Quotulatiousness

October 23, 2021

The English Statute of Monopolies gets far more credit than it actually deserves

Filed under: Britain, History, Technology — Tags: , , , , , , , — Nicholas @ 03:00

The Statute of Monopolies (1624) is often said to have been critical in helping to start England on the road to the Industrial Revolution, but in the latest Age of Invention newsletter Anton Howes argues it is far more complicated than it seems:

Letters Patent Issued by Queen Victoria, 1839. On 15 June 1839 Captain William Hobson was officially appointed by Queen Victoria to be Lieutenant Governor General of New Zealand. Hobson (1792 – 1842) was thus the first Governor of New Zealand.
Constitutional Records group of Archives NZ via Wikimedia Commons.

One of the most frequently mentioned landmarks in the history of intellectual property is the Statute of Monopolies, passed by the English parliament in 1624. I’ve often seen it lauded as the beginning of the system of patents for invention, or the first patent law. I remember giving a talk a few years ago where I downplayed the role of formal institutions in encouraging the Industrial Revolution, prompting an outraged economist in the audience to point to the law as a sort of gotcha — “here’s a better explanation: with patents you incentivise invention, and the Brits had just invented patents”.

Which is all to illustrate that the Statute of Monopolies is often fundamentally misunderstood. So what, exactly, did it actually do? It’s a tale of opportunism, corruption, and court intrigue, with some actual innovation inbetween. The whole saga ended Francis Bacon’s political career, led to a major constitutional crisis, and set the scene for how inventors were to behave and act for well over a century. In this first part, I’ll give the context you’ll need to really appreciate what was going on, and I’ll publish the rest in the weeks to come.

First off, the Statute of Monopolies was certainly not the first patent law. Venice’s senate had enacted a law on monopolies for invention as early as 1474. But even then, we shouldn’t be looking for statutes at all. The history of patents does not begin in 1474, but much earlier, with plenty of monopolies over new inventions having already been granted by the ruling grand council of Venice, and by the authorities of other Italian cities like Florence. The key thing to recognise about early patents is that they were not a creation of parliaments or their statutes, but of those in charge. They were the creation of sovereigns, a creature of kings and queens (or in the case of republics like Venice, of governing councils).

As regular readers of this newsletter might remember, patent monopolies for invention had already had long history in England, well before 1624. Patents in general were a very ordinary tool of English monarchs, used to communicate their will. By issuing letters patent, monarchs essentially issued public orders, open for everyone to see. (Think “patently”, as in clearly or obvious, which comes from the same root.) Monarchs used letters patent to grant titles and lands, appoint or remove people as officials, extend royal protections to foreign immigrants, incorporate cities, guilds, even theatre troupes — in general, just to rule.

And, eventually, English monarchs copied the Venetians by issuing letters patent to grant temporary monopolies to particular people, to encourage them to make discoveries, publish books, or introduce new industries or inventions to the realm. It’s only over the passage of centuries that we’ve come to refer to patents for invention — a mere subset of letters patent, and really even a mere subset of patent monopolies for all sorts of other creative work — as simply patents. Intellectual property was thus a ruler-granted privilege, created in the same way that a town gains the official status of a city, or a commoner becomes a knight. English monarchs began granting monopolies for discovering new territories and trade routes from 1496, for printing certain books from 1512, and for introducing new industries or inventions from 1552 (with one weird isolated exception from as early as 1449).

October 14, 2021

The quasi-monopolies of the “web giants”

Filed under: Australia, Business, Media, Technology, USA — Tags: , , , , , , , — Nicholas @ 03:00

Arthur Chrenkoff runs afoul of automated “community standards” enforcement on social media, getting locked out of his Twitter account for something that any actual human being would be able to instantly decide was not at all any kind of violation of normal human interactions online or in-person. Of course, if you’ve been in this position yourself, you won’t be surprised to find that launching an appeal of the bot’s action does not get immediate response … and sometimes never gets any attention from a human. He’s aware of this, and he’s still of the belief that this does not call out for any kind of government intervention:

“Automotive Social Media Marketing” by socialautomotive is licensed under CC BY 2.0

I remain broadly sympathetic to the free market argument that competition will, in time, cure any problems that business activity throws up from time to time, such as market domination or underhand practices. The mighty will be brought down low, new players will offer new products, consumer preferences will change, creative (or destructive) equilibrium will be restored. We can all argue, of course, to what extent free market and free competition exist in any particular setting at any particular time. If “real socialism” has never been tried, “real free market” (as opposed to capitalism, which is not necessarily the same thing) might be equally rare in practice. It is certainly true that comparing the lists of top 50 biggest companies one hundred, 50, 20 years ago and today will indicate a lot of economic change, but might not tell us very much about the reasons for that change, which can be quite complex.

The tech giants might not be historically unique as far as their size and power are concerned, but they’re not the norm either. They are not exactly monopolists, but their domination of their particular sections of the market elevates them from the domain of mere companies to something akin to public utilities. Google, Facebook and YouTube, for example, account for 80 per cent of digital advertising in Australia. There are alternatives to all these providers but they are so tiny by comparison as to defeat their main purpose for many users, which is to provide the biggest possible reach and exposure to the world. If you get demonetised or banned by YouTube, other video-sharing platforms can give you only a fraction of the traffic and the eyeballs, which impoverishes you literally and the internet users metaphorically, since they are now less likely to be exposed to the broad range of content. There are other social networks, but only Facebook has “everyone” on it, including your grandma, school friend from primary, and that couple you’ve met on the trip to Spain. Sure, if you get banned from Facebook, you can still try to keep in touch with all these people via many separate channels but it’s so much more difficult, disjointed and time consuming. For that same reason, Facebook’s Marketplace has a much better reach than other platforms that are focused exclusively on online ads. If Marketplace continues to shadow ban me, I can try Craigslist or Gumtree or Locanto, but – certainly in the categories I’m interested in – they all have significantly smaller audiences.

