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This however is one of those over-statements of a true principle, often met with in Adam Smith. In his days there were few instances of joint stock companies which had been permanently successful without a monopoly, except the class of cases which he referred to; but since his time there have been many; and the regular increase both of the spirit of combination and of the ability to combine, will doubtless produce many more. Adam Smith fixed his observation too exclusively on the superior energy and more unremitting attention brought to a business in which the whole stake and the whole gain be: long to the persons conducting it; and he overlooked various countervailing considerations which go a great way towards neutralizing even that great point of superiority. Of these one of the most important is that which relates to the intellectual and active qualifications of the directing head. The stimulus of individual interest is some security for exertion, but exertion is of little avail if the intelligence exerted is of aninferior order, which it must necessarily be in the majority of concerns carried on by the ersons chiefly interested in them. here the concern is large, and can afford a remuneration sufficient to attract a class of candidates superior to the common average, it is possible to select for the general management, and for all the skilled employments of a subordinate kind, persons of a degree of acquirement and cultivated intelligence which more than compensates for their inferior interest in the result. Their greater perspicacity, enables them, with even a part of their minds, to see probabilities of advantage which never occur to the ordinary run of men by the continued exertion of the whole §theirs; and their superior knowledge, and habitual . of perception and of judgment, guard them against blunders, the fear of which would prevent the others from hazarding their interests in any attempt out of the ordinary routine. It must be further remarked, that it is not a necessary consequence of joint stock management, that the persons

by the

employed, whether in superior or in subordinate offices, should be paid wholly by fixed salaries. There are modes of connecting more or less intimately the interest of the employés with the pecuniary success of the concern. There is a long series of intermediate positions, between working wholly on one's own account, and working by the day, week, or year for an invariable payment. Even in the case of ordinary unskilled labour, there is such a thing as task-work, or working iece: and the superior efficiency of this is so well known, that judicious employers always resort to it

when the work admits of being put out

in definite portions, without the necessity of too troublesome a surveillance to guard against inferiority in the execution. In the case of the managers of joint stock companies, and of the superintending and controlling officers in many private establishments, it is a common enough practice to connect their pecuniary interest with the interest of their employers, by giving them part of their remuneration in the form of a percentage on the profits. The personal interest thus given to hired servants is not comparable in intensity to that of the owner of the capital; but it is sufficient to be a very material stimulus to zeal and carefulness, and, when added to the advantage of superior intelligence, often raises the qualit of the service much above that which the generality of masters are capable of rendering to themselves. The ulterior extensions of which this principle of remuneration is susceptible, being of great social as well as economical importance, will be more particularly adverted to in a subsequent stage of the present inquiry. ...As I have already, remarked of large establishments generally, when com

pared with small ones, whenever com

petition is free its results will show whether individual orjoint stock agency is best adapted to the particular case, since that which is most efficient and most economical will always in the end succeed in underselling the other.

§ 3 The possibility of substituting the large system of production for the small, depends, of course, in the first lace, on the extent of the market. The i. system can only be advantageous when a large amount of business is to be done: it implies, therefore, either a populous and flourishing community, or a great opening for exportation. Again, this as well as every other change in the system of production is greatly favoured by a progressive condition of capital. It is chiefly when the capital of a country is receiving a reat annual increase, that there is a arge annount of capital seeking for investment: and a new enterprise is much sooner and more easily entered upon by new capital, than by withdrawing capital from existing employments. The change is also much facilitated by the existence of large capitals in few hands. It is true that the same amount of capital can be raised by bringing together many small sums. But this o that it is not equally well suited to all branches of industry), supposes a much greater degree of commercial confidence and enterprise dif. fused through the community, and belongs altogether to a more advanced stage of industrial progress. In the countries in which there are the largest markets, the widest diffusion of commercial confidence and enterprise, the greatest annual increase of capital, and the greatest number of large capitals owned by individuals, there is a tendency to substitute more and more, in one branch of industry after another, large establishments for small ones. In England, the chief type of all these characteristics, there is a perpetual growth not only of large manufacturingestablishments, but also, wherever a sufficient number of purchasers are assembled, of shops and warehouses for conducting retail business on a large scale. These are almost always able to undersell the smaller tradesmen, partly, it is understood, by means of division of labour, and the economy occasioned by limiting the employment of skilled agency to cases where skill is required; and partly, no doubt, by the saving of labour arising

