The Dawn of Innovation (61 page)

I helped perpetuate the mistake in my book
The Tycoons
.

In the nineteenth century, with the notable exception of the 1870s, there was usually little difference between nominal and real, or inflation-adjusted, growth rates. Long-term prices were quite stable although year-to-year fluctuations could be quite sharp.

The explanation for the apparent distress as the real economy boomed probably lies in the temporary distribution of the adjustment pain. The better-off, who were likely to be creditors, would have greatly benefited from the rise in monetary values, and it is likely that wage cuts applied first to the most vulnerable workers. The question has recently drawn much interest, but definitive answers will require a great deal of scholarly digging to reconstruct data on wage levels and household balance sheets to match the generally good census data on physical output.

The shift is apparent in a mid-century leap in American worker productivity. Even as its manufacturing sector grew rapidly, American labor maintained its roughly 2:1 edge over British workers for the rest of the century. At the same time, American transportation productivity jumped sharply, doubling that of the British by century's end, while wholesale and retail trade made gains nearly as great. Aggregate data somewhat muffle the shift, in part because as an older population, Great Britain had a considerably higher percentage of its people in the work force.

Henry Bessemer, a prolific British inventor, had discovered that injecting a blast of cold air into a container of molten iron touched off a violent reaction that decarburized the iron within minutes. Adding a small amount of carbon back into the mixture produced excellent steel, as the chemical violence within the container ensured total mixing. A technical problem, which took some time to overcome, was that the process worked only with low-phosphorus ores. Fortunately, the vast Mesabi ore range around the Great Lakes was ideal for the Bessemer process.

All such statements reserve the significant exception of African American slavery. Even after the Civil War, freed slaves and their descendants—particularly, but not just, in the South—were kept in a state not unlike that of Russian serfdom for nearly another century.

A GE official pooh-poohed the idea that they would allow such critical technology to be exploited by China: “Why would we give away our future?” he asked. But senior bankers made that same argument in the years just before the financial crash. In most cases, they readily sold their firms' futures for the sake of temporarily higher revenues, higher stock prices, and higher bonuses.

Hu Jintao is the “paramount leader,” holding the posts of general secretary of the Communist Party, president of the People's Republic of China, and chairman of the Central Military Commission. Wen Jiabao is the premier of the State Council, which oversees the day-to-day operations of the government. The members of the Party Politburo and the State Council all come from a relatively small body of senior leaders, who make all important policy and personnel decisions. All important positions are filled by party members. At this writing, the Hu-Wen government will complete its second five-year term in office in 2013 and will cede its positions to a new team that has not yet been officially designated.

Chovanec worries that the government can manipulate inflation data by managing prices on goods tracked in the official consumer market basket. Impressionistically, the prices he sees every day in Beijing are rising by double-digits, but taxi fares, which are in the basket, have been held flat, causing a visible diminution of taxi service. Other data, based on physical movement of goods and the like, suggest that important sectors of the economy are contracting, even though reported growth continues to be strong.

The patent system then in effect required a petition with a short description, separate detailed descriptions and drawings, and a model if the secretary required it, which Jefferson did in this case. The secretary did not “approve” patents: he officially accepted completed filings to give notice to other inventors. A filing conferred fourteen years' exclusive production and use subject to challenges in courts.

After the fire, the Patent Office solicited families and other sources for old records to reconstruct lost filings. The family provided Whitney's written specifications but not drawings. The drawing shown in
Figure A.1
is a copy of drawings, certified as accurate in 1804, which were found in the records of one of the cotton-gin patent cases. The Patent Office later made a model of the Whitney gin and apparently made drawings from that, which are now bundled with the original specifications. A 1960 article by a senior patent official confirms that the patent office commissioned a model of the Whitney gin in 1845, and that the drawings now on file “are merely drawings of the cotton gin made in 1845” and include “the addition of some figures . . . showing alternative forms of teeth.” But it adds, “Whitney is known to have made a model showing three different forms of teeth.” The original description, on the other hand, nowhere mentions other forms of teeth. Instead of clearing up the record, therefore, the Patent Office may have merely made it conform to the legend.

Miller wrote Whitney in 1797 that “We”—presumably referring to the gin business—“have been literally bankrupts for one year past—and I have been reduced to the cruel and mortifying necessity of appropriating the Property of the Estate to prevent this Bankruptcy from becoming public—In consequence of which a Plantation belonging to the Estate of Gen. Greene of Carolina will this spring be sold for half its value.” Whitney in the meanwhile was complaining to Stebbins that Miller was skimming too much money, and there is a later very bitter letter from Miller to Whitney.