An Economic History of London 1800-1914

Professor Michael Ball, David T Sunderland, Michael Ball, David Sunderland

• Publisher: Taylor & Francis
• Year: 2001
• Print ISBN: 9780415246910
• eBook ISBN: 9781134540297
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In 1800 London was already the largest city in the world, and over the course of the next century its population grew rapidly, reaching over seven million by 1914. Historians have often depicted London after the Industrial Revolution as an industrial backwater that declined into the mass exploitation of labour through 'sweating', dominated by City

Part 1: Economics and urban history

1 This city

Nineteenth-century London was a place of firsts and superlatives: the capital of the first industrial nation; the largest and richest urban agglomeration in the world; the first city with extensive mass suburbanisation, to name but a few. It was also a city of contrasts which could be seen in the extremes of wealth and poverty; in dynamic, successful industries along-side declining ones; in people at leisure and those locked in the most menial drudgery; and in new architectural and civil engineering wonders next to acres of dilapidation.

Identifying such distinctive features and how they changed over time is at the heart of any narrative urban history. Yet, the characteristics of any city cannot simply be described. There needs to be an explanation of how things came about and there is no shortage of explanations within the wide literature on London’s history. What is noticeable, however, is how little use has been made of modern economic theories, particularly those falling within the ambit of urban economics. To claim this is not to beat the drum of professional jealousy nor to suggest that economics can explain all, but rather to suggest that developments in nineteenth-century London were mainly stimulated by what are now reasonably well-understood economic processes.

This viewpoint is at variance with many histories of London because they tend to identify a uniqueness in the character of the metropolis at the centre of their explanations. Uniqueness can certainly be found and as a theme it has a long pedigree. The capital city of the United Kingdom, the leading world power by the 1820s, was a special place that caused wonderment at its vastness. At the same time, its scale filled many contemporary observers with horror, mixed with pride at the scale of the human endeavour needed to create it. Yet, the causes of the growth of London were generally regarded as something of a mystery. Other cities in Britain, like Manchester, had burst forth out of virtually nothing at the end of the eighteenth century, but they could be seen to be a product of the new industrial capitalist society. The same forces transformed London but this was not so obvious because there were few of the features that spawned the industrial towns of the Midlands and North. Near it were no coal-fields; there was no intense specialisation in heavy industry or textiles; nor was London even a focal point for a network of surrounding industrial towns.

Only one thread of argument seemed to explain London’s existence. Despite all its apparent modernity, the metropolis was a unique throw-back to a bygone mercantilist age: with its scale generated by the conspicuous consumption of the wealthy, the world-wide tentacles of the City and Empire, and a terrible exploitation of a mass of poor people. Uniqueness was clearly important within this interpretation, because, if it was extrapolated to the nation as a whole, this view was revolutionary in content but, when localised to the capital, it was believed by many who were hardly radical in their general politics. This explanation had a powerful effect on what was seen as London – an image that has persisted in much of the literature until today. The capital was like Wilde’s Dorian Gray. The proud architectural and cultural face of Georgian, Victorian and Edwardian London existed because of the hidden picture that was the inner-suburban industrial districts and the poverty associated with them. The problem of London was contained in the misleading geographical metaphors of the West End versus the East End and the City versus Industry.

Heaven and hell were found just a few streets away from each other, as commentators noted with a regularity that never seemed to flag or bore, and this theme filled a flood of novels, amateur reports and official inquiries. This viewpoint of London as the unique jewel-encrusted terror helped to promulgate a horror of large cities and suburban sprawl that is still such a common English characteristic today. It also has become the standard way of explaining nineteenth-century metropolitan development. The problem is that it does not make much economic sense.

The economic dimension

Urban life started over four thousand years ago, when human beings combined specific building technologies with ways of organising society to create densely populated living spaces. Since then, many different types of society have found urban living useful, and technological change has made the potentials of city existence manifoldly apparent. Yet, it was not until the nineteenth century that countries larger than city states became structured as predominantly urban ones. Britain was the first country to experience that shift, and London towered above all its other cities in size, wealth and productive capacity – housing over a fifth of England’s population by 1900. The cause, of course, was associated with the development of modern capitalist societies – a process in which Britain took the initial lead.

Urbanisation went along with industrialisation and sustained economic growth. These inter-linked processes subsequently spread through other countries and continue to encompass more areas of the globe. In today’s Third World can be seen the fastest urban growth rates ever, and it is estimated that over half the world’s population will live in urban areas within a decade, so the process looks set to continue for the foreseeable future and undoubtedly beyond. In many senses, therefore, the growth of London in the nineteenth century represents the first example of this modern phenomenon and its economic history is interesting for that reason alone.

The technical and organisational characteristics of capitalist cities, moreover, make them highly amenable to economic analysis. Clustering does not arise in such societies through some pre-conceived plan but through the responses to market forces of a multitude of individuals and firms. The foundation of urban organisation is consequently that of markets – the stuff of economic analysis. The strong positive impact that cities make on the productive potential of society overall, and the social ills which go along with it, in addition, make an economic analysis of cities important for an understanding of general economic development. (It is one of the professional paradoxes of economics that modern growth theory has tended to ignore the urban dimension when looking at the causes of economic growth.)

