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AnationofoutlawsAcenturyago,thatwasn'tChinaitwasusByStephenMihm|August26,2007

Ifrecentheadlinesareanyindication,China'srapsheetofcapitalistcrimesisgrowingasfastasitseconomy.Havingexportedpoisonpetfoodandtoothpastelacedwithantifreezeearlierthisyear,theworld'semergingeconomicpowerhousehasdiversifiedintoother,equallydubiousproductlines:scallopscoatedwithputrefyingbacteria,counterfeitdiabetestests,piratedHarryPotterbooks,andbabybibscoatedwithlead,tonamebutafew.

PoliticiansarebelatedlyputtingChinaonnotice.RepresentativeFrankWolfofVirginiadeliveredoneofthemorestingingcounterattackslastmonth,warningthattheUnitedStates"mustbevigilantaboutprotectingthevaluesweholddear"inthefaceofChina'sdepredations.

HisangerreflectsthemountingdisgustwithhowrecklesslyChinapliesitstrade,apparentlywithoutregardforthethingsthatmakecommercenotonlydependablebutpossible:respectforintellectualproperty,foodanddrugpurity,andbasicproductsafety.Witheachtawdryrevelation,China'sbrandofcapitalismlooksincreasinglymenacingandforeigntoourownsensibilities.

That'satemptingwaytoseethings,butwrong.What'shappeninghalfwayaroundtheworldmaybedisturbing,evendisgraceful,butit'shardlyforeign.Acenturyandahalfago,anotherfastgrowingnationhadareputationforsacrificingstandardstoitspursuitofprofit,anditwastheUnitedStates.

AswithChinaandHarryPotter,AmericawasahotbedofliterarypiracylikeChina'spoisonouspetfoodmakers,Americanfactoriesturnedoutadulteratedfoodsandwillfullymislabeledproducts.Indeed,toseeChinatodayistoglimpse,inadistantmirror,the19thcenturyAmericaneconomyinallitscornercutting,fraudulentglory.

Chinamaybeaverydifferentcountry,butinmanywaysitisayoungerversionofus.Thesoonerweunderstandthis,thesoonerwecanrealizethatChina'sfastandloosebrandofcommerceisnotanexpressionofnationalcharacter,muchlessaconspiracytopoisonusandourpets,butaphaseinthecountry'sdevelopment.Callitadolescentcapitalism,ifyouwill:burstingwithenergy,exuberant,dynamic.Likeanyteenager,China'sbehaviorisalsomaddening,irresponsible,anddangerous.Butitisaphase,andunderstandingitthatwaygivesussomemuchneededperspective,aswellassometoolsforhandlingtheproblem.Indeed,ifwewanttounderstandhowtodealwithChina,wecoulddoworsethanlooktoourownhistoryasaguide.

Abitofempathymightevenbeinorder.Onehundredandfiftyyearsago,evenAmerica'sclosesttradepartnersweredespairingaboutourcheatingways.CharlesDickens,whovisitedin1842,was,likemanyBritons,stunnedbytheeconomicambitionofournation'sinhabitants,andappalledbywhattheywoulddoforthesakeofprofit.WhenhefirststeppedofftheboatinBoston,hefoundthecity'sbookstoresrifewithpiratedcopiesofhisnovels,alongwiththoseofhiscountrymen.Dickenswouldlaterdeliverlecturesdecryingthepractice,andwrotehomeinoutrage:"mybloodsoboiledasIthoughtofthemonstrousinjustice."

IntheUnitedStatesoftheearly19thcentury,capitalismasweknowittodaywasstillverymuchinitsinfancy.Mostpeoplestilllivedonsmallfarms,and

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7/21/2015 AnationofoutlawsTheBostonGlobe

http://www.boston.com/news/education/higher/articles/2007/08/26/a_nation_of_outlaws/?page=full 2/4

despitethepersistentmyththatAmericawasthelandoflaissezfaire,therewereplentyoflawsonthebooksaimedatkeepingtightreinsonthemarketeconomy.Butascommercebecamemorecomplex,andstretchedovergreaterdistances,thispatchworksystemoflocalandstatelevelregulationswasgraduallyoverwhelmedbyanewgenerationofwheelerdealerentrepreneurs.

TakingapagefromtheBritish,whohadpioneeredmanyingeniousmethodsofadulterationagenerationortwoearlier,Americanmanufacturers,distributors,andvendorsoffoodbegantamperingwiththeirproductsenmassebulkingoutsupplieswithcheapfiller,usingdangerousadditivestomaskspoilageortogivefoodstuffsamoreappealingcolor.

AcommitteeofwouldbereformerswhometinBostonin1859launchedoneofthefirststudiesofAmericanfoodpurity,andtheirfindingsmakeforlessthanappetizingreading:candywasfoundtocontainarsenicanddyedwithcopperchlorideconnivingbrewersmixedextractsof"nuxvomica,"atreethatyieldsstrychnine,tosimulatethebittertasteofhops.Picklescontainedcoppersulphate,andcustardpowdersyieldedtracesoflead.SugarwasblendedwithplasterofParis,aswasflour.Milkhadbeenwatereddown,thenbulkedupwithchalkandsheep'sbrains.Hundredpoundbagsofcoffeelabeled"FineOldJava"turnedouttoconsistofthreefifthsdriedpeas,onefifthchicory,andonlyonefifthcoffee.

