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Long before the United States began accusing other countries of stealing ideas, the U.S. government encouraged intellectual piracy to catch up with England’s technological advances. According to historian Doron Ben-Atar, in his book, Trade Secrets, “the United States emerged as the world's industrial leader by illicitly appropriating mechanical and scientific innovations from Europe.”
Among those sniffing out innovations across the Atlantic was Harvard graduate and Boston merchant, Francis Cabot Lowell. As the War of 1812 raged on, Lowell set sail from Great Britain in possession of the enemy’s most precious commercial secret. He carried with him pirated plans for Edmund Cartwright’s power loom, which had made Great Britain the world’s leading industrial power.
Halfway across the Atlantic, a British frigate intercepted Lowell’s ship. Although the British double-searched his luggage and detained him for days, Lowell knew they would never find any evidence of espionage for he had hidden the plans in the one place they would never find them—inside his photographic mind. Unable to find any sign of spy craft, the British allowed Lowell to return to Boston, where he used Cartwright’s design to help propel the Industrial Revolution in the United States.
Founding Fathers Encouraged Intellectual Piracy
Lowell was hardly the first American to pilfer British intellectual property. The Founding Fathers not only tolerated intellectual piracy, they actively encouraged it. Many agreed with Treasury Secretary Alexander Hamilton, who believed that the development of a strong manufacturing base was vital to the survival of the largely agrarian country. Months before taking the oath of office as the first president in 1789, George Washington wrote to Thomas Jefferson that “the introduction of the late improved machines to abridge labor, must be of almost infinite consequence to America.”
The fledgling country, however, lacked a domestic textile manufacturing industry and lagged far behind Great Britain. The quickest way to close the technological gap between the United States and its former motherland was not to develop designs from scratch—but to steal them.
In his 1791 “Report on Manufactures,” Hamilton advocated rewarding those bringing “improvements and secrets of extraordinary value” into the country. Among those who took great interest in Hamilton’s treatise was Thomas Attwood Digges, one of several American industrial spies who prowled the British Isles in the late 18th and early 19th centuries in search of not just cutting-edge technologies but skilled workers who could operate and maintain those machines.
In order to protect its economic supremacy, the British government banned the export of textile machinery and the emigration of cotton, mohair and linen workers who operated them. A 1796 pamphlet printed in London warned of “agents hovering like birds of prey on the banks of the Thames, eager in their search for such artisans, mechanics, husbandmen and laborers, as are inclinable to direct their course to America.”
Digges, a friend of Washington who grew up across the Potomac River from the president’s Mount Vernon estate, was one such intellectual vulture. Foreigners recruiting British textile workers to leave the country faced £500 fines and a year in prison, and Digges found himself jailed repeatedly.
The American spy printed 1,000 copies of Hamilton’s report and distributed them throughout the manufacturing centers of Ireland and England to entice textile workers to the United States. His most successful recruit was Englishman William Pearce, a mechanic whom Digges thought a “second Archimedes.”
Dispatched to the United States with letters of introduction to both Washington and Jefferson, Pearce initially worked on manufacturing projects for Hamilton. He later established a cotton mill in Philadelphia that was personally inspected by Jefferson and George and Martha Washington. The first president praised Digges for “his activity and zeal (with considerable risk) in sending artisans and machines of public utility to this country.”
Pirated Technology Was Patented
Under the Patent Act of 1793, the United States granted dubious patents to Americans who had pirated technology from other countries at the same time that it barred foreign inventors from receiving patents. “America thus became, by national policy and legislative act, the world’s premier legal sanctuary for industrial pirates,” writes Pat Choate in his book Hot Property: The Stealing of Ideas in an Age of Globalization. “Any American could bring a foreign innovation to the United States and commercialize the idea, all with total legal immunity.”
That’s what Samuel Slater did. The English-born cotton mill supervisor posed as a farmhand and sailed for the United States in 1789. Having memorized the details of Richard Arkwright’s patented spinning frames that he oversaw, Slater established the young country’s first water-powered textile mill in Rhode Island and became a rich man. While President Andrew Jackson dubbed him “Father of American Manufactures,” the English had a quite different nickname for him—“Slater the Traitor.”
More than two decades after Slater’s emigration, the textile industry in the United States still lagged behind the British who had the cutting-edge technology of the Cartwright power loom, the water-driven machine that weaved thread into finished cloth. Living in Edinburgh, Scotland, under doctor’s orders to recuperate from nervous exhaustion, Lowell grew determined to bring British technology back to the United States.
Lowell’s upper-crust pedigree had made him an unlikely spy, but that was precisely how he gained access. Bearing letters of reference, the sickly American did not appear to be a threat to the textile mill owners and England and Scotland who gave him the unusual privilege of touring their factories, which were concealed behind fortress-like walls topped with spikes and broken glass. Lowell took no notes and asked few questions, but all the while he studied the power loom design and committed it to memory.
Back in Boston, Lowell did more than replicate the pirated British technology. With the help of Paul Moody, he improved upon Cartwright’s power loom in 1814 by constructing in Waltham, Massachusetts, the first integrated textile manufacturing mill, which converted cotton into finished cloth under one roof.
The spinning water wheels of American textile mills—and the stolen secrets upon which they were built—propelled the United States forward and quickly transformed it into one of the world’s leading industrial powers.
How a Little Bit of Industrial Espionage Started the Industrial Revolution
The Industrial Revolution changed the lives of ordinary people faster and more radically than any other period in history before it. Within only a few decades, small artisan shops were replaced by large factories. The Industrial Revolution started with the mass processing of cotton. Yet, as we will see, this happened only due to significant industrial espionage across multiple countries.
How Industrial Espionage Started America’s Cotton Revolution
With technical know-how and entrepreneurial spirit, Samuel Slater helped build early American industry–becoming rich and famous along the way.
Slater bailed on the English and came to America in 1789, sailing on a ship to New York in response to the bounties offered by the American government for workers who knew how to manufacture cotton. The technologies involved in manufacturing cotton fabrics were held by the British, who kept them from the Americans by the fairly simple expedient of forbidding skilled textile workers from emigrating and not allowing technical drawings of the machinery to leave Britain.
Because of these practices, even though cotton had been cultivated in the United States with the use of enslaved laborers for more than a century, the country had no domestic textile manufacturing industry. After Slater brought his technological know-how from Britain, with the backing of American merchants, textile manufacture became America’s most important pre-Civil War industry and cotton production became a central part of the early American economy.
Slater was born in Derbyshire, England in 1769, writes PBS, and started working at a young age. He was apprenticed to a cotton mill owner and eventually became a supervisor at the mill. In that position, the public broadcaster writes, “he became intimately familiar with the mill machines designed by Richard Arkwright, a genius whose other advances included using water power to drive his machines and dividing labor among groups of workers.” In other words, he was just the kind of person that the British wanted to hold onto.
However, Slater was able to sneak out of Britain. He wasn’t carrying any documents with him, but he had memorized everything he could about Arkwright’s machines and process. In America, he found the support of a Rhode Island merchant, Moses Brown, and constructed the first water-powered cotton spinning mill in that state. It opened on this day in 1790.
This marked the beginning of a manufacturing boom for Rhode Island and New England in general that drew families of workers to Slater’s mills. “He eventually built several successful cotton mills in New England and established the town of Slatersville, Rhode Island,” writes the Library of Congress. Figures like Samuel Slater and, later, Francis Cabot Lowell, helped to create a domestic textile manufacturing industry that became the most important industry in America before the Civil War, the library writes.
In the South, where the raw material for these mills was produced, the national demand for cotton helped shape the economy. Eli Whitney’s infamous invention of the cotton gin in the early 1790s coincided with this new domestic demand for cotton and thus the demand for slaves to farm it, writes historian Junius P. Rodriguez. “In the South, cotton became the chief crop and the basis of the region’s economy,” he writes. “Cotton production in the South increased from about 3,000 bales in 1793 to approximately 178,000 bales by 1800.” With this growing demand came a resurgence of the slave trade. By the time the Civil War began, "cotton production had exploded to four million bales per year," he writes.
