Index

Abernathy, William J., 124 A. L. Moore Company, 59 early Detroit leaders and, 95–96, 98, American Bicycle Company, 56, 59 100, 102 American Bosch Magneto spin-offs and, 105, 110, 115–116 Corporation, 227–228 Absorptive capacity, 384 American Exchange National Bank, Acceptable use policy (AUP), 308 58 Acetylene gas, 52 American Marconi, 194 Ackerman, Robert C., 118 American Multigraph, 45 Adams, Stephen B., 46 American Optical, 261 Adams-Bagnall Electric Company, 54 American Telephone and Telegraph Aghion, P., 414, 436 (AT&T), 20, 249–250 Aircraft industry, 98, 129, 297 1956 consent decree and, 293 Air Mail Act and, 185, 192 computers and, 290, 297, 318 civil aircraft and, 191 fiber-optic technology and, 262–263, computers and, 327 265 information technology (IT) and, lasers and, 260 283 Lucent Technologies and, 273 Kelly Bill and, 185–186 MCI and, 254, 268, 272 Lindbergh and, 186–187 monopoly of, 252–253, 264–265, McNary Watres Act and, 191–193 272, 278n12, 312n3 passenger revenues and, 191 patents of, 261 production collapse of, 190–191 semiconductors and, 288–290 U.S. military and, 185, 191 U.S. Stock Market and, 194, 228, U.S. Post Office and, 185, 188, 230, 232 191–193 Western Electric and, 263 U.S. Stock Market and, 182–193, Anand, B. N., 367–368, 387 197, 199 Andreesen, Marc, 308 World War I and, 183 Annual Reports of the Commissioner Wright brothers and, 182 of Patents, 61, 66 Air Mail Act, 185, 192 Antitrust policies, 20, 312n3 Akerlof, George A., 409 IBM and, 330, 347–348 ALCOA, 52 telecommunications and, 251, 264 Allied Chemicals, 228 Apollo program, 301 478 Index

Arc-lighting system, 47, 55. See also Automobile Quarterly,89 Brush Electric Company Automobiles, 13–14, 17, 54, 60, Arc-welding, 54 77n16, 130 Argentina, 144 Britain and, 152–153 Ark club, 47 Cleveland, Ohio and, 42 Armistead, Bill, 259, 261, 269–270, electric, 56, 88 275 financial experiments of 1890s and, Armstrong, Jeff, 436, 438, 441, 445 134 Arnold, Thurman, 251 gasoline, 60, 88, 94–95 Arora, Ashish, 1, 25, 365–403 steam, 81n43, 88, 94 ARPANET, 306–308 tiller steering and, 88 Arrow, Kenneth J., 21, 285, 309, 365, Aviation Corporation (AVCO), 368 190–192 Asian Venture Capital Journal, 425 Aviation industry, 17–18 Athreye, S., 367 auto industry and, 182–183 Atje, Raymond, 170 growth in, 185–193 Atomic Energy Commission, 98, 297 U.S. Stock Market and, 164–165 Australia, 143 AVIDAC, 295 Automobile industry. See also Specific company Bachie, Andrew, 119 aircraft and, 182–183 Bailey, L. Scott, 89, 94–95, 98, 100 carriage companies, 100–101, Baker, George W., 59–60 115–116, 118, 180 Baker, Walter C., 55, 59–60 Corning Glass Works and, 256, Baker Motor Vehicle Company, 55 270n14, 279n14 Bancamerica-Blair Corporation, 189 de novo entrants and, 91 Banerjee, Abhijit V., 436 early Detroit-area leaders of, 94–104 Banks entrant origins, 91–94 Cleveland, Ohio and, 40–45, 58 experienced firms and, 91 deflation effects and, 137–158 foreign competition and, 85 entrepreneurs and, 411 growth of, 87–90 Federal Reserve System and, 131 heyday of, 85 General Motors and, 102, 177–178 historical perspective of, 87–90 German Reich and, 153 inexperienced firms and, 91 information technology (IT) and, 283 moving assembly line and, 96 joint stock, 130 NYSE and, 179–180 Liberty loans and, 199 parts contracts and, 108–109 patents and, 6 production methods and, 88, 95–96, Second Industrial Revolution and, 99–100 131 recession of 1920 and, 112–113 Victory loans and, 199 spin-offs and, 86, 91–92, 104–126 Baran, Paul, 305 subcontracting and, 96–97, Barbour, William T., 105 103–104, 123 Barro, Robert, 234 survival curves and, 92–94 Barron’s, 195–196 U.S. Stock Market and, 164, Barsky, Robert B., 218 175–182 Bascavusoglu, E., 369 Index 479

Baskin, Jonathan, 168 Brazil, 473 Batteries, 49 Bresnahan, T., 221, 372 Bayh-Dole Act, 311, 472 Bridgman, Percy, 240 Bell Laboratories, 339, 471 Briscoe, Benjamin, 97, 100, 103, 106, semiconductors and, 288–289 112, 122–123, 178 telecommunications and, 249–250, Briscoe, Frank, 97, 100, 103, 106, 254, 262–264 112, 122–123 Belmont, August, 55 British Post Office (BPO), 253, Belmont, Perry, 55 260–261 Bendix Aviation, 297 British Telecom, 253 Bentley, Edward M., 51, 57, 78n20 Broadway Savings and Trust, 44 Bentley-Knight Electric Railway Brown, Alexander E., 75n1 Company, 51, 57 Brown, Fayette, 44 Berners-Lee, Tim, 308 Brown, Harvey H., 44–45, 75n1 Bethlehem Steel, 238–239 Brown, Walter Folger, 191 Bezner, Frederick, 108, 110 Brown Hoisting Machine Company, Bicycles, 56, 59, 97–98, 120 44–45 Big Board, 18 Bruchey, Stuart, 201 Bikhchandani, Sushil, 436 Brush, Alanson, 96, 111–112, 117, Bioscan, 440, 442 122 Biotechnology, 434, 438 Brush, Charles F., 12, 47–48, 50, firm governance and, 417–425 123 knowledge capital and, 441–442 Brush Electric Company, 15, 41, 62, rDNA, 441–442, 446–447, 450–451 74–75, 103–104 Bishop-Babcock-Becker Company, 45 arc-lighting systems and, 47–48 Black-McKellar Bill, 185, 192 demonstration effect and, 47–50 Blair & Company, 189 ease of capital for, 49–50 Blanchard, Oliver, 234 employee ideas and, 53–54 Boeing, William, 183 inventors and, 50–56 Boeing Airplane Company, 183–184, limited role of financial institutions 187, 189–190, 192 and, 56–58 Bolt, Beranek and Newman, 305–306 mergers and, 54–55 Bond, Stephen R., 222 networking and, 50–56 Bonds, 44–45. See also U.S. Stock Brush Runabout Company, 111–112, Market 121–123 clearing mechanisms and, 140 Brynjolfsson, Erik, 221–222, 234–235 deflation effects and, 137–158 Bubbles, 19, 131 Second Industrial Revolution and, Budd, Edward, 115 133–158 Buderi, Robert, 252, 266 Borden, Gail, 12 Buick, David, 101–103 Boston Consulting Group, 269 Buick Motor Company, 124–125, Boulton Carbon Company, 49, 79n29 177 Bradey, Anthony N., 55 Chevrolet and, 117–118 Brady, 108–109 early years of, 94, 100–104 Branstetter, L. G., 369 Maxwell and, 106 Braudel, Fernand, ix–x Model 10 and, 117 480 Index

