Electricity Versus Steam Power

I heard this great story from a Lawrence Summers talk in the past that I can’t find online — it was about the disruptive force of electricity in a time when steam power was the norm in the industrialized world of the 1800s.

This is the closest referenced I could find via the BBC:

But given the huge investment [adopting electrical motor power from central distribution points of electricity versus local steam engine power in factories that proved to work fine] involved, they were often disappointed with the savings. Until about 1910, plenty of entrepreneurs looked at the new electrical drive system and opted for good old-fashioned steam.

Why? Because to take advantage of electricity, factory owners had to think in a very different way. They could, of course, use an electric motor in the same way as they used steam engines. It would slot right into their old systems.

But electric motors could do much more. Electricity allowed power to be delivered exactly where and when it was needed.

Small steam engines were hopelessly inefficient but small electric motors worked just fine. So a factory could contain several smaller motors, each driving a small drive shaft.

It’s interesting to consider the before and after of the steam engine versus electricty:

Old factories were dark and dense, packed around the shafts. New factories could spread out, with wings and windows allowing natural light and air.

In the old factories, the steam engine set the pace. In the new factories, workers could do so.

Factories could be cleaner and safer – and more efficient, because machines needed to run only when they were being used.

But you couldn’t get these results simply by ripping out the steam engine and replacing it with an electric motor. You needed to change everything: the architecture and the production process.

And because workers had more autonomy and flexibility, you even had to change the way they were recruited, trained and paid.

Factory owners hesitated, for understandable reasons.

Of course they didn’t want to scrap their existing capital. But maybe, too, they simply struggled to think through the implications of a world where everything needed to adapt to the new technology.

In the end, change happened. It was unavoidable.

Mains electricity became cheaper and more reliable. American workers become more expensive thanks to a series of new laws that limited immigration from a war-torn Europe.

I found these slides from Professor Moyer at Chicago quite relevant.