The Wright Brothers and Patents on This Day in History

 

Today in History: The Wright brothers make the 1st sustained motorized aircraft flight at 10:35 AM on this day in 1903 at Kitty Hawk, North Carolina. But how much of what the Wright Brothers did led to the first airplane? 

"It is because of patent-based historiography that people believe that the Wright Brothers invented the airplane, when in fact they made only a tiny contribution of combining wing warping with a rudder. It was Sir George Cayley in Britain and Otto Lilienthal of Germany who did the bulk of the work of inventing the airplane. But it was the Wright Brothers who applied for the patent and quickly used it against Glenn Curtiss who improved wing warping with movable control surfaces." Jeffrey Tucker

The Wright brothers were so litigious with their patent that it stifled plane innovation in America. During this time the French picked up the slack and airplane technology advanced under them. In fact, when the USA entered World War 1 they had to use French planes. Many have since argued against intellectual property rights as they tend to harm new technology, economic activity, and societal wealth.

In 1851, The Economist wrote: “The granting [of] patents ‘inflames cupidity’, excites fraud, stimulates men to run after schemes that may enable them to levy a tax on the public, begets disputes and quarrels betwixt inventors, provokes endless lawsuits . . . The principle of the law from which such consequences flow cannot be just.”

Henry V. Poor and the S&P 500 on This Day in History

 

Today in History: Henry Varnum Poor was born on this day in 1812. Poor was a financial analyst and founder of H.V. and H.W. Poor Co, which later became the financial research and analysis bellwether, Standard & Poor's, or if you will, the S&P 500. The S&P 500 is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. The 10 largest companies in the index are Apple, Microsoft, Amazon, Facebook, Alphabet(class A & C), Berkshire Hathaway, Johnson & Johnson, JPMorgan Chase and Visa Inc. The components that have increased their dividends in 25 consecutive years are known as the S&P 500 Dividend Aristocrats. It was only recently that AT&T, General Electric and ExxonMobil were in that top 10.

Tesla's stock will be added to the S&P 500 later this month. To be eligible for S&P 500 index inclusion, a company should be a U.S. company, have a market capitalization of at least USD 8.2 billion, the public float must consist of at least 50% of outstanding shares. It must have positive reported earnings in the most recent quarter, as well as over the four most recent quarters and the stock must have an active market and must trade for a reasonable share price.

State Licensing on This Day in History

Today in History: London becomes the world's first city to host licensed taxicabs on this day in 1897. This makes you think: what is a license, really? "What does a business license accomplish? Well, I guess it proves that you're seriously in business, although in most cities you can't be in business without one. So it's outright extortion, like property taxes, going to fund city government services that you didn't want anyway. Police? Well, maybe you do want police protection of your property, but police won't go near a riot and they're always too busy elsewhere, so you'll have to pay extra to hire your own." Robert Klassen

Why do you have a license on your car when the manufacturer has already placed a number on your car? This is so the government can track you, and they also want the fee a license costs. "The fee, of course, goes to support a state bureaucracy consisting of bored and indifferent individuals who are only working there for the wages and benefits and who couldn't care less about their career, if you can call it that." ibid

According to a 2015 White House report, "By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars...Consumers are likely most familiar with licensing requirements for professionals like dentists, lawyers, and physicians, but today licensing requirements extend to a very broad set of workers," including auctioneers, scrap metal recyclers, barbers, manicurists, eyebrow threaders, and tour guides. This means that an ever-growing share of jobs "are only accessible to those with the time and means to complete what are often lengthy"—not to mention expensive—licensing requirements, while the penalties for working without a license can include job loss, fines, and even incarceration.

Perhaps we need to be more like cats. You have to license your dog, but not your cat. Cats refuse to be licensed. They are too independent, stubborn, stuck-up and disobedient.

 

Legendary Stock Operator Jesse Livermore on This Day in History

 

Today in History: Legendary American stock trader Jesse Livermore died on this day in 1940. He is considered a pioneer of day trading and was the basis for the main character of Reminiscences of a Stock Operator, a best-selling book by Edwin Lefèvre. At one time, he was one of the richest people in the world. 

In a time when accurate financial statements were rarely published, getting current stock quotes required a large operation, and market manipulation was rampant, Livermore used what is now known as technical analysis as the basis for his trades. His principles, including the effects of emotion on trading, continue to be studied.

Some of Livermore's trades, such as taking short positions before the 1906 San Francisco earthquake and just before the Wall Street Crash of 1929, are legendary and have led to his being regarded as the greatest trader who ever lived.

He learned to read and write by the time he was 3 and a half. By the time he was 5, he was reading newspapers and devouring the financial pages.

He died by suicide. He shot himself with an Automatic Colt Pistol. Interestingly, his son and grandson would go on to kill themselves as well.

Andrew Carnegie on This Day in History

 
Andrew Carnegie: Robber Baron or Hero of Capitalism?

