Private initiative spurred vital discoveries throughout history

Language, mathematics, geography, science -- these and other kinds of knowledge originated in markets and were diffused around the globe by private initiative

Phoenician merchants pioneered the alphabet, written on this tablet

Markets and communications. Writing as well as simplified numerical notations began in the vortex of Sumerian trade, because merchants had to keep track of goods on which Sumerian civilization was based. Business records appear as angular notations on thousands of clay tablets.

Because time is money in markets, the Sumerians developed a calendar based on lunar observations. "Calendars were developed," reported economic historian Shepard Clough, "by which the businessman could decide when a contract should be executed and the farmer could determine when to prepare for floods or when to plant.

"In the invention of apparatus for keeping track of shorter spaces of time, the exigencies of economic life seem likewise to have played a role, for the businessman needed to 'know the time' in order to make and keep appointments, and workingmen engaged upon a cooperative task had to have a measure of time to determine when to begin their labors. To meet these requirements, the Sumerians divided the day into twelve double hours, which has given us our twenty‑four hour day, the week into seven days, and the year into twelve months. Both they and the Egyptians employed sundials, movements of the stars, or water clocks, which worked on the principle of the hourglass, for regularizing the activities of life."[1]

The alphabet originated with Phoenician merchants who prospered by trading in timber, bronze, iron, glass, ivory, gold and dyed cloth. They traded with Egyptian pharaohs and with Israel's King Solomon. Homer praised a Phoenician silver bowl as "the goodliest in all the earth." In the Bible, Isaiah saluted the Phoenician port Tyre as "the crowning city...whose traffickers are the honorable of the earth."

The Phoenicians started with complex writing systems, developed in Mesopotamia and Egypt, which used several hundred symbols. Perhaps it was the commercial drive for efficiency which led Phoenician traders to simplify. Some time between 2100 BC and 1300 BC, a new script emerged in Byblos. Dating is vague, because surviving examples are brief, largely undeciphered and unaccompanied by known artifacts. In any case, the system had about 80 symbols. Since this was too many for an alphabet, where each symbol represents a single sound, it was probably syllabic.

Archeologists discovered what might be the root of our alphabet along a Sinai trade route between Phoenicia and Egypt. On the walls of a copper/turquoise quarry, owned by Egyptians and worked by Semites, was an inscription written in a 27-symbol script. As yet undeciphered, it's believed to date from between 1800 BC and 1400 BC.

North of Phoenicia, near modern Ras Shamra, a Syrian farmer discovered an underground chamber which turned out to be a temple. It was part of Ugarit, an ancient port city. In the temple were some clay tablets, dating from around 1500 BC, and this time they could be deciphered. They were commercial records, tax accounts and religious documents -- including stories which later appeared in Old Testament chapters of Exodus, Judges, Deuteronomy, Isaiah, Proverbs, Job and Song of Solomon. There were 30 symbols. It isn't known how this Ugaritic script is linked either to any previous Semitic or Mesopotamian scripts; the city was destroyed by invaders around 1200 BC, and the script doesn't resemble anything which emerged anywhere else. What is clear that by 1000 BC, centuries after the early Byblos script, a 22-symbol alphabet was used there. Curiously, it had only consonants. No vowels.

Byblos seems to be the city which gave the alphabet to the world. As Phoenician traders travelled East, they introduced more people to their remarkably efficient alphabet, and it became the model for Aramaic which, in turn, led to the Indian, Persian, Arabic and Hebrew alphabets. To the Phoenician alphabet, Greeks added five vowel symbols to form their written language. The name "Byblos" became the Greek word for "papyrus scroll" or "book". The Greek alphabet evolved into the Etruscan, Latin and Cyrillic alphabets. The English word "Bible" is derived from "Byblos".

Key role of Muslim trade. Between the 8th and the 12th centuries, Muslim traders diffused knowledge as they extended their commercial networks in China, the Middle East, Europe and North Africa. They operated incredible caravans with as many as 4,700 camels. They learned far more about geography than Marco Polo. Four centuries before Columbus set sail, an Arab geographer expressed the view that the world was round.

Muslim traders learned paper-making from the Chinese near Samarkand, then refined it and introduced it to the West. Muslim traders brought the compass from China, and it helped make possible later voyages of discovery. Muslim traders found coffee in Ethiopia and brought it to Turkey and Europe. Muslim scholars preserved ancient Greek texts which were lost to the West. Muslim traders discovered "Arabic" numbers in India. A Muslim scientist developed the basis of optics. Muslims introduced the idea of zero to the West, making sophisticated mathematical systems possible; Muslims are largely responsible for algebra, geometry and trigonometry.

