Money - The Author of All History
Great Entrepreneurs the Authors of all HistoryELI WHITNEY 1765 – 1825
Failure a word feared by all men and women. Failure they say is an orphan. There’s nothing quite as demoralizing and shameful as owning up to being the father or mother of this child. When failure has been declared absolutely everyone associated seeks to distance themselves from it. But the amazing thing is that all those nominated to be included in this book were all failures. Failure is something we’ve all had to come to terms with. Whether it’s relationships, sport, exams or business we have all had to endure it. The disturbing fact is that the greatest men and women have suffered the greatest failures. Take Abraham Lincoln for example winning the election to become president of America was one of his very few victories. To be matriculated into the hall of fame you need to fail. It was once said our greatest glory is not in never falling, but in rising every time we fall. Eli Whitney is one such failure. He was born in Westboro, Massachusetts. He displayed a passion for tools almost as soon as he could walk. He made a violin at the age of twelve and about the same time took his father's watch to pieces on the quiet and put it together again so successfully he father hadn’t a clue. As the war of independence raged around him he sold hand made nails to the neighbours. Young Eli knocked about as a rural teacher. He wasn’t the sharpest tool in the box at school but he decided he wanted to attend college. Eli needed to finance his way through college. He attended Yale and the cost where high. Eli Whitney was able to help fund college by utilising his skill with his hands.
Upon graduation from Yale Eli Whitney needed money to repay his father and time to prepare for the bar exam to become a lawyer. A tutoring position was found for him in the South, but it never materialized. Instead, he found himself at Mulberry Grove, a plantation near Savannah, Georgia, owned by Catherine Greene, the widow of General Nathanael Greene and managed by Phineas Miller, later to become his partner. He was a Yale graduate and former tutor of the Greene children. Eli heard discussion dealing with the problem of separating seeds from the cotton a process called ginning. Eli came to an arrangement with Miller agreeing to split the profits in the event of coming up with a winner. Eli struggled between teaching and creating the machine. It meant sacrificing at least 50% of his income. Whitney came up with a model. He was offered 100 Guineas for the it. He turned it down. He stepped up the pace leaving the school and dedicating himself to perfecting his idea. He continued to improve the idea one having the ability to do 10 times the average man another fifty times. All the machines were to use either water, horse and man as a source of power. Soon Eli Whitney was off to the capital Philadelphia to learn how obtain protection for his idea in the form of a patent. Eli told to keep things hush-hush and if someone offered him right now $10,000, cash, no messy around, the design he’d turn it down. It was in 1793 Eli Whitney designed and constructed the cotton gin that easily separated cottonseed from the short-staple cotton fibre. His cotton gin was capable of maintaining a daily output of 23 kg (50 lb) of cleaned cotton and its effect was far-reaching, making southern
cotton a profitable crop for the first time. His cotton engine consisted of spiked teeth mounted on a boxed revolving cylinder which, when turned by a crank, pulled the cotton fibre through small slotted openings so as to separate the seeds from the lint. Simultaneously a rotating brush, operated via a belt and pulleys, removed the fibrous lint from the projecting spikes. Now, a worker could clean fifty times more cotton than before. Eli thought he had the whole thing on the quiet. But as soon as hostess, Mrs. Greene, had shown the machine to some friends, it was like putting it no on News at 10. Before Eli Whitney could obtain his patent, cotton gins based on his were being manufactured and used. He got his patent in 1794. Eli and partners decided to manufacture the machines in New Haven, Whitney putting in the leg work and would Miller put in the capital and deal with the firm's southern interests. Like most entrepreneurs the partners suffered from delusions of grandeur. They planned to own all gins and let them on a sort lease basis. They also planned to do some seed cleaning of their own. They envisioned a monopoly over the cotton industry and a self induced industrial revolution. Eli and the boys thought punters would sit by using an old system whilst others around them used a machine they could knock up it a couple of days. Only problem fracturing patent laws. In 1795 Eli Whitney's workshop burns down containing inventory to produce 20 machines. It is a major setback. If that wasn’t enough the partners were hard-up for cash. Then word came from England that the Manchester spinners had found the ginned cotton to contain knots, and this was sufficient to start the rumour throughout the South that Eli Whitney's gin injured the cotton fibre and that cotton cleaned by them was worthless. After US the workshop went up in smoke, Whitney, utilising his experience of watching clock makers, he knew that if the gears were identical you could inter-change them or exchange them and with the proper machines, the parts could be made faster. It was two years before this ghost was laid. Meanwhile Whitney's patent was being infringed left right and centre. Eli Whitney’s invention was able to satisfy the great demand brought about by Boulton and Arkwright improvements in efficiency. He provided the Southern states with great prosperity, but the farmers were as tight with money as a Camel’s arse in a sand storm. They simply replicated the easily copied the machine and put Whitney ’s company out of business. 1797. Miller and Eli Whitney brought suits against the copycats but they were flogging a dead horse.
