Further it could not be housed in cottages. This resulted in machines being purchased and installed by wealthy men in special buildings, where large number of workers worked under expert guidance. In other words, it resulted in the replacement of the domestic system by the factory system. Though the domestic system also continued to exist side by side with the factory system, the latter tended to dominate and supplant the former.
With the passage of time when the factory system became more complicated and huge enterprises like railways were undertaken, the individual capitalist could not provide capital by themselves.
As a result joint stock companies and corporations were evolved. Large number of people invested in these companies through stocks of bonds and shared profits of the company. It gave a great fillip to investments. It is estimated that in England the capital investment increased from 35 billion dollars in 1870 to 70 billion dollars in 1910.
The mechanization of industry and enhancement of capitalism was also accompanied by a growth of population. The population of England which stood at 9 million in 1800 increased to 14 million in 1830; 22 million in 1870 and about 187 million in 1900. Most of the increased population went to the cities and contributed to the growth of cities and towns. For example while London expanded into an urban colossus, the other cities like Bristol or Glasgow also became densely populated.
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Some of the small villages also grew into big and busy centres such as Liverpool, Leeds, Sheffield, Manchester, Birmingham. This tremendous growth of the industrial towns resulted in a significant change in the social structure. The society in addition to the familiar divisions of landowner and peasant, merchant and artisan, also came to have division of industrial capitalists and industrial proletariats. Initially the lot of the workers was very miserable.
They were expected to work for long hours in the minimum dismal, unsanitary and unsafe conditions. The factory owner paid wages and often preferred to employ women and children who were ready to work at lower wages. The introduction of machinery also lead to the problem of unemployment.
However, after 1870 as industrialization deepened and broadened, attention was paid to the betterment of working and living conditions of the wage-earners, and a numbers of social reforms were undertaken by the government. The workers who were brought together by the introduction of factory system formed trade unions for the promotion of their common interests.