What Was the Factory System?

For those of us living today, it seems impossible that there was ever a time before factories produced all the goods we use in our daily lives. 

In reality, the factory’s rise is relatively recent regarding the scope of human history. For much of human existence, people made goods and grew food. Only the very wealthy might have purchased goods from artisans.

The Factory System is the term used to describe the manufacturing system first developed in the 18th century. 

The creation of factories made it possible to create large and specialized businesses solely devoted to specific kinds of production. 

The Factory System is also linked inextricably with the Industrial Revolution, which has forever changed how people worldwide live today.

What Did the Factory System Replace?

The Factory System replaced what is known as the Domestic System. This system is also called the putting-out system. Before the rise of the factory, 17th-century Europeans employed local producers to make products for them. 

These people might have worked in their homes or workshops to create handmade goods they sold at the market or to specific buyers. These finished products might be made by women and children or by guilds of workers hired for their skill at making specific goods.

The first death knell for the Domestic System was the rise of water-powered and steam-powered machines. When these items could be made rapidly enough to increase the production power of a specific farm or industry, the need to send out for work was superseded by what these new machines could do. 

However, it was not until the creation of interchangeable parts that the Factory System took off.

The reason that interchangeable parts were so key to the rapid adoption of the Factory System was that this new way of making all the components of an item made it possible to create the same good over and over with predictable results. 

These were the first instances of mass production, and they forever changed how every kind of good was made in countries progressing through the stages of the Industrial Revolution.

Characteristics of The Factory System

Some key characteristics define the Factory System:

Considered to be a Form of Production

Factory System is a form of production where the labor does not own a significant amount of the enterprise. This system is very different from the cottage or putting-out system, where workers produce the goods, and people pay them directly for their efforts.

Use of Unskilled Labor

The use of unskilled labor also undermined the putting-out system, which required that artisans and craftsmen have trained skills that they used to create goods from start to finish. 

The Factory System allowed people with very little training to produce goods through an assembly-line production method. This fact saved the factory owner time and money but undermined the development of skilled labor.

Economics of Scale

Factories can produce goods on a large scale. The putting-out system would never be able to produce goods as rapidly or effectively as the Factory System. 

Transportation was also a vital aspect of the economics of scale. Owners could readily transport the factory-made goods from a central location to those looking to buy them.


Artisans no longer had to work in the fields or outside the city to make their goods and then transport them into city centers. 

Factories instead brought raw goods for production to the city and created the goods onsite. This centralized site led to quicker production and rapid turnaround times for the delivery of goods to customers.


The cost to invest in factory machines and locations was too significant for the cottage industry to participate in the Factory System. 

This cost meant that all production moved to city centers. Perhaps the one exception was the sewing machine’s creation, which promoted the longevity of the putting-out system in specific clothing and sewing-based industries.


For the first time, goods could be standardized and produced with regularity and precision. 

This created the first model of predictable goods production. Of course, we take this feature of purchasing goods for granted today, but before the rise of the Factory System, this was not a possibility.

The First Technological Developments

Britain’s first significant industrial system developments were related to a few key industries. 

The spinning jenny, the mule, and the power loom significantly improved production speed and regularity in the weaving and clothing industries and allowed for the more rapid production of certain forms of food, such as flour.

Most of the attention is always placed on the weaving industry when discussing how the Factory System impacted the production of goods in Britain. 

This specified lens is because, by 1800, factory production had wholly replaced old handcrafting methods for spinning cotton in Britain. No other European nation moved to factory production of textiles so rapidly. 

France would not be creating most of its cotton via factory until 1830. The rest of Europe was not utilizing factories at the same level as Britain until the 1840s.

The iron industry is another excellent example of the changes that an entire industry could experience due to the rapid rise of the Factory System. 

There are few industries wherein the use of division of labor was so prevalent, and this is one of the best examples that shows how goods were produced in Europe and the United States. 

Iron production and the creation of tools and metal parts were not always done through an assembly-line production system. 

Without the rise of the modern factory, the concept of an assembly line might never have been fully realized.

How Did The Factory System Work?

The division of labor was the heart of the factory. Without it, everyone would have been making goods from start to finish as they had been in the putting-out system. 

When factories use the division of labor to guide the production process, each worker creates one part, or perhaps a few parts of a product, before passing the good along to someone else to complete yet another step. 

Division of labor requires that workers know a few essential skills, saving time and effort for the factory owner and management. Being able to save time concerning training meant that labor could be kept cheap and affordable, and owners could easily replace workers.

