On this day in economic and financial history...
April 2 is notable for two important patents, both of which have contributed greatly to the fortunes of two longtime components of the Dow Jones Industrial Average (DJINDICES: ^DJI ) . In fact, these two patents can be considered indirectly responsible for much of the modern industrial world's efficiency, as well as the success of other Dow components. As such, they may be two of the most underrated patents in American industrial history.
The motor of the world
George B. Brayton gained a patent for his "Ready Motor" -- an early reciprocating internal-combustion engine and one of the first internal-combustion engines ever to provide motive power -- on April 2, 1872. The Brayton engine, as it's now popularly known, maintained its operation by means of pilot flames, similar to today's gas stovetops, and also established the "Brayton cycle," which remains a popular principle in the construction of gas turbine engines to this day. The Brayton engine, within a few short years, would also become the focal point of the auto industry's first major patent war.
Brayton's Ready Motor went on display at the Philadelphia Centennial Exposition in 1876, where it caught the eye of tinkerer George B. Selden. The sight of this chugging motor inspired Selden to create the "road engine," which was to become the first true patented automobile in the United States. This patent was to create such trouble for the early auto industry that it brought Henry Ford (NYSE: F ) into a fierce legal fight that lasted for years. Before Ford's ultimate triumph in 1911, Selden used the patent and its defensive cartel to push many other automakers to either enter licensing agreements or go out of business. Once the threat of patent litigation cleared, the auto industry was free to develop along competitive lines, rather than legal ones -- and here Ford would triumph with its assembly line manufacturing process.
Although the auto industry transitioned away from Brayton-type engines very early in its history, the Brayton cycle informs the development of engines to this day. Gas turbines and air-breathing jet engines both operate under Brayton cycle principles -- which means that the underpinnings of virtually all modern airline flights were first patented more than 140 years ago. General Electric (NYSE: GE ) leads the world in jet engines; this segment is worth more than $18 billion to the industrial conglomerate. GE also happens to be a major developer of gas generators, which makes the company -- which traces its origins to the same decade in which Brayton developed his engine -- perhaps the greatest beneficiary of Brayton's innovation.
Foiling high production costs -- for good
Charles Martin Hall also gained an important patent on April 2: His process for low-cost extraction of metallic aluminum from raw ore was patented on April 2, 1889. For the first time, the abundant metal could be brought out of the earth without great labor and the resulting exorbitant prices.
Aluminum is abundant in the Earth's crust and has been known since the discovery of clay-like bauxite (the predominant source of aluminum) in 1821. Early aluminum-refining efforts took multiple steps and required the application of electrical currents -- hardly an easy process in the days before widespread electrical generation. This made aluminum nearly on par with gold for rarity and prestige. Before Hall's process was developed, its status was "capped" when a pyramid of refined aluminum was used on the top of the Washington Monument. Wired recounts Hall's development:
Hall, fresh out of Oberlin College in 1886, tried dissolving the aluminum salt in a fused-cryolite (sodium aluminum fluoride) bath instead of water. Voila: metallic aluminum. Hall needed money to scale up the process, and he eventually got it from the Pittsburgh's Mellon Bank, founding a company that would become the Aluminum Company of America, now Alcoa (NYSE: AA ) . ...
The Hall process (sometimes called the Hall-Heroult process) has made aluminum available for widespread use in aviation, construction, kitchenware, beer kegs, cooking foil and myriad other uses. The price of aluminum metal dropped from $32 a pound in the 1850s ($730 in today's money) to $15 a pound before the Hall process ($340 today) to 18 cents a pound in 1914 (about $3.75). The aluminum market is subject to market fluctuations, but it's increased from 50 cents a pound to more than a dollar in the last 15 years.
Variants of the Hall process are still in use today and require between 6.5 and 9 kilowatt-hours of electrical energy to produce a pound of aluminum. That's why recycling aluminum uses 95 percent less energy than making it from ore. A recycled can saves enough electricity to light a 100-watt bulb for up to three and a half hours.
The companies that benefit
No Dow component benefits more directly from the combined value of these two patents than Boeing (NYSE: BA ) , the aircraft manufacturer that has long been a prime user of both GE's jet turbines and Alcoa's aluminum. These two developments -- efficient turbines and a strong but inexpensive and lightweight metal -- contributed enormously to the Jet Age, which has shrunk the world to a point where you can take off from nearly any airport and land at nearly any other airport in the world within a day's flight.
Boeing operates as a major player in a multitrillion-dollar market in which the opportunities are massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool's best industrial-sector minds have collaborated to provide investors with the must-know info on Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.