THE STRUCTURE OF MODERN INDUSTRY.
Sec. 1. _Growing Size of the Business-Unit._
Sec. 2. _Relative Increase of Capital and Labour in the Business._
Sec. 3. _Increased Complexity and Integration of Business
Structure._
Sec. 4. _Structure and Size of the Market for different
Commodities._
Sec. 5. _Machinery a direct Agent in expanding Market Areas._
Sec. 6. _Expanded Time-area of the Market._
Sec. 7. _Interdependency of Markets._
Sec. 8. _Sympathetic and Antagonistic Relations between Trades._
Sec. 9. _National and Local Specialisation in Industry._
Sec. 10. _Influences determining Localisation of Industry under
World-Competition._
Sec. 11. _Impossibility of Final Settlement of Industry._
Sec. 12. _Specialisation in Districts and Towns._
Sec. 13. _Specialisation within the Town._
Sec. 1. Turning once more to the unit of industry, the Business, and
thence to the Trade and the Market, or area of competition, it is
necessary to examine the structural and functional changes brought
about by the action of the new industrial forces.
In considering the effect of modern machine-production upon the
Business, the most obvious external change is a great increase in
size. The typical unit of production is no longer a single family or a
small group of persons working with a few cheap simple tools upon
small quantities of material, but a compact and closely organised mass
of labour composed of hundreds or thousands of individuals,
co-operating with large quantities of expensive and intricate
machinery, through which passes a continuous and mighty volume of raw
material on its journey to the hands of the consuming public.
The expansion in mass of labour and capital composing the industrial
unit does not, however, proceed at the same pace in the different
industries.
The largest growths are found in two classes of industry. First, those
which close dependence on monopoly of land, or other privilege
conferred by state or municipal government, has placed outside
competition. The size here is determined by that amount of capital
required to achieve the most profitable equation of supply and demand
prices under terms of monopoly.[99] In this class are placed such
large businesses as railways, gas, or water companies. Second, those
industries where the net advantages of large-scale production over
small scale in competitive industry are greatest. Generally speaking,
those industries where the most expensive machinery is employed come
under this head, or where, as in banking and financial business, a
large capital is managed more economically, and enjoys a monopoly of
certain profitable kinds of work.
In retail trade, where neither of these forces is so powerfully
operative, the increase in mass of capital and labour is not so great,
though here too the economies of large-scale production are giving
more and more prominence to the Universal Provider, and a large number
of local shops are falling into the hands of companies. Large
syndicates of capital at Smithfield are owning butchers' shops in most
large towns, the drapery, jewellery, shoe trade are more and more
passing into the hands of large companies, while an increased
proportion of tobacconists, publicans, grocers, and other retailers
are practically but agents of large capitalist firms. In such branches
of agriculture as have lent themselves most effectively to new
machinery the same movement is visible in the prevalence of large
farming. This is seen everywhere where land is placed on the same
property footing as other forms of capital. Though small farms are for
some purposes still capable of yielding a large net as well as gross
product, it is for the most part the legal, customary, and
sentimental restrictions on free transfer of land that impede the
tendency towards large farming.
It is, however, in the manufacturing and transport industries that we
trace the most general and rapid growth of the unit of production. And
here machinery is the chief external cause. Gigantic railways and
steamship companies are the successors of stage coach businesses and
small shippers. The size and value of the modern cotton factory, iron
works, sugar refinery, or brewery are incomparably greater than the
units of which these industries were composed a century and a half
ago. In certain highly-machined industries the size of the unit is so
enlarged that the number of businesses engaged in turning out the
ever-growing output is actually diminishing. Among textile industries
the spinning mills of England and Wales show a marked diminution in
numbers between 1870 and 1890, while a similar movement in weaving
mills is only retarded by the capacity of small sweating masters to
compete with the more developed factories in certain minor branches,
such as tape manufacture, and by the survival of the home worker
owning his loom and hiring his power in such trades as the ribbon
weaving of Coventry.[100]
The following statistics[101] of the cotton and woollen industries in
Great Britain serve to illustrate the growing size of the unit of
production in the representative branches of textile work:--
KEY:
A: Spinning.
B: Weaving.
C: Spinning and Weaving.
D: Others.
E: Total.
F: Spinning.
G: Doubling.
H: Power-Looms.
COTTON.
NO. OF MILLS. NO. OF SPINDLES.
A B C D E F G H
1870 1108 693 532 150 2483 33,995,221 3,723,537 440,676
1890 935 990 438 175 2538 40,511,934 3,992,885 615,714
WOOLLEN.
1870 648 109 860 212 1829 2,531,768 160,993 48,140
1890 494 124 895 280 1793 2,107,209 299,793 61,831
This increase of the number of spindles and looms in the average
textile mill is more significant when the "speeding up" of modern
machinery is taken into account. The increased size of the unit of
industry as measured by productivity is even greater than appears from
the statistics above quoted.
Schulze-Gaevernitz points out that in the thirty years between 1856
and 1885, while the factories in cotton spinning and weaving only
increased from 2210 to 2633, the number of spindles increased from
28,010,217 to 44,348,921, the number of looms from 298,847 to 560,955,
and that since both spindles and looms worked much faster in 1885 than
in 1856, the output has increased in still greater proportion.[102]
Turning to another highly-developed machine industry, that of milling,
we find a similar movement. Flour mills are diminishing in number both
in England and in the United States. The period 1884-86 showed a
diminution in the number of flour mills in the United States from
25,079 to 18,267, though the total productive power of the smaller
number was greatly increased. Mr. Wells finds a similar tendency in
the general manufacturing industry of the United States:--"Between
1850 and 1860 the number of manufacturing firms and corporations in
the United States increased from 123,025 to 140,433, and the value of
manufactured products increased from $1,019,106,616 to $1,885,861,876,
so that in that decade there was an increase of 17,408 establishments,
to an increase of $866,755,060 in the value of products. In 1870 there
were 252,148 firms and corporations so employed, producing
$4,232,325,442 in manufactured products; or an increase of 111,715
establishments in the decade of 1860 to 1870 gave an increase of
$2,346,463,766 in the value of products. In 1880 the number of
manufacturing establishments was returned at 253,852, producing
articles valued at $5,365,579,191, or an addition of only 1704 firms
and corporations was accompanied with an increase of product of
$1,133,537,749. Here then is a demonstration that the average product
of a manufacturing establishment in the United States in 1880 was just
60 per cent. greater than it was in 1860."[103]
Sec. 2. While the mass of capital and labour which constitutes a business
is growing, the latter grows less rapidly than the former. That is to
say, capital is in point of size becoming more and more the dominant
factor in the business. With the effect of this upon the economic
character and conditions of labour we are not here concerned. The
subject requires a separate treatment. Here it suffices to recognise
the quantitative change that has taken place. Under domestic industry
the value of the implements used was, as a rule, equivalent only to a
few months' wages. In 1845 McCulloch estimated that the fixed capital
in well-appointed cotton mills amounted to about two years' wages of
an operative.[104] In 1890 Professor Marshall assigns a capital in
plant amounting to about L200 or five years' wages for every man,
woman, and child in a fully-equipped spinning mill.[105] In the
typical modern industry, that of cotton-spinning and weaving, the
increasing size is both continuous and rapid. The average number of
spindles and looms to the single factory in 1850 and 1885 are as
follows:--
Spindles. Power-Looms.
