by Leonard E. Read
This is the story of how a simple pencil is manufactured using numerous raw materials from all over the world, as told in the first person by the pencil itself. It was first published in 1958 to explain how free-market economies work and to discredit centrally-planned economies, such as the Soviet Union. While trade barriers are not expressly discussed in the story, the reader can infer potential consequences rippling through the supply chain.
“I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write… Yet, not a single person on the face of this earth knows how to make me.”
“My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods.”
“The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto?”
“Consider the millwork in San Leandro. The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted… People prefer that I look pretty, not a pallid white. The slats are waxed and kiln dried again. How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? Sweepers in the mill among my ancestors? Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant which supplies the mill’s power!”
“My ‘lead’ itself—it contains no lead at all—is complex. The graphite is mined in Ceylon [Sri Lanka]. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships.”
“The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow—animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions—as from a sausage grinder—cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.”
“My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are.”
“Observe the labeling. That’s a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black? Why, even the processes by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate!”
“My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature.”
“Then there’s my crowning glory, inelegantly referred to in the trade as ‘the plug,’ the part man uses to erase the errors he makes with me. An ingredient called factice is what does the erasing. It is a rubber-like product made by reacting rapeseed oil from the Dutch East Indies [Indonesia] with sulfur chloride… Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives ‘the plug’ its color is cadmium sulfide.”
“Actually, millions of human beings have had a hand in my creation… There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field—paraffin being a by-product of petroleum.”
None of those millions of people perform their work because they want a pencil. “Their motivation is other than me… Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants.”
There is no master mind orchestrating all of this activity. “Instead, we find the Invisible Hand at work.” The Invisible Hand is a metaphor for free-market economic dynamics. The term was introduced by Adam Smith in The Wealth of Nations.
“The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand.”
Leonard E. Read (1898-1983) founded the Foundation for Economic Education (FEE) in 1946 and served as its president for 37 years. FEE’s mission is to inspire, educate, and connect future leaders with the economic, ethical, and legal principles of a free society.
Read, Leonard E. I, Pencil. Atlanta, GA: Foundation for Economic Education, 1958. Buy the hardcopy booklet from Amazon.com or download the PDF for free from The Foundation for Economic Education (FEE).