A visit to the old mill in Thorp, WA is helping me puzzle through a conundrum: Where does wealth come from? Increasing affluence is the ultimate non-zero sum game; everybody seems to win. We have more possessions and longer lives than our parents, and they more than theirs, and so on back through the ages, allowing for occasional down swings and depressions. Plants use sunlight to build themselves out of air and water; entropy is reversed through the input of solar energy. How do we manage to create so much out of nothing?
In a word: Invention.
The first example at the Thorp Mill was the Samson Lateral Power Turbine. This water-powered turbine drives the mill, much like a water wheel powered earlier mills. The difference (I was told by Lexi, the excellent guide and curator) is that the Samson works by water pressure, and not water speed. It’s evident that it also extracts more energy, since the entire (horizontal) wheel is under water; it is powered all the way around its circumference, all the time, unlike a vertical wheel. The other advantage must have been that it was easier to install. A water wheel would have to be designed for the particular speed of the water in the available mill race; the Samson would work the same way everywhere. The Samson, in other words, replaced the dependency on the intelligence of many mill designers, one of which would need to found to design each new mill, with the inventiveness of Mr. Samson, who replaced custom design by encapsulating his insight in some cast iron and a set of installation instructions.
Tren Griffin came up with the term “software in a box” (recently written up by Bill Gurley) to capture his insight that the value of most devices is not concrete; it’s in the software that they embody. Samson’s Lateral Power Turbine is the nineteenth century equivalent of “software in a box”.
The value of intellectual property became even clearer when I saw the Bernard & Leas “Plan Sifter”. This device enabled a miller to extract 40% more flour per bushel of wheat than they were able to do with previous equipment. The legend on the side of the sifter proudly proclaim its inventor (one Carl Haggenmacher), that it was patented in May 27th, 1890 (patent numbers 428 907, 428 908, and 428 909), and the patent was reissued on June 28th, 1892 (number 11.252).
Patents must have mattered. For example, W. D. Gray’s Patented Noiseless Roller Mill was prominently labeled with 23 patents, issued between Dec 23rd, 1879 (number 222,895) and September 8th, 1891 (159,075).
Patents enabled the inventor and manufacturer to extract a temporary premium for their insight and investment. Even with the premium, the Plan Sifter made the miller more profitable, since he decided to buy one, and not use the old technology. In the long term, after the patents had expired, this knowledge was available to all; every subsequent sifter was more economical. We humans were able to use more and throw away less. It was as if we were now able to create more flour out of thin air. Alchemy, indeed.