Thoughtherewastheoccasionalclumsyattemptatdomesticreformbymidcenturymostfamouslyinresponsetothepracticeofselling"swillmilk"takenfromdiseasedcowsforcefedadietoftoxicrefuseproducedbyliquordistillerieslittlechanged.AndjustastheworstsufferersofadulteratedfoodinChinatodayaretheChinese,soitwastheAmericanswhosufferedintheearly19thcenturyUnitedStates.ButwhenAmericastartedexportingfoodmorebroadlyaftertheCivilWar,thepracticestartedtocatchuptous.

Oneofthefirstinternationalscandalsinvolved"oleomargarine,"abuttersubstituteoriginallymadefromanalchemicalprocessinvolvingbeeffat,cattlestomach,andforgoodmeasure,finelydicedcow,hog,andeweudders.This"greasycounterfeit,"asonecriticcalledit,wasshippedtoEuropeasgenuinebutter,leadingtoaprecipitousdeclineinbutterexportsbythemid1880s.(Wilyentrepreneurs,recognizinganopportunity,boughtupgenuinebutterinBoston,affixedcounterfeitlabelsofBritishbuttermanufacturers,andshippedthemtoEngland.)Thesamedecadesawasimilar,thoughlessunsettlingproblemasBritishauthoritiesdiscoveredthatlardimportedfromtheUnitedStateswasoftenadulteratedwithcottonseedoil.

Evenworsewasthemeatpackingindustry,whosepracticespromptedatradewarwithseveralEuropeannations.The20thcenturymalfeasanceoftheindustryiswellknowntoday:"deviledham"madeofbeeffat,tripe,andvealbyproductssausagesmadefromtubercularporkand,ifUptonSinclairistobebelieved,lardcontainingtracesoftheoccasionalhumanvictimofworkplaceaccidents.Buttheinternationalarenawasthesceneofsomeofthefirstscandals,mostnotablyin1879,whenGermanyaccusedtheUnitedStatesofexportingporkcontaminatedwithtrichinaewormsandcholera.ThatledseveralcountriestoboycottAmericanpork.Similarscaresoverbeefinfectedwithalungdiseaseintensifiedthesetradebattles.

Food,ofcourse,wasonlythebeginning.Intheliteraryrealm,formostofthe19thcenturytheUnitedStatesremainedanoutlawintheworldofinternationalcopyright.Thenation'spublishersmerrilypiratedbookswithoutpermission,andwithoutpayingtheauthorsororiginalpublishersadime.WhenDickenspublishedascathingaccountofhisvisit,"AmericanNotesforGeneralCirculation,"itwas,appropriatelyenough,immediatelypiratedintheUnitedStates.

Inoneindustryafteranother,19thcenturyAmericanproducerschurnedoutcounterfeitproductsinremarkablequantities,slappingfakelabelsonlocallymadeknockoffsofforeignales,wines,gloves,andthread.Asoneexposeatthetimeputit:"Wehave'Parishats'madeinNewYork,'LondonGin'and'LondonPorter'thatneverwasinaship'shold,'SuperfineFrenchpaper'madeinMassachusetts."

Counterfeitersofpatentmedicineswereespeciallynotorious.Thiswasabitironic,giventhatmostoftheseremedieswereprettyspuriousalready,butthatdidn'tstopthepractice.Themostelaborateschemesinvolvedimportingemptybottles,fillingthemwithbogusconcoctions,andthenaffixingfakelabelsfromwellrespectedEuropeanfirms.

Americansalsodisplayedaparticulartalentforcounterfeitingcurrency.Thiswasatimewhenindividualbanks,notthefederalgovernment,suppliedthenation'spapermoneyinabewilderingvarietyofsocalled"banknotes."

7/21/2015 AnationofoutlawsTheBostonGlobe

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Counterfeitersflourishedtothepointthatin1862oneBritishwriter,aftercountingcloseto6,000differentspeciesofcounterfeitorfraudulentbillsincirculation,couldreasonablyassurehisreadersthat"inAmerica,counterfeitinghaslongbeenpracticedonascalewhichtomanywillappearincredible."

Whatwasitthatmadethe19thcenturyUnitedStatessuchahotbedofbogusgoods?AndwhyisChina'seconomicboomtoday,asNewYorkTimeswriterHowardFrenchcluckedearlierthismonth,"mintedincounterfeit"?

Piracy,fraud,andcounterfeiting,whetherofcurrency,commodities,orbrandnameelectronics,flourishesataparticularmomentinacapitalistsociety:theregulatoryinterregnumthatemergesinthewakeoffastpacedcapitalistchange.Thisperiodisoneinwhichtechnologyhasimproved,oftendramatically,andmarketshavebursttheirolderboundaries.Yetthecountrystillreliesonobsoletewaysofcontrollingcommerce.Untilthere'ssomethingtoreplacethem,counterfeitersandotherflimflamoperatorsflourish,pushingnewmeansofmakingmoneytotheirlogical,ifunethical,conclusion.