Eli Whitney, close to being a bankrupt saw an opportunity to apply his idea of using identical interchangeable and exchangeable parts to the gun. America was flexing its muscle on the international stage squaring up to all comers and needed guns. The government had to let private contractors help meet the demand. The near bankrupt Whitney saw an opportunity to apply his idea of using identical He was after a secure government contract, to produce firearms, which he got. He demonstrated that machine tools, manned by workers who did not need the highly specialized craft skills of gunsmiths, could produce standardized parts to exact specifications and that any part could be used as a component of any musket.. On June 14, he signed to produce 10,000 muskets to be delivered within 28 months at the cost of $134,000.00. But this time Eli was a seasoned pro and no longer a novice. He smoothly acquired up front cash. An advancement of $5,000 upon the signing of the agreement, another $5,000 upon his preparation to manufacture and then payment of $500 for each 1000 guns when delivered. Gone was the youthful exuberance of design and manufacture business is an art in itself. And Eli was becoming a
artist. This money, along with $10,000 put up by ten New Haven backers, assuring him of operating capital, which caused him so many problems whilst manufacturing the cotton gin. Despite this two years passed without the delivery of a single musket. Despite Eli Whitney moving heaven and Earth, the original schedule proved to be pie in the sky. By January, he needed more money and an extension on his contract. Going to capitol Washington, he demonstrated to President Adams and the military that his system of uniform parts worked. With the election of Thomas Jefferson as President, further problems with extensions or advancements were solved. Thomas Jefferson, discussed Honoré Blanc’s musket manufacturing methods with Eli Whitney eight months before the first delivery of muskets to the government In May 1799 his new main factory building was completed. Its strategic position had the advantage of the river to drive the machines. Finally in September, the muskets were delivered, making 500 pistols for the government by using machines and a division of labour just 20 miles away in Middletown. The parts were so well made that little or no filing was needed at time of final assembly. His son, Selah, invented a filing jig, matching concave moulds that held the piece that forced the men to follow the contours of the jig in filling the piece to be shaped.
They say the harder you work the luckier you get. It has also been found that people who make small adjustments to their method of operating produce good luck. In 1801Miller and Eli Whitney’s good luck was continuing. Eli sued for compensation relating to his invention and got a pitiful return. Not worth the effort. However, in 1801, South Carolina purchases patent rights for $50,000 from Eli Whitney. The deal was $20,000 to be paid down and the remainder in
three annual payments of $10,000 each. Eli Whitney states in a letter "We get but a song for it...in comparison with the worth of the thing, but it is securing something." Every penny paid by Carolina had to be dragged kicking and screaming out of their coffers. In 1805 Whitney fights with the state of South Carolina for their money. South Carolina suspended the contract, after paying $20,000 and sued Eli Whitney and his partner Phineas Miller for recovery of the sum paid, on the grounds that the partners had not complied with the conditions. Eli Whitney and Miller defeated the state Legislature and had them reinstate the contract and pay him the remainder of the money. Miller died a discouraged and broken man because of this experience. In 1807 Eli Whitney emerges triumphant in his battle over ownership of the cotton gin design. It took 60 lawsuits to finally establish him as the inventor of the cotton gin and collect $90,000 from the suits. However, the time and money spent on the suits meant little profit on the invention. Nevertheless it was money in the bag. The last of the agreed 10,000 guns were delivered in January 1809, ten years after Eli Whitney first contract was drawn, at a profit to Whitney of $2,500. In 1812 Eli Whitney’s ships arrives in the form of war. The fledgling U.S.A declares war on Britain over British interference with American maritime shipping and westward expansion. Whitney6 accumulated a fortune. He married Henrietta Edwards aged 51. A few years later they had a son Eli Whitney II. Eli Whitney, in his last years was troubled by poor health. He died on January 8 1825. “Inventor and innovator, he invented an office desk in which all the drawers were locked by a single key using one lock. He learned as he grew as an entrepreneur exemplified by getting the government to help him produce and then buy the guns. He also kept the milling machine closely guarded secret after his cotton gin idea got stolen.” He kept improving, as did his designs. He failed to protect his designs well enough and failed to come up with a realistic business model. But he succeeded to learn from his failure and. He utilised the failure of the cotton gin and succeeded in using part of its process to produce a product that was on time a in demand the gun.
