What Made America Different?
A British analyst surveying the relative technical positions of America and Great Britain in midcentury could rightfully argue that there was no cause for panic: the mother country still enjoyed great advantages over its rustic former colony. American woodworking was indeed ingenious—tubs, reapers, even machine tools, were built mostly of wood and leather; but if one believed that the future lay with steel, Americans were not yet even in the field. Almost all quality American edge-tool makers relied on Sheffield steel, with British factories supplying either finished parts or rough blanks to be trimmed and finished locally. American gun-makers switched to American steel suppliers at the start of the Civil War, but switched back as soon as the war ended. (And for all its vaunted superiority in gun-making, the North imported 80 percent of its guns in the first year of the war.) Much the same could be said of engines. American factories were mostly water-powered, but the wave of the future was clearly steam, and American railroad and steamboat lines bought British engines. On the eve of the Civil War, America’s biggest manufacturing industry was still cotton textiles, and the British could take sour comfort in the fact that American mills ran mostly on stolen British technology.
But the unexpectedness of the American showing at the Crystal Palace set off alarms. Advanced skills in precision manufacturing was so jarringly inconsistent with the common perception of America that it suggested a sudden economic acceleration. In fact, had national macroeconomic data been available, concerned Englishmen would have seen exactly the acceleration they feared. American income per head jumped from about two-thirds the British level in 1830, when it lagged countries like Portugal, France, and Canada, to virtual equivalence with Great Britain by 1860, far ahead of the next country on the list. Whitworth’s emphasis on the prodigious output of American machine-aided factories, in industries as diverse as stonecutting and window-making, implied that England might have already lost the productivity race. Modern research suggests that the crossing point came as early as the 1820s.
In an insightful analysis of the causes for the American surge, Whitworth proposed a list that included the relative scarcity of labor; the country’s great natural resources (although he points out that large tracts of the nation were quite barren); the lack of resistance to innovation on the part of workers; fewer barriers to organizing businesses; and most important in his view, the high national rate of literacy supported by a “cheap press.”
Modern scholars have considerably tweaked and refined Whitworth’s list. Scarcity of labor, for example, may have been a much more important factor in mechanizing midwestern farms than in, say, firearms production. When large farms could be had almost for the asking, especially in the prairie states, no skilled farm worker would choose to become a laborer. Since big farms had the same unforgiving weather-dictated time windows for planting and reaping as small ones, an ambitious, labor-short farmer had no choice but to mechanize. In 1857, Scientific American specified the minimum machinery for a one-hundred-acre farm as “a combined reaper and mower, a horse rake, a seed planter and a mower, a thresher and grain cleaner; portable grist mill, a corn sheller, a horse power, three harrows, roller, [and] two cultivators . . .” But it’s much harder to relate Armory mechanization to labor scarcities, for both Springfield and Harpers Ferry seemed to have an ample supply of craftsmen. Fear of displacement among Harpers Ferry craftsmen was a prime source of John Hall’s political problems.
The abundance of natural resources undoubtedly channeled American technology toward wood, water power, and large farms, but the historian Nathan Rosenberg suggests it may also have affected the pace of mechanization. In deforested England, workmen had to be much more respectful of their wood supplies than Americans, who were prodigiously wasteful. Hand-carving conserved wood better than machines, and British power saws were smaller, thinner, and ran more slowly than American saws to save wood. Whitworth also may have been right about America’s probusiness legislative stance. He suggests, for example, that American telegraph companies could get organized much faster than in England, and that telegraph penetration was much deeper as a consequence.
And almost all observers agreed on the extraordinary quality of American workers, the social fluidity of the industrial system, and very high average educational levels. (American school spending doubled between 1840 and 1850, and doubled again by 1860; per pupil spending rose by about half.) A British manufacturer who had spent many years in America told a committee of inquiry:
. . . the Englishman has not got the ductility of mind and the readiness of apprehension for a new thing which is required. . . . An American readily produces a new article; he understands everything you say to him as well as a man from a college in England would; he helps the employer by his own acuteness and intelligence.
Alfred Hobbs, the American lock maker, who had experience manufacturing in England, was also convinced that British workmen were a major productivity obstacle: “In America they might set to work to invent a machine, and all the workmen in the establishment would, if possible, lend a helping hand. . . . But in England it was quite the reverse. If the workmen could do anything to make the machine go wrong, they would do it.”
Whitworth similarly admired “the readiness with which [American workmen] cause new improvements to be received, and the impulse which they thus unavoidably give to that inventive spirit.”
The British cataloger of the American exhibit at the Crystal Palace caught that spirit very acutely:
The absence in the United States of those vast accumulations of wealth which favour the expenditure of large sums on articles of mere luxury, and the general distribution of the means of procuring the more substantial conveniences of life, impart to the productions of American industry a character distinct from that of many other countries. . . . [B]oth manual and mechanical labour are applied with direct reference to increasing the number or the quantity of articles suited to the wants of a whole people, and adapted to promote the enjoyment of that moderate competency which prevails among them.
