An oil well. Photo: John Hill.
1757 – The first modern canal, The Sankey Brook Navigation, is opened. The canal connects St Helen’s with the River Mersey.
1769 – James Watt patents the first steam engine.
1771 – The first modern industrial factory, a water powered cloth mill, is opened by Richard Arkwright at Cromford in Derbyshire. As rate at which land is enclosed by landowners increases, increasing numbers of people leave their villages to find work in the new factories.
1773 – A group of London stockbrokers erect their own building in Sweeting’s Lane. They call it ‘The Stock Exchange’. In Boston, protesters throw a cargo of tea overboard in protest against import duties forced on the American colonists by the British government.
1776 – Adam Smith publishes his Inquiry into the Nature and Causes of the Wealth of Nations. In it, he suggests that labour rather than land is the source of a nation’s wealth. He also suggests that it is advantageous for countries to protect their markets by placing restrictions on foreign imports. He also argues against government regulation of markets and argued instead for free markets. In America, the Continental Congress issues the Declaration of Independence and declares both political and economic independence from Britain. The colonies’ ports open to free trade.
1781 – James Watt patents a steam engine with a continuous rotary motion.
1783 – The end of the American War of Independence. The United States of America is officially recognised as an independent nation.
1785 – Edmund Cartwright patents the power loom, which is the first loom to be powered by steam.
1792 – In New York, 24 stockbrokers sign an agreement under a buttonwood tree on Wall Street. The agreement states that they agree only to deal with each other and to charge a commission of 0.25%. They rent a room, located at 40 Wall Street.
1793 – Samuel Slater opens the first factory in America. The factory is located in Pawtucket, Rhode Island and produces textiles.
1794 – In America, Eli Whitney invents the cotton gin, which increases the efficiency of cotton production turning cotton into a highly profitable product.
1798 – Eli Whitney invents a way of producing machine made interchangeable parts for muskets.
1799-1800 – The Combination Acts prohibit the formation of trade unions and make strike action illegal in Britain.
1801 – The London Stock Exchange becomes a regulated organisation.
1811 – The Luddite movement is formed. Groups of artisans attacked factories, destroying the machinery that they blamed for making their skills obsolete. In America, construction begins on the first federal highway, The Cumberland Road, which connects the Potomac and Ohio rivers.
1812 – The Frame Breaking Act makes machine breaking a crime that is punishable by death.
1815 – The Corn Laws are passed, which impose a tariff on imported corn. They are introduced in order to protect the domestic market.
1817 – New York stockbrokers draft a formal constitution to replace the ‘Buttonwood Agreement’ forming the New York Stock and Exchange Board.
1824 – The Combination Acts are repealed.
1825 – The first public railway, The Stockton to Darlington Railway, is opened in North-East England. The carriages are pulled by Robert Stephenson’s engine, Locomotion, which he designs especially for the railway.
1832 – The Reform Act extends the right to vote to all male holders of property worth above £10. In America, Samuel Morse submits a patent application for a Telegraph machine.
1833 – The first Factory Act is passed to regulate the conditions under which factory employees work. Children under the age of nine are banned from working in factories and the working is limited to 12 hours for workers under the age of 18. The first system of government inspections is set up in an attempt to enforce the act.
1843 – The Economist is founded by the business and banker James Wilson. It publishes its first edition in September. It campaigns for freer trade and less government regulation of economic markets. It’s first campaign is against the Corn Laws.
1844 – The bank act makes 1844 Bank Act, made the Bank of England the only authorised issuer of bank notes and creates a Gold standard for British currency. This means that all bank notes are convertible into predetermined, fixed amounts of gold. The first message is sent via Telegraph.
1845 – Friedrich Engels publishes The Condition of the Working Class in England, in which he chronicles the appalling working and living conditions of the working classes in the booming industrial town of Manchester.
1846 – The Corn Laws are repealed. Their repeal ushered in an era of freer trade. The tariffs that had previously been leveed on many foreign goods were gradually lifted. The government moved towards a more laissez-faire attitude. Government regulation of the market became increasingly reduced.
1848 – Friedrich Engels and Karl Marx publish The Communist Manifesto, which they encourage the working classes to rise up and take control of the factories in which they work.
1860 – The Cobden-Chevalier Treaty is signed enabling freer trade between France and Britain.
1861 – The American Civil War begins.
1863 – The New York Stock and Exchange Board changes its name to the New York Stock Exchange.
1864 – The Chicago Board of Trade lists the first ever standardised exchanged traded forward contracts, which are effectively a futures contracts.
1865 – The Yankees win the American Civil War. Slavery is prohibited in the United States of America. The New York Stock Exchange moves to Broad Street.
1867 – Karl Marx publishes the first volume of Capital. In it he argues that capitalism is an inherently flawed system that always leads to the suffering of the labouring classes, because capitalists profit by paying workers as little as possible to make their products. They then sell the products at a much higher price. The worker never receives the full value of the work that she has done. In contrast, the capitalist makes money without doing any actual work.
1868 – The formation of the British Trade Union Congress.
1870 – American John D. Rockafeller founds Standard Oil.
1871 – Trade unions are officially legalised in Britain.
1874 – Alexander Graham Bell patents the first telephone.
1884 – The foundation of The Fabian society whose aim is, as George Bernard Shaw articulates it, an end to a system that divides society ‘into hostile classes with large appetites and no dinners at one extreme and large dinners and no appetites at the other.’
1886 – German Karl Benz patents the first automobile.
1892 – Engels writes that the condition of the working class in Britain is greatly improved. He speaks optimistically about the future of capitalism: ‘the larger the scale on which capitalistic production is carried on, the less can it support the petty devices of swindling and pilfering that characterize its early stages.’
