Paul Israel

Excerpted as "Invention and Corporate Strategies" in Gary Kornblith, ed., The Industrial Revolution in America (1998)

Invention and inventors could be a threat to the large and powerful corporations which emerged in late 19th C. Setting up its own R & D staff, Paul Israel shows how Western Union sought to control inventiveness by underwriting the work of inventors and securing patent rights. This allowed Western Union to achieve a near monopoly of the telegraph business.

At Western Union, William Orton "came to believe that the best way to improve his company's competitive position would be to increase the volume of business with a minimal additional expense." (p. 151) Initially, Orton waited for inventors to come up with improvements, then he incorporated them into the Western Union system. It was with the successful sponsorship of Joseph B. Stearns' duplexing technology, which nearly doubled the capacity of the company's wire, that Orton became convinced of the importance of sponsoring inventors to produce improvements. Most importantly, Orton went about patenting Stearns' improvement and even retained Thomas Edison to invent as many duplexing techniques as possible for the purpose of patenting them and protecting them from the competition. It was the experience of loosing out in the patent competition for rights to the quadruplex telegraph (to Jay Gould's Atlantic and Pacific Telegraph) and the telephone (to Western Electric), however, that convinced Orton to retain the services of Thomas Edison's Menlo Park Laboratory on a regular basis. Many other companies would follow in Orton's footsteps in retaining corporate inventors to improve their products and at the same time to secure patent rights to protect themselves from the competition. Invention as corporate strategy was part of the general move in the later 19th C toward large-scale bureaucratic corporations.… (mehr)