The Factory System New inventions led to a new system of producing goods. Before the Industrial Revolution, most spinning and weaving took place in the home. Industrial production involved large machines, however, and these had to be housed in large mills near rivers. Water flowing downstream or over a waterfall turned a wheel that captured the power to run the machines.

Why were many early mills/factories built near sources of water?

Many early mills and factories were built near sources of water because the water was used to power the machines. Water flowing downstream or over a waterfall turned a wheel that captured the power to run the machines, making it an efficient and cost-effective way to produce goods.