Midwestern populism caused a ripple effect that extended to open technology transfers and exchanges between Ford Motor Company and both Soviet and Nazi specialists. Rob and Jackie sat down with Stefan Link, Associate Professor of History at Dartmouth University, to discuss Henry Ford and his “open door policy” regarding methods and engineering.
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Midwestern populism caused a ripple effect that extended to open technology transfers and exchanges between Ford Motor Company and both Soviet and Nazi specialists. Rob and Jackie sat down with Stefan Link, Associate Professor of History at Dartmouth University, to discuss Henry Ford and his “open door policy” regarding methods and engineering.
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Rob Atkinson: Welcome to Innovation Files. I'm Rob Atkinson, founder and President of the Information Technology and Innovation Foundation. We're a DC-based think tank that works on technology policy.
Jackie Whisman: And I'm Jackie Whisman. I head development at ITIF, which I'm proud to say is the world's top ranked think tank for science and technology policy.
Rob Atkinson: This podcast is about the kinds of issues we cover at ITIF and the broad economics of innovation with specific policy and regulatory questions about new technologies. And today, I'm going to invoke another historian, Santayana, who said, “Those who forget history are condemned to repeat it.” I think it's close enough. And today, we're going to talk about history and particularly the history of how the automobile industry of U.S. leadership spilled over to other countries in the '30s and '40s, in particular to the Soviets and the Nazis. You can say, “Well, why are we talking about that?” Because there's so many parallels around what's happening today with countries competing for advanced industries, tech transfer all around the world. So I'm really, really excited about our guest today.
Jackie Whisman: Our guest is Stefan Link, Associate Professor of History at Dartmouth University and author of the book, Forging Global Fordism? Nazi Germany, Soviet Russia, and the Contest Over The Industrial Order. The book explores how 20th century industries took shape as activist states confronted America, competed over industrial development and clashed over the terms of globalization. Welcome.
Stefan Link: Thank you for having me. Glad to be on.
Jackie Whisman: Rob is very excited. We have a lot to cover. He loved your book.
Rob Atkinson: So everybody knows I'm a wonk, but I got to tell you, this is a really, really, really good book. It's super interesting. You learn so much. Stefan has just done such a masterful job of really helping me understand what was going on in the '30s from a global economic political challenges, but in particular with mass production technology and how we unwittingly helped both the Soviets and the Nazis to modernize. And that's such an important issue because we're always talking about China and tech transfer. So really looking forward to this interview.
Jackie Whisman: Well, so let's start there. Tell us more about your book. Maybe Rob could do this, but we should ask you to do it, and why you wrote it.
Stefan Link: Yes, absolutely. I mean I came to it through historian's instinct. The connections between the Ford Motor Company and Nazi Germany and Soviet Russia are known to historians. But what I found looking into this was essentially just under-research. There was a bigger story there that required reconstruction, especially setting this on the background of the 1930s coming out of the Depression. So that's how I got to writing about it and it was a great experience. It involved archival research in Detroit, obviously in the Ford Motor Company archives, notably in Germany, in federal archives and the Volkswagen archives and in Russia in the state archives, but also the archives of that mass production plant that was a result of the Soviet Ford cooperation of the 1930s, which is in Nizhny Novgorod, still around today. And that was the fruit of this collaboration. I had the privilege to work in their archives.
Rob Atkinson: So Stefan, one of the things I thought was really interesting, particularly in the world we live in now where companies take trade secrets and intellectual property protection very seriously. There was just this mass of, it was like Detroit became Woodstock. Everybody came there. It wasn't just the Germans and the Russians, but the Japanese auto technicians and executives. The Italians came, you noted they took pictures, they took detailed notes. It was even surprised to hear you talked about the Soviets who set up a commission at Ford Motor Companies. Spent six years there in the 1930s. You also write that Ford stopped enforcing his patents and began offering blueprints to interested parties. This is similar to what we would call today open source, what's going on there? Why was Ford so open? And was Ford really the only one that was sharing knowledge like that?
Stefan Link: Yeah, that was one of the surprising finds of the story I was able to reconstruct there. It's an interesting kind of unlikely historical conjunction. And so the book is about precisely what you said. It is about engineering delegations from around the world. I focus on Soviets and Germans in the 1930s, but were also delegations from Italy and Japan, came to Detroit, came to the burgeoning American automobile industry and at the big three General Motors, Chrysler and Ford. And wanted to, well learn the secret of automotive mass production for two reasons really. Well, first of all, it was the lead sector of the civilian economy at the time. But in the 1930s it was also clear that this is a kind of dual use technology that would be necessary to equip mid 20th century armies with the kind of material that they need to wage large scale wars.