Great Entrepreneurs the Authors of all History I: John Law and the Mississippi Bubblehttp://www.youtube.com/watch?v=y_wi3pBgnPc
Causing a Revolution
...One investor, who had been slighted by Law in an investment opportunity, tried to create a stampede by withdrawing such a quantity of cash that it took three wagons to deliver the money to its owner. Some clever stock jobbers slowly and methodically traded in their paper for bullion coins of gold and silver. The shrewd understood the fragile nature of the financial bubble Law had created and knew it had to burst sometime. As a result, Law’s meteoric rise was short-lived. A run on the bank plunged France, and the rest of Europe, into a severe economic crisis. It has been argued that shockwaves from the collapse ultimately triggered the French Revolution...
Extract from 'The History of the World's Greatest Entrepreneurs'
Great Entrepreneurs the Authors of all History II: John Jacob Astorhttp://www.youtube.com/watch?v=JHI0xGOM1so
The following year John Jacob Astor bought five times the inventory he had previously acquired. He then joined forces with a Canadian establishment called the Northwest Company, just after founding the Southwest Company. Each party held a 50 percent share in the other. The coalition required both entities to operate strictly within the confines of their respective geographic areas. Astor would try to extend his ‘hunting territory’ by snatching as much area as he could get his hands on, which often meant getting into a competitor’s patch. When a law preventing Canadians from involvement in the American fur trade was introduced, Astor jumped at the opportunity to make his partners an offer they couldn’t refuse. His partners had their hands tied and Astor landed himself the whole concern at a bargain price.
Extract from 'The History of the World's Greatest Entrepreneurs'
Great Entrepreneurs the Authors of all History III: Samuel Colt and How the West was Wonhttp://www.youtube.com/watch?v=hX04BoBIy3s
The entrepreneur was down but not out. He formed an association with the inventor of the telegraph, Samuel F. B. Morse, and tried to get the government to buy into a new invention. The pair began marketing waterproof ammunition; underwater mines for harbour defence. Success was limited. Colt began promoting the telegraph companies, widening the market for his waterproof telegraph cable. He made $50 (£20) per mile.
The US annexed Texas in 1845, precipitating the Mexican-American War. Units of the US Dragoon forces and Texas Rangers were engaged in fighting horse-mounted Apache, Comanche, and Cherokee in Texas. War meant a change of fortune for Colt. The natives, armed with bows and arrows, could shoot a batch of arrows faster than their European invaders could shoot a batch of bullets.
By the end of the campaign the US soldiers were celebrating ‘the Colt’ as being largely responsible for their success in defeating native forces in the competition for land – and indeed for their very existence in America. The US soldiers could now reload as fast as the Native warriors. From 1831 to 1838, Cherokee, Choctaw, Creek and other South-Eastern nations were removed to the so-called Indian Territory, now Oklahoma, on the Trail of Tears. An estimated 100,000 people were moved West, driven out by the revolver.
Extract from ‘The History of the World’s Greatest Entrepreneurs’