A U.S. Technology Double Standard?

How crucial was U.S. technology piracy in the 1770s and thereafter?

October 20, 2004

How crucial was U.S. technology piracy in the 1770s and thereafter?

From the first moments of the North American confederation as an independent political entity in the 1770s and thereafter, the transfer of protected technology from Europe was a prominent feature in the economic, political and diplomatic life of the emerging country.

In that process, the United States and Great Britain became fierce political and economic adversaries.

American political independence was founded on the notion of economic self-sufficiency. That, in turn, depended on the ability of the young nation to reduce its vast consumption of English imports — and to manufacture industrial goods at home. And technology piracy became the premier tool to industrial development.

The existing economic pressures resting on young America were only heightened by wartime demands for military and industrial goods.

And once that hurdle had been overcome, the pressure was on to respond to the post-war desire of proving the compatibility of republican government and a high standard of living.

To see what was happening at the frontlines of this economic battle, look at the life story of Thomas Attwood Digges. At age 26, Mr. Digges sailed from the British colonies to Europe in hopes of gaining fame and fortunes.

Born in 1742, this son of one of Maryland's most prominent Catholic families thought he was destined for greatness.

After some early troubles in his teen years — Digges was somewhat of a kleptomaniac — he moved to Europe in the late 1760s, settled in Portugal and engaged in international trade.

At the same time, he began working on a novel. In 1774, Digges moved to London. The following year, he published his largely autobiographical novel — the first ever written by an American — "Adventures of Alfonso."

The literary career of this American expatriate took a political turn during the Revolution.

His close relationship with George Washington — the Digges estate was located just across the Potomac River from General Washington's Mount Vernon — made him a natural choice for enlisting with the Revolutionary effort in England. He consequently took part in illegal shipping of munitions to the American rebels.

But Digges' involvement in the American cause was highly controversial. He aroused the suspicion of almost all the American representatives in Europe, who believed he was a double agent.

His reputation plummeted when contemporaries discovered he had embezzled charitable funds aimed at arranging the escape — or ameliorating the conditions — of American prisoners.

With the war over, Digges turned to technology piracy. In the decade following American independence, he traveled through England and Ireland in search of artisans willing to violate British laws and migrate to America with their advanced machinery.

Prohibitions on the emigration of artisans and the exportation of machinery from the British Empire had been in effect throughout the 18th century.

In the mid-1770s, as the imperial conflict took shape, the British Parliament ruled that all people leaving for the North American colonies from the British Isles and Ireland with intent to settle there were required to pay £50 per head.

In the period following American Independence, however, growing anxiety in Britain over industrial piracy prompted stronger legislation and stricter enforcement.

Exporting industrial equipment from textile, leather, paper, metals, glass and clock making was prohibited in the 1780s. The restrictions were particularly comprehensive in all that was connected with the textile industry, covering existing as well as future developments.

Digges was well aware of these laws. Yet, by taking such personal risks in circumventing them, he had hoped to profit handsomely — while rehabilitating his patriotic credentials.

His most successful recruit was William Pearce, a mechanic from Yorkshire who settled in Belfast in 1790. The ambitious Marylander called his prized recruit a "second Archimedes." He even claimed Pearce "was the inventor of Arkwright's famous Spinning and Weaving Machinery, but had been robbed of his invention by Mr. Arkwright."

After Pearce failed to get premiums from the Irish Parliament in recognition of his mechanical innovations, he warmed up to Digges' overtures and agreed to immigrate to the United States.

Digges proudly reported to Secretary of State Jefferson that "a box containing the materials and specifications for a new Invented double Loom" was about to depart to American.

Pearce and two of his able assistants would follow thereafter, where they would reconstruct the machinery and put it to work.

While reading a New York newspaper, Digges came across Alexander Hamilton's report on Manufacturers.

Submitted to Congress on December 25, 1791, the Secretary of the Treasury's thorough analysis of the state of American industries was followed by a call for an aggressive policy of technology piracy.

Digges was delighted to read that Washington's closest lieutenant had endorsed his goals and methods — and believed that the early 1790s were an excellent time to plunder European technology.

By offering inducements and developing opportunities for employment, Hamilton wrote in the report, the United States could immeasurably "increase the extent of valuable acquisitions to the population, arts and industry."

Digges could not have agreed more. He wrote Hamilton that in the industrial regions of Belfast, Liverpool and Manchester, newspapers would not publish any favorable account of American manufactures, fearing that it might "lead the people to Emigration."