Building-and-loan associations, 44 Chalmers, Hugh, 109–111, 115, Burdett, Henry, 149 120–124, 180 Burgess Aeroplane Company, 183 Chalmers-Detroit, 30, 109–110 Butler, Orville R., 46 Chalmers Motor Co., 111 Bygrave, W., 207 Chance Vought Corporation, 189, 192 Caballero, Ricardo, 224 Chandler, Alfred, x, 221–222 Cable, 269–270 Chandler, Frederick, 120, 180 Cadillac Motor Car Company, Chandler-Cleveland, 181 123–125, 177 Chandler Motor Company, 120 Brush Runabout Company and, Chapin, Roy D., 107–110, 121–123 111–112 Chatham and Phoenix National Bank Lincoln Motor Company and, of New York, 178 112–113 Chemicals, 13–14, 220, 228, 385 Oakland Motor Car Company and, Cleveland, Ohio and, 42, 44 112 Corning Glass Works and, 260 organization of, 94, 97–105 financial experiments of 1890s and, spin-offs from, 111–113 132 Cailliau, Robert, 308 Chevrolet, Louis, 117–118 Calcium carbide, 52 Chevrolet Motor Car Company, Calhoun, Craig, xi 117–118, 121, 124, 180–181 Cameras, 220 Chia, Robert Kay Guan, 425 Campbell, Van, 259 Chicago, 18, 140, 142–143, 202 Campbell-Kelly, M., 300–301 Chicago Research Center in Securities Canada Cable and Wire, 268 Prices, 222 Cantwell, J., 367 China, 426, 473 ‘‘Capital Market Myopia’’ (Sahlman Christie, Milton, 209 and Stevenson), 206–207 Chrysler, Walter, 104, 121, 124 Carlson, W. Bernard, 14 Chrysler Corporation, 85, 87–88, Carnegie Mellon Survey, 25, 120–121 376–377, 380, 383–384 Civilization and Capitalism (Braudel), Carosso, Vincent P., 200 ix Carothers, Wallace, 220 Clark, Kim B., 124 Carriage companies, 100–101, early Detroit leaders and, 95–96, 98, 115–116, 118, 180 100, 102 Carter, Richard, 446 spin-offs and, 105, 110, 115–116 Case School of Applied Science, 47, Clement, J. R. B., 299 60 Cletrac, 60 Cassiman, B., 369 Cleveland, Ohio, 14–18, 39 Ceccagnoli, Marco, 25, 365–403 automobiles and, 42 Celcor, 273 banks and, 40–45, 58 Central Trust Company of New York, Brush Electric Company and, 46–58, 178 74–75 Cerf, Vinton, 306 chemicals and, 42, 44 CERN, 305, 308 financial information sources and, Cetus Corp., 440 46–61 Index 481

financial sector of, 41–46 card-programmed calculator and, historical perspective of, 41–42 326–330 iron ore and, 42 federal R&D and, 283–284, location of, 41–42 294–305, 317–319 machine tool industry and, 42 IBM and, 326–328 (see also manufacturing sector of, 41–46 International Business Machines Monumental Park and, 48 (IBM)) patents and, 42 increased capability of, 318 post–Civil War growth in, 42 information and, 294–300 quantitative patterns in, 61–73 Internet and, 305–309 stock market and, 142–143 massive public investment in, 317 Telegraph Supply Company of punched cards and, 322–330 Cleveland and, 47–48, 56 software industry and, 300–305 trust companies in, 42, 44 solid state, 338–343 White Sewing Machine Company Computer Sciences Corporation, 300 and, 45, 55–61 Computer Usage Company, 300 Cleveland Machine Screw Company, Con artists, 49 56, 59–60 Consolidated Aircraft Corporation, Cleveland Malleable Iron Company, 184, 190 44 Consolidated Exchange, 140–141 Cleveland Motor Plow Company, 60 Consumer Price Index, 443–445 Cleveland Plain Dealer,45 Control Data Corporation (CDC), Cleveland Stock Exchange, 40, 44–45, 347 57, 60 Coombs, Joseph E., 436–437 Cleveland Trust Company, 40, 44, Cornell University, 51, 59 77n10 Corning Glass Works, 19–20 Cleveland Twist Drill Company, 44, antitrust policies and, 251, 264 48 ‘‘associations’’ of, 250–251, Coal, 130 265–266 COBOL, 301–302, 304 British Post Office and, 253, Coca Cola, 227 260–261 Coffin, Howard, 95, 107–110, business plan of, 255–256, 272–277 121–125 cable technology and, 269–270 Coggeshall, Porter E., 442 capacity building and, 270–272 Cohen, Jon S., 155 corporate structure of, 258–259 Cohen, Wesley M., 25, 228, 365–403 creative response and, 247, 276–277 Comer, G. P., 228 diversity of, 273–274 Commercial and Financial Chronicle, electrical components and, 255 61, 172, 217–242 family-owned stock of, 251 Commercial Bank of Lake Erie, 44 fiber-optic technology and, 259–277 Commercial National Bank, 44 financial risks of, 248 COMPUSTAT database, 444 ‘‘The Guns of August’’ and, 271 Computer Control Corporation, 297 Houghton and, 259, 267, 269–270, Computers, 22, 234–235, 240–241, 274–275 273 intellectual property issues and, advanced processing and, 318 266–269 482 Index

Corning Glass Works (cont.) Curtiss-Robertson Airplane joint ventures and, 250–251, Manufacturing Company, 187 265–266, 269 Curtiss-Wright Corporation, 190 lawsuits by, 267–269 Curved-Dash Runabout licensing issues and, 262–264 automobile industry organization long-term funding and, 265–266 and, 95–102, 105–108, 113, 125 Lucy and, 261–262, 265 Brush Runabout Company and, marketing strategies of, 270–272 111–112 Maurer and, 249, 261–262, 266–267 Dalzell, Fred, 252 MCI and, 268, 272, 275 Darby, Michael R., 26–27, 433–467 post-World War II era and, 255–256 Dark, Frederick, 446 productivity vs. creativity and, David, Paul, 221, 240–241 248–249 Davis, Lance E., xi, 16–17, 45, 74, project documentation and, 266–267 115, 129–161 proprietary knowledge and, 251–252 Dawson, Al, 270 Pyrex and, 254 Dayton-Wright Company, 183–184 research and development (R&D) Debugging, 284 and, 248–249, 255–259 Decarolis, Dona, 436–437 resource allocation and, 257 DECNET, 306 Sullivan Park and, 249 Deeds, David L., 436–437 technology strategy of, 259–260 Deeds, Edward A., 183 telecommunications industry and, Deere, 142 254–256 Defense Calculator, 320 television picture tubes and, 255 Deflation uncluttered path approach and, financial experiments of 1890s and, 250–251 133–137 Western Electric and, 263 Germany and, 153–155 windshields and, 256, 270n14 Great Britain and, 143–153 Corning Ware, 254 United States and, 137–143 Covington, Edward J., 54 World War I and, 149 Cowles, Alfred H., 51, 56–57 World War II and, 151 Cowles, Eugene, 51, 56–57 De Forest, Lee, 193 Cowles Electric Smelting and De Forest Radio, 194–195 Aluminum Company, 51–52, 57 DeLong, J. Bradford, 217–218 Cox, Jacob D., 44, 48 Demonstration effect, 97 Crawford family, 54 fiber-optics and, 262 Creative destruction, 247 Lindbergh and, 186–187 Creative response, 247, 276–277 Second Industrial Revolution and, Cross-licensing, 262–264 47–50, 53 Crystal Palace exhibition, 3, 471 Denby, Edwin, 115 Cull, Robert J., 45 Detroit, Michigan, 15–17 Cummins, Jason G., 222 Buick Motor Co. and, 94, 100–104 Curtiss, Glenn, 182–183 Cadillac Motor Car Co. and, 94, Curtiss Aeroplane and Motor 97–98 Corporation, 183–189 de novo entrants and, 91 Index 483

early leaders in, 94–104 automobile industry and, 98, experienced firms and, 91–92 101–103, 112, 121–124, 177, 181 firm concentration in, 88–89 spin-offs founded by, 117–119 Ford and, 94, 97–100 World War I and, 98 historical perspective of, 87–90 Durant-Dort Carriage Company, 101, inexperienced firms and, 91 118, 123–124 Olds Motor Works and, 88–89, Durant Motor Company, 118–119 94–97, 103–104 Dyer, Davis, 251–252, 256, 258, 266, spin-offs and, 86, 91–92, 104–126 270 Detroit Aircraft Corporation, 190, Dynamos, 47–48, 52–53, 55 192 Detroit Automobile Company, 97 Eads, G. C., 311 Detroit Edison Illuminating Company, Earl Radio Corp., 196 97, 99, 140 East Cleveland Railway Company, 51 Detroit Stove Works, 105 Eastman Kodak, 220, 222, 230, 232, Detroit Street Savings and Loan, 44 324 Devenow, Andrea, 417 Eckert, J. Prespert, 295, 330, 328–329 Devine, Warren, 240 Economic issues Dictionary of American Biography,53 business cycles and, 130–131 Digital Equipment Corporation, 306, creative response, 247, 276–277 348 deflation effects and, 137–158 Directory of American Research and ERISA and, 470 Technology, 376 globalization and, 130, 469–470, Discounted cash flow (DCF), 257 473 DNA technology, 27 gold standard and, 130, 133–137 Dodd, Paul A., 183–186, 188, 190 Great Crash and, 217–218, 241 Dodge, Horace E., 96–97, 116–117, Great Depression and, 166–167 176 intangible capital and, 217–242 Dodge, John F., 96–97, 116–117, 176 New Deal and, 251, 264 Dodge Brothers, Inc., 77 NYSE and, 16–18 Chrysler and, 121 patents and, 3–12 (see also Patents) Organization of, 99, 102–103, recession of 1920 and, 112–113 116–117, 122–123 royalties and, 48 stock flotation by, 181–182 Second Industrial Revolution and, Doolittle, James, R., 123 13–15, 28, 39–75, 129–130 Dort, Dallas, 101–102 survival curves and, 92–94 Douglas Aircraft, 190 U.S. Stock Market and, 163–211 Dow Corning, 142, 251 (see also U.S. Stock Market) Doyle, William M., 174 World War I and, 149, 155–157 Drake, J. Walter, 114–115 World War II and, 151, 207 Duke, Dave, 271 Economic Report of the President, Dunham, Terry B., 117 443 Duplex Condenser and Radio, Eddy, George, 197, 204 194–195 Edgar, D., 299 du Pont, Pierre, 178 Edison, Thomas, 12, 14, 46, 129, 227 Durant, William Crapo Edson, E. R., 44 484 Index