1850 10,858 155
1885 15,227 213
Even these figures do not fully represent the facts, for they include
considerable numbers of mills of the older sort, where spinning and
weaving are carried on together. Taking the more highly specialised
spinning mills in the Oldham district, the average is stated at
65,000, while the largest mills have as many as 185,000 spindles. So
also the average number of power-looms in the North Lancashire
district is placed at 600, the largest number in a single business
amounting to 4500.[106]
"Again, the cost of a steamship is perhaps equivalent to the labour of
ten years or more of those who work her, while a capital of about
L900,000,000 invested in railways in England and Wales is equivalent
to the work for about twenty years of the 400,000 people employed on
them."[107]
This growth in the unit of capital is, as we perceive, largely due to
the establishment of large and expensive machinery and other plant as
a leading feature in modern production. The fact that modern methods
are largely instrumental in increasing the quantity of products might
lead us to suppose that the growth of the raw material or circulating
part of the capital of a business would correspond with the growth of
fixed forms of capital. This, however, is not the case. In the most
highly organised machine industry an increasing proportion of the
economy goes into the improved methods of manipulating material so as
to prevent waste, and by improved quality of work and elaboration of
manufacture to get a larger net amount of product out of a given
quantity of raw material.
In cotton-spinning, for example, since 1834 the waste of raw material
has been reduced from 1/7 to about 1/10; inferior material, once
useless, is now mixed with better stuff; and more important still,
modern machinery has, by adapting itself to the spinning of finer
yarn, effected great saving in the quantity consumed by each spindle.
In many other industries we shall find this same process going on,
whereby the proportion of capital which consists of raw material is
reduced, and the proportion which consists in machinery and other
fixed capital enhanced.
The growth of the unit of capital in the developed modern
manufacturing business entails also a growth in the unit of labour,
though not a corresponding growth. The number of employees in a
business is larger in proportion as the business passes into the stage
of highest industrial organisation. In the United States in 1880 it
was estimated that the average number of employees in a manufacturing
business for the whole country was a little less than 11, but in the
chief manufacturing states of Massachusetts, Connecticut, and Rhode
Island it was about 25, while in Pittsburg, the great centre of iron
industry, it was more than 33.
Sec. 3. In addition to increased size we find increased and
ever-increasing complexity of structure in the business-unit. This has
proceeded in two directions, horizontally and laterally--that is to
say, by subdivision and accession of processes on the one hand, and by
an increased variety of products, and therefore of processes, upon the
other hand. The constantly growing specialisation of fixed capital and
of labour in our factories and workshops is a commonplace. Adam
Smith's famous pin manufactory, with its ten separate processes, has
been left far behind. In a modern shoe factory in the United States
there are sixty-four distinct processes. Grain, in the elaborate
machinery of a steam flour mill, passes through a score of different
stages, cleaning, winnowing, grinding, etc. The American machine-made
watch is the product of 370 separate processes. The organisation of a
modern textile factory provides a dozen different processes
contributing to the spinning or weaving of cotton or silk. New
processes of cleaning, finishing, and ornamenting are continually
being added. The subsidiary process of packing, the manufacture of
packing cases, the printing of labels, etc., are taken on in many
factories.[108] Many branches of production which were formerly
carried on in separate places and as separate business-units are
grouped together under the factory roof, or if still separated
locally, and executed by separate machinery and power, are related as
forming part of the same business, and are under the same management.
So in the woollen manufactures the preliminary processes of sorting
and cleansing, carding or combing, as well as the main processes of
spinning and weaving, fulling, dyeing, and finishing, each of which
was once committed to a separate and independent group of workers, are
now frequently found going on simultaneously in a single factory.[109]
Thus a number of small simple business-units representing the various
stages in the production of a commodity, come to group themselves into
a large complex unit.
This complexity is further increased by constant demand for variety in
size, quality, and character of goods to meet the growing variety of
demand in a market of increasing area. Special classes of goods must
be manufactured for Australia, for Egypt, for Burmah. Less civilised
customers, including such countries as China and Persia, insist upon
their imported goods being made up and packed in some familiar form
long after the use or convenience of this form has passed away. The
exigencies of close competition require constant experiment in new
lines of goods to benefit the fancy of a newly-opened market, or to
get away the trade of some competitor. Moreover, the increasingly
important part which is played by advertising in the trades where
competition is keenest is followed by a very singular result, which
seems at first sight to contravene the growing specialism or
differentiation of function that marks modern trade. Finding that
goods advertise one another, manufacturers are frequently induced to
add new departments to their business, expanding the scope and variety
of their productions. In retail trade this tendency is widely
operative. The modern grocer sells tinned meats, cakes, wine,
tea-pots, and Christmas cards, the draper sells every sort of
ornamental ware, the stationer, the oil shop, the china shop set out
an increasing and miscellaneous number of differing wares, moving
towards the position of a general dealer. The Stores and the Universal
Providers represent the culmination of this movement in the retail
business, returning to an enlarged and more complex form of the
primitive little "general shop" of the village. But this same economy
is strong enough in certain classes of manufacture to overpower the
advantages of an expansion of business in the older form. Up to a
certain point the economies of production upon a large scale will make
it advantageous to a manufacturer to employ all the capital at his
command in producing increased quantities of the same class of goods.