from the great scale of the transactions:

as it costs no more time, and not much more exertion of mind, to make a large purchase, for example, than a small one, and very much less than to make a number of small ones. With a view merely to production, and to the greatest efficiency of labour, this change is wholly beneficial. In some cases it is attended with drawbacks, rather social than economical, the nature of which has been already hinted at. But whatever disadvantages may be supposed to attend on the change from a small to a large system of production, they are not applicable to the change from a large to a still larger. When, in any employment, the régime of independent small producers has either never been possible, or has been superseded, and the system of many work-people under one management has become fully established, from that time any further enlargement in the scale of production is generally an unqualified benefit. It is obvious, for example, how great an economy of labour would be obtained if London were supplied by a single gas or water company instead of the existing plurality. While there are even as many as two, this implies double establishments of all sorts, when one only, with a small increase, could probably perform the whole operation equally well; double sets of machinery and works, when the whole of the gas or water required could generally be produced by one set only; even double sets of pipes, if the companies did not prevent this needless expense by agreeing upon a division of the territory. Were there only one establishment, it could make lower charges, consistently with obtaining the rate of profit now realized. But would it do so? Even if it did not, the community in the aggregate would still be a gainer since the shareholders are a part of the community, and they would obtain higher profits while the consumers paid only the same. It is, however, an error to suppose that the prices are ever permanently kept down by the competition of these companies. ero competitors are so few, they always end by agreeing not to compete. They may run a race of cheapness to ruin a new candidate, but as soon as he has established his footing they come to terms with him. When, therefore, a business of real public importance can only be carried on advantageously upon so large a scale as to render the liberty of competition almost illusory, it is an unthrifty dispensation of the public re^ources that several costly sets of artangements should be kept up for the purpose of rendering to the community this one service. It is much better to treat it at once as a public function; and if it be not such as the government itself could beneficially undertake, it should be made over entire to the comany or association which will perform it on the best terms for the public. In the case of railways, for example, no one can desire to see the enormous waste of capital and land (not to speak of increased nuisance) involved in the construction of a second railway to connect the same places already united by an existing one; while the two would not do the work better than it could be done by one, and after a short time would §. be amalgamated. Only one such line ought to be permitted, but the control over that line never ought to be parted with by the State, unless on a temporary concession, as in France; and the vested right which Parliament has allowed to be acquired by the existing companies, like all other proprietary rights which are opposed to public utility, is morally valid only as a claim to compensation.

§4. The question between the large and the small systems of production as applied to agriculture—between large and small farming, the rande and the petite culture—stands, in many respects, on different grounds from the general question between great and small industrial establishments. In its social aspects, and as an element in the Distribution of Wealth, this question will occupy us hereafter: but even as a question of production, the superiority of the large system in agriculture is by no means so clearly established as in manufactures,

I have already remarked, that the operations of agriculture are little susceptible of benefit from the division of labour. There is but little separation of employments even on the largest farms. The same persons may not in general attend to the live stock, to the marketing, and to the cultivation of the soil; but much beyond that primary and simple classification the subdivision is not carried. The combination of labour of which agriculture is susceptible, is chiefly that which Mr. W. terms Simple Co-operation; several persons o: One another in the same work, at the same time and place. But I confess it seems to me that this able writer attributes more importance to that kind of co-operation, in reference to agriculture properly so called, than it deserves. None of the common farming operations require much of it. There is no particular advantage in setting a great number of people to work to. gether in ploughing or digging or sowing the same field, or even in mowing or reaping it unless time presses. A single family can generally supply all the combination of labour necessary for these purposes. And in the works in which an union of many efforts is really needed, there is seldom found any impracticability in obtaining it where farms are small.

