas Savery’s already existing patent. The other legacy of the Interregnum was the Navigation Act of 1651, some version of which was in force for the next 200 years, until final repeal in 1849. This followed the principles of Thomas Mun, of whom more below, by banning foreign ships from transporting goods from Asia, Africa or America to England or its colonies. Only ships with an English owner, master and a majority English crew were acceptable. It allowed European ships to ship their own country’s products to Britain but banned shipment to England in European ships of any goods from a third European country. It was aimed primarily at the Dutch and essentially banned Dutch ships from shipping goods to England, since there were few goods produced in the Netherlands that were competitive in the English market). In 1660, King Charles II returned, accompanied by Clarendon as Lord Chancellor In their first summer, the Convention Parliament passed legislation that would be absolutely crucial to the future Industrial Revolution: the Tenures Abolition Act, 1660. This abolished the Court of Wards and Liveries, abolished tenancies in capite and by knights-service, and purveyance. By doing so, it eliminated many feudal dues and service obligations that had been due to the Crown. Most important, it eliminated the feudal restrictions on land holding, making land an asset that could be freely bought, sold and mortgaged. Thereby, it freed up enormous amounts of capital that could be used to finance industrialization. By creating a free market in land, it gave Britain an advantage that other European countries all lacked, even a century later. The free market in land, when combined with the local country banks that grew up after 1750, played a crucial role in getting the first industrializations off the ground – the country banks could grant mortgages on the land of local farmers and gentry, thus making capital available for new industrial projects. Section 14 of this Act also imposed an excise duty on tea, coffee, sherbet and chocolate. By shifting state revenues to these new sources, Clarendon performed a vital service for the country’s fiscal future. Instead of being fixed like previous taxes, customs and excise duties on these newly consumed products (as well as on tobacco and sugar, produced in Britain’s American and West Indian colonies) increased with the increase in national wealth, trade, “luxury” and consumption of these expensive imported goods. These new revenues formed the basis of Britain’s taxation system until the 1840s; by 1792 customs and excise duties were producing 69% of Britain’s revenue of £18.7 million, itself some 15 times the revenue in 1661 (in pounds whose value had changed little). The Restoration saw a huge expansion of British trade, with corresponding benefit to the Exchequer. A newly aggressive approach to international trade was accompanied by a sharp expansion and professionalization of the Royal Navy led by Charles II and hist brother James. It was in this period that Britain became a leader in world trade, with military resources to back it. Sugar and tobacco were now produced in British colonies in the West Indies and America. Sugar used slave labour, because the West Indies climate was intolerable to the light-skinned British. However, tobacco used very few slaves until around 1690, relying instead on indentured servants shipped over from British jails. The revenue effect of these two products was huge. Tobacco was already producing excise duties of £100,000 a year, 10% of total budget revenues, by the time of Bacon’s Rebellion in 1676, while sugar went on growing through the 18th century so that its duties were a fifth of greatly enlarged total budget revenue by 1792. These new revenues made national budgeting easier; after the Great Stop of the Exchequer in 1672 the Treasury ran surpluses overall in the next 15 years of peace – only after 1688 with William III’s expensive wars did the National Debt become necessary. Coffee, tea and chocolate also began to be imported into Britain in quantity in the Restoration period. These products were not produced in British colonies (tea was Chinese, not Indian) and so did not produce huge excise revenues (the East India Company’s surplus of tea in 1773 was a cause of the notorious Boston Tea Party). However, coffee had a big cultural effect starting in the Restoration period, by spawning coffee houses where conversation and deal-making mixed. Jonathan’s, founded in 1680, became the Stock Exchange; Lloyd’s, founded in 1686 became the world’s insurance market and Garraway’s founded in 1657 introduced tea to Britain and then became a leading commodities exchange, holding the Hudson Bay Company’s first sale of furs in 1671. (The Hudson’s Bay Company, founded in 1670 by the King’s cousin Prince Rupert of the Rhine, at one point owned 1.5 million square miles of Canada, and still exists as a retail chain.) Next, the Restoration period marked the birth of banking. Before 1660, banking services had been carried out by two groups: goldsmiths and scriveners. Goldsmiths acted as depositories for gold and silver, forming it into tableware as desired and lending against gold or silver tableware and other artefacts deposited with them. Because they dealt in such luxury items, their clientele was largely limited to the very rich, especially Londoners. Scriveners were drafters (and, before the invention of printing, writers) of documents, with skill in legal wording but without the specialized legal practice of attorneys. They became specialists in land transactions and documents, having contacts at the Mayor’s Court in London where titles could be checked. They had a good period in the early 17th century because of a high volume of land transfers – the poet John Milton’s father was a scrivener and rich enough to keep Milton comfortably until his death – writing poems about Paradise was not very lucrative, earning Milton only £30 for several years’ work. Scriveners’ clients were mostly country landowners, but not the very rich – money transfers to London were sent with a sheep drover bringing his flock to London – sheep drovers, travelling in groups and with sheepdogs, were pretty safe from highwaymen. After 1660, both groups began to move into true banking, though goldsmiths were knocked back by the 1672 Great Stop of the Exchequer (scriveners, without many Court contacts, did not lend much to government). Goldsmith banks included Hoare’s founded in 1672, Child’s founded in 1671 and a little later Coutts, founded in 1692. The biggest scrivener bank was Clayton & Morris, which grew out of a scrivening business and became a bank from 1658, beginning by lending money to Royalist plotters, notably George Monck, who restored the King with his Coldstream Guards and became Duke of Albemarle. Clayton & Morris built a nationwide deposit and mortgage business, their largest client being the hugely landed but heavily indebted 2nd Duke of Buckingham. While Clayton & Morris did not survive Sir Robert Clayton’s death in 1707, with its mortgage lending, deposit taking and primarily rural gentry clientele it set the pattern for the country banks of the next century. The Restoration period was fertile with economists, a discipline that had few previous adherents. These anticipated much of Adam Smith’s thinking by a century. Thomas Mun’s mercantilist classic “England’s Treasure by Forraign Trade” is something of a cheat, having been written in the 1620s, but it was first published in 1664 and was highly influential on Restoration economic thinking. Mun was a Director of the early East India Company; his thesis was that trade should be organized to store up “Treasure” – gold and silver – thus making the state powerful and happy. This was a very sensible approach in the 17th century, when monarchs were chronically short of cash and the cost of warfare had escalated. It was realized through the trades in tobacco, sugar, coffee, tea and chocolate, as I mentioned before. Its success made the last years of the Restoration period fiscally much happier than the early years, let alone the cash-starved monarchy of James I and Charles I – it also provided the money to build up the Navy. Sir William Petty made his fortune surveying Ireland for the Cromwellian clearances, acquiring a substantial fortune thereby. After the Restoration, he helped found the Royal Society, then retired to his new Irish estates and pondered on economics. His “Political Arithmetic” written in 1676 but published in 1690, pioneered the collection of economic statistics, developing the first national income accounts. He also pioneered the doctrine of laissez-faire, postulating that the economy develops best when government meddles least. Sir Dudley North was the younger son of an impoverished Royalist peer, who spent 20 years in Turkey making a fortune as a merchant. He returned to England in 1680, entered Parliament as a Tory and was Chairman of Ways and Means in the 1685 Parliament, where he stamped out several frauds in the Revenue and warned against excessive money printing. His 1691 “Discourses upon Trade” published after his death but containing ideas from his period of political power, anticipated Smith and Cantillon in its enthusiasm for free trade and warned against government regulation: “Thus we may labour to hedge in the Cuckow, but in vain; for no People ever yet grew rich by Policies, but it is Peace, Industry and Freedom that brings Trade and Wealth, and nothing else.” Mun solved the principal problem of 17th century governments, but the future-oriented Petty and North pointed the economic way ahead clearly. Their insights set the policy framework that made the Industrial Revolution possible. The Restoration period also saw the birth of political parties. Their names emerged from the 1678-81 Exclusion Crisis, but their ideas predated that crisis. The Whig party was the natural home for supporters of the Commonwealth, though it was broader than that. Its primary base was the high landed aristocracy, who resented Royal power, together with the cosmopolitan City of London, home of the goldsmith-bankers who propped up the Whig aristocrats’ fortunes. Before 1800 the Whigs were highly protectionist, passing the Trade with France Act 1678, prohibiting such trade even though Britain was at peace with France (they were to continue such protectionism under Walpole). The “Whig Martyrs” of 1683, who attempted to assassinate the King, included one high aristocrat, William Russell whose brother I think became the Duke of Bedford and a Commonwealth-supporting agitator and polemicist, Algernon Sidney; they were sentenced to death by a jury chosen by Sir Dudley North. Since the goldsmith-bankers did not finance industry, the Whig party was devoted to wars, Imperial exploitation and slavery; they were generally opposed to the forces that produced the Industrial Revolution. To be fair, the Whig hostility to monarchy did produce one liberating result: the Habeas Corpus Act of 1678, observed more rigorously in its early years than it is today. The Tory party grew out of Clarendon’s Restoration Settlement; his second son Laurence Hyde, Earl of Rochester was its main founder. It represented the great rural mass of the country, devoted to the monarchy and the Church of England. Tories favoured free trade, being influenced by Sir Dudley North and also peace and low taxes, since their members paid most of the taxes without having the liquid means of the Whig high aristocracy or the “monied interest” of the City of London While the goldsmith-bankers were Whig, the scrivener-bankers and their eventual successors the country banks were mostly Tory, since their business was based on land and local knowledge, not money market dealing. With its openness to global trade and its localization, the Tory party was well suited to assist in the birth of industrialization, from the Devon ironmonger Thomas Newcomen onwards. The final innovation of the Restoration period and perhaps the most important for Britain’s long-term future, was the founding of the Royal Society in 1662. This propagated Bacon’s Scientific Method, making it a paradigm that innovators of whatever educational level could use in developing and improving their machines. In the Restoration period it also produced a stellar collection of scientists and other intellects: Robert Boyle, Christopher Wren, Robert Hooke, John Flamsteed, Edmond Halley and most important Isaac Newton, who between them revolutionized science and made Britain a leading scientific power for the next three centuries. The Society’s alumni’s scientific discoveries themselves stimulated industrialization; they also had an effect in industrialization’s more practical needs. For example, Thomas Tompion, a protégé of Hooke, was Britain’s leading clock maker of the period, greatly improving engineering tolerances in metal machinery, a skill that would be vital to future industrial progress. Intellectually, economically and politically, the Restoration period was essential to producing the Industrial Revolution. During this period that Britain became different from every other European economy, with better property rights, freer domestic trade and superior scientific education. These differences led to faster economic growth and eventually, to changes never before seen in the history of the world. Charles II and the Earl of Clarendon, the Restoration period’s founders, deserve our utmost gratitude and recognition. Thank you very much for listening. That is the end of Tory Stories Podcast No. 6