Factories operated with direct supervision and had well-established and strict rules. Because workers could be so easily trained, sacking someone for mistakes or missed work days was no penalty to the factory or its owner. 

Factories worked for fixed, long hours, most of which were open Monday through Saturday or even seven days a week. 

Punctuality and attendance were critical to the factory system, and those who were late or did not perform might be docked their pay, be dismissed, or suffer corporal punishment.

Certain industries still needed skilled craftsmanship. As a result, companies would contract for these services rather than look to train workers to meet this need. 

Foreman supervised the rest of the working staff, and the hired artisans would take care of their unique tasks without needing to work with the assembly line workers.

The advent of the Factory System predates the invention of a practical source of lighting for factories by nearly 100 years. Factories had seasonal hours since the working conditions often did not allow for safe operating conditions once darkness had fallen. 

Workers might work sixteen or seventeen hours in the summer and then six to seven hours a day during the deepest part of the winter. 

Despite the grueling hours worked during the summer, the advent of stable lighting sources would lead to abusive assembly-line conditions where workers worked seven days a week for sixteen hours a day. Workers would eventually have to unionize to halt some of these abuses.

Problems Which Arose From the Factory System

The Factory System might have made it possible to create goods rapidly with great consistency, but there were flies in the ointment. 

Problems related to the Factory System were immediate, and the social pressures work placed upon working-class people in various developing countries were numerous and highly damaging. 

It would be generations before some of the damage done during the Industrial Revolution could be rectified.

The living conditions were appalling in the factories of the early industrial period. A lack of restroom facilities was common, as was working in low light, with little fresh air. 

Many men and women were forced to move into factory housing in the city, where companies preyed on them by forcing them to pay more than they earned to buy goods at company stores. 

The living conditions might be as squalid as the factory itself, but no one raised a hand to stop the oppression of workers so long as there were vast amounts of money to be made by the factory owners.

Child Labor Conditions

Children as young as four and five were hired to work in factories, sometimes taking on the most dangerous jobs at each location due to their small size. 

Children who were missing limbs, digits from hands and feet, or who suffered from lung ailments were common. Unfortunately, the standard fourteen-hour workday also applied to these children, making it easy for young workers to fall asleep at work and become injured or let go due to exhaustion. 

Gangs of children roved through major cities living on the streets and scraping together money from various odd jobs or even outright theft when they were between factory jobs.

The devaluation of labor brought the lower classes down to a poverty level that they had perhaps never experienced or at least had not been forced to contend with since the Middle Ages. 

The first real middle class arose from the ashes of the cottage industry, making the lines between haves and have-nots clearer than ever. Factory owners could enjoy an aristocracy that came from their wealth, freeing them from the caste system which had held them down in the days when only hereditary wealth was possible. 

This widening gap between social classes was perhaps the most damaging feature of the Industrial Revolution. The social ills caused by the wide gap between the poor and the wealthy are still being felt.

The Factory System Has Forever Changed the Way We Work and Relate to One Another

The Factory System would forever change how people interacted with one another, how they earned money, and how goods were produced and sold. Gone were the days of skilled artisans being valued for the beauty and unique nature of the goods they could produce. 

The creation of interchangeable parts and the rise of the steam-powered engine made it possible to create goods that could be made rapidly and with predictable results without paying for the services of skilled artists and craftsmen.

For over 100 years, workers were subjected to squalid, unsafe, and predatory working conditions while earning pennies on the dollar and struggling to survive. 

This era of invention and production would also become one of social upheaval, strife, and revolt. The Factory System has created our current reality of possibility, discovery, and easy gratification, but at a great and terrible social cost.


Britannica.com. “Domestic System.” Britannica.comhttps://www.britannica.com/topic/domestic-system. Accessed 16 Jan. 2023.

Moy, Charlotte. “Factory System.” The Economic Historian, 31 July 2022, https://economic-historian.com/2020/11/factory-system/. Accessed 16 Jan. 2023.

energy.gov. “The History of the Light Bulb.” Energy.gov, 22 Nov. 2013, https://www.energy.gov/articles/history-light-bulb. Accessed 16 Jan. 2023.

Digital History. “The Introduction of the Factory System.” Digital History, https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3518. Accessed 16 Jan. 2023.

Langlois, Richard. “Capitalism and the Factory System.” Economic as a Process: Essays in the New Institutional Economics, Cambridge University Press, 1986, p. 203–223.

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