Business organization

“ 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. ”

“ Many corporations have upon their boards of directors the leading business men, merchants, bankers and financiers. In this way, the investing public has the assurance that the enterprise will be conducted along business lines, while the business men on the board have an opportunity to get in on the "ground floor."
The corporation has a permanence, a stability, and a breadth of financial support that are quite impossible in the case of the private venture or of the partnership. It does for business organization what the machine did for production. ”

“ It is in the industrial corporations that this capitalization of good-will is seen to the best advantage - including, under the term "industrial corporations," railway companies, iron and steel concerns, mines, etc., as well as what are known in the stock market specifically as "industrials." The corporation is, of course, not the only form of business concern in the industrial field, but it is the typical, characteristic form of business organization for the management of industry in modern times, and the peculiarities of modern capital are therefore best seen in these modern corporations. ”

“ 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. ”

“ To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any corporation engaged in commerce, excepting banks and common carriers subject to the Act to regulate commerce, and its relation to other corporations and to individuals, associations, and partnerships. ”

“ The responsibility of a corporation to the community, expressed in a sound financial organization and in the relation of its officers to its stockholders, would in no way restrain the usefulness of these industrial agencies, and would make them wholly consistent with extended and equal opportunities in production. Immense wealth has often been acquired in connection with corporations whose usefulness to the public has been thereby restricted and the profits of stockholders disregarded. ”

“ It can and should require for itself and for the use of all persons interested in the corporation, the fullest and most detailed information, consistent with practical business methods, as to the details of its organization, the powers and restrictions imposed upon its stockholders and as to the property against which stock is to be or has been issued. ”

“ 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. ”

“ I.⁠Every organization, association, combination, or trust of persons or corporations, which seeks to control, combine, pool, or consolidate the business or property of any persons or corporations engaged in any trade, business, or manufacture, or which seeks to consolidate several such properties, or unite several businesses, or place the property of individuals or corporations, or the capital stock thereof, in the hands of individuals for control or management, shall be deemed a corporation, and subject to all the regulations of the laws as such. ”

“ 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 business unit is thus the medium through which society works to satisfy its economic wants.
Internal Organization of the Business Unit.—Society early found that only by means of a highly specialized division of its activities was it possible to satisfy without waste its rapidly increasing economic wants. Individual business units are thus organized for the purpose of carrying on some one or more of these greatly subdivided activities. Within itself the business unit is organized into departments or divisions for the efficient and thrifty handling of its work. ”

“ 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 ”

“ When the employer is in danger of losing valuable assistants, he sometimes gives them a share in the business. In the ordinary partnership, two or more men divide the ownership and duties, agreeing as to the division of control. Coöperation among workmen, though rare, gives an unusual opportunity for the discovery of special talent. The dominant form of organization to-day is that of the stock company, or corporation, the ownership of which is divided among the holders of shares of stock, or of certificates of membership. ”

“ We therefore demand a strong National regulation of inter-State corporations. The corporation is an essential part of modern business. The concentration of modem business, in some degree, is both inevitable and necessary for national and international business efficiency. ”

“ The agents of the corporations were the aristocrats, not because of their wealth, but on account of the office they held, which was one of great responsibility, requiring, as it did, not only some knowledge of business, but also a certain tact in managing, or utilizing the great number of operatives so as to secure the best return for their labor. ”

“ Existing Organisation of Industry Inadequate Is our present organization of industry in any way suggestive of a partnership, in which Labor, Capital, Management, and the Community are regarded as interrelated and interdependent? ”

“ This conception has not yet become universal, but when it does—and it undoubtedly will—there will result a general demand for successful business men in the administration of the People’s Corporation. ”

“ 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. ”

“ Every corporation is composed of four parties: the stockholders, who supply the money with which to build the plant, pay the wages, and operate the business; the directors, whose duty it is to select executive [Pg 50] officers carefully and wisely, plan the larger and more important policies, and generally see to it that the company is prudently administered; the officers, who conduct the current operations; and the employees, who contribute their skill and their work. ”

