Midnight Ride, Industrial Dawn
Page 34
Many entrepreneurial Americans took advantage of the new economic climate with a flurry of new inventions, adaptations to existing processes, or managerial changes that produced even more economic growth. For example, Jacob Perkins’s nail-making machine decreased the time and expense associated with home building and other construction. Eli Whitney’s cotton gin transformed both the southern and national economies by vastly increasing the efficiency of cotton farming, and Joshua Humphreys’ shipbuilding advances, as well as the improvements in steamboat technology started by John Fitch, James Rumsey, and Robert Fulton, improved the American navy while increasing the speed and decreasing the cost of American shipping. Other developments centered on increasing America’s productive output: Oliver Evans’s automated flour mill in 1787 inaugurated the age of the automated factory, saving large amounts of labor with a combination of spatial organization, mechanization, and synchronization of work processes, while other inventors, including textile pioneer Samuel Slater, clockmaker Eli Terry, and weapons manufacturer Thomas Blanchard, laid the final groundwork for standardized mass production. Many of these new techniques reflected the objectives and primary bottlenecks of earlier technological systems. Textile and papermaking factories needed to reduce labor and other operating costs to allow them to compete with cheap foreign goods, so they developed new machinery that raised productivity and efficiency without imposing higher skill requirements upon the largely unskilled labor force. Managers of armament workshops, in contrast, struggled to increase precision in order to finally solve the problem of interchangeability. These advances improved the prospects of individual firms while raising America’s overall technological expertise.13
New England cities became centers of industry and fostered technological advancement via a strong technical network that disseminated knowledge through subcontracting, equipment comparisons, open shops, a pool of skilled labor, and technically competent entrepreneurs such as Paul Revere. New England firms grew more specialized, especially in metalworking trades, and different shops often subcontracted work to each other to maintain their areas of expertise. As a result, many shops became centers of learning that transferred knowledge to other manufacturers, even in different fields. Nathan Rosenberg coined the term technological convergence to describe this phenomenon: when a large number of firms work on similar challenges and trade knowledge and solutions, rapid technological advancement usually results. New England’s industrial advantages become evident in a comparison between the Harpers Ferry and Springfield armories: the Harpers Ferry Armory in Virginia was hampered by a lack of discipline and constant resistance of skilled workers to change, while Massachusetts’s Springfield Armory drew support from its community and had an easier time purchasing equipment and hiring technically proficient laborers.14
Following his successful copper sheet rolling trial and the ensuing confusion as the government clumsily transitioned from a Federalist to a Democratic-Republican administration, Paul Revere faced some of the most promising business conditions the nineteenth century had to offer, and he knew it. He was one of the most experienced and diversified members of a small manufacturing community, operating within a nation whose vast public and private demand for goods continued to increase. Revere’s success in the final decade of his professional life benefited from the prevailing political and economic climate, but also resulted from his own skills, decisions, and background. By continuing his production of earlier items such as bells, cannon, bolts, and spikes, while improving the quality and quantity of his copper sheet output, Revere maintained a profitable line of products and increased his profits and his reputation in spite of occasional setbacks from embargoes, lawsuits, and technical challenges. In particular, Revere set up his growing enterprise in a way that allowed him to marshal the four fundamental resources required for proto-industrial manufacturing success: investment capital, labor, technology, and the natural environment. These four categories provide a helpful framework for a study of Revere’s final working years, and frame the analysis of America’s transition from crafts to industry.
