One of the heroes of the industrial revolution, USA division, is Eli Whitney and the McCormicks who ran with his invention. First,
Eli Whitney:
If some people are born with the natural ability to invent, Eli Whitney certainly was one of them. From a young age, Whitney had an innate understanding of machinery. The Yale graduate would later use this talent to invent the Cotton Gin, a mechanical device that transformed the economy of the pre-civil-war South.
***Before Webster’s dictionary gained wide acceptance, people did their own thing on spelling. Gin in this case is short for engine. The machine was a cotton engine.***
When inventor Eli Whitney arrived in the South in 1793, only green seed cotton could be grown inland. Problem was: the process of removing seeds from the cotton was extremely laborious. So Whitney devised a machine that automatically separated the seeds from cotton much faster than people could with their hands (in only one hour, Whitney's invention de-seeded a day's worth of cotton). When word got out about the Cotton Gin, plantation owners began planting as much green seed cotton as the land would allow.
***A good thing introduced in the wrong place at the wrong time. See my other blog for a riff on this point. http://shallnotkill.blogspot.com/ ***
Though Whitney received a patent for his cotton gin invention in 1794, by that time the invention was being pirated and used all over the country. Ultimately, Whitney left the South with very little to show for the invention that had made croppers millions. However, upon his return to the North, he reinvented American manufacturing with the idea of mass production.
***Now that would be patent number 72 for USA. Notice the confused view: patent, pirated, nothing to show. Croppers made millions because of a violent system that picked them as winners. What have patents to do with that? Does the writer here suggest had the patents been effectively enforced, Eli Whitney may have gotten a cut of the millions croppers earned by exploiting stolen lands and slavery? is that to be regretted?
Next, note as in China today, USA had rules on patents but no means of enforcing them. Yet the industrial revolution proceeded apace. Indeed, where there was a lack of enforcement, there was industrial revolution.
Not long after Eli Whitney invented the Cotton Gin, Cyrus McCormick invented another significant agricultural invention that revolutionized farming: the mechanical reaper. Prior to this invention, reaping was a painstaking process (done by hand with a scythe) that limited a farm's harvest.
The initial idea and design for the reaper actually came from Cyrus McCormick's father, Robert, who worked on the invention for 16 years. In 1831, twenty-two-year-old Cyrus took over his father's project and, within six weeks, he had built, field-tested, remodeled and successfully demonstrated the world's first mechanical reaper. McCormick's invention automatically cut, threshed and bundled grain while being pulled through a field by horses.
In 1834, inventor Cyrus McCormick took out a patent on his invention and, soon after, began manufacturing the reaper himself. Despite the amazing potential of the invention, most farmers remained uninterested.
***Of course, as is the case of some 7.9876 million times out 8 million, the patent equals failure.***
McCormick spent years making improvements to the mechanical reaper invention and coming up with business innovations to boost sales (including credit for purchases, performance guarantees, replacement parts and advertising). All his work eventually paid off – by 1851, Cyrus McCormick's reaper invention was an international sensation.
***Again, USA writers cannot see reality. There is no market for an invention that mechanizes reaping. There is a market for vendor financed, performance guaranteed, service assured and reference rich mechanized reaper. It is marketing of invention that matters, not invention. A patent brings absolutely nothing to the economy.***
Cyrus McCormick filed patents for the invention, and his achievements were chiefly in the development of a company, marketing and sales force to market his products.
***It does not matter that “marketing and sales” as imperative is widely known, we are supposed to believe that patents matter.***
His son Cyrus took up the project.[3] He was aided by Jo Anderson (slave), an enslaved African American on the McCormick plantation at the time.[4]
***This is a little remarked upon phenomena. Under slavery, people of some African heritage were often valued for their creativity and productivity. All slavery is profoundly evil, even the slavery enshrined in USA with the 13th Amendment of the US Constitution, the version of slavery acceptable to the progressives and the law of the land in USA today. But back under private chattel slavery there were architects, doctors, writers, ship captains, civil engineers, you name it. If a slave showed aptitude, the slave master enjoyed a bonus. Today, if it were not for the progressives and their agenda, we’d be enjoying the benefit of a wider range of contributions of Americans of some African heritage. But I digress...***
A few machines based on a design of Patrick Bell of Scotland (which had not been patented) were available in the United States in these years. The Bell machine was pushed by horses. The McCormick design was pulled by horses and cut the grain to one side of the team.
*** Ideas improved by other ideas... hegelian dialectic: thesis, antithesis, synthesis. As one of some Scottish heritage, I can well imagine an invention in which against all rational thought, a Scotsman insists the horses push, not pull, the reaper. If patents were in effect, McCormick would have well have been obliged to pay Bell and limit himself to horse-pushed reaping.***
Using the endorsement of his father's first customer for a machine built by McPhetrich, the younger McCormick continuously attempted to improve the design.
*** Fail fast, fail early. Constant customer-based improvement. What I teach is nothing new, it is just woefully unpresented.***
He finally sold seven reapers in 1842, 29 in 1843, and 50 in 1844. They were all built manually in the family farm shop. He received a second patent for reaper improvements on January 31, 1845.[5]
***Now notice: no finance. The horror of lending credit at interest had not yet becomes widespread. Also, this is how businesses were once started. The introductory product was poorly designed, expensive, rare, and hard to acquire. Patents lock in a design. That design is necessarily bad to start. Why lock in what is necessarily bad? ***
As word spread about the reaper, McCormick noticed orders arriving from farther west, where farms tended to be larger. While he was in Washington, DC to get his 1845 patent, he heard about a factory in Brockport, New York, where he contracted to have the machines mass-produced.