Indeed,theeasewithwhichcounterfeitersandcornercuttersoperateinChinatodaycanbeattributedtomanyofthesamefailingsthatplaguedtheUnitedStates150yearsago:aweak,outdatedregulatoryregimeillsuitedtohandlingthecomplexitiesofmoderncommercelimitedincentivesforthestatetopoliceandeliminatefraudand,perhapsmostimportantofall,ablurringofthelinesbetweenlegitimateandfraudulentmeansofmakingmoney.

Allofthesearetypicalofcapitalisminitsearly,exuberantphaseofdevelopment.TheUnitedStatesmayhavebeentheworstoffender,butearlyindustrialBritainhadsignificantproblemswithfoodadulterationandcounterfeiting,andRussiafromthe1990sonwardhasbeenthesceneofsomeoftheworstcapitalistexcessesinrecentmemory.AndinalllikelihoodChina'srecklessnessisjustthat:aphasethatwilleventuallypasswhenthenation'sregulatoryinstitutionscatchupwithitseconomicambition.

NoneofthisistosuggestthatweshouldexonerateChinaforshippingpoisonouspetfoodandleadimpregnatedtoys,northatwecancountonChinamerelytofollowinourfootsteps.Thereare,obviously,enormousdifferencesbetweenmodernChinaandtheUnitedStatesof150yearsago.Chinaisnotademocracyhoweverangryitscitizensmaybe,theyhavelimitedcapacitytotranslatetheirrageintolegislationaimedatputtingthebrakesontheeconomicfreeforall.Andthere'snoequivalentofthemuckrakingAmericanjournalistswhothrusttheseissuesintothepublicspotlight.Justasbad,manyoftheworstexcessesarebeingconductedundertheauspicesofthestate.

Butunderstandingtheparallelsdoessuggestawaytomoveforward.TherogueindustriesoftheUnitedStateseventuallyrespondedtostiffinternationaleconomicpressure.Beginninginthe1880s,theEuropeanmeatboycottsspurredCongresstopassaraftoffederallegislationaimedatimposingsomeinspectioncontrolsontheexportsofmeat.Inresponse,EuropeancountriesopenedtheirdoorstoAmericanmeatagain.Andin1891,Congressfinallybowedtodecadesofangrylobbyingandpassedaninternationalcopyrightlawthatprotectedforeignauthors.

Atacertainpoint,someofthepushforchangecancomefromwithin.Asacapitalistsystemevolves,therecancomeatimewhensomeplayersintheeconomyprefertobeheldtomorestringentstandards,evenonesthatimposeadditionalcosts.

Partly,thishappenswhenacountrybeginsproducingandexportingoriginalgoodsthatmightappealtocounterfeiterselsewhere.TheUnitedStates,forinstance,strengtheneditscopyrightlawstoprotectthegrowingnumberofAmericanauthorswhosebookssoldoverseas.IftheChinesemoviebusinessgainsasignificantinternationalaudience,it'ssafetosaythatHollywoodwillgetabetterreceptionnexttimeitcomplainsaboutknockoffDVDsofthelatestBruceWillisflick.

InthescandalrackedAmericanfoodbusiness,severalindustryleadersconvertedtothecauseofregulationinnosmallpartbecausetherewasmoneytobemade:Certaincompetitorswouldbeputatadisadvantage,andthenewfederallawswouldbanishtheinefficienciesoftheolderpatchworkofstatelevelregulation.

Butatamorefundamentallevel,producersbegantorealizethattheycouldreapbigprofitsfromsimpletrust.By1905,businessleadersweretestifyinginCongressthatthefederalgovernmentcould"domuchtowardpreservingthereputationofUSfoodsabroad"inotherwords,theycouldmakemoremoneyifpotentialtradingpartnersbelievedtheUnitedStateswasfinally

7/21/2015 AnationofoutlawsTheBostonGlobe

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cleaningupitsact.Andthat'sexactlywhathappenedwiththepassageofthelandmarkFoodandDrugActthefollowingyear.

Witheachregulatoryadvance,theUnitedStatesbegangainingthetrustofitsownconsumers,alongwiththerestoftheworld.Intheprocessitwentfrombeinganupstarttothemostpowerfuleconomyontheglobe.Chinaisfarmorethananupstartalready,butasrecenteventssuggest,ithasalongwaytogobeforeitemerges,astheUnitedStatesoncedid,fromitsownrecklessyouth.

Indeed,iftheChinesearetrulyfollowingDengXiaoping'sapocryphalmaxim,"togetrichisglorious,"thentheirownentrepreneursandindustriesmayeventuallyrecognizethattogetrichwhilebowingtointernationalstandardsmaybeequallygloriousandevenmoreprofitable.

StephenMihmisanassistantprofessorofAmericanhistoryattheUniversityofGeorgiaandistheauthorof"ANationofCounterfeiters,"tobepublishedthisweekbyHarvardUniversityPress.

Copyright2007GlobeNewspaperCompany.1234RelatedarticlesonBoston.com

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