IP Theft Is What Once Helped Make America Great

The growing demands that China be punished by tariffs is ironic – since it was actually the theft of intellectual property from Great Britain that served as a linchpin of manufacturing strategy for the United States.

There are a number of arguments against making it a priority to combat China’s intellectual property piracy. Just because you take something doesn’t mean it will be valuable to you – unless you make it even more valuable than it was. China’s grab of intellectual property could actually make us better off – by spawning the creation of new technologies that will benefit consumers all over the world, including the United States. Is intellectual property, like physical property, confined by national frontiers? At what point, after all, does an idea become an innovation? In fact, Benjamin Franklin never applied for patent protection for any of his inventions, arguing they belonged to all mankind.

Moreover, if one wants to protect intellectual property, the best way is to organize a large group of countries to work cooperatively around international treaties established to guarantee respect for foreign intellectual property laws. The Trans-Pacific Partnership could have served that very purpose for the United States.

But regardless of how one feels about the legalities of the issue, knowledge of America’s history in hijacking intellectual property should at least soften the rough edges of criticism of China. And the subsequent U.S. leadership on this issue after World War II should remind us that a nation is likely to change as its economic circumstances and position in the world change.

That was certainly the case for the United States. The practice of grabbing intellectual property was a staple of U.S. economic strategy since the outset of the nation’s founding. The play Hamilton has brought new and deserved respect to the first secretary of the treasury. But his many economic achievements should not blind us to the fact that theft of intellectual property was a linchpin of his manufacturing strategy.

In the late 18th century, intellectual property theft was taken seriously indeed. In fact, England had criminalized the export of textile machinery, and even the emigration of textile mechanics. But such harsh measures did not deter attempts. In 1787, for example, Andrew Mitchell -- who had been sent to Britain by Pennsylvania businessman Tench Coxe, a close associate of Hamilton -- was trying to smuggle new technology out of the U.K when he was intercepted by British authorities. Seized after being loaded on board a ship, his trunk contained models and drawings of one Britain's great industrial machines.

The city of Lowell, Massachusetts actually got its start after its namesake, Francis Cabot Lowell, visited England in the early 19th century and spent his time trying to figure out how the Brits had managed to automate the process of weaving cloth. Charming his way into factories, he memorized what he saw, and managed to reproduce the weaving machine.

Hamilton didn’t just send Americans to Britain in search of the secrets of the industrial revolution. He used patents to lure immigrants with skills and knowledge to move to the United States. George Parkinson, for example, was awarded a patent in 1791 for a textile spinning machine, which was really just a rip-off of a machine he had used in England. The United States also paid his family's expenses to emigrate and re-locate to the US.

But probably the greatest thief of intellectual property in America’s early days was Samuel Slater. An immigrant from Great Britain, Slater had a unique asset when it came to stealing manufacturing ideas and processes – an incredible memory. Disappointed by the relatively primitive state of technology in his adopted country, Slater offered his services to a U.S manufacturer. Working only from his memory of the advanced tools used in his native Britain, within a year Slater managed to create America’s first automated textile mill.

By 1815, within a 30-mile radius there were 140 mills operating over 130,000 spindles – launching the U.S. textile industry, and upending the relationship between an American economy based on resource extraction and agriculture and a British economy based on manufacturing. The United States soon shifted from taking Great Britain’s intellectual property to creating its own.

America’s past offers two lessons for today: A country that gets an economic foothold by appropriating existing technology can benefit largely to the extent that it improves upon it – a pattern that China may soon follow. And those who live in IP glass houses shouldn’t raise tariffs.