There really does seem to have been a culture of invention in America. There were hundreds of water-powered sawmills in Massachusetts by the end of the eighteenth century, when they were still relatively rare in England, in part because of opposition from the sawyers, the British woodcutting trade. (Sawyers actually burnt down a new sawmill in Manchester in 1825.) Flour-grinding in stone water mills was hardly changed in England for hundreds of years, but in America, Oliver Evans patented a radical new design for a semi-automated flour mill in 1790 that was widely licensed. The patent drawing shows an extraordinary five-story apparatus with multiple conveyors and belts that could direct grain along several process paths depending on the operation to be performed. As the licensing brochure puts it:
. . . the grain and meal are carried from one story to another, or from one part of the same story to another; the meal is cooled; and the boulting hoppers are attended by machinery, which is moved entirely by the power of the mill, and lessens the expense of attendance at least one half.
While the British invented spinning machines and power looms, the Americans greatly improved the stolen British designs, making them faster and easier to operate, opening up the industry to young women. Within a decade after Lowell built the first American loom, American textile-making productivity exceeded Great Britain’s by 10 percent or more. The 1840s even saw the phenomenon of the patent broker, men who traveled by wagon throughout rural areas of the country, displaying recent inventions, and soliciting new ideas, which, for a fee, they would write up and submit as patent applications. It was Lincoln, after all, who said, “We, here in America, think we discover, and invent, and improve, faster than any [European nation].” Indeed, there may have been something of a patenting craze. After Asa Waters patented a trip-hammer forge, one competitor grumbled, “I should not think of gitting a patent for . . . applying a trip to welding a gun barel any moure than plating a scythe or a hoe it seems to me that a s
trange fanatism has operated on sum peope for gitting patents for some simple things.” One is reminded of some of the very strange software patents that were issued during the 1990s technology bubble.
The fundamental novelty of the “American system” suggests that it sprang from a unique technology environment. Consider the trajectory of Blanchard’s gun-stock machine: the tight network of machine geeks who spread the word of what he was up to even before he had finished; the instant receptivity to his ideas, and rapid creation of an R&D setting to work out a complete production solution; the culture of innovation, supported by quick patenting and wide licensing; the way good ideas radiated and refracted off each other, as from Waters’s barrel lathe to Blanchard’s gun-stock machine, and then to fully mechanized production environments through the combined work of Hall, men like Buckland at Springfield, and great private machinists like North, Ames, and Robbins and Lawrence. And key to the entire process was a consensus within the government and military that advanced technology was very much a national priority. Driving it all was the sense of opportunity—Lincoln’s “prudent, penniless beginner” could strive to become an independent businessman.
A schematic of Oliver Evans’s patented grist mill from a 1797 licensing brochure. The tall conveyor belt on the left raises the grain for storage. Sluice gate settings release it for multiple processing paths, including grinding, cleaning, heating, cooling, and chopping, each of which could be set for multiple repetitions. The mill was water-driven, and Evans maintained that it reduced “the expense of attendance at least one half.”
What Lincoln had not foreseen was that exploiting American innovation would require larger-scale enterprises than he could have imagined. The path to creating them would be very twisting indeed.
*A second-generation Blanchard machine, dating from the early 1840s, can be seen at the American Precision Museum in Windsor, Vermont, which is housed in the former main factory of the same Robbins and Lawrence company that won the firearms medal at the Crystal Palace exhibit. It has one of the world’s best collections of nineteenth-century machine tools, many of them still in working order, demonstrating as well how multiple machines, running at different speeds, were all driven off the same waterwheel. Strikingly, modern rifle factories still cut stocks with machines practically identical to Blanchard’s—except that they cut multiple stocks at a time and have a variety of guards to protect workers from cutting edges and flying chips.
*The investors who created the town of Holyoke, for example, calculated that even in the dry season, the river provided some 550 “mill powers.” A mill power is thirty cubic feet of water per second over a twenty-five-foot fall. The very largest mills consumed only four to five mill powers. The calculation also suggests the professionalism of early American capitalists.
*For many classes of products, strict interchangeability was not such an obvious requirement. A prairie farmer was satisfied with a replacement reaper blade even if it took some effort to make it fit. So long as the job was within the typical farmer’s skill set, it was “interchangeable” enough. The military definition tended to be a strict one, however—soldiers should be able to unscrew a defective gunlock piece and screw in another that fit just as well. During the Crystal Palace Exhibition and subsequent British investigations, the strict definition was the one generally intended, and is the one I use in this chapter.
*Historians used to take such claims at face value. But modern scholars like David Hounshell and Merritt Roe Smith developed the annoying habit of going back to the artifacts, gathering samples of, say, same-model Colt pistols, and taking them apart to see if the parts are interchangeable. They’re not. A dead giveaway is that each part is marked with the number of the specific pistol it fits. Colt’s production accounts specify the existence of “fitting departments” where specialized workmen used elaborate arrays of files to assemble the final product. The same was true in Singer’s and McCormick’s factories.
*Thornton and Hall feuded in public in 1819, after an antiquarian asserted that a German Marshal Saxe had anticipated Hall by a century. When Hall defended his priority, he was challenged by Thornton and, not for the first time, asked for an open arbitration, which Thornton airily dismissed with a quatrain:
What I have written, I have written, Pilate said
In answ’ring Jewish infidels, and those ill-bred.
