Schulze-Gaevernitz points out that in the thirty years between 1856 and 1885, while the factories in cotton spinning and weaving only increased from 2210 to 2633, the number of spindles increased from 28,010,217 to 44,348,921, the number of looms from 298,847 to 560,955, and that since both spindles and looms worked much faster in 1885 than in 1856, the output has increased in still greater proportion.[102]
Turning to another highly-developed machine industry, that of milling, we find a similar movement. Flour mills are diminishing in number both in England and in the United States. The period 1884-86 showed a diminution in the number of flour mills in the United States from 25,079 to 18,267, though the total productive power of the smaller number was greatly increased. Mr. Wells finds a similar tendency in the general manufacturing industry of the United States:—"Between 1850 and 1860 the number of manufacturing firms and corporations in the United States increased from 123,025 to 140,433, and the value of manufactured products increased from $1,019,106,616 to $1,885,861,876, so that in that decade there was an increase of 17,408 establishments, to an increase of $866,755,060 in the value of products. In 1870 there were 252,148 firms and corporations so employed, producing $4,232,325,442 in manufactured products; or an increase of 111,715 establishments in the decade of 1860 to 1870 gave an increase of $2,346,463,766 in the value of products. In 1880 the number of manufacturing establishments was returned at 253,852, producing articles valued at $5,365,579,191, or an addition of only 1704 firms and corporations was accompanied with an increase of product of $1,133,537,749. Here then is a demonstration that the average product of a manufacturing establishment in the United States in 1880 was just 60 per cent. greater than it was in 1860."[103]
§ 2. While the mass of capital and labour which constitutes a business is growing, the latter grows less rapidly than the former. That is to say, capital is in point of size becoming more and more the dominant factor in the business. With the effect of this upon the economic character and conditions of labour we are not here concerned. The subject requires a separate treatment. Here it suffices to recognise the quantitative change that has taken place. Under domestic industry the value of the implements used was, as a rule, equivalent only to a few months' wages. In 1845 McCulloch estimated that the fixed capital in well-appointed cotton mills amounted to about two years' wages of an operative.[104] In 1890 Professor Marshall assigns a capital in plant amounting to about £200 or five years' wages for every man, woman, and child in a fully-equipped spinning mill.[105] In the typical modern industry, that of cotton-spinning and weaving, the increasing size is both continuous and rapid. The average number of spindles and looms to the single factory in 1850 and 1885 are as follows:—
| Spindles. | Power-Looms. | |
| 1850 | 10,858 | 155 |
| 1885 | 15,227 | 213 |
Even these figures do not fully represent the facts, for they include considerable numbers of mills of the older sort, where spinning and weaving are carried on together. Taking the more highly specialised spinning mills in the Oldham district, the average is stated at 65,000, while the largest mills have as many as 185,000 spindles. So also the average number of power-looms in the North Lancashire district is placed at 600, the largest number in a single business amounting to 4500.[106]
"Again, the cost of a steamship is perhaps equivalent to the labour of ten years or more of those who work her, while a capital of about £900,000,000 invested in railways in England and Wales is equivalent to the work for about twenty years of the 400,000 people employed on them."[107]
This growth in the unit of capital is, as we perceive, largely due to the establishment of large and expensive machinery and other plant as a leading feature in modern production. The fact that modern methods are largely instrumental in increasing the quantity of products might lead us to suppose that the growth of the raw material or circulating part of the capital of a business would correspond with the growth of fixed forms of capital. This, however, is not the case. In the most highly organised machine industry an increasing proportion of the economy goes into the improved methods of manipulating material so as to prevent waste, and by improved quality of work and elaboration of manufacture to get a larger net amount of product out of a given quantity of raw material.
In cotton-spinning, for example, since 1834 the waste of raw material has been reduced from 1/7 to about 1/10; inferior material, once useless, is now mixed with better stuff; and more important still, modern machinery has, by adapting itself to the spinning of finer yarn, effected great saving in the quantity consumed by each spindle. In many other industries we shall find this same process going on, whereby the proportion of capital which consists of raw material is reduced, and the proportion which consists in machinery and other fixed capital enhanced.
The growth of the unit of capital in the developed modern manufacturing business entails also a growth in the unit of labour, though not a corresponding growth. The number of employees in a business is larger in proportion as the business passes into the stage of highest industrial organisation. In the United States in 1880 it was estimated that the average number of employees in a manufacturing business for the whole country was a little less than 11, but in the chief manufacturing states of Massachusetts, Connecticut, and Rhode Island it was about 25, while in Pittsburg, the great centre of iron industry, it was more than 33.
§ 3. In addition to increased size we find increased and ever-increasing complexity of structure in the business-unit. This has proceeded in two directions, horizontally and laterally—that is to say, by subdivision and accession of processes on the one hand, and by an increased variety of products, and therefore of processes, upon the other hand. The constantly growing specialisation of fixed capital and of labour in our factories and workshops is a commonplace. Adam Smith's famous pin manufactory, with its ten separate processes, has been left far behind. In a modern shoe factory in the United States there are sixty-four distinct processes. Grain, in the elaborate machinery of a steam flour mill, passes through a score of different stages, cleaning, winnowing, grinding, etc. The American machine-made watch is the product of 370 separate processes. The organisation of a modern textile factory provides a dozen different processes contributing to the spinning or weaving of cotton or silk. New processes of cleaning, finishing, and ornamenting are continually being added. The subsidiary process of packing, the manufacture of packing cases, the printing of labels, etc., are taken on in many factories.[108] Many branches of production which were formerly carried on in separate places and as separate business-units are grouped together under the factory roof, or if still separated locally, and executed by separate machinery and power, are related as forming part of the same business, and are under the same management. So in the woollen manufactures the preliminary processes of sorting and cleansing, carding or combing, as well as the main processes of spinning and weaving, fulling, dyeing, and finishing, each of which was once committed to a separate and independent group of workers, are now frequently found going on simultaneously in a single factory.[109] Thus a number of small simple business-units representing the various stages in the production of a commodity, come to group themselves into a large complex unit.