essential element of distrust of individual management in large
enterprises as to fair distribution of the profits stands in the way of
such a combination.
_Limits to aggregation._--It is easy to see that the advantages of great
establishments cannot always be gained. The limits of demand restrict the
possibility of profit in supply. The element of space in connection with
the market and in relation to the buyers makes an important limit. Special
advantages of location on a small scale may outweigh the advantages of
aggregation. Utilization of forces in nature, like pure water or water
power, or special qualities of raw materials, may outweigh all other
considerations. In general the requirement of interested oversight in a
single superintendent has checked such growth. The more perfect, however,
the system of management, the less effective is such a limitation. It is
possible with extreme division of labor to make distinct rules take the
place of personal direction, and oversight is reduced to a minimum. All
these limitations serve to check the too rapid growth of this factory
system and to hold in check the tendency to misuse of power in possible
monopolies. Any raising of prices which diminishes the demand destroys the
advantage of a great combination. It makes its profits by the quantity of
its products sold. A reduction of the quantity much more certainly than a
reduction in price destroys the advantage. Hence a monopoly gained in the
ordinary progress of trade can seldom operate for any long time to advance
prices, though it may destroy the competition of smaller establishments
completely.
_Disadvantages of aggregation._--It is impossible to overlook a
considerable number of disadvantages to the welfare of a community in a
too rapid aggregation of its industrial enterprises. It changes large
numbers of laborers from independent workers to wage earners, and thus
makes them a part of the great machine, with an immense momentum in
production which does not so readily yield to the fluctuations of demand.
An independent worker is not worried if he has a leisure day. The great
establishment cannot adjust its machinery to a lessened demand without a
uniformity of reduction in wages or time of employment, or else the
discharge of numbers of employes. This is one of the causes of
over-production so evident in certain directions upon the coming of
financial crises. Another great disadvantage is seen in the breakdown of
|