Yes, The US Industrial Revolution Was Built On Piracy And Fraud

from the a-little-history-lesson dept

Missed this when it first came out, but Bloomberg ran a fantastic report at the beginning of February, highlighting how piracy and fraud were key components to helping America catapult into the industrial revolution. In fact, there are reasonable arguments to be made that if the US was not a “pirate” nation, it would not have had the kind of success that it has had as the industrial world leader. We’ve discussed some of this in the past, and have highlighted how Eric Schiff’s research showed how other countries (the Netherlands and Switzerland) industrialized by explicitly rejecting patents. The US didn’t go that far, but it did involve quite frequent copying of the efforts of others and then improving on them, without fear of repercussions.

In its adolescent years, the U.S. was a hotbed of intellectual piracy and technology smuggling, particularly in the textile industry, acquiring both machines and skilled machinists in violation of British export and emigration laws. Only after it had become a mature industrial power did the country vigorously campaign for intellectual-property protection.

This is a point we’ve made many times as well. Patent and copyright system supporters frequently argue that stronger laws are needed to create incentives for creation and innovation. But, there are a ton of studies that show the actual pattern runs the other way. When you look at the pace of innovation before and after a change to patent laws, or if you do cross-country comparisons at the same time for similar types of economies, you quickly see that those with weaker laws show more innovation. The ratcheting up of patents is rarely about increasing incentives to innovate. Patents are put in place with the support of incumbents, knowing that it allows them to “exclude” competitors and upstarts. It is not a tool of innovation, but a tool to suppress disruptive innovation. Not having those laws (or having them widely ignored) leads to a situation in which people continually improve what’s out there — which is how the US economy took over the world during the industrial revolution.

The most candid mission statement in this regard was Alexander Hamilton’s “Report on Manufactures,” submitted to Congress in December 1791. “To procure all such machines as are known in any part of Europe can only require a proper provision and due pains,” Hamilton wrote. “The knowledge of several of the most important of them is already possessed. The preparation of them here is, in most cases, practicable on nearly equal terms.”

Notice that Hamilton wasn’t urging the development of indigenous inventions to compete with Europe but rather the direct procurement of European technologies through “proper provision and due pains” — meaning, breaking the laws of other countries. As the report acknowledged, most manufacturing nations “prohibit, under severe penalties, the exportation of implements and machines, which they have either invented or improved.” At least part of the “Report on Manufactures” can therefore be read as a manifesto calling for state-sponsored theft and smuggling.

In fact, as the article notes, our own original Patent Act recognized this very fact, by refusing to cover foreign inventions.

Of course, the idea that loose patent and copryight laws can help nations develop economically is not a new idea. Over a decade ago, we were writing about how various officials were admitting that strong IP laws probably did more harm than good for developing nations. And, yet, the US continues to try to push its extreme maximalism for copyright and patent laws around the globe. Either they are doing this out of ignorance (a real possibility) or because they actually understand the truth, which is that other countries with IP laws like the ones in the US will see a slow down in their economic development.

Either way, those who insist that the US was founded on the principles of strong respect for “intellectual property” haven’t paid that much attention to the actual history of American industrialization.

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Comments on “Yes, The US Industrial Revolution Was Built On Piracy And Fraud”

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Ninja (profile) says:

Ah I invite average_out_of_the_bob to comment on this. I’m interested to see how they’ll twist it.

Isn’t it pretty obvious? If you don’t have any protection you’ll be forced to work to stay ahead. At least you’ll need to copy it right (Samsung anyone?) but ultimately everyone will have to aim to get a head start or some early boost and instead of just riding this initial success the companies would be forced to keep innovating to keep this advantage.

It’s fairly obvious to most of us but as it was wisely said once: It is difficult to get a man to understand something when his salary depends upon his not understanding it.

Anonymous Coward says:

Nothing wrong with preventing other countries doing to the US what the US has done to other countries.

Just as there’s nothing wrong with torture as long as it’s the US doing it, nothing wrong with waging aggressive war when it’s the US doing it, nothing wrong with supporting terrorism if it’s the US doing it.