The traditional response to bad customer experience has been “try somebody/something else”. You don’t like Facebook – or Facebook doesn’t like you? Try another similar service. But I’m not sure if most of my friends would be able to name even one alternative to FB, and the chances they are on it are even slimmer. So telling people to stop whining and use an alternative to the tech giants is akin to telling someone “Oh, you can’t have a mobile (cell) phone? So what, no one is stopping you from writing a letter!” It’s the same but different. This is the consequence of the domination of the internet by the Googles and the Facebooks. And the internet now does play an essential role – for better or worse – in our lives and work. Hence the comparison to public utilities. Facebook might not be quite like electricity or running water, but it’s very close to, say, phone service. Yes, you can opt for another social network, but compared to Facebook this would be like a phone company that only makes it possible for you to contact one in twenty people instead of just about everyone, and even then maybe only once a week, at a time predetermined by the provider. It’s a service of sorts, but so inferior in every way to the main game in town as to be incomparable.

I’m not offering any solution to this problem. Many, both on the left and the right, are increasingly of a mind that, like Standard Oil of more than a century ago, the tech behemoths of today need to be broken down into smaller and less powerful units. That could solve some problems but won’t solve many others. Like mine, for example; a somehow “smaller” Twitter and Facebook can still be unresponsive and unaccountable. And as we know from other areas of economy, greater involvement and control by the supposedly impartial government does not guarantee better outcomes either. Big government, like big business, is run by human beings who, quite apart from their own characteristics as individuals, work within a particular culture, which has its own values, agendas and preferences. Government is a monopolist too in many ways, and for all the politics, is not necessarily responsive and accountable either.

September 25, 2021

Will Mars become the equivalent to Earth that India and the East Indies once were for Europe?

Filed under: Economics, Europe, History, India, Space — Tags: , , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes goes a long way in both time and space away from his normal Industrial Revolution beat to consider what might happen as humans attempt to colonize Mars:

The first true-colour image generated using the OSIRIS orange (red), green and blue colour filters. The image was acquired on 24 February 2007 at 19:28 CET from a distance of about 240 000 km; image resolution is about 5 km/pixel.
Photo taken by the ESA Rosetta spacecraft during a planetary flyby.

The other week I attended an unconference, which had a session on the implications of establishing colonies on other planets. Although this was largely meant to be about the likely impact on Earth’s natural environment — what will be the impact of extracting raw materials from asteroids and other planets? — some of the discussion reminded me of the challenges faced by the long-distance explorers, merchants, and colonists of four hundred years ago. There are quite a few parallels I can see between travelling to Mars, say, in a hundred years’ time, and travelling between continents in the age of sail.

For a start, there’s the seasonality and duration of the voyages. European ships headed for the Indian Ocean had to time their voyages around the monsoon season; trips across the Atlantic were limited to just half the year because of hurricanes. Round-trips took years. Similarly, the departure window for a voyage from Earth to Mars only comes around once every 26 months, and even the most optimistic estimates place eventual journey times at about 4-6 months. Supposing that Mars can be permanently settled, any colony there will likely be extremely dependent on the regular arrival of resupply craft. There’s only so long that any group can survive in a hostile environment on their own.

[…]

The Portuguese had once been the only Europeans to trade directly into the Indian Ocean, but the structure of their trade — essentially a state-run monopoly with some licensed private merchants — was unable to compete with the arrival of the Dutch. The initial Dutch forays into the Indian Ocean in the 1590s had originally been financed by lots of different companies, often associated with particular cities — similar to the proliferation of billionaire-led space exploration companies today. But the Dutch soon recognised that such a high-risk trade would only be able to survive if it came with correspondingly high rewards — rewards that could only be guaranteed by eliminating domestic competitors (and if possible, foreign ones too). They therefore amalgamated all of the smaller concerns into a single company with a state-granted monopoly on all of the nation’s trade with the region. In this, they actually copied the English model, but then outdid them in terms of the organisation and financing of that company […].

Are we likely to see a similar move towards state-granted monopoly corporations when it comes to space colonisation? I suspect it depends on the potential rewards, and on the strength of the competition. There is certainly precedent for incentivising risky and innovative ventures in this way, through the granting of patent monopolies. Patents for inventions in the English tradition originally even had their roots in patents for exploration. I would not be surprised if such policies end up being used again by countries that are late-comers to the space race, perhaps by granting domestic monopolies over the extraction of resources from particular planets or moons. Although direct state funding can help in being first, like they did for Spain and Portugal in the fifteenth and sixteenth centuries, state-granted monopolies for private actors may again end up being the ideal catch-up tool for laggards, as they were for the English and the Dutch.

How the monopolies are managed will also matter. The English East India Company, for example, was initially more focused on rewarding its shareholders than it was on investing in the full infrastructure with which to dominate a trade route. The Dutch company, by contrast, from the get-go was part of a more coordinated imperial strategy — one that sought to systematically rob the Portuguese of their factories and forts, to project force with the aid of the state. Indeed, if there’s one big lesson for the geopolitics of space, it’s that far-flung empires can be extremely fragile, with plenty of opportunities for late-arriving interlopers to take them over.

Although it’s difficult to imagine space colonies being able to become self-sufficient any time soon, it seems likely that those controlled by particular companies or countries may occasionally be persuaded — by bribes or by force — to defect. What’s to stop them when they’re hundreds of millions of kilometres away from any punishment or help? Ill-provisioned factors, forts, or colonies happily switched sides to whoever might provision them better. As I mentioned last week, such problems curtailed the ambitions of other would-be colonial powers, like the Duchy of Courland and Semigallia. When the Dutch turned up in the Indian Ocean, many of the Portuguese forts they threatened simply surrendered.

I bow to Anton’s far greater historical knowledge in most things, but state monopolies in the 16th to 19th centuries were very different creatures than their potential modern equivalents, and the much more comprehensive degree of state control of the economy now would probably mean that a state monopoly over extraterrestrial activities would be a worst-possible outcome. The greater the powers in the hands of the state, in almost every case, the worse all state-controlled activities have become. The incentives of civil servants are vastly different than those of individuals or businesses and are farcically incompatible with the risk-taking necessary on a dangerous frontier.