Investment Capital, Managerial Practices, and the Role of Government
The technological and managerial aspects of early manufacturing firms evolved in parallel and became increasingly interdependent, particularly after 1790. As Revere’s experiences with individuals, businesses, and governments have illustrated, many Americans struggled with both technological and managerial challenges. The colonial artisan, for example, had to master more than the tools and construction procedures of his craft, because he also made pricing, advertising, labor oversight, equipment purchasing, and many other decisions every day. We can divide these decisions into two categories. Most issues corresponded to short-term needs related to the smooth and profitable functioning of a shop, which we now recognize as the field of management. Other issues related to the longer-term raising and allocation of funds, which we describe as investment capital (or simply capital) issues. Managerial skill and investment capital remained in short supply throughout the colonial and early American periods, and successful artisans and manager-entrepreneurs had to overcome these deficits in order to thrive.15
The simultaneous realization of political independence and growth of a market economy inspired many artisans and entrepreneurs to abandon their familiar craft principles in order to invest in new techniques, equipment, and managerial practices aimed at producing more goods for broader markets. With the growing prevalence of machinery, owners brought larger numbers of workers together in factory settings, accompanied by specialized supervisors to coordinate and even synchronize their operations. The prohibitive capital cost of land, buildings, labor, and equipment also inspired new forms of corporate ownership and the growing separation of owners and managers. As a former artisan, Paul Revere might have resisted these changes, but instead he embraced them. His reasons for joining the vanguard of the industrial and managerial revolution included his lifelong eagerness to master new processes and his desire to enter the increasingly anachronistic gentry class. Since a mid-eighteenth-century gentleman would not sully his hands with manual labor, Revere quickly adopted new practices that enabled him to identify himself as an owner and manager instead of a laborer, even though he previously stood among the most skilled laborers in the nation.16
Investment capital, or more accurately the shortage of capital, played a key role in defining early American economic growth, particularly in the manufacturing sector. Beginning in colonial times but continuing throughout the nineteenth century, artisans struggled to raise capital when they wished to start a new business, relocate, expand, or modify their production. Craft shops often grew slowly, periodically directing some of their profits back into the business to cover fixed (land, buildings, machines) and working (wages, inventory) capital costs. Workshops and factories on the other hand required larger investments and spent more on land and buildings than machinery. Many of these bigger operations, especially ones selling to distant clients, often required more working capital because they had to pay wages and purchase supplies continually, while their own income from clients might be delayed for months.17 When artisans or manufacturers found themselves in need of additional credit they usually attempted to secure a loan from merchants or wholesalers if possible, because banks rarely wanted to take a risk. For example, the Evening Post reported in 1804 that for most New York banks, “the application of the laborious mechanic is treated with contempt and rejected with disdain.” Without an accommodating bank, artisans had to depend on individual lenders or patrons. In the first generation of metalworking production in many areas, growth proceeded at a crawl until the mid-nineteenth century due to capital scarcity. Even successful or high-profile inventor-entrepreneurs suffered from capital scarcity in the 1790s: steamboat pioneer John Fitch faced immense capital shortages (among other problems) that curtailed his operations, and Oliver Evans attempted to develop a series of inventions related to steam power, including steam vehicles, but the lack of ca
pital doomed him every time.18
The federal government indirectly helped fill this investment capital void by building infrastructure and creating favorable trade conditions that facilitated the growth of national markets and credit sources to aid capital accumulation. After 1806 new policies started to encourage investment in manufacturing: bounties and premiums for technological improvements, fairs to display them, fundraising lotteries, and even support from Thomas Jefferson and James Madison in times of national crisis all helped investors funnel millions of dollars into new mills and factories, primarily for the purchase of buildings and land.19 And in a small but increasing number of cases the government directly helped manufacturers with support or long-term contracts, as it did with Revere. In this sense the government paralleled the natural resources of the young nation: it was a powerful asset offering tremendous benefits to those who knew how to access it.
Paul Revere addressed his biggest need for capital when he started his copper-rolling mill. As with most manufacturers, land and buildings represented his major expenses, though he also invested in new equipment and additional workers. He made it to the end of 1801 thanks to a combination of his prior earnings, ongoing bolt and spike contracts, and government loans. From that point forward he did not face any major capital outlays but he did have to keep a careful eye on his balance sheet, putting the maximum possible amount of his profits into expanded operations while making sure he had enough available cash to cover expenses. This task became even harder when such a large percentage of his business depended on the government.
In 1802 Revere thought of his rolling mill in restricted terms. Funded by a hard-won loan from the Department of the Navy and faced with thousands of pounds of government copper waiting to be rolled into sheets, he saw this new enterprise primarily as a tool for the completion of federal contracts. Although his mill had only operated for a short time, he had no trouble imagining it on a large scale, as a pillar of America’s defense program. This confidence and enthusiasm was an important prerequisite in Revere’s attempt to create a major manufactory. He had abandoned much of his small craft shop mentality and was willing to think big, to lobby for major contracts and federal protection. Now he needed to convert big dreams into big successes.
Revere’s early contracts paint a picture of great productivity and prove the degree to which the government counted on his ability. He received more than 193,000 pounds of copper from Boston naval agent Stephen Higginson in 1802, enough copper to satisfy all the bolt, spike, sheathing, and other copper needs of the two 74-gun ships under construction. By November he had already delivered almost 85,000 pounds of bolts and spikes to the navy yard, and another 40,000 pounds of bolts and spikes stood ready for shipment. He had refined and melted the more than 68,000 pounds of remaining copper and was ready to make it into whatever was needed, probably sheeting. The navy trusted him with all the copper manufacturing for two of its major vessels, and he was well on his way to finishing the entire contract.20
Unfortunately, the federal government and Revere had many frustrating interactions in the years to come. Federal payments were more often late than on time, and most government representatives wasted his time with repetitive or confused requests. His requests for tariff protection, federal appointments, or new contracts almost never bore fruit. He dropped a clue about his opinion of the relative importance of his federal and state contracts in a November 6, 1802 letter to Robert Smith. Revere could not account for all of the sheets he rolled a few months earlier, because “about that time I had an application for thin sheet copper to cover the Dome of the new State House, which was an order of so considerable consequence to us, that we undertook it.”21 Unlike the federal government contracts that always involved late payments, misunderstandings, and voluminous correspondence, this Boston job for a local government agency able to pay promptly and with cash did not require a single letter or headache. Revere later provided sheathing for the dome of New York City Hall, and the transaction unfolded just as smoothly. These state and local governments had more experience than the new federal government, and operated on more manageable and tangible scales. Revere would have loved to deal with them more, but a city or state could only provide so much work, while the federal government’s needs seemed to grow without bounds.