Although a lot of this cotton left the country–it was the biggest export, he writes–it also fueled domestic textile production in New England. “The manufacturing of cotton cloth enabled the North to evolve into an industrialized region,” he writes. To the British, Samuel Slater was known as “Slater the Traitor” for taking their trade secrets to America–to the history of America, he was a more complicated figure.
About Kat Eschner
Kat Eschner is a freelance science and culture journalist based in Toronto.
How America's Industrial Revolution Was Launched by Spies - HISTORY
The information revolution has rendered obsolete the legacy legal regime on intellectual property rights, enabling spying for commercial purposes to morph into a strategic issue.
T he lawless world of international espionage, until recently the preserve of the most secretive organs of government, has come to affect the everyday commercial affairs of businesses around the world, which are woefully unprepared to deal with it. Economic espionage is not itself a new phenomenon. Chinese silkworms legendarily made their way to India in a clandestine transaction. In 1812, Francis Cabot Lowell traveled to Britain, where he visited and managed to memorize and steal the secret workings of the Cartwright loom. 1 More recently, starting no later than 1980, Hitachi and other Japanese companies repeatedly launched espionage attacks against IBM and other American companies, with the support of the Japanese government. In the early 1990s, the purchasing chief for GM’s European operations decamped for Volkswagen, allegedly taking with him GM’s cost-cutting secrets. Though he was never convicted, German prosecutors tied him to a trove of secret GM documents, and VW settled with GM for $100 million and a commitment to buy $1 billion in auto parts. American know-how was the target, and by the mid-1990s, tens of billions of dollars’ worth of intellectual property had reportedly been stolen from American companies. 2
This was the background against which Congress passed the Economic Espionage Act of 1986, which criminalized stealing intellectual property. 3 The incidents that led to the act, while notorious, were exceptional. That is no longer true. The ubiquitous digitization of information and pervasive connectivity of electronic networks have facilitated espionage as well as productivity, and they have turned exceptional theft directed against the largest American companies into a daily reality for companies large and small.
Foreign intelligence services and their surrogates have been penetrating the networks of Western corporations on a regular basis and stealing technology electronically since the late 1990s, but for years most businesses preferred to ignore the problem. That was in part because they did not understand it and in part for fear of antagonizing countries in which they wished to do business. That began to change in 2010, when Google admitted that Chinese cyber spies had penetrated its networks, stolen source code, and used Google both to spy on its users and to worm their way into many other companies. About a week later the Christian Science Monitor revealed that persistent electronic espionage against Marathon Oil, Exxon-Mobil, and ConocoPhillips had yielded massive amounts of information about the quantity, value, and location of global oil discoveries. The theft was traced to a single site in China. 4 That same year, Chinese spies mounted a sophisticated penetration of RSA, the company known for security tokens. These tokens are the cryptographic keys to other companies’ secrets. Their theft led to the compromise of some 760 other organizations, including four major defense contractors and the Massachusetts Institute of Technology. 5
These incidents represent a small part of the systematic theft of intellectual property (IP), much of it state sponsored, that shows no sign of abating. In 2009, while serving as the national counterintelligence executive, I warned that foreign entities were penetrating U.S. networks to steal technology, trade secrets, and proprietary information. 6 The warning got little traction. In 2011, however, following the Google affair, the undertone of unease became audible when my successor reported that “[f]oreign economic collection and industrial espionage against the United States represent significant and growing threats to the nation’s prosperity and security.” 7
This is unquestionably true. American and European firms have lost automotive braking and battery technology, high-speed rail technology, aeronautical test data, and valuable chemical and pharmaceutical formulas in this way. The governments of Germany and Britain have complained publicly about the thievery. Networks in Japan and Australia have also been scoured. About 20 percent of European companies have been victim to at least one attempt to steal a trade secret over the past decade. 8 Western companies and governments nevertheless continued to dither.
Then in 2013 the security firm Mandiant disclosed that hundreds of terabytes of data from 141 companies in 20 different industries had been stolen remotely by China, and traced the theft back to a specific office in the People’s Liberation Army known as unit 61398. 9 The U.S. government could have made similar disclosures years earlier but regrettably chose silence. After the Mandiant report, however, the thievery had become too brazen, pervasive, and obvious to ignore. This past May, in United States v. Wang, a Federal grand jury indicted five Chinese military personnel associated with unit 61398 for economic espionage and related crimes against five U.S. companies and a U.S. labor union.
State-sponsored espionage directed at company secrets is still growing, however. In its most recent breach report, Verizon reported that state-affiliated actors had increased significantly to account for 21 percent of all breaches. The Chinese intelligence services are the worst but not the only sponsors of this kind of larceny. The Russian intelligence services are quieter and more selective than the Chinese, but they too are in the business of stealing IP for commercial purposes. Indeed, they operate under a public directive from President Putin to “more actively protect the economic interests of our companies abroad.” 10 Iran also engages in economic espionage, and unlike other offenders, it is also active in attempting to disrupt American banks. 11 France and Israel are frequently cited as offenders too, though recent examples are hard to find. Taken together, this larceny is an assault on national economies in which jobs and wealth depend on innovation and IP protection. By 2010, IP-intensive businesses accounted for more than a third of U.S. GDP and, directly or indirectly, for nearly 28 percent of all U.S. jobs. 12
Technology alone cannot prevent this larceny. Attribution of cyber network operations—that is, proving who did it—is difficult, though with enough time and resources it can sometimes be done, as the Mandiant report demonstrates. 13 But even if the internet were fundamentally re-engineered to make attribution more reliable at the device level, the weakest link in the system would remain the human user. Moreover, the operation of national and global enterprises, whether private or governmental, requires sensitive information to be widely shared among people in far-flung locations. Clamping down severely on that dissemination would impair productivity and the quality of decision-making. Some degree of network vulnerabilities will therefore continue, regardless of technological improvements.
Even as the level of theft increases, quantifying its aggregate financial cost is difficult. For reputational and liability reasons, many companies will not disclose that they have been victimized, and companies that do business in China are resolutely silent on the subject (at least in public) for fear of retaliation. In any case, translating an IP loss into lost market share, revenue, and profit is usually speculative. This kind of loss has therefore been impossible to insure against. But regardless of the aggregate figures, the effect of cyber-enabled economic espionage on victim companies can be devastating. Those companies deserve effective remedies.
We are dealing with a trade and economic issue. Theft via networks should not be treated differently than theft by any other means. The question is whether the theft of legally protected IP should be treated differently when undertaken by governments or their surrogates. Answering this question requires an examination of basic ideological differences regarding espionage.
M oses sent spies into Canaan. In the Rig Veda, which is at least as old as the oldest text in the Hebrew Bible, spies sit at the table with the god Varuna. To most practitioners of espionage, and indeed to anyone familiar with the hard realities of international relations, the idea of limiting the ancient practice through law is naive. Espionage is premised on breaking laws—other countries’ laws. Spies will undertake it so long as their masters believe they can get away with it, and it has long been tolerated under international law.
Though espionage is ancient, its modalities have recently shifted in two fundamental ways. First, it has moved from a retail-scale business to a wholesale business. The quantity of purloined information moving over our networks is measured in units too large for most people to comprehend. And if you can extract terabytes of data from an adversary’s network from thousands of miles away, you may not require a human spy in the adversary’s camp. Or the spy you require may be an underling in the IT department rather than the Defense Minister’s principal private secretary.