August 29, 2021

The competing English and Dutch East India companies

Filed under: Asia, Britain, Economics, History, India, Military — Tags: , , , , , , — Nicholas @ 03:00

In his latest Age of Invention newsletter, Anton Howes considers the odd fact that although the Dutch were the last major seafaring power to extend to the East Indies, they quickly became the most powerful European traders and colonialists in the region:

By the mid-seventeenth century, although the trans-Atlantic trades were still almost entirely in the hands of the Spanish, the European trade to the Indian Ocean had come to be dominated by the Dutch — which is quite surprising, as they had arrived so late. The high-value exports of the Indian Ocean — particularly pepper — had anciently arrived via the Red Sea, the Persian Gulf, or overland, and then been bought up in Egypt or Syria by the Venetians and Genoese, who then sold them on to the rest of Europe. It was then the Portuguese who had supplanted that trade in the late fifteenth century by discovering the direct route to the Indian Ocean around the Cape of Good Hope. The Portuguese monopolised the new sea route around Africa for a century, almost totally undisturbed by other Europeans, entrenching their position by building forts — occasionally with the permission of local rulers, but often without.

The Portuguese seem to have spread the rumour in Europe that they had effectively conquered the entire region, presumably to dissuade others from even trying to break their monopoly. Even as late as the 1630s, when other nations were already regularly trading there, foreign writers took the time to mock such assertions. As the Welsh-born merchant Lewes Roberts put it, the Portuguese “brag of the conquest of the whole country, which they are in no more possibility entirely to conquer and possess, than the French were to subdue Spain when they possessed of the fort of Perpignan, or the English to be masters of France when they were only sovereigns of Calais.” Quite.

[…]

But for all their tardiness, the Dutch arrival in the Indian Ocean was dramatic. The English may have been the first to threaten the Portuguese monopoly, but in the whole of the 1590s they sent a mere two expeditions out east, and in 1600-10 sent only a further eight (seven by the newly-chartered East India Company (EIC), with a monopoly over English trade with the region, and another voyage licensed to break that monopoly in 1604 by the king, which unhelpfully spoiled the company’s relations with local rulers by turning pirate and plundering Indian and Chinese ships). What the English sent out over the course of twenty years, the Dutch exceeded in just five. Between just 1598 and 1603, after the successful return of de Houtman’s first voyage, they sent out a whopping thirteen fleets — and this despite their merchants not even pooling their efforts like the English had until the very end of that period, when in 1602 the various small and city-based Dutch companies were merged to form a single, national joint-stock monopoly, the Verenigde Oost-Indische Compagnie (VOC). The founding of the VOC accelerated the divergence. Between 1613 and 1622 the EIC sent out a paltry 82 ships compared to the VOC’s 201.

The sheer quantity of Dutch ships heading for the Indian Ocean meant that they were soon dominant amongst the European merchants there, capturing forts from the Portuguese, founding further bases of their own, and able to forcibly keep the English out — sometimes by attacking the English directly, other times by simply threatening any of their would-be trading partners. The steady stream of Dutch ships also allowed them to resupply and maintain their factors — the key infrastructure of long-distance commerce, as I explained in last week’s post for subscribers. They were able to have a presence, and project force, in a way that the English could not. By 1638, Lewes Roberts, despite often lauding England’s commercial achievements, and being an EIC official himself, had to concede that in the Indian Ocean “the English nation are the last and least”.

That English weakness was reflected in how EIC merchants had to comport themselves in the region so as to have any share in the trade at all. Despite the EIC’s later reputation for bloodthirsty rapaciousness, in the early seventeenth century they were highly reliant on good relations with the locals. Whereas the Dutch could often afford to use force and bear the repercussions, the English more or less only held on in the early days by ingratiating themselves with local rulers — often by finding common cause against the aggressive and domineering Dutch. The infrequently-supplied English factors were often heavily indebted to local merchants too, including the Indo-Portuguese — a group that they often married into, for access to social networks and support. As the historian David Veevers argues in a new overview of the early EIC (a relatively pricey academic book, but compellingly argued and juicy with detail), the English often went further than just friendliness or integration, subordinating themselves to local rulers too. Of the few early forts that the English managed to establish, for example, that at Madras in 1640 was only built because the local ruler encouraged it, treating the English there as his vassals.

March 30, 2021

QotD: Static societies and disruptive outsiders

Filed under: Books, Britain, Economics, Government, History, Japan, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

In 1981, the social scientist Mancur Olson published his magisterial The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. Olson had already won acclaim for The Logic of Collective Action, which explained why some groups received an outsize slice of the political pie. In his new book, Olson turned to the question of why nations fail. His thesis: nations lost dynamism when insiders managed to stack the rules against disruptive outsiders.

Stable societies with unchanged boundaries, Olson observed, “tend to accumulate more collusions and organizations for collective action over time.” Instead of accepting rules that encourage overall growth, these collusive organizations — trade groups and labor unions were paradigmatic examples — fight to keep what they have, slowing down “a society’s capacity to adopt new technologies and to reallocate resources in response to changing conditions,” thus reducing economic efficiency. Decline follows.

Olson pointed to Japanese stagnation under the Tokugawa shogunate, when, “before Admiral Perry’s gunboats appeared in 1854, the Japanese were virtually closed off from the international economy.” Ruling Japanese society, he writes, “were any number of powerful za, or guilds, and the shogunate or the daimyo often strengthened them by selling them monopoly rights.” The guilds “fixed prices, restricted production and controlled entry in essentially the same way as cartelistic organization elsewhere.”