But after the market for these goods is fairly supplied it may pay
better to appeal to a variety of wants by new species of goods of the
same generic character, than by attempting to force new markets, or to
effect an increased sale in the old markets at such reduced prices as
the increased scale of production may permit. The business of Messrs.
Huntley & Palmer is a striking example of this enterprise, issuing in
a large variety of products and of processes which, though generically
related, cover a widening range of food luxuries. The new products
which are taken on will of course not only reap the advantage of being
effectively advertised by the earlier products, but consisting
largely of new adaptations of the same kind of raw material, the
economies of purchase and transport will be almost as great as attend
an increased production of the same goods, while much of the machinery
of management, and even of manufacture, can be utilised for the new
processes. This tendency not merely to multiply processes in the
manufacture of a single commodity, but to increase the variety of
commodities turned out by analogous processes in a single business, is
also operative in certain textile and metal industries, where an
increasing proportion of the expensive machinery and skilled labour is
engaged, not in narrowly specific processes of manufacture, but in
generating power and in transmitting it for a number of later uses to
be governed by specific machinery. There is in many factories an
increasing facility to take on new processes, and to transfer a large
portion of the plant from the manufacture of one class of goods to
another class.
"Most of the operatives in a watch factory would find machines very
similar to those with which they were familiar if they strayed into a
gun-making factory or sewing-machine factory, or a factory for making
textile machinery. A watch factory, with those who worked in it, could
be converted without any overwhelming loss into a sewing-machine
factory."[110] Thus in the evolution of the modern business we see not
only a number of processes in the production of a commodity, each of
which constituted a separate business-unit in the earlier division of
labour, growing together into a large complex whole, but a growing
together of analogous processes in the production of different
commodities, a lateral aggregation of processes. So we recognise that
the growing complexity of the business-unit, whether we regard it from
the point of view of capital or of labour, arises in large measure
from an increased integration of productive processes. The
business-unit is larger, more heterogeneous, and more highly
integrated.
Sec. 4. Ascending from the business-unit to the larger unit in the
structure of industry, the Market, or groups of directly competing
businesses, we find similar changes have taken place. In considering
these changes the relation between Market and Trade should be clearly
grasped. The mere fact that two persons or groups of persons in
different places are engaged in similar processes of production, that
is to say, belong to the same trade, has no significance for us. The
trade or aggregate of productive units of a particular sort receives
industrial unity only in so far as there is competition of the units
in buying the raw materials, tools, and labour for carrying on their
trade, and in selling the results of their activity. Weavers of cotton
goods in Central China belong to the same trade as weavers in
Lancashire, and conduct their craft with similar implements to those
which still prevail in the cottage industries of France and Germany,
but such competition as may exist between them is so indirect and
slight that it may be neglected in considering industrial structure.
It is in the competition of a market that businesses meet and are
vitally related. In a trade there may be several markets whose
connection is distant and indirect. Market is the name given to a
number of directly competing businesses. "Economists understand by the
term market not any particular market-place in which things are bought
and sold, but the whole of any region in which buyers and sellers are
in such free intercourse with one another that the prices of the same
goods tend to equalise easily and quickly."[111]
A single competitive price is then the essential feature and the test
of a market. Businesses in such close relation with one another that
the prices at which they buy and sell are the same, or differ only by
reason of and in correspondence with certain local advantages or
disadvantages, are members of a single market. The money market is a
single market throughout the world. The price of money in London,
Rome, Rio de Janeiro, may differ, but this difference will correspond
to certain differences of risk. There will be a tendency towards a
single price, or, putting the case in other words, wherever in the
world L100 of money represents the same commodity the same price will
be paid for its use, while any difference in its value as a commodity
will be accurately reflected in the difference of price.
Absolute freedom of intercourse is not essential to the establishment
of a common market. Market tariffs and other advantages and
disadvantages may place the competitors on an unequal footing.
Moreover, in order to form part of a market as helping to determine
the price, a business need not actively enter the field of
competition. Fear of the potential competition of outsiders often
keeps down prices to a level above which they would rise were it not
for the belief that such a rise would bring into active, effective
competition the outsider. England had until recently a monopoly of the
market for cotton goods in certain Eastern countries, but the price at
which she sold was determined by the possibility of rival French or
German merchants, as well as by the direct competition of the several
English firms. In certain commodities the market is conterminous with
the trade, that is, we have a world-market. This is the case with many
of the forms of money, the most abstract form of wealth, and the most
highly competitive.
Dealers in Stock Exchange securities, in the precious metals, are in
active, constant competition at all the great commercial centres of
the world. Other staple commodities, whose value is great, durable,
and portable, such as jewels, wheat, cotton, wool, have to all intents
and purposes a single market.
This world-market represents the fullest expansion due to modern
machinery of transport and exchange, the railway, steamship,
newspaper, telegraph, and the system of credit built up and maintained
by the assistance of these material agents.
The market-area for various commodities varies with the character of
these commodities, from the world-market for stock exchange securities
down to the minimum market consisting of a few neighbouring farmers
competing to sell their over-ripe plums or their skim-milk. The chief
qualities which determine the market-area are--
(_a_) _Extent of demand._--Things in universal or very wide demand,
which are at the same time durable, such as money, wool, wheat,
compete over very wide areas. Things specially accommodated to the
taste or use of a particular locality or a small class of individuals
will have a narrow market. This is the case with clothes of a
particular cut, and with many kinds of fabrics out of which clothes
are made. The market for certain classes of topographical books will
be confined to the limits of a county, though the book market for many
books is a world-market.
(_b_) _Portability._--Even where the demand is far from a general one,
the market-area may be very wide where high value is stored in small
bulk. Smoking tobacco and more highly valued wines and liqueurs are
examples of this order. The market for common bricks is local, though
Portland marble finds a national market.
(_c_) _Durability._--Durable objects and objects which can easily be
brought within reach of modern means of rapid transport have a wide
market. Perishable goods, as, for example, many fruits and vegetables,
have for these reasons a narrow market.