EDVAC, 295 challenges of, 406–409 E. I. du Pont de Nemours, 19, 178, commercializing firms and, 12–21 201 contracting difficulties and, 413–415 computers and, 324 employee ideas and, 53–54 intangible capital and, 220, 222, functional approach and, 405 228, 230, 232 inexperienced parties and, 413 Eisenman, Harry J., 47, 58 intermediaries and, 409–412 Electric brakes, 53 market conditions and, 408 Electricity, 13–14, 16, 150 nature of assets and, 407–408 Britain and, 152–153 patents and, 3–12 Brush Electric Company and, 15, 41, productivity vs. creativity and, 47–75 248–249 dynamos and, 47–48, 52–53, 55 research and development (R&D) falling prices and, 221 and, 414, 417–425 financial experiments of 1890s and, shareholder value and, 408–409 134 suspicions of, 405 hydroelectricity and, 52 uncertainty and, 406–407 intangible capital and, 220–221 Equity markets, 45 Lincoln Electric Company, 53–54 E. R. Thomas-Detroit, 107–109, 121, research and development (R&D) 125 and, 372 E. R. Thomas Motor Company, 108 Second Industrial Revolution and, Euclid Avenue National Bank, 58 130 European Patent Office (EPO), 224 smelting and, 51–52 European Union, 470 Thomson Houston Electric Everhart, Steve, 436–437 Company, 48, 51, 55 Everitt, Barney, 113–114, 121–122, Electric machinery industry, 42 124 Electric motors, 54 Everitt-Metzger-Flanders (E-M-F) Electro Gas Company, 52 Company, 113–114, 121–125, Elliott, Emmett, 54 178–179 Elliott, Samuel K., 54 Ex ante technology contracting, 366, Elliott, W. H., 54 377–378 Elliott-Lincoln Electric Company, 54 Ex post technology contracting, 366, Employee Retirement Income Security 368–370, 376, 378 Act (ERISA), 470 Engineering Research Associates, 328 Fabrizio, Kira R., 22, 283–316 ENIAC, 295, 329 Fairchild, 290, 318, 348 Entrepreneurs, 429, 471–472 Fama, Eugene, 218 agency problems and, 408–417 F. Eberstadt & Co., ix Asian contracts and, 425–428 Ferleger, L., 191 asymmetric information and, 407, Fessenden, Reginald, 193 409–410 Fiber-optic technology, 132 banks and, 411 1960s development level of, behaviorial explanations and, 253–254 415–417 AT&T and, 262–263 biotechnology and, 417–425 cable and, 269–270 Index 485

capacity building and, 270–272 Flint Wagon Works, 100, 118 Corning Glass Works and, 259–277 Florida, Richard, 257 creative responders and, 247 Flower, Roswell P., 55 demonstration effect and, 262 Fogarty, Michael S., 42 intellectual property issues and, Foley, C. F., 369 266–269 Ford, Harry, 110–111 knowledge base for, 248 Ford, Henry, 95–99, 102, 121, 123, lasers and, 260 125, 176 licensing issues and, 262–264 Ford Motor Company, 85–89, 122, long-term funding and, 265–266 124–125, 176 marketing strategies for, 270–272 Dodge Brothers Motor Car OV/IV processes and, 271–272 Company and, 116–117 research and development (R&D) early years of, 94, 97–104 and, 248–249, 253–254 E-M-F Company and, 113–114 signal attenuation and, 249 Hupp Motor Car Company and, Field, Alexander, 227, 241 114–115 Finance capitalism interchangeable parts and, 100 1920s and, 197–203 Model N, 99–100 creative responders and, 247 Model T, 88, 100, 116, 122 deflation effects and, 137–158 moving assembly line and, 96 experiments of 1890s and, 133–137 NYSE and, 179–181 government and, 131 production methods and, 99–100 historical perspective of, 130–133 race cars and, 97 London Stock Exchange and, spin-offs from, 113–117 143–153 stock flotation and, 181 New York Stock Exchange and, Forrester, Jay, 319 137–143, 148–153 FORTRAN, 300 railroads and, 137–140 Fosfuri, A., 1, 367–369, 379, 385 Schumpeter and, 130–131 France, 5, 265, 307 stock issue effects and, 169–196 Franklin Institute, 48 U.S. Stock Market and, 163–211 Freed-Eiseman Radio Corp., 196 (see also U.S. Stock Market) Freeman, Chris, x Financial History of the American French, Kenneth, 218 Automobile Industry, A (Seltzer), Freudenthal, Elsbeth E., 183–190, 175–176 206 Financial World, 269 Functional approach, 405 Fink, C., 369 Furman, 220 Firestone Tire and Rubber, 231 Fish and Neave, 267 Galambos, Louis, 252, 258 Fisher, Franklin M., 297–298 Galbraith, J. K., 241 Fisher, Irving, 217, 220 Gallaudet Aircraft Company, 184 Fisher Body, 180 Gallini, Nancy, 411 Fisman, R., 369 Gambardella, Alfonso, 1, 365–367, Flamm, Kenneth, 295, 297, 302, 317 374, 379, 385 Flanders, Walter, 99–100, 106, Gans, J., 1, 368, 380, 383 113–114, 120–124 Garfield Savings Bank, 58 486 Index

Garofalo, Gasper S., 42 financial experiments of 1890s in, Garvey, Ed., 338, 341 133–137 Garvy, G., 201 semiconductors and, 292 Gasoline automobiles, 60, 88, 94–95 Gilbert, Richard, 234 Gross Domestic Product (GDP) Glenn Martin Company, 188, 190 measurement, 17, 169–170, 219, Globalization, 130, 469–470, 473 428 Global News Issues, 440 Geijsbeek, W. R., 257 Goldin, Claudia, 221 GenBank, 441 Goldman, Henry, 179 General Electric, 14, 16, 19, 54, 56, Goldman Sachs and Company, 179 199 Gold Seal Electrical, 196 computers and, 297 Gold standard, 130–137 IBM and, 340 Gommel, Rainer, 153, 136 intangible capital and, 220, 222, Gompers, Paul A., 416 228, 230, 232, 241 Good, David F., 155 Langmuir and, 220 Goodyear Tire and Rubber, 201, 231 Radio Corporation of America and, Gorman, Mel, 47 193–194 Government, 2, 28 semiconductors and, 289 Air Mail Act and, 185, 192 Generalized method of moments antitrust policies and, 20, 251, 264, (GMM), 458 312n3, 330, 347–348 General Motors, 19, 85, 87–88, 124, Bayh-Dole Act and, 311, 472 199, 201, 471 bond prices and, 45 banks and, 177–178 computers and, 317–319 Buick Motor Co. and, 94, 100–102 defense budget and, 283 Chevrolet and, 117–118 deflation effects and, 137–158 Durant and, 98, 101–102, 112, ERISA and, 470 177–178, 181 federal funding and, 283–311 financial troubles of, 102 finance capitalism and, 131 founding of, 101–102 financial experiments of 1890s and, intangible capital and, 221–222, 133–137 231–232 IBM and, 318–322, 327, 330–334, Leland and, 98 337–339 Maxwell-Briscoe and, 106 information technology (IT) and, Model T and, 117 283–311 NYSE and, 179–180 Kelly Act and, 185–186 Oakland Motor Car Company and, Liberty Bonds and, 199, 221 112 McNary Watres Act and, 191–193 Olds Motor Works and, 97 New Deal and, 251 spin-offs and, 104 patents and, 4–5 World War I and, 98 Radio Corporation of America and, Germanium, 341 193–194 Germany, 132, 156–158, 369 research and development (R&D) Corning Glass Works and, 265–266 and, 256–257 deflation effects and, 153–155 tax changes and, 168 entrepreneurs and, 411 Victory loans and, 199 Index 487

