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Very interesting. There is a sense in which maybe we should expect more intangible capital in the past since there were fewer legal protections of physical capital and contracts/liability are harder to enforce. If the buyer can’t guarantee legal protection the the engine they buy (that it’s what they expect), brand name will matter more and you’ll find other work arounds. Maybe it’s similar to how minorities that were persecuted (Jews and Chinese especially) invested in human capital which the majority can’t just steal.

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Yeah, different types of intangible capital must have been replacing others. I almost framed it explicitly - some paragraphs I cut for length and being a little meandering - in that there was a trade-off between IP protection and some elements of branding/reputation. e.g. they explicitly rejected the old strategy of going in for prizes and giving their models to museums - which was often suggested to them - because the patent meant they could pursue a more effective strategy of commercialisation and spreading the invention's use.

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"one of the most famous business partnerships of the British Industrial Revolution — that between Matthew Boulton and James Watt from 1775 — was originally almost entirely based on intangibles."

This fact is a good argument (among many) in the debate why the Industrial Revolution didn't happen in the Roman or Chinese Empires. Such a partnership was possible only where intellectual property rights existed and were effectively enforced.

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Steam engines as a Service! Why was this model ultimately abandoned by Watt and co.? The US financial system makes it extremely lucrative to run a business this way because you can sell shares to stock market investors who will capitalize your high margin recurring revenues at very high multiples. SaaS businesses a good example here. Arguably too high -- returns are so high that it crowds out investment in cyclical asset-heavy business models. Which is part of the reason our infrastructure is crumbling and we’ve run out of everything from semiconductors to nails

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You're the second person now to call it Steam as a Service and I CANNOT believe that I missed that as the obvious title. Genuinely tempted to change it... Or perhaps put it as the subtitle.

It wasn't abandoned by them. The most important extended patent simply came to an end in 1800, so in 1796 they set up the Soho Foundry to transition the business to manufacturing steam engines because their licencing arrangements would expire with the patent. As for their foreign patents, those were of more typical and shorter duration. e.g. the Dutch patent they acquired in 1786 also expired in 1800. And the French one, as we saw, was essentially not granted.

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Super interesting Anton ! Thanks for sharing

As the patent expired in 1800, had France experienced a surge in Watt's machines ?

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Is your thinking that after 1800 the partnership would have tried to push into France without the patent anyway? Perhaps. They did actually end up trying to break into France again after 1786, but a commission from the government to replace the Marly water-pumping machinery for Versailles fell through. Other than that I think they had one serious order in 1789 (unsure if it was ever actually implemented), and in 1791 one that did proceed for powering a Nantes flour mill. But then Britain and France became embroiled in a pretty severe war for almost the entirety of 1792-1815. The Nantes mill seems to have reneged on paying its fees, perhaps because of the war, and there was little opportunity for further serious orders during that period anyway.

Otherwise, in terms of the piracy of the B&W engine in France, the key person was Jacques-Constantin Périer. He had managed to negotiate a deal with B&W for two engines for the Paris water supply while they felt protected by the arret de conseil, but then after receiving the engines he reneged on the deal. It was then many years before B&W were able to get the back-payments he owed them. (B&W's French partners seem to have constantly being reneging on their deals!)

Périer managed to create a few pirated versions of the engines, but only by going to all the trouble of finding engineers and suppliers himself. It helped that he had a direct relationship with Wilkinson for the bored cylinders - it seems that Wilkinson was perfectly happy to betray his friend for this business! Périer was thus able to make one engine in 1783 for Santo Domingo for irrigating sugarcane, and one in 1786 for the Indret cannon foundry, without B&W being involved. After that he was able to make a few more by copying Wilkinson's boring techniques too, at his own foundry at Chaillot. I haven't yet been able to determine how many he then made at Chaillot, but the works seem to have struggled from lack of capital and skills - perhaps again due to the war.

The early Périer piracies, along with the handful (I think four or five?) of the "legit" B&W engines, is very few, especially considering the sheer number of enquiries - 51! - that B&W and then the Soho Foundry partnership of their sons received from France over the course of 1775-1825. Really my contention is that B&W would likely have put a lot more effort into spreading their engine to France over the course of the 1780s had they not been denied patent protection there. Otherwise after 1792, and certainly after 1800, things are rather complicated by the war.