Sec. 5. Modern machinery has in almost all cases raised the size of the
market. The space-area of competition has been immensely widened,
especially for the more durable classes of goods. It is machinery of
transport--the transport of goods and news--that is chiefly
responsible for this expansion. Cheaper, quicker, safer, and more
calculable journeys have shrunk space for competing purposes. Improved
means of rapid and reliable information about methods of production,
markets, changes in price and trade have practically annihilated the
element of distance.
Machinery of manufacture as well as of transport has a levelling
tendency which makes directly for expansion of the area of
competition. As the spread of knowledge places each part of the
industrial world more closely _en rapport_ with the rest, the newest
and best methods of manufacture are more rapidly and effectively
adopted. Thus in all production where less and less depends on the
skill of the workers, and more and more upon the character of the
machinery, every change which gives more prominence to the latter
tends to equalise the cost of production in different countries, and
thus to facilitate effective competition.
Sec. 6. Modern methods of production have also brought about a great
expansion in the time-area of the market. Competition covers a wider
range of time as well as of space. Production is no longer directed by
the quantity and quality of present needs alone, but is more and more
dependent upon calculation of future consumption. A larger proportion
of the brain power of the business man is devoted to forecasting
future conditions of the market, and a larger proportion of the
mechanical and human labour to providing future goods to meet
calculated demands. This expansion of the time-market, or growth of
speculative production, is partly cause, partly effect of the improved
mechanical appliances in manufacture and in transport. The
multiplication of productive power under the new machinery has in many
branches of industry far outstripped the requirements of present known
consumption at remunerative prices, while increased knowledge of the
widening market has given a basis of calculation which leads
manufacturers to utilise their spare productive power in providing
against future wants. So long as industry was limited by the labour of
the human body, assisted but slightly by natural forces and working
with simple tools, the output of productive energy could seldom
outstrip the present demand for consumable goods.
But machinery has changed all this. Modern industrial nations are able
to produce consumables far faster than those who have the power to
consume them are willing to exercise it. Hence there is an
ever-increasing margin of productive power redundant so far as the
production of present consumptive goods is concerned. This excess of
productive power is saved. It can only be saved by being stored up in
some material forms which are required not for direct consumption but
for assisting to increase the rate at which consumables may be
produced in the future. In order to make a place for these new forms
of saving it is necessary to interpose a constantly increasing number
of mechanical processes between the earliest extractive process which
removes the raw material from the earth and the final or retailing
process which places it in the consumer's hands. New machinery, more
elaborate and costly, is applied; special workshops, with machines to
make this machinery--other machinery to make these machines; there is
an expansion of the mechanism of credit, the system of agents and
representatives is expanded, new modes of advertising are adopted.
Thus an ever-widening field of investment is provided for the spare
energy of machine-production. The change is commonly described by
saying that production is more "roundabout."[112] A larger number of
steps are inserted in the ladder of production. This increased
complexity in the mechanism of production is not, however, the central
point of importance. We must realise that the change is one which is
essentially an increase in the "speculative" character of commerce.
The "roundabout" method of production signifies a continual increase
in the proportion of productive forces devoted to making "future
goods" as Now future goods, plant, machinery, raw material of
commodities, are essentially "contingent goods": their worth or waste
depends largely upon conditions yet unborn: their social utility and
the value based upon it depend entirely upon the future powers and
desires of those unknown persons who are expected to purchase and
consume the commodities which shall come into existence as results of
the existence and activity of these future goods.
The actual time which elapses between the extractive stage and the
final retail stage of a commodity may not be greater and is in many
cases far less under the new methods of industry. The raw cotton of
South Carolina gets on the wearer's back more quickly than it did a
century and a half ago. But when we add in the time-elements involved
in the provision of the various forms of intricate plant and machinery
whose utility entirely consists in forwarding these cotton goods, and
whose existence in the industrial mechanism depends upon them, we
shall perceive that the "roundabout" method signifies a great
extension of the speculative or time-element in the market.[113]
Sec. 7. The growing interdependency of trades and markets, the ever
closer sympathy which exists between them, the increased rapidity with
which a movement affecting one communicates itself to others, is
another striking characteristic of modern trade. This interdependency
is in large measure one of growing structural attachment between
trades and markets formerly in faint and distant sympathetic
relationship. Formerly, agriculture was the one important foundational
industry, and from the feebleness of the transport system the vital
connections and the unity it supplied was local rather than national
or international. Now the agricultural industries no longer occupy
this position of prominence. The coal and iron industries engaged in
furnishing the raw material of machinery and steam-motor, the machine
manufacture, and the transport services, are the common feeders and
regulators of all industries, including that of agriculture. They form
a system corresponding to the alimentary system of the human body, any
quickening or slackening of whose functional activities is directly
and speedily communicated to the several parts. Any disturbance of
price, of efficiency, or regularity of production in these
foundational industries is reflected at once and automatically in the
several industries which are engaged in the production and
distribution of the several commodities. The mining and metal
industries, shipbuilding, and the railway services are recognised more
and more as furnishing the true measure and test of modern trade;
their labour enters in ever larger proportion into the production of
all the consumptive goods.
Besides the general integration or unification of industry implied by
the common dependency of the specific trades upon these great
industries, there are other forces engaged in integrating groups of
trades. Foremost is the "roundabout" method of production, to which
our attention has been already directed. Not merely does this
capitalist system bring a number of trades and processes under the
control of a single capital, as a single complex business, but it
establishes close identity of trade-life and interests among
businesses, trades, and markets which remain distinct so far as
ownership and management are concerned.
Sec. 8. If we take the mass of capital and labour composing one of our
staple productive industries, we shall find that it is related in four
different ways to a number of other industries.
(1) It has a number of trades which are directly co-ordinate--_i.e._,
engaged in the earlier or later processes of producing the same
consumptive goods. Thus the manufacture of shoes is related
co-ordinately to the import trades of hides and bark, to tanning, to
the export trade in shoes, and to the retail shoe trade. A common
stream of produce is flowing through these several processes, and
though from the point of view of ownership and management there may be
no connection, there is a close identity of trade interest and a quick
sympathy of commercial life at these several points.
(2) Each important manufacturing industry has a number of industries
which in their relation to it are secondary, although in some cases,
having similar relations to a number of other trades, they may in
themselves be large and important. In the large textile centres are
found a number of minor industries, planers, sawyers, turners,
fitters, smiths, engaged in irregular work of alteration and repairs
upon the plant and machinery of the textile factories. The same holds
of all important manufactures, especially those which are closely
localised.