This is not to say that the antecedents of metropolitan growth in the nineteenth century were unimportant, nor that some sudden break can be seen in the way in which Britain’s capital city functioned. Even so, from the later decades of the eighteenth century, five important new characteristics are discernible.

The first was that London’s population began to expand continuously at the fast rate of around a fifth every decade. This growth continued for over 150 years until the suburbs spilled far beyond the juridical area of the metropolis. City growth, in other words, was a self-sustaining process – no longer linked to government and aristocratic behaviour but to market relations.

The second new characteristic was that traditional work practices had noticeably given way after centuries of slow dissolution, so that nineteenth-century London industry was, in the main, openly competitive and exhibited overtly capitalist behaviour.

The third feature was an increasingly commonplace separation between workplace and residence amongst all urban social classes. It was also widely believed, and desired, that all families should have their own separate accommodation with no shared facilities. The transformed way of living was so pervasive that by the end of the nineteenth century home-working and overcrowding were generally being condemned as social evils rather than the facts of life they had been for centuries before. These separations transformed the physical structure of cities into their modern, functionally distinct areas and helped to define many urban problems in terms of work and home and getting between them. The processes by which they came about in London are central themes of this book.

The fourth characteristic was particularly significant in nineteenth-century Britain. There was a marked specialisation of the country’s regions in particular economic activities and the rapid appearance of major cities in the areas where manufacturing became important. London, therefore, was not alone. An array of other urban areas simultaneously existed, in what came to be called ‘conurbations’, but with notably different features from each other and the metropolis – reflecting the differing industrial specialisations of the regions in which they emerged. London, consequently, was the first amongst many. This influenced its development and provided a means by which to compare its development.

Finally, from around the 1820s, another facet of nineteenth-century urban development became significant, in that the technologies of urban life were subject to widespread change with many radically transformed. Public transport, for instance, from being virtually non-existent for most social groups became more widespread, and its motive power slowly shifted from the horse to steam and electricity, below ground as well as on it, and finally to the petrol engine. This prodigious and unexpected series of innovations, and their subsequent application to metropolitan life, lasted throughout the period up to 1914. Further additions could be made to the list of relevant and important discoveries and new organisational capabilities, and they would include many of today’s urban technologies that are now taken for granted. Then they were new but highly expensive to install. Some of the most notable were street lighting; extensive paved, drained and cleansed roads; sanitation and fresh, piped water for the masses; gas and electricity; the telegraph and telephone; new types of long-distance transport, and ways in which travel was related to cities via stations and ports. The scale of these new inventions, their speed of adoption and the enormous costs of providing them were a unique event of the period from around the 1820s to the 1920s.

The rapidity of change, moreover, made investing in the new technologies of urban living a highly risky business. Most of all, the content of urban life was changed beyond recognition. New words had to be invented to deal with the spatial forms and lifestyles that were made feasible. The new technologies enormously increased the spatial spread of cities, expanded hugely the amount of fixed capital required to make urban areas function and made sustained economic growth viable at last in major cities.

Technologies are only socially useful when some agency turns them into viable products. With regard to the new urban technologies that transformed nineteenth-century London, most were provided by private interests, with local government supreme in only a few. Rules and regulations were put in place to affect the ways in which those private firms operated and invested. Some were fixed by Parliament or by public urban agencies, others arose from the detailed histories of the organisations involved and the nature of the competitive contexts in which they found themselves. Organisations and institutional practices, therefore, are important in understanding the history of the metropolitan economy during this period. Contemporary observers were well aware of this fact and there were widespread debates about the functioning of particular industries and the efficacy of new urban technologies. Controversy particularly raged over urban infrastructure and over the ways in which it should be provided with champions of the private and public sectors and, even on occasion, private–public partnerships. Debates, none the less, went beyond simple public–private polarisations to question what forms of regulation were needed, how to avoid monopoly abuse and the means to encourage change.

Institutions were also significant with regard to social policy, labour markets and other key areas of the economy, such as the City, the docks and the structure of consumer industries. London government during the period, similarly, is often regarded as woefully inadequate because of the earlier institutional framework from which it developed and the lack of change in it. This negative description may be debatable but the impact of urban governance on infrastructure provision, private as well as public, was none the less substantial.

To talk of markets, consequently, is not to deny the significance of the broader contexts in which they exist. Whether unregulated market outcomes or constraints on them dominated is a matter of historical and empirical enquiry. The theme of markets and institutions pervades the analyses contained in this book, but when interpreting the available evidence most weight is put on market outcomes. This is partly because, empirically, market processes were more likely to be causally important than some hypothesised monopoly, hidden influence or act of political manipulation. In addition, a market approach provides a means by which to link together the distinct aspects of urban economic development, and underlies standards through which to evaluate change.