And what I’ve written, I have written, once for all,
Whether the attack’s
From Marshal Saxe
Or from John Hall.
* Hall almost despaired when Ordnance sent samples of his rifles to Simeon North as manufacturing templates. Even a man as sympathetic as Bomford had missed the point that a sample wasn’t a pattern, and would inevitably incorporate imperceptible, but possibly fatal, deviations that would be passed along to all its progeny.
3
BANDIT CAPITALISM
Icy nights on the Hudson River shroud the black waters in swirls of white fog. Shorelines were dark in 1868, and the small boat with two sailors and two passengers circled aimlessly, having lost direction in the choppy river. A ferry suddenly loomed out of the fog like a ghost ship, swamping the boat with freezing water and nearly capsizing it. When the sailors finally deposited their charges on the dock at Jersey City, Jay Gould was drenched and shivering in his greatcoat like a rat terrier. His partner, Jim Fisk, Jr., corpulent, expansive, bediamonded, was his usual cheerful, booming self. And why not? They had eluded sheriff’s officers in New York, they had booked a whole floor of rooms in a good hotel, they had $7 million in cash, and Josie Mansfield, Fisk’s favorite actress of the moment, who was said to strike men dumb with her (rather zaftig) beauty, would join them in due course. The cash had been extricated from the safes of the Erie Railway, although most of it arguably belonged to Gould’s and Fisk’s nemesis of the moment, “Commodore” Cornelius Vanderbilt. But if one took the title chain just a step further back, it was really the property of European investors.
The late 1860s were raw, explosive times. The massive injection of federal spending during the war years had triggered a wild scramble for wealth and a pandemic of corruption. Every system—physical, commercial, financial—was strained and struggling. Even as federal spending dipped after the war, foreign money came pouring in. Between 1855 and 1865, net foreign investment in America had doubled; in the decade to 1875, it tripled. Most of it came from England. Victorian prosperity was underpinned by Prime Minister William Ewart Gladstone’s granitic commitment to Victorian morality in economic affairs—fiscal discipline, free trade, steadfast devotion to gold, and low interest rates. The return on British bonds fell steadily from more than 6 percent during the Napoleonic wars toward 2 percent in the 1880s. But stable prosperity could be boring, especially for adventurous sons and daughters of the upper classes who felt constrained by the modest returns from their “competencies.” The greedy monied classes were irresistibly drawn to Wall Street in the 1870s, and to a clever young trader like Gould they looked like so many sheep lined up to the horizon, asking to be sheared.
Gould and Fisk had been forced to repair to the rigors of a Jersey City hotel because they were in the process of extracting one of the country’s largest railroads, and biggest companies, from Vanderbilt and the other shareholders of the Erie. The episode was all the more shocking since it was masterminded by Gould, still in his early thirties and a virtual unknown on Wall Street, while Vanderbilt was the richest and arguably the most powerful man in the country, with long experience of financial markets. Still, it was Gould who emerged with the prize, although Vanderbilt wreaked enough havoc in the process that the railroad was damaged goods by the time Gould took control.
Of our four fledgling tycoons, Gould and Rockefeller were the first to make their presence felt in the years immediately after the war. Morgan, back in his father’s firm, made the occasional cameo appearance, while Carnegie had cut loose from the Pennsylvania and was casting about for a career, albeit making buckets of money in
the process. By 1870, however, Rockefeller had already become the most powerful figure in oil, while Gould’s late-1860s “Erie Wars” were a dry run for the strategies that made him the nation’s dominant railroad manager of the 1880s. In a pattern he would repeat again and again, Gould took control of the Erie by exploiting immature financial markets, and then violently disrupting the comfortable business patterns of his competitors. The resulting price wars and frantic defensive investments helped force the all-out, lurching style of railroad development that characterized the last quarter of the nineteenth century. Conservatives like Morgan deplored his methods, even as they sought his business, but the national system would never have developed so fast without Gould’s provocations.
Opéra Bouffe
The Erie Railway was a lopsided saga of vast disappointments leavened by extraordinary accomplishment. Organized under a special act of the legislature in 1832 to link “the ocean and the lakes,” its founders badly underestimated the engineering challenges of building a railroad through the stony, river-streaked hills of western New York. It took almost twenty years for the line to reach Lake Erie—at a point about fifty miles west of Buffalo—and it cost at least six times the original estimates. The railroad was freighted with a sodden history of bad luck and execrable judgments. Its finances were perennially a disgrace and its securities widely mistrusted. An inopportune burst of penny-pinching in 1841 prevented it from owning a direct route into New York City; instead it terminated on the western side of the Hudson, so city-bound freight had to “break bulk” and was ferried across from Jersey City. Traversing its difficult terrain with 1840s technology left a legacy of steep grades, rickety bridges, limited double-tracking (for safe two-way travel), and the wrong rail gauge—an unusually wide one, unfortunately, that substantially increased the cost of roads and rolling stock.
The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supercompany Page 8