You're going to love this story. The father of the American Industrial Revolution wasn't an inventor, or even a financier. He was a thief -- a Brahmin thief (Exeter, Harvard), but a thief nonetheless.
What did he steal? Intellectual property. Some of those who changed the technology world were populizers who took (and I mean took) an innovation and brought it to fruition … in the U.S.
When Britain set up its colonies, it had in mind a terrific business model. The colonies (us, India, Australia, Canada, etc.) were supposed to supply the mother country with cheap raw material, such as cotton and wool. And we were supposed to buy costly finished goods, such as fabric and clothes, at full retail (no discounts for those ex-convicts and revolutionaries). And, of course, the Empire would get richer. The Crown and the wealthy noblemen would own the means of production, and that manufacturing asset would not be exported to the "colonies."
Back in Merry Old England, every family used to make their own clothes. They did the carding, the spinning and weaving at home -- remember Ben Kingsley in "Gandhi"?
Carding meant taking a wooden block with metal spikes and running it through wool or cotton to make fibers. Fibers were run through a spinning wheel powered by a human foot, turned into thread and woven on a home loom to create cloth. This technique was pretty much the same going back to the Egyptians. The Brits found that their spinning frame could automate the task, but they needed power -- even more than a team of horses could provide. So they first put their spinning frames near fast-moving streams or rivers, but eventually they hooked them up with one of James Watt's steam engines.
This solution led to automated factories, which threatened the livelihood of the British textile industry workman -- so much so that Ned Lud and the Luddites (which I know sounds like a bad rock band) destroyed several of these early factories. About that time, a Yalie called Eli Whitney perfected the cotton gin, which drove the cost of raw material down even more. Got it? So Britain had automation, cheap raw materials and a stranglehold on the technology -- and even better, a virtual monopoly.
Enter Francis Cabot Lowell.
Lowell was a merchant. He imported silks and tea from China and textiles from Britain, and he went on factory tours -- lots of factory tours. He spent two years going from English factory to factory, studying spinning and weaving machines that operated on both water and steam power. At the time, the Brits would allow no drawings of these machines to leave the island, nor would they allow the machine designers off of Britain's shores. Talk about a closed system.
So Lowell memorized the inner workings of British power looms. He told everyone he was "recuperating" from an illness, and that was why he was spending so much time in Britain. He had reached the conclusion that the U.S. needed to manufacture here and stop buying there. He was, of course, not able to buy drawings or obtain a model of power looms.
By the time the War of 1812 started, Lowell was back in Boston, starting the first integrated factory -- taking raw cotton and turning it into finished cloth. He hired young women as textile workers and built a system -- and for the next 100 years, textiles were the basis of much of New England's wealth. But Lowell wasn't the only one. Samuel Slater also learned textile machinery as an apprentice in Britain. He knew cotton spinning technology inside and out and memorized as much as he could before departing for the U.S.
In America, we know Slater as the Father of the American Factory System. But in Britain, he's Slater the Traitor. (Brits have to work on their sense of humor -- or humour.) So let's not hear any more about how Huawei may have inadvertently expropriated some Cisco operating systems, or how the evil Chinese are electronically rifling our best technology…
I love this story for a whole bunch of reasons: Their traitors are our heroes. By starting manufacturing here, America built up its skill set. Some of those early mill buildings on the Merrimack River later housed companies such as Digital Equipment.
Steve Jobs was once offered a factory tour by Xerox, where he saw the first real computer workstation. Jobs was so impressed he went back and eventually built Lisa, and from Lisa came the Mac and from the Mac came everything else. Actually, Xerox got the technology from Citibank, which back then was building its own computer workstations and PBX under a bank automation initiative called Project Paradise. Citibank believed that no computer or telecom company understood its needs. So Jobs "borrowed" from Xerox, which "borrowed" from Citibank.
Years ago, many of my clients at The Yankee Group were Japanese companies that wanted tours of U.S. factories. Some said yes, but General Electric always said no. Maybe they knew something.
Lowell died at age 42 (who said that only the good die young?) His machine shop sold power looms all over, and it later built locomotives. With steam power, the importance of rivers became less important, so the textile industry was able to move to the South, then to the Midwest, and eventually to the rest of the world.
In his own way, Francis Cabot Lowell was a genius -- not a technical genius, but an organizational one. He conceived of the fully integrated factory, one that would take raw material in at one end and deliver a finished good out the other. America had both a domestic market for home consumption and a thriving export market, but not so much in Great Britain, where they also had a very good memory.
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