“ The efficient administration of these co-operative Corporations being demonstrated by their financial success, makes it unnecessary to dwell upon the details of their intensely developed organization. Existing as they do upon so broad a comprehension of the whole commercial and social structures, it is little wonder that they have proven their value to the community. ”

“ The organizer or manager of a capitalistic enterprise is as truly a trustee of the interests of others—viz., both stockholders and employes—as is the guardian of an orphan, or the receiver of an insolvent corporation, or the master of a passenger steamship on the Atlantic. The business is created by the union of many men ”

“ Having examined into corporations collectively and also into their general administration, we will now turn to consider their internal organization. It was only after long and difficult struggles that these trade associations succeeded in taking a definite and established position; without, however, succeeding at any time in organizing themselves as one body on the same basis and with the same privileges. ”

“ Corporate organization and management should be a department of the exposition. By the elimination of all the unnecessary risk in investments in corporation securities through effective governmental regulation and supervision the people may gain control and reap the large profits of capitalized industry. ”

“ A corporation which derived its profits from public franchises, or from a business transacted in many different states, found the purchase of a local or state machine well within its means and well according to its interests. ”

“ Here, too, is joint venture on the part of the Community just as much as on the part of Labor, Capital, or Management. What is 99 per cent. of the expenditure of government in normal times but outlays in the nature of investment in industry: investment in property and services of one kind or another, which alone makes possible the vast co-operation and co-ordination of effort which is the very life-blood of industry? The vaster industrial organization becomes, the more it depends, in a multitude of directions, upon the investments of the Community. ”

“ On its face, this enterprise in assorted education simulates the precedents given by the larger modern business coalitions, which frequently bring under one general business management a considerable number and variety of industrial plants. ”

“ The reason for this is a general rule of public policy that in a partnership the corporation would be bound by the acts of persons who are not its duly appointed agents and officers. There may be any number of members in a firm, such matters being left to the choice and wisdom of those operating the business. ”

“ The organization of unlike and unrelated industries—manufacturing industries, public utilities, insurance companies, railroads, trust companies and banks brought under the financial control of Morgan and Company or of some other banking syndicate. ”

“ In our municipal life, for example, it is the aroused interest and zeal of the best business community for better government and better conditions that can alone produce important results. Happily, all over the country we find chambers of commerce, boards of trade, merchants' associations, and other bodies of men of practical business affairs, taking their stand for the transaction of public business upon high standards of character and efficiency. ”

“ As a matter of necessity, organization followed in the wake of this concentration. The owners of industry organized on the one side: the workers organized on the other. Besides these two major forms of organization within the field of industry, there was the organization of the state, which has played a leading rôle in the life of present-day society.
The organization of the owners, which is far more complex and more highly developed than that of the workers, has followed four general lines ”

“ This organization affords a unique medium for exhibition of new variations of human ingenuity and efficiency as well as perversity. These opportunities are embraced both by aggregations of capital on the one hand and by aggregations of labor on the other hand. ”

“ You will see those engaged in these companies associate together, confer with each other, lay their plans before each other, investigate them, scan every branch, and every part and particle of their business. ”

“ Unlike the corporation where for management purposes the owners’ powers are delegated to a controlling board, the essential character of the partnership is that each partner has, regardless of the amount of his investment, an equal right in the direction of its business. As between themselves, for purposes of division of duties and specialization of effort, definite power to exercise control over certain features of the business may be delegated to individual partners. ”

“ Conversely, when a flourishing partnership or similar private firm has gained an assured footing of good-will, in the way of any or all of the items enumerated under that term above, its lot, as prescribed by modern business exigencies, is to go up into a corporation, either by simple conversion into the corporate form or through coalition with other firms into a larger corporate whole. ”

“ The spirit of enterprise must, indeed, be encouraged in every possible way. Organization of industries will be promoted by a judicious system of duties, by the employment of cheap raw material, and by the institution of a board to collect and publish industrial statistics. ”