Factory (trade)

“ The main objection to charging the factory output to the selling department at any price other than cost is that such a policy introduces an element of unrealized profit. This objection is not serious if, at the time the books are closed for the purpose of showing results for the fiscal period, the unrealized profit is eliminated from the stock-in-trade inventory. ”

“ It should be noted that the factory was, in the beginning, not the creation of capital, but of labor. The early master manufacturers were risen workingmen. Sir Richard Arkwright, the creator of the factory, the man who dominated industrial activities in the first great period of expansion, was a penny barber; but he died a Knight Bachelor with an income greater than that [Pg 54] of many a prince. The process of social elevation by means of trade began back in the fifteenth century with the first extension of manufactures. ”

“ The independent workman with his own tools was superseded by the factory, the small producer has given way in turn to the trust.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. ”

“ In one woolen factory the milligrams of dust in a cubic centimeter of air were reduced from twenty to seven by the installation of an exhauster. [40]
The fact, too, that organizations such as trade unions and consumers' leagues can allow the use of their labels to certify that an article has been made under fair conditions, is a striking confirmation of the fact that some manufacturers do maintain proper factories and treat their employees justly.
Nevertheless, competition has a black as well as a silver lining. ”

“ Some tell us that we want capital, and that we should send abroad and get men to come here with money to build factories. This is not what we need. If the cotton lord and the millionaire come here and hire you to build factories and pay you their money for their work, when the factory is erected they own it, and they set their price upon your labor and your wool or cotton—they have dominion over you. But if, by your own efforts and exertions, you cooperate together and build a factory it is your own. ”

“ The dealer in raw materials knew that the user must come to him; the great factories were contented with the phenomenal demand for their output, not alone at home, but also abroad, where merit had already won a profitable trade. ”

“ Money or some equivalent must be had to keep the machinery of the department going. Arrearages especially should be provided for. For instance, over $5,000,000 is now due to the factory interest alone for goods long since delivered and expended, and that, too, after a liberal use of call certificates, non-taxable bonds, and even the raw material, cotton. All the factories are under contract to deliver at fair prices two-thirds of their production. They all work under a uniform system, one built up with care and labor, and with a result perfectly satisfactory. ”

“ These are some of the steps by which the systems of the manufacturing world have been, in the past 150 years, transformed from household work, or that of the small shop, into that of the factory—and the factory developed into enormous establishments through the investment of great sums of money in the purchase and installation of ever-improving machinery, more ingenious, more productive, more costly, but turning out more and better of the finished product with each new device and new investment of capital. ”

“ Almost invariably some finished stock is on hand and goods are in process of manufacture. Where interest is added, the result is to inflate the value at which the goods must be carried on the inventory—a very undesirable procedure from an accounting and financial viewpoint. By such means it is conceivable that a factory might be made to show a handsome profit even before any of the product had been sold. ”

“ It is also certain, that by the diminution of profit which the manufacturer suffers from the diminished price, his ingenuity will be additionally stimulated;—that he will apply himself to discover other and cheaper sources for the supply of his raw material,—that he will endeavour to contrive improved machinery which shall manufacture it at a cheaper rate,—or try to introduce new arrangements into his factory, which shall render the economy of it more perfect. ”

“ It is contended that by admitting the exportation of machinery, foreign manfacturers will be supplied with machines equal to our own. The first answer which presents itself to this argument is supplied by almost the whole of the present volume; That in order to succeed in a manufacture, it is necessary not merely to possess good machinery, but that the domestic economy of the factory should be most carefully regulated. ”

“ It would make no difference whether one company or one individual owned all the factories fabricating the component parts of a single product, or whether such part were made in our independently owned factory, if only all adopted the same service methods. If we can buy as good a part as we can make ourselves and the supply is ample and the price right, we do not attempt to make it ourselves—or, at any rate, to make more than an emergency supply. ”

“ Small factories are constantly seeking out lower rents, taxes, wages, salaries, cheaper local sources of materials, cheap though limited sources of power, and thus they compete successfully in many markets. The point is reached in the growth of establishments where oversight cannot be as perfect and complete; the eye of the master cannot be over all. The market that can be reached by one factory is limited by distance, as the cost of transportation finally offsets all the other advantages of large industry. ”

“ The case was the same with the home-products of earlier times, and compared with them the newer factory-product was shoddy; because, if the manufacturer was to earn a living from his industry he must produce a certain quantity within a limited time. These by-products of the home were enabled to hold their own against the factory products until the development of machinery in the eighteenth century; and until that time the factory system, although factories existed on a rudimentary scale, did not fully develop. ”

“ The statement is, however, that labor received only 20 per cent of the value of the product which it served to create.
Even with a superficial knowledge of economics and industrial processes one ought to perceive that the laborers employed in manufacturing industries by no means create the full value of the products which these industries place upon the market. The laborer in the factory does not create the raw material which the factory uses; labor on the farm, in the mine or in the forest entered into that. ”