Graham, Margaret B. W., 19–20, Grumman, 190 247–282, 411 Gru¨ ndungkrise, 153–155 Gramme Electrical Company, 49 Guardian Trust Company, 44 Granger causality analysis, 454–457 Gunnell, John, 91 Grasselli, C. A., 44, 50 Gustin, Lawrence D., 117 Gray, John, 99 Great Britain, 5, 132–133, 156 Halberstam, David, 86 British Post Office (BPO), 253, Hall, Robert, 217, 219 260–261 H. A. Lozier and Company, 120 British Telecom, 253 Hammack, David C., 42 computers and, 295 Hanna, Daniel R., 45 Corning Glass Works and, 265 Hanna, Marcus, 44 deflation effects and, 143–153 Hanna, Robert, 44 financial experiments of 1890s in, Hart, Oliver D., 409, 414 133–137 Harvard University, 329 Internet and, 307 Hastings, Charles, 114–115 radio and, 194 Hayden, Stone and Company of technological lag of, 152–153 Boston, 189 Great Crash, 217–218, 241 Hayes, Rutherford B., 49 Great Depression, 166–167 Hayes, Webb C., 49 Great Lakes Aircraft, 190 Haynes-Apperson, 105 Green, Milford B., 425 Hazard, John, 209 Greenwald, Bruce C., 408 Hecht, Jeff, 250, 253, 264 Grigsby-Grunow, 196 Helfat, C. E., 382 Griliches, Zvi, 224, 233, 441 Henry Ford Company, 97–98, 103 Gross, Daniel, 251, 256, 258, 266, Herrick, Myron T., 49, 58 270 Hicks, D., 367 Gross Domestic Product (GDP) Hicks, George B., 47 measurement, 17, 169–170, 219, Hinkley, James W., 55 428 Hirshleifer, David, 436 Gross National Product (GNP) Hitchcock, Peter M., 54 measurement, 219, 224 Hitt, Lorin M., 221–222, 234–235 Grossman, Sanford J., 409, 414 Hobijn, Bart, 234, 238 Growth Holding companies, 130 airplane industry and, 185–193 Hornblower and Weeks, 181 Cleveland, Ohio and, 41–75 Houghton, Amo, 259, 267, 269–270, Detroit, Michigan and, 85–126 274–275 financial experiments of 1890s and, Hounshell, David, 19, 220, 241, 256 133–137 Hoyt, Henry I., 49 intangible capital and, 217–242 Hritsko, Rosemary Solovey, 56, 59 Second Industrial Revolution and, Hsu, D., 368, 380, 383 130–133 (see also Second Industrial Hudson, J. L., 109–110 Revolution) Hudson Motor Car Company, 94, technology and, 2–3 105, 109–110, 121, 125, 177, 181 U.S. Stock Market and, 163–172, Hughes, Thomas Parke, x, 12, 56, 59, 178 153, 157 488 Index

Hughes Corporation, 301 Initial public offerings (IPOs), 208 Hupp, Robert, 114–115, 122 capital raised, 443–444 Hupp Motor Car Company, COMPUSTAT database and, 27 114–115, 120–121, 123 knowledge capital and, 433–454 Hurd, Cuthbert, 326–328 market indicators for, 443 Hydroelectricity, 52 proceeds from, 451–454 Hyper-text markup language Innovation, x (HTML), 308–309 adoption rates and, 284 Hyper-text transfer protocol (HTTP), automobile industry and, 85–126 308–309 (see also Automobile industry) commercializing firms and, 12–21 I. C. I., 228 complementary capabilities and, I. G. Farben, 228 382–383 ILLIAC, 295 debugging and, 284 Incandescent lamp, 220 employee ideas and, 121–122 Independent software vendors (ISVs), employment relationship and, 397n1 302 federal funding and, 283–311 Industry, 28. See also Specific industry financial experiments of 1890s and, 1920s and, 197–203 133–137 development of new, 203–207 financial markets and, 16–17 federal R&D and, 283–311 globalization and, 469–470, 473 information technology (IT) and, human capital and, 220–221 283–311 information technology (IT) and, intangible capital and, 217–242 283–291 post-1920s and, 207–210 institutional environment for, 2 secrecy and, 381–382 intangible capital and, 219–221 stock issue effects and, 169–196 invention process and, 1 technology transactions and, licensing issues and, 262–264 384–385 (see also Technology market value and, 233–242 transactions) moving assembly line and, 96 Information and communications networking and, 20–21 technology (ICT), 238–239 patents and, 3–12 Information technology (IT), 22, as product, 1–2 130 production methods and, 88, 95–96 adoption rates and, 284 Second Industrial Revolution and, airlines and, 283 39–75, 130 (see also Second banking and, 283 Industrial Revolution) computers and, 294–300 technology transactions and, federal R&D and, 283–311 366–368, 385–393 Internet and, 283, 305–309 Third Industrial Revolution and, public R&D and, 285–287 39 railroads and, 283 U.S. Stock Market and, 163–164 semiconductor industry and, Inside vapor deposition (IV) process, 283–284, 288–294 271–272 software and, 300–305 Institute for Advanced Study, 295 Ingersoll-Rand, 231–232 Institute of Electrical Engineers, 249 Index 489

Institutional Change and American Intel, 241, 348 Economic Growth (Davis and Intellectual property, 248 North), xi complementary assets and, 374–375 Institutions patents and, 3–12 (see also Patents) automobile industry and, 85–126 returns from protecting, 285–286 commercializing firms and, 12–21 Interchangeable parts, 100 deflation effects and, 137–158 Interface message processor (IMP), early U.S. framework of, 3–12 305–306 globalization and, 469–470, 473 International Business Machines IPOs and, 27 (IBM), 19, 23, 207, 313n9, 317, knowledge capital and, 433–463 471 limited role of financial, 56–58 305 RAMAC and, 335, 354n52 market forces and, 23–27 603 Electronic Multiplier and, 326, mergers and, 54–55 328, 330 networking and, 20–21 604 Electronic Multiplier and, patents and, 3–12 326–328, 330 Second Industrial Revolution and, 650 drum computer and, 335, 337 13–15 701 and, 320–322, 331, 338–339, spin-offs and, 104–126 353n36 start-ups and, 15–17 702 and, 321, 338 survival curves and, 92–94 704 and, 335 Insull, 140 705 and, 331, 333, 335, 339 Intangible capital antitrust policies and, 330, 347–348 1920s and, 239 business practices of, 322–325, AT&T and, 228, 230, 232 343–348 company financials and, 222–224 card-programmed calculator (CPC) Eastman Kodak and, 222, 230, 232 and, 326–330 E. I. Du Pont and, 222, 228, 230, commercial success of, 334–338 232 debts of, 332 estimating market value of, 233– enters electronic data processing, 242 325–330 General Electric and, 220, 222, 228, government contracts and, 318–322, 230, 232, 241 327, 330–334, 337–339 General Motors and, 221–222, Internet and, 306 231–232 lost initiative of, 330–331 human capital and, 220–221 punched cards and, 322–324 information and communications rental agreements and, 323, 350n14 technology and, 238–239 research and development (R&D) innovation and, 219–221 and, 318–319 new technologies and, 237–241 SAGE system and, 319–322, NYSE and, 237–238 331–333, 337, 339–340, 344, patents and, 218–232 348 research and development (R&D) SNA and, 306 and, 220, 222 software industry and, 300–301 Westinghouse and, 224, 228, 232 solid-state design investment and, Integrated circuits, 292–293 338–343, 358n79, 360n84 490 Index