What is so complicated here people, the US does things but doesn’t want other people doing same to them, perfectly reasonable and I doubt very many in the US disagree with the principle of being unprincipled, especially when it’s perfectly acceptable to call unprincipled, principled as long as it’s the US doing it, ditto torture by any other name is not torture etc.

anonymouse says:

Re: Re:

One thing i dont think they counted on was the chinese playing the game better than they could ever hope to play it, The Chinese are already using their patents to get into Europe and make money from the patent system as defined, there next step is to start getting all of their patents approved by the US patent office, and if anyone thinks the US can stop them , it is very easy to use a US lawyer to put patents forward for review and hide the country of origin. I guess the only solution for the US at this point is to competently change the law and stop anyone from making money of the back of actual innovators who develop something physical that can be sold, and hope that the Chinese don’t start small factories developing goods in the US.

Anonymous Coward says:

Re: Re:

That is the attitude that led to terrorist attacks, which is leading to you country moving towards a fascist regime. The exporting of manufacturing jobs will lead to the export of all skills, and the US sinking to third world status to get its jobs back. Exporting the maximalist approach to intellectual rights will only speed up the process as the rules are turned against you by countries that bend the rules inside their own domain.

out_of_the_blue says:

The Kingdom of England was built by war and plunder.

No one denies that you can accumulate an empire by theft, Mike. This isn’t even a strawman, it’s grasping at one straw and claiming it’s an entire strawman.

“In its adolescent years the U.S.” — Well, besides that an entire continent was wide open except for a few pesky Indians and distant thieves with existing empires, we’re now no longer adolescents. GROW UP.

Take a loopy tour of! You always end up at same place!
A “safe haven” for pirates. Weenies welcome. Vulgarity cheered.

Rikuo (profile) says:

Re: The Kingdom of England was built by war and plunder.

So when shown direct proof that piracy helped grow industrial nations and that enforcement of IP laws retards that progress…you instead choose to put your hands over your ears and go “LALALALALALA, CAN’T HEAR YOU!”

Other examples include anime dubbing, which owes its entire existence to the fact that the anime studios saw there was widespread bootlegging in the 80s and 90s, and decided to tap that demand.

What does it take to convince you that you’re wrong? I’ve stated before that I will admit I’m wrong when I’m shown proof that something I say or believe in is false. What about you?

Zakida Paul says:

Re: The Kingdom of England was built by war and plunder.

“In its adolescent years the U.S.”

Yeah right.

Drone attacks that kill innocent civilians in the Middle East
Being so far up Israel’s arse that you would sell out your own people to please such a ‘friend’
Imposing you economic, military and cultural will on other nations with impunity

That sounds like adolescent behaviour to me.

Greevar (profile) says:

Re: Re: Re:2 The Kingdom of England was built by war and plunder.

Let me make this clear, infringement != theft. However, some theft may have occurred to get machinery out of Europe since those nations had strict laws against exporting industrial equipment. They weren’t likely taking those machines without using some form of black market tactics.

Anonymous Coward says:

Re: Re: Re: The Kingdom of England was built by war and plunder.

I can just imagine the smugglers thinking “I’m going to smuggle this large piece of machinery out of the country, what i really need to do is steal it so they know to look for me before i reach the border”

Really though, they didn’t exactly have 18 wheelers to move this stuff around back then. The last thing you needed was someone chasing you for 12 days while you made a run for the border.

Anonymous Coward says:

Re: The Kingdom of England was built by war and plunder.

I got a different take on it. I thought it was the more restricted copyright and patent protection the slower the innovation. It wouldn’t surprise me if China eventually takes over the US spot due to its disregard of patents of other countries. Besides, I thought the US motto was “Do as I say, not as I do.”

Sam (user link) says:

Re: Re: The Kingdom of England was built by war and plunder.

Agreed. This reminds me of an episode on the Discovery Channel about the history of trains and the British railroads. For a period of time there were basically no real innovations in regards to locomotives… Until the first patents expired and only then did things start to take off.

Anonymous Coward says:

Re: The Kingdom of England was built by war and plunder.

You’re perfectly fine with it when your own message is ‘founded on strong patents and protections’ but when the proof is shown otherwise you denounce it as simply being a young and immature country.
You’re perfectly fine with it when your own message is ‘strong patents and protections drive innovation’ but when the proof is shown otherwise you denounce it as being circumstantial.
You’re perfectly fine with it when your own numbers are based on factual inaccuracies, creative accounting, bias and ignoring specific values but when the proof is shown otherwise you denounce it as being inaccurate and unfounded and biased.

