many small contributions; or in other words, by the forma tion of joint stock companies. The advantages of the joint stock principle are numerous and important.

In the first place, many undertakings require an amount of capital beyond the means of the richest individual or private partnership. No individual could have made a railway from London to Liverpool; it is doubtful if any individual could even work the traffic on it, now when it is made. The government, indeed, could have done both; and in countries where the practice of cooperation is only in the earlier stages of its growth, the government can alone be looked.to for any of those. works for which a great combination of means is requisite; because it can obtain those means by compulsory taxation, and is already accustomed to the conduct of large operations. For reasons, however, which are tolerably well known, and of which we shall treat fully hereafter, government agency for the conduct of industrial operations is generally one of the least eligible of resources, when any other is available.

Next, there are undertakings which individuals are not absolutely incapable of performing, but which they cannot perform on the scale and with the continuity which are ever more and more required by the exigencies of a society in an advancing state. Individuals are quite capable of despatching ships from England to any or every part of the world, to carry passengers and letters; the thing was done before joint stock companies for the purpose were heard of. But when from the increase of population and transactions as well as of means of payment, the public will no longer content themselves with occasional opportunities, but require the certainty that packets shall start regularly, for some places once or even twice a day, for others once a week, for others that a steam-ship of great size and expensive construction shall depart on fixed days twice in each month, it is evident that to afford an assurance of keeping up

punctuality such a circle of costly operations, requires a much larger capital and a much larger staff of qualified subordinates than can be commanded by an individual capitalist. There are other cases, again, in which though the business might be perfectly well transacted with small or moderate capitals, the guarantee of a great subscribed stock is necessary or desirable as a security to the public for the fulfilment of pecuniary engagements. This is especially the case when the nature of the business requires that numbers of persons should be willing to trust the concern with their money; as in the business of banking, and that of insurance, to both of which the joint stock principle is eminently adapted. It is an instance of the folly and jobbery of the rulers of mankind, that until very lately the joint stock principle, as a general resort, was in this country interdicted by law to these two modes of business; to banking altogether, and to insurance in the department of sea risks; in order to bestow a lucrative monoply on particular establishments which the government was pleased exceptionally to license, namely, the Bank of England, and two insurance companies, the London and the Royal Exchange.

These are some of the advantages of joint stock over individual management. But if we look to the other side of the question, we shall find that individual management has also very great advantages over joint stock. The chief of these is the much keener interest of the managers in the success of the undertaking.

The administration of a joint stock association is, in the main, administration by hired servants. Even the committee, or board of directors, who are supposed to superintend the management, and who do really appoint and remove the managers, have no pecuniary interest in the good working of the concern beyond the shares they individually hold, which are always a very small part of the capital of the

association, and in general but a small part of the fortunes of the directors themselves; and the part they take in the management usually divides their time with many other occupations, of as great or greater importance to their own interest; the business being the principal concern of no one except those who are hired to carry it on. But experience shows, and proverbs, the expression of popular experience, attest how inferior is the quality of hired service, compared with the ministration of those personally interested in the work, and how indispensable, when hired service must be employed, is "the master's eye" to watch over it.

The successful conduct of an industrial enterprise requires two quite distinct qualifications-fidelity and zeal. The fidelity of the hired managers of a concern it is possible to secure. When their work admits of being reduced to a definite set of rules, the violation of these is a matter on which conscience cannot easily blind itself, and on which responsibility may be enforced by the loss of employment. But to carry on a great business successfully, requires a hundred things which, as they cannot be defined beforehand, it is impossible to convert into distinct and positive obligations. First and principally, it requires that the directing mind should be incessantly occupied with the subject; should be continually laying schemes by which greater profit may be obtained, or expense saved. This intensity of interest in the subject it is seldom to be expected that any one should feel, who is conducting a business as the hired servant and for the profit of another. There are experiments in human nature which are quite conclusive on the point. Look at the whole class of rulers and ministers of state. The work they are entrusted with, is among the most interesting and exciting of all occupations; the personal share which they themselves reap of the national benefits or misfortunes which befal the state under their rule, is far from trifling, and the rewards and punishments which they may expect from pub

lic estimation are of the plain and palpable kind which are most keenly felt and most widely appreciated. Yet how rare a thing is it to find a statesman in whom mental indolence is not stronger than all these inducements! How infinitesimal is the proportion who trouble themselves to form, or even to attend to, plans of public improvement, unless it is made still more troublesome to them to remain inactive; or who have any other real desire than that of rubbing on, so as to escape general blame! On a smaller scale, all who have ever employed hired labor, have had ample experience of the efforts made to give as little labor in exchange for the wages, as is compatible with not being turned off. The universal neglect by domestic servants of their employer's interests, wherever these are not protected by some fixed rule, is matter of common remark, unless where long continuance in the same service, and reciprocal good offices, have produced either personal attachment, or some feeling of a common interest.

Another of the disadvantages of joint stock concerns, which is in some degree common to all concerns on a large scale, is disregard of small gains and small savings. In the management of a great capital and great transactions, especially when the managers have not much interest in it of their own, small sums are apt to be counted for next to nothing; they never seem worth the care and trouble which it costs to attend to them, and the credit of liberality and open-handedness is cheaply bought by a disregard of such trifling considerations. But small profits and small expenses, often repeated, amount to great gains and losses; and of this a large capitalist is often a sufficiently good calculator to be practically aware; and to arrange his business on a system, which, if enforced by a sufficiently vigilant superintendence, precludes the possibility of the habitual waste, otherwise incident to a great business. But the managers of a joint stock concern seldom devote themselves sufficiently to the

work, to enforce unremittingly, even if introduced, through every detail of the business, a really economical system.

From considerations of this nature, Adam Smith was led to enunciate as a principle, that joint stock companies could never be expected to maintain themselves without an exclusive privilege, except in branches of business which, like banking, insurance, and some others, admit of being, in a considerable degree, reduced to fixed rules. 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 belong 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 secures the greatest amount of exertion, but that exertion is of little avail if the intelligence exerted is of an inferior order, which it must necessarily be in the majority of concerns carried on by the persons chiefly interested in them. Where 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 inte