Business capacity

“ This unreasoning faith in large and difficult combinations has been induced in the modern community by its experience with the large-scale organization of the mechanical industries, and still more particularly by the convincing pecuniary efficiency of large capital, authoritative control, and devious methods, in modern business enterprise ”

“ If a hundred producers with small capitals carry on separately the same business, the superintendence of each concern will probably require the whole attention of the person conducting it, sufficiently at least to hinder his time or thoughts from being disposable for anything else: while a single manufacturer possessing a capital equal to the sum of theirs, with ten or a dozen clerks, could conduct the whole of their amount of business, and have leisure too for other occupations. ”

“ The essential features in the adoption of any plan should be that the returns of the private owner should be in proportion to the skill and economy which he exercises in managing his business; that competition and its resulting waste be done away with; and that the industry be placed on such a safe and stable basis that the capital invested in it shall receive the lowest possible rate of interest, thus leaving the greatest possible amount for the payment of wages of labor and permitting sales of the product at a low price. ”

“ The number of producers, or dealers, who turn over their capital, as the expression is, in the shortest possible time, is very small. There are few who have so rapid a sale for their wares, that all the goods which their own capital, or the capital which they can borrow, enables them to supply, are carried off as fast as they can be supplied. The majority have not an extent of business, at all adequate to the amount of the capital they dispose of. ”

“ There are three classes of establishments by which industry is carried on—those that are the property of an individual, those which belong to partnerships or firms of unlimited liability, and those belonging to corporations of limited liability. The usefulness of the individual system is of course limited to small undertakings, where but little capital and credit are necessary; this form of organization still dominates the field in agriculture, in the small retail trade, and in the repairing industries. ”

“ The corporation aggregate, which is but a mode of substituted service, is one of the great forces of civilization. It is the prevailing form of the associated energies, the money, enterprise, and intelligence of society. It is particularly adapted to those branches of business like salvage and wrecking, which require a permanent organization, costly appliances, trained services, and considerable capital, which is content with slow or uncertain returns. ”

“ The reason that the masters of combination have sought to shut out competition is that the basis of control under competition is brains and efficiency. I admit that any large corporation built up by the legitimate processes of business, by economy, by efficiency, is natural ”

“ The ability and integrity of the men who control the policy of the company and the efficiency of the operating officials are the principal factors [71] in the success of an industrial undertaking. Vacillating policies, weakly executed, will ruin the most promising enterprise. This is particularly true in the case of small companies. Every man of business experience will understand the importance of this factor and be guided by it in the selection of industrial securities. ”

“ And even in those cases in which the efficiency of shop management might play an important part it must be remembered that for success no company need be better organized than its competitors.
The most severe trial to which any system can be subjected is that of a business which is in keen competition over a large territory, and in which the labor cost of production forms a large element of the expense, and it is in such establishments that one would naturally expect to find the best type of management. ”

“ The possibility of substituting the large system of production for the small, depends, of course, in the first place, on the extent of the market. The large 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. ”

“ The great, at the present stage of development perhaps the greatest, opportunity for saving by consolidation, in the common run of cases, is afforded by the ubiquitous and in a sense excessive presence of business enterprise in the economic system. ”

“ Of course, with the development of the market the complexity of office management increased. In modern times the business man concerns himself not only with the duties of the merchant and exchanger, but also with the organization of industry and economical procedure. ”

“ The producer who works at the greater advantage is foreordained to underbid and supplant the one who works under more unfavorable conditions. That a static state may exist and that the movements of labor and capital from point to point may be precluded, every competitor within a subgroup must be able to keep his business intact, hold his customers, and retain in his employment all the labor and the capital that he has. ”

“ Whether or not the advantages obtained by operating on a large scale preponderate in any particular case over the more watchful attention, and greater regard to minor gains and losses, usually found in small establishments, can be ascertained, in a state of free competition, by an unfailing test. Wherever there are large and small establishments in the same business, that one of the two which in existing circumstances carries on the production at greatest advantage will be able to undersell the other. ”

“ It is my wish that the collection of the revenue should be organised on a strictly business basis, with the same guarantees for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant. ”

“ The forces which are operating to drive capital to group itself in larger and larger masses, and the consequent growth of the business-unit, require special study in relation to changes effected in the character of competition in the market and the establishment of monopolies. The economies which give to the large business an advantage over the small business may be divided into two classes—economies of productive power, and economies of competitive power. ”

“ The branch and agency forms of increasing sales in large enterprises are an outgrowth of the policy of “service” combined with economy of management which dominates all present-day capitalistic enterprises. The tendency of a successful business is to absorb other businesses in the same line through combinations and amalgamations, and thus the policies of apparently independent units in a single district or throughout the entire country may be controlled by the central management at a head office. ”

“ While these great organizations, made up by placing under one general management a number of great establishments manufacturing articles of like character, are doubtless able to reduce the cost of production and distribution and prevent production in excess of probable demand, it is also true that they are in many cases able to exercise a greater control over prices of labor, of material and of finished product than when operating singly. ”