A somewhat similar relation appertains between those manufactures
engaged in producing the main body of any product and the minor
industries, which supply some slighter and essentially subsidiary
part. In relation to the main textile and clothing industries, the
manufacture of buttons, of tape, feathers, and other elements of
ornament or trimmings may be regarded as subsidiary. In the same way
the manufacture of wall-papers or house paint may be considered
subsidiary to the building trades, that of blacking to the shoe
manufacture. These subsidiary trades are related to the primary one
more or less closely, and are affected by the condition of the latter
more or less powerfully in proportion as the subsidiary elements they
furnish are more or less indispensable in character. The fur and
feather trades are far more dependent upon direct forces of fashion
than upon any changes of price or character in the main branches of
the clothing trade. On the other hand, any cause which affected
considerably the price of sugar would have a great and direct
influence on the jam manufacture, while the rise in price of tin due
to the M'Kinley tariff caused serious apprehension to the Chicago
manufacturers and exporters of preserved meats.
(3) The relations between one of the great arterial industries, such
as coal-mining, railway transport, or machine-making, and a specific
manufacture may be regarded as auxiliary. The extent to which the
price of coal, railway rates, etc., enters into the price of the goods
and affects the condition of profits in the trade measures the
closeness of this auxiliary connection. In the case of the smelting
industries or in the steam transport trades, even in the pottery
trades, the part played by coal is so important that the relation is
rather that of a primary than an auxiliary connection--_i.e._,
coal-mining must be ranked as co-ordinate to smelting. But where heat
is not the direct agent of manufacture, but is required to furnish
steam-motor alone, as in the textile factories, the connection may be
termed auxiliary.
(4) The relationship between some industries is "sympathetic" in the
sense that the commodities they produce appeal to closely related
tastes, or are members of a group whose consumption is related
harmoniously. In foods we have the relations between bread, butter,
and cheese; the relation in which sugar and salt stand to a large
number of consumables. Some of these are natural relations in the
sense that one supplies a corrective to some defect of the other, or
that the combination enhances the satisfaction or advantage which
would accrue from the consumption of each severally. In other cases
the connection is more conventional, as that between alcohol and
tobacco. The sporting tastes of man supply a strong sympathetic bond
between many trades. The same is true of literary, artistic, or other
tastes, which by the simultaneous demand which they make upon several
industries, in some proportion determined by the harmonious
satisfaction of their desires, throw these industries into sympathetic
groups.[114] These four bonds mark an identity of interest between
different industries.
The relationship is sometimes one of divergency or competition of
trades. Where the same service may be supplied by two or more
different commodities the trades are related by direct competition.
Oil, gas, electricity, as illuminants, are a familiar example of this
relationship. Many trades which produce commodities that are similar,
but far from identical in character, feel this relationship very
closely. The competition between various kinds of food, which with
different kinds and degrees of satisfaction may produce the same
substantial effects, between fish and meat, between various kinds of
vegetables and drinks, enables us to realise something of the
intricacy of the relations of this kind. In clothing we have
antagonism of interests between the various fabrics which has led to
great industrial changes. The most signal example is the rise of
cotton, its triumph over woollen clothes by the earlier application of
the new machinery, and over silk by the early superiority of its
dyeing and printing processes.[115] So in recent years in the conflict
among beverages, tea, and in a less measure cocoa, have materially
damaged the growth of the coffee industry so far as English
consumption is concerned. Where such rivalry exists, an industry may
be as powerfully and immediately affected by a force which raises or
depresses its competitor as by a force which directly affects itself.
Sec. 9. The growth of numerous and strongly-built structural attachments
between different trades and markets related to different localities
implies the existence of a large system of channels of communication
throughout our industrial society. By the increased number and
complexity of these channels connecting different markets and
businesses, and relating the most distant classes of consumers, we can
measure the evolution of the industrial organism. Through these
channels flow the currents of modern industrial life, whose pace,
length, and regularity contrast with the feeble, short, and spasmodic
flow of commerce in earlier times. This advance in functional activity
of distribution is thus expressed by Mr. Spencer:--"In early English
times the great fairs, annual and other, formed the chief means of
distribution, and remained important down to the seventeenth century,
when not only villages, but even small towns, devoid of shops, were
irregularly supplied by hawkers who had obtained their stocks at these
gatherings. Along with increased population, larger industrial
centres, and improved channels of communication, local supply became
easier; and so frequent markets more and more fulfilled the purpose
of infrequent fairs. Afterwards, in chief places and for chief
commodities, markets themselves multiplied, becoming in some cases
daily. Finally came a constant distribution, such that of some foods
there is to each town an influx every morning; and of milk even more
than once in the day. The transition from times when the movements of
people and goods between places were private, slow, and infrequent, to
times when there began to run at intervals of several days public
vehicles moving at four miles an hour, and then to times when these
shortened their intervals and increased their speed, while their lines
of movement multiplied, ending in our own times, when along each line
of rails there go at full speed a dozen waves daily that are
relatively vast, sufficiently show us how the social circulation
progresses from feeble, slow, irregular movements to a rapid, regular,
and powerful pulse."[116]
The differentiation of function in the several parts of the industrial
organism finds a partial expression in the localisation of certain
industries. As there is growing division of labour among individuals
and groups of individuals, so the expansion of the area of competition
has brought about a larger and larger amount of local specialisation.
Roughly speaking, the West of Europe and of America has specialised in
manufacture, drawing an ever larger proportion of their food supplies
from the North-West States of America, from Russia, the Baltic
Provinces, Australia, Egypt, India, etc., and their raw materials of
manufacture from the southern United States, South America, India,
etc., while these latter countries are subjected to a correspondent
specialisation in agriculture and other extractive arts. If we take
Europe alone, we find certain large characteristics which mark out the
Baltic trade, the Black Sea trade, the Danube trade, the Norwegian and
White Sea trade. So the Asiatic trade falls into certain tolerably
defined divisions of area, as the Levant trade, the Red Sea trade, the
Indian, the Straits, and East Indian, the China trade, etc. The whole
trade of the world is thus divided for commercial purposes.[117]
Though these trade divisions are primarily suggested by
considerations of transport rather than of the character of
production, the geographical, climatic, and other natural factors
which determine convenient lines of transport are found to have an
important bearing on the character of the production, and convenience
of transport itself assists largely to determine the kind of work
which each part of the world sets itself to do.
