American Economic Association
American Technology: Imported or Indigenous?
Author(s): Nathan Rosenberg
Source: The American Economic Review, Vol. 67, No. 1, Papers and Proceedings of the Eightyninth Annual Meeting of the American Economic Assocation (Feb., 1977), pp. 21-26
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/1815875
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American Technology: Imported or Indigenous?
By NATHAN ROSENBERG*
This paper will consist of some variations
upon a central theme, the theme of America's
great resource abundance and its relationship to
our technological history. I will argue, not only
that much that was unique in the American
technology experience was due to that abundance, but that resource abundance shaped
American technology indirectly as well as directly, via routes and mechanisms which are
still largely unexplored and therefore insufficiently appreciated. These routes and mechanisms take us beyond the issue of factor endowment, at least in the narrow sense. In order to
appreciate these influences, one needs to examine the performance of the American economy,
not just as an exercise in economic logic, but
also as an historical process.
The American colonies, and later the United
States, must be understood as an extension of
in the
British-culture
European-primarily
unique circumstances of the North American
wilderness. The earliest technologies employed
by the European settlers, aside from some modest agricultural borrowings from the Indians,
were those which they had acquired prior to the
emigration to the New World. The mechanism
of the transfer was the knowledge and the technical skills incorporated in each settler, plus the
simple tools, utensils and implements which accompanied these settlers in the ships' cargoes.
Throughout the entire colonial period, it should
be remembered, the European technology was
of a preindustrial nature. Even with the later
the
emergence of industrial technologies,
skilled worker or artisan, as the remarkable instance of Samuel Slater reminds us, remained
the vital carrier from the more advanced to the
less advanced society.
The United States was a beneficiary of those
extensive technological innovations in Great
Britain which we now call the industrial revolution. The early American experience with industrialization, therefore, did not necessarily involve an inventive process, but more commonly
the transfer of technologies which had already
been developed elsewhere. However, although
the early dependence upon European technology was very great, it was not total. Indeed, it
could not have been so, since the differences in
resource endowment and environment generated problems and presented opportunities
which were necessarily outside the range of European experience. European solutions and
techniques were sometimes impossible and
more often highly inefficient. For example,
whereas forest resources were increasingly
scarce and costly in Britain, they were embarrassingly abundant in America. As a matter of
fact, wood and its valuable byproducts, such as
potash and pearl ash, were often quite literally
the waste products of the land-clearing procedures antecedent to agricultural settlement.
Whereas through the eighteenth century (and
earlier) the high price of timber as a fuel and as
a building material provided a powerful incentive in Britain to innovate in iron production
(including the substitution of mineral fuels for
wood and charcoal) Americans were carefully
exploring the possibilities of a wood-intensive
technology. Although there was of course an
extensive collection of European woodworking
techniques upon which Americans could draw,
Western Europe did not possess a resource endowment which would have made it worth
while to explore the highly resource-intensive
end of the production isoquant.
Thus, much of what distinguished the American experience was attributable to the fact that,
when she commenced her industrialization in
the first half of the nineteenth century, she did
so with the pool of British experience upon
which to draw, but also from a distinctly more
favorable resource position. The direction of
*Professorof Economics, StanfordUniversity.
21
22
AMERICAN E(ONOMIC' ASSOCIATION
technological innovation, especially in the early
nineteenth century (and before) was a consequence of this circumstance. Much of it was
specifically geared to the intensive exploitation
of natural resources which existed in considerable abundance relative to capital and labor. For
example, in spite of America's late industrial
start compared to Britain's, she quickly established a worldwide leadership in the design,
production and exploitation of woodworking
machinery. These included a whole range of
machines for sawing, planing, mortising, tenoning, shaping, and boring, in addition to an
entire armory of woodworking machines for
more specialized purposes. It was characteristic
of these machines that they were very wasteful
of wood. Given the relative factor scarcities in
the United States, however, such machines,
which essentially substituted abundant and
cheap wood for scarce and expensive labor,
were admirably adapted to American needs.
