Business combination

“ 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 ”

“ In other words, the businesses amenable to joint-stock enterprise are those where skilled management can be reduced to a minimum, and where the scale of the business or the possession of a natural monopoly limits or prohibits competition from outside. ”

“ 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. ”

“ As an example of a co-partnership industry which divides all surplus profits that may remain after 5 per cent. has been paid on capital between custom and labor, one pound of purchase counting for as much in the division as one pound of wage, let me refer to the well-known Hebden Bridge Fustian Works. I commend to all interested in co-partnership questions a close study of this industry. Started by working men in 1870, it has built up on lines of permanent success a flourishing business, and is making sufficient profits to enable it to divide 9d. ”

“ Explain the advantages of industrial partnership, in which the employés share, in proportion to the wages received, half the profits of the business beyond a certain fixed minimum which is assigned to the employers. ”

“ The primary object of this order shall be to organize exchange on the largest scale that may be practicable, with a view to the establishment of equitable relations between producers and consumers, by eliminating as rapidly as possible, every element of cost that does not go to the producers of the wealth exchanged, less an equitable compensation to the labor, physical and mental, that is necessary to an economical management of the business. ”

“ Nothing is to be gained, either from a scientific or a business point of view, by estimating indiscriminately, profit sharing, gain sharing, indeterminate bonus, labor insurance, stock holding by employés, percentage on sales, product sharing and similar forms. ”

“ It is significant that joint-stock methods of organization and management -- that is to say, impersonally capitalistic methods -- are traceable, for their origin and early formulation, to the shipping companies of early modern times. ”

“ 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. ”

“ 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 partnership had united the interests of a very few men, simplifying the problem by starting with members of the same family, who were naturally bound together. The relation of merchant and factor was another move in the right direction, as it united in loyal support of each other two men separated by considerable distance, and with no other common interest than that of their business. ”

“ The nation is to be considered a partnership, the several members engaged in the various departments of business, and producing annually products of the value of $3,900,000,000, which are distributed among the partners, affording to each a certain share of profit. ”

“ Looking at the process of economic life as a whole and taking it in its rationalized bearing as a collective endeavor to purvey goods and services for the needs of collective humanity, the office of the money unit - money transactions, exchange, credit, and all the rest that make up the phenomena of business - is perhaps justly rated as something subsidiary, serving to facilitate the distribution of consumable goods to the consumers, the Consumption of goods being the objective point of all this traffic. ”

“ Inasmuch as all material wealth was created by labor, and distributed by being bought and sold, it followed as a logical sequence, that there was but one way by which every useful worker could secure a just share in the distribution, and that was to take charge of the business of exchange (buying and selling) and divide the benefits equally among all who united their efforts to establish the largest possible round of exchange between producers and consumers. ”

“ The better way for the farmer, the merchant, or the manufacturer, when he feels the years pressing heavily and that he can no longer attend properly to the old demands on him, is to shift by a properly drawn contract the business management of the enterprise to his children, or to those whom he wishes to place in charge. ”

“ They should, of course, provide for as many contingencies as can be foreseen, such as the nature, name and place of business, when the relation is to commence and when to terminate, what capital shall be contributed by each, what the share of each in the profits and losses shall be, what the powers of the partners as between themselves shall be, whether the business shall be continued after the death of one or more of the partners and how it shall be wound up. ”

“ Third Case.—The third case shows the firm in a position to demand something more than book values as the basis for admission of the new partner. The presumption is that the old firm is favorably known, has an established trade and patronage, built by fair dealing and judicious advertising, by its favorable location, and the numerous other ways in which a substantial business may be developed. Its standing in the community is a factor of value to the firm because it brings trade to its doors. ”

“ Thus large establishments take the place of small ones and men acting in concert achieve what they would never attempt separately. The more perfect the power of association the greater the power of production and the larger the proportion of the product which falls to the laborer’s share. The magnitude of combinations must correspond with the magnitude of the business to be done, in order to secure the highest skill, to employ the latest devices, to pay the best wages, to invent new appliances, to improve facilities and to give the public a cheaper and finer product. ”

