How Did Innovation Shape America's Growth?

In these ways, America made the business of inventing broad and “democratic.” Almost half of the inventors of the early decades of industrialization had only basic education (though an education that was free and easy to come by in America). Many were engineers, machinists, or full-time inventors. Especially after the Civil War, America became famous for its great independent inventors. Some were native-born, like Thomas Edison or Elisha Gray; others were immigrants such as Nicola Tesla and Charles Steinmetz. This is a part of the American inventive landscape that has remained, even as corporations and established firms became a major part of the American economy. Individuals, rather than corporations, filed the majority of patents through the 1930s, and even today, where the vast majority of patents go to for-profit companies, some 9-13 percent is issued to individuals, the second largest category.

With all of these supporting pillars firmly entrenched, the American System proved extremely effective at building a thriving industrial economy. In 1830, the United States was well below Britain and even below Germany in the share of the world’s industrial output. Those figures changed fast. By 1880 it had surpassed Germany, despite Germany’s own rapid industrialization, and was on a beeline to overtake Britain, which it did before the start of the twentieth century. Innovation had transformed America into the world’s most industrial nation. It is no surprise, therefore, that around 1900 a spate of books appeared with titles like The American Invasion and The Americanization of the World.

But just as importantly, innovation also occurred in other sectors, including agriculture and natural resources. Just as today the information economy does not only mean computers and IT but the transformation of a whole host of businesses, ranging from finance and services to even agriculture, so in the nineteenth and twentieth centuries, innovation was crucial to American success in a range of endeavors beyond manufacturing. America’s great mineral wealth, for example, and fertile agricultural lands were not dramatically larger or better than other places such as Brazil, Venezuela, or Argentina. None of those places grew as the United States did. And part of the reason was that the United States did a much better job of exploiting the natural resources that it had. In developing natural resources, the United States benefited from strong innovation and entrepreneurship that turned minerals and land into actually productive assets. In petroleum, coal, copper, iron ore, zinc, lead, tungsten, and many other minerals, the United States was the world leader not so much because it had more reserves in the ground, but because it was better at finding and exploiting what it had. One might even say that innovation made the nation rich in the bounty of nature, rather than the bounty of nature making the nation rich.