American lumber consumption per capita was
several times as great as the corresponding
levels for the United Kingdom, and rose very
sharply in the early years of industrial development. In fact, American technology from the
earliest times had been particularly devoted to
innovations which assisted in the utilization of
wood, or which reduced the cost of complementary inputs.
Although America's abundance of resources
led to a high degree of technological innovativeness and to the development of an essentially new technology in the case of woodworking, it is important to note that resource
abundance could also operate as a conservative
force. This was specifically the case with respect to the critical British innovations in the
iron industry, at the heart of which was the substitution of a mineral fuel for wood fuel.
Whereas the Americans were very quick to
transfer some of the new industrial technologies, this was notably not the case in the
iron industry, where it would be fair to say that
America's abundance of wood caused her to lag
a full half cenitury behind the more "advanced"
mineral-using technology of the industrial revolution. Similarly, the abundance of water power
in New England caused a long delay in the
FEBRUARY 1977
American adoption of the stationary steam
engine for industrial purposes. On the other
hand, in uses where the steam engine uniquely
facilitated the exploitation of abundant natural
resources, it was adopted and exploited very
quickly, as in transportation. America rapidly
introduced the railroad and, even earlier, led the
world in the design and construction of steamboats for her internal waterway system.
The main features of the transformation in
American agriculture in the nineteenth century
also bear the distinctive imprint of resource
abundance. No situation comparable to American abundance had existed in any of the other
societies of Western Europe from which settlers
had come to America. In agriculture this took
the essential form of a very high land-to-labor
ratio, and this feature left a deep impression
upon the direction of technological innovation
in America. A major thrust of agricultural innovation under these circumstances, and one
that became particularly conspicuous around
the middle of the nineteenth century, were innovations which had the consequence of increasing the acreage which could be cultivated
by a single farmer. This was achieved by a
process of mechanization of agricultural operations. The process differed from mechanization
in industry in one fundamental respect. Mechanization in agriculture in the ninieteenth century involved no extensive reliance upon the
new power sources which eventually played
such a central role in transportation and industry. The mechanization of field operations in
agriculture relied entirely upon animal power
and this situation persisted until the large-scale
introduction of the tractor in the 1920's. Animals supplied the power for the great mechanical innovations in nineteenth century agriculture the steel plow (as well as Jethro Wood's
earlier plow which already had replaceable castiron parts), the cultivator which replaced the
hand-operated hoe in the corn and cotton fields,
and the magnificent reaper which swept away
what had earlier been a basic constraint upon
seasonal variations in
grain cultivation-the
labor requirements which reached a sharp peak
during the harvest season. Later, output per
worker was further augmented by binders and
VOL. 67 NO. I
AMERICAN ECONOMIC GROWTH
threshing machines and, eventually, by combine-harvesters. In corn cultivation, the development of the corn sheller and the corn picker
were particularly valuable for their labor-saving
characteristics.
American midwestern agriculture was, happily, relatively free of obstacles of topography
and farm layout which retarded the mechanization of British agriculture. Furthermore, the introduction of barbed-wire fencing in the westan area with few natural materials for fencing
purposes-provided a long sought-after, cheap
material for fencing purposes, and one which
could be put into place with relatively small
amounts of labor. It thus provided a laborsaving technique of land enclosure and, at the
same time, made practicable the highly land-intensive techniques of livestock raising which
became so characteristic of the American West.
It should be remembered, moreover, that the
westward movement itself had a significant initial labor-saving effect in American agriculture
after 1860, since it involved a movement from
largely forested land to nonforested land, and
since the clearing of the latter lands involved a
much smaller labor cost per acre than the clearing of the former. In the South, the introduction
of the cotton gin provided a substitute for the
highly labor-intensive activity of manually removing the seeds from the cotton. In so doing it
liberated cotton from the narrow coastal confinements to which the earlier cultivation of the
long-stranded sea-island cotton was confined. It
thus opened up for cotton cultivation an immense land area from which it was previously
excluded.
