How We Got Here

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  • Format: Paperback
  • Copyright: 4/26/2010
  • Publisher: HarperCollins Publications

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Best-selling author Andy Kessler ties up the loose ends from his provocative book, Running Money , with this history of breakthrough technology and the markets that funded them.Expanding on themes first raised in his tour de force, Running Money , Andy Kessler unpacks the entire history of Silicon Valley and Wall Street, from the Industrial Revolution to computers, communications, money, gold and stock markets. These stories cut (by an unscrupulous editor) from the original manuscript were intended as a primer on the ways in which new technologies develop from unprofitable curiosities to essential investments. Indeed, How We Got Here is the book Kessler wishes someone had handed him on his first day as a freshman engineering student at Cornell or on the day he started on Wall Street. This book connects the dots through history to how we got to where we are today.

Author Biography

Andy Kessler is a former hedge fund manager and Wall Street analyst

Table of Contents

Foreword vii
Logic and Memory 1(8)
Cannons to Steam
Positively Electric
Transportation Elasticity, Sea and Rail
Funding British Trade
Capital Markets and Bubbles
Fool's Gold
Power Generation
Ballistics, Codes and Bombs
Transistors and Integrated Circuits Provide Scale
Software and Networks
Modern Gold
The Business of Wall Street
The Modern Stock Market
ENIAC Press Release 243(4)
Bibliography 247(2)
Index 249


How We Got Here
A Slightly Irreverent History of Technology and Markets

Chapter One

Cannons to Steam

All it took was a little sunshine.

In 1720, the weather improved in Britain. No reason. The Farmer's Almanac predicted it. Crop yields went up, people were better fed and healthy. The plague, which had ravaged Western Europe, ended. Perversely, a surplus of agriculture meant prices dropped, and many farmers (of crops, not taxes) had to find something else to do.

Fortunately, there was a small but growing iron industry. Until the 1700s, metals like tin and copper and brass were used, but you couldn't make machines out of them, they were too malleable or brittle. Machines were made out of the only durable material, wood. Of course, wood was only relatively durable; wheels or gears made out of wood wore out quickly.

Iron would work. But natural iron didn't exist; it was stuck in between bits and pieces of rock in iron ore. A rudimentary process known as smelting had been used since the second half of the 15th century to get the iron out of the ore. No rocket science here, you heated it up until the iron melted, then you poured it out. Of course, heating up iron ore until the iron melts requires a pretty hot oven and to fuel it, a lot of charcoal, the same stuff you have trouble lighting at Sunday BBQ's. Charcoal is nothing more than half burnt wood but, as we all know, if you blow on lit charcoal it glows and gives off heat. So the other element needed to create iron is a bellows, basically, like your Uncle Ira, a giant windbag. Medieval uncles got tired really quickly cranking the bellows, so a simple machine, basically a waterwheel, was devised to crank the bellows, powered by running water. Hence, early ironworks were always next to rivers. This posed two problems, the iron ore came from mines far away, and after a day or two, the forest started disappearing around the mill and the wood needed for charcoal came from further and further away. It is unclear if ironworks sold their own stuff or if middlemen were involved. This raises the age-old question whether he who smelt it, well never mind.

Meanwhile, the iron you would get out of the smelter was terrible, about the consistency of peanut brittle; the sulfur content was high, because sulfur is in most organic material, especially trees, and the sulfur from the charcoal blended with the iron ore. It seems that wood refused to play a part in its own obsolescence for machine parts.

This pig iron, and lots of it, was used for cannons and stoves and things, but it couldn't be used for screws or ploughs or a simple tool like a hammer, which would crumble after its first whack.

Iron makers evolved their process, and added a forging step. If you hammered the crap out of pig iron, reheated it, and hammered it again, you would strengthen it each time until you ended up with a strong substance aptly named wrought iron. Besides gates and fences, wrought iron worked reasonably well for swords and nails and screws. But to create decent wrought iron, you really had to get the brittle out of the pig iron.

In 1710, Abraham Darby invented a new smelting process using coke, basically purified coal, instead of charcoal. The resulting pig iron was better, but not perfect. His son, Abraham Darby II improved on his dad's process and by mid-century, was oinking out pig iron usable for wrought iron, but only in small quantities. Unfortunately, like iron ore, coal was far away from the river-residing ironworks, so roads were built (sometimes with wood logs) and wagons brought coke to the river works. No surprise then that many ironworks moved to be near the coke fields. In 1779 Darby III would build the famous Ironbridge over the river Severn to transport materials with the iron supplied by the process his father and grandfather had developed. Heck of a family.

Demand for iron ore and coke took off and mining became a big business. One minor problem though, mines were often below the waterline and flooded constantly. This cut down on dust but too many miners drowned, hence the huge demand for something to pump out that water. The answer was a steam engine.

The concept of an engine run by steam had been around since the ancient Egyptians. It is not hard to image someone sitting around watching a pot of water boil and remarking that the steam coming off expands, and thinking, "Gee, if I could just capture that steam, maybe it would lift that big rock to the top of that pyramid." In fact, an Egyptian scientist named Hero living in Alexandria in 200 BC wrote a paper titled "Spiritalia seu Pneumatica," which included a sketch of steam from a boiling cauldron used to open a temple door. It looked like a failed seventh grade science fair project.

Not quite a couple of thousand years later, steam projects started boiling up again . . .

How We Got Here
A Slightly Irreverent History of Technology and Markets
. Copyright © by Andy Kessler. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

Excerpted from How We Got Here: A Slightly Irreverent History of Technology and Markets by Andy Kessler
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

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