Samuel Slater got his start as an entrepreneur by being a mole.
At 21, he was a frustrated mechanical genius who had spent 11 years in an English textile factory, and he wanted to go out on his own.
But the industry was overcrowded, and he didn’t know anyone who would give him startup money.
Then he read a newspaper ad offering 100 British pounds (equivalent to $17,000 today) to anyone who would reveal the secrets of textile manufacturing to Americans.
The British government forbade anyone with extensive experience in the industry from leaving the country. Punishment added up to a fine of twice that amount, 12 years in prison, or even death.
Slater took his chances.
He memorized every aspect of how the machines worked, disguised himself as a farm hand and sailed to America in 1789.
With Slater leading the way, the American Industrial Revolution was soon rolling.
By the time of his death in 1835, Salter had a net worth of $1.2 million ($27 million in today’s money).
As a percentage of gross domestic product, that places him 84th on the list of U.S. business titans, according to Michael Klepper and Robert Gunther in “The Wealthy 100.”
Slater was born in 1768, the fifth son among eight children in a prosperous farming family in Belper, in the English midlands.
He received a good education, excelled at math and showed mechanical aptitude.
At 10, he began working for Jedediah Strutt, the partner in a cotton mill with Richard Arkwright, inventor of a water-powered spinning frame that made a worker 10 times more productive than if using a spinning wheel at home.
When Slater was 14, his father died in an accident, and the teen was formally apprenticed to Strutt.
Slater worked from dawn to dusk seven days a week.
Processing raw cotton into cloth was challenging. Before the invention of the cotton gin in 1793, slaves picked out the seeds by hand.
According to “Samuel Slater’s Mill” by Christopher Simonds, “For centuries the next steps were also done with hand tools, until new technology began dramatically increasing productivity”:
First, the cotton was carded or drawn between two wire brushes to get all the fibers running in the same direction.
Second, the mat of carded cotton went through a drawing machine, which stretched and tightened it into a loose yarn called a sliver.
Third, the sliver was wound onto large spools called bobbins, which were put onto the spinning frame, whose whirling spindles stretched the yard and twisted the strands of the fiber, making it strong enough to be woven into cloth on a loom, still mostly by hand in homes.
Armed with his knowledge, Slater left England without telling his family, lest word get out.
He sewed his apprenticeship credentials into his coat to hide them before boarding. Arriving in New York City in the fall of 1789, he soon heard about a retired Quaker sea captain, Moses Brown, in Pawtucket, R.I., who was having trouble creating a cotton-spinning mill.
So Slater wrote him a letter and landed the job.
“Brown needed the good yarn for his weaving plants,” wrote Klepper and Gunther. “He had paid to have a small spinning frame built, but it didn’t work well and he asked Slater to set up a new British-style textile machine, which allowed for continuous spinning, rather than the stop-and-start motion of the older machines.”
Brown’s location on a river was excellent, but Slater realized that even cannibalizing the machine Brown already had would leave him without vital parts, tools or knowledgeable mechanics.
He knew about production problems in England, so he would have to draw on more than what he took out of that country. He used his mechanical skills to adapt the technology to American conditions.
To help, Brown had him live with the Wilkinsons, a family of mechanics. “Brown tried to hire Slater to build the machines and run the factory, but he refused to be a hired hand, and instead bartered his knowledge of cotton manufacturing into a half-interest in the new textile firm,” wrote Barbara Tucker and Kenneth Tucker in “Industrializing Antebellum America.” “Two of Brown’s relations, William Almy and Smith Brown, entered into the partnership of Almy, Brown and Slater. Slater was the archetype of the American immigrant: ambitious, risk taking and flexible in business, and he quickly adapted to the American economic scene while tailoring the British industrial system to the U.S. context.”
It took nearly a year before the first cloth was produced, on Dec. 20, 1790. The building, which had 72 spindles to start out, is part of the National Park Service’s Slater Mill Historic Site in Pawtucket.
Within its first 10 months, it had made 8,000 yards of cloth. Production was so furious, it had to stop temporarily so the owners could hire agents to sell in other cities.
Brown wrote about the success of their venture to Alexander Hamilton, secretary of the Treasury, who shared the good news with Congress in December 1791.
“The manufactory at Pawtucket,” Hamilton said in his address, “has the merit of being the first in introducing into the United States the celebrated cotton mill which not only furnished materials for the manufactory itself, but for the supply of private families for household manufactures.”
In 1792, Slater received $5,000 (worth $126,000 now) for his share of the profit at a time when the average American worker earned $300 to $400 a year.
The same year, he married Hannah Wilkinson, and they would have 10 children. “She was a remarkable person in her own right,” wrote Simonds. “She must have observed her father’s work closely, for she had a great deal of mechanical ability and developed a new method for making cotton sewing thread. In 1793 she became the first woman to be granted a patent by the U.S. government, and her invention would play an important role in the growth of the textile industry.”
Slater began hiring children, as in England, whose size made it easy to get inside the machines and fix them when they malfunctioned.
But he found that in America, parents expected to continue to have authority over their children, which sometimes interfered with work. He decided to hire entire families, with the fathers doing building construction and the mothers weaving.
Sharing The Knowledge
Slater also set up company housing and provided schools for older kids to teach younger ones reading and writing on Sundays.
In 1798 he split to form a partnership — Samuel Slater & Co. — with his father-in-law, Oziel Wilkinson. They developed other mills in Rhode Island, as well as in Massachusetts, Connecticut and New Hampshire.
Slater’s younger brother John came over the next year with the latest technology that was used to boost production by 20%.
By 1810, America had some 50 cotton-yarn mills, many started after the U.S. embargo on British goods of 1807 cut off imports.
By the end of the War of 1812 with Britain, 140 cotton manufacturers employing 26,000 people operating 130,000 spindles were within 30 miles of Providence, R.I.
In 1823, Slater began installing power weaving looms in some factories. Five years later he bought a steam-driven cotton mill in Providence, “a bold and imaginative move that allowed manufacturers to locate near their distribution points and supplies of labor rather than remain tied to river dam sites,” wrote the Tuckers.
But by 1829, Slater had become overextended, in part because of the economic panic that year.
To protect his assets against creditors, he organized the umbrella firm of Samuel Slater & Sons, which under his son Horatio would become one of the leading manufacturers in the country.
By the time Slater died at age 66, America had 2 million spindles, with the cotton trade processing 80 million pounds a year worth $47 million annually (equivalent to $1.3 billion now). The material had displaced British and Indian cotton in the Western Hemisphere.
“Some of Slater’s employees went on to found their own factories,” Edward O’Donnell, author of the Great Courses’ audiovisual program “Turning Points in American History,” told IBD. “The most famous integrated textile manufacturing system was set up in 1814 in Waltham, Mass., by Francis Cabot Lowell, which became the prototype of the modern corporation. The Industrial Revolution quickly spread to pretty much everything else.”
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