The second change is the relentless targeting of proprietary, non-military technology. There have been cases in previous centuries of state-sponsored espionage directed against economic targets, but they generally involved military technology, such as European cannon-making technology sought by the Turks in the 15 th century, or British and German naval technology before World War I. In contrast, state-sponsored espionage against commercial IP is unrelated, in many cases, to military or defense. This kind of espionage has become pervasive in part because insecure networks make it easy to get away with. The collapse of the Soviet Union also drove home to the Russians, the Chinese, and others that if they could not compete technologically and economically with the West, and with the United States in particular, they could not compete geopolitically in any dimension. This is largely why state-sponsored IP theft is state policy in China, Russia, and certain other countries, and why it has become a plague in the West.
To Chinese and Russian ears, however, the distinction between economic and other kinds of espionage is an ideological construction, convenient only to the West. In their view, all state-sponsored espionage is by definition conducted in the national interest. In these countries, where a distinction between the public and private sectors is either non-existent or blurred, and where public and private actions are expected to support national policy, an attempt to carve out IP theft as qualitatively different from other espionage is merely a self-serving, bourgeois legalism.
The Chinese are in any event ideologically hostile to law as a means of controlling the state. Indeed, the English phrase “rule of law”, by which we mean that the law controls the state as well as private actors, can also be translated into Chinese as “rule by law”, by which the Chinese mean that the state uses law to achieve the aims of the state. 14 Last year the Chinese Communist Party explicitly criticized Western notions of rule of law and constitutional government as an “attempt to undermine the current leadership and the socialism with Chinese characteristics system of governance.” 15
This philosophical disposition nevertheless contains a contradiction that will become increasingly apparent. China’s policy of a peaceful rise in international affairs is based on the belief that its increasing prominence will promote stability, benefit its neighbors, and increase its comprehensive national power, by which it means cultural and diplomatic influence as well as military power. To achieve those goals, China must stand for something, just as the United States, however imperfectly, stands for economic and political liberty at home and abroad. But the Chinese, like the Japanese in the 1980s, are well aware they have been unable either to articulate or exemplify a national ideal that other nations can be expected to recognize, let alone willingly follow. Their growing reputation for international commercial IP banditry is inconsistent with this aspiration.
The level of this banditry, most of it from China, has reached alarming levels. State-sponsored theft of IP is not merely an attack on the victim enterprises. It is also an attack on the basic principles of the multilateral commercial order to which China and many other nations have already agreed and from which they benefit. It is therefore time to consider measures aimed at strengthening the multilateral system of political norms that apply, or should apply, to state-sponsored IP theft.
In 1994 the Marrakesh Agreement among the world’s trading nations created the World Trade Organization (WTO), a successor to the General Agreement on Tariffs and Trade (GATT). The WTO structure included the Agreement on Trade-Related Aspects of Intellectual Property Rights, known as TRIPS. 16 Previous multilateral agreements had focused on goods trade and did not protect intellectual property, which by then accounted for a large and growing percentage of the world’s wealth, particularly in Europe and North America. TRIPS aimed to protect IP from predation. It was an important element, along with the then-new General Agreements on Trade in Services (GATS), in updating global trade rules to better reflect the modern global economy as it existed twenty years ago.
TRIPS protects not only trademarks, copyrights, and patented goods but also designs and trade secrets. It does so by requiring WTO members to adopt domestic standards for protecting IP and enforcement procedures, and penalties to ensure that IP holders can effectively enforce those rights internally and at their borders, such as by excluding counterfeit goods. These requirements need not meet Western standards, but they must “permit effective action” against infringement and must provide “expeditious remedies.” Developing nations were given significant time to comply with this requirement through transitional arrangements. When China and Russia joined the WTO (in 2001 and 2012, respectively), however, they immediately assumed full TRIPS obligations.
Violations of TRIPS are covered by the WTO’s dispute settlement understanding (DSU), through which member states, but not private parties, can bring disputes to the WTO for consultation and, if necessary, resolution by decision. Disputes that cannot be resolved through consultation are heard in the first instance by a dispute panel, and in the second instance by an appellate body. These bodies make findings and recommendations binding decisions can be made only by representatives of all member governments, acting as the Dispute Settlement Body (DSB). Panel and appellate body reports to the DSB must be accepted, however, unless there is a consensus that they be rejected. This rule virtually ensures acceptance.
From the perspective of 1994, TRIPS and GATS brought the multilateral trading regime up to date, but that was long before the internet had become the backbone of a digitized knowledge economy with little respect for international borders. Consequently, TRIPS did not deal with cross-border enforcement challenges, which are now rife as a result of network-enabled IP theft by both states and criminal organizations. In 2013 Richard Clarke, who was special adviser for cybersecurity in the George W. Bush Administration, and James Lewis, a senior fellow at the Center for Strategic and International Studies, each suggested that this form of industrial espionage be outlawed under TRIPS. Computer network operations by their nature cross borders and trigger both virtual and actual effects at great distances. This characteristic makes them a fit subject for an international remedy. Nevertheless, Clarke and Lewis’s suggestion was quickly met with objections. The chief objection was simply to point out that TRIPS merely requires members to enact and enforce at least minimal national laws to enforce TRIPS principles it cannot deal with extra-territorial misbehavior. As David Fidler of the Indiana University School of Law put it, “WTO rules operate on a territorial basis, meaning that only in unusual circumstances do the rules recognize the legitimacy of the extraterritorial application of a WTO member’s domestic law in trade contexts.” 17
This is a fair statement of how TRIPS has worked for the past twenty years. As a result, however, we find ourselves with an international trading regime in which members are obligated to prohibit IP theft in their national laws, but are free to engage in it, chiefly but not exclusively through network-enabled espionage in other countries. This is an irrational and probably untenable arrangement. The question, then, is how TRIPS and the WTO’s dispute settlement structure might work to inhibit state-sponsored IP theft.
Fortunately, TRIPS already enshrines principles of fair play and honest dealing that are inconsistent with cross-border IP theft “for commercial purposes”, and it establishes the right to protect oneself from such theft (Article 26). On its face, this right applies against all third parties—states as well as non-states—regardless of the means by which it is violated. Another provision enshrines the principle of honest commercial practice: “Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices” (Article 39.2). These same principles should form the foundation of a remedy in the WTO as well as under national law.
T he international trade regime in goods and services has long recognized an exceptional remedy known as a “non-violation nullification of benefits”, based on the premise that negotiated benefits may be “nullified or impaired” by measures that may be technically consistent with TRIPS provisions (GATT Article 23). This remedy has been rarely invoked, though a provision for it appears in many bilateral U.S. trade agreements, and various WTO decisions make it clear that the remedy is disfavored. The United States and Switzerland proposed to permit such complaints in the case of IP, but widespread objections, especially from the developing world, resulted in a 1994 moratorium on them, which has been extended several times since then.
In theory, the opposition to permitting non-violation complaints under TRIPS is grounded in resistance to a mechanism that could lead to an expansion of specifically negotiated TRIPS obligations. But that argument merely turns inside out the rationale for permitting non-violation complaints in the first place: namely, that countries sometimes engage in measures that do effectively nullify those negotiated obligations. In practice, the opposition stems more narrowly from the belief that non-violation complaints would undermine the Doha Declaration on Public Health. That Declaration recognized that TRIPS “can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.” The specific fear is that developed nations with large pharmaceutical industries, like Switzerland and the United States, would use non-violation complaints as “a stealth attack on WTO members’ sovereign right to use TRIPS flexibilities such as compulsory licensing to safeguard health and promote access to medicines for all.” 18
The objection to the general lifting of the moratorium on non-violation complaints in TRIPS is unlikely to be overcome. But nations asserting this objection do not assert a right to steal IP they are concerned with health. So a multilateral consensus against state-sponsored IP theft may therefore be possible if a health-related exception can be crisply carved out, and diplomatic efforts to achieve it could proceed based on either of two proposals.