1900 – The Labour Party is formed by Keir Hardie, with support of The Fabian Society. Hardie manages to persuade the Trade Union Congress to switch their allegiance from The Liberal Party to his new party.
1901 – U.S Steel is created by J.P. Morgan and Elbert Gary from a merger between Federal Steel, The Carnegie Steel Company and the National Steel Company. It is valued at $1.4 billion, making it the world’s first billion dollar company. Such mergers and acquisitions become a popular way of consolidating the power of a company and ensuring its domination of the market.
1903 – New York Stock Exchange moves to its current location at 18 Broad Street. Its new neoclassical building is designed by architect George B. Post.
1904 – Standard Oil controls 91% of oil production and 85% of final sales in the United States.
1905 – In Germany, Max Weber publishes The Protestant Ethic and the Spirit of Capitalism, in which he argues that capitalism evolved out of Calvinsim. The spirit of modern capitalism is rooted in a Protestant frame of mind that ‘strives systematically and rationally in a calling for legitimate profit’ in accordance with the virtues of punctuality, industry and frugality and honesty’.
1908 – The Model T Ford goes on sale in America. It is the first automobile that is affordable enough to be purchased by the middle classes.
1911 – The United States Supreme Court rules that Standard Oil is an illegal monopoly and forces the company to be split into 33 smaller companies. As a result, Rockafeller makes a fortune and becomes the richest man in the world.
1913 – Henry Ford introduces an assembly line form of production into his Model T Ford factory. A conveyer belt moved the work to the worker, rather than requiring the worker to move to the work. This speeded up production.
1914 – Henry Ford increases his worker’s salaries and reduces their working hours to 8 hours a day, 5 days a week. He argues that in order to develop a market for mass produced goods, workers must be paid enough to be able to afford to buy mass produced goods and have enough leisure time to enjoy them in. Mass production requires a mass market.
1918 - The Labour Party adopts clause IV as part of its constitution, which states that the party’s aim is to: ‘To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.’
1929 – For nine years the price of stock on the New York Stock Exchange increases steadily. Much of this investment is fuelled by borrowing. In September 1929, economist Irving Fisher declares that ‘Stock prices have reached what looks like a permanently high plateau.’ Three days later, the New York Stock market abruptly fell. Wall Street is shaken. On September 20, the London Stock Exchange crashes when top investor Clarice Hatry is jailed for fraud. The New York Stock Exchange becomes increasingly unstable, fuelled by a sudden in the price of wheat. Between Thursday 24 October, the Dow Jones drops by 11% fuelled by panic and chaos on the trading floor. Leading Wall Street bankers met to try and find a way to halt the slide in the market, but to no avail On Monday 28 and Tuesday 29 October, the Dow Jones continued to drop dramatically losing over $30 billion dollars of value. The value of shares fell across all global markets, with the exception of Japan. After a decade of prosperity, America is plunged into the Great Depression.
1933 – The Glass-Steagall Act separates commercial and investment banking in America.
1936 – In Britain, John Maynard Keynes publishes The General Theory of Employment, Interest and Money, in which he outlines a new approach to lifting an economy out of recession. He argues instead of instigating polices that ultimately lower consumer spending, governments should instigate policies to increase it. For example, a government could invest in infrastructure projects, such as road building, which would create more jobs and lower unemployment. Increased spending would create an increased demand for commodities so lifting the economy out of recession.
1938 – In America, the Federal National Mortgage Association, more popularly know as Fannie Mae, is founded. It’s role is to securitise mortgages so that mortgage lenders can reinvest their assets so allowing them to lend to more people. Through its establishment, the government aimed to increase home ownership and the availability of affordable housing.
1943 – The first programmable electronic computer is invented in Britain by Tommy Flowers. It is used to help solve encrypted German messages.
1944 – Bretton Woods Agreement creates fixed exchange rates between the world’s major currencies. The value of each currency is fixed in relation to the dollar and whose value in turn is fixed in relation to gold. The IMF (International Monetary Found) is created to foster international economic co-operation, international trade, employment, and exchange rate stability. The foundation of the World Bank, whose aim is to reduce global poverty by providing loans to developing nations. Loans from the World Bank help to fuel reconstruction in the aftermath of the Second World War. The Bretton Woods Agreement helps to stabilises the global financial system for around twenty years.
1948 – The creation of the British Welfare State, which aims to provide adequate income to people, adequate health care, adequate education, adequate housing and adequate employment for all citizens, in return for the payment of a National Insurance contribution.
1960 – The foundation of OPEC (The Organisation of Petroleum Exporting Countries).
1962 – American economist Milton Friedman publishes Capitalism and Freedom, in which he argues that political freedom and economic freedom are intrinsically linked. He argues for a floating exchange rate system and flat rates of income tax. He argues and against government regulation of the workplace and intervention in financial markets. He claims that government welfare systems are bad for the poor. He believes most of the best aspects of American society are born our of the free operation of the market.
1965 – Diversification becomes a popular form of merger. Instead of merging with companies within the same industry, companies instead merge with or acquire companies in a variety of different industries as way of hedging their investments and reducing risk. In Britain, the politician Iain McLeod coins the term ‘stagflation’ to describe a situation in which inflation and unemployment are high and economic growth is low. It is problematic to resolve stagflation as any measures you take to lower inflation are likely to cause higher unemployment and vice versa.
1968 – Fannie Mae is privatised.
1969 – American businessman Victor Posner takes over the Sharon Steel Corporation against the wishes of its board. He milks the company’s assets using it as source of cash to fund other investments and eventually driving the company into bankruptcy in 1987. This is one of the earliest examples of a hostile takeover.
1970 The Federal Home Loan Mortgage Corporation (Freddie Mac) is established to provide a competitor for Fannie Mae and end the company’s monopoly on the securitised mortgage market.