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.
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