***Notice how much time he wastes on patents. Some people study art or write poetry in their spare time, apparently McCormick delighted in long meetings with expensive lawyers and filling out forms. All of the patent work did exactly zero for his company, just as time spent composing poetry would be irrelevant. ***
To obtain
the money and credit necessary to begin operations, McCormick formed what was to be a short-lived partnership with the mayor and leading citizen of Chicago, William B. Ogden. With $25,000 given by Ogden for a half interest, McCormick built his first plant near Lake Michigan on the north bank of the Chicago River.
***Money for expansion came from partnership, not a bank loan. Ogden risked his money by participating, not loaned money at interest. There was still the idea that this was the way to do business, indeed Christianity taught it as an imperative then, as islam teaches it is an imperative today.***
When
McCormick tried to renew his patent in 1848, the US Patent Office noted that a similar machine had already been patented by Obed Hussey a few months earlier. McCormick claimed he had really invented his machine in 1831, but the renewal was denied.[7] William Manning of Plainfield, New Jersey had received a patent for his reaper in May 1831, but at the time, Manning was evidently not defending his patent.[5]
***Oh. So the patents never really mattered. Never mind.
The first year of mass production was 1848. It was also the year that the original patent ran out. An application for extension was hung up in litigation and eventually disapproved, probably due to the effective lobbying of competitors who finally realized the potential of the reaper.
***Oh. So the patents never really mattered. Never mind. And in any event, it gets down to politics, not law.***
With his manufacturing plant set up, McCormick concentrated on sales and developed a system of company agents with machines on hand. He was one of the first manufacturers to offer his product at a fixed price with a written guarantee. The farmers were asked to pay $30 down and $90 later if the machine lived up to the claim of being able to cut 1 and 1/2 acres an hour.
***Oh. So the patents never really mattered. Never mind. What matters is marketing. Also, this is also Shariah compliant payment terms. The manufacturer participates in the risk of the farmer.***
Such a use of credit and guarantees was unusual at that time.
*** No it wasn’t. It is how new things were introduced for millennia: I invent, you share the profits of the improvement with me. it is an ancient practice. McCormick was not the first person to do this, he may have been the last though. State enforcement of usury had become widespread, so bank credit was getting easier to obtain than industrial cooperation. And with banks acting as clearing houses for indusrial cooperation, the state could more easily tax business and industry. Once they could effectively tax, they could in turn begin to fund war, bailout, famine, torture, prisons, in short, the progressive agenda. A writer today can be forgiven for not knowing how mankind advanced previous to today, especially when one is so dazzled by what glitters presently. But there are alternatives, which may come in handy in the not too distant future.
Next we see beginning then what we see happening today: those who “believe” in patents inevitably begin to game the system. To game the system is an admission the system is corrupt.***
To help toward this end as speedily as possible, McCormick's agent, acting incognito, would purchase and ship to Chicago one of the machines which had been so successful in the harvest just closed. The inventors at the factory then studied it carefully for the purpose of discovering a way whereby the implements in their charge might attain a similar perfection of operation, without making their employer liable to a suit for an infringement of patent-rights. If this could be done, the law still required that the patent should be granted to the expert who had made the invention—but he immediately thereafter assigned all of his interest in the monopoly to his employer. Therefore, the latter gave him a new problem to master, and the process was repeated. In this fashion the inventor of machinery was himself mechanized. The patrons of this Renaissance overshadowed the artists.
***So, use the police power of the state to undermine competitors and deny inventors just compensation. it is amazing that the biggest defenders of IPR are the very victims of it. C’est la vie!.***
McCormick also continued his practice of entering his machines in competition against the products of other companies. He ran full page advertisements with testimonials stating exactly when and where a feat had been accomplished.
***Just like your website should do today.***
McCormick was careful to keep the loyalty and goodwill of the farmers. In 1848, he said, "I have never yet sued a farmer for the price of a Reaper." He was always quite liberal in cases of natural disaster such as the drought that hit Kansas and South Dakota early in the history of the company.
***Now this is important. Along with lending credit, the banks would foreclose on anyone who could not pay a loan, and then sell the small farmers land to the preferred huge farmers, bring collectivization to the USA. With vendor financing, your suppliers want your success. With bank financing, the bank wants your failure. But to take loan at interest is to reject the bible teaching on usury and bring down destruction on the yourself. Can’t say they were not warned. But the main lesson is we can have industrial revolution without banks and intellectual property rights.***
Invention of harvesting implements was not confined altogether to the machine-shop of the industrialist between 1855 and 1885. In fact, the half-dozen most significant of the hundreds of patents for improvements in self-raking reapers, harvesters, and binders during these years were granted to farmers or to small-town mechanics. Nevertheless, the control of these inventions tended quickly to gravitate to the big manufacturers. They, alone, had the capital to exploit a new mechanism. Their scouts, or "patent experts," searched the countryside for valuable devices. These might often be secured for a very small sum." [3]
***O that too... Thos. Jefferson designed the unique USA patent system to benefit the small inventor. Banks allowed to lend credit at usury enabled a crime in natural law: outsized production crowded out competition while enfeoffing the customers, and denying inventors just compensation.
With the USA civil war, a tension between freedom and fascism finally broke in favor of fascism, and empire followed. IPR was strengthened.
Can we go back to where we go off track? Close cooperation between inventors, manufacturers, customers, with no banks nor IPR?
No, but maybe we can carve out a part of USA where we go back to say just before the USA invasion of Mexico, with some improvements like sound money, no IPR, respect of property rights, non-enforcement of slavery. I think the peninsula upon which Detroit sits would be a good candidate for such a nation/state. One country, two systems, like Hong Kong.
***John Spiers will be offering an all-day seminar on small business international trade start up at Orange Coast College, Los Angeles Area, June 29, 2013. Full info here...***
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