While Western Europeans were grovelling amidst filth and ignorance, Morocco had a nine-story building devoted to selling books. Morocco was the world center of the book trade. Muslims from Baghdad gave a clock to the illiterate Holy Roman Emperor Charlemagne; he didn't know what it was, because he had never seen anything like it before in Europe. Enduring Muslim gifts to civilization are evidenced by Arabic words which entered our language, like algebra, candy, cotton, damask, guitar, jar, lemon, lute, mattress, muslin, sherbet, sofa, spinach, sugar and traffic.

Italian & Dutch markets stimulate knowledge. Venetian traders learned much from the Arabs, especially Hindu-Arabic numbers which made calculation much easier than with Roman numerals. Venice became a center for studying what as referred to as commercial mathematics. The first Western mathematics books were published in Venice. Venice was the first city to establish a teaching post for mathematics and to sponsor public lectures on algebra. German merchants visited Venice to learn mathematics. Gradually "reckoning schools" developed along the trade routes between Italian commercial cities and the rest of Europe, where people could learn mathematics.[2]

The medieval cloth trade turned Florence into a prosperous commercial center. Florence financiers invented double-entry bookkeeping, bank checks and holding companies. In the 13th century, 7 out of the 10 major Florence guilds were engaged in export trade. The Florence money market, at Piazza Mentana, enabled merchants not only to conduct commercial transactions but to exchange valuable information. Florence supported Renaissance geniuses like Giotto, Michelangelo and Leonardo who pursued science as well as art.

Merchants were important sources of knowledge about the world. During the late 13th century, Marco Polo, his father and uncle hoped to grow rich trading gems in China, but what they brought back to Venice was mainly knowledge. Polo's Travels was the principal Western source on East Asia for some 500 years. He was the first to describe the vastness of China and the fabulous luxuries of the Mongol court. He reported that the Chinese had a rock which burned -- coal. Another rock yielded a thread which didn't burn -- asbestos. He talked about Chinese engineering innovations like gutters to prevent roads from flooding and bridges tall enough for ships to pass underneath. Europeans hadn't heard of paper money until they read about it in Travels. Marco Polo told how he saw oil in the Caucasus mountains. He shared insights about Siberia, Tibet, Thailand, Burma, Japan, Korea, Java, Ethiopia, the Andaman Islands and Madagascar. His statement that there was a great ocean east of China led Christopher Columbus to believe China could be reached by sailing West from Europe.

The 17th century gem merchant Jean-Batiste Tavernier recorded his extensive knowledge of the Middle East and India. Born in Paris of Protestant parents, he visited Britain, Germany and the Low Countries while still a teenager. By the time he was 25, he had also seen France, Switzerland, Italy, Hungary and Poland. He drew on the knowledge of others as well as his own first-hand experiences to write his Six Voyages, published in 1675. In it he vividly chronicled the jeweled wealth of Mughal India. He recorded the struggle between Britain and the Dutch Republic for commercial supremacy there. He described the rich diamond mines at Golconda. He provided accounts of Asian bankers and money changers. He covered trade in spices, musk, indigo, ivory and much more. He wrote about food, wine, social customs, religious practices. He noted wildlife he saw, including peacocks, monkeys and elephants.[3]

During the 17th century, the capitalist Dutch Republic was the world center of practical knowledge, scholarship and art. Immigrant Jews brought their skills in the diamond, silk, sugar and publishing industries. Baruch Spinoza, from a family of Portuguese Jews, was a lens grinder who became a famous philosopher. Christian Huygens improved the telescope and made many discoveries in astronomy. Working with a microscope, Anthony van Leeuwenhoek discovered spermatozoa and red blood corpuscles. George Rumphius, a former German soldier, pioneered tropical horticulture. Balthasar Bekker wrote World Bewitched (1691), a decisive attack on the superstition of witchcraft. And of course there were artists like Frans Hals, Jan Vermeer and Rembrandt van Rijn who depicted the world around them with a degree of realism seldom seen before. The Dutch Republic became an international publishing center, issuing geographies, scientific treatises and other books, not only in Dutch but in Latin, French, German and English.

The Dutch Republic was the premier source of business information. A large number of traders continuously passed through it, and they brought information. Because Amsterdam, Rotterdam, The Hague and Middelburg were closely-linked via roads and canals, information moved swiftly among these centers. The Dutch East India Company gathered information from its offices in Asia and Africa. Dutch bankers had their contacts in Europe. Newspapers had been started to promote political views, but in the Dutch Republic newspapers became valued sources of general information. Amsterdam firms published commodity prices and foreign exchange rates. Advertisements listed the contents of cargoes. Dutch merchant manuals were widely circulated because they contained useful information about business practices, banking services, taxes and laws.

