The transformation from a market town to a major city began in 1761 when the Duke of Bridgewater canal began to bring cheap coal to Manchester. By the end of the 18th century Manchester had established itself as the centre of the cotton industry in Lancashire. The merchants brought the raw cotton from Liverpool, sold it to small-time masters in Manchester who then passed it to the spinners working in the cottages. In the 1770s the invention of machines such as the Spinning Jenny and the Water Frame completely changed the way that cotton goods were produced.
The machines in the first textile factories were driven by water-power and were therefore built in villages besides fast-flowing streams. By 1790 there were about a hundred and fifty water-powered cotton spinning factories in Britain.
Richard Arkwright was quick to see the significance of the Rotary Steam-Engine invented by James Watt and in 1783 he began using the machine in his Cromford factory. Others followed his lead and by 1800 there were over 500 of Watt's machines in Britain's mines and factories. With the invention of Watt's steam-engine, factories no longer had to be built close to fast-flowing rivers and streams. Entrepreneurs now tended to build factories where there was a good supply of labour and coal.
Manchester became the obvious place to build textile factories. Large warehouses were also built to store and display the spun yarn and finished cloth. The town's population grew rapidly. With neighbouring Salford, Manchester had about 25,000 inhabitants in 1772. By 1800 the population had grown to 95,000. The rich manufacturers built large houses around the Mosley Street area. At first the cheap housing for the factory workers were confined to New Cross and Newtown. However, as the population grew, close-packed houses were built next to factories all over Manchester.
The Stockton & Darlington line opened in 1825 successfully reduced the cost of transporting coal from 18s. to 8s. 6d. a ton. It soon became clear that large profits could be made by building railways. A group of businessmen in Manchester and Liverpool led by William James recruited George Stephenson to build them a railway.
The Liverpool & Manchester railway was opened on 15th September, 1830. The prime minister, the Duke of Wellington, and a large number of important people attended the opening ceremony that included a procession of eight locomotives. Large crowds assembled along the line and when the train entered Manchester the passenger carriages were pelted with stones by weavers, who remembered the Duke of Wellington's involvement in the Peterloo Massacre and his strong opposition to the the proposed 1832 Reform Act.
The Liverpool & Manchester railway was a great success. In 1831 the company transported 445,047 passengers. Receipts were £155,702 with profits of £71,098. By 1844 receipts had reached £258,892 with profits of £136,688. During this period shareholders were regularly paid out an annual dividend of £10 for every £100 invested.
The railway rapidly increased the population of Manchester. By 1851 over 455,000 people were living in the city. Housing conditions were appalling. It was reported that in some parts of the city the number of toilets averaged only two to two hundred and fifty people. Only forty per cent of the children living in this area reached their fifth year.
Manchester is famous for its libraries. The library founded by Humphrey Chetham (1580-1653) was the first free public library in Britain. Joseph Brotherton, a local MP, played an important role in 1849 in helping Salford become the first municipal authority in Britain to establish a library, museum and art gallery. The following year Brotherton joined William Ewart in persuading Parliament to pass the Public Libraries Act.
In 1846 John Owens, a successful Manchester cotton merchant, died and left most of his wealth to help establish a further education college for men that would not have: "to submit to any test whatsoever of, their religious opinions". His Unitarian friends, John Fielden and Thomas Ashton, also raised money for the venture and arranged to purchase the former home of Richard Cobden, in Quay Street, Deansgate. This became the first premises of Owens College when it was opened in 1851.
The Nonconformist business community in Manchester continued to raise money for the project and supported by Charles Prestwich Scott, the editor of the Manchester Guardian, the trustees were able to arrange the building of new premises at Oxford Street. Designed by Alfred Waterhouse, the new Owens College was opened in 1873. Seven years later, the college, along with those in Liverpool and Leeds, became Victoria University (Manchester University after 1902).