Thus, the major technical innovations in
nineteenth century agriculture consisted primarily of labor-saving and land-using mechanical devices, often extremely simple, which
drew extensively upon the cumulating pool of
technical skills and knowledge in the growing
industrial sector. Such innovations had the primary effect of raising agricultural output per
worker, but not the productivity of land, the
abundant nineteenth century input-although
one must add the qualification that, as in the
cases of the cotton gin and barbed wire, some
innovations were of a "triggering" nature
23
which enabled certain lands to be put to uses or
cultivated in ways which would not otherwise
have been feasible. Furthermore, the commonly-observed recourse of the American
farmer to soil management practices which led
to declining soil fertility ("mining the soil")
were essentially practices which substituted
abundant land for other inputs.
So far I have argued that American technology took a direction the distinctive feature of
which was its resource-intensive nature.1 What
does this have to do with those developments in
the manufacturing sector, particularly those
sectors which are usually regarded as defining
what was so truly special about our technological history-the mass production of standardized products consisting of interchangeable
component parts, and involving the use of
highly-specialized machinery, a system so different from anything known in Europe that, by
mid-century, it was widely referred to there as
"The American System of Manufacturing"'? I
believe that American resource abundance had
a great deal to do with American leadership in
this direction, because this new technology was
not only labor-saving but, particularly in its
early stages, also resource-intensive. To the extent that this was so, it possessed an underlying
economic rationale similar to the forest-based
and arable-land-abundant technologies to which
I have already referred. America had a very
great advantage in the early search for a laborsaving technology because it was much less
constrained by the resource-wasting characteristics of that technology in its early years. This
is particularly apparent in the gun-making
trade, properly regarded as the original home of
'it is interesting to note that American resource abundance shaped the scientific enterpriseas well in a resourceintensive way, although the point cannot be developed
here. The flora, fauna, and geology of America offered an
enormous potential increment to the stock of European
knowledge concerning the naturalworld. Europeanscientists were intensely interested in accumulatingsuch information. Descriptive accounts and all forms of reportingon
the naturalenvironment of the New World were eagerly
sought after and enthusiasticallyreceived in Europe. The
comparativeadvantageof aspiringAmericanscientists was,
thus, emphatically in the "export" of primaryproductsrelatively unprocessed, descriptive accounts of specimens
of the naturalenvironmentof the New World.
24
AMERICAN\E('ONOI('
mass production technology. But it was true in
other areas as well that we could adopt a machine-using technology very early because
American resource abundance offered the opportunity for trading off natural resource inputs
for other, scarcer factors of production. Thus,
New England industry not only relied heavily
upon water wheels but for long used wooden
pitchback wheels which were, in a strictly engineering sense, highly inefficient. They were,
however, comparatively cheap to build and thus
allowed Americans to "waste" potential energy in order to minimize capital costs. Similarly, Americans showed a great preference for the
high pressure steam engine over the low pressure steam engine which was much preferred in
Britain. Although the low pressure steam
engine was more efficient in its utilization of
fuel, such engines, which were more expensive
to construct, would again have involved a larger
capital expenditure. American railroads notoriously tolerated steep gradients and sharp
curvatures, and often took circuitous routes to
avoid the construction of tunnels. A main consequence of such practices was to raise the fuel
costs of railroad operation but, again, it made
eminently good economic sense, in America, to
substitute cheap natural resource inputs for
more expensive capital inputs.
