James Watt, the eldest surviving child of eight children, five of whom died in infancy, of James Watt (1698–1782) and his wife, Agnes Muirhead (1703–1755), was born in Greenock on 19th January, 1736. His father was a successful merchant. According to his biographer, Jennifer Tann: "James Watt was a delicate child and suffered from frequent headaches during his childhood and adult life. He was taught at home by his mother at first, then was sent to M'Adam's school in Greenock. He later went to Greenock grammar school where he learned Latin and some Greek but was considered to be slow. However, on being introduced to mathematics, he showed both interest and ability."
At the age of nineteen he was sent to Glasgow to learn the trade of a mathematical-instrument maker. After spending a year in London, Watt returned to Scotland in 1757 where he established his own instrument-making business. Watt soon developed a reputation as a high quality engineer and was employed on the Forth & Clyde Canal and the Caledonian Canal. He was also engaged in the improvement of harbours and in the deepening of the Forth, Clyde and other rivers in Scotland.
In 1763 Watt was sent a Newcomen steam engine to repair. While putting it back into working order, Watt discovered how he could make the engine more efficient. Watt worked on the idea for several months and eventually produced a steam engine that cooled the used steam in a condenser separate from the main cylinder. James Watt was not a wealthy man so he decided to seek a partner with money. James Watt was not a wealthy man so he asked John Roebuck to provide financial backing for the project. Roebuck agreed and the two men went into partnership. Roebuck held two-thirds of the original patent (9th January 1769) in return for discharging some of Watt's debts.
In March 1773 Roebuck became bankrupt. At the time he owed Matthew Boulton over £1,200. Boulton knew about Watt's research and wrote to him making an offer for Roebuck's share in the steam-engine. Roebuck refused but on 17th May, he changed his mind and accepted Boulton's terms. James Watt was also owed money by Roebuck, but as he had done a deal with his friend, he wrote a formal discharge "because I think the thousand pounds he (Boulton) he has paid more than the value of the property of the two thirds of the inventions."
For the next eleven years Boulton's factory producing and selling Watt's steam-engines. These machines were mainly sold to colliery owners who used them to pump water from their mines. Watt's machine was very popular because it was four times more powerful than those that had been based on the Thomas Newcomen design.
Watt continued to experiment and in 1781 he produced a rotary-motion steam engine. Whereas his earlier machine, with its up-and-down pumping action, was ideal for draining mines, this new steam engine could be used to drive many different types of machinery. Richard Arkwright was quick to importance of this new invention, and in 1783 he began using Watt's steam-engine in his textile factories. Others followed his lead and by 1800 there were over 500 of Watt's machines in Britain's mines and factories.
Eric Hobsbawm, the author of The Age of Revolution (1962) has argued: "Fortunately few intellectual refinements were necessary to make the Industrial Revolution. Its technical inventions were exceedingly modest, and in no way beyond the scope of intelligent artisans experimenting in their workshops, or of the constructive capacities of carpenters, millwrights, and locksmiths: the flying shuttle, the spinning jenny, the mule. Even its scientifically most sophisticated machine, James Watt's rotary steam-engine (1784), required no more physics than had been available for the best part of a century."
Arthur Young pointed out in his book, From Birmingham to Suffolk (1791): "What trains of thought, what a spirit of exertion, what a mass and power of effort have sprung in every path of life, from the works of such men as Brindley, Watt, Priestley, Harrison, Arkwright.... In what path of life can a man be found that will not animate his pursuit from seeing the steam-engine of Watt?"
Watt became a member of the Lunar Society of Birmingham. The group took this name because they used to meet to dine and converse on the night of the full moon. Other members included Matthew Boulton, Josiah Wedgwood, Joseph Priestley, Thomas Day, William Small, John Whitehurst, William Withering, Richard Lovell Edgeworth and Erasmus Darwin. The historian, Jenny Uglow, has argued: "The members of the Lunar Society were brilliant representatives of the informal scientific web that cut across class, blending the inherited skills of craftsmen with the theoretical advances of scholars, a key factor in British manufacturing's leap ahead of the rest of Europe. Most had been entranced by mechanics in childhood in the 1730s and 1740s, when itinerant lecturers toured the country displaying electrical and mechanical marvels."
In 1755 Watt had been granted a patent by Parliament that prevented anybody else from making a steam-engine like the one he had developed. For the next twenty-five years, the Boulton & Watt company had a virtual monopoly over the production of steam-engines. Watt charged his customers a premium for using his steam engines. To justify this he compared his machine to a horse. Watt calculated that a horse exerted a pull of 180 lb., therefore, when he made a machine, he described its power in relation to a horse, i.e. "a 20 horse-power engine". Watt worked out how much each company saved by using his machine rather than a team of horses. The company then had to pay him one third of this figure every year, for the next twenty-five years.