In all such trades new machinery and new processes are for the greater part devised by manufacturers for their own use.Each new departure is an experiment which may fail; those which succeed must pay for themselves and for the failure of others;and though a small manufacturer may think he sees his way to an improvement, he must reckon on having to work it out tentatively, at considerable risk and expense and with much interruption to his other work: and even if he should be able to perfect it, he is not likely to be able to make the most of it.For instance, he may have devised a new speciality, which would get a large sale if it could be brought under general notice: but to do this would perhaps cost many thousand pounds; and, if so, he will probably have to turn his back on it.For it is almost impossible for him to discharge, what Roscher calls a characteristic task of the modern manufacturer, that of creating new wants by showing people something which they had never thought of having before; but which they want to have as soon as the notion s suggested to them: in the pottery trade for example the small manufacturer cannot afford even to make experiments with new patterns and designs except in a very tentative way.His chance is better with regard to an improvement in making things for which there is already a good market.But even here he cannot get the full benefit of his invention unless he patents it; and sells the right to use it; or borrows some capital and extends his business; or lastly changes the character of his business and devotes his capital to that particular stage of the manufacture to which his improvement applies.But after all such cases are exceptional: the growth of machinery in variety and expensiveness presses hard on the small manufacturer everywhere.It has already driven him completely out of some trades and is fast driving him out of others.(6*)There are however some trades in which the advantages which a large factory derives from the economy of machinery almost vanish as soon as a moderate size has been reached.For instance in cotton spinning, and calico weaving, a comparatively small factory will hold its own and give constant employment to the best known machines for every process: so that a large factory is only several parallel smaller factories under one roof; and indeed some cotton-spinners, when enlarging their works, think it best to add a weaving department.In such cases the large business gains little or no economy in machinery; and even then it generally saves something in building, particularly as regards chimneys, and in the economy of steam power, and in the management and repairs of engines and machinery.Large soft-goods factories have carpenters' and mechanics' shops, which diminish the cost of repairs, and prevent delays from accidents to the plant.(7*)Akin to these last, there are a great many advantages which a large factory, or indeed a large business of almost any kind, nearly always has over a small one.A large business buys in great quantities and therefore cheaply; it pays low freights and saves on carriage in many ways, particularly if it has a railway siding.It often sells in large quantities, and thus saves itself trouble; and yet at the same time it gets a good price, because it offers conveniences to the customer by having a large stock from which he can select and at once fill up a varied order;while its reputation gives him confidence.It can spend large sums on advertising by commercial travellers and in other ways;its agents give it trustworthy information on trade and personal matters in distant places, and its own goods advertise one another.
The economies of highly organized buying and selling are among the chief causes of the present tendency towards the fusion of many businesses in the same industry or trade into single huge aggregates; and also of trading federations of various kinds, including German cartels and centralized co-operative associations.They have also always promoted the concentration of business risks in the hands of large capitalists who put out the work to be done by smaller men.(8*)3.Next, with regard to the economy of skill.Everything that has been said with regard to the advantages which a large establishment has in being able to afford highly specialized machinery applies equally with regard to highly specialized skill.It can contrive to keep each of its employees constantly engaged in the most difficult work of which he is capable, and yet so to narrow the range of his work that he can attain that facility and excellence which come from long-continued practice.
But enough has already been said on the advantage of division of labour: and we may pass to an important though indirect advantage which a manufacturer derives from having a great many men in his employment.
The large manufacturer has a much better chance than a small one has, of getting hold of men with exceptional natural abilities, to do the most difficult part of his work -- that on which the reputation of his establishment chiefly depends.This is occasionally important as regards mere handiwork in trades which require much taste and originality, as for instance that of a house decorator, and in those which require exceptionally fine workmanship, as for instance that of a manufacturer of delicate mechanism.(9*) But in most businesses its chief importance lies in the facilities which it gives to the employer for the selection of able and tried men, men whom he trusts and who trust him, to be his foremen and heads of departments.We are thus brought to the central problem of the modern organization of industry, viz.that which relates to the advantages and disadvantages of the subdivision of the work of business management.