A second example: Great Britain, “the major nation with the longest immunity from dictatorship, invasion and revolution” and, consequently, Olson explained, suffering “this century a lower rate of growth than other large, developed democracies.” In Olson’s view, the weak performance resulted from limits on change established by a “powerful network of special-interest organizations,” which included labor unions, industrial groups, and aristocratic cliques. By the 1970s, after the conservative government of Edward Heath fell in a losing battle with striking miners, many deemed Britain ungovernable. Olson contrasted the British situation with that of postwar Germany and Japan, where the chaos and destruction of wartime defeat wiped away established industrial and retail groups, leaving the field open to newcomers like Soichiro Honda or the Albrecht family (creators of international supermarket giant Aldi), who could work economic magic.

The word “ungovernable” was also used to describe New York in the 1960s and 1970s, when Mike Quill’s transit union ran roughshod over Mayor John Lindsay’s attempts to control public-sector wage growth. New York was a long-established city with lots of political collusion. The old Tammany Hall could broker deals to keep Gotham going, but Lindsay’s successor, Abe Beame, proved too weak to resist any special interest that wanted more spending or government favors. New York’s spending kept rising even as public services worsened, until bankruptcy loomed and public power wound up in the hands of the unelected Municipal Assistance Corporation. Thankfully, New York reformed itself economically, at least to some extent, under Mayors Rudolph Giuliani and Michael Bloomberg, as Britain did under Prime Minister Margaret Thatcher. Sufficiently strong leaders can buck entrenched insiders.

Edward L. Glaeser, “How to Fix American Capitalism”, City Journal, 2020-12-13.

February 2, 2021

The History of Hollywood

Filed under: Business, History, Media, USA — Tags: , , , , , , , — Nicholas @ 04:00

The Cynical Historian
Published 3 Sep 2020

This episode is about the history of Hollywood, and it’s quite a long one. This is part 9 in a long running series about California history.

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references:
Bernard F. Dick, Engulfed: The Death of Paramount Pictures and the Birth of Corporate Hollywood (Lexington: The University Press of Kentucky, 2001). https://amzn.to/3f2Yb0S​

Hollywood’s America: United States History Through its Films, eds. Mintz, Steven and Randy Roberts (St. James, N.York: Brandywine Press, 1993). https://amzn.to/2tZIoJT​

Richard Slotkin, Gunfighter Nation: The Myth of the Frontier in Twentieth-Century America (New York: Atheneum Books, 1992). https://amzn.to/2KX0jI2​

Kevin Starr, Inventing the Dream: California through the Progressive Era, (Oxford, U.K.: Oxford University Press, 1985). https://amzn.to/2VPTbVX​

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Wiki: By 1912, major motion-picture companies had set up production near or in Los Angeles. In the early 1900s, most motion picture patents were held by Thomas Edison’s Motion Picture Patents Company in New Jersey, and filmmakers were often sued to stop their productions. To escape this, filmmakers began moving out west to Los Angeles, where attempts to enforce Edison’s patents were easier to evade. Also, the weather was ideal and there was quick access to various settings. Los Angeles became the capital of the film industry in the United States. The mountains, plains and low land prices made Hollywood a good place to establish film studios.

Director D. W. Griffith was the first to make a motion picture in Hollywood. His 17-minute short film In Old California (1910) was filmed for the Biograph Company. Although Hollywood banned movie theaters — of which it had none — before annexation that year, Los Angeles had no such restriction. The first film by a Hollywood studio, Nestor Motion Picture Company, was shot on October 26, 1911. The H. J. Whitley home was used as its set, and the unnamed movie was filmed in the middle of their groves at the corner of Whitley Avenue and Hollywood Boulevard.

The first studio in Hollywood, the Nestor Company, was established by the New Jersey–based Centaur Company in a roadhouse at 6121 Sunset Boulevard (the corner of Gower), in October 1911. Four major film companies – Paramount, Warner Bros., RKO, and Columbia – had studios in Hollywood, as did several minor companies and rental studios. In the 1920s, Hollywood was the fifth-largest industry in the nation. By the 1930s, Hollywood studios became fully vertically integrated, as production, distribution and exhibition was controlled by these companies, enabling Hollywood to produce 600 films per year.

Hollywood became known as Tinseltown and the “dream factory” because of the glittering image of the movie industry. Hollywood has since become a major center for film study in the United States.
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Hashtags: #history​ #Hollywood​ #California

December 16, 2020

QotD: Distorting the history of America’s “Gilded Age”

Filed under: Economics, Education, Government, History, USA — Tags: , , , , — Nicholas @ 01:00

We study history to learn from it. If we can discover what worked and what didn’t work, we can use this knowledge wisely to create a better future. Studying the triumph of American industry, for example, is important because it is the story of how the United States became the world’s leading economic power. The years when this happened, from 1865 to the early 1900s, saw the U.S. encourage entrepreneurs indirectly by limiting government. Slavery was abolished and so was the income tax. Federal spending was slashed and federal budgets had surpluses almost every year in the late 1800s. In other words, the federal government created more freedom and a stable marketplace in which entrepreneurs could operate.

To some extent, during the late 1800s — a period historians call the “Gilded Age” — American politicians learned from the past. They had dabbled in federal subsidies from steamships to transcontinental railroads, and those experiments dismally failed. Politicians then turned to free markets as a better strategy for economic development. The world-dominating achievements of Cornelius Vanderbilt, James J. Hill, John D. Rockefeller, and Charles Schwab validated America’s unprecedented limited government. And when politicians sometimes veered off course later with government interventions for tariffs, high income taxes, anti-trust laws, and an effort to run a steel plant to make armor for war — the results again often hindered American economic progress. Free markets worked well; government intervention usually failed.

Why is it, then, that for so many years, most historians have been teaching the opposite lesson? They have made no distinction between political entrepreneurs, who tried to succeed through federal aid, and market entrepreneurs, who avoided subsidies and sought to create better products at lower prices. Instead, most historians have preached that many, if not all, entrepreneurs were “robber barons”. They did not enrich the U.S. with their investments; instead, they bilked the public and corrupted political and economic life in America. Therefore, government intervention in the economy was needed to save the country from these greedy businessmen.

Burton W. Folsum, “How the Myth of the ‘Robber Barons’ Began — and Why It Persists”, Foundation for Economic Education, 2018-09-21.