“ Production on a large scale is greatly promoted by the practice of forming a large capital by the combination of many small contributions; or, in other words, by the formation of joint stock companies. The advantages of the joint stock principle are numerous and important. ”

“ The history of the formation of any one of the great industrial coalitions of modern times will show how great and indispensable a factor in the large business is the invention and organization of difficulties desired to force rival enterprises to come to terms. ”

“ The common run of business concerns are occupied with industrial enterprise of some kind, and with transactions in credit, -- with a running sequence of bargains from which the gains of the concern are to accrue, -- and it is upon these gains that attention and effort centers, and to which the management of the concern constantly looks. ”

“ Some progress in this latter direction is being made, there being a tendency to improve upon simple profit-sharing by capitalizing the workman’s “bonus,” whereby he becomes a shareholder, and the business is gradually modified in a co-operative direction. There are remarkable instances of such modification abroad, notably that of the great iron foundry and Familistère at Guise in France. ”

“ The interstitial adjustments of the industrial system at large are in this way withdrawn from the discretion of rival business men, and the work of pecuniary management previously involved is in large part dispensed with, with the result that there is a saving of work and an avoidance of that systematic mutual hindrance that characterizes the competitive management of industry. ”

“ The convenience of this method being found great, it was improved as commerce increased, till a market was established where merchants might meet and make their exchanges without loss of time, instead of having to run after one another in search of what each wanted. The next thing was to institute a class of persons whose express business should be to manage these transactions. ”

“ While industry and business stand in a relation of mutual cause and effect, in this as in other cases, the initiative in such a movement belongs with the business traffic rather than with the industrial processes. ”

“ 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. ”

“ 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. ”

“ Certain individuals controlling certain corporations were enabled to obtain a decided advantage in supplying certain services and products to the enormously increasing American market; and once those individuals and corporations had obtained dominant positions, it was in their interest to strengthen one another's hands in every possible way. One big corporation has as a rule preferred to do business with another big corporation. ”

“ Now, the means by which this balance is kept is business transactions, and the men in whose keeping it lies are the business men. The channel by which disturbances are transmitted from member to member of the comprehensive industrial system is the business relations between the several members of the system; and, under the modern conditions of ownership, disturbances, favorable or unfavorable, in the field of industry are transmitted by nothing but these business relations. ”

“ The organization for this purpose which has the most widely extended apparatus, which can reach the greatest number of points, and which is ready to take any business at any time and perform it with the least doubt or delay, will always have an advantage in competition for business, if there is competition, which will enable it to advance to a monopoly. ”

“ This competition of one manufacturer with another making the same line of goods was not only expensive but resulted in working at cross purposes in many ways, and in loss of energy and money. So certain of the companies or corporations engaged in like industries began to make agreements among themselves by which they could co-operate in distributing their supplies to a given field and reduce the expenses of supplying that field. ”

“ The same process operates in areas devoted to business uses, competition segregates utilities of similar economic strength into areas of corresponding land values, and at the same time forces into close proximity those particular forms of service which profit from mutual association such as financial establishments or automobile display-rooms. ”

“ 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. ”

“ In industrial enterprise as it was then carried on the prevailing unit of organisation was the private firm, with partnership concerns making up a secondary and less commonplace element in the business community. Ordinarily and typically205 these private firms and partnerships owned a certain material equipment employed in industry, and they took the initiative in industrial enterprise on the ground of this ownership; hiring the workmen, buying materials and supplies, and selling the products of the establishment. ”

“ The demand for a greater volume, lower cost of production, and more economical methods, has brought with it an incentive to greater effort on the part of the individual, with corresponding rewards.
That the efforts of the individual may be productive of best results, he must have the coöperation of other individuals engaged in the same enterprise. The enterprise must be properly organized. ”

“ That is to say, the interindustrial relations into which any branch of industry necessarily enters do not run to a final term in any direction; within the process of industry at large there is no member that stands in the relation of an initial term to any sequence of processes. The ramification of industrial dependence is without limits. The method of these relations of one concern to another, or of one branch of industry to another, is that of bargaining, contracts of purchase and sale. ”