The first engine was ready to work in 1776, and was for John Wilkinson's iron works, at Broseley; one for Bloomfield Colliery, in Staffordshire, was ready almost1 at the same time, while the first engine in London, was that for Cooke & Company's Distillery, at Stratford-le-Bow.

The arrangements and terms were from the beginning definitely fixed, and the effect of lack of capital upon the system of payment adopted, from the first, was clearly in evidenced.2 The cost of the erection of the Bloomfield engine was £2,000; the colliery paid for the materials of which the engine was composed, and for the labour necessary to erect it at the ordinary market price. Many of the bills were paid straight to Wilkinson, for the castings and foundry work that he supplied. On the parts that were supplied from Soho, Boulton & Watt got no profit, but looked to an annual payment to reimburse them for their capital expenditure on tools and workshops. This annual payment was based on the comparison of the consumption of coals by a common atmospheric engine, with those consumed by one of the new Watt engines. The amount of the saving, by using one of Watt's engines, was then to be divided between the owners of the engine and the firm of Boulton & Watt, in the proportion of two to one. 3 This curious system of payment was almost certainly devised by Watt.4 It was ingenious and honest, but very difficult of application, as it laid the steam-engine company open to the attacks of all who felt inclined to defraud them. The amount of coals consumed, and the work the engine performed, were both difficult to estimate and supervise. Moreover, the fact that the engine owners had to continue paying Boulton & Watt rent for an engine, for which they had already paid, was a constant source of friction.

The real cause of the curious system of payment was, undoubtedly, lack of capital. The firm had not the money to spare to lay down large works and purchase large stores of raw materials, nor for that matter, had they the labour with which to build the engines.5 Consequently, though this method of erecting engines did not mean prodigious expenditure of capital, yet it meant that the returns to the initial cost were correspondingly slow in coming in.

The charges against the business were, first, the peculiar tools necessary for the engineering business; among these was a new forge at Soho, and in 1781, a new engine-shop was erected. There were also travelling expenses of partners and workmen, expenses of the patents, and until the business began to pay, Watt was credited with £330 per annum. All this capital had to be found by Boulton, and though Fothergill, Boulton's partner in the hardware business, had refused to take any share in the engine business, much money, in the early stages, was borrowed from the older firm.

It was essential, if the engine business was to go on, that more capital must be procured, and the methods by which it was obtained are of the greatest possible interest and importance. The resources of Boulton & Fothergill were the foundation upon which the rest of the structure was based. In 1780, a statement of the position of that firm was drawn up by the cashier, and he estimates that during the eighteen years, from 1762 to 1780, on the capital of £20,000, the firm had lost £11,000; 6 especially the painting and japanning side of the business, which was losing at the rate of £500 per annum; however, Boulton himself was a man of substance, and his own credit was good. His wife had brought him £28,000,7 but of this he had been forced to sell the Patkington Estate to Lord Donegal for £15,000,8 and had, further, sold or mortgaged much of his father's property. This, however, was not enough.

Already, in 1778, before the engineering business had time to have much influence on their finances, Boulton & Fothergill were finding money difficult, and Fothergill was endeavouring to persuade their creditors to " differ their demands for a few weeks, and those who had it in their power do, in general, behave very tenderly."9 At the same time, the engine company, which was just beginning its business in Cornwall,10 was getting ever more difficult to work owing to the lack of funds. Up to this date, Boulton, who had, according to their partnership deed, advanced all stock in traded,11 had provided his capital privately, either from his own estates or his share in Boulton & Fothergill. Latterly, however, he had had recourse to loans from his friends, Day, Wedgwood, and Wilkinson, but these loans were personal affairs, and the lenders had no share in the business, but were paid a fixed rate of interest. 12

The situation of Boulton in 1778 was, in many ways, comparable to that of Roebuck in 1771, but the divergences in the position were all to Boulton's advantage. In the first place, his financial position was better established than Roebuck's, while he had the advantage of a better developed and more intelligent banking system, and no period of extreme financial stress at the time of his application for credit.

Boulton was at this time banking with the bank of Lowe, Vere, Williams & Jennings,13 and a loan might have been possible from them, but, unfortunately, they too were passing through a period of difficulty. Boulton had bills refused by the Bank of England (although they had been accepted by Lou e, Vere & Co.), because the Bank was suspicious of their soundness. Nor was this peculiar, for at the beginning of the month of July, 1778, Boulton writes that " Jennings, the junior partner of L. V. W. & J. House, was absconded, and that he had accepted bills unknown to the House, and unentered in any of their books, to the amount of £180,000 for an Irishman, and as the bills now became payable, and nothing to answer them, Mr. Jennings took five hundred pounds and went off to France. This circumstance became instantly known to the publick, and was mentioned in the newspapers. A run and immediate ruin was expected to fall upon the House, but it took a more favourable turn in the minds of the people, and no run was made upon the House, and what was still (more) favourable was the transactions for the greatest part of the sum were done by Jennings between Christmas and Lady-day, whilst Sir Chas. Raymond was in partnership, and, therefore, he comes in for his share . . "14 However, the next day saw things in a less favourable light, Boulton, fearing that " L. & V. House—would be destroyed as a Banking house, and, therefore, I must find a new connexion . . . 15 The greater part of the business of this firm was, as yet, mainly commercial, and it was with the money gained from the West Indian trade that capital was eventually found to finance Watt. " Even in this emergency, Lowe, Vere & Company may yet be saved, if ye West Indian Fleet arrives safe from ye French Fleet . . . as many of their securities depend on it." 16