British industrial know-how. The world's first self-sustaining industrial revolution began in commercial Britain during the 16th century and gathered momentum during the 18th century. Private property was reasonably secure, unlike the Orient where kings claimed ownership of just about everything. Moreover, Britain comprised the largest free trade area. France had a larger territory, but it was broken into small autarkic markets by a maze of customs tolls. Although France had about three times more people, a higher portion of British people lived in commercial cities. In France, as elsewhere on the Continent, a lot of cities like Paris, Versailles, Arras, Caen, Nancy, Tours, Poitiers and Toulouse were primarily government and ecclesiastical centers rather than commercial centers. British people benefited from a lower-cost government as well ready access to overseas markets. British merchants were subject to fewer guild restrictions than on the Continent. Efficient, large-scale commerce was much easier in Britain. Prosperity was more widespread. People ate better. They kept warm with wool clothing, while people on the Continent typically suffered through harsh winters with linen. In Britain, people had more money to spend on manufactured goods. It was a much more hospitable place to develop industrial technology.

After about 1550, the pace of industrialization quickened noticeably in Britain. There was a dramatic expansion of coal and iron mining, which stimulated the development of more powerful machinery. Larger and more efficient businesses developed in the papermaking, printing, sugar refining, brewing, soap-making, glass-making, pottery-making, shipbuilding and other industries. While French aristocrats lavished their resources on a few opulent chateaux, Shakespeare's contemporaries noted the clatter of a construction boom which saw large numbers of modest houses rise in London, Newcastle, Norwich, Nottingham and elsewhere.

Commercial Britain was comparatively tolerant of maverick scientists. While it took William Harvey, for instance, years to gain recognition for his revelations about the circulation of the blood and the functioning of the heart, at least he could go about his work without serious opposition in Britain. By contrast, officials throughout Europe made it illegal to teach his theories. Only classical and medieval doctrines were acceptable. Besides Britain, there was just one other place where people could freely discuss Harvey's theories, and that was the Dutch Republic. Europe's two most prosperous commercial centers placed a premium on knowledge, however controversial it might be. This is why economic historians like the University of Chicago's John Nef concluded there's a strong link between commerce and science.

The poet John Milton based much of his case for a free press on the need for knowledge. In his famous Areopagitica, a speech he delivered before Parliament in 1644, he noted that Spanish scholars, fearful of the Inquisition, "did nothing but bemoan the servile condition into which learning amongst them was brought; that this was it which had damped the glory of Italian wits; that nothing had been there written now these many years but flattery and fustian." Milton pleaded: "Give me the liberty to know, utter, and to argue freely according to conscience, above all other liberties."

During the 18th century, British entrepreneurs thrived by being more open to outsiders than their counterparts on the Continent. As Harvard economic historian David Landes noted, "where, in a country like France, the family firm was almost always closed to outsiders, British entrepreneurs were far more willing to enter into association with friends or friends of friends. Indeed, this seems to have been the preferred way of raising capital to expand or of attracting and attaching special skills to the enterprise...established concerns welcomed into their partnerships bankers and merchants, who of necessity brought in the social and political consequences of vast wealth made in other fields." British entrepreneurs weren't afraid of foreign investors; the Dutch, for instance, provided an estimated one third of the capital needed to finance the British industrial revolution.

All this contact with the outside world helped provide a powerful stimulus to expand practical knowledge. There was a proliferation of inventions which accelerated development, especially in the textile, iron, steel, chemical and machine‑building industries. None of the inventions was born perfect; all needed substantial improvement, requiring the cooperation of many people.

Chinese & Westerners. People gained new knowledge to the degree they had commercial contact with the outside world. Expanded trade brought knowledge of Western commercial methods to China during the 19th century. Insurance companies, banks and joint-stock companies were started. Steamships accelerated the diffusion of knowledge. Silver dollars lubricated commerce, and credit became available more on the basis of business merit than social status. Hong Kong and Shanghai developed as international commercial centers, beacons of prosperity in China.

Chinese and Westerners alike benefited from Chinese free markets. Workers seem to have earned as much working Western firms as for Chinese firms. Westerners didn't restrict what Chinese entrepreneurs could do. On the contrary, Chinese entrepreneurs harnessed family connections and resources to build ventures which were more successful than Western firms. Without the catalytic stimulus of trade, noted University of Tennessee China scholar Pen-p'ing Hao, "it would have been difficult for China to experience a commercial revolution from the 1820s to the 1880s."

The explosion of knowledge in America. In America, there was an explosion of knowledge brought about by private individuals, long before there were widespread government schools.

