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11.2: The Enfield Arsenal

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    58493
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    This chapter departs from the usual presentation style employed in this book. There is no Excel workbook associated with this application. Instead, you will be given the opportunity to answer questions and the answers are provided at the end of the chapter. Each question is highlighted by the usual Step marker. Try to work out each question on your own before looking at the answers.

    There are four goals:

    1. To understand cost minimization with isoquants and isocosts.

    2. To provide an example of how theory can be applied to real-world problems.

    3. To illustrate how economics can help us understand what we observe.

    4. To see that economics has wide and varied application.

    The inspiration and source of this application of cost minimization is from Edward Ames and Nathan Rosenberg, “The Enfield Arsenal in Theory and History,” The Economic Journal (Vol. 78, No. 312, December, 1968), pp. 827–842, www.jstor.org/stable/2229180.

    Ames and Rosenberg were economic historians and that immediately leads to a puzzler: how are economic historians different from regular historians? The answer has to do with the economic approach. Once trained as an economist, the methods and way of thinking can be applied to events and outcomes from the past. This is what Ames and Rosenberg did with the Enfield Arsenal. But before we get to that, we need to understand what rifling is all about.

    Rifling

    Rifles are a relatively recent innovation in firearms. Figure 11.5 shows an early version of the famous Enfield rifle with labels for the three main parts: the lock, stock, and barrel.

    It is the barrel that distinguishes rifles from smooth-bore muskets. The barrel of a rifle has a striated pattern that spins the bullet, increasing velocity and accuracy compared with a ball from a musket.

    STEP Watch this short video on rifling from The Story of the Gun: vimeo.com/25200729.

    But the Enfield rifle was important not because it rifled, but because of how it was made.

    The American System of Manufacturing

    Ames and Rosenberg (p. 827) explain what the Enfield Arsenal was in the introduction to their paper:

    This paper analyses a particular historical event, the establishment of the Enfield Arsenal, in the context of the literature cited. The British Government committed itself to the construction of the Enfield Arsenal in 1854 because it wished to be able to make large numbers of rifles for an impending war with Russia (now known as the Crimean War). The event is important because it marked the beginning of the movement of mass-production techniques from the United States to Europe. Technical changes in gunmaking in the nineteenth century were a major source of new machine techniques; and industrialisation in the nineteenth century is overwhelmingly the history of the spread of machine making and machine using.

    So an arsenal is an armory, a warehouse of guns and ammunition. Enfield is a place in England and the Enfield Arsenal is literally a building constructed by the British government in 1854 that would be used to store rifles made with mass-production techniques.

    The Enfield Arsenal was special because it was the first time the British would use mass-production techniques to make weapons. Up to this point, the British had made guns the old-fashioned wayby hand in the small shops of thousands of skilled artisans in the area around Birmingham. The stock was carefully carved by an experienced craftsman who fitted the stock with the lock and barrel. It was like a tailor making a bespoke suiteach rifle was one of a kind. A work of art.

    Ames and Rosenberg (p. 832, footnotes omitted) point out that making the stock by hand was especially slow and expensive to do:

    The gunstock was one of the most serious bottlenecks in firearms production. In England, at the time of the Parliamentary hearings, out of about 7,300 workmen in the Birmingham gun trade, the number of men employed in making gunstocks totalled perhaps as many as 2,000. Its highly irregular shape for long seemed to defy mechanical assistance, and the hand-shaping of the stock was a very tedious operation. Furthermore, the fitting and recessing of the stock so that it would properly accommodate the lock and barrel were extremely time-consuming processes, the proper performance of which required considerable experience. With Birmingham methods, it required 75 men to produce 100 stocks per day. Using the early (1818) version of the Blanchard lathe, 17 men could produce 100 stocks per day.

    This quotation requires some explanation. First, the reason for the Parliamentary hearings was that British politicians were angry with the Birmingham gunsmiths for not adopting fast, efficient mass-production techniques. There was an investigation and testimony was given. How could upstart Americans have better technology than the British, a nation that dominated the entire globe? It was a national embarrassment!

    Second, the quotation mentions the Blanchard lathe. This is a machine that cuts and shapes wood (and other materials like metal), but it is easier to understand if you see it.