The establishment of a world-market for a larger and larger number of
commodities is transforming with marvellous rapidity the industrial
face of the globe. This does not now appear so plainly in the more
highly-developed countries of Europe, which, under the influence of
half a century's moderately free competition for a European market,
have already established themselves in tolerably settled conditions of
specialised industry. But in the new world, and in those older
countries which are now fast yielding to the incursions of
manufacturing and transport machinery, the specialising process is
making rapid strides.
Improved knowledge of the world, facile communication, an immense
increase in the fluidity of capital, and a considerable increase in
that of labour, are busily engaged in distributing the productions of
the world in accordance with certain dominant natural conditions.
Those industrial forces which have during the last century and a half
been operative in England, draining the population and industry from
the Southern and Eastern counties, and concentrating it in larger
proportions in Lancashire, the West Riding, Staffordshire, and round
the Northumbrian and South Wales coal-fields, specialising each town
or locality upon some single branch of the textile, metal, or other
industries for which its soil, position, or other natural advantages
made it suitable, are now beginning to extend the area of their
control over the whole surface of the known and inhabited globe.
As large areas of Asia, South and Central Africa, Australia, and South
America fall under the control of European commercial nations, are
opened up by steamships, railways, telegraphs, and are made free
receptacles for the increased quantity of capital which is unable to
find a safe remunerative investment nearer home, we are brought nearer
to a condition in which the whole surface of the world will be
disposed for industrial purposes by these same forces which have long
been confined in their direct and potent influence to a small portion
of Western Europe and America. This vast expansion of the area of
effective competition is beginning to specialise industry on the basis
of a world-market, which was formerly specialised on the more confined
basis of a national or provincial market. So in England, where the
early specialisation of machine-industry was but slightly affected by
outside competition, great changes are taking place. Portions of our
textile and metal industries, which naturally settled in districts of
Lancashire, Yorkshire, and Staffordshire, while the area of
competition was a national one,[118] seem likely to pass to India, to
Germany, or elsewhere, now that a tolerably free competition on the
basis of world-industry has set in. It is inevitable that with every
expansion of the area of competition under which a locality falls the
character of its specialisation will change. A piece of English ground
which was devoted to corn-growing when the market was a district one
centred in the county town, becomes the little factory town when
competition is established on a national basis; it may become the
pleasure-ground of a retired millionaire speculator if under the
pressure of world-competition it has been found that the manufacture
which now thrives there can be carried on more economically in Bombay
or Nankin, where each unit of labour power can be bought at the
cheapest rate, or where some slight saving in the transport of raw
material may be effected.
Sec. 10. The question how industry would be located, assuming the whole
surface of the globe was brought into a single market or area of
competition, with an equal development of transport facilities in all
its parts; or in other words, "What is the ideal disposition of
industry in a world-society making its chief end the attainment of
industrial wealth estimated at present values?" is one to which of
course no very exact answer can be given. But since this ideal
represents the goal of modern industrial progress, it is worth while
to call attention to the chief determinants of the localisation of
industries under free world-competition. The influences may be placed
in three groups, which are, however, interrelated at many points.
(1) The first group may be called Climatic, the chief influences of
which are astronomical position, surface contour, prevalent winds,
ocean currents, etc. Climatic zones have their own flora and fauna,
and so far as these enter into industry as agricultural and pastoral
produce, as raw materials of manufacture, as sustenance of labour,
they are natural determinants of the localisation of industry. In
vegetable products the climatic zones are very clearly marked. "The
boreal zone has its special vegetation of mosses, lichens, saxifrages,
berries, oats, barley, and rye; the temperate zone its peas, beans,
roots, hops, oats, barley, rye, and wheat; this zone, characterised by
its extent of pastures, hop gardens, and barley fields, has also a
distinctive title in the 'beer and butter region.' The warm temperate
zone, or region of 'wine and oil,' is characterised by the growth of
the vine, olive, orange, lemon, citron, pomegranate, tea, wheat,
maize, and rice; the sub-tropical zone, by dates, figs, the vine,
sugar-cane, wheat, and maize; the tropical zone is characterised by
coffee, cocoa-nut, cocoa, sago, palm, figs, arrowroot, and spices; and
the equatorial by bananas, plantains, cocoa-nut, etc."[119]
(2) The second group is geographical and geological. The shape and
position of a country, its relation in space to other countries, the
character of the soil and sub-soil, its water-supply, though closely
related to climatic influences, have independent bearings. The
character of the soil, which provides for crops their mineral food,
has an important bearing upon the raw materials of industry. The shape
and position of the land, especially the configuration of its coast,
have a social as well as climatic significance, directing the
intercourse with other lands and the migrations of people and
civilisations which play so large a part in industrial history.
(3) Largely determined by the two groups of influences named above are
the forces which represent the national character at any given time,
the outcome of primitive race characteristics, food supply, speed and
direction of industrial development, density of population, and the
various other causes which enter in to determine efficiency of labour.
The play of these natural and human forces in world-competition leads
to such a settlement of different industries in different localities
as yields the greatest net productiveness of labour in each part.
Sec. 11. But this world-competition, however free it may become, can lead
to no finality, no settled appointment of industrial activity to the
several parts of the earth. Setting aside all political and other
non-economic motives, there are three reasons which render such local
stability of industry impossible.
There is first the disturbance and actual loss sustained by nature in
working up the mineral wealth of the soil, and the flora and fauna
sustained by it, into commodities which are consumed, and an exact
equivalent of which cannot be replaced. The working out of a
coal-field, the destruction of forests which reacts upon the
elementary climatic influences, are examples of this disturbance.
Secondly, there is the progress of industrial arts, new scientific
discoveries applicable to industry. There is no reason to believe that
human knowledge can reach any final goal: there is infinity alike in
the resources of nature and in the capacity of the development of
human skill.
Lastly, as human life continues, the art of living must continually
change, and each change alters the value attached to the several forms
of consumption, and so to the industrial processes engaged in the
supply of different utilities. New wants stimulate new arts, new arts
alter the disposition of productive industry, giving value to new
portions of the earth. Ignoring those new material wants which require
new kinds of raw material to be worked up for their satisfaction, the
growing appreciation of certain kinds of sport, the love of fine
scenery, a rising value set upon healthy atmosphere, are beginning to
exercise a more and more perceptible influence upon the localisation
of certain classes of population and industry in the more progressive
nations of the world.