International Business Machines Second Industrial Revolution and, (IBM) (cont.) 13–15, 28 STRETCH and, 337 technological advancement and, 1 System/360 and, 317–320, 338, 341, (see also Technology) 343, 345, 347–348, 362n102 U.S. Stock Market and, 163–211 Texas Instruments and, 341–342, (see also U.S. Stock Market) 347, 358n77 IPO Reporter, 440 Watson and, 320–321 Iron, 42, 45, 132 International Motors, 180 Israel, 470 Internet, 22, 283 Israel, Paul, 46 federal R&D and, 305–309 Italy, 265 IBM and, 306 ITT, 253, 262, 268 Inventors, 1. See also Specific person Brush Electric Company and, 50–56 Jackson, Roscoe, 107–109, 122–123 commercializing firms and, 12–21 Jaffe, Adam, 224 Crystal Palace exhibition and, 3, 471 Janeway, William, ix–xii employee ideas and, 53–54 Japan, 369 as financial information sources, Corning Glass Works and, 265, 270 46–61 entrepreneurs and, 411 networking and, 50–56 semiconductors and, 292 patents and, 3–12 Jensen, Michael C., 408 Second Industrial Revolution and, Jewett, Harry, 119 13–15, 28 J. I. Case Threshing Machine specialization and, 6–7 Company, 227 start-ups and, 15–16 Jin, Hechui, xi United States and, 2 JOHNIAC, 295 Inventory, 224 Johnson, Thomas H., 257 Investment, 18–19 Joint development agreements (JDAs), automobile industry and, 175–182 265–266, 269 commercializing firms and, 12–21 Joint ventures con artists and, 49 automobile industry and, 88, deflation effects and, 137–158 106–107, 114 demonstration effect and, 47–50 Corning ‘‘associations’’ and, 19–20, early-stage backing and, 40–41 250–251 entrepreneurs and, 405–429 in research and development, 341, financial information and, 46–61, 367, 369, 437–438, 447, 454 131–132 Sperry Electric Railway and, 56 going public and, 45–46 Jones, Lyle V., 442 government’s role and, 2, 21–23 Joseph Henry (trolley car), 52 IBM and, 330–344 Jovanovic, Boyan, 170, 234, 238 information sources and, 46–61 J. & W. Seligman, 178 institutional framework and, 3–12 intangible capital and, 217–242 Kaffir shares, 144 IPOs and, 27 Kahn, Robert, 306 mistakes in, 49 Kalachek, Edward D., x patents and, 3–12 Kamien, Morton, 411 Index 491

Kantrow, Alan M., 95–96, 98, 100, Kollins, Michael J., 96–97, 99, 102, 105, 110, 115–116, 124 115–116 Kao, Charles, 262, 268 Kolster Radio Corp., 196 Kaplan, Robert S., 257, 426 Korean War, 319, 331 Kaufman, Louis, 178 Kortum, Samuel, 24, 470 Keck, Donald, 260 Kundtz, Theodor, 44, 59, 80n40 Kelly, Mervin, 288–289, 324, Kurz, Mordecai, xi 339–343 Kuznets, Simon, ix–x Kelly Act, 186 Kelly Bill, 185 Labor, 28–29, 365 Kennedy, J. H., 47 Brush Electric Company and, 53 Kenney, Martin, 257 ERISA and, 470 Kettering, Charles, 183 human capital and, 220–221 Keys, Clement M., 185–186, 189 knowledge capital and, 437–448 Khan, Zorina, 1, 3, 5, 7, 12, 227 Lake Superior, 42 Khanna, T., 367–368, 387 Lamoreaux, Naomi R., xi, 248, 408, Kilby, Jack, 290 469–474 Kim, J., 367 historical innovation financing and, Kimes, Beverly R., 91, 112, 116, 118 1–37 King, Charles, 105–106 intangible capital and, 220 Kleiman, H., 290 patents and, 366, 368, 380 Kleinrock, Leonard, 305 Second Industrial Revolution and, Kleinwort Sons & Company, 179 39–84 Klepper, Steven, 14–17, 41, 175, U.S. Stock Market and, 205 automobile industry and, 85–128 Landau, Ralph, 153 patents and, 383, 392 Lange, J. R., 207 stock market swings and, 221, Langlois, R. N., 301, 303 238–239 Langmuir, Irving, 220 Kline, S. J., 366 Lasers, 253, 260 Knight, Walter H., 51, 57 Lawrence, Washington, 49, 56–57 Knowledge capital, 463 Lazonick, W., 191 biotechnology and, 441–442 Learson, T. Vincent, 341 COMPUSTAT database and, 27 Lee, Higginson and Co. of Boston, financial variables and, 444–446 178 Granger causality analysis and, Leffler, G., 201 454–457 Legal issues, 7–8. See also Patents IPO analysis and, 433–454 antitrust policies and, 251, 264, measurement of, 444–446 312n3, 330, 347–348 natural excludability and, 434–436 Corning Glass Works and, 266–269 patents and, 441, 445 financial experiments of 1890s and, spillovers and, 441–442 135–136 stock price behavior and, 444, patents and, 3–12 457–462 Leggett, Mortimer D., 47–48 study data for, 437–446 Lehman, Arthur, 179 theoretical approach to, 434–437 Lehman, H. H., 179 Kogut, B., 366, 374 Lehn, Kenneth, 413 492 Index

Leland, Henry Lucent Technologies, 273 automobile industry and, 96–103, Lucy, Chuck, 261–262, 265 111, 121–123 Lincoln Motor Company and, Ma, Tongshu, 155 112–113 MacAvoy, Tom, 259, 267, 275 Leland and Faulconer, 96, 103, 111 MacGarvie, 220 Lerner, Joshua, 24, 26, 228, 405–432, Machine tool industry, 42 470 Maclaurin, W. Rupert, 193–194, 204 Levenstein, Margaret, 14–15, 17, Maddison, Angus, 169 39–84, 408 Majluf, Nicholas S., 408 Levin, Richard C., 368, 380 Malaysia, 426 Levine, Ross, 170 Malcolmson, Alexander, 99, 176 Levinthal, D. A., 373, 384 Mancke, Richard B., 297–298 Liberty Bonds, 199, 221 MANIAC, 295 Lincoln, John C., 53–54 Mansfield, E., 368 Lincoln Electric Company, 53–54 Manufacturing Lincoln Laboratories, 297 automobile industry and, 85–126 Lincoln Motor Company, 112–113 Cleveland, Ohio and, 41–75 Lincoln Motor Works, 54 fiber-optic technology and, 248 Lindbergh, Charles, 17–18, 186–187 interchangeable parts and, 100 Linde Air Products Company, 49–50, moving assembly line and, 96 57 precision, 96–97, 113–114 Lindenberg, E., 222 production methods and, 88, 95–100 Lindzey, Gardner, 442 U.S. Stock Market and, 173–196 Lipartito, Ken, 252 Marconi company, 193 Liquidity, 170 Markets. See also U.S. Stock Market Liquified air, 49–50 building capacity in advance of, Little, Big Bill, 117–118 270–272 Little Motor Company, 117–118 clearing mechanisms and, 140 Liu, Qiao, 436, 457–458, 462–463 Cleveland, Ohio and, 45–75 Loans, 44–45 computers and, 317–318, 330–331 Lockheed Aircraft, 190, 192 (see also Computers) Locomobile Co. of America, 94, 119 deep capital, 132 Loening, 190 deflation effects and, 137–158 London Stock Exchange (LSE), 155 entrepreneurs and, 408 arbitrage trades and, 148–149 equity, 45 Committee for General Purposes financial experiments of 1890s and, and, 144–147, 149 133–137 deflation effects and, 143–153 financial information and, 46–61, kaffir shares and, 144 131–132 NYSE and, 148–153 fixed-capital, 175–176 World War I and, 149 futures, 130 Loose coupling, 132 global, 130, 469–470, 473 Los Alamos National Laboratories, innovation in, 16–17 297 intangible capital and, 217–242 Lozier, H. A., 120 knowledge capital and, 433–463 Index 493

liquid, 132 Menasco Manufacturing, 192 New York Stock Exchange and, Merck, 471 141–142 (see also New York Stock Mergers, 54–55, 101–102, 114, 184 Exchange (NYSE)) Merges, Robert, 26, 380 over-the-counter (OTC), 202–203, Merton, Robert C., 405 209–210 Metzger, William, 98, 105, 113–114, patents and, 3–12 121–124 returning forces of, 23–27 Mezzanine finance, 142 Second Industrial Revolution and, Michelsen, Al, 267 130–133 (see also Second Industrial Michie, Ronald C., 136, 144, 148, 155 Revolution) Microsoft, 237–238 securities, 17, 40 Milgrom, P., 374 software, 302–305 Miller, Carol Poh, 42 start-ups and, 24–25 Miller, Merton, 413 technology transactions and, Miller, Stewart, 250 368–370 (see also Technology Miranti, Paul, 168 transactions) Missile systems, 290 World War I and, 155–157 MITRE Corporation, 301 Marschke, G., 367 Mokyr, Joel, 228 Martin Company, 183 Montgomery Ward, 201 Marx, Leo, x Monumental Park, 48 Maskus, K., 369 Moody’s Manual of Industrial Mason, Arthur, 117–118 Securities, 61, 180, 222, 227, 440 Mason Motor Company, 117–118 Moore, John, 409 Massachusetts Institute of Technology Moore School, 295 (MIT), 297, 305, 319, 331, 368 Morck, R., 169 Matthiessen, Frederick William, 52, Morgan, E. V., 148 79n27 Morgan, J. P., 16, 106, 122 Mauchly, John W., 295, 330 Morone, Joseph G., 266 Mauchly, William, 329 Mosaic, 308–309 Maurer, Robert, 249, 260–262, Moser, Petra, 227 266–267 Motolese, Maurizio, xi Maxwell, Jonathan, 104–106, Moving assembly line, 96, 100 121–122, 124, 179–180 Mowery, David C., 2, 21, 366, 373 Maxwell-Briscoe Motor Company, federal funding and, 283–316 104–106, 120–125 stock market and, 220, 228 Maxwell Motor Company, 120, 178 Munn and Company, 7–8 May, George S., 95–97 Murphy, Edward, 112 McCormick, 142 Myers, Stewart C., 408 McDowell, Wallace, 329–330 McGrattan, Ellen R., 218–219 Nagaoka, S., 369 MCI, 254, 268, 272, 275 NASA, 300 McKie, James W., 297–298 Nasdaq, 210, 237–238 McNary-Watres Act, 191–193 Nash Motors Company, 177 Meckling, William H., 408 National Academy of Science, 317, Mees, Kenneth, 220 442 494 Index