So all this stuff, tanks and airplanes would have to be produced on assembly lines. So there's a clear military and civilian incentive behind these attempts at technology transfer. And now you might ask how is it possible that the automobile industry, the big three, allowed this to happen or were so remarkably open? And in the example of the Ford Motor Company, this goes back to the origin of where the Ford Motor Company came from. It's came from, and this is not as well known or understood as I think it should be. It came out of a particular political tradition of the American Midwest, which is this producer populism. And producer populism in late 19th century. This was essentially a Ford's miler recall that when he founded the Ford Motor Company in 1903 he was already 40 years old. So this is the stuff not late 19th century populism that he imbibed.
And one of the tenets of populism was a kind of view of technology as open source, as a common repertoire of human ingenuity, especially in the automobile industry. This is remarkable and interesting and understandable because the Americans were actually copycat adopters of the technology, of the combustion engine and the first automobile, as you all know, it was developed in France and in Germany and was transmitted to the United States through, well these trade journals. So there are great stories of Henry Ford around in the 1890s reading the Scientific American and using articles from the Scientific American as a basis for him tinkering with his first engine in his shed if you want. So, Ford held a deep conviction about the open source nature of technology, and this was reinforced by a couple of episodes in the early 20th century as patent holders. The so-called Selden patent is turned out to be a species patent over the very technology of the gasoline engine.
Tried to force Ford out of business and he did not obviously take kindly to that. That went through a round of litigation, was eventually decided in Ford's favor and in response, Ford said, We're going to make all our technological advances open source. He didn't use those words, this is our terminology, but essentially a strong stance against patent law. I did this work in practice. Ford Motor Company did take patents out on all in-house innovations, but essentially declined to enforce them and furnished technical information to all comers.
General Motors and Chrysler weren't quite as open, but there was a general culture of technology sharing, which also reflects I think the confidence of the American automobile industry in this period, the 20s and 1930s that they were absolutely leading, that they could give to international learners pupils, what they desire to learn, the idea that they would grow up to compete with the American automobile industry seemed very distant.
A third factor is that in the 1920s and 30s, the United States government itself was not yet concerned that this kind of stuff, technology transfer of cutting edge, mass production technology might constitute a national security threat. Kind of national security thinking about technology transfer is a result of the 1940s. That's the turning point, the World War II and then obviously the incipient Cold War, which is, you don't have Washington raising an eyebrow about this at all in the 1930s that you have a Soviet delegation, which is, well they're essentially for six years sets up shop at the Ford Motor Company in '29. They arrive and have a revolving roster of engineers cycling through the factory. And they are, they're not only there to observe, really the Ford Motor Company engineers help them explicitly to transfer all this technology, and keep them up to date in transferring this technology back to central Russia.
And so this goes on from 1929 to 35 and Washington is completely unconcerned with these kinds of transfers, also with German engineers arriving in these factories a little bit later, 1935, 1937, 1938. It only becomes an issue actually with Japan, the so-called moral embargo, which is not yet kind of legal enforcement mechanism, but at first a gentleman's agreement that American firms should maybe rethink some of their dealings with Japan. This is 1939. It's only with the outbreak of hostilities in Europe and the coming of war that there is a major revision. This obviously is the origins of the national security state, the modern American national security state that we still live with today.
Rob Atkinson: That is fascinating. And one of the points you make in the book is that this sort of American Midwestern populous tradition, it led to that, but it really also led to the US being the leader because they saw cars as mass production. Whereas the Europeans, and certainly a lot of other firms on the east coast, in fact my wife's great grandfather was the founder of the Franklin Automobile Company, which was an air cooled, and it went out of business in the depression, but it was really selling to the upper class, the upper middle class, and that didn't work as a strategy, whereas the Midwesterners where the populists who sold to everybody. So that strategy really worked from a technology and market perspective just didn't work in the last, after 40 years of tech transfer.
Stefan Link: Absolutely true. It's easy to forget that when automobiles first started, they were a play thing for the rich. Regarded pretty much in the same way, maybe as an analogy, the way we think about private jets today, something that is very exclusive and it's also easy to forget and often forgotten that the first automobiles built on the East coast by these, if you want, boutique producers for the upper echelons of the American income stratification, that those were electric vehicles.
And it was one of the innovations of these Midwestern firms to insist on the gasoline engine. And from the perspective of the east kind of gentile perspective, these noisy and smelly engines were actually unfit for the kind of upper niche markets that they envision. Turns out, of course, that mass demand trumps these kind of niche markets in terms of industrial and economic growth any time. So yes, this was an insight coming out of also the popularist tradition, that technology should be put to use, this is Ford, should be put to use for essentially the common people, the commoners. And it had a very explicit kind of, again, populist anti-elite thrust and the Ford motor company made it work. And this led to the industrial leadership in that crucial early 20th century sector of the automobile industry that the United States had over, well really the rest of the world at that point.