The bank had-already advanced Boulton large sums, and in this time of extremity began to press for repayment, but the steam-engine firm wanted more advances not repayments. Boulton urged Watt to press for payments for the engines already erected in Cornwall,17 and asks whether any advances were possible from Cornish bankers.18 Watt, who was no business man, was unable to do either of these things, and wrote back to Boulton in a very hopeless strain. Nevertheless, in July, 1778, things were beginning to be serious. Watt, on Boulton's suggestion, had tried to persuade a Cornish bank to advance them some money, but the banks were very cautious, " and such is the nature of the people—and so little faith have they in our engine scheme, that very few of them believe it to be materially better, and, as far as I can judge, none I have conversed with would advance us £500 on a mortgage of it."19

Moreover, at the end of 1778, credit again became restricted, and great prices were given for ready money, and premiums were illegally offered for loans. 20

Matters improved slightly as the month (July, 1788) went on; by the eleventh Boulton had received a thousand pounds on account from Moscow from his hardware business, a thousand pounds as part payment for an order for plate, and another thousand pounds from his shares in the Birmingham Navigation Company. In spite of this, Lowe, Vere & Co. pressed for repayment, but Boulton persuaded them to delay, and obtained their promise in writing. 21 During this month, too, a fire broke out in the engine-house at Soho, and damage estimated at from three to four thousand pounds was done, part of which was covered by insurance.22 However, matters became more difficult, and although, in August, Watt sent a draft to pay Wilkinson's account for erecting Ting Tang engine, which they had already met,23 it was very long before the first annual payment for the engine was made.

Things seemed hopeless. Watt, in this extremity, suggested the introduction of John Wilkinson as a third partner, on the grounds that, " rather than founder at sea,we had better run on shore."24 This suggestion was not really acceptable to either partner, and towards the end of the year, Boulton tried to make arrangements with a Mr. Wiss for a loan of £7,000, in return for which Boulton & Watt were to pay him an annuity, guaranteed by the engine contracts. Neither Boulton nor Watt was anxious to mortgage or sell agreements, but as money looked like being " more scarce than ever it was known" in the coming winter, something had to be done.25

Mr. Wiss, who was a merchant, was not anxious to put away money in annuities, unless there was a distinct prospect of good returns, for which purpose he demanded the definite allotment to himself of various engines and their payments. 26 One of the difficulties in the way of completing the transaction was that Wiss wanted the money paid straight to him from the engine owners, and not through Boulton & Watt, 27 which was impossible, as it would have deprived the engine firm of the shadow of authority that it possessed.

During 1779 and 1780, the prospects did improve appreciably, though difficulties were found in the way of estimating the amount of coals burned and the amount of saving, 28 and Boulton began to advocate a fixed annual payment, instead of a variable amount based on Watt's tables of the saving. Watt, however, was tenacious of his tables, and was very disappointed when an agreement with the Wheal Virgin was concluded for a payment of £2,500 per annum.29

Moreover, the Cornish mines to which they supplied engines had, in some cases, ruined the people who already had shares in them, and the time taken to erect the engine and pump the water out was long enough to break up the companies.

Thus it happened in several cases that Boulton & Watt had to take shares in the Copper Mining Companies in order to obtain payments for their engines. Wheal Union Mine was one of the earliest of these; its agent said it would be given up unless a new corps of adventurers be raised. " Mr. Edwards wishes we would take some shares . . . what strikes me this time is this—If the engine is stopped we gain nothing, if they will accept of our payments from the monthly savings we may venture to buy to that extent." 30 The snowball of capital was beginning to roll faster and faster, and more and more shares had to be taken in mines every year. Their share in Wheal Union was a sixteenth,31 and by December, 1780, Boulton was engaged in five mines,32 and, in 1782, he and his friends accounted for a quarter share in a mine33 that had not been worked for twenty-five years.34

The Cornish mines were curiously in advance of their times in their company organization. At the time when an ordinary partner in a trading company was liable to meet deficiencies in that company with all his property,35 a Cornish mine was " subject to the Stannary Laws, so that if it should become a losing concern, an adventurer may withdraw, and is not liable to lose any more than the sum he advances, and as the accounts are publicly settled every month, you may from time to time see how the concern goes." 36 This was a long step toward a limited liability company. All these new commitments in the Cornish mines though ultimately they brought in a return, were at the time a drain on the firm's resources.