Basically your entire argument falls flat whenever you’re presented with evidence contrary to your own because you can’t possibly accept anything that doesn’t fall within your predefined viewpoint.

Anonymous Coward says:

Re: The Kingdom of England was built by war and plunder.

“No one denies that you can accumulate an empire by theft, Mike. This isn’t even a strawman, it’s grasping at one straw and claiming it’s an entire strawman.”

Actually, that’s what you and others deny every day. That piracy and disrespect for intellectual “property” and the associated nonsense that goes with it CAN and HAS led to growth of industries, as well as economies. With the example being the U.S. in this case.

“Well, besides that an entire continent was wide open except for a few pesky Indians and distant thieves with existing empires, we’re now no longer adolescents. GROW UP.”

That last line is hilarious coming from the guy who goes into EVERY article, writes something along the lines of “blah blah blah nothing to write about, huh? lame!”

Also, in point of fact, while you may not think so, this country, the United States is very much still an adolescent when compared to the history of other countries around the world.

And to add to that, just look at your behavior and the behavior of other copyright maximalists, as well as the behavior of copyright holders in general. Completely adolescent. Throws tantrums regularly? Check. Moody and tempermental? Check. Flips the fuck out when they don’t have their way? Check. Makes unreasonable demands on others? Check. Thinks the world revolves around them (and their wants and needs come first and foremost above everyone else’s)? Check.

Should I go on, blue? You really screw yourself over with your own stupidity, you know that? You throw something out their as a dismissal, but you fail to think things through in a “can someone turn this around on me” manner. Short answer: Yes. Long answer: Yes, every single time you post.

Please, find a hobby and stop posting pointless dribble.

Anonymous Coward says:

Re: The Kingdom of England was built by war and plunder.

Have you noticed that everyone is a thief if you examine all your many myriad narratives for various things at once? If everyone steals from everyone at what point does turn-about become fair play and it’s no longer significant that someone is a thief? I mean there are so many thieves in your world view seems like they all deserve one another so why bother getting all bent out of shape over ‘theft’ anymore?

Wally (profile) says:

Oh there’s more….the TV and radio industry was built upon screwing people over as well.

Philo Farnsworth was the inventor of the transceiver camera (projected the TV image with a cathode ray tube onto a screen) which later became the camera tube with the help of others. He came up with and drew the circuitry plans when he was 14 and demonstrated it at age 20. Farnsworth’s works were noticed by RCA’s CEO, David Sarnoff who offered to buy the patent for $100,000 with the stipulation that he work for RCA as a developer. Farnsworth refused to take the offer and David Sarnoff produced them anyway while trying to sue Farnsworth trying to invalidate the patent so he could use it. Farnsworth finally won when his High School Chemistry Teacher dew up the design that was presented to him by Farnsworth and Farnsworth was awarded a one time $1,000,000 licensing fee for his device.

Then we have the story of Edwin Howard Armstrong…the pioneer of FM radio.

His story is here:

Predates the suicide of Aaron Swartz by 59 years…and for the exact reasons. He spent 90% of his career butting his head against David Sarnoff in legal battles. Why? The original frequeancy range for FM radio was 42-50 MHz. All FM radios had that range at first. RCA’s David Sarnoff pushed the FCC to move the FM radio spectrum frequency to where it is today so he could “make room” for the first television channel which relied on FM radio waves to work. It is speculated that he also did this because he saw FM Radio as a threat to AM Radio empire he owned. The shift happened so quickly that it rendered all FM radios carrying Armstrong receivers of that time useless.

Anonymous Coward says:

Oh they realize this quite well, which is why the US spends so much effort cajoling other countries into adopting stronger laws as well.

