Planet Money
00:11:17 · Jacob Goldstein, David Kestenbaum, William Nordhaus
[00:11:17] S1: Over time, there are small improvements in life and in light. The Romans figure out how to make a lamp that's a little more efficient. People start to use whale oil. This, of course, is very, very bad for whales, but whales have a lot of fat. They were like these big swimming sources of fuel. Still, even when you get all the way to the seventeen hundreds, life still looks more like ancient Babylon than the modern world. People still travel the same way, by foot, by horse, by sailing ship. Most people are still subsistence farmers, usually living in some kind of hut, trying to grow enough food not to starve to death. [00:11:52] S5: Year after year, there are tiny gains in productivity, little bits of economic growth, but not a lot. And light, Light still comes from finding stuff that's lying around and just lighting it on fire. Again, economist Bill Nordhaus. [00:12:05] S7: As you look at the picture of what happened here, it's economic history in a nutshell. From Babylonian times to around 1800, there were even though there were improvements, as best we can tell, they were very modest. And then around 1800 in the lighting, you can see it so clearly in lighting. Just a enormous change in the pace of improvement. [00:12:29] S5: What happens in the eighteen hundreds is a few things. We start to really actively experiment. We try to discover stuff. And around 1850, a guy in Canada comes up with something that's not just a slightly better wick or a slightly more efficient lamp. It is this magical liquid. With the right techniques, you can get it from coal or oil.
00:12:29 · David Kestenbaum, Jacob Goldstein, Jane Brox, William Nordhaus
[00:12:29] S5: What happens in the eighteen hundreds is a few things. We start to really actively experiment. We try to discover stuff. And around 1850, a guy in Canada comes up with something that's not just a slightly better wick or a slightly more efficient lamp. It is this magical liquid. With the right techniques, you can get it from coal or oil. [00:12:49] S1: This big breakthrough, kerosene. Not cutting edge now, but back then, Jane Brox says, kerosene was a huge deal. [00:12:57] S2: When the first kerosene lamps came out, it was, as one historian said, it was the kind of oil people had dreamed about for centuries. [00:13:05] S1: It was brighter. It was cleaner. And importantly, it was much cheaper. [00:13:10] S7: You work a day, you get about an hour of whale oil. Kerosene, you get about five hours. Woah. So it's about five times more efficient kerosene lit the world and saved the whales. [00:13:29] S1: So if kerosene was so great, why did it take the world so long to find it? Science. This idea of professional scientists, this idea that there are lots of people who go to work every day at universities and do experiments. In the eighteen hundreds, this is still a new thing. [00:13:47] S5: If you happen to be president of Yale University, this is around the time when you're thinking, you know, maybe we should get one of those science departments. [00:13:54] S7: Why were why were they doing those experiments a century earlier? Well, Yale didn't have scientists a century earlier. They were teaching Greek and they were teaching logic.
00:13:54 · William Nordhaus, David Kestenbaum, Jacob Goldstein, Paul Israel, S6
[00:13:54] S7: Why were why were they doing those experiments a century earlier? Well, Yale didn't have scientists a century earlier. They were teaching Greek and they were teaching logic. [00:14:05] S5: Now all these scientists are working on better ways to make light. And light is getting cheaper. More people are using it. No more locking yourself in and huddling in the dark all night. Around this time, street lights start popping up, and people start going out at night. [00:14:18] S1: So we have kerosene. What's the next big advance after that? [00:14:21] S7: Okay. Next big advance after that is the electric lamp. [00:14:25] S4: The big one. [00:14:27] S7: Well, you might think so. [00:14:29] S5: You know, Jacob, I thought I knew the story of the light bulb. You know, Thomas Edison, the great inventor, story about science and innovation. You know, Edison trying all these different filaments, these different designs, and finally getting one that'll glow for hours. But this Eureka light bulb moment, it is not... It's not enough to get you to the world of really cheap light because Edison needed this other thing. He needed money. He needed lots and lots of money. [00:14:53] S1: After the break, how many bankers does it take to turn on a light bulb? One, JPMorgan, more or less. [00:15:02] S6: Stay tuned for the following announcements and messages from our sponsors.
00:15:02 · S6, S0, Paul Israel
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00:16:29 · Paul Israel, Jacob Goldstein, David Kestenbaum
[00:16:29] S4: So right now, we're at the location of the original power plant in Lower Manhattan. [00:16:34] S1: This is Paul Israel. He's an Edison scholar. We met him here in New York City. We're standing in front of this plaque. It says Thomas Alva Edison in big letters, and there's this picture, an etching. [00:16:47] S4: And the image that they show is the generator room of the power plant. [00:16:51] S1: With a bunch of guys in really long mustaches and hats. [00:16:54] S4: Right. This is 1882, so lots of mustaches at that point. [00:16:58] S5: The money part of building the power plant is so important that when they finally get this historic thing completed in 1882, they get the power plant built, and they're ready to turn it on. Edison is not here. He's a few blocks away at a big impressive stone building, where today there is another plaque to a guy you may have heard of, JPMorgan. It reads, the capitalist's capitalist known throughout the world of finance, sought out by presidents, helped bankroll the industrialization of America. Can't write that on too many people's plaques. JPMorgan's bank and a bunch of investors, they put up the money for the power plant. [00:17:33] S1: To be clear, they built this great big expensive complicated power station, the first central power station in the world. Right? Basically, inventing electric light. And when they turn it on, Edison is not there. Right.
00:17:33 · Jacob Goldstein, Paul Israel, David Kestenbaum
[00:17:33] S1: To be clear, they built this great big expensive complicated power station, the first central power station in the world. Right? Basically, inventing electric light. And when they turn it on, Edison is not there. Right. [00:17:47] S4: Right. He was where he needed to be with the people who had funded the whole thing. Right? So at 3PM on September 4, Edison flicked on the switch here at JPMorgan's office. [00:17:58] S1: And what happened? [00:17:59] S4: It went on. And as did lights all over the district, about a square mile of Lower Manhattan suddenly was lit by electricity. [00:18:08] S5: You think of Edison the inventor, but even more important is Edison the businessman. At the time, buildings in Lower Manhattan were running off gaslights, and Edison knew that was who he had to beat. [00:18:19] S1: So he spent a lot of time thinking about economics. [00:18:21] S4: Yeah. Well, he he did. Yeah. In fact, if you look at his notebooks, constantly, he's going through and comparing the cost of what he's doing to what the cost of a gas system is. [00:18:31] S5: You never think about that. [00:18:32] S4: Well, and that's what made him such a good innovator. Right? Because he he recognized that these economic questions were just as important in designing what he did in the laboratory. [00:18:43] S1: When you think of economic growth, how much do you think of it as coming from, like, individual, like, eureka moments and inventions and stuff like that? And how much is it the stuff around it? Like, the ability to finance these things, the economic structure around it.