The first proposal would lift the moratorium on non-violation complaints only in cases of non-military IP theft, even when engaged in by a sovereign. The second proposal, alternatively, would amend TRIPS to make such theft an explicit violation. Neither proposal would affect developing nations’ asserted right to ignore or compulsorily take a patent for public health purposes. Amending TRIPS may be harder to achieve, but would be preferable for two reasons: It would give clearer guidance to arbitrators faced with actual disputes, and it could lead to the imposition of obligatory rather than advisory remedies as would apply in cases on non-violations (DSU Article 26).
Pursuing either path would require patience and a significant diplomatic effort. That effort should start with drafting the necessary principles into the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), which are now being negotiated. Attempts to lift the TRIPS moratorium or amend TRIPS could benefit from this experience. Recognizing that TRIPS covers state-sponsored IP theft would be important not only as a remedy in its own right. It may be even more important as a means of controlling retaliation for actions taken under national laws.
T here has been no shortage of excuses for failing to address state-sponsored cyber theft of IP. The first excuse is that “everybody does it.” Americans have had this charge thrown at them with force in the wake of Edward Snowden’s disclosures, but Snowden is a red herring here. Stealing IP for commercial gain is unlike the surveillance he exposed because it is an assault on property whose right to protection is already recognized in TRIPS. True enough, the Chinese and the Russians do not accept this distinction. But they are members of, and benefit from, a world trade order that rests on precisely such distinctions they should not be permitted to participate in that order while they simultaneously go about undermining it.
The “everybody does it” rationale is also false . The U.S. government does not employ its intelligence services to steal IP in support of national industries—for two good reasons. First, it is a bedrock principle of American policy to strengthen the legal order that supports IP rights and international trade. To sacrifice that principle for whatever tactical advantage would derive from IP theft would be foolish. Second, to be brutally honest about it, the Russians and Chinese don’t have much IP to steal. Russia, for all its cultural depth and brilliant scientific minds, has never produced a commercially viable computer chip. China, for all its engineering prowess and dramatic growth rate, has thus far not produced much innovation.
In an effort to prove that the U.S. government does “it”, however, Snowden has asserted that the United States engages in “economic espionage” because it will grab any information it can, economic and otherwise. But “economic espionage” is much too broad a term to be useful. Neither Snowden nor anyone else has shown that U.S. intelligence has stolen IP for commercial purposes, but those who imagine that he is a noble whistleblower incline to believe everything he says without scrutiny. The only economic espionage that offends existing international norms is the stealing of IP for commercial gain—regardless of whether a state or a private actor undertakes it. This is not a self-serving American distinction TRIPS recognizes the significance of a “commercial purpose” and “unfair commercial use” in establishing violations.
Hence, penetrating a foreign banking network for the purpose of understanding or disrupting terrorist financing is not commercial use, and no one proposes to prohibit the collection of economic information per se, even when it pertains to an individual firm, let alone an economic sector or an entire economy. Nor should a state be prohibited from conducting espionage for the purpose of understanding, say, the condition of another nation’s economy or its position in international political or trade negotiations, or for the purpose of interdicting criminal behavior. Every nation able to conduct that kind of espionage does so and will continue to do so. Nor would the development of weaponry or military technology (as defined by the Wassenaar Agreement) be off-limits to espionage merely because it is undertaken by a commercial entity. None of these activities offends TRIPS principles.
Another explanation for failing to address economic espionage through international norms is that it supposedly cannot be stopped and is now simply a condition of doing business. But that is precisely the point to be tested. Equally defeatist is the rationale that we innovate faster than the thieves, so they will never catch up with our latest stuff. This is what chief executive officers tell their boards of directors when they find themselves over a barrel in a lawless and disruptive cyber environment. But the argument ignores the fact that third-world markets are usually happy to buy last year’s model or the one before that. They may even prefer it.
We find ourselves at a juncture reminiscent of the early days of the campaign against foreign bribery. Many were scornful of the Foreign Corrupt Practices Act of 1977 and called it unrealistic or worse. The list of objections to that act rings a familiar bell: It would be difficult to distinguish corrupt payments from legitimate payments business could not be done in some countries without corrupt payments and, of course, everybody supposedly did it. But entrenched corruption did long-term damage to the political culture of less developed countries, and forbidding it was the right thing to do. The European Union and the United Kingdom eventually implemented their own anti-bribery measures, thus copying the legislation they formerly ridiculed. Foreign commercial bribery has not been wiped out, but it now comes with much higher costs. Transnational IP theft probably cannot be wiped out either, but significant costs can be attached to it that would form a limiting boundary for its practice.
The practical difficulties of implementing even limited espionage protections under the WTO are nevertheless significant, and they begin with the need to put a boundary on the national security exception to the TRIPS rules. Article 73 states that the agreement cannot be used “to prevent a Member from taking any action which it considers necessary for the protection of its essential security interests.” On paper, that exception is limited to disclosure obligations, to rights under the UN Charter, and to matters involving fissionable materials, traffic in arms, and measures taken in wartime or international emergency. In practice, however, these limitations may not apply.
Moreover, as already noted, the Chinese and Russians do not recognize a distinction between national and economic security. This is a deep ideological belief and not merely a position of current convenience. The United States also accepts the linkage between economic and national security President Obama referred to economics or the economy 130 times in his current National Security Strategy. But a legitimate exception cannot be allowed to swallow the entire TRIPS principle of fair dealing in international trade. A prosperous regime of global trade requires a national security exception and a requirement that trading partners obey a common set of norms. If the security requirement could be invoked to permit state-sponsored theft of IP, it could also be invoked to condone the state-sponsored infringement of any patent and any other protected right relating to any subject.
Network intrusions present difficult evidentiary issues, but they are not unique in this regard. Proof of misappropriation would have to be presented, with all the well-known difficulties of attributing cyber operations to a particular device, operator, and organization. And if some or all of that evidence were classified, the complainant’s government might have to make a difficult decision about giving up intelligence sources and methods.
Countries already deal with that problem in their own national courts, however. Assuming that misappropriation were shown, would it be sufficient to show an intention to use the misappropriated IP for commercial purposes, or would actual introduction of a product into the flow of commerce be required? Would proof of damage be necessary? These questions raise ordinary issues of judicial proof. Parties and courts deal with them regularly. Remedies would not seem different in kind from those that arise in other WTO cases.
The fundamental obstacles to bringing a measure of international order to rampant IP theft remain political and commercial. Companies and nations must weigh the likelihood of retaliation against complainants by the allegedly offending nation, either under that nation’s law or by commercial or political measures. That difficulty will not disappear. Potential claimants would have to deal with it, just as litigants deal with other strategic decisions. Undoubtedly, there would be some potential for unwanted escalation. In the absence of institutionalized legal means to deal with this problem, however, victim companies and states will be tempted to take unilateral steps, overt and covert, that hold even greater potential for instability and that bear a far greater risk of escalation. If the level of commercial espionage does not abate, we can expect to see retaliatory cyber measures against economic sectors, with significant potential for disruption.
T he use of national intelligence means (directly or through proxies) to steal technology and business secrets for commercial purposes must be brought under control by concerted diplomatic efforts as well as enhanced national laws. The thievery is corrupt, and in the already affirmed language of TRIPS, it is “an affront to honest commercial practices in international trade.” Thus far most Western companies have felt that the short-term profits have been worth the long-term cost of losing technology and incubating their own competition. But they now stand at a tipping point. Confronting the challenge will require four concerted initiatives.
First, the United States and like-minded states should agree on a definition of state-sponsored, non-military IP theft for commercial purposes. A fundamental issue will be whether to include dual-use technologies. Espionage directed against non-military IP is distinguishable from the politico-military variety precisely because it involves property already protected under TRIPS. State sponsorship should not be a predicate in a TRIPS proceeding that involves IP theft, however, any more than, say, in a patent proceeding. Yet including state-sponsored acts in the definition is critical because it would remove a blanket defense for such espionage in international law.