That there was a high degree of literacy shouldn’t be a surprise because all that's required is a motivated student and a motivated teacher. For more than two centuries, probably most Americans were taught how to read by their parents. Self-interest motivates most people to read, because it's hard to get a job without the ability to read signs, labels, technical manuals and so much else.

The prosperity of the 19th century publishing industry affirms that literacy rates were reasonably high. Publishers imported power presses to meet the strong demand for books. New York, Philadelphia, Boston and Cincinnati were centers of the American book trade. Take the smallest of these: in 1840, Cincinnati publishers issued an estimated 2 million books. In 1855, the American Publisher's Circular reported that more books were sold in the United States than Britain, then a much wealthier country; this publication noted that a few British books sold more than 10,000 copies, but this was common in the United States, and there were many titles which sold over 50,000 copies. Walter Scott was hugely popular literary figure. James Fenimore Cooper's novels sold about 40,000 copies annually; his Last of the Mohigans sold over 2 million copies.

An estimated 30% to 40% of what U.S. publishers issued were textbooks. The New England Primer, a catechism, sold 500,000 copies. By 1859, Noah Webster's spelling book had sold an incredible 30 million copies; this was approximately equal to the U.S. population at that time. The most popular American textbook, the Readers developed by William Holmes McGuffey, sold an amazing 125 million copies. Born in 1800, he had learned to read and spell from his mother. His Readers taught people how to read, provided good quality prose and poetry selections as well as selections from the Bible. The Readers taught moral values in chapters about history, philosophy and temperance. During the 19th century, large numbers of students dropped out of school to work on farms or in factories, and these people relied principally on McGuffey's Readers. John Tebbel, the respected historian of American publishing, reported that, on average, 10 students used a single copy before it wore out, which meant that some 1.2 billion people have read these books. They're believed to have had a greater influence on young Americans than any other book except the Bible. The market was bigger than McGuffey, because his success attracted competitors who produced a large number of similar books, and many of those sold well.

Literacy among American children must have been quite respectable, because children's books sold in the millions. Peter Parley sold over 7 million copies of books like Peter Parley's Tales of America (1827) Parley's Geography for Children (1846). A lot of history and moral principles. Anna Sewall's Black Beauty, initially published in London, sold 3 million copies in the United States. Books like She, Heidi, Little Women, Treasure Island, Little Lord Fauntleroy, Uncle Remus, Peck's Bad Boy and The Adventures of Tom Sawyer were among the children's bestsellers.

Cheap paperbacks began appearing in the 1860s and provide further evidence of widespread literacy. Frank Leslie, who started publishing in 1855, issued children's books, joke books, dime novels, books about the Civil War and myriad other subjects. In 1889, Street & Smith began publishing adventure series around characters like Nick Carter, Buffalo Bill, Diamond Dick and Frank Merriwell -- there were more than 200 Frank Merriwell books alone. Horatio Alger, Jr., published by A.K. Loring and Street & Smith, sold millions of rags-to-riches books like Ragged Dick, Fame and Fortune, Mark The Match Boy, Luck and Pluck, Tattered Tom, Rough and Ready and Young Adventurer.

The most successful 19th century entrepreneurs didn't have much formal schooling, but they had a keen appreciation for learning. In 1881, Andrew Carnegie created an endowment which over the years has spent $56 million to build 1,681 libraries across America. In 1895, New York Public Library was formed by consolidating the private libraries of furrier John Jacob Astor, real estate entrepreneur James Lenox and railroad and mining attorney Samuel Tilden; New York Public Library now has 206,000 prints, 400,000 sheets of music, 6.5 million books and 13.5 million manuscripts. Altogether, by 1900, there were an estimated 40 million books in 5,000 American libraries.

Capitalists supported colleges and universities long before there was an income tax. For example, great women's colleges like Mount Holyoke (1837), Vassar (1861), Smith (1871), Wellesley (1875), Radcliffe (1879), Bryn Mawr (1885) and Barnard (1889). In 1861, about 20 Boston scientists and entrepreneurs contributed $100,000 to start the Massachusetts Institute of Technology; the biggest contributor ever was photography entrepreneur George Eastman who, starting in 1913, gave $20 million anonymously under the name "Mr. Smith". In 1868, Cornell University started with a $500,000 gift from Western Union investor Ezra Cornell and another $5 million which he gained through shrewd land speculation. In 1873, Baltimore wholesale grocer and railroad investor Johns Hopkins died, leaving $7 million to help fund a major university which opened three years later. Railroad entrepreneur Leland Stamford started a university in 1885 as a memorial for his son and operated it on his 8,800-acre farm; after his death, his wife gave the fledgling university more than $20 million. John D. Rockefeller gave $35 million to help establish the University of Chicago; more Nobel Prize winners -- 62 have reportedly been associated with it than any other university.