Wiss pressed for a definite allotment of engines; Watt demanded frantically to be released from his personal bond to Lowe, Vere & Co.; while the hardware firm was gradually sinking under the weight of the engine business.

Watt's argument in that matter was that Boulton had agreed to provide the capital, and he did not see why he should enter into bonds to guarantee an advance.37 Boulton was in a very difficult situation; large commitments, a reproachful partner, and two creditors pressing for repayments.

Fortunately, at this time he had received £4,000 for reels for the East India Company38 One thousand of this went to his partner in the contract, Rehe, and £3,000 Wiss retained until their affairs were settled. Boulton intended to repay the £3,000 to Lowe, Vere & Company, and get their release for half the £14,000 and obtain the release of Watt from his personal bonds, substituting the personal security of Boulton & Fothergill. In order to do this, Watt was to hand over to Boulton & Fothergill sufficient engines to meet the demands of the bankers, and in return to draw from Boulton & Fothergill one-third the value Of £7,000. or to receive engines equal in value to such thirds.39 Watt agreed that this was desirable, but saw numerous objections to assigning as many engines as Boulton suggested. He thought that such a general assignment could not fail to hurt their credit. 40

However, Lowe, Vere & Company preferred to keep the inventor in the agreement if possible, and Watt told Boulton that if his release was impossible, all he demanded " was an absolute release of so much of the mortgage as is equivalent to the money obtained from Mr. Wiss.''41

Boulton repaid Wiss £1,000 in May, 1780, and agreed to pay an equal sum in December, 1781 and 1782, thus reducing the annuity which had to be provided for him to £400.42 When the agreement with Wiss was submitted to Watt, he was annoyed to find that it was a mortgage agreement between Wiss, and Boulton & Watt, whereas it should have been between Wiss, and Boulton & Fothergill, or Boulton alone. Watt was willing to assign any quantity of engines, provided " that sufficient is left to secure Lowe, Vere & Co., and that he was bound in no bonds."

The position was quite simple: Watt had agreed to provide the invention, Boulton the capital. Those were the terms of the partnership, but to an outsider this was not apparent, and the bankers were naturally suspicious of lending money to a firm only one of whose partners was to be responsible for repayment. In the middle of May, Watt wrote to Boulton, " I shall, therefore, only say this, that if my executing this deed cannot be dispensed with, I will do it, but will not execute any personal bond for the money, and would rather assign you all Cornwall on proper conditions than execute this." 43

The difficulty with the bankers was that if the engines that were assigned to them stopped working, their payments stopped too, and unless they could control Watt, they might not be recompensed. Therefore, Watt agreed to assign certain agreements to Wiss, and bind himself " in a command" with Boulton " to put another agreement of equal value in the place of it, if that mine should stop working, but that Mr. Wiss is to take your and Mr. Fothergill's personal bond in place of mine.''44 The capital difficulty was not so pressing for a little t me, though the copying machine, which Watt had invented,45 needed supporting and advertisings.46

Although Watt was eager that Fothergill should take his place as a security, he made difficulties about lending his workmen to the hardware firm when they received a large order for more reels Tom the East India Company. He quite failed to appreciate, though he took for granted the fact, that the engine company was founded on Boulton & Fothergill's reputation.

Moreover, the development of the copper and tin mines, consequent on the application of steam power, increased the importance of the home production in the market, and in November, 1780, it was suggested by the hardware manufacturers of Birmingham, that a copper and brass works, with a capital of £50,000, be set up with Boulton as manager to lower the price of copper and brass. Boulton, however, refused, and " recommended patience for 18 mo., as in that time there will, in all probability, be double the ore raised than at present in this country," due to the use of steam engines. 47 In any case, it is doubtful whether Boulton could have found the time or the capital to have entered an undertaking of that description, while his own affairs were in such a critical state.