Second, national laws remain critical and should be strengthened in three important ways: They should permit the sequestration of goods containing stolen IP under procedures that are rapid as well as fair they should deny access to banking systems by companies that profit from stolen IP and they should allow a private right of action under national laws by parties victimized by trade-secret theft. 19
Third, the U.S. government should lead a consensus for including an enforceable proscription against network-enabled IP theft in the TPP and the TTIP.
Fourth, the U.S. government should encourage like-minded states to lead a diplomatic effort to include the same proscription in TRIPS, either through a partial lifting of the current moratorium on non-violation complaints under TRIPS or by amending TRIPS. This effort will require persuading India, Brazil, Indonesia, Egypt, and other nations that the effort to combat network-enabled IP theft will not undermine the Doha Declaration on the TRIPS Agreement and Public Health. It will also require trading nations to give the WTO sufficient resources to deal with an expanding and crowded docket.
The goal in all of this is to devise effective mechanisms to diminish the plague of network-enabled IP predation. Western companies should support this effort because they will benefit from it, but given the potential for retaliation they cannot be expected to lead it. Progress will depend on achieving an international consensus through hard diplomatic work. That work will be difficult and the goal will seem elusive, but it is high time to begin the effort.
1 Cartwright’s effort had been foreseen and encouraged by Treasury Secretary Alexander Hamilton’s Report on Manufactures December 5, 1971. Hamilton specifically referred to textile mill technology and said, “To procure all such machines as are known in any part of Europe, can only require a proper provision and due pains.” His report was rejected by Congress, however, and so did not become official policy of the United States.
2 U.S. v. Kai-lo Hsu, 155 F.3d 189, ¶23 (3d Cir. 1998), citing Richard J. Heffernan and Dan T. Starwood, Trends in Intellectual Property Loss (1996). Hsu involved the theft of secrets from Bristol-Myers Squibb.
3 18 U.S.C. §§ 1831–1832. Section 1831 criminalizes “economic espionage”, which requires a showing that the defendant knew that a foreign government, instrumentality, or agent would benefit from the theft. Section 1832 criminalizes “industrial espionage”, which is the theft of trade secrets in interstate or foreign commerce. The distinction between industrial and economic espionage is therefore significant for Federal criminal law purposes, but the terms are otherwise often used interchangeably.
4 Mark Clayton, “US Oil industry hit by cyberattacks: Was China Involved?”, Christian Science Monitor, January 25, 2010 McAfee, “Global Energy Cyberattacks: ‘Night Dragon’”, February 10, 2011.
5 See Brian Krebs, “Who Else Was Hit by the RSA Attackers?”, Krebs on Security, October 11.
6 Office of the National Counterintelligence Executive, “Annual Report to Congress on Foreign Economic Collection and Industrial Espionage, FY 2008” (“ONCIX 2008 Report”), July 23, 2009.
7 ONCIX, “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace: Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009–2011” (“ONCIX 2011 Report”), October 2011.
8 Joel Brenner, Glass Houses: Privacy, Secrecy, and Cyber Insecurity in a Transparent World (Penguin, 2013) see also Alex Barker, “Brussels Takes Aim at Economic Espionage”, Financial Times, November 28, 2013.
9 Mandiant, “APT 1: Exposing One of China’s Cyber Espionage Units”, February 2013.
10 Quoted in the ONCIX 2011 Report, p. 6.
11 See appendix, ONCIX 2008 Report.
12 U.S. Department of Commerce, “Intellectual Property and the U.S. Economy: Industries in Focus”, March 2012, pp. vi–viii.
13 There are three levels of attribution. First, from what machine did the attack originate? Second, who controlled the machine? And third, who was that person working for? The first level, and in some cases the second, can sometimes be done reliably through electronic means alone, with time. The third level, if done at all, usually requires additional intelligence means and methods.
14 For this point and for the point expressed in the following paragraph, I thank Nigel Inkster, CMG, Director of Transnational Threats and Political Risk, International Institute for Strategic Studies, London.
15 “Document 9: A China File Translation”, China File, August 8, 2013.
16 I am grateful to Robert C. Fisher of Hills & Company, formerly of the Office of the U.S. Trade Representative, for his advice on WTO and TRIPS issues. The opinions and any errors in this discussion are mine, however, not his.
17 Fidler, “Why the WTO is not an Appropriate Venue for Addressing Economic Cyber Espionage”, Arms Control Law, February 11, 2013.
18 WTO TRIPS Council, “India’s intervention on Non-Violation and Situation Complaints”, February 26, 2014 “Intellectual property meeting mulls Irish tobacco plan, drug tariffs, sport, non-violation.”
19 These and other measures were proposed in The Report of the Commission on the Theft of American Intellectual Property (2013).
Spy Vs. Spy
Last month, Attorney General Eric Holder announced that the United States was charging members of the Chinese military with economic espionage. Stealing trade secrets from American companies, he said, enabled China to “illegally sabotage” foreign competitors and propel its own companies to “success in the international marketplace.” The United States should know. That’s pretty much how we got our start as a manufacturing power, too.
“The United States emerged as the world’s industrial leader by illicitly appropriating mechanical and scientific innovations from Europe,” the historian Doron Ben-Atar observes in his book “Trade Secrets.” Throughout the late eighteenth and early nineteenth centuries, American industrial spies roamed the British Isles, seeking not just new machines but skilled workers who could run and maintain those machines. One of these artisans was Samuel Slater, often called “the father of the American industrial revolution.” He emigrated here in 1789, posing as a farmhand and bringing with him an intimate knowledge of the Arkwright spinning frames that had transformed textile production in England, and he set up the first water-powered textile mill in the U.S. Two decades later, the American businessman Francis Cabot Lowell talked his way into a number of British mills, and memorized the plans to the Cartwright power loom. When he returned home, he built his own version of the loom, and became the most successful industrialist of his time.
The American government often encouraged such piracy. Alexander Hamilton, in his 1791 “Report on Manufactures,” called on the country to reward those who brought us “improvements and secrets of extraordinary value” from elsewhere. State governments financed the importation of smuggled machines. And although federal patents were supposed to be granted only to people who came up with original inventions, Ben-Atar shows that, in practice, Americans were receiving patents for technology pirated from abroad.
Piracy was a big deal even in those days. Great Britain had strict laws against the export of machines, and banned skilled workers from emigrating. Artisans who flouted the ban could lose their property and be convicted of treason. The efforts of Thomas Digges, America’s most effective industrial spy, got him repeatedly jailed by the Brits—and praised by George Washington for his “activity and zeal.” Not that the British didn’t have a long history of piracy themselves. In 1719, in Derby, Thomas Lombe set up what’s sometimes called the first factory in the United Kingdom, after his half brother made illicit diagrams of an Italian silk mill. (Lombe was later knighted.) And in the nineteenth century Britain’s East India Company, in one of the most successful acts of industrial espionage ever, sent a botanist to China, where he stole both the technique for processing tea leaves (which is surprisingly complex) and a vast collection of tea plants. That allowed the British to grow tea in India, breaking China’s stranglehold on the market.
These days, of course, things have changed. The United States is the world’s biggest advocate for enforcing stringent intellectual-property rules, which it insists are necessary for economic growth. Yet, as our own history suggests, the economic impact of technology piracy isn’t straightforward. On the one hand, patents and trade secrets can provide an incentive for people to innovate. If you realized that a new invention was going to get ripped off by China, you might not invest the time and money needed to come up with it in the first place. On the other hand, patents and trade secrets limit the diffusion of new technology—and sometimes slow down technological progress—while copying accelerates it. Samsung, for instance, is known for being a “fast follower” in its consumer business, which really means that it’s adept at copying other companies’ good ideas. That’s not the same as theft, but evidence from its recent patent trials with Apple shows that Samsung’s response to the iPhone was, in large part, simply to do it “like the iPhone.” This was bad for Apple’s bottom line, but it meant that many more people ended up enjoying the benefits of Apple’s concepts.
