ded the
materials and paid the wages was tolerably complete. By the middle of
the century the free artisan was gradually passing into the condition
of a hired "hand." Improved means of communication were beginning to
expand the area of the market, enlarged businesses enabled labour to
be profitably divided, and required a more effective control over the
workers than could be obtained over a scattered population of
agricultural manufacturers.

Sec. 13. Regarding the Business as a combination of Labour and Capital,
we perceive that one strongly distinctive characteristic of the
pre-machinery age is the small proportion which capital bears to
labour in the industrial unit. It is this fact that enabled the
"domestic" worker to hold his own so long in so many industries as the
owner of a separate business. So long as the mechanical arts are
slightly developed and tools are simple, the proportion of "fixed
capital" to the business is small and falls within the means of the
artisan who plies his craft in his home. So long as tools are simple,
the processes of manufacture are slow, therefore the quantity of raw
material and other "circulating capital" is small and can also be
owned by the worker. The growing divorcement in the ownership of
capital and labour in the industrial unit will be found to be a direct
and most important result of those improvements in mechanical arts
which, by continually increasing the proportion of capital to labour
in a business, placed capital more and more beyond the possession of
those who supplied the labour power required to co-operate in
production.

In the middle of last century there were very few instances of a
manufacturing business in which a large capital was engaged, or in
which the capital stood to the labour in anything like modern
proportion. It was indeed the merchant and not the manufacturer who
represented the most advanced form of Capitalism in the eighteenth
century. Long before Dr. Johnson's discovery that "an English merchant
is a new species of gentleman," Defoe had noted the rise of
merchant-princes in the Western clothing trades, observing that "many
of the great families who now pass for gentry in these counties have
been originally raised from and built out of this truly noble
manufacture."[52] These wealthy _entrepreneurs_ were sometimes spoken
of as "manufacturers," though they had no claim either upon the old or
the new signification of that name. They neither wrough