Watt's care for his own skin, ill health, and occasional reproaches, had made Boulton's position very difficult. It has been said that in a combination between an inventor and a capitalist, the capitalist " is generally in a position to get the best of such a bargain,"48 but this was not true of Boulton's partnership with Watt, and in December, 1780, Boulton wrote to Fothergill, that he must either " quit this business here (Cornwall) in favour of Soho (and I must say I do not think Mr. Watt has either health or spirits to encounter with the wrangels we do and must constantly meet with) or I must quit Soho in favour of the engine business."49 This was written when Boulton was disheartened; and things improved slightly, until in June, 1781, Boulton's debts were, " Day, £1,000; Messrs. Baskerville, £1,000; Messrs. Lowe, Vere & Co., and the Amsterdam (Wiss) debt on mortgage; and although I am now within one year of being tolerable easy in money matters, yet I am at this time so circumstanced as to be truly miserable." Watt has been again pressing Boulton to release him from the personal bonds in which he was bound to Lowe, Vere & Co.; Boulton has " received so much pain from Mr. Watt's repeated ungenerous behaviour to me on that account, that I am determined as soon as possible to wipe away all obligation to him.''50

Thus the firm went on, the income gradually meeting the expenditure, but in 1781 more difficulties appeared. Though Watt had almost perfected his rotary motion, it was not yet either patented or on sale. The Cornish mines were, therefore, still the main objects of their attention; and here two difficulties appeared, the mines that had been worked were becoming poor and unprofitable, while those that were large and rich had in many cases been so long disused, that large amounts of capital would be required to set them going.

Chacewater had become so poor that the adventurers lost £300 in the month of July, 1781,51 while to set North Downs to work would cost £20,000 to £24,000, and would take two years.52 However, Boulton suggested taking a small share in all the newly started mines.53

Boulton was gradually paying off his debts with regularity, when, unfortunately, in August, 1781, " the Dutch politicks kept back the mails," and remittances he had expected did not come to hand. 54 Moreover, a Dr. Moor, who owed them55 money, failed, and Boulton had to leave London without reducing his debts to Lowe, Vere & Co., much to the annoyance of the bankers.56

Boulton, nevertheless, managed to make his peace with them, and by October they were again in a complacent humour. Fothergill was the next trouble that Boulton had to deal with. He was ill and tied of the long struggle. The main weight of the hardware business fell on his shoulders, and he obtained no profit from the time spent by Boulton on engine affairs. Boulton intended to make an ultimate settlement with Fothergill, and Watt urged him to be more careful that the engine business suffered no loss.57

Boulton wished to deal fairly with Fothergill, and thought that he should receive some benefits for the risks that had been taken. 58 Watt, on the other hand, does not see why Fothergill should profit from his invention.59 "At any rate, a sum equalto what you have at greatest outlay stood delivered for should be a sufficient compensation for the risk which I think was never very great since the Act was obtained and all the prior sums you tell me were charged to your own account, and, in fact, I do not see Mr. Fothergill was very bound in law for any sums you advanced, and consequently the whole loss would have fallen upon you in case of failure so that any compensation you are in equity obliged to make must be for the time you have abstracted yourself from the concerns of Boulton & Fothergill." 60

The fact that Arkwright's patent had just been upset must, doubtless, have influenced their credit adversely at this time.61

Boulton was tired of Watt's complaints and desired that he should take over the accounts of Boulton & Watt. This Watt was pleased to do and immediately tried to cut down expenses in the firm as he had tried to cut down his own private ones. 62 Moreover, instead of all the engine company's profits being paid into Boulton & Fothergill's account, they were to be banked separately in the Birmingham Bank, and then applied to wiping off the debt to Lowe, Vere & Co. Watt wished to be out of debt to the London banker rather than to settle up with Boulton & Fothergill. While Fothergill was naturally anxious for a repayment as soon as possible. 63

However, both sides were eager for a settlement as Fothergill was leaving partnership with Boulton. The position as it was between the original hardware firm and the engine firm is carefully set out in a letter to Pearson, the cashier, " By our contract of partnership, all expenses whatsoever attending the business prior to the passing of the Act of Parliament—were to be placed to his (Boulton's) account solely. And also all expenses which might or may ensue in making experiments for the improvement of the engine were to be charged to him, and in return, such engines, models, etc., which were made for that purpose were to be and remain his property or part of his stock. Consequently he ought to be debited for the costs of the several engines which have been erected for the use of Soho manufactory—Boulton & Fothergill ought to be debited to Mr. Boulton for the value of the said engines, which were applied to the use of the manufactory, and also for their maintenance. All expenses which were incident to the making of engines for sale should be charged to respective engines.

" General expenses should be debited for interest of money rents, clerks, salaries, travelling expenses, etc., in the prosecution of the business, my personal account is, I believe, clearly stated except some claims against Mr. B., prior to 1775, of no great amount—

" Whether Mr. B. ought to pay the late charges of patents I leave to himself,—

" As money had been advanced by Mr. B., through B. & F., at various periods, and has been applied promiscuously to the purposes of experiments and trade, it will be necessary to deduct the first from the latter, according to their dates before the interest can be charged.

" It may perhaps appear hard to charge Mr. B's. part with the whole expense of experiments, etc., but when it is considered that upon that account he is allowed two-thirds of the profits, and that it is according to the tenor of our bond of partnership, I expect that the appearance of hardship will vanish; at any rate I am ready to forgo any claim which does not, in the present state of the business, seem just and reasonable....