Jackie Whisman: Do you have a sense of why the FDR administration appeared to be so passive on this? It didn't either notice or didn't care that American companies were transferring technology to potential adversaries?
Stefan Link: Well, again, I think this is only to be explained by the fact that there was a sense that American corporations had absolute technological leadership in this, and that it took a long time until this got institutionalized in Washington, that this is a dual use technology that could be a security threat. If you want to, by the way, I just read about this, a brand new book by Mario Daniels and John Krige on Knowledge Regulation And National Security In Postwar America, wonderful book, which is on the history of precisely these technological export controls.
So the origins of the national security state when it comes to thinking about trying to deny technology to competitors and they date the origins of the modern export control system. So, actually the government worrying about technology transfer abroad to World War I, and this essentially lapsed in the 1920s under the Republican administration of the 1920s, very much along the lines of all sorts of World War I precedents that would then get rediscovered in the New Deal and World War II lapsing in the 1920s. And I think this kind of oversight of technological exports was part of that. Great book, and by the way, you should really get these guys on your podcast. I think there will be a lot there to explore.
Rob Atkinson: Yeah, I mean the other point to that is we forget just how small the federal government apparatus was in the thirties. It was really tiny compared to what we have now. So you're like, who would do that really?
I want to come back to this issue about tech transfer. One of the really fascinating things you wrote was that when trades started to shrink and foreign investment started to shrink, other nations returned to tech transfer, that seemed to be the way they wanted. Nobody wanted to be dependent. All these, it reminds me a little bit about how in the last 15 years countries are looking at ICT or information communications technology. Nobody wants to be dependent anymore.
The Europeans have this whole thing, which I think is frankly bogus, but they do it called digital sovereignty. It's kind of, back then people wanted metal mass production sovereignty. And so they curbed imports of US cars. They instead encouraged encouraged imports of US technology. So they didn't want to import our cars, they wanted to import our technology. You noted that Ford was willing to do that with Russia. They provided them technical assistance I think probably to that plant you alluded to, but GM was less willing to do that. Any sense on of why GM and Ford differed with the strategies?
Stefan Link: I think there are two reasons. So one is GM really in that period is a very different outfit from the Ford Motor Company. So the Ford Motor Company, Henry Ford is still around, very much a creation of the founder, committed to some of these ideas about technology being open source, cars for commoners. General Motors is really a creation of East Coast Finance. DuPont's partnering with JP Morgan, pulling together this collection of car makers in Michigan, calling it General Motors. And so there was a much bigger sense of profitability issues. You want to sell technology, not necessarily share it, but also a greater distrust of, well these communists showing up at your door, what do they want with your technology? The way I was able to reconstruct this is simply actually from the Soviet side, who found the Ford Motor Company simply just way more forthcoming.
There's one very interesting line in the discussions. This is the late 1920s where the Soviets want to build a modern automobile industry and Ford is kind of world star, international star at this point. So they turn to the Ford Motor Company, but they would've turned to General Motors just as well. But they found General Motors less forthcoming. They said very interesting quote at one point saying, General Motors does not want to help us develop our own indigenous mass production capability. They want to sell us essentially outdated technology or just not the frontier technology, but the one that is just becoming obsolete and that's not good enough. And then on the other hand, in the Fort Motor Company, the Soviets found, well a corporation willing to not only open the doors to these delegations but actively help them transfer this stuff, this again can only be understood if we take into consideration this view on technology.
I think that was institutionally built into the institutional culture of the Ford Motor Company. And in that respect, the Ford Motor Company was actually special for the entirety of the Soviet tech transfer effort of the first five year plan and the 1930s. So, I came across multiple references to that saying if only all American corporations were as cooperative, willing and open as the Ford Motor Company. So it was a spectrum. The Soviets did not walk through open doors everywhere. The Ford Motor Company was particularly forthcoming, but at the same time, American corporations were remarkably open by standards today or then of course by Cold War standards partially. This also had to do with the situation of the depression. These are metal working industries, battered hard by the depression, looking for business wherever they could and dealing with the Soviets who were willing to put state funds behind industrial buildup in the very period that America was going through the depression, dealing with the Soviets seemed like a promising avenue in that regard.
Jackie Whisman: You quote Stalin saying Soviets wanted to develop to reach the point where metal and machines are in our hands and we are not dependent on the capitalist economy. This is very close to what we're hearing from Chinese leadership now, do you agree with that parallel?
