Massachusetts Institute of Technology Studies of Innovation • GiSma,..=("EaEssormat THE MACMILLAN COMPANY THE ELECTRIC-LAMP INDUSTRY: NEW YORK a BOSTON a CHICAGO DALLAS • ATLANTA • SAN FRANCISCO MACMILLAN AND CO., LIMITED Technological Change and Economic LONDON a BOMBAY a CALCUTTA MADRAS a MELBOURNE Development from 1800 to 1947 THE MACMILLAN COMPANY OF CANADA, LIMITED TORONTO By ARTHUR A. BRIGHT, Jr. THE MACMILLAN COMPANY • NEW YORK 1949 FOREWORD THIS study of the economic development of the electric- lamp industry is the second volume in a series of studies on the economics of innovation, undertaken at the Massachusetts Insti- tute of Technology. The creative role played by science and technology in modern economic life is apparent to everyone. But we know relatively little about the human factors which condition the introduction of technological change into our environment. Are there barriers to innovation inherent in the increasing concentration of power in a few large concerns? Does the patent system, designed as an incentive to invention, act more often as a brake on new develop- ments? What has been the role of key personalities in creating change? Are there lessons to be drawn from the past on how the innovating process can be more effective, not only from the standpoint of achieving a higher standard of material being but from the point of view of smoother human relations? Certainly, material progress at any price is not a satisfactory goal. On the other hand, freedom for creative action in initiating and carrying out new developments is a basic human drive for many individu- als. I believe, personally, that a great society should strive toward a goal which will give to individuals and groups the maximum opportunities for creative expression; yet this means to me that the State must act to prevent the compulsive pressure of some particular group from overriding others to the destruction of human values. But, although many of us could probably agree on the general goals for which we should strive in an industrial society, we know very little in detail about the operation of our industrial machine in relation to these goals. This is understandable enough when we realize that modern industry is only about 150 years old and that in this country at least we have been so busily engaged during that period in building business empires that there has been very little time out for reflection. The Great Depression and the Second World War have jolted us out of our complacency. We are now ready to re-examine the vii viii Foreword values of industrial life in a more critical vein. There is much to admire and a good deal to criticize. Most American observers PREFACE would probably agree that the weaknesses in the process of eco- nomic development can be corrected without any major reor- ganization. On the other hand, if we are to progress to a standard TREMENDOUS strides have been made in the application of and a content of living as yet undreamed of in this country, the technology to industry in the United States during the one hun- nature of the structural defects must be critically examined. dred and seventy years of its existence as an independent nation. Arthur Bright's study of the electric-lamp industry represents Most handicraft industries have been mechanized and placed on a contribution to this objective. It offers a detailed analysis of the a mass-production basis; hundreds of new industries have come economic and technological evolution of electric lighting from into existence; and even agriculture has been adopting more the first scientific demonstrations shortly after 1800 to the end scientific methods. Enormous increases in the amounts of goods of World War II. Attention is focused upon the various forces produced have accompanied the sweeping changes in methods affecting the direction and timing of technical advances in the of production and distribution. lamp industry; and conclusions are drawn concerning the influ- Except for short pauses, the rising trends of productivity and ence of the organization of the industry, the patent system, the output continued through the decade following World War I. international cartel and antitrust enforcement on the develop- The long and severe depression of the thirties raised serious doubts ment of the industry. as to whether a fundamental change had not occurred in these Mr. Bright has given us an extremely thorough and penetrating trends. A theory of "secular stagnation" emerged, and even in the analysis of the data, based on intimate study. He has visited all midst of the production and employment peaks of World War the major companies in the industry and digested a vast quantity II, doubts persisted for the period of peace which lay ahead. of historical evidence. The result is a basic descriptive analysis of There are important unresolved questions regarding the future a major American industry which covers the period when Amer- course of technological progress in American industry. Is the rate ica came of age industrially. This should prove an important of advancement likely to slow down, or are we rather on the document for the formulation of public policy. It should also verge of a new era in which the application of science to industry contribute to one of our major scientific tasks—the formulation is going to be far more rapid and economically significant than of an organized and systematic theory of economic development ever before? What are the principal environmental factors that based on observation and experiment. affect technological progress? How can the rate of development W. RUPERT MACLAURIN and effectiveness of new industrial designs and techniques be stimulated? To provide partial answers to such questions it should be helpful to explore the process of technological change as mani- fested in particular American industries. By investigations of this sort we can learn how progress has taken place in the past, and what have been some of the limiting factors on the rate of change. The present analysis of the electric-lamp industry is one in a series of studies in the economics of technological change under- taken by members of the Department of Economics and Social Science at the Massachusetts Institute of Technology. These studies are being carried out under the leadership of Professor ix x Preface Preface xi W. Rupert Maclaurin through a grant from the Rockefeller and conclusions of the earlier chapters and treats topically the Foundation. influence on innovation of industrial organization, the patent sys- Empirical evidence is needed to answer the many questions in- tem, cartelization, tariffs, antitrust legislation, and other factors. volved in the economics of technological change. This work and The conclusions of this study are primarily relevant to the its companion intensive industry studies are designed to add a new electric-lamp industry only. At the same time, certain inferences type of evidence to that which is already available through studies may be drawn regarding other industries confronted by similar of industry as a whole, groups of industries, and specific problems conditions. Companion studies may eventually permit us to gen- such as the patent system. The emphasis throughout each study eralize convincingly for a large segment of American industry. has been upon the underlying factors which have influenced the Although the primary purpose of this study is to analyze the fac- direction, extent, and timing of technological advances. Industrial tors which influence technological progress, I hope that the technology cannot move forward more rapidly than the scientific story of the electric-lamp industry will also be of interest to the knowledge which is fundamental to such advances, but the transi- general student of industrial development and to those concerned tion from basic research to practical applications in industry is with electric lighting itself. I do not know of any other analysis of materially affected by the incentives for change and by the capaci- the lamp industry with so broad a scope or such a long historical ties of business organizations to make changes. sweep. The present analysis of technological developments in the elec- Assistance and helpful criticism in the collection and presenta- tric-lamp industry covers the entire historical sweep of events tion of material have been generously given by a great number from the earliest experiments in electric lighting to 1947. The of individuals and organizations. Thanks must first of all be given original development and introduction of commercial electric to the Rockefeller Foundation, which has provided the financial lighting, both arc and incandescent, are treated in some detail. support for the entire program and at the same time has given The principal emphasis, however, is on improvements in electric us freedom to carry out the studies in the ways which seemed lamps and methods of production after electric lighting was first most productive and useful. Professor W. Rupert Maclaurin, introduced. Since it became evident during the course of the study who has been in charge of the program, has also directed the ef- that the organization of the lamp industry and the operation of forts of those of us who have been responsible for studies of the patent system have been of outstanding importance in relation particular industries with the utmost encouragement and gener- to technical progress in lighting, they have been given special at- osity. He has provided us with considerable latitude in the tech- tention, both in the historical portions of the book and in the niques of collection and presentation of material to suit the conclusions. peculiarities of our own industries and working habits, while Although the major developments in electric lighting are dis- ensuring that our attention was directed into the same broad lines cussed more or less chronologically, I have tried to effect a com- of research.