The Owosso times. (Owosso, Mich.) 1897-1926, 1899-09-15
INDUSTRIAL EVOLUTION.
CoNrIKUEp FROM PAGE ONE.


CONTINUED FROM PAGE ONE.
ness OF manufacturing cotton. These in
ventions are prototypes OF modern
mechanical progress and out OF them the
factory system has developed. Up to
the period that may be roughly marked
off as having begun with 1870, there had
been a great development OF the factory
system. Factories had increased in size,
railways had developed and had been
consolidated into extensive systems.
labor had formed itself into trade assoc
iations, corporations were numerous and
controlled great wealth, but all OF these
institutions were separate The new
period is characterized by more cumpre-
hensve combinations, by railway pools,
unions obtaining workmen OF all or
many trades, of manufacturing establish
ments combined in trusts" The latter
name survives though the legal entity to
which il was properly applied has be-
come obsolete.
Theearly trusts were created through
the transfer OF the property of various
establishments to trustees, who issued
trust certificates to the original owners
and sometimes gave mortgages also up
on the property placed in trust by each.
These organizations met great popular
opposition, and were found exceedingly
vulnerable to legislative attacks. They
lasted long enough to impress upon
capitalists the advantages OF consolida-
ton and were then superseded by gigan-
tic corporations organized to take over
the property formerly belonging to
separate individuals, firms or smaller
corporations. Popular opinion attaches
tn these new corporations the incident
OF monopoly, but in so doing is never
quite accurate. For example, we hear
much OF trusts in the iron industry, but
20 per cent OF the furnaces are operated
independently OF each other, while the
remaining IS per cent is controlled by
fourteen separate organizations, all
bitterly antagonistic to each other.
The phenomena suggested have been
the product OF natural causes, are all
closely related, and the latest was indi-
Gated by the earliest. To explain these
relations it is necessary to examine the
nature OF industrial competition, and
especially to consider the notifications
which it has undergone as the result of
m Of A
retically simple classification of industries
depends upon whether they conform (a)
to the law OF diminishing returns, (b) to
the law OF constant returns, or, (c) to
the law OF increasing returns.
The facts which determine the place
of particular industry, under this
classification, belong to its technique,
but the results are Of the utmost inn
portance among the postulates of econ
omists. Technical evidence, available
to the economists, indicates that all in
dustries pass, or may pass, through
successive states in which they conform
respectively to the law of increasing, of
constant, and of diminishing returns.
When an industry is in the first state,
each establishment tends to increase its
output. and as such increase, other
things being equal, reduces prices, the
process must eventually crowd out
those who produce under the least fav-
orable conditions. The position of
marginal producers is therefore UNI
stable and such industries tend toward
monopolization In the hands of the
single producer whose. cost per unit of
production is lowest Industries which
now conform to the law of constant or
to that of diminishing returns, have
reached these states, in nearly all cases,
before the establishments have grown to
the size which would permit them to
supply the entire market. Machinery
has extended the application of the law
of increasing returns and thus tended to
remove industries from the competitive
field
With regard to industries conforming
to the law of constant or to that of d. |
minishing returns, it is apparent that
they may be divided into supplementary
classes based upon the amount of CAPT |
tai required. Where establishments |
have grow to considerable size before
entering these classes there Is in each a
large amount of fixed capital. If, in