He had 1,000 copies of Hamilton's Report on Manufactures printed in Dublin in 1792 and spread among the manufacturing societies of Britain and Ireland. He believed the report would "induce artists to move toward a Country so likely to very soon give them ample employ & domestic ease."

Digges' proclivity to steal, not pay his debts and engage in industrial espionage landed him in a British jail for some time in the mid 1780s, in 1792 and probably in 1795.

His many American detractors were not impressed by his activities in England and continued to distrust him. In the eyes of at least one American, however — George Washington — his clandestine efforts on behalf of U.S. manufacturing proved his patriotism.

Responding to Digges' critics, the president declared that all along he believed that the conduct of "Mr. Thomas Digges towards the United States during the War has not only been friendly, but I might add zealous."

And those who doubted his devotion to the republic should look no further than "his activity and zeal (with considerable risque) in sending artisans and machines of public utility to this Country I mean by encouraging and facilitating their transportation."

Digges was not the only American industrial spy in England. Americans roamed the English countryside in the years following independence looking for recruits.

Abe Buel of Killingworth, Connecticut, a convicted counterfeiter — whose crime was forgiven on account of his appropriation of European methods of grinding and polishing crystals — went to Europe to copy the latest English developments in textile production.

An anti-emigration pamphlet, published in London in the mid-1790s, declared that "there are plenty of agents hovering like birds of prey on the banks of the Thames, eager in their search for such artisans, mechanics, husbandmen and laborers, as are inclinable to direct their course to America."

The industrial spying career of Thomas Digges stands for the crucial transformation in American ideas about technology diffusion and technology piracy that took place in the 1790s. The first decade of national existence saw the most intense pursuit of English technology on the federal and state level.

Initially, the constitutional provision to promote the useful arts was interpreted as a mandate to use the mechanism of the new national government effectively to appropriate forbidden European technology. These efforts were particularly successful in the textile industry, as small-scale capacity to build and operate the newest mule spinning and Arkwright technologies sprang in a variety of spots in the northeastern urban centers.

At the same time, however, a new understanding developed about the limitations — and drawbacks — of technology piracy. A self-respecting government eager to join the international community on an equal basis could not flaunt its violation of the laws of other countries.

Patterns established under the semi-anarchic revolutionary and Confederation circumstances were now seen as inappropriate behavior for a respected member of the international community. This was all the more important in the case of the nascent Washington Administration, whose chief task was establishing legitimacy at home and abroad.

To be sure, clandestine appropriation of English technology not only persisted, but also intensified.

Every major European state engaged in technology piracy and industrial espionage in the 18th century — and the United States could not afford to behave differently.

Yet, there was etiquette to this piracy. It was undertaken in secret and officials would deny any connection to such practices. The young republic embraced a Janus-faced approach.

Officially, it disavowed technology piracy and Congress passed a patent law founded on a principled commitment to worldwide originality as the foundation of intellectual property in the United States. Covertly, federal officials winked as they disavowed any connection to the theft of knowledge. The constant influx of immigrants lessened the necessity for recruiting skilled artisans in Europe.

Moreover, the wars of the French Revolution created large demands for American agricultural products, unleashing an unprecedented economic boom.

In this context, the impetus to create a self-sufficient industrial economy in order to secure American independence was no longer urgent. In a sense, the emergence of a federal policy to guard against technology piracy signaled the coming of age of the republic.

But the story behind the story, as the Digges vignette suggests, is a little more complicated. In theory, the United States pioneered a new standard of intellectual property that set the highest possible requirements for patent protection — worldwide originality and novelty.

In practice, however, the country encouraged widespread intellectual piracy and industrial espionage. Piracy took place with the full knowledge — and sometimes even aggressive encouragement — of government officials.

Congress never protected the intellectual property of European authors and inventors — and Americans did not pay for the reprinting of literary works and unlicensed use of patented inventions.

Lax enforcement of the intellectual property laws was the primary engine of the American economic miracle. The United States employed pirated know-how to industrialize. In textile, some managed to talk their way into factories, while others circumvented the restrictions on the export of machinery by shipping machine parts to the United States as separate components.

What fueled the 19th century American boom was a dual system of principled commitment to an intellectual property regime — combined with absence of commitment to enforce laws. This ambiguous order generated innovation by promising patent monopolies.

At the same time, by declining to crack down on technology pirates, it allowed for rapid dissemination of innovation that made American products better and cheaper.

The foregoing excerpted from “Trade Secrets” by Doron S. Ben-Atar