Capital and Labour - The Invention of the Steam-Engine : Roebuck

Roebuck was born at Sheffield, in 1718. The son of a cutler, he was educated at Edinburgh and Leyden, and settled in Birmingham to practise as a physician. While there he met Samuel Garbett, the first of the great Birmingham men who were to have such an influence on the economic developments of the century. In conjunction with Samuel Garbett, Roebuck established a large laboratory, in which he discovered more economical and improved processes for refining and working gold and silver, and made the important discovery of a commercial method of preparing sulphuric acid in leaden vessels, at a quarter the cost of the glass retort method that had previously been in use.

The two partners established a manufactory of sulphuric acid at Prestonpans, in East Lothian, in 1749; the consumption of the article increased rapidly, and the undertaking was exceedingly profitable. They, therefore, added to their manufacture, and established a pottery for making white and brown ware, which was also successful.1

After these various manufactories had been running for some time, Roebuck became fairly rich, and was considered sound financially; therefore, when he resolved to establish in Scotland a manufactory of iron on a large scale, he was able to obtain the necessary capital from his friends in England and Scotland. He had met in Prestonpans a certain Mr. Cadell, who had unsuccessfully attempted to start an iron-works and who was very eager to develop the backward industry of Scotland.2 Roebuck formed a company, but this company merely provided the capital, and left the entire direction of the business, buildings, machinery, processes, and site all to him. After mature consideration, he decided on a spot, on the banks of the river Carron, in Stirlingshire, where there was much water-power, ready transport by sea, and, in the immediate neighbourhood, good supplies of iron ore, lime stone, and coal.

This is a decisive change in the structure of industry. In the generality of cases previous to this date, an industry had become localized in a particular district by natural selection. Industries had been established in many places by accident, nearness to the continent being, in many cases, the most obvious of determining factors. Then gradually they throve, and increased in some places more than others, until gradually they died out in the unsuitable neighbourhoods, and became localized in the places that were most suitable. This is especially true of the woollen industry. From being almost universally practiced, it became localized first in three districts—the south-western, round Stroud; the eastern, round Norwich; and the northern, in the West Riding of Yorkshire; then later it was largely confined to the West Riding.

The contrast between this evolution of localization, and the considered planting of a works by Roebuck, shows that a new era is at hand; it is the conflict of the two forces that are at war during the last half of the eighteenth century—historical evolution and abstract right. The principle was at issue between Burke, who believed in the historical evolution of the constitution, and the French Revolutionaries, who would have built their state on the abstract principles of right and justice expressed by Rousseau and the philosophers.

Roebuck went further than this: he imported his engineer and his workmen from England. The Carron Iron-works were Smeaton's first work in Scotland, though he had long been a friend of Roebuck.3 The first furnace was blown at Carron, in 1760, and the works proved a lucrative investment.4 Roebuck was indefatigable in improving the manufacture; from the beginning he employed pitcoal for smelting his iron, and to do this, he had need of Smeaton's advice, in order to increase his blowing apparatus. Moreover, in order to im prove the transport to Glasgow, the Carron Company surveyed a line for the Forth and Clyde Canal, which, though at the time abandoned, owing to the objections of the landlords, was later carried into execution on the lines of the original suggestion.

The question of the coal supply now received the attention of Roebuck; he seems to have determined from the beginning to control all his raw materials. He, therefore, leased the coal-mines belonging to the Duke of Hamilton, at Borrowstoness, as well as the salt pans that were connected with them.

Roebuck discovered that in order to keep the pits clear of water, the most powerful pumping apparatus was necessary; Newcomen's engine was

Unfortunately, Boulton was almost without money, he says, " Doctor R's proposal is perfectly agreeable to us, only as to me it is, unfortunately, made after the engagement of nearly all my money.5 I cannot help adding a word of congratulation upon the great prosperity of your colliery."