“ The interest of the community at large demands industrial efficiency and serviceability of the product; while the business interest of the concern as such demands vendibility of the product; and the interest of those men who have the final discretion in the management of these corporate enterprises demands vendibility of the corporate capital. The community's interest demands that there should be a favorable difference between the material cost and the material serviceability of the output ”

“ It will be noted that this plan promotes steadiness in work, stimulates to industry, and adds a most valuable element of hopefulness to labor. As a business enterprise for the owners it is sound, for it makes every workman an interested party in increasing the profits of the firm—interested not only in production, but in the marketableness of the thing produced. ”

“ Hence the corporation, under which the manufacturing establishments grew to enormous proportions, employing thousands and tens of thousands of people, and bringing material from the places in which it could be most cheaply obtained, investing money if need be in facilities for transporting and even producing the raw material, and cheapening the cost of production. ”

“ They, even at the present time, take the place, frequently, of freedom of competition in retail business, in the book business, and in the determination of lawyers' and doctors' fees, as well as in the distribution of a nation's income among the three great branches of its general economy,671 deciding, instead of competition, how much shall go to each. ”

“ The independent workman with his own tools was superseded by the factory, the small producer has given way in turn to the trust. With the introduction of expensive machinery it became necessary to organize capital on a large scale. Corporations with limited liability were organized for the manufacture of goods, the exploitation of mines, the building of railroads, and the carrying on of trade. As methods of production improved industry became more and more concentrated, and finally huge trusts took over the operation of combined plants. ”

“ The Small Business Administration, through its vigorous lending and loan guaranty efforts, has improved access to capital so that small manufacturing firms and other small businesses can modernize, expand, and invest in worker training. ”

“ To inquire searchingly into every nook and cranny of the business, to construct, as it were, for each part a separate balance-sheet of profit and loss, to expand in those directions where further development promises good results, and to curtail activity where loss is already evident, is the very essence of good management. Here, it will be observed, we are using language very similar to that in which we described the principles which govern a business man's expenditure. ”

“ Will the present standards of management, skill, workmanship and factory discipline be improved? Will the consumers benefit? Will people save? i. e. Will sufficient fresh capital be forthcoming for the further developments of industry? ”

“ Certain lines would be managed more efficiently than others and might make more money, just as certain departments of a big business might, because of peculiarly able management, earn an unusually large contribution to the total profits ”

“ With a fuller development of the modern closeknit and comprehensive industrIal system, the point of chief attention for the business man has shifted from the old-fashioned surveillance and regulation of a given industrial process, with which his livelihood was once bound up, to an alert redistribution of investments from less to more gainful ventures, (5*) and to a strategic control of the conjunctures of business through shrewd investments and coalitions with other business men. ”

“ It would be very hard to get them to agree to your way of distributing the products of industry, for they would say that impartial distribution of the difference of ability among individuals in industry and earning capacity is unjust. ”

“ The great increase in the size of the manufacturing establishment and of the capital invested in the manufacturing industry which necessarily followed the adoption of expensive machinery for manufacturing purposes was followed by a tendency toward co-operation and mutual agreements among the great organizations engaged in similar lines of work, the purpose being to reduce expenses, increase profits and control prices. ”

“ Industry must be conducted to suit the business man in his quest for gain; which is not the same as saying that it must be conducted to suit the needs or the convenience of the community at large. Ever since the institution of property was definitely installed, and in proportion as purchase and sale has been practiced, some approach has been made to a comprehensive system of control of industry by pecuniary transactions and for pecuniary ends, and the industrial organisation is nearer such a consummation now than it ever has been. ”

“ Our business succeeded beyond our expectations; and in order to supply the increasing demands for our products, we found it necessary to employ additional force and capital, build new forges, and otherwise enlarge the sphere of our operations. ”

“ As the business grew, and markets were obtained at home and abroad, more persons and capital were added to the business, and new corporate agencies were obtained or organized, the object being always the same, to extend our business by furnishing the best and cheapest products. ”

“ Now the extension of business which almost certainly follows in any department in which an improvement has been made, affords a strong inducement to those engaged in it to add to their capital; and hence, at the slow pace at which improvements are usually introduced, a great part of the capital which the improvement ultimately absorbs, is drawn from the increased profits and increased savings which it has itself called forth. ”

“ But as the state became more and more involved in business affairs, it was able to advise what products would be in demand, when it was advisable to use caution and economy and when activity would be rewarded. The functions of the state as a medium of exchange between the producer and the consumer became rapidly extended, and before the close of the century it became the chief and in many things the only buyer and seller of the products in most common use, as well as the sole factor in all monopolies and in banking, insurance, and public amusements. ”

“ Production is limited not [pg 499] solely by the quantity of capital and of labor, but also by the extent of the “field of employment.” The field of employment for capital is twofold: the land of the country, and the capacity of foreign markets to take its manufactured commodities. On a limited extent of land, only a limited quantity of capital can find employment at a profit. As the quantity of capital approaches this limit, profit falls ”