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Thank you for the detailed answer. I read in an old article of a French newspaper there were 52 B&W machines in France in the 1790s

https://www.lesechos.fr/1998/05/comment-watt-linnovateur-et-boulton-lentrepreneur-inaugurent-lere-industrielle-1047441

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Hmm that seems highly unlikely for it to mean 52 B&W-type engines in the 1790s. But 52 may well be the true figure for all steam engines (Savery + Newcomen + B&W-type engines) in France. The article is ambiguously phrased on this regard, but I wonder at the source.

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I’m a bit late to this one, but I caught up on this (excellent, of course!) blog today and had similar questions about what happened in France. The blog implies that patent protection is important for spreading the technology, but one might also expect that France could have experienced a freeloader effect. By not paying for the patent, yet having access to the technology, maybe its use would grow even faster in France because there would be more profitable uses when there isn’t a licensing fee. Sounds like that didn’t happen, so maybe there’s an argument that it was the expertise of B&W that was more important than their patent itself. Do you have thoughts on that hypothesis? I also wonder about how quickly the engine was adopted in neighbouring countries, compared to France, if that would be useful data to evaluate the question.

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Fascinating, thank you. Also another example of the crucial role of parliament in the 18th century in supporting progress (the lengthy patent extension here, the effective and far-sighted operation of the Board of Longitude in a previous post of yours).

I wonder if the role of parliament in supporting the Industrial Revolution has been underestimated. And, if so, what it was about the pre-Great Reform Act parliament that made it so effective. In many ways it seems that exact opposite of what you'd get if you asked a committee of experts to design the perfect regulator and funding body.

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That element is very striking - also the primacy of Parliament as the enabler of so many infrastructure projects, which is a point that Dan Bogart and his colleagues and students have been working on for a few years now.

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Given the current obsession with renewables:

the first steam engines were competing with existing windmills and waterwheels - did steam push either of these out, or did steam simply expand into regions where there wasn't suitable rivers/winds?

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Complementary, I’d say. Plan to write more on this soon, but after coal mine draining the next use was for raising water to then drive waterwheels! Especially useful when there were droughts or frosts, so effectively made water power more reliable.

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Fascinating! Sounds bizarre, but I suppose since water can flow, I suppose it makes more sense to let the water flow down to the water wheel than to ship coal to the mill!

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Great article.

“Like so many modern intangibles-based businesses, Boulton and Watt’s partnership thus largely rested on research, design, training, networks, branding, and above all intellectual property.”

Perhaps we could also consider the extent to which this is true of the development of the mining and metallurgy industry more generally.

This might seem like an obvious point as technological innovation is key to almost any industry, but tangible mineral resources are only valuable to the extent they can be profitably extracted. Ultimately, the process by which the ore is extracted/smelted/refined - determined by intangibles such as research, talent, training, trade secrets, patents - is what matters. Historically, huge mineral deposits have often remained untapped until someone develops a profitable way to process them. (Somewhat separately, regulation and trade policies have also been critical in the development of the mining industry.)

The Associated Smelters of Swansea exemplify the importance of technical knowledge, training, and coordination. Thanks to their mastery of the closely guarded ‘Welsh Process’, this cartel was able to dominate for large parts of the 19th Century, smelting huge amounts of South American copper.

Patent rights seem very important; they could make or break mining and metallurgy companies, as seen by the success of Minerals Separation Ltd. (until their patent expired), and the poor fate of John Cort and John MacArthur.

The "professionalization" of the mining industry is another interesting case study; the influence of financiers and merchants, their role in establishing schools of mining and metallurgy in the late 19th Century, and in the development of companies like Rio Tinto, Newmont and Vale.

(All info here from, “Mining in World History”, by Martin Lynch. Interestingly the author also argues that Watt’s patent stifled further innovation in the UK, pointing to the improvements made by Richard Trevithick and other Cornish engineers following the expiration of the patent)

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Arguably, the English patent system and corporations were developed specifically for mining (along with voyages of exploration and publishing, which are just a bit earlier). Two of the earliest business corporations, and the first that weren't to do with overseas trade - the Company of Mines Royal and Company of Mineral and Battery Works - were both chartered in 1568 on the basis of the patent monopolies given to their founders.

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