The waste of productive powerby subdivision of the land often amounts to a great evil, but this applies chiefly to a subdivision so minute, that the cultivators have not enough land to occupy their time. Up to that point the same principles which recommend large manufactories are applicable to agriculture. For the greatest productive efficiency, it is generally desirable (though even this proposition must be received with qualifications) that no family who have any land, should have less than they could cultivate, or than will fully employ their cattle and tools. These, however, are not the dimensions of large farms, but of what are reckoned in England very small ones. The large farmer has some advantage it the article of buildings. It does not cost so much to house a great numbet of cattle in one building, as to lodge them equally well in several buildings. There is also some advantage in imlements. A small farmer is not so ikely to, possess expensive instru; ments. But the principal agricultural implements, even when of the best construction, are not expensive. It may not answer to a small farmer to own a threshing machine, for the small quantity of corn, he has to thresh; but there is no reason why such a machine should not in every neighbourhood be owned in common, or provided by some person to whom the others pay a consideration for its use; , especially as, when worked by steam, they are so constructed as to be moveable.* The large farmer can make some saving in cost of carriage. There is nearly as much trouble in carrying a small portion of produce to market, as a much greater produce; in bringing home a small, as a much larger quantity of manures, and articles of daily consumption. There is also the greater cheapness of buying things in large quantities. These various advantages must count for something, but it does not seem that they ought to count for very much. In England for some generations, there has been little experience of small farms; but in Ireland the experience has been ample, not merely under the worst but under the best management: and the highest Irish authorities may be cited in opposition to the opinion which on this subject commonly prevails in England. Mr. Blacker, for example, one of the most experienced agriculturists and successful improvers in the North of Ireland, whose experience was chiefly in the best cultivated, which are also the most minutely divided parts of the country, was of opinion, that tenants holding farms not exceeding from five * The observations in the text may hereafter require some degree of modification from, inventions such as the steam plough and the reaping machine. The effect, however, of these improvements on the relative advantages of large and small farms, will not depend on the efficiency of the instruments, but on their costliness. I see no reason to expect that this will be such as to make

them inaccessible to small farmers, or combinations of small farmers.

to eight or ten acres, could live com. fortably, and pay as high a rent as any large farmer whatever. “I am firmly ersuaded” (he says,”) “that the small armer who holds his own plough and digs his own ground, if he follows a proper rotation of crops, and feeds his cattle in the house, can undersell the large farmer, or in other words can pay a rent which the other cannot afford; and in this I am confirmed by the opinion of many practical men who have well considered the subject. . . . The English farmer of 700 to 800 acres is a kind of man approaching to what is known by the name of a gentleman farmer. He must have his horse to ride, and his gig, and perhaps an overseer to attend to his labourers; he certainly cannot superintend himself the labour going on in a farm of 800 acres.” After a few other remarks, he adds, “Besides all these drawbacks, which the small farmer knows little about, there is the great expense of carting out the manure from the homestead to such a great distance, and again carting home the crop. A single horse will consume the produce of more land than would feed a small farmer and his wife and two children. And what is more than all, the large farmer says to his labourers, go to your work; but when the small #. has occasion to hire them, he says, come; the intelligent reader will, Idare say, understand the difference.” One of the objections most urged against small farms is, that they do not and cannot maintain, proportionally to their extent, so great a number of cattle as large farms, and that this occasions such a deficiency of manure, that a soil much subdivided must always be impoverished. It will be found, however, that subdivision only produces this effect when it throws the land into the hands of cultivators so poor as not to possess the amount of live stock suitable to the size of their farms. A small farm and a badly stocked farm are not synonymous. To make the comparison fairly, we must suppose the same

* Prize Essay on the Management of Landed Property in Ireland, by William Blacker, Esq. (1837,) p. 23.

amount of capital which is possessed by the large farmers to be disseminated among the small ones. When this condition, or even any approach to it, exists, and when stall feeding is practised (and stall feeding now begins to be considered good economy even on large farms), experience, far from bearing out the assertion that small farming is unfavourable to the multiplication of cattle, conclusively establishes the very reverse. The abundance of cattle, and copious use of manure, on the small farms of Flanders, are the most striking features in that Flemish agriculture which is the admiration of all competent judges, whether in England or on the Continent.*

