Quite when Arkwright’s interest in cotton-spinning machinery began is difficult to date, but his interest was by no means unique; the Enlightenment in Britain was a time of great scientific and technical advances, particularly in mechanics, and interest was widespread. From the 1740s onward there had been a number of experiments with cotton-spinning machines. In 1767 Arkwright teamed up with John Kay, a clockmaker from Bury who already had some patents to his name. According to most accounts, Arkwright had the idea for a spinning frame, a powered machine which would spin cotton using a system of rollers. Lacking the technical expertise to put the idea into execution, he called on Kay’s skills to build the first working models. However, Kay had also worked with the inventor Thomas Highs, who later claimed that Kay and Arkwright had stolen his own ideas. Accusations of theft of intellectual property dogged Arkwright for the rest of his life.

Regardless of whether the original idea was Arkwright’s, there can be no doubt that he exploited it with great ability. In 1768 he moved from Preston to Nottingham, then a centre of cotton manufacturing, and with two partners, David Thornley and John Smalley, set up a horse-powered mill for spinning cotton yarn. The experiment worked, but more capital and a better source of power were needed for full commercial exploitation. With two new partners, Samuel Need and Jedediah Strutt, Arkwright built a second mill at Cromford in Derbyshire, using water power (his spinning frame is thus more usually known as the ‘water frame’).

The new mill was a success, and Need and Strutt began buying the yarn it produced for their own hosiery manufacturing concerns. The next obstacle to full commercial exploitation was regulatory. Arkwright’s raw material, Indian cotton, was subject to a high import tariff, a protectionist measure which had been enacted for the benefit of the Lancashire woollen industry. Intense lobbying by Arkwright and his partners succeeded, in 1774, in gaining an exemption for raw cotton to be used for manufacturing in England. The combination of free trade and new technology set the scene for a boom in the cotton industry throughout the north of England; cotton imports, which amounted to 4.7 million pounds weight in 1771, had reached 56 million pounds by 1800.

Arkwright, meanwhile, was about to demonstrate both his organizational skills and his understanding of intellectual property to the fullest. From 1771—5 he was involved in continuous improvement and expansion of his Cromford mill. His aim was to produce a single machine which would handle not only spinning cotton yarn but also all the preparatory processes including carding, drawing and roving. No contemporary accounts survive which tell exactly how Arkwright developed these processes, but it seems clear that, although he used individual devices invented by others along with ones he invented himself, the concept of the continuous process was his alone. The actual work of building and testing the new machines was difficult; capital was not in short supply, but skilled workmen were. Only clockmakers had the necessary skills and tools to create the fine-precision machinery Arkwright needed, and these were recruited wherever they could be found (some years later, during the great boom in factory construction, Londoners found that there were almost no clockmakers left in the capital; all had gone north to build factories). Direct supervision of the designs and building process was undertaken by Arkwright himself, who seems to have carried most of the designs in his head..

By 1775 he had succeeded, and promptly patented his new process. This was the true heart of the factory system: a single machine process, capable of continuous production through multiple stages, driven by a permanent supply of power and capable of being worked in shifts. Its commercial potential was enormous, far beyond the capabilities of one man or even a small group to exploit. Arkwright knew this well; apart from building new mills of his own, he sold licences to other groups of capitalists who wished to build mills using his designs. Often he also invested sums of his own in these licensed mills. By 1780, as many as fifteen Arkwright-patent mills were operating, either directly owned or under licence. Arkwright himself reckoned they employed as many as five thousand people.

In fact, the Arkwright patent on the spinning process was indefensible in both theory and practice. Although the design for the overall process was Arkwright’s own, many of its components were not; he had borrowed freely from other engineers and inventors during the design process. Further, although some entrepreneurs bought licences from him, others simply pirated the design and set up mills without licences. In 1781 Arkwright took nine of these pirate mill-owners to court, but lost the case on the grounds of lack of specificity in the patent, which was then declared null and void.

Arkwright seems to have been unperturbed by this setback. Nor did the Chorley riots of 1779, when rioting workers sacked and burned a newly built mill in Lancashire, cause him more than a momentary setback. He was already a very rich man, with plenty of capital to exploit in expanding still further, and well able to absorb the loss of Chorley; and he was ahead of his rivals in terms of both technological abilities and skilled workers. The six years from 1775—81 had allowed him to build up a priceless competitive advantage.

