Eli Whitney (1765-1825) was a mechanical wizard. While travelling in the south, he became acquainted with the problem of removing the seeds from cotton. Enormous numbers of slaves were employed pulling the seeds out by hand. Eli Whitney spent a whole two weeks on this challenge and invented the cotton gin. He patented the invention and went on to capitalize on his invention by opening a factory to make cotton gins. It ended in bankruptcy. The failure of Eli Whitney to make his fortune on the cotton gin was due primarily to the very simplicity of the design of the machine.
Once the initial shipments of Whitney’s cotton gin arrived on the cotton plantations of the South, entrepreneurial individuals pried off the top and peered inside. What they saw was eminently copiable–and copy they did. The Patent Office in Washington wasn’t eager to send agents into the South to enforce Eli Whitney’s patent rights, and he couldn’t obtain legal redress in the court system, so he eventually walked away from his invention.
Business students, in common with all students, are told not to copy. Copying is dishonourable and deserving of dismissal. They graduate and enter a world in which copying is endemic.
A new idea is not the property of its originator because everyone copies in all areas of business. If a firm discovers a more efficient way of doing something, it will be copied. If a firm discovers a more effective way of marketing a product, it will be copied. If a firm discovers a more efficacious way of financing its expansion, it will be copied. Copying is critical in understanding the nature of the business cycle. Copying contributes to the ups and downs of the business cycle by directing larger investments into new areas than would occur if copying were not so endemic.
The building of a greater number of factories than is necessary is a consequence of copying that helps to keep the good times good. (Randall Bartlett, 1998). On the other side of the coin, copying can cause businesses to dedicate too much productive capacity to new products. When all the investments are completed and the combined productive capacity of a thousand and one copyists is brought to bear on the market, all the copyists have for their efforts are huge unsold inventories and excessive productive capacity.
Then they copy one another again by collectively slashing production to try to keep inventories in line with sales. This type of copying helps to turn good times into bad. One might expect that patent protection should limit copying. However, if what is being copied is a strategy for marketing or making financial deals, there is no patent infringement because an idea cannot be patented. Even copyrights on computer software have been difficult to enforce because a program can be essentially copied by rewriting it with minor editorial changes, such as calling something X that was called Y in the original program.
Patents on products and processes are enforceable within a given nation, but they are more difficult to enforce in the international arena. Thus, a firm can spend millions to develop a new product and find itself in the position of not being able to recoup its research and development expenditures because copies are being imported from foreign copiers that do not have to price the goods on the basis of recouping the initial R&D expense. The globalization of manufacturing facilities and free trade has proved to be a boon for copyists.
The simplicity of the cotton gin, the ease of copying it, and Whitney’s sad return on his investment in his invention are of interest in understanding the role of copying in the business cycle. But the real point of this discussion is Eli Whitney on the comeback trail. Whitney obtained a government contract to make ten thousand muskets. The contract presumed that he would make the muskets in the way that all muskets, and everything else, were made. In the cottage industry of the day, a musket was assembled by an individual who made a barrel, a stock, a flintlock, a trigger, and the other mechanical parts.
As each part was made, it was filed to fit the rest of the components making up the musket. The result of this mode of production was that each particular part of a musket was unique. A flintlock made for a musket could not be removed and interchanged with the flintlock of another musket and be expected to work. The parts were not interchangeable without further filing because they were not uniform in design and would not fit together properly. Each musket was, in effect, tailor made to its own set of specifications. (David Burner, Elizabeth Fox-Genovese, Virginia Bernhard, 1991).
To fill his contract with the government, Eli Whitney built a factory near New Haven, Connecticut, in 1798, that was unique in several respects. Water-powered machines were designed to replace human effort as much as possible. The machines were dedicated to the manufacture of the individual component parts of a specified design, rather than each part being individually handmade. In other words, Eli Whitney was substituting machine labour for manual labour, thereby increasing the productivity of labour. In Whitney’s factory, the parts produced were of sufficiently close tolerances to be interchangeable.
Quality control was introduced to ensure that the flintlock of one musket would be interchangeable with the flintlock of another with no additional filing. Eli Whitney’s “uniformity system” had at its core the idea of manufacturing ten thousand barrels, ten thousand stocks, ten thousand flintlocks, ten thousand trigger mechanisms, ten thousand whatever, all of sufficiently close tolerances to be interchangeable without additional filing. The parts were manufactured first, and the completed musket was assembled later. Whitney’s uniformity system was the forerunner of today’s assembly line.
Eli Whitney gave to modern society the most productive means of manufacture known to mankind. There are those who can point to the fact that he did not originate the idea, that it had antecedents in Europe. That is true and bears about as much weight as the fact that Christopher Columbus was not the first European to discover America. Leif Ericsson may, or may not, have been first. Even if Ericsson was first, what does that do to take away from Columbus’ achievement? It was the discovery of America by Columbus that counts.
The nations of North and South America owe their existence to Columbus’ explorations, not to Ericsson’s. The same holds true for Whitney’s uniformity system. More than any other individual, he popularized the idea of Adam Smith’s specialization of labour. Eli Whitney vastly increased the productivity of his specialized labour force by replacing tools with machines and by introducing quality control measures to ensure that the interchangeable parts were indeed interchangeable. His water-powered factory in New Haven was the progenitor of many such plants in the northern states. Daniel A. Wren, Ronald G. Greenwood, 1999).
Eli Whitney affected the course of the development of the United States in two quite unintentional ways. The removal of the cotton seeds by the cotton gin rather than by a slave’s fingers had a dramatic impact on the profitability of growing cotton in the South. One might conclude that the price of slaves would fall with the invention of the cotton gin because the labour required to remove the seeds from the cotton was nearly eliminated. Was there no other impact that might have turned out to be true?
But the cotton gin made cotton growing much more profitable because the slaves could dedicate more of their time to planting and harvesting the cotton rather than to removing its seeds. Nothing did more to spread the growing of cotton in the South than did the cotton gin. As new areas of the South were brought under cultivation, there was a greater demand for slaves. The price of slaves increased, and the institution of slavery, which was actually waning at the time of the invention of the cotton gin, was given new life. The South embarked on a path of agriculture based on slave labour.
In the North, just the opposite occurred. Whitney’s factory in New Haven was a cause of the North’s embarking on a path of industrialization, based, as some would assert, on wage-slave labour. As in the South, Eli Whitney himself had no pretensions of embarking on anything. He invented the cotton gin and tried to make a buck from his invention. When that failed, he devised the uniformity system to make a buck out of a government contract. Nevertheless, the social repercussions of his contributions to technology had a significant impact on the history of the nation. (John G. Blair, 1988).