In numerous ways, therefore, resource abundance and labor scarcity, and the nature of industrial technology, thrust the American economy very quickly toward the capital- and
resource-intensive end of the spectrum of techniques. These pressures, however, led to exploratory activities and to eventual learning experiences the outcome of which cannot be
adequately summarized merely in terms of the
factor-saving or factor-using biases just referred
to. For they also led to new patterns of specialization and division of labor between firmsespecially between the producers and the users
a result of which the
of capital goods-as
American economy developed a degree of technological dynamism and creativity greater than
existed in other industrial economies in the second half of the nineteenth century. I believe that
this technological dynamism was due in large
ASSOC4IATION
FEBRUARY 1977
measure to the unique role played by the capital
goods industries in the American industrialization process and the especially favorable
conditions under which they operated. For these
capital goods industries-I refer here primarily
to that group involved in the forming and shaping of metals-became
learning centers where
metalworking skills were acquired and developed and from which such skills were eventually transferred to the production of a sequence
of new products-interchangeable
firearms,
clocks and watches, agricultural machinery,
sewing machines, typewriters, bicycles, automobiles. A key feature of industrialization is
that it involved the application of certain basically similar production techniques to an everwidening circle of final products. Moreover, the
technological
knowledge and competence
which was gradually accumulated in this sector
was directly applicable to generating cost reduction in the production of capital goods themselves. A newly-designed turret lathe or universal milling machine, or a new steel alloy
permitting a lathe to remove metal at higher
speeds-each of these innovations not only resulted in better machines but they also reduced
the cost of producing the machines in the first
place. Thus, although the initial shift to the
capital-using end of the spectrum was generated
by the unique pattern of American resource
scarcities discussed earlier, it is by no means
even obvious what the final outcome of this
process was in terms of factor biases. For the
capital-using path was also a path which, eventually, generated a much-increased capacity for
capital-saving innovations. The attempt to deal
with labor scarcity in a regime of natural resource abundance pushed us quickly in a direction where there turned out to be rich inventive
possibilities. In turn, the skills acquired in a
more capital-abundant society with an effectively organized capital goods sector provided
the basis-in terms of knowledge and engineering skills and expertise-for innovations which
were capital saving as well as labor saving. Indeed, most new products, after their technical
characteristics became sufficiently stabilized,
have passed through such a cost-reducing stage
VOL. 67 NO. I
AMERICAN ECONOMIC GROWTH
during which capital goods producers accommodated themselves more efficiently to the
large quantity production of the new product.
American industry seems to have particularly
excelled at these activities.
Aside from the highly visible, major inventions, capital-intensive technologies have routinely offered extensive opportunities for improvements in productivity which seem to have
had no equivalent at the labor-intensive end of
the spectrum. Knowledge of mechanical engineering, metallurgy and, perhaps most important of all, the kind of knowledge which comes
from day-to-day contact with machine technology, provide innumerable opportunities for
small improvements-minor modifications, adaptation to some special purpose use, design alterations, substitution of a superior or cheaper
material the cumulative effects of which
have, historically, been very great.
It is important that these developments be
seen in the actual historical sequence in which
they occurred. For the fact that America began
the growth of her capital goods sector not only
with a strong preoccupation with standardization and interchangeability, but with some
early experience with such techniques as well as
a market which readily accepted standardized
products, shaped the nature of the eventual outcome of the process of industrialization in some
decisive ways. For the acceptance of standardization and interchangeability vastly simplified
the production problems confronting the makers
of machinery and provided the technical basis
for cost reductions in machine making. At the
same time it provided the conditions which encouraged the emergence of highly specialized
machine producers as well as the transfer of
specialized technical skills from one industrial
use to another. Indeed, America's most significant contributions to machine tool design and
operation and related processes-Thomas
B lanchard's profile lathe, turret lathes, milling machines, die forging techniques, drilling and filing jigs, taps and gauges-were associated with
specialized, high-speed machinery devoted to
the production of standardized components of
complex products.
25
I would like to suggest that the American experience with standardization, uniformity and
interchangeability shaped the development of
the capital goods sector in ways which subsequently made it an unusually effective agent
for the generation and transmission of technological innovation. The extent of standardization significantly determines the amount of
initiative which it was possible for capital goods
producers to exercise with their customers.
With extreme heterogeneity of products (as was
characteristic of Britain) the role of the machine
maker becomes merely passive and adaptive.