    STEP Watch this video, vimeo.com/25200825, to understand how a lathe works and how the production of precision parts makes Diderot’s dream come true.

    The video explained that the new country of the United States of America needed weapons so the Springfield Armory was built in 1794 in Springfield, Massachusetts. At first, stocks were made by hand, just like in Birmingham. They were then individually fitted to each rifle.

    But in 1818, the Blanchard lathe burst on the scene. The narrator, echoing the British Parliamentary hearings, says, "Prior to the Blanchard Lathe, it took one to two days to make a rifle stock by hand. Now, a twelve-year-old boy could turn out a dozen stocks in a single day."

    The Blanchard lathe enabled a reorganization of the production process. In factories in the northeast, the United States began to use mass-production techniques to make rifles and pistols (and then bicycles, sewing machines, typewriters, and so on). This is the American system of manufacturing. A key element is that a machine can make a precision part so many almost identical parts can be made and then the product is assembled.

    The video points out that the history of gun-making is closely tied to the rise of mass-production techniques and precision manufacturing. In the video, William Ruger cites an idea from French philosopher Denis Diderot (1713–1784). Ruger says Diderot’s theory at that time was that "It would be possible to make all of the individual parts alike and then at the last minute assemble them, rather than fitting them together as you went, which was the customary thing up to that time."

    Adam Smith (1723 - 1790) was a contemporary of Diderot. For Smith, the division of labor explained the explosion in productivity that he saw all around him as the Industrial Revolution began.

    Breaking production into a series of steps and then assembling the parts enables many more units of output to be produced. This is called the division of labor. Smith emphasized several reasons for the greater productivity enabled by the specialization of labor:

    1. Practice makes perfect: focusing on a single task makes you very good at it.

    2. Saves time: no need to set things up when you move to a new task.

    3. Innovation: adjustments are made by workers who are expert in a particular task.

    Machines such as the Blanchard lathe feed into the division of labor by enabling much finer specialization. For rifles, production with a lathe meant that they were no longer one of a kind. They were all alike and could be easily connected to the lock and barrel to make a rifle.

    By applying Diderot’s theory of assembling perfectly fitted parts and Smith’s division of labor, the Springfield Armory was able to enjoy a huge increase in productivity compared with Birmingham methods.

    So now you know exactly what a lathe is and how mass production played a key role in the exponential increases in productivity during the Industrial Revolution, but there is one more important advantage to mass production. Let’s see if you can figure it out.

    STEP What are the tremendous advantages of interchangeable parts in a rifle (or anything else for that matter) for the end user?

    The answer is at the end of this section, but take a few minutes to think about the question. What advantage would soldiers using rifles that were all alike have over enemies using individually made rifles?

    Two Big Questions

    The key date in this story is 1854. Until this time, the British used Birmingham methods, which means an experienced craftsman made each entire gun by hand. They shaped the stock, then attached it to the lock and the barrel. Each part was slightly different and could not be easily replaced if damaged.

    Beginning in 1854, rifles produced for the Enfield Arsenal, however, were made with interchangeable parts (including stocks made on lathes) that could be put together in an assembly line. Once in use, broken parts could be removed and new ones snapped on.

    Ames and Rosenberg (pp. 839–840, footnotes omitted) sum up the situation:

    As of 1785, neither the British nor the Americans could make guns with interchangeable parts. As of 1815, Americans could make guns with interchangeable metal parts, but could not make interchangeable gunstocks. As of 1820, they could make interchangeable gunstocks. At any date, presumably, they could use not only current methods but earlier methods which these had displaced.

    The United States had been mass-producing guns with interchangeable parts since 1815. The British waited until 1854 to use the superior, mass-production techniques. This gives rise to two big questions:

    1. Why did the British wait so long to use mass-production techniques to make rifles with interchangeable parts?

    2. Why did the British switch to mass-production techniques in 1854?

    1. Why Did the British Wait so Long?

    A possible answer to the puzzle of why British gunsmiths did not adopt the new technology is that the British did not know about the Blanchard lathe so that is why they did not use it?

    STEP Is lack of knowledge about American technology a good answer? Why or why not?

    Another possible answer is poor management. Maybe British rifle manufacturers were lazy, stupid, and careless? The right answeradopt mass-production techniqueswas staring them in the face and they ignored it.

    STEP Is managerial failure a good answer? Why or why not?