Because the United States was the world's largest free trade areas, the possibilities for business enterprise were virtually unlimited. Entrepreneurs could expand across the continent without worrying about tariffs, excise taxes, guild restrictions and other barriers which throttled business throughout Europe. All this generated a powerful demand for practical knowledge. Inventors developed labor-saving machinery. In 1865, an English writer named Peto expressed his admiration for American inventors: "Mechanical contrivances of every sort are produced to supply the want of human hands. Thus we find America producing a machine even to peel apples; another to beat eggs; a third to clean knives; a fourth to wring clothes; -- in fact, human hands have scarcely been engaged in any employment in which some cheap and efficient labor-saving machine does not now to some extent replace them."

Between the end of the Civil War and the turn-of-the-century, the number of U.S. patents filed annually quadrupled. Among the most important were the typewriter, type-setting machine, sewing machine, adding machine, steel-frame construction, gasoline engine, electric power. Long-established industries like grains, whiskey, sugar and vegetable oil were revolutionized. Brand new industries like television, computers and telecommunications were created as the pace of technology accelerated in the 20th century.

Improved communications. Markets also generated knowledge through improved communications. Businesses pioneered communications technologies to help make more money, and these become available for others.

Financial markets stimulated improved communications during the 19th century. Paul Julius Reuter, for example, was a clerk in his uncle's bank at G ttingen when he learned about telegraphy and its potential value for inventors. In 1850, he recognized a business opportunity: there was a gap between the end of the German telegraph lines at Aiz-la-Chapelle and the end of the French telegraph lines at Verviers. He set up a news-gathering agency at each terminal, then used carrier pigeons to relay news back and forth. Pigeons were faster than a horse and rider or a coach with a team of horses.

Reuter tried to establish a news-gathering agency in Paris, but he was frustrated by French government restrictions, so he moved to London and became a naturalized British citizen. By 1851, he had opened an office in Dover, since it was a terminal for an undersea cable which ran to Calais. He developed an agent network throughout Western Europe. He laid a cable beneath the North Sea to Cuxhaven, to accelerate the flow of news from Europe. He laid down a cable between Cork and Crookhaven which enabled him to get news of the Civil War before steamships arrived in Liverpool. He participated in a joint venture with the Anglo-American Telegraph Company to lay undersea cable between France and the United States. For his efforts, he was named a baron by the duke of Saxe-Coburg and by Queen Victoria.[4]

Long distance voice communications resulted from the discoveries of Alexander Graham Bell. After immigrating from Edinburgh to Boston, Bell earned a livelihood teaching the deaf how to speak. This stirred his interest in developing a harmonic telegraph which could send more than one message over the same wire. Bell received financial support from two wealthy Bostonians, Gardiner Hubbard and Thomas Sanders, whose deaf daughters were his students. But when Bell learned the Elisha Gray, a Western Union technician, was working on the same idea, he abandoned it to work on a device which could actually transmit speech. His backers withdrew their support, so Bell and his associate Thomas A. Watson were on their own. Throughout his frustrating experiments, Bell was inspired by his blossoming love for Gardiner's daughter Mabel who later became his wife. On February 14, 1876, Bell filed a patent application for an electric telephone -- just two hours before Elisha Gray filed an application for a similar device. On March 3, 1876, Bell received U.S. Patent No. 174,465 which evenutally became the most valuable patent ever issued.

Heroic efforts were required to turn Bell's crude device into a working communications system. Together with Watson and his original backers, Bell formed the Bell Telephone Association in 1877. Work was begun to develop a transmitter which would function without people having to shout into it. Competition from Western Union made decisive action urgent. An entrepreneur was needed. In 1878, Gardiner Hubbard recruited Theodore Vail, then general superintendent of the Railway Mail Service. Hubbard promised him a $3,500 annual salary -- a $1,000 pay cut from his present job. Vail accepted the offer because he became convinced that the telephone would dominate global communications for a long time. He began litigation against patent infringers. He built a vertically-integrated network with licensees controlled by a parent company, AT&T. He acquired Western Electric, an equipment manufacturing company started by Elisha Gray. But Vail disagreed over basic policy with his principal backers, and he left the company in 1887.

By 1907, the company had lost its way, and market pressure demanded serious management change. Long-distance service was slow and noisy. Maintenance was was hazardous. Employee morale was low. Vail was brought back in by the company's principal financier, J.P. Morgan. Vail raised new capital via rights offerings to current shareholders. He hired practical managers to operate network operations. He consolidated research and development, setting the standard for what would become Bell Laboratories. He established a policy of forthright dealings with customers.