National Air Transport, 186 New York Stock Exchange (NYSE), National Battery Company, 56 16–18, 40, 45, 200–201 National Carbon Company, 45, automobile industry and, 179–180 49–50, 56–58 as blue chip market, 140–141 National Cash Register Company, clearing mechanisms and, 140 108–110, 124, 183, 322, 333–334 Consolidated and, 140–141 National Center for Supercomputing deflation effects and, 137–143 Applications, 308 financial experiments of 1890s and, National City Bank of New York, 189 135–137 National City Company, 189 intangible capital and, 237–238 National Institutes of Health (NIH), London Stock Exchange and, 21 148–153 National Research Council, 61, 220, panics of 1890/1893 and, 140 298–299, 306 quality imprimatur and, 141–142 National Science Foundation, seat prices and, 142–143 307–308, 314n16, 398n13 Second Industrial Revolution and, National Security Agency, 98, 297 130, 156, 158 Navin, T., 211n1 New York Times, 48, 179 Neal, Larry, 16–17, 129–161, 408 Niagara Falls, 52 Nelson, Emil, 114 Nicholas, Thomas, 18–19, 217– Nelson, Richard, x, 21, 86 245 federal funding and, 285–286, 309, Nobel Prize, 220 311 Nohria, Nitin, 252 Second Industrial Revolution and, Nonlinear technologies, 132 157–158 North, Douglas C., xi–xii stock market and, 228 North American Group, 190–192 technology transactions and, 365, Northern Manufacturing Company, 368, 376, 380, 383 105–106, 121 Neon lights, 129 Northrop Aircraft, 297 Neoprene, 220 Northrup Aviation, 327 Nerkar, A., 382 NSFNET, 308 Net present value (NPV), 257 Nylon, 220 Networking Brush Electric Company and, 50–56 Oakland Motor Car Company, 112, Buick and, 101 122 Durant and, 101–102 Office of Electronic Information General Motors and, 101–102 Products and Services, 441 software and, 304–305 Official Gazette, 237 Nevins, Allan, 99 Ohio Auto Co., 89 Newbery, David, 234 Ohio National Bank, 44 New Deal, 251, 264 Olds, P. F., 95 New York Curb market, 18 Olds, Ransom Second Industrial Revolution and, Brush and, 111 141–142 business practices of, 95–97, U.S. Stock Market and, 179–180, 102–103, 106–107, 122–123 184, 188, 194, 201–202 Olds Gasoline Engine Works, 107 Index 495

Olds Motor Works, 102, 125 company financials and, 222–224 automobile industry organization complementary assets and, 374–375, and, 88–89, 94–97, 103–104, 108, 383 177 conflicts in, 50 E. R. Thomas-Detroit and, 107–109 Corning Glass Works and, 266–269 Hudson Motor Car Company and, disputes over, 52 109–110 expanded commerce from, 7–8 Maxwell-Briscoe and, 104–106 fee for, 4 Reo Car Company and, 106–107 fiber-optic technology and, 266–269 Saxon Motor Company and, filing costs and, 4–5 110–111 funding and, 4–5 spin-offs and, 105–111 government and, 4–5 subcontractors and, 103–104 historical perspective on, 221–232 Open Standard Interconnect (OSI), increase of, 7–9 306 infringement issues and, 266–269 Optical transmission, 20 intangible capital and, 218–232 ORACLE, 295 investment incentives and, 4–5 Ordinary least squares (OLS) analysis, knowledge capital and, 441, 445 235, 386 lawyers and, 7–8, 12 Organization for Economic multinational licensing and, 369 Cooperation and Development profits from, 5–8 (OECD), 367 protection effectiveness of, 380–381 O’Sullivan, Mary, 17–18, 163–216, radio and, 193–194 221, 241, 408 reform of 1836 and, 7–9, 30n5 Otis Elevator, 224 regional data of, 10–12 Outside vapor deposition (OV) registration system and, 4–5 process, 271–272 royalties and, 48 Owens, Raymond, 107 Scientific American and, 7–8 Owens-Corning, 251 Second Industrial Revolution and, 14–15 Pacific Aero Products, 183 secrecy and, 381–382 Packard Motor Car Company, 89, shares in, 6–7 120, 177 specialization and, 6–10 Packet switching, 305–306 technology transactions and, Paige, Fred, 119 368–374 Paige-Detroit Motor Company, 119, telecommunications and, 261 180 transfer of rights and, 6–10 Palmer, Ralph, 326–328, 339–341 uniform laws for, 367 Parente, Stephen, 219 U.S. lead in, 3–12, 31n8 Passer, Harold C., 14, 19 validation of, 4 Pa´stor, Lubos, 237–238 wildcatters and, 49 Patents, 22, 25, 55–56, 61, 274, 471 Patent Technology Set: Genetic AT&T and, 252–253, 261 Engineering, 441 banks and, 6 Patterson, John, 322 Bayh-Dole Act and, 311, 472 Peach, 221 Cleveland, Ohio and, 39–40, 42 Peck, Merton J., x 496 Index

Peerless, 180 Quaker Oats, 227 People’s Savings and Loan Association, 44 Radar, 290 Perez, Carlota, x, xii, 130–131 Radio, 17, 18, 129 Perrow, Charles, 132 U.S. Stock Market and, 164–165, Petroleum, 130 193–200 P. F. Olds & Son, 95 Radio Corporation of America (RCA), Pharmaceuticals, 385 237, 289 Phelps, Byron, 326–328 computers and, 297, 318, 324 Philadelphia, 18 IBM and, 324, 340 Philippines, 426 telecommunications and, 255–256 Photography, 220 U.S. Stock Market and, 193–196 Pierce-Arrow, 180 Rae, John B., 182–183 Piore, Emmanuel, 340, 357n71 Raff, Daniel M. G., 248 Pittsburgh, 251 Railroads, 13, 16–17, 130 Pittsburgh Reduction Company, 52 Cleveland Stock Exchange and, 45 Plastics, 129 deflation effects and, 137–140 Pontiac Buggy Company, 112 information technology (IT) and, 283 Poor’s, 61, 181 streetcars and, 51 Pope Manufacturing Co., 94 U.S. Stock Market and, 166 Poulson, Annette B., 413 Rajan, Raghuram, 171, 221 Pratt and Whitney Aircraft RAMAC (Random Access Memory Corporation, 186, 189, 192 Accounting Calculator), 335, Precision tools, 14 354n52 Prentiss, John, 181–182 RAND Corporation, 301, 305 Prescott, Edward C., 218–219 Rappoport, Peter, 217–218 Princeton University, 295 Raytheon, 289, 297 Production rDNA technology, 441–442, aircraft industry and, 190–191 446–447, 450–451 capacity building and, 270–272 Real estate, 173 creativity and, 248–249 Reconstruction Finance Corporation, Ford and, 99–100 192 innovations in, 88, 95–96, 100 Recursion analysis, 222, 224 interchangeable parts and, 100 Regression analysis, 169, 235 parts contracts and, 108–109 Reich, Leonard, 252 subcontractors and, 103–104 Reliance Electric, 54 Taylorism and, 241 Reliance Motor Car Co., 119 U.S. Stock Market and, 170, Remington Rand, 295–296 173–175 Renner, Gail K., 108, 110 Project Whirlwind, 319 Rentschler, Frederick B., 186, 189 Prudential, 324, 330, 332 Rentschler, Gordon, 186, 189 Prussia, 155 Reo Motor Car Company, 106–107, Public utilities, 173 123, 177 Punched cards, 322–324 Research and development (R&D), 2, Puttitanum, T., 369 29, 471–472 Pyrex, 254 adoption rates and, 284 Index 497

