Mises Daily Articles
[Excerpted from chapter 18 of The Mainspring of Human Progress (1943)]
When the American Revolution had its beginning, living conditions had scarcely changed since the reign of Nebuchadnezzar. The colonial woman gathered her own firewood and cooked over an open fire, just as women had cooked since the dawn of history, and just as more than two-thirds of the women on earth are cooking today. She spun thread and wove coarse cloth, with a spindle and loom handed down from the early Egyptians. Every housewife made her own soap and candles and carried water from a spring or well. A crude millstone, dating back to ancient Babylon, ground the grain that the American farmer cut and threshed with knives and flails that were older than history.
These were the conditions existing when our forefathers threw off the shackles of Old World tyranny in order that human beings might be in control of their own lives and make full use of their individual initiative.
The outburst of human energy was terrific, and in no way is it better illustrated than by the inventive progress that immediately took place.
In 1793, Eli Whitney invented the cotton gin, which could do the work of four dozen men. But that's only part of the story. Whitney's invention made it commercially profitable to cultivate the short-fiber "green-seed" cotton that grew wild in the foothills of Virginia and the southeastern states. In contrast to the long-staple or sea-island variety, the lint stuck so tenaciously to the short-fiber seed that only a few ounces a day could be separated by hand.
The lower processing costs increased the market for all varieties of cotton. Acreage was greatly expanded, and the southern states entered an era of high prosperity. In less than ten years, the annual production of cotton in America had increased from less than five million pounds to over fifty million pounds.
New England shared in this prosperity. The availability of cotton in such large quantities and at such low prices stimulated the development of carding and weaving machinery. A few years later in Waltham, Massachusetts, for the first time in history, raw cotton was turned into finished cloth under the roof of one factory.
Clothing could now be obtained at prices within the reach of all. It was no longer necessary for the housewife to work overtime at her spinning wheel and handloom. Thanks to Eli Whitney, she could have an occasional evening for rest and recreation.
In 1799, the same Eli Whitney, through the influence of Thomas Jefferson, was given a contract to build muskets for the War Department. His work on that project was one of the most important milestones in the development of modern mass-production technique.
Whitney is frequently spoken of as the inventor of mass production, but that is hardly accurate. In England in the early 1680s, a man named Sir Dudley North had outlined a program of mass production, with particular reference to the building of ships. Sir Dudley's analysis and proposal were presented in a paper entitled Considerations Upon the East-India Trade, which stands today as a remarkable document on the fundamentals of mass production.
Sir Dudley was much concerned about the confusion and perplexity to which the workingman was being subjected as a result of his having to switch back and forth from one type of job to another. He wanted to "abate" such unnecessary confusion by advance planning and by assigning jobs of different variety to different artisans of different skills and talents.
No Decrease in Wages
Sir Dudley also foresaw the possibilities of reducing costs "tho' Wages shou'd not be abated." But he was ahead of his time. The idea of increasing production through systematic planning was too revolutionary to be given serious consideration. And the idea of making things easier for the workers was downright antisocial.
A hundred years later, Adam Smith, in The Wealth of Nations, expanded on the principles laid down by Sir Dudley North. But mass production had made little headway. Ships were still being built in the old way — with no abatement in the confusion. Production-minded Americans, who probably had never heard of Sir Dudley, were the first to produce ships on a mass-production basis — and they didn't get around to it until World War I.
About all that Adam Smith could find to report along lines of practical progress was that the principle of specialized operation was being applied to the manufacture of dressmakers' pins. That was in the year 1776.
On this side of the Atlantic, in that same historic year, a rumor came out of Rhode Island that a tack maker named Jeremiah Wilkinson had perfected a new invention that would boost his production to several thousand tacks a day per man. Jeremiah's "new invention" turned out to be nothing more than a scheme for fastening a dozen bits of metal in a vise, so that, with a broad-faced hammer, the heads could all be pounded at the same time.
Today such a procedure seems perfectly obvious, but in those days, it was startling news and represented an important step toward modern manufacturing efficiency.