The situation in 1769 was that Watt was engaged in constructing " an engine of an 18in. cylinder and 5 ft. stroke at Kinneil," and Watt says that " Doctor Roebuck's colliery is in a very thriving condition, and daily improving," though " some people in Birmingham have an interest in doing all in their power to lessen his character and credits."6 This must have been the beginning of the end: Watt's engine was not available for pumping the colliery, and Roebuck began to be in financial difficulties. However, some of the other undertakings went well, for even in 1771, Watt says, " our pottery does very well, tho' we make damned bad ware."7 However flourishing the undertakings were in 1769, in that year an agreement was finally made by Roebuck with Boulton and his friend, small, under which they were to take a third share, and, in exchange, to pay half the expenses.8

Roebuck's difficulties went on increasing, and lack of capital made him frightened of delays. It was unfortunate that this occurred just at a time when the banks were restricting their credit in consequence of bad harvests, and the unwise speculation that had been going on. 1763 had been a critical year for the credit of Europe. The Bank at Amsterdam had refused to support a firm, called Neufville, which had large connexions, and this disaster extended to England; fortunately, the Bank of England was able to support the credit of the principal houses, not only of England, but of Hamburg and Holland.9 Moreover, from 1769, there was a rapid increase in our exports, and the inevitable reaction, which came in 1772, was accentuated by the failure of Neale, James, Fordyce, and Downe, a large London firm, whose failure also affected the Scottish banks.

The recently established Bank of Ayr had been founded to relieve the distress of the country. This bank was more liberal than any other in granting credit and in issuing notes,10 while the Bank of Scotland worked hard to enforce the retirement of the notes of other banks. The Ayr bank was unable to keep pace with this movement, and, moreover, its London agents refused to help it any longer. Thus, the failure of Neale's merely hastened its collapse along with other mercantile banking houses.11 Almost every private banker in Scotland failed during this period.

This was an unfortunate time for Roebuck to be in difficulties. For a restriction of credit was the only method of restoring financial stability.

Adam Smith says that " the paper which was issued upon those circulating bills of exchange amount, upon many occasions, to the whole fund destined for carrying on some vast and extensive project of agriculture, commerce, or manufactures . . ." This was a capital which those projectors had very artfully contrived to draw from those banks, not only without their knowledge or deliberate consent, but for some time, perhaps, without their having the most distant suspicion that they had really advanced it."12 " When a banker had even made this discovery, he might sometimes make it too late, and might find that he had already discounted the bills of those projectors to so great an extent that by refusing to discount any more, he would necessarily make them all bankrupts, and thus by ruining them, might perhaps ruin himself. The difficulties accordingly which the Bank of England, which the principal bankers in London, and which even the more prudent Scotch banks began after a certain time, and when all of them had already gone too far, to make about discounting, not only alarmed, but enraged in the highest degree those projectors. "

In many cases, the projectors expected the banks to go on supplying them with capital as long as their ventures failed to give them any return. The banks had been financing the maddest and most insane undertakings; but the panic of 1772, and the gradual experience and development of technique of the bankers, made them wiser, and " by refusing, in this manner, to give more credit to those to whom they had already given a great deal too much, took the only method by which it was now possible to save either their own credit or the public credit of the country."13

Thus, in 1772, Roebuck's already wavering fortunes were involved in the commercial crisis, and he became insolvent.14 This placed Watt in a difficult position. Roebuck was neither financing him, nor paying for the experiments that had already been made, though Watt was self-reproachful that " the Doctor should be out so great a sum upon this affair, while he has otherwise such pressing occasion for money."15

About this time, in a letter to Small, Watt makes the curious statement that " as to the engine, I am not afraid of being able to carry it on with a small capital or almost none, provided the success was certain; or that I was in such circumstances as to be able to make the necessary experiments for establishing its merit.16 Watt must have been thinking how it would be possible to retain control of his monopoly, and supervise and improve the engine at the same time. The result of these thoughts appears in some of the rather curious arrangements made for production, when Watt and Boulton finally began to produce engines.

