The pressure to produce more goods for a growing market and to reduce the labor costs of manufacturing was directly related to the first decisive breakthrough of the Industrial Revolution: the creation of the world’s first machine-powered factories in the British cotton textile industry. Technological innovations in the manufacture of cotton cloth led to a new system of production and social relationships.

The putting-out system that developed in the seventeenth-century textile industry involved a merchant who loaned, or “put out,” raw materials to cottage workers who processed the raw materials in their own homes and returned the finished products to the merchant. There was always a serious imbalance in textile production based on cottage industry: the work of four or five spinners was needed to keep one weaver steadily employed. During the eighteenth century the putting-out system grew across Europe, but most extensively in Britain. The growth of demand only increased pressures on the supply of thread.

Many a tinkering worker knew that devising a better spinning wheel promised rich rewards. It proved hard to spin the traditional raw materials — wool and flax — with improved machines, but cotton was different. Cotton textiles had first been imported into Britain from India by the East India Company. By 1760 a tiny domestic cotton industry had emerged in northern England based on imported raw materials, but it could not compete with cloth produced by workers in India and other parts of Asia. International competition thus drove English entrepreneurs to invent new technologies to bring down labor costs.

After many experiments over a generation, a carpenter and jack-of-all-trades, James Hargreaves, invented his cotton-spinning jenny about 1765. At almost the same moment, a barber-turned-manufacturer named Richard Arkwright invented (or possibly pirated) another kind of spinning machine, the water frame. These breakthroughs produced an explosion in the infant cotton textile industry in the 1780s. By 1790 the new machines were producing ten times as much cotton yarn as had been made in 1770.

Hargreaves’s spinning jenny was simple, inexpensive, and powered by hand. In early models from six to twenty-four spindles were mounted on a sliding carriage, and each spindle spun a fine, slender thread. Arkwright’s water frame employed a different principle. It quickly acquired a capacity of several hundred spindles driven by waterpower. The water frame required large specialized mills located beside rivers and factories that employed as many as one thousand workers from the very beginning. The major drawback of the water frame was that it could spin only a coarse, strong thread. Around 1790 a hybrid machine invented by Samuel Crompton proved capable of spinning very fine and strong thread in large quantities. Gradually, all cotton spinning was concentrated in large-scale factories.

These revolutionary developments in the textile industry allowed British manufacturers to produce vast quantities of both fine and coarse cotton thread. Families using cotton in cottage industry were freed from their constant search for adequate yarn from scattered part-time spinners, because all the thread needed could be spun in the cottage on the jenny or obtained from a nearby factory. The income of weavers, now hard-pressed to keep up with the spinners, rose markedly until about 1792. In response, mechanics and capitalists sought to invent a power loom to save on labor costs. This Edmund Cartwright achieved in 1785. But the power looms of the factories worked poorly at first and did not fully replace handlooms until the 1820s.

Working conditions in the early cotton factories were so poor that adult workers were reluctant to work in them. Factory owners often turned to orphans and abandoned children instead. By placing them in “apprenticeship” with factory owners, parish officers charged with caring for such children saved money. The owners gained workers over whom they exercised almost the authority of slave owners. Housed, fed, and locked up nightly in factory dormitories, the young workers labored thirteen or fourteen hours a day, six days a week, for little or no pay.