" It is only with Mr. B. that I am in partnership. That he is bound to admit no other partner in his share without my consent under my hand and seal. That I never did consent to his dividing any part of the profits of this business with Mr. F. any longer than Mr. F. and he should remain in partnership, and that I agreed to on consideration of Mr. F's. enabling Mr. B. to give a greater share of his time and attention to B. and his business than he has in reality done, and in consequence of which so much of the business has fallen to my share to do, that I have been rendered very unhappy—the want of Mr. B's. assistance has been a loss of some thousands to B. & W., and I cannot pretend to foresee all the consequences."64

Unfortunately, Watt, in taking charge of the affairs of Boulton & Watt, had not only written to Soho about the accounts, but also to Lowe, Vere & Co. In this letter, too, Watt made his own position and lack of responsibility quite clear, and, unfortunately, gave the bankers an opportunity of complaining about Boulton's handling of the transaction. Boulton immediately wrote to Watt upbraiding him, a letter which Mrs. Watt kept from her husband for some days. Watt apologized for his letter, but continued to complain about their debts, and said that he was sick of the engine business, and wished he were out of it. There are three ways in which the business can be saved, all of which entailed sacrifices on Boulton's part. His suggestions to Boulton are :65

" First. If you can borrow upon bond or mortgage of any of your property, the sum you owe Lowe, Vere & Williams.

" Second. If you can dispose of your property in the house of B. & F., even at the losing price.

" Third. If you can find a proper person to buy so much of your engine property as will relieve you—J. Wn ;66 the Dale Co. ;67 or our friends, W. Phillips & Co. ;68 Mr. E."69

The main object of Watt's solicitude was his own emancipation from the personal bonds, and to do this, Boulton even tried to transfer the loan to another firm.

This certainly was the most difficult period of the engine business; the mines in Cornwall, the main source of income, were making difficulties about payment,70 and the orders for engines had almost ceased to come in. 71 At the end of the financial year, 1781, Boulton & Watt had not " money to pay their Xmas balances nor their workmen's wages, but have had money from B. & F. on account for those purposes."72 Then, in June, the position began to simplify itself. Fothergill died and Boulton made ample, even generous, provision for his family; the death of his partner simplified the financial affairs of the firms considerably.73

Money, generally, was easier, and Boulton thought that if he could only get rid of his present indebtedness, he could get half a dozen friends, who would lend him eight thousand pounds each. 74 The difficulties of the firm can be understood, for their net income from engines erected up to the end of 1782 was £3,724, whereas the payments, which ought to have been made had all the engines been at work, was £9,878.75 However, money was beginning to come in, and while Boulton was in London occupied with the foundation of a brass company and the opposition of a petition to Parliament, which sought to prevent the exportation of brass,76 he received bills from Watt, in Cornwall,77 which enabled him to reduce their debt to Lowe, Vere & Co. by £10,000, and at the same time to obtain Watt's conditional release from the personal bonds. 78

Rotative engines were now being ordered and paid for by annual payments of £5 per unit of horsepower, 79 and the Albion Steam Corn Mill was founded by Boulton, Watt & Co., in London. This necessitated a further sinking of capital, Boulton investing £6,000 in that concern; but by this time the engine business was firmly on its feet, Watt, at any rate, was deriving an income from it, for in 1785 he ceased to draw his £330 per annum from Boulton & Fothergill, while in 1787, he was credited with £4,000 from Boulton & Watt, and Boulton would have paid him the whole amount due had it not been for the demands of the Albion Mill. 80

In 1784 matters were finally arranged with Lowe, Vere & Co., and Matthews took over the banking of Boulton & Watt. 81

The crisis was passed, Boulton's credit and the real efficiency of the steam-engine had enabled the engine company to succeed in spite of the prejudice against the monopolies, the suspicion of wild-cat schemes, and the large scale of the enterprise. The extension in the size of the business had meant improved business methods in Cornwall. Boulton had introduced formal procedure into the Adventurers' meetings, and at Soho order and accuracy were everywhere insisted upon. The invention of a machine for copying letters, by Watt, was in direct answer to a demand; he was tired of copying long, wearisome letters, and they had made it a rule, from the foundation of the business, never to send a letter without copying it, and the machine saved many laborious hours. The internal business organization was a natural accompaniment of the expansion of industrial enterprise, and it is probable that the methods were copied to a large extent from those of the bankers and merchants; in fact, just as more and more capital was diverted from commerce to industry, so the methods of commerce were applied to industry.

Boulton, having successfully overcome all his difficulties, sought for new fields to conquer. He became the moving spirit of the Cornish Metal Company, which was to buy, smelt, and sell to manufacturers the copper and brass of Cornwall.82 As this company consisted almost entirely of the manufacturers who consumed the brass and copper in their works, the result was the saving of a middleman, and the control of the preliminary stages of production by the final producers.