* “The number of beasts fed on a farm

of which the whole is arable land,” (says the

elaborate and intelligent treatise on Flemish Husbandry, from personal observation and the best sources, published in the Library of the Society for the Diffusion of Useful Knowledge,) “is surprising to those who are not acquainted with the mode in which the food is prepared for the cattle. A beast for every three acres of land is a common proportion, and in very small occupations where much spade husbandry s used, the proportion is still greater. After comparing the accounts given on a variety of places and situations of the average quantity of milk which a eow gives when fed in the stall, the result is, that it greatly exceeds that of our best dairy farms, and the quantity of butter made from a given quantity of milk is also greater. It appears astonishing that the occupier of only ten or twelve acres of light arable land should be able to maintain four or five cows, but the fact is notorious in the Waes country.” (pp. 59, 60.) This subject is treated very intelligently in the work of M. Passy, On Systems of Cultivation and their Influence on Social Economy, one of the most impartial discussions, as between the two systems, which has yet appeared in France. “Without doubt it is England that, on an equal surface, feeds the greatest number of animals; Holland and some parts of Lombardy can alone vie with her in this respect: but is this a consequence of the mode of cultivation, and have not climate and local situation a share in producing it? Of this I think there can be no doubt. In fact, whatever may have been said, wherever large and small cultivation meet in the same place, the latter, though it cannot supportasmany sheep, possesses, all things considered, the greatest quantity of manure-producing animals. “In Belgium, for example, the two provinces of smallest farms are Antwerp and East Flanders, and they possess on an average for every 100 hectares (250 acres) of cultiwated land, 74 horned cattle and 14 sheep.

: The disadvantage, when disadvantage there is, of small, or rather of peasant farming, as compared with capitalist farming, must chiefly consist in inferiority of skill and knowledge; but it is not true, as a general fact, that such inferiority exists. Countries of small farms and peasant farming, Flanders and Italy, had a good agriculture many generations before England, and theirs is still, as a whole, probably the best agriculture in the world. The empirical skill, which is the effect of daily and close observation, peasant farmers often possess in an eminent degree. The traditional knowledge, for example, of the culture of the vine, possessed by the peasantry of the

The two provinces where we find the large farms are Namur and Hainaut, and they average, for every 100 hectares of cultivated ground, only 30 horned cattle and 45 sheep. Reckoning, as is the custom, ten sheep a. equal to one head of horned cattle, we find in the first case, the equivalent of 76 heast. to maintain the fecundity of the soil; in the latter case less than 35, a difference which must be called enormous. (See the statistical documents published by the Minister of the Interior.) The abundance of animals, in the parts of Belgium which are most subdivided, is nearly as great as in England. Calculating the number in England in proportion only to the cultivated ground, there are for each 100 hectares, 65 horned cattle and nearly 260 sheep, together equal to 91 of the former, being only an excess of 15. It should besides be remembered, that in Belgium stall feeding being continued nearly the whole year, hardly any of the manure is lost, while in England, grazing in the open fields diminishes considerably the quantity which can be completely utilized. “Again, in the Department of the Nord, the arrondissements which have the smallest farms support the greatest quantity of animals. While the arrondissements of Lille and Hazebrouck, besides a greater number of horses, maintain the equivalent of 52 and 46 head of horned cattle, those of Dunkirk and Avesnes, where the farms are larger, produce the equivalent of only 44 and 40 head. (See the statistics of France published by the Minister of Commerce.) “A similar examination extended to other portions of France would yield similar results. In the immediate neighbourhood of towns, no doubt, the small farmers, having no difficulty in purchasing manure, do not maintain animals: but, as a general rule, the kind of cultivation which takes most out of the ground must be that which is obliged to be most active in renewing its fertility. Assuredly the small farms cannot have numerou flocks of sheep, and this is an inconvenience but they support more hormed cattle than th

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