On any night illuminated by a full moon in the late 18th century, Samuel Galton Junior, an illustrious citizen of Birmingham, could be found in deep, convivial discussion about the wonders of science with fellow thinkers and manufacturers in the town's Lunar Society, including the steam-engine manufacturers and heroes of the industrial revolution James Watt and Matthew Boulton. Galton was the richest of them all and earned his fortune as owner of Britain's most prolific gun manufactory, which thrived on military contracts.


Galton was a Quaker – a sect known for its belief in the unchristian nature of war. Yet he believed that war drove the industrialism around him, and said as much to defend his business to fellow Quakers in 1796. He noted that everyone in the rapidly transforming economy of the Midlands was in some way contributing to the state’s war-making powers; he was no worse than the copper supplier, the taxpayer, or the thousands of skilled workmen manipulating metal into everything from buttons to pistol springs for the king’s men. Indeed, even the Quaker Friends deputed to redeem him from his morally compromising business were involved in material supply or war finance. To Galton, complicity in war was general and inescapable. Government contracts were driving the astonishing industrial transformation around him.

We know that Britain’s almost continuous wars from 1689 to 1815 made it the preeminent global power, but Galton’s view suggests they also made Britain the world’s first industrial power. It’s a view at odds with received wisdom about an industrial revolution driven by free enterprise – the idea that Britain’s historically small, hands-off government allowed enterprise and individual genius to flourish.

This narrative has had a deep, imaginative influence on conversations about what drives innovation and what role governments should have in economies. In this story, the post-Second World War welfare state was a dramatic break from British tradition, and its undoing represents a return to a more authentically British style of government. But what if Galton was right in 1796? If he was right – if government was the real driver of industrialism – then what we think of as 'real' British governance looks rather different.

The institutions that made up the 18th-century British ‘state’ existed entirely to provide the resources for war; the idea that government offices ought to build schools and canals did not exist. The British state was a ‘fiscal-military’ state, raising taxes to prosecute the many wars of the period more effectually than any other European government of the time. The growth in trade those wars (forcibly) produced was critical to Britain’s industrial revolution – providing raw materials and stimulating efforts to imitate luxury imports. The expenditure of tax revenue itself also had an important role in that transformation. And besides taxation, the other early purpose of government offices was management of contracts for military supply.

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The firearms industry provides a window onto the way military purchasing sparked industrial revolution. The constitutional monarchy established by revolution in 1689 feared that a single, concentrated set of gunmakers might be seduced or coerced into throwing its weight, and weapons, behind Jacobite rebels determined to restore the ousted Stuarts. To insure against this risk, state offices strove to multiply the number of gunmakers and gunmaking sites – despite complaints from old contractors that “so many warrants” were going to “some quite foreign in the business”. Thus did the Ordnance Office, the department in charge of small arms procurement, nurture a firearms industry into existence in Birmingham partly to dilute the power of London-based gunmakers.

Aware of the office’s concerns, gunmakers also leveraged loyalty for work, appealing for contracts by reminding the office that in earlier “dangerous times”, they had “behaved in all respects as loyal subjects”. The government was loath to alienate an industry essential to its security. It continued to intervene in the industry’s development to both keep it in good health and increase its productivity in times of need. For instance, the Ordnance Office employed out-of-work artificers in government armoury workshops, sold old military guns back to gunmakers for resale abroad, provided funds to train more gunlock-makers to expand production capacity, and supported gun sales to chartered companies and other customers, especially those involved in the slave trade and the conquest of south Asia and North America. Concerns that these sales would arm potential British enemies were assuaged with the logic that, by abstaining, Britain would merely forfeit profit and prestige to rival powers.

The Ordnance Office was also sensitive to gun contractors' reminders that discontinuation of contracts would force them to discharge workmen – men who might not be easy to find on the next outbreak of war and jobless men who might join the shiftless minions of rebellion. Contracts for the gun industry both armed the regime and purchased gunmakers' loyalty.