Boulton was asked to persuade his friends to advance money at 8 per cent for this venture, but he managed to obtain the loan of thirty or forty thousand pounds at a rate not to exceed 5 per cent from an Amsterdam banker, called Hope, who was alsolaced to his (Boulton's) account solely. And also all expenses which might or may ensue in making experiments for the improvement of the engine were to be charged to him, and in return, such engines, models, etc., which were made for that purpose were to be and remain his property or part of his stock. Consequently he ought to be debited for the costs of the several engines which have been erected for the use of Soho manufactory—Boulton & Fothergill ought to be debited to Mr. Boulton for the value of the said engines, which were applied to the use of the manufactory, and also for their maintenance. All expenses which were incident to the making of engines for sale should be charged to respective engines.

" General expenses should be debited for interest of money rents, clerks, salaries, travelling expenses, etc., in the prosecution of the business, my personal account is, I believe, clearly stated except some claims against Mr. B., prior to 1775, of no great amount—

" Whether Mr. B. ought to pay the late charges of patents I leave to himself,—

" As money had been advanced by Mr. B., through B. & F., at various periods, and has been applied promiscuously to the purposes of experiments and trade, it will be necessary to deduct the first from the latter, according to their dates before the interest can be charged.

" It may perhaps appear hard to charge Mr. B's. part with the whole expense of experiments, etc., but when it is considered that upon that account he is allowed two-thirds of the profand I fear many failures will follow among the middle class of manufacturers and traders. An instance of which happened this morning in Birmingham. The commercial world now seems to be in as great agitation as it was in the year 1772, and I fear the effects will be more violent." 88

However, Boulton had no need for alarm, the engine business was in a sound position, and continued to develop rapidly until the end of their period of monopoly,89 and Boulton was enabled to stand as a representative of the manufacturers of the country on many questions. His pre-eminent position in the declining years of the eighteenth century proved the solidarity of his achievement for industry.

1 Watt's Memorandum on Boulton. Tew MSS. Boulton to S. Garbett, February 16, 1776. Tangye MSS,

2 Smiles is scarcely accurate in his account of the origin of the system of payment. He says that at first Boulton and Watt " were mainly concerned to get orders and were not very particular as to the terms on which they were obtained. But when the orders increased and the merits of the invention gradually became recognized they found it necessary to require preliminary agreements to be entered into as to the terms on which the engine was to be used." This seems to be inaccurate, for in a letter to Richard Lodge, of Gray's Inn, in answer to a very early inquiry for an engine, Watt writes, " in relation to my own profits, I do not propose to charge any upon the prime cost of the engine but upon the savings of fuel over any other fire-engine you please to compare it with," and the whole of the system is outlined in its finished state. Watt to Lodge, June 12, 1775. Tangye MSS. Moreover, there is a vague reference to the system as early as 1769. Watt to Small May 28, 1769. Tew MSS.

3 Watt to Richard Lodge, Gray's Inn, June 12, 1775. Tangye MSS. Watt to Peter Capper, October 10, 1782. Boulton & Watt's engine raised 83.33 thousand cubic feet of 4 water 1 fathom high per A good common 22 t bushel of coal.

4 All the earliest letters in which the system is described are Watt's composition.

5 John Wilkinson did the major part of the iron work for the engines, thus relieving the engineering firm of the necessity for laying down immense sums in capital for iron founding.

6 Statement by Zach Walker. Tew MSS.

7 Boulton to Matthews, June 26, 1781. Tew MSS.

8 Smiles, Boulton and Watt, p. 205.

9 Fothergill to Boulton, February 7, 1778. Tew MSS.

10 Watt's Memorandum of Boulton, Tew MSS. Chacewater started in September, 1777.

11 Watt in Boulton re Partnership Tow MSS.

12 Day was the author of Sandford and Merton. He lent Boulton £3,000 at 4 per cent in July, 1776.

13 F. G. Hilton Price, A Hand-book of London Bankers (1890), p. 177. " Williams Deacons Bank:—I have been unable to trace this banking house further back than the year 1771 when they appear in the London Directory under the style of Raymond Williams, Vere, Lowe, and Fletcher."

14 Boulton to Watt, July 2, 1778. Tangye MSS.

15 Boulton to Watt, July 3, 1778. Tangye MSS.

16 Boulton to Watt, July 3, 1778. Tangye MSS.

17 Boulton to Watt, July 2, 1778. " It is better to be pressing for the payment of our just debts than to be pressing and importuning Cold Friends to lend their money." Tangye MSS.

18 Boulton to Watt, July 3, 1778: " If we could be assisted by any means with £5,000 we could be easy, and therefore I wish to exhort you to read, mark, learn if it were possible to raise as much in Cornwall." Tangye MSS.