December 12, 2020

Trains and Oil | California History [ep.8]

Filed under: Business, Economics, Government, History, Politics, Railways, USA — Tags: , , , — Nicholas @ 02:00

The Cynical Historian
Published 4 Jul 2019

After a long hiatus, here is the return of the History of California series. For those who haven’t seen the previous episodes, here’s the playlist: https://www.youtube.com/playlist?list…

Today we’re going over the history of transcontinental railroads, monopolistic practices, and crude oil production in California.
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references:
eds. Richard Francaviglia and David Narrett, Essays on the Changing Images of the Southwest (Arlington: University of Texas at Arlington, 1994). https://amzn.to/2JwNiHk

William H. Goetzmann, Army Exploration in the American West, 1803-1863, new ed. (1959; Lincoln: University of Nebraska, 1979). https://amzn.to/2K8tslY

Paul Sabin, Crude Politics: The California Oil Market, 1900-1940 (Berkeley: University of California Press, 2005). https://amzn.to/2W16gtt

Jules Tygiel, The Great Los Angeles Swindle: Oil, Stocks, and Scandal During the Roaring Twenties (Berkeley: University of California Press, 1996). https://amzn.to/2ASH7Z0

Richard White, Railroaded: The Transcontinentals and the Making of Modern America (New York: W.W. Norton, 2011). https://amzn.to/2zkURO3
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Wiki: The history of the Southern Pacific stretches from 1865 to 1998. For the main page, see Southern Pacific Transportation Company; for the former holding company, see Southern Pacific Rail Corporation. The Southern Pacific was represented by three railroads. The original company was called Southern Pacific Railroad, the second was called Southern Pacific Company and the third was called Southern Pacific Transportation Company. The third Southern Pacific railroad, the Southern Pacific Transportation Company, is now operating as the current incarnation of the Union Pacific Railroad.

The story of oil production in California began in the late 19th century. In 1903, California became the leading oil-producing state in the US, and traded the number one position back-and forth with Oklahoma through the year 1930. As of 2012, California was the nation’s third most prolific oil-producing state, behind only Texas and North Dakota. In the past century, California’s oil industry grew to become the state’s number one GDP export and one of the most profitable industries in the region. The history of oil in the state of California, however, dates back much earlier than the 19th century. For thousands of years prior to European settlement in America, Native Americans in the California territory excavated oil seeps. By the mid-19th century, American geologists discovered the vast oil reserves in California and began mass drilling in the Western Territory. While California’s production of excavated oil increased significantly during the early 20th century, the accelerated drilling resulted in an overproduction of the commodity, and the federal government unsuccessfully made several attempts to regulate the oil market.
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Hashtags: #history #California #trains #oil

October 29, 2020

War, Cinema, and Cheese! | BETWEEN 2 WARS: ZEITGEIST! | E.01 – Harvest 1918

Filed under: Europe, Food, History, Media, Military — Tags: , , , , , , , — Nicholas @ 04:00

TimeGhost History
Published 28 Oct 2020

War, poverty, and disease continue to pummel the word in the wake of the Great War. But still, humanity carries on, not only surviving but creating a host of futuristic opportunities in the arts, the economy, and … cheese.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Hosted by: Indy Neidell
Written by: Indy Neidell, Francis van Berkel, and Spartacus Olsson.
Director: Astrid Deinhard
Producers: Astrid Deinhard and Spartacus Olsson
Executive Producers: Astrid Deinhard, Indy Neidell, Spartacus Olsson, Bodo Rittenauer
Creative Producer: Maria Kyhle
Post-Production Director: Wieke Kapteijns
Research by: Indy Neidell, Francis van Berkel, and Spartacus Olsson.
Archive Research: Daniel Weiss
Edited by: Daniel Weiss
Sound design: Marek Kamiński

Colorizations:
Daniel Weiss – https://www.facebook.com/TheYankeeCol…
(BlauColorizations) – https://www.instagram.com/blaucolorizations
Dememorabilia – https://www.instagram.com/dememorabilia/

Sources:

From the Noun Project:
iron cross By Souvik Maity, IN
poverty By Phạm Thanh Lộc, VN
Skull_51748

Soundtracks from Epidemic Sound:
– “One More for the Road” – Golden Age Radio
– “Dark Shadow” – Etienne Roussel
– “Not Safe Yet” – Gunnar Johnsen
– “Rememberance” – Fabien Tell
– “Last Point of Safe Return” – Fabien Tell
– “Steps in Time” – Golden Age Radio
– “What Now” – Golden Age Radio
– “Sunday Worship” – Radio Night
– “Astray” – Alec Slayne
– “Break Free” – Fabien Tell

Archive by Screenocean/Reuters https://www.screenocean.com.

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

TimeGhost History
1 day ago
Welcome back to Between Two Wars! Strap in for what is going to be an exciting ride through the massive cultural, social, economic, and technological shifts that take place after the Great War. We can’t guarantee this will always be a positive tale. These changes entail plenty of fear and suffering, and even ‘fun’ things like the Jazz Age have their darker sides.

But that doesn’t alter the fact that the interwar era is a time of promise where people envision modern futures to replace old pasts. There is everything to play for in this brave new world and a vision of progress all around in politics, culture, food, and more.

September 18, 2020

From innovation to absolutism — English inventors and the Divine Right of Kings

Filed under: Britain, Economics, Government, History — Tags: , , , , , , , — Nicholas @ 05:00

In the latest Age of Invention newsletter, Anton Howes looks at how innovations during the late Tudor and Stuart eras sometimes bolstered the monarchy in its financial battles with Parliament (which, in turn, eventually led to actual battles during the English Civil War):

King Charles I and Prince Rupert before the Battle of Naseby 14th June 1645 during the English Civil War.
19th century artist unknown, from Wikimedia Commons.

