There were two world-changing events stirring in the confused British politics of the 1760s and 1770s. One of them, led by Edmund Burke and the Founding Fathers and endlessly studied, ended in the American Revolution and a new and eventually powerful country. The other, simultaneous and much less studied, led to the Industrial Revolution, a development that has had an even greater positive effect on the future of humanity as a whole. This column will focus on the politics of the latter.

One illustration of the two world-changing events running in parallel came in the parliamentary session of 1766. The Marquis of Rockingham’s shaky Whig government on March 18 gained popular support among the Whig-dominated media and the Boston mob by repealing the previous year’s Stamp Act, accompanying the repeal with a great deal of inflammatory rhetoric that made it more difficult for the North American moderates to preserve a connection with England. Any goodwill in North America from this was lost by their simultaneous passage of a Declaratory Act asserting Parliament’s right to tax the colonies. Since a similar Whig Declaratory Act of 1719 had been used to oppress the Irish Catholics, this was more inflammatory than it appeared. The combination of the two Acts made relations with the American colonies irreparable in the long-term, given the usual frictions involved in transatlantic discussions.

On May 14, even more important legislation for the world’s future was passed, authorizing two canals, the Trent and Mersey Canal and the Staffordshire and Worcestershire Canal. As I shall explain below, this is as good an inception date as any for the Industrial Revolution. The legislation was sponsored by Granville Leveson-Gower, 2nd Earl Gower, with the assistance of his agent Thomas Gilbert, who had recently through Gower’s patronage become MP for the Staffordshire town of Newcastle-under-Lyme, near both projected canals.

It is a tribute to Gower’s political heft that he was able to get the bill passed during a government controlled by the Rockingham Whigs, his political opponents (Gilbert had voted against the repeal of the Stamp Act in March). However, Rockingham led a weak government, that was to fall in late July – he had been appointed by George III the previous year, in a reversion to his grandfather’s favorite Whig Oligarchy, and the King was already looking for potential replacements. If Rockingham could attract Gower into his government (as did his successor the Duke of Grafton a year later) he could build his own strength and reduce that of his opponents – hence not opposing Gower’s canal project was a move in this direction. Gower was a fairly strong Tory and would later be a member of North’s and Pitt’s Cabinets but making nice with Rockingham was a price worth paying to get his canals through Parliament.

The two canals were part of a master plan developed by James Brindley, Britain’s leading canal engineer, who had devised a “Grand Cross” linkage of the Thames, Severn, Trent and Mersey rivers that when completed would open up canal and ocean transportation to the entire inland area of the English Midlands. Canals had a huge cost advantage over roads, far greater than the early steam engines would have over water power. A canal boat with one horse and two men could transport 50 tons of goods, about 25 times as much as a cart on the primitive roads of the day. These first two canals completed three legs of Brindley’s “Grand Cross” linking the Severn, Trent and Mersey rivers; only the Thames was missing, to be connected by the Oxford Canal, also planned by Brindley and authorized by Parliament in 1769, although completed only in 1790. The Staffordshire and Worcestershire Canal was completed in 1772, before Brindley died; the Trent and Mersey in 1777, although the link from Josiah Wedgwood’s new “Etruria” works to the Trent was opened earlier, in 1771 (the western part of the canal required digging the 2,880-yard Harecastle Tunnel; given 18th century digging technology, that delayed matters.)

The industrializing effect of the new canals was immense and immediate because they made carriage of bulky goods so much cheaper; the Bridgewater Canal a few years earlier had halved the price of coal in Manchester, while the Birmingham Canal, linking to the Staffordshire and Worcestershire, did the same for Birmingham. Without those price reductions, James Watt’s early steam engines, which used huge amounts of coal, would have remained cost-uncompetitive with water power, and their development would have been seriously retarded. Moreover, canal transport hugely reduced the breakages of Wedgwood’s china tableware and ornaments compared with road transport – at last he could get supplies reliably to his London showroom in one piece. The canals alone caused the beginning of Walt Rostow’s economic “takeoff” which should be dated some 15 years earlier than the conventional date of the mid-1780s.

The second key Parliamentary legislation for the Industrial Revolution came eight years later, in 1774. Again, it coincided with major developments in Parliament’s relations with the American colonies, in this case passing the “Intolerable Acts” following the terrorist outrage of the Boston Tea Party. Those Acts made the mistake of punishing the entire population of Boston for the acts of a few; they also included the Quebec Act, which outraged the bigoted New England Puritans by granting a measure of self-government for Quebec’s French Catholic population. Whatever their merits, they precipitated the slide into war — the first Continental Congress met in September 1774, in an atmosphere of outrage over this legislation.

Gower was Lord President of the Council in Lord North’s predominantly Tory government, who believed in a firm hand with the Continental Congress, whose deliberations he would describe as “the language of a rabble, and a few factious leaders.” Nevertheless, his primary interest was the nascent force of industrialization – he had in 1764 established a partnership “Earl Gower and Company” to develop the coal and iron ore resources on his Staffordshire estates. Now he stepped in to help a local entrepreneur Richard Arkwright, who had established a water-powered textile mill at Cromford but found himself restricted from entering the most attractive sector of the textile market.

As this column discussed a few weeks ago, the Woolen etc. Manufactures Act of 1720, passed early in the Whigs’ interminable period of power, had not only prohibited the import of Indian patterned “calicoes” – cotton textiles – it had also prohibited the manufacture of those textiles domestically (the Act had been a payoff to the domestic woolen industry). Cotton textile manufacturers like Arkwright could only manufacture plain fabrics, much less attractive to consumers, especially women. With his new “spinning frame” machines, Arkwright was confident he could hold off Indian competition, but he wanted the chance to enter the patterned fabric sector, where the sales and profit potential was greatest.

Gower had no objection in principle – Gower himself and the rest of North’s Tory government were far more aware than the Whigs of 1720 that regulations of this kind damaged economic progress, both domestically and in India, for which the East India Company, bailed out by the government the previous year, bore an increasing responsibility. Accordingly, with his support, the government backed the Duty on Cotton Stuffs etc. Act 1774, which removed the prohibitions on both imports and domestic manufacture of cotton patterned textiles.

It was the key legislation for the takeoff, not only of Arkwright’s business, but that of the British textile industry as a whole – Arkwright himself died a very rich man, but several imitators died even richer. The textile industry was entirely water-powered until around 1790 but given Arkwright’s improvements in textile machinery and those of Samuel Crompton and Edward Cartwright in the following decade, the British textile industry was already far more cost-competitive than that of India or anywhere else. When trade to France was opened by the Eden Treaty of 1786, British textile imports drove French textile manufacturers out of business – yet another significant cause of the 1789 Revolution, as well as of the bitter anti-British feeling that accompanied it.

As in 1766, this Parliamentary legislation of 1774 galvanized into exponential growth the first truly dynamic British industrial sector and thereby changed the world. Gower’s attitudes to the American colonies may have been retrograde, but he had a sound instinctive understanding of industrial development (and profited from it – he was the fifth richest man in Britain by the time he died in 1803). Yet, despite Gower’s 27 years in Cabinet and four invitations to become prime minister, all of which he declined, I believe there to be no biography of him in existence – one is forced to wonder what the hell British historians have been playing at for the last 200 years?

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)