    Economic historians give a third answer to why the British did not adopt the Blanchard lathe. They use the economic way of thinking. They look for differences in the environment that would lead to different optimal solutions.

    In other words, Ames and Rosenberg stop searching for why the British made a mistake and accept the fact that their refusal to adopt mass-production techniques was actually smart and correct. They look for reasons that justify the British decision to reject the Blanchard lathe.

    This is crazy, right? It is obvious that mass production is better. Well, it turns out that there are two critical differences between the United States and Britain in the first half of the 19th century that play an important role in deciding how to make rifles.

    First, the two countries had quite different labor forces. The British had a cohort of skilled rifle craftsmen and the United States did not. As the Parliamentary hearings noted, there were several thousand skilled craftsmen in Birmingham making stocks and rifles. The United States was a young country with mostly unskilled, male workers. Few skilled craftsmen would emigrate to the United States since they had good, high paying jobs at home.

    These supply and demand differences meant that, in the United States, wages for skilled craftsmen were much higher than in Britain, and wages for unskilled labor were lower.

    Second, wood was plentiful and cheap in the United States, but it was much more expensive in Britain. Ames and Rosenberg offer the following footnote (p. 831) to help explain why wood plays a critical role:

    Report of the Small Arms Committee, op. cit., Q. 7273-81 and Q. 7520-7521; G. L. Molesworth, "On the Conversion of Wood by Machinery," Proceedings of the Institution of Civil Engineers, Vol. XVII, pp. 22, 45-6. In the discussion which followed Mr. Moleworth’s paper Mr. Worssam, a prominent English dealer in woodworking machinery, made some interesting comparative observations which were summarised as follows: "He had seen American machines in operation, and he found that, although they might be adapted for the description of work required in that country, they were not so suitable for English work, in which latter high finish and economy of material were of greatest importance. In America the saws were much thicker than those used in the English saw-mills, so that they consumed more power, wasted more material, and did not cut so clean, or so true, though there was less care required in working them" (ibid., pp. 45-6).

    A key point in this long quotation is that American saws (and, of course, lathes) "wasted more material." A British skilled craftsman making stocks from lumber would be careful to "economize" on the material. In America, a 12-year old boy working with a lathe (a dangerous job) would not care at all about wasting wood.

    The different endowments of wood in the two countries meant that the Blanchard lathe was much more expensive to operate in Britain than in America.

    Now that we know how the United States and Britain differed with respect to (1) wages for skilled and unskilled labor and (2) operating costs for the Blanchard lathe, we are ready to make the case for the economic explanation for why the British waited so long to adopt mass-production techniques.

    As is typical in economics, the exposition will rely on graphs. But instead of just reading the explanation, you will try to do it yourself first. The idea is to apply the input cost minimization problem to this scenario. You can, of course, simply jump to the end of the section to see the answers, but you will learn much more if you try to do it yourself first. Follow the instructions and hints offered below and see how close you get. Make sure you understand where you made a mistake or in what ways you were confused.

    STEP Draw graphs that show how the different resource endowments and input prices affected the optimal input mix. Use the detailed instructions that follow as a guide. How do the graphs explain why the British waited so long to adopt mass-production techniques?

    We will use two sets of two graphs. The first set of two graphs will be for the labor force difference between the United States and Britain. The second set shows the effect of the different endowments of wood.

    Begin by drawing a graph representing the British situation in 1820 with respect to using skilled and unskilled labor to make, for example, an order of 1,000 rifles. It should have skilled labor on the y axis and unskilled labor on the x axis. Draw in an isoquant (representing the combinations of skilled and unskilled labor that would make the requested 1,000 rifles).

    Draw another graph, next to the first one, that is exactly the same. Your second graph represents the United States’ options for making 1,000 rifles in 1820. The fact that both isoquants are the same means that the two countries had access to the same technology and are making the same product.

    Next, you need to draw the isocost lines. This is where the difference in labor force comes into play. We know the British have skilled labor and the United States does notimmigrants to the United States were not typically experienced, educated workers, but young, unskilled males. That means the price of skilled labor is much higher in the United States. How is that reflected in the isocosts for your two graphs?