AT&T and, 252–253 R. G. Dun & Company, 50 biotechnology and, 417–425 Rhee, C., 234 commercializing firms and, 12–21 Roberts, J., 374 COMPUSTAT database and, 27 Roberts, P. W., 382 control processes for, 258–259 Rockefeller, John D., 77n16 Corning Glass Works and, 248–249, Roedel, J. R., 207 255–259 Rollin Motor Company, 60 division of labor and, 372 Romanelli, Elaine, 437, 442 documentation and, 266–267 Roosevelt, Franklin, 251 economics of public, 285–287 Rose, William Gansom, 59 entrepreneurs and, 414, 417–425 Rosenberg, Nathan, x, 2–3, 21, 153, ex ante contracting and, 366 284, 366, 373 ex post contracting and, 366 Ross, Steven, 222 federal, 21–23, 256–257, 283–311 Royalties. See Patents fiber-optic technology and, 248–249, Runabouts 253–254 automobile industry organization firm size and, 372 and, 95–102, 105–108, 113, 125 globalization and, 469–470 Brush Runabout Company and, IBM and, 318–319 111–112 increased costs of, 366–367 Hupp and, 115 industrialization and, 28 information technology (IT) and, 22, S&P Composite Index, 217 283–311 Sahlman, William, 206–207, 415 intangible capital and, 220, 222 Savings-and-loan associations, 44 integration of, 367 Saxenian, AnnaLee, 1 knowledge capital and, 433–463 Saxon Motor Company, 110–111, lasers and, 260 124, 180 Lawrence and, 49 Schall, L. D., 257 market forces and, 23–27 Scheinkman, Jose A., xi networking and, 20–21 Scherer, F. M., 368 outsourcing of, 371–372 Schmookler, Jacob, 1 patents and, 9–10, 369–370 (see also Schoar, Antoinette, 26, 428 Patents) Schumpeter, Joseph, x, 130, 221, 247, post–World War II era and, 256 276–277 proprietary knowledge and, 251–252 Schwarzchild, Otto P., 189 resource allocation and, 257 Science, 14. See also Research and Second Industrial Revolution and, development (R&D) 13–15, 28, 74 (see also Second knowledge capital and, 437–446 Industrial Revolution) universities and, 220–221 secrecy and, 381–382 Scientific American, 7–8, 32n11, 129, technology transactions and, 237 368–370, 385–393 Scotchmer, Suzanne, 224 U.S. military and, 256–257 Scott, Richard, 107 U.S. Stock Market and, 171 Sears, 211n1 RFTA (request for technical Second Industrial Revolution, 13–15, assistance), 259, 261 28 498 Index

Second Industrial Revolution (cont.) Short Electric Railway Company, 53 banks and, 131 Shuldiner, Alec T., 251, 256, 259, Brush Electric Company and, 47–56 261, 264, 266–267, 270 deflation effects and, 137–158 Siecor, Inc., 269–270 Federal Reserve System and, 131 Siemens, 266, 269 finance capitalism and, 129–158 Signetics, 263 financial information sources and, Sikorsky Aircraft, 192 46–61, 131–132 Silicon Valley, 1 institutional financing and, 39 Simcoe, 306 modern effects of, 129 Simmons, Kenneth, 221 NYSE and, 40 Simplex Automobile Company, 183 quantitative patterns in, 61–73 Singh, Ajai, 446 research and development (R&D) Sloan, Alfred P., 19 and, 39 Small Business Innovation Research White Sewing Machine Company (SBIR), 442, 450, 452 and, 58–61 Smelting processes, 51–52 Secrecy, 381–382 Smil, Vaclav, 129 Securities, 45 Smith, Adam, 365 clearing mechanisms and, 140 Smith, Fred, 95 deflation effects and, 137–158 Smith, John Kenly, Jr., 19, 220 financial experiments of 1890s and, Smith, Merritt Roe, x 133–137 Smith, Philip H., 87, 91, 175 Securities and Exchange Commission Smith, P. J., 369 (SEC), 202, 208–209, 211n2 Smith, Samuel, 95, 102, 106, 108 Securities Data Company, 440 Smith, S. Winifred, 53 Seltzer, Lawrence, 175–176, 178, 180 Snowden, Kenneth, 137–138 SEMATECH, 312n6 Sobel, Robert, 140, 201, 207–208, Semi-Automatic Ground Environment 323 (SAGE) air defense network Social Science Research Council federal funding and, 297, 301 (SSRC), xi IBM and, 319–322, 331–333, Society for Savings, 42, 49, 58 337–340, 344, 348 Soete, Luc, x Semiconductors, 22 Software industry, 22, 300–305 federal R&D and, 288–294 Sokoloff, Kenneth L., xi, 408, IBM and, 338–343 469–474 information technology (IT) and, 283 historical innovation financing and, transistors and, 228–290, 338–343 1–37 Severance, J. L., 50 patents and, 366, 368, 380 Shane, S., 383 Second Industrial Revolution and, Sheppard, Samuel, 220 39–84 Sherbloom, James P., 421 U.S. Stock Market and, 227 Shettler, Reuben, 106–107, 122 South Korea, 426 Shiller, Robert, 217 Soviet Union, 208, 295 Shleifer, Andrei, 169, 217, 415 Specialization, 6–10 Shockley Laboratories, 290 Sperry, Elmer, 12, 15, 53, 56, 59, Short, Sidney H., 15, 52–53, 55, 57 77n16 Index 499

Sperry Electric Railway Company, 56 Sudzarek, Robert G., 97–99, Sperry Rand, 295–296 111–116, 119 Sperry Syndicate, 56, 58 Sumitomo, 268 Spillovers, 441–442 Summers, Lawrence, 234 Sputnik, 208 Sundem, G. L., 257 Standard Catalog of American Cars, Superior Cable, 270 The,91 Survival curves, 92–94 Standard Communications Laboratory Swan Lamp Manufacturing Company, (SCL), 253 54 Standard Oil, 50, 142, 228 Sylvania, 289 Stanford University, 442 Synthetic fertilizers, 129 Star car, 118–119 Systems Development Corporation Start-ups, 15–17. See also Cleveland, (SDC), 301–302 Ohio; Detroit, Michigan going public and, 45–46 Taiwan, 426 market forces and, 24–25 Tauman, Yair, 411 Steam power, 130 Taxes, 168, 251 Steel, 13–14, 42, 100, 115–116, 132 Taylorist approach, 241 Stephan, Paula E., 436–437 TCP/IP protocol, 306–308 Stern, Scott, 1, 368, 380, 383 Technological Revolutions and Stevenson, Howard, 206–207, 415 Financial Capital (Perez), xii Stiglitz, Joseph E., 408–409 Technology, x Stock Exchange Official Intelligence, automobiles and, 85–126 (see also The (Burdett), 149 Automobiles) Stockly, George W., 47–48, 51, 57 biotechnology, 27, 434, 438, ‘‘Stock Market and Investment, The: 441–442, 446–447, 450–451 Is the Market a Sidewhow?’’ commercializing firms and, 12–21 (Morck, Shleifer, and Vishny), 169 computers and, 317–318 (see also Stocks. See also U.S. Stock Market Computers) Britain and, 143–153 Crystal Palace exhibition and, 3, 471 clearing mechanisms and, 140 DNA, 27 deflation effects and, 137–158 evaluation of, 18–19, 27 financial experiments of 1890s and, financial information and, 46–61, 133–137 131–132 Germany and, 153–155 funding of, 1–2 Stock tickers, 46 government role and, 2 Streetcars, 45, 51–53, 55 intangible capital and, 237–241 Strojwas, Marcin, 228 IT, 130, 283–311 (see also Stromberg, Per, 426 Information technology (IT)) Studebaker Brothers Manufacturing knowledge capital and, 433–463 Company, 178–179 long-run economic growth and, 2–3 Studebaker Corporation, 113–114, nonlinear, 132 178–180 optical fiber and, 247–277 Sturtevant Aeroplane, 184 patents and, 3–12, 369–370 (see also Stutz, 180 Patents) Subcontracting, 96–97, 103–104 process technologies and, 260 500 Index