The various schemes that innovators proposed — from finding a northeast passage to China, to starting a brass industry, to colonising Virginia, or boosting the fish industry by importing Dutch salt-making methods — all promised to benefit the public. They were to support the “common weal”, or commonwealth. And to a certain extent, many projects did. The historian Joan Thirsk did much pioneering work in the 1970s to trace the impact of various technological or commercial projects, revealing that even something as mundane as growing woad, for its blue dye, could have a dramatic impact on local economies. With woad, the income of an ordinary farm labouring household might be almost doubled, for four months in the year, by employing women and children. In the late 1580s, the 5,000 or so acres converted to woad-growing in the south of England likely employed about 20,000 people. That may seem small today, but at a time when the population of a typical market town was a paltry 800 people, even a few hundred acres of woad being cultivated here or there might draw in workers from across the whole region. In the mid-sixteenth century, even the entire population of London had only been about 50-70,000. As Thirsk discovered, innovative projectors also sometimes fulfilled their other public-spirited promises, for example by creating domestic substitutes for costly imported goods, or securing the supplies of strategic resources.

But the ideal of benefiting the commonwealth could also, all too frequently, be elided with serving the interests of the Crown. Projectors might promise the monarch a direct share of an invention’s profits, or that a stimulated industry would result in higher income from tariffs or excise taxes. Increasingly, they proposed schemes that were almost entirely focused on maximising state revenue, with little evidence of new technology. They identified “abuses” in certain industries — at this remove, it’s difficult to tell if these justifications were real — and asked for monopolies over them in order to “regulate” them, then making money by selling licences. Last week I mentioned patents over alehouses, and on playing cards. They also offered to increase the income from the Crown’s property, for example by finding so-called “concealed lands” — lands that had been seized during the Reformation, but which through local resistance or corruption had ostensibly not been paying their proper rents. The projectors would take their share of the money they identified as “missing”. And they proposed enforcing laws, especially if the punishments involved levying fines or confiscating property. The projectors offered to find the lawbreakers and prosecute them, after which they’d take their share of the financial punishments.

Projectors thus came to present themselves as state revenue-raisers and enforcers, circumventing all of the traditional constraints on the monarch’s money and power. They provided an alternative to Parliaments, as well as to city corporations and guilds, in raising money and propagating their rule. Taking it a step further, projectors offered the tantalising possibility that kings like James I and Charles I might rule through proclamation and patents alone, without having to answer to anybody. They thus experimented with absolutism for much of 1610-40, only occasionally being forced to call Parliament for as briefly as possible when the pressing financial demands of war intervened.

In the process, with the growing multitude of projects — a few bringing technological advancement, but many merely lining the pockets of courtier and king — the designation “projector” became mud. It was as if, today, the Queen were to use her prerogative to grant a few of her courtiers monopolies on collecting all traffic fines, or litter penalties, to be rewarded solely on commission. Or if she were to award an unscrupulous private company the right to award all alcohol-selling licences (perhaps on the basis that underage drinking was becoming common). The country would soon be awash with hidden speed cameras and incognito litter wardens, and the price of alcohol would go through the roof. The people responsible would not be popular. A recent book by economic historian Koji Yamamoto meticulously charts the changing public perceptions of projects, describing the ways in which innovators then struggled, for decades, to regain the public’s trust.

September 5, 2020

Beginning the transition from personal rule to the modern bureaucratic state

Filed under: Britain, Bureaucracy, Economics, Europe, Government, History — Tags: , , , , , , , — Nicholas @ 05:00

Anton Howes discusses some of the issues late Medieval rulers had which in some ways began the ascendency of our modern nation state with omnipresent bureaucratic oversight of everyone and everything:

… the bureaucratic state of today, with its officials involving themselves with every aspect of modern life, is a relatively recent invention. In a world without bureaucracy, when state capacity was relatively lacking, it’s difficult to see what other options monarchs would have had. Suppose yourself transported to the throne of England in 1500, and crowned monarch. Once you bored of the novelty and luxuries of being head of state, you might become concerned about the lot of the common man and woman. Yet even if you wanted to create a healthcare system, or make education free and universal to all children, or even create a police force (London didn’t get one until 1829, and the rest of the country not til much later), there is absolutely no way you could succeed.

King James I (of England) and VI (of Scotland)
Portrait by Daniel Myrtens, 1621 from the National Portrait Gallery via Wikimedia Commons.

For a start, you would struggle to maintain your hold on power. Fund schools you say? Somebody will have to pay. The nobles? Well, try to tax them — in many European states they were exempt from taxation — and you might quickly lose both your throne and your head. And supposing you do manage to tax them, after miraculously stamping out an insurrection without their support, how would you even begin to go about collecting it? There was simply no central government agency capable of raising it. Working out how much people should pay, chasing up non-payers, and even the physical act of collection, not to mention protecting that treasure once collected, all takes substantial manpower. Not to mention the fact that the collecting agents will likely siphon most of it off to line their own pockets.

[…]

It was not until 1689, when there was a coup, that an incoming ruler allowed the English parliament to sit whenever it pleased. Before that, it was convened only at the whim of the ruler, and dispersed even at the slightest provocation. In 1621, for example, when James I was planning to marry his heir to a Spanish princess, Parliament sent him a petition asserting their right to debate the matter. Upon hearing of it, he called for the official record of parliamentary proceedings, personally ripped out the page with the offending vote, and promptly dissolved the Parliament. The downside, of course, was that James could not then acquire any parliamentary subsidies.

Ruling was thus an intensely personal affair, of making deals and finding ways to circumvent deals you had inherited. Increasing your capabilities as a ruler – state capacity – was thus no easy task, as the typical ruler was stuck in an essentially medieval equilibrium. Imposing a policy costs money, but raising money involves imposing policy. Breaking out of this chicken-and-egg problem took centuries of canny leadership. The rulers who achieved it most would today seem hopelessly corrupt.

