Modern Texas owes everything to the innovation and marketing genius of John Warnes Gates. Don’t worry, I hadn’t heard of him either, until this week.
In 1876 he presented a technological marvel that would revolutionize the state, in a promotional display in Military Plaza, in the heart of downtown San Antonio. Exactly where City Hall would later be built, just 15 years later.
Gates described his innovation as “lighter than air, stronger than whiskey, cheaper than dust.” A print advertisement from the year before had dubbed it “The Greatest Discovery of the Age.”
Gates’ marketing stunt: He bet all comers that their wildest longhorns, whipped into a frenzy by his sidekick with a burning brand, couldn’t break through a flimsy-looking little wire pen he’d built in Military Plaza.
His innovation: barbed wire. It worked.
The anecdote comes from some enjoyable summer reading, Tim Harford’s 2017 book: Fifty Inventions That Shaped The Modern Economy.
In a series of 50 essays of 3-4 pages each, Harford describes the surprising results of many seemingly humble innovations.
So what revolution did barbed wire launch? Before barbed wire, the vast prairielands of Texas couldn’t be divvied up effectively into private parcels. Before barbed wire, the American prairie was effectively unbounded. Native tribes, as well as cowboy teams heading up cattle drives, thrived in this fence-less free range. Like an untame-able ocean.
Despite President Lincoln’s 1862 promise of 160 acres through the Homestead Act to anyone who could settle it and work it for 5 years – privately-held land in the state just didn’t work economically. In vast swathes of Texas it was nearly impossible to keep free-roaming cattle in – and out – of people’s property. Property lines, without an effective means of enforcement, weren’t respected.
But now with barbed wire, cheap and easy enforcement changed everything. The native tribes were doomed. The traditional cowboy-led cattle drive was doomed. Without unfenced prairie to roam – forever altering the previous regime of “the open range,” their livelihood was gone. “The devil’s rope” tamed wild Texas. Private property owners now had the cheap and effective means to invest in and develop their land.
What gives Harford’s book extra philosophical texture is his eagerness to consider technological innovations for all their consequences – for both better and worse. With new products or methods we enhance our lives in many ways, but we also suffer as well. We expand the scale at which humans can live, but we completely upend traditional ways of life. He explores who lives and who dies, who reaps astonishing benefits and who loses their livelihood.
Harford’s book is mind-expanding, easy to digest, and if you like business stories – fun. Harford raises many issues of our day that underlie conflict in our politics and society. One is the unintended consequence of disruptive technological change. From trade disputes to privacy invasions to relentless market pressure to rising inequality – it seems like every big issue of the day hinges on these unintended effects.
The invention of baby formula maybe saved millions of lives, but led us on a 100+ year detour away from the original best nutrition for babies. Birth control pills launched an education and economic revolution as a result of the first effective contraceptive that women themselves could control. The technology of music recording, and revenues from copyright, created a winner-take-all star system in entertainment, previously unimaginable just two generations ago.
In essay after essay Harford shows how a smallish change in material conditions alters the entire way our society works.
The barbed wire example highlights our still unsettled attitudes towards private property. The transformation of Texas into an economic powerhouse required enforceable private real estate property rights. But clearly we are not all in agreement that this is a good thing. And depending on who we are or were – the native, the cowboy, the homesteader – a little innovation changed absolutely everything. At the core of some of our biggest political fights today – on taxation, student loan debt, health-care costs, to name a few – is a disagreement over the relative cost and benefit of private property rights enforcement. Should education be free? Should health care be affordable for all? Should we have to pay for music we download from the internet?
Harford explicitly makes the connection between barbed wire and musical copyrights. The technology needed to protect the private copyrights of music recordings is similar to the ‘stronger than whiskey, cheaper than dirt” barbed wire.
In a post-Napster world of illegal downloading and streaming, music copyrights nearly became completely unenforceable. The music industry went into an industry-long slump from about 2005 to 2015. One of the main things Disney and Netflix and YouTube do today is erect and maintain digital barbed wire around their private properties. Their effective digital barbed wire creates massive differences between winners and losers in music royalty payments. Is this a good thing?
By the way, as a recent amateur investor in music royalties myself, I newly applaud strict enforcement of these private property rights. It suddenly seems fair to me.
No doubt, however, effective private property enforcement renders many people worse off.
A few other notes on barbed-wire promoter John Warne Gates. Gates went on to build a fortune in steel production, his company eventually purchased by the early 20thCentury mega-company US Steel. He was also an early major investor and then President of a business born from the original Spindletop gusher, The Texas Company – begun in Beaumont in 1902, moved to Houston in 1903, and later renamed Texaco.
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