19 Watt to Boulton, Redruth, July 8, 1778. Tew MSS. The principal Cornish Bank was Elliott & Praed, which had as its London representative, Biddulph & Co.

20 " It has been owing to the scarcity of money, says a correspondent, that people have lately very commonly given not only five per cent. but also large premiums for the use of capital thereof contrary to the laws against usury.---Aris's Birmingham Gazette, October 26, 1778.

21 Boulton to Watt, July 11, 1778. Tew MSS.

22 Boulton to Watt, July 25, 1778. Tew MSS. 23 Watt to Boulton, August 8, 1778: " I send enclosed Draft of the Cornish Bank ' Elliot & Praed' on their representatives in London for £386 1OS. od., being ye amount of Ting Tang account with Mr. John Wilkinson paid by us to him," Tew MSS.

24 Watt to Boulton, July 8, 1778. Tew MSS.

25 Boulton to Watt, December 17, 1778. Tangye MSS.

26 Wiss to Boulton, November 7, 1778: " Considering the great value of money at this time, I would not choose to part with three or four thousand pounds on annuities, but upon the footing which yourself did propose, and to which I did acquiesce, adding only this, that for my security I shall be satisfied with your joint engagement of you and Mr. Watt's ensuring me the enjoyment of the income of the engines until the end of your privilege in the manner you do propose, viz. by making over others in case these should cease going; I beg that you will favour me with your answer directed for me at Genoa by way of France, as I have some money there which I might remove in case you should agree." Tew MSS.

27 Boulton to Watt. vanuary 20, 1779. Tangye MSS.

28 Boulton to Watt, February 1, 1777. Tangye MSS. Watt has invented an unalterable counter to register the strokes of the engine.

29 Watt to Boulton, September 18, 1780: " I shall not depart from the tables." Tew MSS.

30 Boulton to Watt, April 19, 1780. Tangye MSS.

31 Boulton to Watt, April 28, 1780. Tangye MSS.

32 Boulton to Fothergill, December 11, 1780, Tew MSS. " I have found it necessary to interweave myself into the general Cornish business, by which I am the better enabled to protect and encourage the engine business and profits, I am now become quite initiated into the mining and copper trade, and have embarked in no less than four different partnerships, and am upon the brink of closing another agreement of do., which will require much of my attention."

33 A list of adventures in Polgooth Mine is given by Boulton writing to Wedgwood, who was also a shareholder.

Mr. John Wilkinson5sixty-fourths
The classes of shareholders are worthy of notice. They consist in Boulton and Watt and their friends, the Cornish Landowners, Cornish Bankers, London Bankers, and the Cornish Mining Adventures.

34 Boulton to Capper, November 11, 1782. Tew MSS. Boulton is confident of the worth of the mine

35 Boulton to John Wilkinson, October 8, 1787. Tew MSS.

36 Boulton to Wedgwood, November 3O, 1782. Tew MSS.

37 Watt to Boulton, May 1, 1780. Tew MSS.

38 Watt's Memorandum of Boulton: " Reels used in organizing silks . . . which Mr. Boulton undertook, and by the assistance of the late Mr. Rehe made considerable improvements in," Tew MSS.

39 Boulton to Watt, April 15, 1780. Tew MSS.

40 Watt to Boulton, April 13, 1780. Tew MSS.

41 Watt to Boulton, May 1, 1780. Tew MSS.

42 Boulton to Watt, May 17, 1780. Tangye MSS. Watt to Boulton, May 17, 1780. Tew MSS.

43 Waft to Boulton, May 19, 1780. Tew MSS.

44 Watt to Boulton, June 9, 1780. Tew MSS.

45 This was the ordinary wet-copying process which Watt invented.

46 Boulton to Watt, Tune 12, 1780. Tew MSS.

47 Boulton to Watt, November 20, 1780. Tangye MSS.

48 Marshall, Industry and Trade, p. 244.

49 Boulton to Fothergill, December 11, 1780. Tew MSS.

50 Boulton to Matthews, June 28, 1781. Tew MSS. Matthews was the firm's London representative, and later took over the banking of the firm.

51 Watt to Boulton, August 16, 1781. Tew MSS.

52 Watt to Boulton, July 10, 1781. Tew MSS.

53 Boulton to Watt, July 24 1781. Tew MSS. " I think in North Downs we might take 1/32. We may always venture our license against their money."

54 Boulton to Zach. Walker, August 10, (?) 1781. Tew MSS.

55 Boulton to Watt, August 21, 1781. Tew MSS.

56 Boulton to Vere Lowe & Williams, August 30, 1781. Tew MSS. Watt to Boulton, October 15, 1781. Tew MSS.

57 Watt to Boulton, September 6, 1778. Tew MSS.

28 Watt to Boulton, February 11, 1782: Boulton had arranged to share the engine profits with Fothergill until they reached twenty thousand, a sum which Watt is sceptical of their ever reaching. Tew MSS.