“ The manufacture being a strictly private enterprise, its owners find it advantageous to have all the branches of a given industry under their own management; they thus cumulate the profits of the successive transformations of the raw material. And when several thousand power-looms are combined in one factory, the owner finds his advantage in being able to hold the command of the market. ”

“ As the number of factories increased it became possible for operatives to rise, first to positions of trust within the factory, and later to the rank of master manufacturer—so that many a bobbin boy became a cotton lord. ”

“ At such times the value of factories increases greatly, but after a few years of prosperity business again collapses. Such prosperous periods are the opportunity of the business man and of the promoter to sell the factory at its highest price. Machinery adapted only for a special product will not sell as readily when less needed for its special use, as that which, like a turning-lathe, can be used for many purposes; but the more special the appliances needed for a certain product, the higher, more abnormal will be their temporary value when they are suddenly needed. ”

“ Or in agriculture, to the contract method, whereby specified products such as sugar beets, sweet-corn, peas, beans, tomatoes, fruits, and other products for manufacture, canning, preserving, or pickling in a factory, are raised by the farmer and sold to the manufacturer at a previously agreed-upon contract price. Under the guild plan the manufacturer or importer sold usually to the ultimate consumer. So the economic system was gradually growing more complex, and the interdependence of man upon man more pronounced. ”

“ The factory system has not only wrought this change, but has compelled the economists to recognize the distinction between commodities and services. There has been greater and greater freedom of contract in respect to commodities, but the contracts which involve labor have become more and more completely under the authority and supervision of the State. ”

“ The establishment of the factory altered completely the relation between employer and employee. Indeed in the modern sense these relations were then first established. Labor became a commodity which the master manufacturer, who was also the capitalist, bought and which the workingman sold. When in the year 1785 Arkwright’s patents were set aside and the use of his perfected spinning machinery became free to all manufacturers, a great extension of the cotton industry followed. ”

“ What, also, of the machinery in the factory, and of the factory buildings themselves, and, back of them, again, the tool makers and the providers of raw materials? It is obvious that no human intellect could ever unravel the tangled skein of human labor, and that in actual exchange there can be no calculation of the respective labor content of commodities. If the law of value holds good, it must operate mechanically, automatically. And this it does, through the incidence of bargaining and the law of supply and demand. ”

“ It hardly need be added that a further advantage which the factory owner has is, that he can find a sale even for produce of the most inferior quality, provided there is a considerable quantity of it to be sold. ”

“ The owner of a factory, on the contrary, being commonly possessed of a large capital, and having all his workmen employed under his own immediate superintendence, may make experiments, hazard speculation, invent shorter or better modes of performing old processes, may introduce new articles, and improve and perfect old ones, thus giving the range to his taste and fancy, and, thereby alone enabling our manufacturers to stand the competition with their commercial rivals in other countries. ”

“ You have seen that in that factory of the Pioneers five hundred workmen were employed and sixteen hundred workingmen held the stock. This much must also be clear to you—that, unless we are willing to imagine the workmen as rich people (in which case all questions are solved—in imagination) , the capital necessary for the establishment of a factory can never be raised from the pockets of the workmen employed in it. They will be obliged to take in a much greater number of other workingmen stockholders, who are not employed in their factory. ”

“ It will be seen from the figures above presented that in these four great industries the tendency from 1880 to 1900 was distinctly in the direction of reduction of the number of factories, and a greater increase in capitalization than in that of persons employed, wages paid or in value of product turned out; while the figures covering the operations of the entire factory system for the period 1900 to 1905 also show a continuation of this same tendency toward a greater growth in capital than in persons employed, wages paid or value of product turned out. ”

“ They do not perish because a substantial economy can be realised in the factory production-in many more cases than is usually supposed, the fact is even the reverse-but because the capitalist who establishes a factory emancipates himself from the wholesale and retail dealers in raw materials; and especially, because he emancipates himself from the buyers of his produce and can deal directly with the wholesale buyer and exporter; or else he concentrates in one concern the different stages of fabrication of a given produce. ”

“ A larger portion of the public will receive advantage from the use of the article, and they will procure it at a lower price; and the manufacturer, though his profit on each operation is reduced, will yet, by the more frequent returns on the larger produce of his factory, find his real gain at the end of the year, nearly the same as it was before; whilst the wages of the workman will return to their level, and both the manufacturer and the workman will find the demand less fluctuating, from its being dependent on a larger number of customers. ”

“ A factory in a town changes every person in the town, mentally and physically. This being true, does not the management of this factory call for men of heart and soul—broad-minded, generous, firm in the right? Then every factory is influenced by the laws of the land, and each country is influenced by the laws of other countries, since most countries that are engaged in manufacturing find a market abroad. ”

“ A marked characteristic of capitalistic production is the concentration of the means of production in increasingly large factories. In distribution the opposite trait becomes manifest. Whoever has been driven by competition out of the ranks of independent producers, in nine cases out of ten seeks to win a place as dealer between producer and consumer to obtain a living. [205] This accounts for the surprising increase of persons [344] engaged in intermediate trade, dealers, small shopkeepers, hucksters, agents, jobbers, etc. ”