BOOK I. The various functions of capital illustrate the same principle. Arrange ment of the subject. The remarks which have been made to illustrate the functions of capital, afford striking examples of the complex cooperation of labour. An individual may save the fund which forms his capital from a great variety of sources. The wealth which he has thus saved, he will probably embark in a great number of different investments, and in this way assist the labour of those engaged in the production of various kinds of wealth. Part of his capital will probably be devoted to the trade in which he is engaged; and he will perhaps deposit the remainder with his banker, by whom it would be lent to numerous traders to support them in their business. All commerce, in fact, forcibly exemplifies the cooperation of labour, not only between different employments, but between different countries. England gathers wealth from every quarter of the world, but at the same time she equally enriches the countries with whom she trades. In an earlier part of this chapter, we considered the increased efficiency given to labour, when the distinct operations of any industry are performed by separate sets of workmen. In this case, workmen who are differently employed combine to assist each other in the production of the same commodity, and hence division of labour is an instance of the complex cooperation of labour. We have therefore departed from scientific accuracy in our arrangement of this chapter, and, partly in deference to popular opinion, have given precedence in our remarks to a discussion of the advantages of division of labour. Political economists following in the steps of Adam Smith have restricted the subject of the division of labour to its narrow sense. The reason of this may perhaps be, that the illustrations used by Adam Smith have made the division of labour one of the most popular parts of political economy; and thus its importance, compared with other portions of the subject, has been greatly exaggerated. CHAPTER VI. PRODUCTION ON A LARGE AND A SMALL SCALE. IF F we had not feared that the last chapter was becoming too long, we should not have placed the subject we here propose to discuss in a separate chapter, because the carrying out of production on a large and a small scale exerts a very powerful effect upon the productive powers both of land, labour, and capital. The comparative advantages of production on a large, and production on a small scale, depend upon conditions which may vary greatly at different times, and in different employments. Every extension of machinery no doubt tends to give an advantage to production on a large scale. In the days of hand-loom weavers, little would have been gained by gathering them together into large buildings, such as the mills of Manchester. Each hand-loom weaver worked for himself; he needed not the assistance of others, and therefore there was no reason why he should not work in his own cottage. But the introduction of machinery has divided the work which was previously done by the hand-loom weaver, into a great number of distinct operations; and in this way machinery renders production on a large scale absolutely necessary. But to what extent it is advantageous to increase the scale of production, whether it is more profitable to erect a mill containing 10,000 spindles, or two mills containing 5,000 each, will be most correctly determined by those engaged in the trade. The comparative economy of working large and small mills is sure to be quickly ascertained by the manufacturers themselves; there can, however, be no doubt that a small manufactory will have little chance of competing with a large one, if the small manufactory is not large enough F. M. E BOOK I. Advantages of large manufactories. The scale of manufac turing operations is the de mand. for the efficient working of the most complete machinery used in the trade. Again, a small manufactory cannot compete with a large one, if in the one there is a less complete division of labour than in the other. A pin factory which employed ten men would produce pins at a much smaller cost than a factory in which only five men were employed. The labour of superintendence generally forms a comparatively larger item in small concerns than in large ones; for instance, each room in a cotton mill may require an overlooker, whether a hundred men are working in the room, or two hundred. A steamengine must be constantly watched by an engineer, whether the engine is fifty-horse power, or a hundredhorse power; but all such questions concerning the greater or less economy of business arrangements will ultimately be decided by practical experience. There is at the present time a very decided tendency to increase the scale of production, and this tendency is particularly shown in those vast manufactories and warehouses which exemplify the wealth and energy of Lancashire and Yorkshire; hence we must conclude, that production on a large scale, especially in the manufacturing districts, is rapidly becoming more advantageous. In fact, we have ascertained that a cotton mill containing 10,000 throstle spindles can be worked with a capital of 20,000l., whereas a mill with 5,000 spindles requires a capital of not less than 11,000l. It was remarked in the last chapter that the extent of the demand places a limit upon the division of labour. But the extent of the demand influences in a much more limited by decided manner the scale on which the production of any commodity can be carried on. A very serious loss would be incurred if the demand for any commodity was not sufficient to take off all that might be produced by the machinery and plant erected for its manufacture. Machinery when unemployed is capital lying idle, and the workmen when thrown out of employment could only be kept together by paying them some portion of their wages. This would represent an unproductive employment of capital, but if the labourers were not thus kept together, when work was resumed new and untrained hands would have to be employed. Machinery also, if kept idle, frequently suffers great injury. The fluctuation in the demand, when it is small, is comparatively much greater than when the demand is large. BOOK 1. CH. VI. scale may maintain itself, though at a disadvantage. Even if production on a large scale is very advan- Production tageous, production on a small scale may still be very on a small much practised. Let us again use our previous example, and suppose that a cotton mill containing 20,000 spindles can be worked at a much cheaper rate than one containing 5,000; but a capital of nearly 40,0007. may perhaps be required to work a mill with 20,000 spindles, whereas a capital not much exceeding 11,000l. would probably suffice for a mill with 5,000 spindles. The number of individuals who possess a capital of 40,000l., and who are willing to invest it in a cotton mill, is very limited, and therefore there can only be a limited number of mills with 20,000 spindles. These mills may not suffice to spin all the cotton for which there is a demand, and therefore other and smaller mills must be worked. It is true that the small mills could not remain open if they had to compete with an unlimited number of large mills; but as the number of these is virtually restricted, the small mills may be still worked at an advantage, although the profits obtained by these mills may fall far short of the profits obtained by the larger ones. Large capitals thus obtain an advantage, and possess as it were a monopoly; we shall treat this subject at considerable length in our chapters on profits. It may naturally be supposed that, in a wealthy country like England, production on a large scale when advantageous will never be restricted by the causes to which we have just alluded, for it may be said that if the individuals who have sufficient capital to work large mills are limited in number, there will be no difficulty in gathering together the requisite capital by means of jointstock companies, and that such companies will avail themselves of the advantages of a large production, and thus drive the small producers out of the market. But jointstock companies labour under many difficulties; and although they secure the advantages of producing on a large scale, yet in many industrial occupations, joint-stock companies cannot compete with the energy of the individual trader or manufacturer. With one or two exceptions there are no individuals who have capital enough for the con The advan tages of production on a large scale only partly at tainable by joint-stock companies, BOOK I. CH. VI. owing to the want of in terest on the part of the managers. struction and maintenance of such works as railways, docks |