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dollar to a dollar and a half per ton in manufacture. The leather combinations find that they have avoided similar wastes by manufacturing certain special grades of shoes in one establishment to which special kinds of leather can be sent, instead of having each establishment separate the leather for itself and manufacture many different grades of shoes. This waste of competition or, more accurately, this waste due to subdivision which can be avoided by combination, of course varies largely with the different kinds of manufacture. In some the waste is doubtless very great. The saving in a large establishment does not of necessity imply monopoly.
8. Another advantage from the combination of different establishments, one that tends to strengthen monopoly, comes from the common use of patents, trade marks, brands and similar business devices. The use of a patent or trade mark is usually restricted to one establishment; by the combination it may become almost general. Of course, the combination, by selecting the best patents and suppressing or preventing the use of others may foster monopoly. Some combinations are accused of buying up competing patents for the purpose of preventing their use.
9. The head of one of the largest stores in the country was not long since showing a friend through the establishment. To inquiries as to wages of different employees, the reply was: “This man receives $10,000 per year; that one receives a salary of $15,000 per year,” and so on, as the heads of various important departments were pointed out. When the friend remarked that it must be difficult to pay dividends if such large salaries were paid to so many men, the manager replied: “There is nothing so cheap as brains; they must be had at any price.” Every person who deals with large affairs in any profession or trade or walk in life recognizes the fact that nothing is so rare as excellence. Whether the work be manufacturing, or transportation, or merchandizing, or teaching, or law, the fact is the same. The first-class man is exceedingly rare, and is cheap at almost any price. The great merchant princes, like Stewart, or Field, or Wanamaker; the great business men like Carnegie, Rockefeller, Vanderlip, Gary, Schwab, Vail, McCormick, are possible under present circumstances because such talent for managing, whether for the public good or ill, is rare; and when it is found, the opportunities for its employment readily come, as they do to the great lawyer or preacher. Without ignoring the fact that the competitive system plays a noble part often in selecting for industrial society the great leader, it is still true that one of the chief wastes of competition is found in the fact that the separate establishments are mostly in the hands of mediocre men, who, unable to effect the sayings that come from the most skilful organization or from a judicious forecast of the market, lose money for their stockholders without any saving to consumers from low prices. The consequent loss to economic society as a whole is enormous.
10. Great skill in management is by no means, as many seem to think, the mere taking advantage of an opportunity to cheat a customer or hoodwink a competitor. It frequently, if not generally, results in an absolute saving of energy by means of the more skilful organization of labor, and the adaptation of ways and means to ends. The combination, bringing together numerous establishments of the same kind, is enabled to select the most skilful men to place in charge, and thus practically an entire industry can be managed with the same skill as a single establishment. While it is of course true that one man cannot give his personal attention to the details of a very large business, so that at times, doubtless, in the combination there is a certain waste that comes from lack of detailed inspection by the chief owner, it is nevertheless true that this waste is in most cases comparatively little. The man of really great executive ability knows so well how to organize his business that men of inferior capacity working under his system, even though only upon salaries, are enabled to do better and more careful work by far than the same men in independent positions, where they are unable to consult to advantage men more skilled than they. One chief gift of a great executive is the power to select and direct subordinates. The skill of Grant as a general was shown not more in the planning of battles than in the selection of his chief commanders, and in his power to discern wherein they could be trusted, so as thus to inspire each to his best efforts.
The same skill is shown by a great captain of industry, possibly to a much higher degree. The workmen in an industrial establishment are not under the same constraint as are soldiers. Willing workers do more work and better work than do sullen drudges, and much of the skill of the industrial manager is shown in dealing with these human factors. The small concern gives opportunity for the personal touch; the large one for pension funds and a type of esprit de corps not possible in small ones. The special discussion of these points comes in another chapter.
This advantage of management by the best talent is a matter also of the proper distribution of talent. One man in his independent establishment may have been peculiarly successful on account of his skill as a salesman; another, on account of his organizing ability; a third, on account of his special technical knowledge, and so on. If these various competing establishments are united into one, to each man can be given the department for which he is peculiarly adapted, and in that way the joint establishment gets the advantage of the peculiar skill of each.
11. Managers of the industrial combinations often say that they secure many of the benefits of competition through their system of comparative accounting among their different plants. Each plant is required to send to the central office daily or weekly reports of actual conditions: materials, labor, sales, prices, cost analyses, etc. These are so tabulated that one can see at a glance the relative standing of each plant in all particulars. If labor cost per ton is high in one establishment, the manager of that plant is asked to explain; if in another the by-products per ton or per head are exceptionally good, the manager is commended. By this system competition among managers and establishments is kept keen and the competition is more beneficial than under the old system. Under that a manager might know that his rival was beating him, but could not tell how or why; in the combination, he is told his weak points and his strong ones and then the general efficiency is greatly increased. Moreover, as promotion depends on success, the stimulus is practically as great as in the case of an independent owner.
12. A very large establishment finds it profitable to manufacture some by-products from its waste material, which, owing to the extra capital needed, or to an insufficient quantity of waste material, its smaller rival must either lose entirely or part with at a disadvantage. The largest oil refineries at times make as much profit from by-products as from their illuminating oil.
The great meat-packing establishments have also carried the utilization of by-products to almost a wonderful degree and of late years nearly all the great combinations like the Steel Corporation, the International Harvester Co., the Standard Oil Co., and others keep a staff of experts and inventors for the special purpose of finding out new uses, new methods, new machines to lessen production costs and improve the products.
13. Manufacturing establishments are sometimes embarrassed by the difficulty of securing a proper supply of raw material at the exact time when it is needed, and in proper quantities and qualities. On the other hand, miners or other producers of raw material are also frequently embarrassed in finding a sure market for their product. In consequence of these facts, many combinations such as the Federal Steel Company and later the United States Steel Corporation were made, not of those who were competitors in the same line of manufacture, but rather of the producers of raw material and the manufacturers of the finished product, in order that these requirements of demand and supply might be readily met, and the course of production