To gain extra cash without interference from Parliament, successive monarchs first asserted and then abused their ancient prerogative rights to grant monopolies over trades and industries. They eventually granted them to whomever was willing to pay, establishing monopolies over industries like gambling cards or alehouses under the guise of regulating unsavoury activities. They also sold off knighthoods and titles, and in 1670 Charles II even made a secret deal with the French that he would convert to Catholicism and attack the Protestant Dutch, all in exchange for cash. Anything to not have to call a potentially pesky Parliament. At times, the most effective rulers even resembled mob bosses. Take Elizabeth I’s anger when a cloth-laden merchant fleet bound for an Antwerp fair in 1559 was allowed to depart. Her order to stop them had not arrived in time, thus preventing her from extracting “loans” from the merchants while she still had their goods within her power.

August 22, 2020

John Cabot’s patent monopoly grant and the rise of the modern corporation

Filed under: Britain, Business, Government, History, Law — Tags: , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes traces the line of descent of modern corporate structures from the patent granted to John Cabot to explore (and exploit) a trade route to China:

The replica of John Cabot’s ship Matthew in Bristol harbour, adjacent to the SS Great Britain.
Photo by Chris McKenna via Wikimedia Commons.

I discussed last time [linked here] how the use of patent monopolies came to England in the sixteenth century. Since then, however, I’ve developed a strong hunch that the introduction of patent monopolies may also have played a crucial role in the birth of the business corporation. I happened to be reading Ron Harris’s new book, Going the Distance, in which he stresses the unprecedented constitutions of the Dutch and English East India Companies — both of which began to emerge in the closing years of the sixteenth century. Yet the first joint-stock corporation, albeit experimental, was actually founded decades earlier, in the 1550s. Harris mentions it as a sort of obscure precursor, and it wasn’t terribly successful, but it stood out to me because its founder and first governor was also one of the key introducers of patent monopolies to England: the explorer Sebastian Cabot.

As I mentioned last time, Cabot was named on one of England’s very first patents for invention — though we’d now say it was for “discovery” — in 1496. An Italian who spent much of his career serving Spain, he was coaxed back to England in the late 1540s to pursue new voyages of exploration. Indeed, he reappeared in England at the exact time that patent monopolies for invention began to re-emerge, after a hiatus of about half a century. In 1550, Cabot obtained a certified copy of his original 1496 patent and within a couple of years English policymakers began regularly granting other patents for invention. It started as just a trickle, with one 1552 patent granted to to some enterprising merchant for introducing Norman glass-making techniques, and a 1554 patent to the German alchemist Burchard Kranich, and in the 1560s had developed into a steady stream.

Yet Cabot’s re-certification of his patent is never included in this narrative. It’s a scarcely-noted detail, perhaps because he appears not to have exploited it. Or did he? I think the fact of his re-certification — a bit of trivia that’s usually overlooked — helps explain the origins of the world’s first joint-stock corporation.

Corporations themselves, of course, were nothing new. Corporate organisations had existed for centuries in England, and indeed throughout Europe and the rest of the world: officially-recognised legal “persons” that might outlive each and any member, and which might act as a unit in terms of buying, selling, owning, and contracting. Cities, guilds, charities, universities, and various religious organisations were usually corporations. But they were not joint-stock business corporations, in the sense of their members purchasing shares and delegating commercial decision-making to a centralised management to conduct trade on their behalves. Instead, the vast majority of trade and industry was conducted by partnerships of individuals who pooled their capital without forming any legally distinct corporation. Shares might be bought in a physical ship, or even in particular trading voyages, but not in a legal entity that was both ongoing and intangible. There were many joint-stock associations, but they were not corporations.

And to the extent that some corporations in England were related to trade, such as the Company of Merchant Adventurers of London, or the Company of Merchants of the Staple, they were not joint-stock businesses at all. They were instead regulatory bodies. These corporations were granted monopolies over the trade with certain areas, or in certain commodities, to which their members then bought licenses to trade on their own account. Membership fees went towards supporting regulatory or charitable functions — resolving disputes between members, perhaps supporting members who had fallen on hard times, and representing the interests of members as a lobby group both at home and abroad — but not towards pooling capital for commercial ventures. The regulated companies were thus more akin to guilds, or to modern trade unions or professional associations, rather than firms. Members were not shareholders, but licensees who used their own capital and were subject to their own profits and losses.

Before the 1550s, then, there had been plenty of unincorporated business associations that were joint-stock, and even more unincorporated associations that were not joint-stock. There had also been a few trade-related corporations that were not joint-stock. Sebastian Cabot’s innovation was thus to fill the last quadrant of that matrix: he created a corporation that would be joint-stock, in which a wide range of shareholders could invest, entrusting their capital to managers who would conduct repeated voyages of exploration and trade on their behalves.

August 7, 2020

From Medieval Letters Patent to our modern patents, by way of Venice

Filed under: Britain, Europe, History, Law, Technology — Tags: , , , , , — Nicholas @ 05:00

In the latest Age of Invention newsletter, Anton Howes traces the lines of descent from the Letters patent of the Middle Ages, through Venetian legal innovations, to what began to resemble our modern patent system:

Letters Patent Issued by Queen Victoria, 1839
On 15 June 1839 Captain William Hobson was officially appointed by Queen Victoria to be Lieutenant Governor General of New Zealand. Hobson (1792 – 1842) was thus the first Governor of New Zealand. This position was renamed in 1907 as “Governor General”. Hobson arrived in New Zealand in late January 1840, and oversaw the signing of te Tiriti o Waitangi only a few days later. By the end of 1840, New Zealand became a colony in its own right and Hobson moved the capital of the colony from the Bay of Islands to Auckland. He served as Governor until his death in 1842 after he suffered a stroke at the age of 49.
Constitutional Records group of Archives NZ via Wikimedia Commons.

Patents for invention — temporary monopolies on the use of new technologies — are frequently cited as a key contributor to the British Industrial Revolution. But where did they come from? We typically talk about them as formal institutions, imposed from above by supposedly wise rulers. But their origins, or at least their introduction to England, tell a very different story.