Sec. 12. The same laws and the same limitations which are operative in
determining the character and degree of specialisation of countries or
large areas are also seen to apply to smaller districts, towns, and
streets. Industries engaged in producing valuable, durable material
objects in wide demand are locally specialised; those engaged in
providing bulky perishable non-material goods, or goods in narrow
demand, are unspecialised. England, where internal intercourse has
been most highly developed, and where internal competition has been
freest and keenest, shows the most advanced specialisation in several
of its staple industries. The concentration of cotton spinning in
South Lancashire is an example, the full significance of which often
escapes notice. From the beginning South Lancashire was the chief seat
of the industry, but it is now far more concentrated than was the case
a century ago. Several of the most valuable inventions in spinning
were first applied in Derbyshire, in Nottingham, at Birmingham, and in
Scotland. Scotland then competed closely in weaving with Lancashire.
Now the Scotch industry is confined to certain specialities. In spite
of the enormous growth of the manufacture, the local area it covers is
even narrower than last century. Within Lancashire itself the actual
area of production has shrunk to some 25 square miles in the extreme
south, while the two great cities are further specialised--Liverpool
as the market for cotton, Manchester for yarn and cotton cloths.
Moreover, the localisation of various departments of the trade within
Lancashire is still more remarkable. Not only have the old mills in
which spinning and weaving were carried on together given way before
division of labour, but the two processes are mostly conducted in
different districts, the former in the towns immediately around
Manchester, the latter in the more distant northern circuit. Nor is
the specialisation confined to this. Spinning is again divided
according to the coarser and finer qualities of yarn. The Oldham
district, with Ashton, Middleton, and other towns south of Manchester
are chiefly confined to the medium numbers. Bolton, Chorley, Preston,
and other northern towns undertake the finer numbers. In weaving there
is even more intricate division of labour, each town or district
specialising upon some particular line of goods.[120] Moreover, it
must be borne in mind that the substitution of the factory for the
domestic system and the continual enlargement of the average factory
indicates an important progressive concentration. So the cotton
industry does not in fact cover nearly so large a local area as when
it was one-hundredth the size. The same is true of the other chief
branches of the textile and metal industries. Nor is it only in the
manufactures that towns and districts are closely specialised. The
enormous increase of commerce due to machinery of manufacture and of
transport requires the specialisation of certain towns for purely
commercial purposes. London, Liverpool, Glasgow, and Hull are more and
more devoted to the functions of storage and conveyance. Manchester
itself is rapidly losing its manufacturing character and devoting
itself almost exclusively to import and export trade. The railway
service has made for itself large towns, such as Crewe, Derby,
Normanton, and Swindon. Cardiff is a portentous example of a new
mining centre created when the machine development of England was
already ripe.
The specialisation of function in a large town is, however, qualified
in two ways. The strong local organisation of a staple trade requires
the grouping round it of a number of secondary or auxiliary trades. In
large textile towns the manufactures of textile machinery, and of
subsidiary materials, are found. The machine-making of Manchester is
one of its most important industries, furnishing the neighbouring
textile towns. Leeds is similarly equipped for the woollen trade. This
is one of the respects in which the superior development of the
English cotton industry over the continental ones is indicated. In
Alsace alone of the continental centres has the concentration of
industry advanced so far as to furnish a local machine industry
specially devoted to cotton machinery. Germany is still mainly
dependent upon England for her machines.[121] So likewise with regard
to co-ordinate trades, there is an advantage in the leading processes
being grouped in local proximity, though they are not united in the
same business. Thus we find dye-works and the various branches of the
clothing trade largely settled in the large textile towns, such as
Leeds, Bradford, Manchester, Bolton. The unit of local specialisation
is thus seen to be not a single trade, but a group of closely allied
trades, co ordinate, dependent, and derivative.
Round some large industries in which men find employment minor
parasitic industries spring up stimulated by the supply of cheap
abundant labour of women and children. In metal and machine towns such
as Birmingham, Dudley, Walsall, in Newcastle-on-Tyne, and other
shipbuilding towns, where the staple industries are a masculine
monopoly, textile factories have been planted. The same holds of
various mining villages and of agricultural villages in the
neighbourhood of large textile centres. There is in the midland
counties a growing disposition to place textile factories in rural
villages where cheap female labour can be got, and where the
independence of workers is qualified by stronger local attachments and
inferior capacity of effective trade union organisation. As textile
work passes more and more into the hands of women,[122] this tendency
to make it a parasitic trade thriving upon the low wages for which
women's labour can be got where strong and well-paid male work is
established, will probably be more strongly operative.
Sec. 13. The specialisation of certain districts within the town, though
far less rigid than in the mediaeval town, is very noticeable in the
larger centres of industry. Natural causes often determine this
division of localities, as in the case of the riverside industries,
brick-making and market-gardening in the outer suburbs. Round the
central station in every large town, for convenience of work and life,
settle a number of industries related to the carrying trade. Every
trade, market, or exchange is a centre of attraction. So the broking,
banking, and the general financing businesses are grouped closely
round the Royal Exchange. Mark Lane and Mincing Lane are centres of
the corn and tea trades. In all town industries not directly engaged
in retail distribution there are certain obvious economies and
conveniences in this gregariousness. Agents, travellers, collectors,
and others who have relations of sale or purchase with a number of
businesses in a trade find a number of disadvantages in dealing with a
firm locally detached from the main body, so that when a district is
once recognised as a trade centre, it becomes increasingly important
to each new competitor to settle there. The larger the city the
stronger this force of trade centralisation. Hence in London,
untrammelled by guild or city regulations, we find a strong
localisation of most wholesale and some retail businesses. In retail
trade, however, the economic gain is less universal. Since retail
commodities are chiefly for use in the home, and homes are widely
distributed, the convenience of being near one's customers and away
from trade competitors is often a predominating motive. Shops which
sell bread, meat, fish, fruit, groceries, articles which are bought
frequently and mostly in small quantities, shops selling cheaper
articles of ordinary consumption, such as tobacco, millinery,
stationery, and generally shops selling articles for domestic use, the
purchase of which falls to women, are widely dispersed. On the other
hand, where the articles are of a rarer and more expensive order, when
it is likely that the purchaser will seek to compare price and
character of wares, and will presumably be willing to make a special
journey for the purpose, the centralising tendency prevails in retail
trade. So we find the vendors of carriages, pianos, bicycles, the
heavier articles of furniture, jewellery, second-hand books, furs, and
the more expensive tailors and milliners clustering together in a
special street or neighbourhood.