Paul Revere put forth his best efforts in dealing with inexperienced government bureaucrats and managed to receive more funding than most manufacturers, but the deck was stacked against him. Revere’s Federalist sensibilities did not endear him to the Democratic-Republican administration, and he returned the favor. His ideological dissatisfaction became evident in an 1804 letter: “I very much doubt my influence with the present Administration. My sentiments differ very widely from theirs in politicks—My friend, you know I was allways a warm Republican; I always deprecated Democracy as much as I did Aristocracy; Our Government is now completely Democratic, they turn every person out of office who are not nor will be of their way of thinking & acting.”22 In this statement Revere declares himself a republican, a foe of both democracy and aristocracy. He refused to accept the leadership of a hereditary few, but also feared the consequences of rule by an unqualified mass. Instead, he confirmed his lifelong and even die-hard adherence to the principle of a republican meritocracy: he wanted a minority to represent the interests of the people, chosen because of their talents and experience instead of their birthright. Unsurprisingly, Revere considered his lifetime of hard work, technical accomplishments, public service, and leadership more than ample qualifications for societal leadership, even though the Jeffersonians did not. In more pragmatic terms, Revere also disagreed with the Jeffersonian administration’s plan to limit the size of the federal government, restrict naval funding, and retire the large oceangoing warships that needed his copper sheathing. After numerous letters failed to produce new contracts or any form of encouragement, Revere was ready to write off his elected leaders. At least he had plenty of work orders from merchant ships and Massachusetts contracts.
Jefferson’s non-importation and embargo policies eventually made matters worse. The period from 1793 to 1806 was, with minor exceptions, one of vast American prosperity. A large proportion of this economic boom resulted from wars between Britain and France that increased demand for American goods while removing overseas competition. Starting in 1805, however, Britain increased its attacks upon American shipping in order to minimize American trade with France. Other practices such as impressment of American sailors continued unchecked. Jefferson’s administration responded to attacks on American shipping with the Non-importation Act of 1806, a prohibition on certain British imports intended to economically coerce Britain into amending its aggressions without dragging America into a war. When Britain continued its hostile activities into June 1807, Congress passed the Embargo Act to end all American shipping to all countries, hoping that this economic punishment would force them to negotiate better terms. Between December 1807 and March 1809, Jefferson’s administration maintained this policy against violent protest from merchants, particularly those from New England. Incidentally, this policy had little, if any, effect upon the economies of Britain or France.23
Although disastrous for merchants, the embargo actually produced several substantial benefits for manufacturers. The cessation of overseas trade immediately ended any competition from foreign imports, opening the entire American market to domestic producers. In addition, many merchants and bankers found themselves in an unfamiliar position, holding a surplus of capital that they could no longer apply to shipping ventures. These moneyed interests endorsed a variety of new endeavors and invested heavily in manufacturing operations that might make up some of the shortfall of imported goods. Unfortunately, Revere deviated from typical manufacturers in many ways and the embargo hurt him more than most. He did not need or want investment capital from outsiders at this late date, having already purchased his property and established his manufactory. With the prohibition of all trading, the merchant vessels tha
t provided a large percentage of his clientele no longer operated. In addition, his raw materials usually arrived from abroad, so he found himself cut off from nearly all metal supplies. Fortunately he found a silver lining, described in a March 6, 1809 letter to Joseph Carson in Philadelphia: “The miserable conduct of our Rullers in laying that Cursed Embargo has nearly deprived us of selling copper for ships, but as good sometimes comes out of evil and there being no chance of gitting copper for stills from England we have turned our attention that way. We are supply some Gentlemen in New York with upwards of 16,000 lb of sheet 3 feet wide by 5 feet long to make two boilers for two Steam Boats.”24 The New York gentlemen in question were none other than Robert Fulton and Robert Livingston, whose relationship with Revere will be discussed later. In spite of his complaining, even Revere had to admit he benefited from the lack of British competition. His market for naval sheathing temporarily evaporated, but other markets appeared. And while he had a harder time finding sources of raw copper, he and his purchasing agents managed to obtain enough, often by increasing purchases of recycled copper, to keep his output from drying up.