Technology (cont.) Television, 255–256, 273 radio and, 193–196 Temin, Peter, 248, 252 rDNA, 441–442, 446–447, 450– Tesla, Nikola, 129 451 Texas Instruments, 290, 293, 318, Second Industrial Revolution and, 341–342, 347, 358n77 13–15, 39–75 Third Industrial Revolution, 39 spacecraft and, 208 Thomas, E. R., 108–109, 122 specialization and, 6–10 Thomas, Horace, 107 transforming effects of, 129 Thomas, W. A., 148 universities and, 220–221 Thomas-Detroit, 108–109 Technology transactions Thomas Register, 183–184 absorptive capacity and, 384 Thomson, Elihu, 14 complementary assets and, 374–375, Thomson Houston Electric Company, 382–383 48, 51, 55–56 cost and, 373–374 Tight coupling, 132 empirical analysis results for, Tilton, J., 289–290 385–396 Tirole, J., 228, 414, 436 ex ante, 366, 377–378 Tobin’s q, 224 ex post, 366, 368–370, 376, 378 Tractors, 60, 129 extent of, 378–380 Tracy, James J., 47–48, 58 firm size and, 372, 383 Trajtenberg, M., 372 gains from trade and, 372 Transcontinental Air, 192 industry characteristics and, Transistors. See Semiconductors 384–385 Transitron, 290 knowledge codification and, 384 Tripsas, M., 382 measures for, 376–380 ‘‘Trunk Telecommunications by rivals and, 383–384 Guided Waves’’ (Institute of secrecy effectiveness and, 381–382 Electrical Engineers), 249 transfer costs and, 373–374 Trust companies, 42, 44, 130 Teece, David J., 382 TRW, 301 Telecommunications, 238 Tufano, Peter, 413 AT&T monopoly of, 252–253 Twentieth Century Fund, 201–202 cable and, 269–270 information technology (IT) and, Union Carbide and Carbon Company, 283–291 50, 52 line capacity issues and, 252–253 Union National Bank, 44 patents in, 261 Union Pacific Railroad, 138 radio and, 193–196 United Aircraft and Transport telegraphs and, 13, 47–48 Corporation, 189–190, 192 telephones and, 13, 52 United Airlines, 192 U.S. Stock Market and, 193–196 United States Telegraphs, 13, 47–48 antitrust policies and, 264 Telegraph Supply Company of Asian contracts and, 425–428 Cleveland, 47–48. See also Brush automobile industry and, 85–126 Electric Company Bayh-Dole Act and, 311, 472 Telephones, 13, 52 biotechnology and, 417–425 Index 501

Cleveland, Ohio, 39–75 U.S. Department of Justice, 264–265, Constitution of, 4 347 Crystal Palace exhibition and, 3, 471 U.S. military, 185, 191, 193, 331 defense budget and, 283 computer research and, 294–300 deflation effects and, 137–143 IBM and, 318–322 Detroit, Michigan, 85–126 SAGE system and, 297, 301, 319– early institutional framework of, 322, 332–333, 337–340, 344, 348 3–12 semiconductors and, 288–294, 290 economic history of, 27–28 telecommunications and, 256–257, federal funding and, 283–311 268 Federal Reserve System and, 131 U.S. Motors, 112, 114, 120 financial experiments of 1890s in, U.S. Patent and Trademark Office 133–137 (USPTO), 441, 472 globalization and, 469–470, 473 historical innovation financing and, high rate of invention in, 2 6, 8, 30n4, 31n10 information technology (IT) sector intangible capital and, 218–219, and, 283–311 224, 227–228, 237 New Deal and, 251, 264 Second Industrial Revolution and, 51 patent system of, 3–12, 31n8 U.S. Post Office, 185, 188, 191–193 population data of, 11–12 Usselman, Steven W., 23, 317–363 Second Industrial Revolution and, U.S. Stock Market, 163 13–15, 28, 39–75, 130–133 1920s and, 164–165, 172–175, Third Industrial Revolution and, 39 197–203, 210–211, 217–219, 239 United States Motor Company, 178 aircraft industry and, 182–193, 197, United States Steel, 238–239 199 Universities, 220–221 automobile industry and, 164, computer research and, 294–295 175–182 federal R&D and, 287, 294–295 aviation industry and, 164–165 University of California, 442 descriptive statistics for, 224–227 University of Denver, 52 financing role of, 166–169 University of Illinois, 308 Great Crash and, 217–218, 241 University of Michigan, 107 Great Depression and, 166–167 University of Pennsylvania, 295 historical financing trends and, Unix to Unix Copy protocol (UUCP), 166–169 306 industry development and, 172–196 U.S. Air Force, 319–322 intangible capital and, 217–242 U.S. Bureau of Economic Analysis, liquidity and, 170 442 manufacturing and, 173–196 U.S. Census Bureau, 42, 174–175, Nasdaq and, 210 184–185 new industry development and, U.S. Department of Commerce, 442 203–207 U.S. Department of Defense, 21 NYSE and, 137–143, 179 (see also DARPA and, 305–306, 307 New York Stock Exchange (NYSE)) federal funding and, 289, 294, 297 over-the-counter (OTC) market and, Internet and, 305–309 202–203, 209–210 software industry and, 300–305 overvaluation and, 218–221 502 Index

U.S. Stock Market (cont.) VentureXpert, 444 post-1920s and, 207–210 VentureOne, 416 public utilities sector and, 173 Veronesi, Pietro, 237–238 radio and, 164–165, 193–200 Very High Speed Integrated Circuit railroads and, 166 (VHSIC) program, 294 real estate and, 173 Veugelers, R., 369 regression analysis of, 169 Victory loans, 199 research and development (R&D) Vishny, R., 169 and, 171 von Hippel, E., 366 S&P Composite Index and, 217 Vonk, Gerro, 425 Securities and Exchange Commission von Linde, Carl, 49–50 (SEC) and, 202, 208–209, 211n2 von Neumann, John, 295, 300 stock issues effects and, 169–196 Vulture capitalists, 405 tax changes and, 168 time function and, 218–219 Wade, Jeptha, 45 U.S. economy and, 169–172 Wager, Richard, 56, 59 World War II and, 207 Walker Manufacturing Company, U.S. Treasury, 198 54–55, 57 Wall Street Journal, 186–187, 195 Vanadium, 100 Walsh, J. P., 228, 368, 376, 380, 383 van der Linden, Robert F., 186, 188, Warburg, Pincus, x 191 Warner and Swasey, 58 Vander Meulen, Jacob A., 191 Watson, Katherine, 144 van Horne, James C., 413 Watson, Thomas, Jr., 320–321, Venture capital, ix–xi, 26, 471–472 327–332, 338–344 Asian contracts and, 425–428 Watson, Thomas, Sr., 322, 324–325, automobile industry and, 97–98 (see 329–331, 334 also Automobile industry) Weisberger, Bernard A., 117–118 Cleveland, Ohio and, 44–45 Weiss, Andrew, 408–409 con artists and, 49 Weitzman, Martin L., xi demonstration effects and, 47–48 Welch, Ivo, 417, 436 early-stage backing and, 40–41 Wellman-Seaver-Morgan, 45 entrepreneurs and, 405–429 Western Air, 192 financial information and, 46–61, Western Electric, 249, 263 131–132 Western Union, 46 going public and, 45–46 Westinghouse, 19, 55, 194, 224, 228, Granger causality analysis and, 232 454–457 Wheeler, Robert, 42 information sources and, 46–61 Wheels of Commerce, The (Braudel), J. P. Morgan and, 106, 122 ix NYSE and, 16–18 White, Clarence, 60 private equity and, 427 White, Eugene N., 134, 217–218, 221 Second Industrial Revolution and, White, Howard W., 58 13–15, 28, 39–40 White, Rollin C., 55–56, 58–59 start-ups and, 15–16 White, Rollin H., 59–60, 81n43 U.S. Stock Market and, 206–207 White, Thomas H., 58–60, 81n43 Index 503

White Sewing Machine Company, 45, Zingales, Luigi, 170–171, 221 55–62 Zucker, Lynne G., 26–27, 433–467 Whiting, James, 100, 102–103 Zuniga, M. P., 369 Wildcat companies, 49 Williams, Albert, 332, 343 Willson, Thomas L., 52 Willys-Overland Company, 121, 177, 179–180 Wilson, John Grosvenor, 140 Wilson, Lee, 267–268 Winkelbo¨ rsen, 154 Winter, S. G., 366, 374 Wise, George, 19 Wong, Kwei Cheong, 425 Woodland Avenue Savings and Trust, 44 World War I era, 181, 221 automobile industry and, 98 Second Industrial Revolution and, 134–135, 149, 155–157 World War II era, 22, 151, 207 computers and, 317–318, 329 Corning Glass Works and, 255–256 IBM and, 330, 332 research and development (R&D) and, 256 World Wide Web, 305, 317 Wright, Brian D., 411 Wright Aeronautical Corporation, 183–188 Wright brothers, 182 Wright-Martin Aircraft Corporation, 183 Wu, G., 207

X.25, 306 Xiong, Wei, xi

Yang, G., 369 Yang, Shinkyu, 222, 234–235 Yanik, Anthony J., 105–106

Zander, U., 366, 374 Zeira, Joseph, 241 Zervos, Sara, 170 Ziedonis, A. A., 367