But as hollywood shows, this isn’t even between countries; they moved to LA for a reason. And it’s quite natural that once you get your monies you’ll do everything to let you keep getting more without any further work. It’s also quite natural for a system to collapse when it is completely hollowed out. See history.

ethicalfan ethicalfan (profile) says:


Why did all of the commercialization of railroads, electricity, radio, television and personal computers come from the USA? Because the investors who invested in Westinghouse, Edison, and Wozniak (Apple) knew their investment was protected by patents. Apple’s most valuable patent was the switching power supply, used in all IBM and IBM clones. Masnick’s isolated quotes from 1791 pale in comparison to the trillions that would have never been invested in American R&D without patent protection to secure the investor’s capital.

Rikuo (profile) says:

Re: Ridiculous

Oh hi, ethical fan. Its been a while.

So going with things that are simply not true again are we?

Apple is infamous, (to be more accurate, Steve Jobs) of taking others designs and inventions, and passing them off as their own, and then aggressively protecting what they did.

Why link us to your website, when you haven’t updated it since last November? I see you still have up that article. Newflash! Kim Dotcom had NOTHING to do with that site (a WHOIS search turns up addresses in the US, which is something that DotCom doesn’t do nowadays).

cpt kangarooski says:

Re: Ridiculous

Why did all of the commercialization of railroads, electricity, radio, television and personal computers come from the USA? Because the investors who invested in Westinghouse, Edison, and Wozniak (Apple) knew their investment was protected by patents. Apple’s most valuable patent was the switching power supply, used in all IBM and IBM clones. Masnick’s isolated quotes from 1791 pale in comparison to the trillions that would have never been invested in American R&D without patent protection to secure the investor’s capital.

Wozniak didn’t deliberately choose to work in the US. It’s just where he was from. And he didn’t concern himself with patents when initially developing the Apple I; it was a personal toy, made possible not from an investor’s capital, but from MOS ripping off Motorola and bringing out the 6502 at a dirt cheap price that Woz could afford with the cash he had on hand.

Also the switching power supply wasn’t Woz, it was Rod Holt. And it wasn’t really as innovative or as much of an impact as you think.

Anonymous Coward says:

Re: Ridiculous

I find this post particularly amusing, on account of the fact that a considerable portion of R&D is actually done in universities with the assistance of taxpayers’ capital (either through military research grants – See also: Internet – or through public finding and projects – see also: Folding@home).

Greevar (profile) says:

Re: Ridiculous

I can tell you for certain that the success of the personal computer can very much be attributed to piracy. Every IBM clone was created by first reverse-engineering the BIOS in order to be able to run PC-DOS and DOS is a knock-off of Unix, which many people had their own DOS that each of them copied their version from others. MS-DOS is a rip-off of Q-DOS, for example. Windows is a rip-off of Mac OS and Mac OS is a rip off of Xerox PARC’s GUI. So don’t give me this bullshit that Mike is cherry picking history, it’s rife with people finding loopholes or committing wholesale rip-offs of other creations.

Rikuo (profile) says:

Re: Re:

I wonder if you can spot the complete failure in logic on your part.

Okay, let’s say for the moment, that Mike is a supporter of piracy. Given the proof here that industrial growth happened in large part because of piracy, it would make sense for him to be a supporter, because then he can say “Piracy resulted in massive economic growth over a span of decades, whereas if you look at nations where IP laws are rigorously enforced, you don’t see that same growth”.

So please, tell us what it takes to change your tune, to finally admit that IP infringement is in fact for the better.

Anonymous Coward says:

Re: Re: Re:

A o-ed in Bloomberg describing the lawless nature of early America isn’t “proof” (sic) that the first “US Industrial Revolution Was Built On Piracy And Fraud”, sorry.

And why would anyone want to lionize such an environment or return to it? Maybe Mike wants to talk about how great he thinks child slave labor is too.

Rikuo (profile) says:

Re: Re: Re:3 Re:

I’m going to sit here and wait while you try and find the non-existent comments where we call for child labour.

That’s your problem, linking something that arguably has no victims (copyright infringement) to something that does (child labour). One is a legalized business model that relies on profiting off the works of others and is frequently abused so as not to pay the laborers while the other…huh now that I’ve gotten this far in the comment, its actually quite hard to tell the difference.

Rikuo (profile) says:

Re: Re: Re:5 Re:

Still waiting on that proof…

In case you haven’t realized it yet, serfs/child labourers don’t have any option but to labour for free. They’re basically slaves. Musicians aren’t.
Then again, in saying we exploit musicians you’re deliberately ignoring the many times the record labels have done just that.