His activities, of an essentially bespoke nature,
are heavily constrained by the nature of his relationship to potential customers. Initiative then
remains, as was the case in Britain, with the ultimate user of equipment, and it is extremnely
difficult to cater to his needs in a technologically creative way. American producers
of machinery and their users had, at an early
date, developed a far more successful network
of interrelationships than had occurred in Britain. I would not want to argue that the technological factors which I have emphasized totally account for the better organizational
relationships which emerged in America, but
they do seem to be a critical part of that
emergence. In America the relationship between machinery makers and customers provided for an interchange of information and a
communication of needs to which the machinery producer gradually learned to respond in
highly creative ways. At the same time, the
machine user learned to rely with increasing
confidence upon the judgment and the initiatives of the machine supplier-a
judgment
which was justified by an increasingly intimate
knowledge, on the part of the supplier, of customer needs and effective ways of catering to
these needs. It was, in some measure, the milutual confidence of these interfirm relationships
which made it possible for mnachinemakers to
suppress customer preferences which were
technically frivolous or irrelevant and, in this
way, to reduce the cost of the capital equipment
as well as that of the final product.
Thus, the greater freedom of the American
26
AMERICAN ECONOMICASSOCIATION'
capital goods producers to exercise initiative,
combined with their obvious financial incentive
to increase the sale of their products, created a
uniquely powerful and successful set of forces
for the dissemination and adoption of new technologies. To a far greater extent than elsewhere, American capital goods producers
engaged in successful promotional activities, simultaneously educating and persuading machinery users concerning the superiority of new
techniques.
All of this seems to me to be an important
part of the explanation for America's distinctive
success, in the twentieth century, not so much
in inventive activity, as in the ability to carry
new inventive possibilities quickly to the stage
of successful commercial introduction. In an
economic world of increasingly complex products and processes, commercial success has
turned, to a greater and greater extent, upon interfirm relationships, upon the ability to coordinate and to utilize the output and services of
specialist contractors and specialist makers of
components. American firms for long have excelled at integrating their own operations with
those of their suppliers in a way which has
enabled them to confine their own productive
operations to a limited number of specialized
activities, while at the same time deriving the
benefits of specialized knowledge and technical
expertise concentrated in other firms and industries. In Britain, by contrast, specialization of
activities by firm was seldom carried as far as in
the United States. This was particularly so
where quality control was an important consideration. In this case there was usually a strong
compulsion to produce the components internally rather than to develop a dependence upon
often unreliable external sources. America's
greater experience with the technology of standardization and interchangeability, by contrast,
had reduced such problems to a more easily
manageable basis. In Britain, the reliance upon
specialist subcontractors was more limited than
in America. Individual firms typically produced
a larger proportion of their own inputs whereas
American industry was much more prone to
spin off specialist producers devoted to a narrow product range. These characteristics persist
FEBRUARY 1977
even today and could be documented in such
"high technology" fields as aircraft, plastics,
electronic capital goods, or chemical process
plants.
All of this has taken us a long way from the
initial condition of American resource abundance with which I started. Nevertheless, I
believe that the American success in interfirm
relationships, which has been so vital to our
twentieth century technological dynamism, is,
to a considerable extent, a product of the unique
historical path which we have traversed because
of our natural resource abundance. If time permitted it could be shown how American resource abundance reinforced the trends which I
have discussed via its influence upon income
level and the composition of demand. For resource abundance enabled us, through trade and
the exploitation of resource-intensive activities,
to achieve comparatively high levels of income
very early in our history. More precisely, it
made possible the early creation of a society
with a large and substantial class of people of
middle class means. (Crevecoeur had already
pointed, in the late eighteenth century, to the
predominance in America of people of "middling competence.") This class, particularly
conspicuous in agriculture, provided much of
the market for standardized, mass produced articles of simple functional design-indeed,
one
could trace this influence right up through
Henry Ford's Model T, which strikingly resembled its predecessor, the horse and buggy, and
which was originally purchased mainly by rural
households. Furthermore, the abundance of
land and the cheapness of food meant that food
purchases constituted a lower proportion of
even urban household budgets, leaving more,
correspondingly, for the purchase of manufactured goods. Moreover, the rapid rate of growth
of the stock of capital and the large size of the
economy by the end of the nineteenth century
created an extensive and growing market for
capital goods which greatly strengthened the
trends with which I have been concerned. But,
although this is a story strongly complementary
to the one I have just told, it will have to await
another occasion.