Soundbite
How America Grew Rich.
The United States is rare among the great world powers in that its rise to dominance owes at least as much to its economic prowess as it does to its military might. That fact is deftly summarized in the title of John Steele Gordon's book An Empire of Wealth, in which the American Heritage columnist traces America's economic development from colonial times to the present. He spoke with Assistant Editor Julian Sanchez in October.
Q: What would you advise the next president to learn from economic history?
A: They should understand the story of Gibbons v. Ogden, when in 1824 the Supreme Court said that interstate commerce was exclusively the province of the federal government and gave us the first really continental-sized common market in the world. The American economy prospered mightily therefrom. The fewer impediments there are to transactions, the better off everybody is. After Gibbons, for instance, the transportation system in this country exploded with the end of the New York monopoly on steamboats. Prices came down wonderfully.
Q: Why did the U.S., as opposed to the other countries in the New World, become such an economic powerhouse?
A: One of the biggest pieces of luck was that we were a child of England rather than a child of Spain. Argentina and others imported Spain's top-down control of the economy and every other aspect of life. England didn't actually found the American colonies. They were founded by profit-seeking corporations or by individual proprietors such as William Penn. England did not control emigration. In fact it dumped prisoners and dissidents: "Hot dog, let's get rid of these guys!" These people made for interesting entrepreneurs because they were more independent in their thinking and therefore more risk-taking and more willing to go do it. If America is famous for its get-up-and-go, it's because we have ancestors who got up and came.
Q: Much of that early innovation depended on what we would today regard as vast intellectual property theft.
A: Oh, sure. We stole quite cheerfully. In the case of textile technology, Samuel Slater was British and he memorized the plans of the textile machinery and then smuggled himself out of Britain. He listed himself as a farm laborer on the manifest of the ship and didn't even write his mother until the day the ship was going to sail. Then he just dropped a letter in a box and hopped on board, because he was afraid of getting stopped. The British were trying to maintain their monopoly on textile technology–unsuccessfully, as always. Technology always leaks out.