Although AT&T was a monopoly, it was subject to the discipline of capital markets. The cost of capital depended on how investors assessed its prospects. This helped keep AT&T in much better shape than the U.S. Government postal monopoly which eluded such discipline. Nonetheless, AT&T wasn't noted for great sensitivity to customers. It relied on courts to help suppress competition.

By the late 1960s, competitive pressures and advancing technology chipped away at AT&T's monopoly. Companies sold increasing numbers of bootleg telephones direct to subscribers, despite AT&T's policy of disconnecting service when its service people discovered such telephones. In 1968, the Federal Communications Commission relaxed government barriers to competition by permitting people to connect non-AT&T equipment to AT&T lines.

Microwave and satellite technology enabled more people to cut costs by doing an end run around the AT&T system. In 1968, William McGowan, son of an Appalachian miner, launched MCI Communications which offered a microwave radio service to help truck drivers cut their communications bill 80%. Six years later, McGowan filed a civil suit challenging AT&T's legal monopoly; this was resolved in 1982 when AT&T agreed to spin off its local operating companies and specialize as a long-distance carrier. Ensuing competition from Sprint and United Telecom as well as MCI forced AT&T to cut US long distance rates as much as 60% in real terms. Millions of Americans gained lower-cost access to global telecommunications.

During the mid-1980s, Britain deregulated its telecommunications system, and British Telecom cut its trans‑Atlantic rates about 50%. To save money, an increasing number of European customers began routing their calls to Britain, then across the Atlantic, rather than go through France and pay steep rates to France Telecom. Rather than lose more business, the French cut their rates 20% and considered further cuts. Now Germany's Deutsche Bundespost Telekom and Japan's Nippon Telegraph are responding to competitive pressures.

Because capitalism fosters freedom of entry, it's always open to new ideas from the most unexpected places. For example, telex was long the dominant means of communicating documents long distance. It involved large, noisy machines which were limited in what they could do and required special training to use. People complained about them, but since telex was controlled by national telecommunications monopolies, little changed. Consequently, these monopolies didn't usher in the next communications revolution. It was consumer electronic companies, especially those from Japan, which introduced inexpensive, convenient and reliable fax machines. The number of telex subscribers in the United States has plunged more than third during the past three years, while fax machines continue to improve. They've vastly accelerated the flow of knowledge around the globe.

First-hand knowledge through travel. Markets have spread knowledge by generating the means for people to travel and discover the world first‑hand.

Until the 19th century, with rare exceptions, only businessmen and soldiers travelled, because it was difficult. The advent of railroads, then steamships cut costs while improving comfort, and growing numbers of middle class people could afford to travel. In the late 19th century, one could book a sleeping car from New York to Chicago for $5. Crossing the Atlantic in steerage class cost about $15. First-class accommodations on a Cunard Line steamship cost $90 to $150.[5]

How did people learn about faraway places? The German printer Karl Baedeker, born in Essen, 1801, became interested in expanding knowledge. His father, Gottschalk Diederich Baedeker, had been credited with inventing the lending library. In 1828, a Coblenz publishing firm went bankrupt, and Karl Baedeker bought it. One of its most popular titles was a travel book, A Guide to the Rhine -- A Rhine Journey from Mainz to Cologne. He updated it based on his own travels, emphasizing practical information about good restaurants and places to stay.

Baedeker noticed that many British tourists had European travel books issued by the London publisher John Murray. He had entered the travel field in 1836, aiming to collect "all the facts, information statistics, &c., which an English tourist would be likely to require or find useful." Murray organized his travel books according to popular routes. He provided not only practical information, but material on history, architecture, geology and other aspects of a destination.

Baedeker adapted many elements from Murray's books and went well beyond Murray. In 1839, Baedeker published his first distinctive travel book, The Rhineland. This was followed by Germany and the Austrian Empire, Switzerland, Belgium and Holland. These books became recognized as superior sources, because Baedeker was meticulous about checking facts. He didn't comment on a destination without seeing it first-hand. He recommended the most interesting routes. He wrote mainly from the standpoint of a walker, because he believed the pleasures of travel were best‑savored by walking. Moreover, Baedeker travelled incognito. He wanted to be treated like an ordinary customer, so he could see how conscientious a hotel or restaurant really was. He identified places travellers should avoid. He warned about museum custodians who pressured travellers for outrageous tips. He wrote his books in a straightforward style, rather than the affected prose common in many travel books. He was smart enough to recognize that his books would be more appealing if he tapped the talent of others; he recruited historians and scholars to contribute articles. Finally, Baedeker revised his books regularly. Karl Baedeker died in 1859, but his children expanded his line to cover destinations around the world, and their books remain among the most popular sources for travel information.