England’s monarchs had long used their prerogative powers to grant special dispensations by letters patent — that is, orders from the monarch that were open for all the public to see (think of the word patently, from the same root, which means openly or clearly). For the most part, such public proclamations had been used to grant titles of nobility, or to appoint people to positions in various official hierarchies — legal, religious, and governmental. And, of course, letters patent could be used to promote the introduction of new technologies.

[…]

Monopolies in general, of course, over particular trades or industries had been granted for centuries, by rulers all across Europe. They granted such privileges to groups of merchants, artisans, and city-dwellers, giving them rights to organise and regulate their own activities as guilds or as city corporations. Inherent to all such charters was the ability of the in-group to restrict competition from outsiders, at least within the confines of their city. And the ruler, in exchange for granting such privileges, typically received a share of the guild’s or corporation’s revenues. But such monopolies were very rarely given to individuals. When they were, it was often so unpopular as to be almost immediately overturned. And they were rarely used to encourage innovation.

With one exception: Italy. Throughout the fifteenth century, some Italian city guilds had begun to forbid their members from copying newly-invented patterns for silk and woollen cloth, effectively granting a monopoly over those patterns to the individual inventors. In Venice, a 50-year monopoly was granted in 1416 to one Franciscus Petri, of Rhodes, to introduce superior fulling mills. In Florence, the famous architect and engineer Filippo Brunelleschi was granted a monopoly in 1421 for a vessel he designed for transporting heavy loads of marble, in exchange for revealing the secrets of his design. The printing press was also introduced to Venice using such a privilege, with a 5-year monopoly granted in 1469 to Johannes of Speyer, though he died only a few months after receiving it. And these ad hoc grants were made with increasing frequency, such that in 1474 Venice legislated to make them more systematic, declaring that 10-year monopolies could be obtained for all new technologies, either invented or imported (though it continued to also grant ad hoc patents, with the terms and durations decided on a case-by-case basis as before). Under the 1474 law, Venice was soon granting patent monopolies to the introducers of various mills, pumps, dredges, textile machines, printing techniques, and even special kinds of lasagna. It granted over a hundred patents in the first half of the sixteenth century, with many more thereafter.

From Venice, the use of patent monopolies as an instrument of policy spread abroad, with the initiative coming from the would-be introducers of novelties themselves. In the mid-fifteenth century, for example, a French inventor who had acquired patents in Venice was also successfully lobbying for similar privileges from the archbishop of Salzburg, the duke of Ferrara, and the Hapsburg Holy Roman Emperor. The use of patent monopolies thus soon diffused to the rest of Italy, to Germany, and to the various dominions of the Spanish emperor — including Spain itself, its American colonies, and the Low Countries.

And, eventually, to England. But not in the way we might expect. In 1496, the Venetian explorer Zuan Chabotto (aka John Cabot) acquired a patent monopoly from Henry VII over the trade and products of any lands he was to discover — a legal procedure unlike anything that earlier English explorers had attempted (they had merely been granted licenses). Cabot’s grant even differed from the agreements made by Christopher Columbus with the Spanish crown, or by earlier explorers for the Portuguese. Columbus, for example, was effectively granted a patent of nobility — the hereditary titles of viceroy, admiral, and governor. He and the Portuguese explorers were direct agents of the crown, with military and justice-dispensing responsibilities over any newly conquered lands — a model derived from the Christian conquests of Muslim Iberia. Columbus effectively became a marcher lord, a custodian and defender of Spain’s new borderlands.

August 2, 2020

QotD: Marx’s imperfect economic understanding

Filed under: Economics, History, Quotations — Tags: , , , — Nicholas @ 01:00

We’re at the 200th anniversary of Karl Marx’s birth – also the 201st of Ricardo’s publication, the 242nd of Smith’s Wealth of Nations. And it has to be said that the latter two were more perceptive analysts of the human condition and also contributed vastly more to human knowledge and happiness. Most of the bits that Marx got right in economics were in fact lifted from those other two. The one big thing he got wrong was not to believe them about markets.

We can find, if we look properly, Marx’s insistences of how appalling monopoly capitalism would be in Smith. They’re both right too, it would be appalling. But we do have to understand what they both mean by this. In modern terms they mean monopsony, more specifically the monopoly buyer of labour. What is it that prevents this? Competition in the market among capitalists for access to the labour they desire to exploit. That very competition decreasing the amount of grinding of faces into the dust they’re able to do. Henry Ford’s $5 a day is an excellent example of this very point.

Ford wanted access to the best manufacturing labour of his time. He also wanted to have a lower turnover of that labour, lower training costs. So, he doubled wages (actually, normal wages plus a 100% bonus if you did things the Ford Way) and got that labour. At which point all the other manufacturers had to try and compete with those higher wages in order to get that labour they wanted to expropriate the sweat of the brow from. Marx did get this, he pointed out that exactly this sort of competition, in the absence of a reserve army of the unemployed, is what would raise real wages as productivity improved.

Smith also didn’t like the setting of wages as it precluded just such competition and such wage rises.

Where Marx went wrong was in not realising this power of markets. He knew of them, obviously, understood the idea, but just didn’t understand their power to ameliorate, destroy even, that march to monopoly capitalism.

[…]

The thing we really need to know on this bicentenary about Karl Marx is that he was wrong. He just never did grasp the power of markets to disrupt, even prevent, the tendencies he saw in capitalism. Specifically, and something we all need to know today, the power of competition among capitalists as the method of improving the lives of all us wage slaves. You know, that’s why we proletariat today, exploited as we are and ground into the dust, are the best fed, longest lived and richest, in every sense of the word, human beings who have ever existed. Something which is, if we’re honest about it, not a bad recommendation for a socio-economic system really. You know, actually working? Achieving the aim of improving the human condition?

Tim Worstall, “Marx At 200 – Yes, He Was Wrong, Badly Wrong”, Continental Telegraph, 2018-05-04.

July 15, 2020

When The Dutch Ruled The World: Rise and Fall of the Dutch East India Company

Filed under: Asia, Business, Europe, History, India — Tags: , , , , , , — Nicholas @ 02:00

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