Patents and trade secrets also limit the kind of innovation that comes from putting a new spin on existing technologies. In Silicon Valley, engineers historically migrated with ease from company to company, in part because California prohibits most non-compete provisions. And, as they moved, they inevitably carried pieces of their old companies’ intellectual property with them. A good thing, too. As the Berkeley scholar AnnaLee Saxenian has convincingly argued, this practice was one reason the Valley became so innovative. Or take the case of Francis Cabot Lowell. He didn’t just copy plans for the Cartwright loom he improved it, and then he made it part of the first integrated textile factory in America. Lowell was a genuine innovator. But, had he not copied the loom, his factories would never have had a chance to work.
Thomas Moore invented the first wooden ice box in Maryland in 1802. The ice box was a simple wooden box lined with insulating materials such as tin or zinc with a large block of ice in a compartment near the top of the box. The outside of the box was lined with rabbit fur or other insulating fabrics. The ice box allowed for perishable food to be kept fresh for longer than before without the need for drying, smoking or canning the food.
Richard Trevithick patented his steam-powered locomotive called the “Puffing Devil” in Camborne, England in 1802. The contraption was the first steam-powered train of its kind.
History of manufacturing in America
The world’s population can be broadly categorized into two groups: those who live in industrialized nations and those who do not. The manufacturing revolution that evolved over more than two centuries is the force that created that divide. Manufacturing—the process of converting raw materials into usable goods—launched the United States as a superpower at the turn of the 20th century just as it launched China’s economy into the 21st. There is a direct correlation between a country’s ability to produce quality goods quickly and cheaply and its ability to wield power on the world stage.
There was a time where virtually everything was individually custom made. Hand-made, one-of-a-kind products are slow to build and expensive to buy. The era of manufacturing, however, gave people and companies the power to churn out an unprecedented number of those shoes, clothing, guns, and furniture—and most anything else, for that matter—at speeds never before possible. The history of manufacturing involves radical innovations like factories, assembly lines, sewing machines, cotton gins, steam-powered diggers, trains, coal, iron, and steel—but it’s also a story of people.
Some of the key players in the history of manufacturing were brilliant and dynamic individuals—inventors, engineers, builders, and titans of industry who are still household names today. Millions of others, however, labored in the mills, factories, sweatshops, and mines, living and dying anonymously. The manufacturing movement created countless jobs and cost countless lives. Amazing developments like steam-powered trains and boats saw early use as tools of industry, but went on to change the human experience far beyond the necessity of moving heavy raw materials from ports to factories. Using a variety of sources, Stacker compiled a timeline that highlights key moments in the history of manufacturing in America. Keep reading to learn about the innovations and inventions that transformed the United States into the greatest manufacturing powerhouse the world has ever seen.
The birth of modern manufacturing can be traced to the early 1780s, when American inventor Oliver Evans began experimenting with the first automated flour mill. He developed the concept of continuous process milling, which relied on five so-called bulk material handling devices. His machines and processes soon caught on across the country because they reduced manpower by 25% while increasing output—the era of automation had begun.
On April 10, 1790, President George Washington signed a bill that created the U.S. patent system. Later that year, Philadelphian Samuel Hopkins received the country’s first patent, which he earned for his new method of making a fertilizer ingredient. For the first time, inventors could safeguard the legal rights to their ideas, creations, and intellectual property.
Also in 1790, a British-born former industrial spy named Samuel Slater revolutionized not only the textile industry, but the future of manufacturing. While living in Rhode Island, Slater built a water-powered cotton-spinning mill that workers first powered by walking on a treadmill. Human workers were now using a machine to dramatically increase their productivity and consistency in spinning cotton into thread.
In the late 18th century, Southern planters were facing soaring demand for cotton, which would soon motivate the textile revolution in the North and in Europe—and all of it was picked and cleaned by hand. In 1794, Eli Whitney patented his invention of the cotton gin, which separated cotton fiber from its seeds automatically. A monumental shift took place, as the huge labor force dedicated to cleaning cotton—virtually all enslaved—could now be tasked with planting and picking much, much more of the global cash crop.
As the 19th century approached, Eli Whitney landed a massive contract to produce guns for the U.S. government. After much experimentation, Whitney developed—or at least dramatically improved upon—the concept of making identical machines that could swap identical, interchangeable parts. For the first time, each gun—or any mechanical product, for that matter—no longer had to be custom made.
Nearly 20 years after he developed bulk material handling, Oliver Evans invented a 17-ton, high-pressure dredge that was powered by steam. Called the “amphibious digger,” it was used to deepen key portions of the Delaware River. It displayed the awesome practical possibilities of steam-generated power, which would fuel the coming Industrial Revolution.
Steam wasn’t only good for digging a single scoop of dirt with the power of thousands of handheld shovels, a fact that American engineer and inventor Robert Fulton made clear in 1807. That year, Fulton invented and built a boat designed to be fitted with a British steam engine. Called the Clermont, his boat made the 150-mile trip from New York to Albany on the Hudson River in a record 32 hours. The invention turned rivers into highways for ferrying raw materials, supplies, products, and, eventually, people.
The monumental developments that came in the preceding decades would reach a critical mass in America in the mid-1800s as the Industrial Revolution took shape. The era of making, sorting, processing, and refining individual products by hand was over. Now, coal, water, and steam were used to power machines, tools, and factories that turned massive amounts of raw materials into products at record speeds.
Decades before trains revolutionized how people traveled, they changed the way materials and products were moved from port to factory, factory to warehouse, warehouse to distributor facility, and beyond. It all started in 1830 with the creation of Tom Thumb, America’s first steam locomotive. Tom Thumb was built specifically to convince the owners of the newly formed Baltimore and Ohio (B&O) Railroad to use steam-powered engines instead of horses to pull cars on their rails.
In 1911, the Triangle Shirtwaist Factory fire seared into the American consciousness images of endless rows of seamstresses working long hours for low pay in bleak, dangerous, death-trap factories. The massive clothing and shoe industries that would lead to that tragedy were officially born in 1846, when American inventor Elias Howe patented the world’s first cheap, practical lockstitch sewing machine.
Cornelius Vanderbilt—a self-made man who dominated American industry and died one of the richest men in the world—epitomized the American dream for many in the mid-19th century. He made his first fortune as a steamship entrepreneur before turning his attention to the next revolution of overland transportation technology: railroads. He was the first of a new breed of industrialist titans and his legacy would spawn generations of giants with names like Carnegie, Ford, and Rockefeller.
By 1879, Thomas Edison had produced and patented a working lightbulb with a carbonized filament that could burn for more than 14 hours straight. The impact it had on society—from street lamps to department stores—is well documented, but what might just be the most significant change brought about by the arrival of electric light is often overlooked. Now that workers could see in the dark, factories could run 24 hours a day: the night shift was born.
Fledgling labor unions had come and gone in the past, but the founding of the AFL in 1886 proved to be a benchmark for the American working class. Throughout much of the Industrial Revolution, human workers were as expendable, disposable, and replaceable as the tools they wielded. The AFL was the start of the modern organized labor movement, a bloody and consequential era that pitted powerful corporations and their political backers against average workers demanding fair pay, decent conditions, and job security.
By the end of the 19th century, monopolies dominated the industries that served as the lifeblood of American manufacturing: oil, coal, railroads, and steel. The 1890 Sherman Antitrust Act was the nation’s first significant antitrust legislation, which banned companies from conspiring to fix prices, eliminate competition, and otherwise corner the market. The greatest trust-buster in American history, President Theodore Roosevelt, would wield the Sherman Act as a powerful weapon against these corporations during his presidency.
Banking magnate J.P. Morgan co-founded U.S. Steel in 1901 by merging the steel empire built by Andrew Carnegie’s Carnegie Steel with the Federal Steel Company and National Steel Company. The result was a corporate juggernaut––worth tens of billions of dollars in today’s money––that shaped the nation and transformed the nature of manufacturing. It produced nearly two-thirds of all steel at its peak, and its finished product was used to build everything from skyscrapers to cars to trains.