But mass production, if applied to anything beyond the simplest kind of article, depends not only on division of labor and multiple operations but also on uniformly accurate, interchangeable parts. Whitney pioneered the idea of interchangeability as a fundamental principle of production, and he successfully applied the principle to a product that must be made with the greatest precision.
Guns had always been built by hand. Each part had to be laboriously filed, lapped, and fitted together by highly skilled gunsmiths. There was no division of labor. No one had ever worried about "abating the confusion." Each worker made everything from the stock to the trigger spring. Each gun was slightly different from every other gun, and each part in each gun was different from the corresponding part in any other gun.
Whitney proposed to substitute highly specialized machine operations for the less uniform hand operations. Thus, each piece would be made exactly as it ought to be in its final form.
This would not only reduce the assembly operation to a routine procedure, but would greatly simplify the problem of repairs. It would no longer be necessary to do a lot of expert filing and fitting to replace a worn or broken part. The principle of interchangeability would make it possible to repair a gun right on the battlefield, without the aid of a professional gunsmith.
Whitney's contract called for the manufacture of ten thousand muskets over a two-year period; and government officials, thinking in terms of piecemeal or handicraft production, naturally assumed that deliveries would be made at an even rate of about one hundred per week. But it is a characteristic of mass production that, while it's a quicker way and a better way to build things once you get started, it takes a long time to get started.
Around a hundred different machines are required to produce uniform guns on a mass-production basis — not to mention the special tools, jigs, fixtures, etc. that have to be made to order. Even with the highly perfected techniques, facilities, and know-how of today, it would take about six months to buy and install the machinery and equipment needed to produce quality guns on a quantity basis.
But back in 1799, it was not just a matter of going out and buying the machinery. That was before the age of the specialized tool industry. Most of the equipment that Whitney had to have just didn't exist. It had to be designed and built from scratch.
The brilliant, ambitious, and audacious Whitney, unwittingly perhaps, had taken on the job of laying the groundwork for the modern machine-tool industry, without which few, if any, of our manufactured products of today would be available at prices within the reach of the average person.
It would have been much easier to go ahead and make the guns by hand, and presumably the first of them were made partly by hand; but at the end of a year, only five hundred muskets had been delivered. The War Department was getting impatient and demanded a showdown.
Whitney was summoned to Washington to appear before a committee of experts. He knew he was in for trouble unless he could get them interested in his broad undertaking. He appeared before the committee with a box containing the loose parts for ten guns.
Without ceremony, he dumped them on the conference table and, like a jubilant child with a new toy, put on a demonstration of what could be accomplished through the use of special machinery, tools, jigs, and fixtures. With parts chosen at random, and without any filing or fitting, he assembled two guns before their very eyes and passed them around for inspection.
It was an impressive demonstration, but the committee had to consider the practical aspects. The government had ordered, not ten guns nor 510, but ten thousand guns. The time was half up, and Whitney himself had to admit that he wouldn't be able to meet the schedule. But he fared better than did Sir Dudley North, and with the support of his friend, President Jefferson, the contract was extended.
As time went on, Whitney had to get additional extensions, but the order was finally filled, and the United States entered the War of 1812 with ten thousand of the most perfect muskets that had ever been made. For the first time in history, precision firearms could be produced in almost unlimited quantities.
The War of 1812 was won; and in the years that followed, the conquest and settlement of the West were greatly expedited by Samuel Colt's application of Whitney's techniques.
But of far greater importance was that Whitney had laid the foundation for quantity production of complex civilian products — bicycles, typewriters, linotypes, motion-picture machines, electric refrigerators, motor cars.
It has been estimated that even the simplest, cheapest, skimpiest kind of automobile could not be built for less than $20,000 without machine tools and the interchangeability of parts that they make possible — and the cost of keeping it in repair would be even further out of line.
Inspired by what he had learned of Whitney's undertaking, Eli Terry, a clocksmith of Plymouth, Connecticut, announced that he was building five hundred clocks — all of the same, identical design — which he would sell for around $10 each, as against the customary price of $25.
This was even more startling than Wilkinson's new method of making tacks. A tack was a very simple thing; but a clock was a mysterious, delicate, and highly complicated mechanism. Clocks had been built back in the days of the pharaohs, but up to the time of Eli Terry they had always been the ornamental luxuries of kings and princes. The common man had depended on the sun and the stars.
