Industrial Organization Continued.
Production on a Large Scale 1.The advantages of production on a large scale are best shown in manufacture; under which head we may include all businesses engaged in working up material into forms in which it will be adapted for sale in distant markets.The characteristic of manufacturing industries which makes them offer generally the best illustrations of the advantages of production on a large scale, is their power of choosing freely the locality in which they will do their work.They are thus contrasted on the one hand with agriculture and other extractive industries (mining, quarrying, fishing, etc.), the geographical distribution of which is determined by nature; and on the other hand with industries that make or repair things to suit the special needs of individual consumers, from whom they cannot be far removed, at all events without great loss.(1*)The chief advantages of production on a large scale are economy of skill, economy of machinery and economy of materials:
but the last of these is rapidly losing importance relatively to the other two.It is true that an isolated workman often throws away a number of small things which would have been collected and turned to good account in a factory;(2*) but waste of this kind can scarcely occur in a localized manufacture even if it is in the hands of small men; and there is not very much of it in any branch of industry in modern England, except agriculture and domestic cooking.No doubt many of the most important advances of recent years have been due to the utilizing of what had been a waste product; but this has been generally due to a distinct invention, either chemical or mechanical, the use of which has been indeed promoted by minute subdivision of labour, but has not been directly dependent on it.(3*)Again, it is true that when a hundred sets of furniture, or of clothing, have to be cut out on exactly the same pattern, it is worth while to spend great care on so planning the cutting out of the boards or the cloth, that only a few small pieces are wasted.But this is properly an economy of skill; one planning is made to suffice for many tasks, and therefore can be done well and carefully.We may pass then to the economy of machinery.
2.In spite of the aid which subsidiary industries can give to small manufactures, where many in the same branch of trade are collected in one neighbourhood,(4*) they are still placed under a great disadvantage by the growing variety and expensiveness of machinery.For in a large establishment there are often many expensive machines each made specially for one small use.Each of them requires space in a good light, and thus stands for something considerable in the rent and general expenses of the factory; and independently of interest and the expense of keeping it in repair, a heavy allowance must be made for depreciation in consequence of its being probably improved upon before long.(5*)A small manufacturer must therefore have many things done by hand or by imperfect machinery, though he knows how to have them done better and cheaper by special machinery, if only he could find constant employment for it.
But next, a small manufacturer may not always be acquainted with the best machinery for his purpose.It is true that if the industry in which he is engaged has been long established on a large scale, his machinery will be well up to the mark, provided he can afford to buy the best in the market.In agriculture and the cotton industries, for instance, improvements in machinery are devised almost exclusively by machine makers; and they are accessible to all, at any rate on the payment of a royalty for patent right.But this is not the case in industries that are as yet in an early stage of development or are rapidly changing their form; such as the chemical industries, the watchmaking industry and some branches of the jute and silk manufactures; and in a host of trades that are constantly springing up to supply some new want or to work up some new material.