In 1841, the British entrepreneur Thomas Cook negotiated economical group travel rates for railway excursions and European tours, so people could discover more about the world first-hand. He pioneered traveler's checks. He wrote travel books. He persuaded aristocrats to open their castles for his clients. How to discourage Bedouins from robbing people who visited the Holy Land? Cook rented Bedouin camels for carrying his clients. He earned considerable good will by helping 12,000 Muslim pilgrims reach Mecca safely, at cost. In 1862, he led his first group tour around the world for $5 per day. After his death three decades later, the company expanded to offer auto tours, battlefield tours and trips to exotic places like New Guinea, Ceylon and Mount Everest. "Cook has made travel easy and a pleasure," remarked Mark Twain. The travel business has boomed since then, and now between two-thirds and three-quarters of travel is for pleasure.[6] The flow of knowledge is often two‑way, as The Economist has noted "Any country that allows its own citizens to travel abroad is almost bound to market itself as a destination to nationals of a foreign country."

In 1978, the United States substantially deregulated airlines, and this enabled millions of people to travel long distances and see things for themselves. Competition forced airlines to cut costs. Fares dropped 20% in real terms, among the few services which have become cheaper. Before 1978, only about one-third of American adults had ever travelled by air, but within a decade, three-quarters of adults had done it. The number of passengers doubled to more than 485 million annually, about 90% of whom benefited from a fare discount. Air fatalities per passenger mile actually declined. There are fewer passenger complaints than before deregulation. Despite this enormous expansion of air travel, Washington failed to deregulate airports and air traffic control facilities, with resulting bottlenecks.

Valuable knowledge from immigrants. During the 1930s and 1940s, the United States gained immensely valuable knowledge by remaining open to immigrants. More than a dozen were Nobel Prize winners. Albert Einstein (Germany), Leo Szilard (Hungary), Edward Teller (Hungary), John Von Neumann (Hungary), George Gamow (Russia), Enrico Fermi (Italy) and Niels Bohr (Denmark) put the United States in the forefront of physics. Poland contributed a slew of important mathematicians like Salomon Bochner, Richard Courant, Alfred Tarski, Stan Ulam and Antoni Zygmund. Vitamin C discoverer Albert Szent-Gorgyi (Hungary), Hendrik Dam (Denmark), Felix Bloch (Switzerland) and Severo Ochoa (Spain) contributed their formidable talents to biology. Joseph Schumpeter, Ludwig von Mises and Friedrich Hayek, all from Austria, ranked among the world's premier economists. "The greatest role of the European-born scientists," explained University of Chicago biochemist Herbert Anker, "was to change the American concept of science -- it used to mean invention."

Immigrant historians like Hans Kohn (Czechoslovakia), Oscar Jaszi (Hungary), Franz Neumann (Poland), Hannah Arendt (Germany), Karl Wittfogel (Germany), Hans Rothfels (Germany) and Hajo Holborn (Germany) have had widespread influence. One of Holborn's students, Leonard Krieger, observed: "These European scholars not only disseminated an intimate knowledge of the European heritage to American students in unprecedented numbers but they themselves represented a selection from European scholarship based on the awareness, drawn from the circumstances of their own careers, of the actual relationships that linked the various activities of man."

The American experience has been revealing for the immigrant historians as well. Holborn: "My transformation into an American has given me a broader perspective of all things German. Many political or intellectual issues over which Germans like to feud lose their significance if looked at from a distance. Even more important was my growing inclination to evaluate historical phenomena on a comparative level. Seen in this light many events and ideas of German history assume, I believe, proper proportions." Holborn's daughter, Hannah Holborn Gray, became President of the University of Chicago.[7]

In recent years, entrepreneurs have immigrated from the Third World and developed trade which helps expand practical knowledge back home. For example, the Indian entrepreneur Sudha Pennathur. After working as a designer with Levi Strauss, she established her own design firm to adapt Indian patterns for the American market. In India she retains craftsmen for $500 to $1,000 a month -- 5 to 10 times more than what many would otherwise earn -- and they gain an understanding of what American consumers want. "At first I encountered resistance from many artisans, Pennathur explains. "They were simply unfamiliar with meeting Western-style deadlines, or they couldn't understand why I chose a color that wasn't used traditionally. Often Indian artisans think that the more detail on a piece of jewelry, the more beautiful. And so the piece is sometimes overdone -- and unsalable in the West. I always say to my artisan, 'Trust my judgment.' We haven't gone wrong yet.'"