The Ordnance Office’s massive demand revolutionised the gun industry, which evolved from an annual production capacity of tens of thousands in the 1690s to millions by 1815. Quite apart from a cultural penchant for entrepreneurship, what mattered in fostering this revolution were the government officials entangled in knowledge networks, the overlap between commercial and government demand geared toward conquest, and innovations triggered by urgent wartime contracts and supported by government agencies.

War incentivised the mass production of objects needed on short order. This was the essential context that allowed the genius of Boulton, Watt and other ‘Lunar men’ to have revolutionary impact

The gun industry had important ripple effects in allied fields in the Midlands – toys, jewellery, clocks, precision instruments, iron manufacture and so on. Nor was its relationship with government anomalous; many trades and sectors benefited from contracts in this period. Government contracts and offices had a major role in the most iconic developments of the industrial revolution, including the steam engine (whose manufacture depended on techniques first applied to cannon-boring), the ‘puddling process’ for producing iron (invented by a naval contractor), copper sheathing (developed for naval ships), and interchangeable-parts manufacturing (invented to produce wooden pulley blocks for the rigging of naval ships). Woollen drapers were also major contractors. The Navy Victualling Office was one of the largest purchasers of agricultural produce. The purchases of trading companies partnered with the state, like the East India Company, further expanded this government footprint in the economy.

Boulton himself was a contractor, networked with other contractor-industrialists. So too were giants of the financial world, like Galton’s relations, the Barclays. In 1804, as gunmaking profits skyrocketed during the Napoleonic Wars, the Galtons also became bankers. Their bank later merged with what became Midland Bank, now folded into HSBC. The reputational effects of government contracts, the opportunity for government support for innovation, the incentive war gave to invent ways to produce mass quantities of objects needed on short order – this was the essential context that allowed the genius of Boulton, Watt and other ‘Lunar men’ to matter and to have revolutionary impact. The line between state and society, public and private, was blurry in the 18th century.

But many began to take a critical view of the mutually profitable partnerships between state offices, landowners, manufacturers and financiers. The radical John Wilkes likened them to a gang of robbers plundering society. After years of war, the celebrated lexicographer Samuel Johnson lamented, “how are we recompensed for the death of multitudes, and the expence of millions, but by contemplating the sudden glories of paymasters and agents, contractors and commissaries…” The political activist William Cobbett called this monstrous constellation of power “the THING”. Such critics saw greater institutional differentiation of the state and a more clearly ‘private’ sector as the solution. The populariser of liberal political economic theory Adam Smith dreamt of a distinct sphere of economic interactions allowed to flourish without the invasive government intervention that was the norm in his own time.

Meanwhile, the wars of conquest that drove industrialism in Britain also withered potential for industrial take-off abroad. British officials determinedly prevented knowledge-sharing in colonies like Bengal, wary of potential damage to the ‘Mother Country’. Allowing Bengalis to develop the rich local metal resources was dangerous because “their curiosity and their avarice would be excited and they would… proceed to experiment”. It would inevitably result in “the teaching of them new means of independence and new sources of wealth”. Sharing any knowledge about metalworking was reckless, for the “step from a knowledge of smelting metals and the manner of casting them into certain forms to that of casting cannon shot and shells is so inconsiderable that if the natives once acquired the former art they would soon become masters of the latter”.

The East India Company’s ammunition laboratories in Calcutta were off-limits: “No Indian, black or person of mixed breed, nor any Roman Catholic… shall… be admitted or set foot in the laboratory or any of the military magazines, either out of curiosity or to be employed in them, or to come near them so as to see what is doing or contained therein.” Besides shutting south Asians out of British knowledge networks, the company also suppressed local knowledge about arms-making – although not without first exploiting it for their own purposes (experimenting, for instance, with Mysore’s formidable rockets in order to manufacture rockets for British forces). Heavy sales of British arms in the subcontinent were partly intended to enable this suppression of indigenous arms-making, at once stimulating profitable industry at home.