    The second set of graphs uses L and K as the inputs. As before, draw a pair of graphs side by side, one for the British and the other for the United States, with machinery on the y axis and labor on the x axis. Include the isoquants. Once again, the isoquants are the same, meaning that the British were aware of and could have used American methods.

    The key to the economic explanation for why the British did not do what the Americans were doing lies in the isocosts. Remember that early versions of the Blanchard lathe used a lot of wood and this increases the price of machinery. If r is much higher in Britain than in the United States, how does this affect the isocosts?

    Take a moment to look at your two sets of graphs. How can they be used to explain why the British rejected mass production before 1854?

    Proceed to the end of this section to check your graphs and answers.

    2. Why Did the British Switch in 1854?

    The second big question revolves around the British decision to switch in 1854 and mass produce the Enfield rifle. Why did they do this? Why did they abandon their decades-old system of production centered in Birmingham, with a network of many small artisans and smiths that made firearms to individual order or in small batches?

    Our first possible answer matches up with the lack of knowledge answer to the first big question. Maybe, in 1854, the British heard that mass-production techniques utilizing the Blanchard lathe were available and immediately moved to adopt the new production methods?

    STEP Is sudden awareness of new American technology a good answer? Why or why not?

    The second possible answer, like before, relies on management. Maybe they wised up? What if British firearms manufacturers recovered from their slumber and moved quickly to modernize their industry?

    STEP Is managerial improvement a good answer for the switch? Why or why not?

    You probably got the first two right, but the third one is harder. It might be easy in general terms, but getting the details can be complicated.

    The third answer is based on economic reasoning. This means that when we see changes in behavior, we look for changes in the environment. We do not search for events or causes that changed a mistake into the right answer. Instead, we accept that the answer to not use mass production was correct for, say, 1830, but the new optimal solution, in 1854, was to switch to the American system.

    This is a key aspect of the economic approach, and it can be challenging to grasp. Our instinct when we see something change is to think of correction or improvement. Economists do not think this way. We see optimization everywhere so if something changes, it was optimal before and it has moved to a new optimal solution because of an exogenous shock.

    The search is on for shocks that switch the correct answer from “reject” to “accept” interchangeable parts.

    There are two ways in which Britain before 1854 differed from Britain after 1854 and these two ways impacted wages and the operating cost of machinery. These changes act as shocks on the input cost minimization problem and produce a new optimal solution. We first have to figure out the shocks, then we can see how they affect the optimal solution.

    STEP Answer these two questions:

    1. What happened to the British labor force?

    2. What happened to the Blanchard lathe?

    You may not be an expert on British labor in the 19th century or know anything about the Blanchard lathe, but you can think about what might have happened. Try to come up with a hypothesis. Think of recent changes in the labor force that you have heard about, especially those driven by technology (e.g., driverless cars and trucks). Think about how machines, computers, and technology in general have changed over time.

    After checking your answer at the end of this section, so now you know what happened, you are ready to draw graphs that illustrate the economic historian’s explanation for the British switch in production technique.

    STEP Draw graphs that show how the changes mentioned affected the optimal input mix. How do the graphs explain why the British switched to mass-production techniques in 1854?

    Draw two pairs of graphs just like before (unskilled and skilled labor on one and machinery and labor on the other), but this time we are comparing environments before and after 1854 in Britain (the United States has nothing to do with this). First, compare the optimal mix of unskilled and skilled labor for Britain in 1820 versus 1854. Remember that the skilled craftsmen died and were not replaced so the skilled wage rate rose. How does this make the 1854 graph different from the 1820 graph?

    In the second set of two graphs, with machinery and labor on the axes, we know that machinery got better and better (wasting less and less wood) over time so r fell. What will this shock do to the isocost lines?

    Check out the suggested answers at the end when you are finished. Take the time to debug any mistakes. Make sure you understand how the isocost lines shift and how the comparison of two graphs yields answers to the questions.

    Evaluating this Application

    At the beginning, we had four goals:

    1. To understand cost minimization with isoquants and isocosts.

    2. To provide an example of how theory can be applied to real-world problems.

    3. To illustrate how economics can help us understand what we observe.

    4. To see that economics has wide and varied application.

    You decide to what extent the goals were met. At the very least, you learned a little about American manufacturing in the 19th century and rifles (including where the phrase “lock, stock, and barrel” comes from).