It’s now getting tiresome to argue with you when I don’t even have to think to come up with a counter-argument for anything you say.

Lord Binky says:

No, you generalize industries and conclude that the bases of the article is not true. But there are very documented specific examples such as the effect of the sewing machines in the textile industry where that closely follow the smuggling of technology and then ‘illegal’ manufacture of the devices that created massive growth in an industry.

Just because the system we use now has industries that grow, you declare that they could not grow without that system, while historical record shows that this growth is in spite of the system we have in place and that the industries could be larger without being inhibited by this system.

Anonymous Coward says:

I see…I think…the argument presented here.

You see something that is really useful, that something being outside the US.

There is no law in the US that prevents the making, using, selling, etc. of that something…and you really want to make, use, sell, etc. that something.

So, you make it, use it, sell it, etc., which is entirely legal under US law.

Yes, that really is the same as piracy involving engaging in activities that are not legal under US law.

Got it…

txpatriot says:

The US also (nearly) exterminated its indigenous population 100-200 years ago. So I guess it would be OK if we just stood by and let China and other countries exterminate their indigenous populations now?

The U.S. enshrined slavery in its Constitution which means the U.S. cannot now take a principled stand against slavery anywhere in the world, right?

Women didn’t have the right to vote 200 years ago in the U.S. so we should stand idly by (which N.O.W. pretty much does anyway) while the Islamic world crushes the rights of Islamic women.

Until recently, homosexuals were considered an abomination in the U.S., so we should not encourage gay rights in foreign countries because that would be, you know, hypocritical of us.

And on and on ad nauseam. Bottom line: Tech Dirt never met a pirate it didn’t love.

Raymond Van Dyke (profile) says:

Our Founders and Patents

Of course our early nation was a hotbed of infringement. That is hardly news. Yet, for hundreds of years before our founding, kings and queens actively courted outsiders to come to their shores. Our young nation was no different, but it took us a long time to get infringement under control – through the development of patent law jurisprudence.

Our Founders, in the midst of the Industrial Revolution, recognized the importance of an orderly patent system (and copyright), and put these fundamental commercial rights into the Constitution so that individuals could invent and prosper. The later dominance of corporations has complicated this, but the idea is still there. Innovation is a good thing, and the patent system provides the mechanism for the protection of that innovation.

The suggestion that things would be better if we were to just revert to old time piracy is nonsensical and antithetical to the wishes of our Founders.

Ray Van Dyke

White Beard says:

Piracy is dangerous Masnick, and you've just become a target

In the world of piracy, morality and justice are each to his own. If stealing and murder for whim or hire are the new laws, Copyrights will mean nothing and your writings are free to copy.

In fact let’s just declare this day Masnick’s writings free to anyone and everyone.

What if nobody steals it?

special-interesting (profile) says:

The world is old and land is finite. All empires are built on stolen land over the ashes, technology and blood of the previous owners and paint themselves as just and proud heroes in the end.

This is a good article that helps substantiate the fact that extended patent laws only slow down and strangle vital technological development. Makes me wonder if patent terms are too long also especially since the advantage is on the larger firms. Taking off from the industrial development it directly related to copyright angle…

Copyright restrictions are directly related to industrial growth because you cant build a mystery device, you need plans, specs and inside experience as found in books and journals.

I also think this also directly relates to (supposed?) problem related to the frozen nature of shared culture. In other words: We don’t share enough! (of cultural items such as books, journals, music and such)

Often when growing I have heard the rumor (from several European immigrants) that Americans are barbarians in the area of culture. Young and immature was heard often. I wonder if that is related to copyright induced stagnation also? What do we think culture is and how it grows?

Shared culture can be like this essay of unoriginal ideas, concepts and even phrases (all aspects of culture) being collected and reused by me in a way that I have re shared what was shared to me. My only claim to original input it the way I knit them together and present the augment.

If our culture/history/industry was censored by copyright law how would we know? How would we recognize the blood stains and bones from the ashes? The real pirates seem to be the copyright industry.

Veli says:

Yes. US industrial revolution was built on piracy and fraud

Friedrich List shared the secret in his National System of Political Economy when he said: “It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him…
Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth”

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