Now, rather than selling licences, he sold water frames and other machinery to those who did not wish to build their own. By 1794 his sales of original equipment alone had amounted to Ł60,000 (Fitton 1989: 91). Of his original partners, Samuel Need died in 1781 and the partnership with Strutt came to an end, but Arkwright created many further partnerships. His son had by now joined the business and was involved in many new ventures. Sometimes Arkwright simply invested in ventures without requiring control, as when he financed Samuel Oldknow’s first mill, or advised David Dale on the establishment of the mills at New Lanark (later controlled by Robert Owen). More often, however, he took a large share of equity and control. His partnerships in these instances were carefully chosen. For instance, for a new mill in Manchester in 1786 he took into partnership two local cotton merchants, William Brocklehurst and John Whittenbury. These men were also involved in a variety of further partnerships with other merchants and businessmen. By bringing them into the business, Arkwright not only secured their capital but tapped into their business networks.

As well as partnerships with other merchants, Arkwright developed a core of highly skilled senior managerial and technical staff. These were often moved around from one Arkwright concern to another, especially when new mills were planned. They were also in great demand elsewhere. The most famous example of an ex-Arkwright man going onto greater things is Thomas Marshall, a former mill superintendent who introduced Arkwright’s methods to New England in 1791 and founded the US cotton industry.

Technological experimentation and advancement were a constant preoccupation with Arkwright. In particular, he was interested in power generation. Water power had the drawback of limiting location: plants had to be sited where streams generated sufficient force to turn the water wheels, and also in areas where there was no risk of the water freezing in winter. In the 1780s Arkwright began experimenting with steam engines, using Newcomen’s original designs, but found them unsatisfactory. His interest in steam, however, brought him to the notice of Matthew Boulton and James Watt, then in the process of improving Newcomen’s designs. Much correspondence ensued, and steam was experimented with on several occasions; however, widespread adoption of steam power did not begin until after Arkwright’s death.

Arkwright, as the founder of the factory system, is often criticized for many of its abuses, particularly in terms of the health and safety of employees and child labour. Like most mill owners of his day, he used workers as young as eight in many of his mills, though his son later put a stop to this practice. In terms of health and safety, his mills seem to have been better than some but worse than others. He was by no means as enlightened as Robert Owen, but visitors to his factories reported them to be clean, sanitary and well ventilated (by no means the usual case among his competitors). Workers put in long hours — Arkwright factories were on continuous production, and twelve-hour shifts were the norm — but were paid better than in other concerns, and Arkwright not only paid bonuses but spent considerable sums on housing and occasional entertainments for his workers. Paternalistic this certainly was, but it ensured that Arkwright employees had a better standard of living — and life expectancy — than those who worked in some other mills.lls.

Many commentators (Fitton 1989; Chapman 1992; Langlois 1999) credit Arkwright with the founding of the factory system, and it seems correct to assume that his combination of organizational genius and ability to use and exploit new technologies not only enriched him personally but contributed to the broader revolution in business and the economy. The impacts of that system were, of course, enormous, but exactly what those impacts were continues to be the subject of debate. Karl Marx and his followers believed that the main impact of the factory system was that it concentrated capital and allowed for greater exploitation of labour, and by and large this remains the orthodox view today. More recently, however, transactions costs theorists such as North and Williamson have argued that the factory system allowed for greater efficiency, as it reduced transactions costs and lowered the costs of coordination and monitoring quality. Langlois (1999) believes that the real revolution lay not in the concentration of capital or of labour, but in the switch of emphasis from product to process. In contracting or putting-out systems, the main methods of producing goods prior to the factory system, the business owner could only monitor the end product; he or she had no control over the process. By bringing the process under direct managerial control, Arkwright could concentrate on engineering that process to produce high-quality output at lower cost. In Langlois’s view: ‘The factory system arose because growth in the extent of the market ... opened up entrepreneurial possibilities for high-volume throughput. This meant not only an extended division of labour but also investment in new capabilities ... that, by making production more routine, permitted lower unit costs’ (1999: 47).

From a tailor’s son, Arkwright had risen to be a power in the land. He was knighted in 1786, ostensibly for making a speech congratulating King George III on his escape from an assassination attempt; in 1787 he was made high sheriff of Derbyshire. He began building a grand new manor house at Cromford. A compulsive worker who was poor at delegation, he continued to be at his desk from 5 a.m. to 9 p.m. every day, and unsurprisingly began to develop heart problems, but worked on until his final illness. When he died, 2,000 mourners attended his funeral in Cromford.