Today in History: The original man of steel, Andrew Carnegie, was born on this day in 1835. Carnegie led the expansion of the American steel industry in the late 19th century and became one of the richest Americans in history. He did now, not by gouging and screwing his customers, but by making his product more easily accessible. For instance, Carnegie almost single-handedly reduced the price of steel rails from $160 per ton in 1875 to $17 per ton nearly a quarter century later. 

Andrew Carnegie had an interesting philosophy when it came to wealth. "Carnegie spoke of the millionaire’s duty to live a 'modest' lifestyle, shunning extravagant living and administering his wealth for the benefit of the community. To do otherwise, he warned, would encourage an age of envy and invite socialistic legislation attacking the rich through progressive taxation and other onerous anti-business regulations. Carnegie practiced what he preached, giving away over $350 million in his lifetime. One of his first acts after U.S. Steel went public was to put $5 million into a pension and benefit plan for his workers...he spent millions building 2,811 public libraries, donating 7,689 organs to churches, and establishing Carnegie Hall in New York and the Carnegie Institution in Washington. He financed technical training at the Carnegie Institute of Technology and established a pension fund for teachers through the Carnegie Foundation for the Advancement of Teaching." Mark Skousen

Carnegie's dictum was (1) To spend the first third of one's life getting all the education one can. (2) To spend the next third making all the money one can. (3) To spend the last third giving it all away for worthwhile causes.

See also: Capitalism in America - 100 Books on DVDrom (Captains of Industry)

Alan Freed and the Payola "Scandal" on This day in History

 
Dick Clark Discusses Payola

Today in History: American disc jockey Alan Freed, who had popularized the term "rock and roll" and music of that style, was fired from WABC-AM radio over allegations he had participated in the payola scandal on this day in 1959. Payola occurs when a disc jockey is paid by record companies or music publishers to play certain recordings, and for some reason this is considered scandalous. Payola is one of those things like insider trading, gambling and the college admissions scandal that really shouldn't be illegal. A play on radio is effectively a commercial for that music or musician. And paying for commercials is, quite obviously, fairly common. Is it really so outlandish that some in the industry want to "buy" spots? Payola actually helped a lot of new artists get airplay. Without payola, we would never have heard of Chuck Berry. 

Payola also has a long history. "The first documented instances of payola date from England in the 1860s. The publishers of sheet music paid vaudeville artists to sing and popularize their songs. Payment of these fees was a normal marketing procedure for publishers and a significant source of income for performers; payola occasioned no political scandal. Prior to the payola scandals, payola had been an accepted and legal business practice used to promote new products for many decades. In the case of rhythm and blues, the independents lacked the reputations and marketing power to place their artists through name alone, and were forced to rely on payola." Tyler Cowen

The Mayflower CommunistPact on This Day in History

Today in History: The Mayflower Compact was signed in what is now Provincetown Harbor near Cape Cod on this day in 1620. The words in this contract that stand out to me the most was "the general Good of the Colony." As William D. Guthrie wrote in 1918:

The history of the Plymouth colony from 1620 until its absorption by the colony of Massachusetts in 1691 teaches us many lessons in political philosophy. There [is one] which I desire to recall to you: One as to the right to private property...The Pilgrims began government under the Mayflower Compact with a system of communism or common property. The experiment almost wrecked the colony. As early as 1623, they had to discard it and restore the old law of individual property with its inducement and incentive to personal effort. All who now urge communism in one form or another, often in disguise, might profitably study the experience of Plymouth, which followed a similarly unfortunate and disastrous experiment in Virginia. History often teaches men in vain. Governor Bradford's account of this early experiment in communism in his annals of “Plimoth Plantation” is extremely interesting. The book is rich in political principles, as true to-day as they were three hundred years ago. After showing that the communal system was a complete failure, and that as soon as it was abandoned and a parcel of land was assigned to each family, those who had previously refused to work became “very industrious,” even the women going “willingly into ye feild,” taking “their litle ons with them to set corne, which before would aledg weaknes, and inabilitie,” Bradford proceeds as follows: “The experience that was had in this comone course and condition, tried sundrie years, and that amongst godly and sober men, may well evince the vanitie of that conceite of Platos & other ancients, applauded by some of later times, —that ye taking away of propertie, and bringing in comunitie into a comone wealth, would make them happy and florishing; as if they were wiser then God. For this comunitie (so farr as it was) was found to breed much confusion & discontent, and retard much imploymet that would have been to their benefite and comforte. For ye yong-men that were most able and fitte for labour & service did repine that they should spend their time & strength to worke for other men's wives and children, without any recompence. The strong, or man of parts, had no more in devission of victails & cloaths then he that was weake and not able to doe a quarter ye other could; this was thought injuestice. The aged and graver men to be ranked and equalised in labours, and victails, cloaths, &c., with ye meaner & yonger sorte, thought it some indignite & disrespect unto them. Let none objecte, this is men's corruption, and nothing to ye course it selfe. I answer, seeing all men have this corruption in them, God in his wisdome saw another course fiter for them.”

Buy my book: The Folly of Socialism (40 Chapters) for 99 cents on Amazon

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See also The Early Pilgrims and the Failure of Socialism by William Starr Myers 1919 and Our First Thanksgiving (and America's 1st Experiment in Communism)