Henry Ford produced 15 million identical Model Ts between 1908-1927. The way they were made, however, is arguably the most important innovation in the history of manufacturing. By 1913, Ford had broken down the production of the Model T into 84 distinct steps, and each worker was trained on just one of these steps along a moving line which brought the work to the workers. Using Eli Whitney’s concept of interchangeable parts and the conveyor belt systems he had seen used in grain mills, Henry Ford invented the modern assembly line.
Throughout the history of manufacturing and up to the end of the Great Depression, corporations generally sought to extract as much labor for as little money as humanly possible from the workers who toiled in the factories, mills, mines, and sweatshops that fueled the Industrial Revolution. People, including small children, worked for 10-16 hours a day in terrible and dangerous conditions, six or even seven days a week, for starvation wages with virtually no recourse. In 1938, Franklin D. Roosevelt signed the Fair Labor Standards Act (FLSA), which mandated standards like the 40-hour workweek, the minimum wage, and child labor restrictions. It remains the bedrock of American labor law today.
When the Japanese military attacked Pearl Harbor, America mobilized for war—and the charge was led by the country’s massive manufacturing industry. From Maytag to Rolls-Royce, American companies stopped producing consumer goods and retrofitted their factories and assembly lines to produce tanks, planes, fighter engines, and other military necessities. It was big business: the American military-industrial complex was born.
The emergence of computer-aided design (CAD) in the 1950s and 1960s allowed machine tools to make precise and consistent cuts not through the skill of talented tradespeople, but by direction received from computer software programs. The emergence of CAD, which is still widely in use today, signaled the start of manufacturing in the digital age.
For American workers, 1970 represented the greatest leap forward in labor protections since the FLSA in 1938. The Occupational Safety and Health Act requires employers to create and maintain workplaces that are safe from known hazards like extreme temperatures, untethered work at heights, toxic chemicals, excessive noise, and unsanitary conditions. Those and other conditions had plagued, and often killed, generations of manufacturing workers.
The year 1979 represented the pinnacle of U.S. manufacturing, with 19.4 million Americans working in the sector. By early 2010, fewer than 11.5 million manufacturing jobs existed, despite steep population gains over the previous three decades. Thanks to automation, robotics, and the arrival of computer technology, however, output has actually increased.
IBM began marketing the first practical personal computer in 1981. The moment signaled the greatest transformation in front-office management in the history of manufacturing. From employee records and sales slips to invoices and order manifests, the personal computer instantly relegated the paper ledger to the dustbin of history.
For generations, traditional processes of casting, forging, tooling, and machining—the heart of manufacturing—were achieved by removing layers of raw materials, like steel, until the desired cut or shape was achieved. 3D-printing, which can now produce everything from firearm receivers to boat hulls, dramatically increases speed and reduces waste by instead adding materials layer by layer, with the help of CAD software, to create three-dimensional products. The concept can be traced to the 1970s, but 3D printing came of age in 1992, when 3D Systems developed the stereolithographic apparatus (SLA).
At the dawn of the new millennium, the Enterprise Integration Act laid the groundwork for the era of smart manufacturing that drives the sector today. It authorized the sprawling National Institute of Standards and Technology to collaborate with major manufacturing industries in developing and implementing standards for enterprise integration in the 21st century.
The first robots appeared on American assembly lines in the 1980s, but they were a far cry from the artificial intelligence and automation that is steadily overtaking modern manufacturing in the digital age. One of the most exciting, yet controversial, innovations in generations, automated (or “smart”) manufacturing uses advanced robotics, big data, and sophisticated computer software to complete tasks much faster and more precisely than their human counterparts ever could.
22a. Economic Growth and the Early Industrial Revolution
This drawing depicts men working the lock on a section of the Erie Canal. Find more lyrics like this "I've got a mule, her name is Sal, Fifteen years on the Erie Canal" on this New York State Canals website.
The transition from an agricultural to an industrial economy took more than a century in the United States, but that long development entered its first phase from the 1790s through the 1830s. The Industrial Revolution had begun in Britain during the mid-18th century, but the American colonies lagged far behind the mother country in part because the abundance of land and scarcity of labor in the New World reduced interest in expensive investments in machine production. Nevertheless, with the shift from hand-made to machine-made products a new era of human experience began where increased productivity created a much higher standard of living than had ever been known in the pre-industrial world.
The start of the American Industrial Revolution is often attributed to Samuel Slater who opened the first industrial mill in the United States in 1790 with a design that borrowed heavily from a British model. Slater's pirated technology greatly increased the speed with which cotton thread could be spun into yarn. While he introduced a vital new technology to the United States, the economic takeoff of the Industrial Revolution required several other elements before it would transform American life.
New York Governor DeWitt Clinton pours a bucketful of Lake Erie into the Atlantic Ocean to mark the opening of the Erie Canal in the autumn of 1825.
Another key to the rapidly changing economy of the early Industrial Revolution were new organizational strategies to increase productivity. This had begun with the " outwork system " whereby small parts of a larger production process were carried out in numerous individual homes. This organizational reform was especially important for shoe and boot making. However, the chief organizational breakthrough of the Industrial Revolution was the " factory system " where work was performed on a large scale in a single centralized location. Among the early innovators of this approach were a group of businessmen known as the Boston Associates who recruited thousands of New England farm girls to operate the machines in their new factories.
The most famous of their tightly controlled mill towns was Lowell, Massachusetts , which opened in 1823. The use of female factory workers brought advantages to both employer and employee. The Boston Associates preferred female labor because they paid the young girls less than men. These female workers, often called " Lowell girls ," benefited by experiencing a new kind of independence outside the traditional male-dominated family farm.
The rise of wage labor at the heart of the Industrial Revolution also exploited working people in new ways. The first strike among textile workers protesting wage and factory conditions occurred in 1824 and even the model mills of Lowell faced large strikes in the 1830s.
Dramatically increased production, like that in the New England's textile mills, were key parts of the Industrial Revolution, but required at least two more elements for widespread impact. First, an expanded system of credit was necessary to help entrepreneurs secure the capital needed for large-scale and risky new ventures. Second, an improved transportation system was crucial for raw materials to reach the factories and manufactured goods to reach consumers. State governments played a key role encouraging both new banking institutions and a vastly increased transportation network. This latter development is often termed the Market Revolution because of the central importance of creating more efficient ways to transport people, raw materials, and finished goods.
Alexander Hamilton's Bank of the United States received a special national charter from the U.S. Congress in 1791. It enjoyed great success, which led to the opening of branch offices in eight major cities by 1805. Although economically successful, a government-chartered national bank remained politically controversial. As a result, President Madison did not submit the bank's charter for renewal in 1811. The key legal and governmental support for economic development in the early 19th century ultimately came at the state, rather than the national, level. When the national bank closed, state governments responded by creating over 200 state-chartered banks within five years. Indeed, this rapid expansion of credit and the banks' often unregulated activities helped to exacerbate an economic collapse in 1819 that resulted in a six-year depression . The dynamism of a capitalist economy creates rapid expansion that also comes with high risks that include regular periods of sharp economic downturns.
The use of a state charter to provide special benefits for a private corporation was a crucial and controversial innovation in republican America. The idea of granting special privileges to certain individuals seemed to contradict the republican ideal of equality before the law. Even more than through rapidly expanded banking institutions, state support for internal transportation improvements lay at the heart of the nation's new political economy. Road, bridge, and especially canal building was an expensive venture, but most state politicians supported using government-granted legal privileges and funds to help create the infrastructure that would stimulate economic development.