    The application should help you understand the conventional isoquant–isocost graph and the firm’s input cost minimization problem. Remember that the higher the price of the input on the x axis or lower the price of the input on the y axis, the steeper the isocosts.

    But the real deep learning and big picture idea concerns how economists view the world. This is called economic reasoning or the economic approach. We did "an economic analysis of the Enfield Arsenal."

    The idea is that economics is not a discipline organized around content (the stock market or money, for example), but a way of thinking. Economists often interpret observed behaviors as optimal solutions to optimization problems and they see change as driven by a shock that takes us from one optimal solution to another.

    Thinking like an economist is difficult and sometimes counter-intuitive, but it can provide an interesting perspective on the world. Certainly, Ames and Rosenberg gave us a novel view of the issues surrounding the Enfield Arsenal.

    Exercises

    1. Explain why the endowment of wood affects the price of machinery used in producing rifles in the 19th century.

    2. What could have caused the British to switch to mass-production techniques before 1854? Give a concrete example.

    3. If the British had used the Blanchard lathe in 1820, then that would have been allocatively inefficient. Draw a graph that shows this and explain what it means.

    4. Ames and Rosenberg (p. 836) include additional differences between America and Britain, such as the fact that the British consumer liked fancier gunstocks:

      American machine processes could not produce guns of the kind favoured by English civilians. The Blanchard lathe produced stocks of a standard size, whereas English buyers did not want standard gunstocks. The English methods were suited to catering to the idiosyncratic needs of individual users.

      How would this information change the comparison of the isoquant–isocost graph in the two countries?

    References

    The epigraph is on the description of The Story of the Gun’s DVD set, available online and in many libraries. This entertaining video mixes the history of firearms with military history and technological change.

    Ames and Rosenberg’s article is an excellent example of economic history. The Cliometric Society is online at www.eh.net/Clio. In Greek mythology, Clio is the muse of history. Cliometricians use economic theory and econometrics to analyze economic history.

    Denis Diderot’s encyclopedia is available online. The Catholic Church banned it because it was too skeptical about Biblical miracles.

    Adam Smith’s discussion of the division of labor and his famous pin factory example is in the first book of The Wealth of Nations, at www.econlib.org/. Although it seems obvious today, specialization as a way to increase productivity was not so clear and Smith argued it drove the mighty economic engine he saw springing to life.

    Appendix: Suggested Answers

    STEP What are the tremendous advantages of interchangeable parts in a rifle (or anything else for that matter) for the end user?

    Fixing broken rifles! You can quickly repair a mass-produced rifle if one of its pieces (lock, stock, or barrel) breaks. A rifle built by hand is useless once one of its individual parts fails. You would need a skilled craftsman to fix it.

    On a battlefield, you could cobble together parts from different broken units to create operating weapons. And anyone could do thisthey would not have to be a skilled craftsman.

    In general, with precision parts, if the product breaks, you can buy a replacement part to repair the product. With bespoke items, you need an expert to adjust and refit to repair it.

     

    STEP Is lack of knowledge about American technology a good answer? Why or why not?

    This is a ridiculous explanation. Granted there is an ocean, but given the common language and communication, this answer makes no sense. In fact, there is lots of evidence that the British knew all about the American methods. They simply chose not to use them.

     

    STEP Is managerial failure a good answer? Why or why not?

    Like lack of knowledge, this is not a very satisfying answer. There is no reason to believe these specific people were especially poor managers. Economists are wary of this type of answer. Self-interested agents who respond to incentives are unlikely to make bad decisions, especially with great sums of money and lives at stake.

    There is a subtle point to be made here that separates economists and non-economists. The latter are much more likely to accept mistake and stupidity to explain an observed decision or behavior that turned out badly. Economists tend to stick with rational, optimizing agents and explain bad choices as a result of lack of information or differing objectives.

    STEP Draw graphs that show how the different resource endowments and input prices affected the optimal input mix. Use the detailed instructions that follow as a guide. How do the graphs answer explain why the British waited so long to adopt mass-production techniques?

    The isoquant is exactly the same in each graph in Figure 11.6. US skilled labor wages were very high because there were few experienced craftsmen migrating to the United States, but lots of young, unskilled workers. The slope of each isocost is the input price ratio, \(-\frac{w_{Unskilled}}{w_{Skilled}}\). Thus, the US isocost lines are flatter than Britain’s. This leads to a different cost-minimizing input mix.

