Silicon Valley has a short memory. The Anglo-American settlements aren’t even 200 years old, but if you ask around, regional history restarts whenever there’s a new defining technology, which happens every couple of decades; we can barely remember the dot-com boom, never mind the radio era.
And yet, if you look closely, there’s a deep continuity. California was a closing link in the capitalist chain that encircled the world at the end of the 1800s. From the railroad to real estate to fruit to radio components, settlers built pre-silicon Palo Alto on new ideas about how science yielded efficiency and profit. The content stays the same, but the form changes: Before there were apps, there were websites, and before there were websites, there were microchips, and before there were microchips, there were horses, and the horses belonged to a man named Leland Stanford.
When he came to California in 1852, Leland Stanford was a hapless 20-something, a failed lawyer who followed his siblings into the frontier grocery business. Within a decade, he was one of the state’s few businessmen of significance and the Republican nominee for governor. This fast success was not a product of his talents or work ethic, which his contemporaries and today’s historians agree were unexceptional. Rather, like future founders who followed in his footsteps, Stanford was in the right place at the right time and he looked the part. As the least capable guy in a crew of unscrupulous Sacramento shopkeepers, Stanford became the face of these “Associates” after their successful pivot into railroads—a role the others were too smart to take during a period of intense class conflict. It was a position that earned him private wealth, public office, and popular scorn.
It was an easy and incredibly well-remunerated gig, but one consequence was that a lot of people hated him and his family. The white labor cartels held him personally responsible for the importation of Chinese workers and the resulting speedup and attack on wages. The location of the Stanford home was no mystery, and protesters made it a frequent target.
So Stanford gathered his family and servants and got out of town. In 1876, they bought a 650-acre farm, called Mayfield Grange, in Santa Clara County. No fan of the contemporary Grange Movement of organized farmers, Stanford renamed the area for a big tree next to the tracks: Palo Alto.
Railroads were never all that interesting to Stanford, and in this grassy expanse he finally found something worth his time: horses. He poured money into the South Bay ranch, which he named the Palo Alto Stock Farm, hiring dozens of workers to equip the stables. By the end of the 1880s, the stock farm had nearly 800 horses and a staff of 150 spread over 11,000 acres, the largest and finest institution of its kind in the world. Shipping horses back and forth to the West Coast from the farms of Kentucky and the markets of New York might have been a prohibitive expense for most, but not for Stanford the railroad man.
As his writing at the time shows, Leland Stanford saw himself as engaged in a serious scientific campaign regarding the improved performance of the laboring animal—hippology, or equine engineering. For Stanford the capitalist, the horses were productive biological machines, and in races he could analyze their output according to simple, univocal metrics. The trotters he raised raced with carriages behind them, restrained below a gallop to simulate a horse at work, not play. Faster horses were better horses, and if he could master the production of better horses, then he could improve the country’s capital stock. Stanford figured that if through the application of scientific methods he could build a program that would raise the value of the average horse by $100, that would be worth $1.3 billion—more than $30 billion today—to a country with 13 million horses.
Stronger, more durable horses led carriages and bigger plows faster and for longer, which reduced the costs of production and increased social circulation in unimaginable ways. Horses were the dominant mode of local transportation (especially during the dreaded “last mile” stage of delivery, which remains a problem for tech giants to this day). They were the military’s most important weapon and the chief source of agricultural power. The country was deeply dependent on them, as was demonstrated when a wave of equine influenza in the winter of 1872–73 infected roughly 100 percent of urban horses, killing more than 1 percent and temporarily debilitating the rest. The Great Epizootic ground eastern cities to a halt, stopping the horse-drawn boats on the Delaware, Hudson, and Erie Canals in addition to virtually all local transport. New York City streetcar operators had to drag the cars themselves, and much of Boston burned down when sick horses were too tired to pull fire engines.
In 1910, the peak of the pre-tractor era, horses and mules constituted two-thirds of farm implements and machinery by value—$2.6 billion of the $3.9 billion in national “crop-growing capital.” Around the turn of the century, finding ways to reduce horse costs was a pressing question for business, particularly in California, a rising agricultural power. The state’s growers used larger and more advanced machinery to get better yields than the rest of the country, and perhaps counterintuitively, late-19th-century mechanization meant high horse intensity. Horses were the engines of the West, and by 1870, California farms already had three times as many draft animals per farm than the national average. Ultimately that’s what the Palo Alto Stock Farm was all about.