Meanwhile, immigration is helping to reinvigorate the West. Immigrants, especially Asians, account for half the graduate students in mathematics, science, technology and medicine at many American universities. Some Americans fear this open door policy is giving away knowledge which foreigners will use to compete against us, but a survey by the National Science Foundation revealed that nearly 60% of these foreign graduate students want to stay here. This is partially because there are more opportunities to use their knowledge than in their home country. In addition, many people prefer the lifestyle choices available in the U.S. The substantial number who do stay help make up for the declining number of Americans in these vital fields. Students who return home hopefully help spread good will which contributes to peace. In any case, thee students help develop new knowledge. Hannah H. Gray, President of the University of Chicago and Chairwoman of the Association of American Universities, is among those insisting that "The growth of knowledge is a good in itself."

Capitalist America remains the mecca for science and technology. In a survey by Nature magazine, 11 out of 13 scientists who originated a line of inquiry are Americans. Of the 1,000 most frequently-cited scientists in English, 700 are Americans. Many scientists hope to capitalize on their knowledge, and despite disincentives created by the 1986 tax law, America remains the premier center for new ventures in biotechnology, computer software and other fields.

Knowledge from foreign investment. Openness to foreign investment has enabled Americans to gain valuable know-how from abroad. A recent example was the joint-venture between Toyota and General Motors -- New United Motor Manufacturing Inc. (NUMMI). During the early 1980s, General Motors lost substantial market share as more American consumers chose reliable, fuel-efficient Japanese cars. Desperate, General Motors agreed to a joint venture in Fremont, California. General Motors would contribute its worst plant, shuttered in 1982. Worker absenteeism was over 20%. There were a thousand grievances filed with the National Labor Relations Board. The property was littered with beer bottles. The quality of the cars was terrible.

For its part, Toyota would contribute capital and management know-how -- it would operate the plant. Toyota hired 2,500 workers, about 30% of whom had been with the plant when General Motors ran it. Workers understood that to keep their jobs, they must produce quality cars. Toyota provided thorough training. Managers had open offices, in the middle of a floor, so they were easily accessible. Work rules were simplified.

Result? Absenteeism was 0.5%. There were less than 20 worker grievances. The plant manufactured the Chevrolet Nova, probably the highest quality General Motors car. For quite a while, arrogant General Motors managers refused to believe what was happening. They thought it was an aberration. But eventually they realized they could learn something from the Japanese. Fremont became a model which showed General Motors managers first-hand how to give customers a quality product.

Joint ventures proliferated world-wide, because they're often an effective way for companies to expand their knowledge. One party commonly offers knowledge about its market, while the other party offers knowledge of an attractive new technology. Among joint ventures formed in recent years are those involving Texas Instruments (U.S.) and Kobe Steel (Japan), Texas Instruments (U.S.) and Hitachi (Japan), Corning (U.S.) and Ciba‑Geigy (Switzerland), Volvo (Sweden) and Renault (France), Motorola (U.S.) and Toshiba (Japan), AT&T (U.S.) and Mitsubishi (Japan), Daimler‑Benz (Germany) and Mitsubishi (Japan), General Electric (U.S.) and Snecma (France), IBM (U.S.) and Siemens (Germany).

An elevator might not seem like a complicated system, but Otis' super-efficient Elevonic 411 was the result of knowledge gained in five countries. Motor drives were designed in Japan. Door systems, in France. Small-geared components, in Spain. Electronics, in Germany. Otis' researchers in the United States handled system integration. This international effort helped cut research cost by $10 million and cut development time 50% to two years.

The advancement of knowledge, as these examples, make clear, doesn't depend on government funding. Powerful market incentives drive individuals as well as companies to expand their knowledge continuously, and in the process enrich our civilization.

[1] Shepard B. Clough, The Rise and Fall of Civilization (Westport, CT: Greenwood Press, 1978), p. 41.

[2] Frank J. Swetz, Capitalism & Arithmetic (La Salle, Illinois: Open Court, 1987), pp. 13-26

[3] See Jean‑Baptiste Tavernier, Travels in India (New Delhi: Oriental Books Reprint Corporation,1977).

[4] Graham Storey, Reuters' Century, 1851-1951 (London: Max Parrish, 1951), pp. 1-31.

[5] Horace Sutton, Travelers, the American Tourist from Stagecoach to Space Shuttle (New York: William Morrow and Company, 1980), pp. 95-96.

[6] See Travel Management (Thomas Cook).

[7] Material on European immigrants drawn largely from Laura Fermi, Illustrious Immigrants, the Intellectual Migration from Europe 1930‑41 (Chicago: University of Chicago Press, 1971).

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