What factors contributed to the rise of the novel?

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The novel, as we would understand it, developed in the 1700's and was the direct result of the Industrial Revolution.  The price of paper, ink, bookbinding, etc. became progressively cheaper as book production became less of a cottage and more of a factory industry.  The steady rise in literacy rates generated a demand for new stories; the establishment of a leisure class enabled authors to write novels, and readers to read them. These factors lead to the novel's rise, and it has continued, somewhat modified, into present time. Many scholars agree that the first novel was Pamela; it's interesting to note that this first novel was about an English heroine, written and read in England, where the Industrial Revolution began.

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