    The price of machinery includes the cost of wood use just like a car’s operating cost includes the cost of gasoline. The early versions of the Blanchard Lathe were quite wasteful, but this did not matter in the heavily forested United States. In Britain, however, wood was expensive. The British Isles were mostly deforested by then. This makes the isocost lines steeper in Figure 11.7 for Britain. Once again, factor prices help determine the input mix.

    So how do these graphs explain how economists view this historical episode? Varying resource endowments mean that each country faces its own set of input prices, which in turn lead to different cost-minimizing solutions. For the United States, unskilled labor with the Blanchard lathe was the cheapest way to make rifles. Not so for the British. At that time and place, with the skilled craftsmen and lack of cheap wood, rejecting mass production was the optimal decision.

    In fact, the economic approach says something even more outlandish. Had the British used mass production for rifles before 1854, that would have been a mistake! Take the US tangency point and transfer it to the British graph in Figures 11.6 and 11.7. Producing with the US input mix is allocatively inefficient for Britainthat is, the British would not be minimizing cost.

    Economists have no problem with agents making different choices. This does not mean that one is right and the other is wrong. All it means is that they face different prices. They are both optimizing. That is a difficult idea to wrap your head around. Ponder it.

     

    STEP Is sudden awareness of new American technology a good answer? Why or why not?

    This answer makes little sense. American and British people and entrepreneurs moved freely across the Atlantic and were well aware of production methods in each country. The claim that a new technique was suddenly made known to the British is absurd.

     

    STEP Is managerial improvement a good answer for the switch? Why or why not?

    This answer is pretty silly. To be credible, it requires an explanation for the sudden change from stupid, lazy, and careless producers of firearms to smart, energetic, and focused ones. There is no evidence of an explosion in managerial aptitude or a burst in managerial education. For this argument to be convincing, we will need a lot more evidence on British management prowess and how it changed over time.

    STEP Answer these two questions:

    1. What happened to the British labor force?

    2. What happened to the Blanchard lathe?

    The British labor force underwent a profound structural adjustment. The skilled craftsmen in the Birmingham gun trade died off and were not replaced. No skilled gunstock maker would suggest that his son follow him into the trade. They could see the writing on the wallthe machines were taking over. As the supply of these workers dwindled, the wages of skilled rifle artisans in Birmingham rose.

    Perhaps more important is the second shock. The Blanchard lathe was continually improved over time; more modern versions of the lathe wasted a lot less wood. Today, a lathe uses a laser sight to precisely cut the wood. No human could possibly compete with it.

    As the lathe wasted less wood, the operating cost of machinery fell. This is a nice example of how the price of an input can represent more than simply the out-of-pocket cost paid for the input. In this example, the price of a lathe is not simply the price paid for the machine itself; it includes the price of the wood used.

    So, the shocks to the input cost minimization problem are that the skilled labor wage rose relative to the unskilled and r fell relative to w.

    Notice how we first figure out what happened and then we model it. That is, we incorporate the story into one of the variables. In this case, the changing labor force increases the wage of skilled labor and the improving Blanchard lathe decreases r.

     

    STEP Draw graphs that show how the changes mentioned affected the optimal input mix. How do the graphs explain why the British switched to mass-production techniques in 1854?

    A high price of skilled labor makes the isocost lines flat (the slope falls in absolute value because the denominator increases). This leads to a more unskilled-labor intensive optimal input mix. As skilled craftsmen disappeared and their wages rose, there was greater incentive to use unskilled labor. Notice how the comparison in Figure 11.8 is across time periods.

    The price of machinery fell and fell as machines got better and better, making the isocost lines steeper and steeper (r is in the denominator) as shown in Figure 11.9, and leading to the adoption of mass-production techniques in Britainthe Enfield Arsenal was born.

    Notice how the Britain in 1854 graphs in Figures 11.8 and 11.9 are the same as the US graphs in Figures 11.6 and 11.7. This shows that when Britain faced the same input prices as the United States, they made the same, optimal decisions.


    This page titled 11.2: The Enfield Arsenal is shared under a CC BY-SA license and was authored, remixed, and/or curated by Humberto Barreto.

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