From the Old World viewpoint, time was unimportant, and the conservation of human energy also seemed unimportant. It is only when men are free that they begin to place a value on their time; and when men begin to place a value on human time, they begin to realize the importance of preserving human life.
Down through the ages, the principal business had always been war. When a people won a war, they made slaves of the defeated people; if they lost, they became slaves of their conquerors. In either case, there was always a surplus of burden bearers. Long hours of drudgery helped to keep the slaves submissive, so there was no incentive to develop labor-saving techniques — no point in worrying about time.
Under such conditions, there was no place for the Eli Whitneys or the Eli Terrys. If any had cropped up, they would have been frowned upon as "enemies of the social order." That is why Sir Dudley's forward-looking ideas were thrown into the discard. Certain of his more daring writings were suppressed until years after his death, when they were published anonymously by a group of cautious admirers.
Terry was no newcomer to the clock business. For some years past, he'd been canvassing the New England countryside, selling high-priced clocks on the installment plan. But the idea of producing clocks of uniform quality at prices low enough to make them available to every family was something new and radical.
Eli Terry, as far as I can find out, was the first to put into practice the American idea of low cost and big volume through mass production and wide distribution. By the end of three years, he and his partner, Seth Thomas, had built and sold over five thousand clocks.
Others were attracted to the field. Competition increased. Quality improved. Wages went up. Prices went down. The unique American formula was in the making.
One manufacturer, a man named Peck, saw possibilities in the export trade. His first shipment of low-priced clocks to England was held up at the Liverpool Customs House on grounds of suspicion. The Customs officials knew the value of clocks, and they knew that clocks just couldn't be produced at the low prices shown on the Peck invoice — fraudulent payments must have been made on the side in order to avoid the full effect of the tariff.
British law provided that under such conditions the goods in question would be confiscated by paying the amount of the invoice plus 10 percent. The clocks never reached the consignee. They were taken over by the government. What the government did with them, I don't know.
But Peck, being a practical man, didn't put up any argument. He was a hardheaded manufacturer, not a salesman. The 10 percent extra profit was "pure velvet," and he rather relished the idea of disposing of his output without any sales expense or credit risk. He added more workers and continued shipping his clocks to Britain and collecting from the Customs Office until they finally got wise to him.
Although the records are incomplete, I like to think that the British, at about that time, began to think that perhaps Sir Dudley had something. However, it took another hundred years to develop and extend mass-production techniques to a point where the worker could switch from one job to another without confusion and perplexity.
Sir Dudley's dream was fulfilled — not in England, but here in the United States. It was brought to its fruition through the ingenuity of American production engineers. But scarcely had it reached full perfection when other forms of confusion were injected into the situation. Although of an artificial, man-made nature, they are so befuddling that even a Sir Dudley North might have difficulty in pointing a way to the solution.
This chapter is based on material gathered over many years from a wide variety of sources. But I especially want to express appreciation to my friend, the late Carl Crow, and to his book, The Great American Customer (New York: Harper & Brothers, 1943).
 By way of anticlimax, it's disappointing to note that Whitney himself made not one red cent out of the cotton gin. Section VIII of the Constitution provided that inventors should, for a period of time, be granted the exclusive right to their original ideas — not so much to protect the inventor, but to make sure that new ideas were made public. As Whitney found, to his sorrow, property rights as applied to inventions were not generally understood. [Editorial note: see Kinsella on this topic.]
Patents didn't afford much protection on a thing like a cotton gin, which could be made in any blacksmith shop.
 As Charles F. Kettering has aptly observed, this is analogous to the publishing business. It takes considerable time to set the type, make the engravings, correct the proofs, take care of make-ready, etc.; but once the presses get going, it's just about as easy to run off a million copies as it is to run off a few thousand. In the printing business, the necessity for all this preliminary work is rather generally recognized, but it is not generally understood that all mass manufacturing involves the same problems — only more so. The story of Whitney has its parallel in the early days of World War II, when industry was being heckled by people who were ignorant of this principle — who thought it was just a matter of turning on the spigot.