After 1815, the old partnership between government and the weapons industry was replaced by state expenditure on public-works schemes like canals and roads – in other words, social welfare

The Galtons pulled out of the gun business in 1815, with the end of the long wars against France. The decline of war industries was general after 1815 and, at last, inspired new kinds of government intervention. Building on old concerns about jobless men as masses of troops were demobilised, the Poor Unemployment Act of 1817 released funding for public-works schemes like canals, bridges and roads. The new idea of state expenditure on such projects – of social welfare – emerged from the older sense of partnership between state agencies and war materiel suppliers.

But the shift was halting, as Adam Smith’s ideal of an economic system free of government distortion came to supplant the memory of war-driven industrial revolution. Today’s image of an industrial revolution rooted in the British genius for invention trades on the liberal values he and his heirs propagated. The Victorian ethic was ‘self-help’ – popularised in Samuel Smiles’ classic book by that name. He wrote the first biography of Boulton, as the exemplar of entrepreneurial genius. Such notions underwrote Victorian horror of governmental intervention on behalf of even the most vulnerable as feckless interference with the workings of the invisible hand. The haves were, perforce, deserving; the have-nots, self-evidently, not.

This Victorian outlook was exceptional, however, in a long history of government intervention in the British economy. Indeed, after the great depression of 1873, as masses of workers became unemployed all at once, many late Victorians perceived that systemic forces had led to this common fate – a business cycle beyond individual control. This new awareness of a realm of ‘the social’ underwrote the foundation of an incipient welfare state in the early 20th century, including a minimum wage, labour exchanges, pensions, national insurance and school meals. These foundations were permanently enlarged during the First World War and interwar depression – the planning processes of the warfare state again casting a shadow over peacetime developments. Keynesian economic theory encapsulated the idea that government had a role to play in the economy.

Still, it was rearmament – the reemergence of the warfare state – that ultimately pulled Britain out of depression. Postwar economic historians acknowledged as much but they shied away from the notion that war had also stimulated economic growth in the 18th century. Acknowledging both might drive one to the unseemly conclusion of a general pattern of war-driven economic growth – an indigestible conclusion in the aftermath of two world wars. Faith in the natively pacific sources of British industrialism now became even more exigent.

Economic historians have clung to the notion that 18th-century wars had an overall negative impact on the British economy. In the absence of clear data, they lean on liberal theory: during war “normal patterns” of investment were “probably” disrupted; war “diverted capital from what Smith considered its natural channel”; it is simply “impossible not to feel” that war’s overall impact was “negative”. Thus have we inherited a view of the industrial revolution as the work of an innately enterprising people, entirely unrelated to the wars raging nearly continuously in that very time.

Galton’s perspective helps us recover the forgotten reality of the government’s central role in the evolution of modern industrialism. His fellow Quakers were not persuaded by his arguments; there was too much at stake in industrial capitalism by 1796 for him to win an argument about its collectively scandalous nature. The arms maker morphed from a morally unremarkable participant in industrialisation to a uniquely villainous merchant of death – and our memory of industrial revolution became one of pacific genius unbound.

Quaker anguish over how to avoid complicity in a war-driven economy finds an echo among individuals and communities straining today to keep their hands clean in a global economy full of ethical pitfalls. Arms industry spokespeople assure the British public that seemingly scandalous arms exports to Saudi Arabia and elsewhere enable it to employ “150,000 highly skilled people” in Britain and “thousands more… through the extended supply chain”, and to invest “huge sums in research and development”.

If we step out of the ethical fog that such arguments produce, we might perceive that, more than arms, it is government contracts that have been good for the economy. War was critical to the invention of our industrial way of life but need not remain so. The Galtons became bankers; BSA, Europe’s largest riflemaker in the late 19th century, ended as a motorcycle manufacturer. Arms-makers need not remain arms-makers, and contracts need not be war-related. As Britain contemplates the future of government in the aftermath of the Brexit vote, it must reckon with the truth of the past.

Priya Satia is professor of modern British history at Stanford University, California. Her books include Spies in Arabia (OUP, 2008)


This article was first published in the September 2018 edition of BBC History Magazine