The inter-dependence of urban activities is central to an economic analysis of cities. The close spatial proximity of both similar and distinct activities gives cities their economic rationale – their big technological benefit over other potential forms of human existence. Alongside the mutual gains of proximity, there is a competitive element, because each urban activity competes for scarce urban resources. Such competition is predominantly over labour and land, as capital is more mobile. Because the overall productivity of an urban economy grows over time, however, the outcome is generally not a zero-sum game of winners and losers. Growth leads to extra facilities in a city, and a wider spatial spread of the urban area. These alter and improve urban resource availability (at least up to the point of excessive congestion). Within the overall process of city growth, some activities expand, and others will be in absolute or relative decline. Some activities may leave the city altogether, because it is no longer profitable for them to be there at the prevailing urban input prices. Competition for scarce urban resources has forced them out, leading to a restructuring of the city’s industrial profile.

Inter-connectedness, in both its mutually reinforcing agglomeration and restructuring competitive aspects, is consequently another general theme of this book, and represents one of its distinguishing features, as many general city histories tend to treat urban activities in isolation. Again, with inter-connectedness, institutional frameworks, specific contexts and first-mover advantages are important. The dock companies, for example, when they were given powers to build new docks were simultaneously handed control of the spatial structure of a large part of East London. Even when they clearly could no longer compete with other activities for an urban location, they still used the land – more because of the sheer cost of converting redundant dockland to any other urban use than because of any land ownership titles they held.

The docks illustrate a parallel point. Urban districts change very slowly because of built environment costs: the need to create new built structures and to demolish or refashion existing ones when they become economically redundant. Added to these physical construction issues when contemplating the transformation of whole neighbourhoods are problems associated with multiple property ownership, legal rights and the difficulties faced by the affected local community. Commitment to a particular activity, consequently, has long-term ramifications for an urban district.

Only when the gains from change were so great did large-scale urban renewal take place in nineteenth-century London. The most spectacular, short-run, neighbourhood changes were caused by the building of transport facilities, which destroyed and divided neighbourhoods on a grand scale. Despite this, over the longer term, there was a radical transformation of most of the pre-existing eighteenth-century urban area, from which only the best West End locations remained untouched. By the 1900s, the city of a century before had been divided into a commercial core of the West End and City of London and an inner-industrial area of factories, workshops and low-income housing. Yet, this process was gradual and unplanned and was only possible because it was so. In other European cities, states were transforming their capital cities but in England private capital was the main instigator. One consequence of piecemeal, private urban renewal was that the street and broader urban pattern of previous centuries still predominated in the nineteenth century on to which new growth was added. This helps to explain the continuing and incessant complaints of congestion, and oddities such as the fourteen mainline railway termini built in central London.

The call of economic analysis

The scale of scholarship related to retrieving information about London’s development has been substantial and its quality high. These histories come from a number of disciplinary backgrounds. Some are generalist, others are political, social or geographic, but few are economic. In most of them, therefore, economic processes are mentioned only descriptively or in passing. Even so, strong conclusions are frequently made about the nature of the metropolitan economy. Keynes once famously wrote of practical men that they were ‘slaves of some defunct economist’¹ and, whether their economists are defunct or not, many histories of London contain poorly articulated, implicit economic theories.

Recognition of a lack of explicit economic analysis has led some historians to call for an economic history of nineteenth-century London. Cannadine, for instance, in a perceptive essay originally written in 1983, suggests that such a history is essential if any progress is going to be made in understanding urban change during this period.² In some senses, his hopes for an economic history are too high, as there is simply insufficient data on so many facets of metropolitan economic life for definitive views to be possible. An economic history, furthermore, is only as good as its explanations, which requires use of appropriate theories as part of the analysis. Theories also offer guidance when data are poor by enhancing the ability to interpret the information that exists.

Cannadine’s essay, in addition, contains a succinct statement of a common view of the capital.

The difficulty is that nineteenth-century London was such a success story in some ways that historians cannot cope with it, and such a fable of failure in others that they do not want to. From one stand-point, London was the Cinderella of nineteenth-century cities, the inert, lifeless embodiment of economic backwardness, class fragmentation, political marginality, municipal stagnation and administrative chaos; while the provinces blazed the trail in economic growth, class formation, political radicalism, municipal reform and administrative progress.³

In this view, the three themes of economic backwardness, a failure to deliver adequate urban public services and unequal wealth form a triangular causality explaining metropolitan change – with backwardness at its apex. This sentiment can be found in many other texts as the reviews in later chapters show. Yet, each of the three categorisations can be questioned. The detailed historical evidence outlined in later chapters, for example, cont...

Table of contents

• Cover Page
• Routledge Explorations in Economic History
• Title Page
• Copyright Page
• Tables
• Figures
• Acknowledgements
• Part 1: Economics and urban history
• Part 2: London’s economy and people
• Part 3: The transformation of London
• Part 4: Infrastructure
• Part 5: Industrial and commercial change
• Part 6: Welfare and government
• Part 7: An assessment
• Notes
• Bibliography