Book Reviews

1 Great Book to Read
by Joseph Dancy
LSGI Advisors, Inc.
December 24, 2007

Social Meanings of a New Technology, 1880-1940
by David Nye
495 pages, The MIT Press; (1992)
List: $28.30 at Amazon.com

Commonly taken for granted in today’s society, a century ago the electrification of modern lighting and home and industrial activities was cutting edge technology. Other than those brief periods when an ice storm or summer thundershower disrupts service, few tend to remember how extensive and relatively recent the changes in our lives that electricity has provided.

David Nye, in his book ‘Electrifying America: Social Meanings of a New Technology’ discusses how electricity changed living patterns by providing a new source of lighting and power, making the older flame-based light sources obsolete, dangerous, and dirty.

In the early days the illumination of government buildings by electrical devices was a major public event, and was celebrated as such as cities competed with each other in installing this modern industrial convenience. Early industry participants battled over the use of direct versus alternating current in the grid. The advantages and disadvantages of both created a major conflict among both the providers and consumers – much like the early years of the Apple versus Microsoft battle over operating systems.

Electrification modified the urban transportation system with the introduction of electric trolleys, and allowed the trolley companies to sell their excess power to parties along the line. It also greatly increased the flexibility of factory planning, and allowed engineers to incorporate many labor saving designs into the manufacturing process.

Many of the early houses that were electrified had only one or two outlets and a bare bulb hanging from a string. Electricity was billed at a flat rate per day, and in many areas the electrical system would be shut down for the night before midnight so the power company could perform maintenance on their generating units. And rural areas provided special economic problems for power providers as the electrical load was not heavy enough to make these systems viable. 

One of the more interesting portions of the book dealt with how the electrification of America was impacted by the Great Depression. Because the value of the U.S. dollar was tied to gold during the depression, and because the amount of gold a government may or may not hold had little correlation with economic activity, one group (which included Thomas Edison) advocated valuing the dollar in terms of a unit of energy. 

While an energy-based currency sounds absurd on initial take, economic activity correlates very closely with energy use. And the argument was the value of the dollar may swing, but the unit of energy will remain constant over time regardless.

Ernst R. Berndt wrote an interesting piece on this topic for MIT back in the early 1980’s, noting:

About fifty years ago in the midst of the Great Depression, Harpers Magazine published an article "Technology Smashes the Price System" by the industrial engineer Howard Scott, who stated that:

"It is the fact that all forms of energy, of whatever sort, may
be measured in units of ergs, joules or calories that is of the
utmost importance. The solution of the social problems of our
time depends upon the recognition of this fact. A dollar may be
worth -- in buying power -- so much today and more or less
tomorrow, but a unit of work or heat is the same in 1900, 1929,
1933 or the year 2000."

Scott and the fascinating Technocracy movement he founded proposed that dollars and money be replaced by energy certificates denominated in units such as ergs or joules, equivalent in total amount to the appropriate national net energy budget. 

One of the early members of the ‘Technocracy’ movement was none other than young geophysicist M. King Hubbert, well known to those in the oil and gas sector for his theory on peak oil which has become known as “Hubbert’s Peak”. Oregon Senator Mark Hatfield also explored energy as the basis of currency value in the 1980’s.

The book made only passing reference to the energy-based monetary concept but is packed full of details on how the typical American was impacted by the electrification of the economy. From a individual’s perspective electricity transformed the home, the factory, and society, all in a few short generations. Taken for granted today in the developed world, the electrification of America is one of the most significant events in this country’s history. 

Those interested in American history, or the global energy challenges we face today in the electrical sector as well as energy sector, will enjoy this book as it provides a great map as to how our electrical grid evolved to its current state.

© 2006 Joseph Dancy
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CONTACT INFORMATION
Joseph Dancy, Adjunct Professor
Oil & Gas Law, SMU School of Law
Advisor, LSGI Market Letter
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