The most famous state-led creation of the Market Revolution was undoubtedly New York's Erie Canal . Begun in 1817, the 364-mile man-made waterway flowed between Albany on the Hudson River and Buffalo on Lake Erie. The canal connected the eastern seaboard and the Old Northwest. The great success of the Erie Canal set off a canal frenzy that, along with the development of the steamboat, created a new and complete national water transportation network by 1840.
Many women also served as spies during the American Revolution, although it is not known how many.
According to the National Women’s History Museum website, most of these female spies worked as cooks and maids for the British and American military camps where they eavesdropped on conversations about troop movements, military plans, supply shortages and deliveries.
Since the war was fought on farms, city streets and the front yards of many American’s homes, these spies easily carried the messages and supplies they gathered to neighboring houses and farms without detection.
Not much is known about the women spies in Massachusetts since the American army didn’t have a central spy system during the Siege of Boston like it did when the war later moved on to New York.
There, the army set up the Culper Spy Ring and even devised the code name ” specifically for women or women spies working within the ring.
One famous female revolutionary spy was Hannah Blair, a Quaker from North Carolina. Blair had a farm where she would hide and protect patriots, supplied food and medical help to soldiers hiding in the woods from loyalist raiders, mended uniforms and carried secret messages.
When loyalists in the area discovered what she was doing, they burned her farm down. Fortunately, Congress compensated her for her loss after the war by issuing her a pension for her service.
These roles are just some of the many ways women participated in the Revolutionary War. Either as nurses, maids, spies or soldiers, these women stepped out of the safety and security of their traditional roles in society and risked their lives to serve their country.
While some of them were recognized and rewarded for their sacrifices with military pensions and pay, many were not. A few of them, such as Deborah Sampson, even published memoirs about their activities during the war, yet most of these women’s stories remain untold.
It’s Our Military Too!: Women and the U.S. Military. Temple University, 1996.
Frank, Lisa Tendrich. An Encyclopedia of American Women at War: From the Home Front to the Battlefields. ABC-CLIO, LLC, 2013.
Kneib, Martha. Women Soldiers, Spies, and Patriots of the American Revolution. The Rosen Publishing Group, Inc, 2004.
Neimeyer, Charles Patrick. The Revolutionary War. Greenwood Publishing Group, 2007.
“Revolutionary War Spies.” National Women’s History Museum, www.nwhm.org/articles/revolutionary-spies
“Women in the U.S. Army.” The United States Army, www.army.mil/women/history
“Women’s Service in the Revolutionary Army.” The Colonial Williamsburg Official History & Citizenship Site, The Colonial Williamsburg Foundation, www.history.org/history/teaching/enewsletter/volume7/nov08/women_revarmy.cfm
When Franklin went to France in the early part of the Revolution as the official diplomat and ambassador of the thirteen colonies, he came as a man of maturity, brilliance, ability, and as a world statesman. Upon his arrival in Paris, there was no other statesman or philosopher who could equal him in his ability and accomplishments. His presence in Paris annoyed the British minister and staff. Franklin enjoyed the situation. The years he remained in Paris were unusually fruitful ones for America and helping to work out the future destiny of the United States of America. In the early 1950's the United States published ten volumes of the United States Foreign Affairs during the Revolution, and the major part of the ten volumes covers the work of Franklin.
The colonies indeed needed help of every description--men, money, equipment, ships, and all things to fight a successful war. The long years of enmity between France and Britain opened the way for the leadership of Franklin. And he was not only the man to exploit it, but also the reason for the acceptance of thirteen states as a recognized nation in the world of nations.
During his long career of service, we shall never know how many men sought commissions in the Revolution. But this much we do know--that Franklin was never deceived, as he never held out any hope for a commission unless the applicant had the ability in his chosen field. One of the men aided very early was John Paul Jones and as an Admiral in the little American Navy composed of two ships under his command, he took those two ships and sailed into English waters for a fight. In a terrific battle, two proud English ships surrendered and they were brought into French waters as American prizes.
When the United States flag, the red, white, and blue, became the official flag of the country in June, 1777, the French Navy saluted it as the first of all nations.
Another important selection was Baron Von Steuben who came to be an important leader at Valley Forge during the tragic winter of 1777-1778 in the reorganization of the Continental Army. Franklin wrote Washington a long personal letter about Steuben. When his services were accepted by Congress, he showed that he was thoroughly dependable and his military ability and leadership were likewise shown in the reorganization of the Army in the days ahead. His devotion to Washington and earnestness to his new country constitute fine commendation of Franklin's aid.
In the final stages of the war, after long weeks of hard campaigning, Cornwallis was bottled up in Yorktown, Virginia. Lafayette, who had done so much for the American cause out of his own private fortune and by his persistence to his own government for men, equipment, and ships, always backed up the entire procedure of Franklin.
As the conditions became ripe and favorable, then Washington and his Continentals came down from the North and by rapid marches joined the French soldiers under Rochembeau and the last great battle of the war entered its final phase. DeGrasse, Commander of the French fleet, kept reinforcements away and the armies, under the supreme command of Washington, in a series of successful attacks upon the British forces led to the final conclusion and surrender of Cornwallis in October, 1782.
There were times during the long residence of Franklin in Paris when events were pleasant and joyful instead of war planning and persuading the French officials to be more generous in their gifts to America. There were meetings of scholars, writers, and scientists in which Franklin was invariably the center of attraction. The plainness of his dress, the simplicity of his personality, and his tact, agreeableness, and responsiveness were always appreciated and there was nothing haughty about him. Under all conditions, he was a friend of man, a world benefactor, and the representative of a cause which appealed to people all over the world--a living exponent of American democracy. He had a wonderful story to tell of the conquest of a continent by a people through thrift, endurance, sacrifice and grit. He was always a welcomed guest at the Royal receptions, and the king and queen appreciated his ready wit.
When the war was over, the great problem remained to conclude the peace. The French politicians determined to make the American alliance turn in every way to their own advantage. When the news of the glorious alliance was made in early Spring, May 1778, which brought so much cheer and new faith to the officers and men alike, just as the new life of Spring was bringing green grass and bursting buds to the naked trees of Valley Forge, which was symbolical of the improved conditions of the American soldiers as they had suffered on the bleak hills of Valley Forge during the tragic winter.
Now the war was over and there were those in power who thought they could use Franklin, the American alliance and the United States to their own advantage. The French politicians were opposed to a separate peace treaty for the United States, but they proposed to have a treaty in which American independence and sovereignty would be tied directly to the French treaty. And then they could hold the United States under their own direction.
Franklin knew French politicians too well, and he resolved such conditions should not result. Franklin was courageous, bold and had a definite sense of vision plans in diplomacy. consequently, he met the leaders of the British commission and secured a separate treaty with them. He secured just what he wanted for his country namely, the absolute independence of the United States, recognition of it as a distinctive government, and at the same time the exact boundaries of the United States were generally established. Some of the American members were fearful lest all plans should be ruined, but not so Franklin.
The French commission was furious and spoke unkindly to Franklin. Again undaunted, he met them and convinced them they could not hold the United States to their own plans and thus he succeeded.
In conclusion, with excerpts of four important Franklin letters as follows:
"We must, indeed, all hang together, or most assuredly we shall all hang separately."
-In the Continental Congress just before signing the Declaration of Independence, 1776.
"It is a common observation here (Paris) that our cause is the cause of all mankind, and that we are fighting for their liberty in defending our own."
-Letter to Samuel Cooper, 1777
"Thus the great and hazardous enterprise we have been engaged in is, God be praised, happily completed***. A few years of peace will improve, will restore and increase our strength but our future will depend on our union and our virtue***. Let us, therefore, beware of being lulled into a dangerous security and of being both enervated and impoverished by luxury of being weakened by internal contentions and divisions***."
-Letter to Charles Thomson, from Paris, 1784,
just after signing the Peace Treaty
"Our Constitution is in actual operation everything appears to promise that it will last but nothing in this world is certain but death and taxes."
-Letter to M. Leroy, 1789.