People counted the number of horses.
But for real. Thomas Savery somewhere around 1700 did a calculation for how much water horses or a steam engine can lift via a pulley system. From this a comparison was made. Basically, get a horse in front of a pulley, attach a bucket of water to the other end and see when it fails to lift it. Do the same with an engine.
Watt later did something similar but with horses turning a big wheel.
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