59 Watt to Boulton, February 13, 1782. Tew MSS.

60 Watt b Boulton, February 11, 1782. Tew MSS.

61 Watt to Boulton, July 16, 1781. Tew MSS., Daniels, The Early English Cotton Industry, p. 102.

62 Watt to Boulton, March 9, 1782.

63 Watt to Boulton, March 9, 1782.

64 Watt to Pearson and Buchanan, February 20, 1 782. Tew MSS.

65 Watt to Boulton, March 16, 1782. Tew MSS.

66 John Wilkinson.

67 The Coalbrookdale Iron Co., and Messrs Reynolds & Rathbone.

68 Another firm of iron smelters.

69 Mr. Eglinton, in partnership with Boulton in the painting side of the hardware business. Boulton to Mathews, April l, 1782. Tew MSS.

70 Boulton to Watt, April 2, 1782. Tew MSS.

71 Boulton to Watt, April 19, 1782. Tew MSS.

72 Boulton to Matthews, June 19, 1782. Tew MSS.

73 Boulton to Ingram, May or June, 1782. Tew MSS.

74 Boulton to Matthews, July (17), 1782. Tew MSS.

75 A list of engines compiled by Boulton, September 24 (1782). Boulton to Watt, May 31, 1783: " Mineing was a losing trade upon the whole like ye state lottery; yet nevertheless the few 5, ten, & twenty thousand pounds prises kept up the spirit of mining." Tangye MSS.

76 Boulton to Watt, May 24, 28 and 31, 1783. Tangye MSS.

77 Watt to Hamilton, July 11, 1782: " The clear income of the engine business is above £3.000 per annum, and has a chance of being £2,000 greater, but may also be less or nothing; as we shall be able to defeat our opponents." Tangye MSS.

78 Boulton to Watt, May 31, 1783: " I have pd. L. V. W. 10,000 of B. & W. money by the 2 bills you sent me and a draught on Matthews for the rest and they are to write you a letter to tell you that they agree to release you as soon as my account with them is reduced to eight mill., which I shall beg Mr. Walker to be attentive to the accomplish as soon as possible." Tangye MSS.

79 Boulton to Morris, Iron Founder, October 21, 1786. Tew MSS

80 Boulton to Matthews, December 7, 1 787. Tew MSS.

81 Boulton to Matthews, December 16, 1784. Tew MSS.

82 Watt to Wilson, November 2, 1786. Tew MSS.

83 Boulton to Wilson, November 2, 1786. Tew MSS.: " It is to be understood that the aforesaid loan is not to lye at interest for a number of years, because such a house as Mr. Hope's can always do better than live upon the simple interest of their money, but they will accommodate the Cornish Company until their sale come round."

84 Boulton to Droz, May, 1787: " The Government proposed five hundred to ten hundred tons coined directly, but the Government will have nothing to do with the purchasing of the copper or with the circulating of the money." Tew MSS. Droz was a French artist whom Boulton proposed to employ to design the coins.

85 Boulton to Townend, February 13, 1781: " A Capital of 20,000 pounds to be employed in Brass and Spelter Works divided into two hundred shares, no person to hold more than four shares and every holder covenants to purchase from the company one ton of brass per annum for every share he holds, by which means you will perceive that the Company has made sure of a market for 200 tons of brass per annum." Tew MSS.

86 Wilson was the agent of the steam engine firm in Cornwall, and had been indefatigable in their interests from the beginning.

87 Among the firms which became insolvent at this date were Livesey, Hargreaves & Co., Calico Printers and Manufacturers, of Blackburn. The number of bankruptcies in the six months ending July 22, 1788, amounted to 360. " Allowing one thousand pounds to be sunk by each—how enormous must be the general loss sustained by the public in so short a space of time."—Harrops Mercury, July 22, 1788. Leo H. Grindon, Manchester Banks and Bankers, 1877. One bank prevented a run by painting all its doors and woodwork, and the time wasted in getting into the bank paintless saved the situation. pp. 45-7.

88 Boulton to Wilson, May 4, 1788. Tew MSS.

89 Inventions, Improvements, and Practice of Benjamin Thompson, Colliery Engineer, with some interesting particulars relative to Watt's Steam Engine, 1847, p. 110. " In 1800 Mr. Watt's patent expired . . . many establishments for making steam-engines of Mr. Watt's principle were then commenced; but it would appear that the object principally aimed at was cheapness rather than excellence, for they fell short as to performance of the Soho engines, and Boulton and Watt for many years afterwards kept up their price and had increased orders." For a " description of a very cheap engine for raising water " see Nicholson's Magazine, May, 1802,

I Capital and Steam Power I Capital in Other Industries I