10The dependence of one process upon the working of the others is sometimes very strict, as, for instance, in the various industries occupied with iron, including the extraction and handling of the ore and other raw materials. In other cases the correlation is less strict, or even very slight, as, e.g., that between the newspaper industry and lumbering, through the wood-pulp industry, the chief component of the modern newspaper being wood-pulp.
11The ulterior ground of efforts directed to the accumulation of wealth is discussed at some length in the Theory of the Leisure Class, ch. II. and V, and the economic bearing of the business man's work is treated in a paper on "Industrial and Pecuniary Employments," in the Proceedings of the thirteenth annual meeting of the American Economic Association. Cf. also Marshall, Principles of Economics (3d ed.), bk. I. ch. III, bk. IV. ch. XII, bk. V. ch. IV, bk. VII. ch. VII and VIII; Bagehot, Economic Studies, especially pp. 53 et seq.; Walker, Wages Question, ch. XIV; and more especially Sombart, Moderne Kapitalismus, vol. I. ch. I, VIII, XIV, XV; Marx, Kapital, bk. I. ch. IV; Schmoller, Grundriss, bk. II. ch. VII.
12It is significant that joint-stock methods of organization and management -- that is to say, impersonally capitalistic methods -- are traceable, for their origin and early formulation, to the shipping companies of early modern times. Cf. K. Lehmann, Die geschichtliche Entwickelung des Aktienrechts bis zum Code de Commerce. The like view is spoken for by Ehrenberg, Zeitglter der Fugger; see vol. II. pp. 325 et seq.
13Cf. Cantillon, Essai sur le Commerce, 1e partie, ch. III, VI, IX, XIV, XV, Wealth of Nations, bk. I; Bucher, Enstehung der Volks wirtschaft (3d ed.), ch. IV and V; Sombart, Kapitalismus, Vol. I bk. I.
14Sombart, vol. I. ch. IV-VIII; Ashley, Economic History and Theory, bk. II, ch. VI, especially pp. 389-397.
15Cf. Marshall, Principles of Economics, on the "Law of Substitution," e.g. bk. VI. ch. I. The law of substitution implies freedom of investment and applies fully only in so far as the investor in question is not permanently identified with a given industrial plant or even with a given line of industry. It requires great facility in shifting from one to another point of investment. It is therefore only as the business situation has approached the modern form that the law of substitution has come to be of considerable importance to economic theory; for a theory of business, such as business was in mediaeval and early modern times, this law need scarcely have been formulated.
16See Sombart, Kapitalismus, vol. 1. chap. VIII.
17It is chiefly the passive owner of stock and the like that holds permanently to a given enterprise, under the fully developed modern business conditions. The active business man of the larger sort is not in this way bound to the glebe of the given business concern.
18Cf. testimony of J.B. Dill, Report of the Industrial Commission, vol. I. pp. 1078, 1080-1085; "Digest of Evidence," p., 77. also testimony of various witnesses on stock speculation and corporate management, and particularly the special report to the Commission, on "Securities of Industrial Combinations and Railroads," vol. XIII., especially pp. 920-922.
19The 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. E.g. the manoeuvres preliminary to the formation of the United States Steel Corporation, particularly the movements of the Carnegie Company, show how this works on a large scale. Cf. E.S. