Chapter 32: Industrialization and the Wider World
This week, we’re stepping away from Europe and the United States to look at the impact of the Industrial Revolution on the rest of the world. Among other places, we’ll be visiting Mexico, Brazil, Egypt, India, China, and Australia.
Sources for this episode include:
“Australia to 1900.” Encyclopedia Britannica. Last updated October 2019. https://www.britannica.com/place/Australia/History
Beckert, Sven. Empire of Cotton: A Global History. Vintage. 2014.
Kripalani, Krishna. Dwarkanath Tagore: A Forgotten Pioneer. A Life. National Book Trust, India. 1981.
Stearns, Peter N. The Industrial Revolution in World History. 4th Edition. Westview Press. 2013.
Weightman, Gavin. The Industrial Revolutionaries: The Making of the Modern World, 1776-1914. Grove Press. 2007.
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On January 26th, 1788, a fleet of eleven ships made anchor in a small bay on the east coast of the Australian continent – there and then dubbed “Sydney Cove” after the British Home Secretary, Lord Sydney. The fleet included six ships carrying over 700 convicts and their children.
For years now, Great Britain had had a growing prison overcrowding problem. The newly discovered island continent offered some potential relief. Sparsely populated by indigenous peoples who had little contact with the wider world – and thus, little material development up to this point – Australia could be easily overrun by the British.
Much like with their colonies (some now former colonies) in North America, this colony of New South Wales was prime real estate for the British to send their undesirables. This would include thieves, fraudsters, and prostitutes, but more importantly in these industrial times, labor agitators and political revolutionaries – especially the unruly Irish.
Additional penal colonies would follow in the giant territory, as well as on the island of Tasmania, known then as Van Diemen’s Land. By 1830, there were about 58,000 convicts in Australia. And a free colony – South Australia – was established as well. By the end of the First Industrial Revolution, there were over 400,000 Europeans (or people of European descent) across the landmass. And from there, immigration really took off, with ocean-faring steamships and a Gold Rush in 1851.
In this way, the history of Australia differed greatly from the histories of other territories of the British Empire. It had, primarily, an import economy – in the sense that it was importing human capital. (Even if many of them were criminals.) And these settlers building the Australian economy had close ties of kinship with their rulers back in Europe.
The same could not be said of much of the world, almost all of which had now been discovered by the Western powers – Europe and the United States. The Industrial Revolution greatly accelerated the economic inequalities between the West and the Rest. Cheap manufactured goods – especially from Great Britain – flooded the global market, decimating proto-industrial outfits in Asia and Latin America. And the end of the transatlantic slave trade effectively ended all legal trade with sub-Saharan Africa, putting merchants there out of business and leaving rulers struggling to develop their young empires.
Concerted efforts were made to industrialize outside the West. Factories and infrastructure were built to accommodate modern economic activities.
But the West did not want to compete with the wider world in the lucrative industrial markets they had so recently developed. Instead, they sought to trade their manufactured goods for raw materials – finished products for agricultural and mining commodities. Using their economic (and sometimes military) power they effectively exploited non-Western societies, creating an imbalance that persists to this day.
This is the Industrial Revolutions
Chapter 32: Industrialization and the Wider World
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The British conquest of India was perhaps unlike any other imperial takeover in history. First, it was very gradual – it wasn’t the result of any single war or battle; it took place over more than a hundred years. Second, it was less a military conquest – at least in the traditional sense – and more an economic conquest.
It started in 1612, when the East India Company (or EIC, as I’ll be saying from here) established a trade relationship with the Mughal Empire. In the years that followed, they played the many regional governments of the subcontinent off each other and created outposts in Bengal, Madras, and Bombay. As we discussed in Chapter 19, the company effectively took over India by 1757, as a result of the Seven Years War.
From there, the EIC established a practice of taxation and trade. One guy from the company would show up and buy the goods you had to sell – usually cotton for the burgeoning textile mills, but sometimes saltpeter or spices or something. Okay great. Then another guy from the company would show up and collect your taxes for their military protection and administration of the territory. Ooookay, maybe not a problem if there was decent governance, but there wasn’t. So effectively the company was taking back the money it paid you before for your time, labor, and resources. Basically, they were robbing you.
And this activity totally thwarted economic incentives. Crops like cotton were more valuable to the EIC than food was. So, to pay those taxes, you needed to sell cotton. But with so many farmers doing that, it created a shortage of food cultivation, contributing to that Great Bengal Famine we also discussed in Chapter 19, which crippled the local economy.
All the while, new textile machinery and production techniques back in Britain had made traditional spinning and weaving obsolete. Indian merchants were put out of business. Unemployment soared and the peasant population became almost entirely dependent on the EIC. And slavery in the Americas made the cultivation of cotton much cheaper than it would have been otherwise. Prices of the global commodity fell, forcing Indian farmers to accept smaller and smaller payments in exchange for their cotton crops.
For most of history, India had been one of the most prosperous regions of the world. But thanks to the duel forces of European imperialism and the Industrial Revolution, it became one of the most impoverished. While Britain’s economy was modernizing, India’s was sent back in time, with more and more emphasis placed on its agricultural and mining outputs.
Still, efforts were made in India to ride Britain’s coattails toward progress and prosperity.
Dwarkanath Tagore was born into an ancient Brahmin family in 1794. His grandfather had made a small fortune as an EIC bureaucrat and built a significant estate on the outskirts of Calcutta in the 18th Century, where Dwarkanath was born and raised. He was sent to an English school where he was taught by a half-Indian, half-English master with strong liberal views.
During his 20s, Tagore worked as a translator of legal documents. Like others in his family, he also went into the service of the EIC as a tax collector, more or less controlling revenue collection across Bengal.
Between this and an enormous inheritance he received as a teenager, Tagore had significant capital to work with. He used it to start his own bank in 1829 and dig the first Indian coal mine in 1832. In 1834, he worked with British capitalists to set up a substantial holdings company that invested in Indian industrial pursuits – sugar refineries, indigo factories, and silk and cotton spinning mills (using textile equipment imported from Britain) – as well as shipping for said pursuits.
Tagore also used this fortune he was building to promote cultural preservation and collaboration with the British, supporting what became known as the Bengal Renaissance. He was, from the get-go, a believer in social reform, driven by a combination of his own Hindu faith, Unitarian ideas he was exposed to, and the philosophies of liberalism with which he identified. He was also friends with the great reformer Ram Mohan Roy, who advocated for the poor, displaced by British imperialism and industrialization.
But Tagore was a businessman, who believed in social reform through economic liberalism. And he appreciated British involvement in the subcontinent, believing they were India’s best chance for development. For this he was thought rather highly of back in Europe. Yet, at the end of the day, Britain had already seriously stunted growth in India.
They had no interest in allowing their colonies to develop into industrial competitors. The EIC took little interest in growing industry on the subcontinent and the British government passed a law requiring all textile goods sold in Britain to be produced in Britain. The colonies, including India, were meant to ship raw materials to the mother country. And the sad fact is that those exports did not create nearly as much value in India as manufactured goods created in Britain.
After Tagore died, his business empire declined significantly. Industrialization on the subcontinent would have to wait for the construction of rail infrastructure in the 1850s. And Indian manufacturing would not pick up in earnest until the Second Industrial Revolution.
Instead, India’s economy became more dependent on cash-crop exports – cotton, jute, indigo, sugar… and opium.
And with opium, Britain used India as a launching pad into that other great Asian civilization – China.
British tastes for silk, porcelain, and – most especially – tea had grown quite a bit since the age of empires began. Yet in resource-rich China, there was little China wanted in return. Thus, a serious trade imbalance lingered between Britain and China.
To correct it, the EIC used its trade dominance in India to buy opium for cheap, began illegally bringing it to China during the late 18th Century, and by the early 19th Century had successfully cultivated a market of opium addicts. Eventually, trade with China became more profitable to the company. 1,400 tons of opium were sold to China in 1838.
That year, the Chinese government started a serious crackdown. Users would be sentenced to death. A personal, moralist appeal was written to Queen Victoria (though she never received it) begging her to help stop the trade. Stockpiles of opium were seized at Chinese ports and destroyed. A lot of nitty gritty bureaucratic decisions followed until the British Parliament decided to go to war in 1840.
Over the next two years, the British used the advanced, industrial power of their military – including the new steamships able to quickly travel up the Pearl and Yangtze rivers – to win this First Opium War. An unequal treaty was signed, giving the British significant trading powers over China. They took Hong Kong Island as British territory, which it remained for 155 years.
A new European scramble to colonize the known world was underway.
When exactly the Middle Ages ended depends on who you ask. Many western Europeans might say 1492, when Columbus stumbled onto the Americas. For eastern Europeans though, the year was probably 1453, the year that Constantinople – the ancient city of Constantine and capital of the Byzantine Empire – fell to the Turks.
For more than 150 years leading up to that historic conquest, the Ottoman Empire had slowly grown out of a small territory of Anatolia, picking up military prowess. They overthrew the Byzantines and expanded into Bulgaria, Greece, and the Balkans. Over the next hundred years they conquered the rest of modern-day Turkey, Egypt, key parts of the Middle East and North Africa, and even parts of modern-day Russia and Ukraine.
By the end of the 17th Century, the Ottoman Empire was a super-power on three continents and its emperor was considered the global leader of Islam.
And then… stagnation. Despite the occasional war, the empire failed to expand any significant holdings. The prejudices held towards western Europeans and their Christianity since the Dark Ages persisted. While European kings developed more and more sophisticated technologies of war, the Ottomans continued to view them as generally ignorant and culturally inferior. Most technological and scientific developments coming out of the historic “backwater-of-the-world” were ignored.
This continued throughout the 18th Century until, in 1798, one of their most precious territories was conquered.
Republican France had become obsessed with emulating the ancient Romans. And one of their ideas to be more Roman was to invade the old breadbasket of the Roman Empire: Egypt.
Now, even though Egypt was a territory of the Ottoman Empire, governance there was generally the business of the Mamluks – descendants of slaves from Crusade times – who played the dominant civil and military role in Egyptian politics.
Under the command of General Napoleon Bonaparte, a French fleet landed in Alexandria and wrestled the country out of Mamluk control. Napoleon’s army, supplied at an (ahem) industrial scale, took just a month to make Egypt a French colony.
And like so many places in Europe, Egypt was forced to adopt Napoleon’s system of administration. And just like in so much of Europe, the Egyptians realized, “Okay, being conquered by a foreign aggressor aside, this administrative stuff really works!”
Now, it was only a few years before France had to give up Egypt and it return to the Ottomans. And when they did, the Ottomans wanted a more direct role in Egyptian governance. A power struggle ensued, and the guy who came out on top was a 36-year-old Albanian officer named Muhammad Ali Pasha.
Born in Macedonia in 1769, Muhammad Ali was the son of a tobacco and shipping merchant. He had rose to prominence for his abilities as a tax collector. And in 1805, he was appointed Wāli (or governor, basically) of Egypt. Muhammad Ali violently purged the country of the previously-ruling Mamluks while distancing himself from the imperial leadership in Constantinople.
The administration he built was inspired by and modeled on Napoleon’s. New kinds of taxes were raised and new kinds of schooling were established, along the lines of those practiced in Europe. He sponsored major irrigation projects and sought to re-create Britain’s agricultural productivity.
But most importantly, Muhammad Ali sought to bring the Industrial Revolution to Egypt. English technicians were hired to bring English machinery. They built modern textile and paper mills, sugar refineries, and arsenals.
And yet, wide-scale industrialization failed to take root. Unlike the British, who had been slowly developing their industrial capabilities for well over a century, all these new technologies and new systems of organizing production were too new for the Egyptians. They struggled to learn and adapt.
Muhammad Ali tried to force it too, stocking the factories with slaves from Sudan, orphans, and lowly-paid Cairo workers coerced into the mills by armed soldiers. Laborers were abused if they didn’t work hard enough. But still, Egyptian factories could not compete with those in Britain, which were exporting finished goods across the world at lower prices than anyone else could match.
Instead, it was the agricultural modernization that took off. But much like in India, this had drawbacks. Landowners were incentivized to produce cash-crops like cotton and sugar, especially to keep up with Muhammad Ali’s taxes, which he needed for military modernization.
This enriched Egyptian landlords and merchants but left few prospects for peasants to advance economically. And with basically zero growth in manufacturing, Egypt became more dependent on imports in a European-dominated global economy.
Yet, Muhammad Ali’s efforts did inspire other attempts at industrialization in the Ottoman Empire. Additional British equipment and expertise was brought in across the empire to build more factories, and iron and coal mining were encouraged. Better systems of communication were set up and shipbuilding became a major industry.
Still, the Egyptian innovation most replicated was the cash-crop system, and the same problems that developed in Egyptian agriculture went on to happen in other territories. Manufacturing was sparse and the Ottoman Empire began a century-long decline in relation to its industrializing rivals. It wasn’t long before Europe began establishing colonies in Ottoman territories, including Egypt again.
But that’s for another time. (In fact, its for another Industrial Revolution).
For now, let’s remain in the first Industrial Revolution. We’ve talked about some of Europe’s current colonies and some of Europe’s future colonies. Let’s turn our attention now to some of Europe’s recently former colonies.
In addition to Napoleon’s escapades in the Ottoman Empire, the French chaos of 1789-1815 also affected neighboring Spain. With their king overthrown and replaced by Napoleon’s brother, Spain’s colonies in the New World took this as an opportunity to follow the United States and Haiti into independence. Even after the Bourbons were restored to the Spanish throne, these colonies continued to fight for the nations they hoped to build, and the Portuguese colony of Brazil would soon follow.
Now, the Spanish and Portuguese had not really jumped into the Industrial Revolution like their neighbors had, and their colonies were not too touched by it. But now that they were free, many individuals in the former colonies wanted to change that.
Even before independence, Brazil had started importing British steam engines to set up modern factories – mostly for sugar refineries and coffee processing plants. By the end of the first Industrial Revolution, they had 144 steam engines. A few cotton textile mills were also set up.
Cuba built the first rail line in Latin America as early as 1838. Paraguay started building steamships and iron foundries. Chile had established several steam-powered flour mills, sawmills, distilleries, and coal mines.
Mining was an especially enticing opportunity in South America. In 1812, two Peruvian businessmen formed a partnership with a Swiss watchmaker named Francisco Uville. Uville went to England looking for new technologies to bring to Peru. What he found were the new high-pressure steam engines built by our old friend Richard Trevithick. He convinced Trevithick to come to Peru with him and invest in some silver mines. Now this ended up being among the many bad decisions Trevithick made in his life, but it was also typical of an Englishman. Having developed significant expertise in mining during the Industrial Revolution, a great many British subjects left for Latin America seeking riches in the mining industry – particularly for precious metals.
Americans from the United States were also drawn to Latin American industrialization. In 1835, a 23-year-old business manager at a New York City iron foundry set sail for Mexico’s Yucatan Peninsula. His name was John Masterson Burke, and he was brought by a pair of investors – one, a former governor of the area named Don Pedro Baranda, the other a Scot named John MacGregor – to run Mexico’s first steam-powered cotton mill.
Burke brought in the machinery needed, along with four engineers (two of whom promptly died of malaria in the unforgiving tropics). But though a bit far inland in the tropical wilderness, at a time when there wasn’t a railroad in the area, this factory at Valladolid was seen as quite the success story. It employed 117 local workers as well as several Mayan families who supplied wood to fuel the engines and planted cotton for the mill in their corn fields. Together, they produced nearly 400,000 yards of cloth between 1835 and 1844.
But this mill was in no way able to compete with the productivity now seen in the textile mills surrounding Manchester. And therein lies that common difficulty the wider world had with the Industrial Revolution – competing with British prices in the global marketplace.
Even with high textile tariffs in Mexico, the Mexican mills couldn’t meet the needs of the entire market. At its 19th Century peak, the Mexican textile industry could accommodate 60% of national demand. And most other Latin American countries (recently liberated by liberal revolutionaries) liberalized trade after independence. As a result, machine-made textile imports from the UK crushed the region’s proto-industrial manufacturers. Brazil’s textile mills could only meet 10% of national demand – the rest had to be imported. Many Brazilian mills shut down not long after they opened. Tens of thousands of textile workers (mostly urban women) were thrown out of their jobs across Latin America.
Other problems plagued Latin America’s efforts to industrialize. Among them were the frequent wars that broke out among the newly independent countries, all vying for different territorial control of important resources, the natural ownerships of which were made vague by the old European colonial maps. These attempts at political consolidation (or sovereignty) took precedent over industrialization and were generally disastrous for the burgeoning economies.
Another significant problem was the lack of necessity to industrialize. For laborers in Great Britain, the 18th Century had upended traditional economic opportunities. The population was too large for everyone to find farm work, and the farms were largely producing wool and basic food staples. In Latin America, populations were still tiny, and they had an incredible amount of land at their disposal. And most of these countries were either partially or entirely in tropical climates, which meant they could grow the big cash-crops – cotton, sugarcane, coffee, and (before long) vegetable oil and rubber.
Those Latin American workers who did enter factories soon discovered what the first generation of British industrial workers had discovered – that factory work sucked. In fact, it was probably a lot worse there than in Britain. I mean, can you even imagine working in a 19th Century Brazilian textile mill, with cotton debris floating everywhere and no air conditioning?
And with plenty of options available to them, these workers opted to get out. Most went back to the fields. The few who still kept entering the factories usually did so on a strictly temporary basis, to send a little money home to their families on the farms.
But changes to the agricultural system would come too. Latin American landlords (and the liberal governments they supported) gradually pried away lands from traditional indigenous and mestizo villagers. Just like Muhammad Ali did in Egypt, they replaced the existing small farms with large-scale, plantation-style operations to cultivate cash-crops. Then they attempted to change the work habits of the laborers – to stop all the holidays and drinking and lax views of time management – just like the British elite did with their laborers in the 18th Century.
The main way Latin America industrialized was in terms of transportation: Bringing steamships to ports and building railroads across the interior.
Now, the governments of this time probably thought themselves wise to develop this infrastructure – I mean, it was going to be vital for their growing export sector. Latin American governments and businessmen borrowed heavily from bankers in Europe and the United States to build the ports and rail lines. But after the 1825 sovereign debt crisis in Latin America, which we touched on in Chapter 27, the interest rates the banks charged were a bit high.
And, really, the money to be made from the export economies wasn’t all that great. The cash-crops and mineral resources being exported to Europe and the United States were not on par with the manufactured goods being imported from Europe and the United States. So not only was there a trade imbalance, the countries with the trade surpluses were also charging interest to the countries with the trade deficits. And so began the long and tragic cycle of Latin American indebtedness to the West.
Growing rich off trading and lending to Latin America, the western capitalists went a step further and started buying up Latin American property outright. By the late 19th Century, US entrepreneurs owned most mines, railroads, and banks in Colombia and Chile.
Westerners owned much of Latin America, exported its wealth, and pocketed the profits. It wasn’t all that different from what the East India Company was doing on the other side of the planet. If there is one word to sum up the first Industrial Revolution in the wider world it’s “exploitation”. It’s how the West got rich and Rest got poor. It’s how Great Britain built its great Empire.
Next, we’re going to turn our attention to that other newly independent country of the Americas – the United States of America – how it industrialized, and how it got lumped in with the West rather than the Rest… next week, on the Industrial Revolutions.
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