Stefan Link: I think it is an absolutely clear parallel. And so one of the things that I was able to do in the book is try and set this story. It's an interesting story in its own right, obviously the Soviets and the Nazis dealing with Midwestern American corporations. But putting this history in the context of essentially state led, state orchestrated catch up efforts which have to rely necessarily on technology transfers from technological leaders. And you realize this stuff is everywhere. You could even go back to the founding of the United States where it was the other way around. This is well known, the British weren't particularly willing to share cotton textile manufacturing technology with the United States. They were in fact quite stingy about it. Nevertheless, through concerted effort at industrial espionage, some of this stuff ended up in America.
By the time we're looking at the early 20th century, obviously the tables have turned. The Americans are technological leaders, at least in the automobile industry, a lot of other stuff actually, this really only kicks in the 1940s and other states want to try and get their hands on this stuff. American technology. And how do you do this? Well, you can try and buy licenses, you can buy and try machines. Technology transfer is very difficult. You might deal with corporations that again, just like General Motors aren't exactly willing to share cutting edge technology for obvious reasons. But you might also deal with a states that says, we're not going to let this technology flow freely abroad. Again, this might be the example of the British in the early 19th century, or it might be the example of the Americans since 1945, which pay close attention to what kinds of technologies flow to which international competitors. And so, what you need and states rediscover this in their own way over and over again in these economic catch up efforts is essentially the goal is always how do you build a homegrown indigenous innovation capacity?
And you want to be able to make this stuff by yourself, not only for import substitution reasons and to be on par with the technological leader, but to put yourself in a position to innovate indigenously, carve out new paths. And there you run against limits of trade. Very, very interesting. I think you had Barry Naughton on your podcast who identifies a kind of turning point in 2006, 7, 8 in the Chinese policy towards, what's our growth strategy, from a kind of labor-intensive export-oriented, but low-tech, low-tech industrialization, towards trying to build precisely this homegrown innovation capacity.
And there you discover that the mechanisms, that there you discover that technology transfer is incredibly difficult to achieve, the kind of mechanism that the Chinese tried. So you know, can buy this stuff. You can buy a machine, you can buy licenses, you can do FDI, you can invite in western corporations, but turns out that they're not necessarily willing to train your personnel to the extent that the Chinese side wants or share transfer production protocols, product innovations, process innovations. So, what do? You turn to all the other artifacts, all the other tactics you might have in the book, including targeted industrial espionage. And this is how we end up where we are today.
Rob Atkinson: Stefan, this is really, really fantastic. We could go on for a long time, but I'm going to ask you one last question and that's on the last page of the book. And by the way, the book is only 217 pages, so it's an easy read, encourage everybody to buy it on Amazon or wherever. Anyway, the quote is “tense and ambivalent global connections are baked into the very logic of development competition. Late developers have no choice to turn for technology and capital to those they seek to emulate and challenge. Histories of globalization would do well to imbibe this lesson, lest they continue to mistake as flows, what have in fact been constantly contested claims on technology, capital goods and information within a shifting political architecture of geo-economic relations.” And I read that quote because I think it is so emblematic of what US policy makers are finally beginning to learn. The US elite class has been living in this to me fantasy world that is all free flows when actually some of it is, but a lot of it is contestability. Any closing thoughts on that?
Stefan Link: Well, from a historical perspective is just abundantly clear that what is in fact the outlier or the exception is these dedicated attempts to build multilateral institutions and build the global economic order on these multilateral institutions, which if you were to take a realist view on this, we're always institutional solutions in which the Americans would call the shots, which worked as long as American ascendancy was unquestioned in the mid to late 20th century. But the rediscover that you have geopolitics built into this system is one that then periodically breaks through. And this already happens in the United States in the 1980s when the big competitor was all of a sudden Japan semiconductors, automobiles, American corporations being out competed. And then I think the Soviet collapse led to this period in the 1990s and early two thousands of a kind of panglossian. Very, very blue eyed, if you want, view of international markets. From a historical perspective, again, this seems like the outlier and the return of geopolitics is in that and that sense you take the long view of this stuff, not surprising.
Rob Atkinson: This was great. Thank you so much Stefan. Really, really enjoyed it. Again, encourage everybody to pick up a copy of the book. It's a fascinating read.
Stefan Link: Thanks for having me.
Jackie Whisman: And that's it for this week. If you liked it, please be sure to rate us and subscribe. Feel free to email show ideas or questions to podcast@itif.org. You can find the show notes and sign up for our weekly email newsletter on our website itif.org, and follow us on Twitter, Facebook and LinkedIn @ITIFdc.
Rob Atkinson: We have more episodes and great guests lined up. New episodes will drop every other Monday, so we hope you continue to tune in.
[RC1]Don't forget to make these bullets.