More valuable than any single horse, or any thousand horses, were the insights into natural efficiency the farm developed. The “13 million horses × $100” calculation is the kind of disruption math that 21st-century start-ups use to persuade venture capitalists to sink millions into protean projects, but Leland had to convince only himself that it was worth his money, which he seems to have had no problem doing. Bringing industrial techniques, goals, and capital to the production of animals, Stanford’s farm was the prototype for what the scholar Phillip Thurtle calls the “laboratories of speed,” with their limitless resources, employment bureaucracies, (pseudo)scientific breeding methods, and focus on a single product. This was not an animal farm in any classic sense; it was an experimental engine factory, churning out high-performance horse flesh by the ton. Because it sold horses for their genetics—the blood more valuable than the muscle—the Palo Alto Stock Farm was really in the business of intellectual property.
Horse breeders were at the vanguard of genetics, tracing lineages back over many generations and pricing studs for their genetic material. Winning a race was nice, but the real prize went to the horse that could produce winners by the cupful. As the paragon of a new ruling class that prided itself on overturning ossified assumptions, Stanford was sure that despite being a newcomer to the sport, he knew more than the rest of the breeders and trainers did. He was a man of science, and he had the money to go at it however he wanted. Stanford bought the untested stallion Electioneer (against professional advice, the story goes) as part of his first batch of breeders; the horse became one of the greatest of all time.
The prevailing wisdom was that the best trotters were pure-blooded, the product of a trotting stallion and a trotting mare. Crossbreeding trotters with Thoroughbreds, a prized racing breed considered high-strung, was thought to produce willful colts that were unable to maintain a trot. Stanford was unconvinced, and Electioneer bred promiscuously. Old hands had to eat their words when the Palo Alto Stock Farm produced both pure and mixed champions, though they tended to credit the extraordinary “brain-controlling force” in Electioneer’s genes rather than any breakthrough in the science, as the stock farm manager, Charles Marvin wrote. Soon, Stanford’s colts were selling for extraordinary prices, setting a record in 1892 when he sold the two-year-old champion Arion to the breeder J. Malcolm Forbes for $125,000—more than $4 million in today’s money. Stanford and his money changed the industry, and the brand-new Palo Alto Stock Farm quickly became the world headquarters for equine engineering.
Capital’s exigencies dictated that Palo Alto shorten the horse-production cycle. That meant training younger animals to trot rather than letting colts learn to walk before they ran. By deriving (or generating) information about his colts’ characters early, Stanford flipped the whole industry’s incentive structure. “The business of breeding has now reached a point where few feel able to wait six or seven years for the get of their stallion to bring prestige to the farm,” the racing expert Leslie Macleod wrote of Stanford’s impact in his review of the Palo Alto equine factory, “and hence he buys the blood that trots young.”
There were consequences. “When you get several yearlings to trot quarters in 0:40, and two-year-olds to show you a 2:20 gait, you must not be surprised if some tendon snaps,” Macleod conceded. “Some good material has without doubt been spoiled.” No reward without risk, but in Palo Alto they interpreted these failures as inevitable. They figured that if you’re going to fail, you might as well do that fast too. Better to snap a yearling’s tendon than feed him to age five just to see it snap then.
The stock farm’s regimen of capitalist rationality and the exclusive focus on potential and speculative value was called the “Palo Alto System,” and it worked. All a man needed to improve the world was an uncompromising dedication to profit and the capital to realize the necessary scale. Stanford had both, and he created Palo Alto to house them. The twin whips of science—data and control—sped money around its circuit like colts around the track, accumulating valuable mass with every lap.
Leland Stanford was but a vector, albeit a robust, capacious one, his coat buttons pulled taut with historical pressure. Anything in his orbit tended to bulge the same way, including his vineyard (the world’s biggest) and his wife’s jewels (among the world’s gaudiest). He couldn’t own horses without transforming them into the world’s fastest. The scientific principles of control, measurement, and deliberate change opened a road to modernity, and capital was the draft mule that pulled the whole world down that path, California first. Here is where the 20th century’s fortunes were made, and so much of that demand flowed in one way or another through the body of Stanford. Like a financial King Midas, he turned everything he touched into an international speculative concern. Everything could be made more.
Stanford and the training staff achieved their goals, but his plan to enhance national horsepower died on the notepad—though genetics, intellectual property, and billion-dollar business schemes endure as Stanford specialties. Palo Alto still stands for capitalist transformation, but following the deaths of Leland Stanford Jr. and Sr. (in that order), the stock farm closed. Or rather, it changed form. The Palo Alto System’s new product was even more important to the American economy than horses were: Stanford became a university, and soon, an industry.
The Palo Alto System persists in Silicon Valley; it’s an underlying ethos that has structured the region’s conventional wisdom. Now, depending on the day’s market fluctuations, nearly half of America’s top 10 most valuable companies are headquartered near the stock farm. Apple, Google, Facebook, and many more: These are Stanford’s “get,” history’s fastest business colts. For better and worse, the Palo Alto System is in their DNA.
This article has been excerpted and adapted from Malcolm Harris’s new book, Palo Alto: A History of California, Capitalism, and the World.
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