Effective competition in retail trade sometimes requires
concentration, sometimes dispersion of business. But the most
characteristic modern movement in retail trade is a combination of the
centralising and dispersive tendencies, and is related to the
enlargement of the business-unit which we found proceeding everywhere
in industry. The large distributing company with a number of local
branch agents, who call regularly at the house of the consumer for
orders, is the most highly organised form of retail trade. In all the
departments of regular and general consumption the movement is towards
this constant house-to-house supply. The wealthier classes in towns
have already learned to purchase all the more perishable forms of food
and many other articles of house consumption in this way, while the
growing facilities of postage and conveyance of goods enable them to
purchase from a large central store by means of a price-list all other
consumables into which the element of individual taste or caprice
does not largely enter. This habit is spreading in the smaller towns
among the middle classes, so that the small dispersed retail
businesses are becoming more and more dependent upon the supply of the
needs of the working classes, and of such articles of comfort and
luxury as may appeal to the less regular and calculable tastes of the
moneyed classes. Just as in towns we have a constant automatic supply
of water and gas instead of an intermittent supply dependent on a
number of individual acts of purchase, so it seems likely that all the
routine wants of the consumer will be supplied.
How far mechanical inventions may be applied to increase the facility
and cheapen the cost of this distribution it is difficult to say. The
automatic machine for distributing matches and sweetmeats is adaptable
to most forms of routine consumption. In the larger stores many kinds
of labour-saving machinery are already applied. As steam or electric
power is adopted more widely in the local transport services the
retail distribution of goods from a large single centre is likely to
proceed apace, and a displacement of human labour by machinery similar
to that which is taking place in manufacture will take place in
distribution. So far as the wants of large classes of the public
become regular and their consumption measurable in quantity, machinery
will unquestionably take over the labour of distribution, especially
in the large towns which are absorbing in a way convenient for
mechanical distribution a larger proportion of the consuming public.
With each new encroachment of machinery into the domain of the
distributing trades the characteristics of machine-industry, enlarged
mass of the business, increased area of the market, increased
complexity of relations to other trades, increased specialisation of
local activity will be clearly discernible.
We thus see in the several departments of industry, under the pressure
of the same economic forces, an expansion of size, a growing complexity
of structure and functional activity, and an increased cohesion of
highly differentiated parts in the business, the market, and in that
aggregation of related trades and markets which forms the
world-industry. The physical instrument by which these economic forces,
making for increased size, heterogeneity, and cohesiveness,[123] have
been able to operate is machinery applied to manufacture and transport.
Moreover, each new encroachment of machinery upon the extractive and
the distributing industries brings into prominence within these
processes the same structural and functional characteristics.
[Illustration: COMPARATIVE VALUE OF FOREIGN TRADE IN EUROPEAN
COUNTRIES.]
FOOTNOTES:
[99] Cf. Chap. VI. for a discussion of this equation of maximum
profit.
[100] _Report to Labour Commission on Employment of Women_ (1893), p.
125.
[101] _Statistical Abstract_, 1878-92, p. 182
[102] _Social Peace_, p. 126; cf. also Brentano, _Hours, Labour, and
Production_, p. 60.
[103] _Contemporary Review_, 1889, p. 394.
[104] Porter, _Progress of the Nation_, p. 216.
[105] _Principles of Economics_, 2nd edit., p. 282.
[106] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 90.
[107] Marshall, _Principles of Economics_, 2nd edit., p. 283.
[108] The works of Messrs. Colman, at Norwich, comprise among others
the following subsidiary departments:--Coopery, engineering shop, saw
mills, box-making, packing, paper-making, printing, laboratory. To the
most highly developed businesses of pottery and machine-making schools
of art and design are not uncommonly attached.
[109] A good deal of the cleansing and combing in the cloth and
worsted trades is, however, done separately on commission by large
firms such as Lister's. Cf. Burnley, p. 417.
[110] Marshall, _Principles of Economics_, 2nd edit., p. 517.
[111] Cournot, _Recherches sur les Principes Mathematiques de la
Theorie des Richesses_ (quoted Marshall, _Principles of Economics_, p.
384).
[112] It ought, however, to be kept in mind that the application of
the "roundabout" method is only economically justified by a continual
increase in consumption. So far as a given quantity of consumption is
concerned the result of the "roundabout" method is to diminish the
quantity of capital which assists to produce it.
[113] Professor Boehm Bawerk shows this increased time of production to
be the essential characteristic of capitalist production. Cf.
_Positive Theory of Capital_.
[114] For a full and valuable treatment of these harmonious relations,
from the point of view of consumption and production, see Patten's
_Economics of a Dynamic Society_.
[115] Cf. Porter, _Progress of the Nation_, pp. 177-206.
[116] _Principles of Sociology_, vol. i. p. 500 (3rd edit.).
[117] For a detailed account of the national trade divisions, cf. Dr.
Yeats, _The Golden Gates of Trade_.
[118] Foreign competition with English textiles, though comparatively
modern so far as the more highly developed machine-made fabrics is
concerned, was keenly felt early in the century in hand-made goods.
Schulze-Gaevernitz points out that the depression in work and wages of
the hand-loom workers in 1820 was due more to foreign competition than
to the new machinery. (_Der Grossbetrieb_, p. 41.)
[119] Yeats, _The Golden Gates of Trade_, p. 12. (Philip & Son.)
[120] Cf. Schulze-Gaevernitz's minute investigation of this whole
subject, _Der Grossbetrieb_, pp. 98, 99, etc.
[121] Schulze-Gaevernitz, p. 110.
[122] For the gain of female over male employment in textile
factories, cf. Chap. xi.
[123] In a free application of Spencer's formula of evolution to
modern industry I have not included the quality of "definiteness,"
which close reflection shows to possess no property which is not
included under heterogeneity and cohesiveness.