Roebuck's affairs showed no signs of improvement, and as he was anxious to see the steam-engine carried to completion, he was quite willing for Boulton and Small to purchase the whole of his share in the patent. In July, 1773, Watt was afraid that Roebuck would not pay 105. in the pound, and as " none of his creditors value the engine at a farthing,"17 there seemed nothing in way of a transference. This was soon done, but as Small had engaged all his funds, it was to Boulton alone, and he obtained Roebuck's two-thirds share of the engine patent in exchange for a remission of a debt of £630, and a payment of £1,000 out of the first profits of the partnership of Boulton and Watt.18

A curious point arises in regard to Boulton's debt, and the question of unlimited liability. In a letter to Boulton, Watt says, " Besides the one part of your debt you have no legal claim for, perhaps they might, if it was mentioned, construe that money as advanced with a view to profit as a partner, whereby you might be subjected to greater loss than that of the capital."19

In exchange for the remission of the £630, the creditors were to empower the Doctor to make over all his property in the engine to Boulton, " for all the models, etc.," were Watt's, and on May 20, 1773, Watt writes to say he has sent off the engine to London by boat on its way to Birmingham.20 It had been lying at Kinneil, open to the weather, but was to have a better fate when it reached Soho. Watt, however, was unable to go to Birmingham for some time. During the intervening years, from 1769, he was occupied in various engineering and surveying works, though by attracting capital to other undertakings, he was indirectly damaging his own chances of success with Roebuck. Among his works was a survey for the Caledonian Canal, which was afterwards successfully constructed by Telford.21

While he was engaged in this survey, he was recalled by news of his wife's illness, and he returned home, only to find her dead. The ties that bound Watt to Scotland were gradually disappearing. On May 17, 1773, Watt had effected his discharge from partnership with Dr. Roebuck, and early in 1774, Watt writes, " I begin to see daylight through the affairs that have detained me so long, and I think of setting out for you in a fortnight."

The contrast between England and Scotland at this date is interesting; both capital and labour were unequal, in the case of the northern country, to the task of producing the steam-engine, and making it a commercial success,22 and the inventor emigrated to England.

Roebuck lived on in obscurity till 1794, and though occasionally envious of the success of Boulton, deserves credit for his share in helping to lay the foundations of that success.

1 Transactions of Royal Society of Edinburgh, 1V, p. 65, 1796. Muirhead, op. cit., p. 162. Watt to Small, Jan. 28, 1769, Tew MSS.

2 Smiles Industrial Biography, p. 135. Muirbead, op. cit., p. 163.

3 Smiles, Smeaton and Rennie, p. 147. See Reports of the late John Smeaton, F.R.S., 3 Vols., 1812. Vol. 1, pp. 359, 412.

4 Muirhead, op. cot., p. 164.

5 Boulton to Watt, October 10, 1769. Tew MSS.

6 Watt to Small, April 28, 1769. Tew MSS.

7 Watt to Small, December 24, 1771. Tew MSS.

8 Watt to Small, December 12, 1769. Tew MSS.

9 Adam Smith, Wealth of Nations, Vol. 1, p. 285.

10 In a week the Bank advanced £1,600,000 Ib., Vol. 1, p. 278.

11 Graham, One Pound Note, pp. 1 1 1-2. The Bank of England held £150,000 of their paper.

12 Adam Smith, op. cit., Vol. 1, p. 277.

13 Adam Smith, op. cit., Vol. 1, p. 278.

14 Muirhead. op. cit., p. 196.

15 Watt to Small, August 30, 1772. Tew A1SS.

16 Watt to Small, November 7, 1772. Tew MSS.

17 Watt to Small, July 25, 1773. Tew MSS.

18 Watt to Boulton, July, 1773. Tew MSS.

19 Watt to Boulton, July, 1773. Tew MSS.

20 Watt to Small, Kinneil, May 20, 1773. Tew MSS.

21 Watt to Small, June 2, 1773. Tew MSS.

22 Watt to Small, Glasgow, April 29, 1774. Tew MSS. In this letter Watt says " there are too many beggars in this country, which I am afraid is going to the Devil altogether; provisions continue excessively dear and laws are made to keep them so, but luckily the spirit of emigrating nses high and the people seem disposed to shew to their oppressive masters that they can live without them. By the time some 20 or 30 thousand more leave this country, matters will take a turn not much to the profit of the landowners."

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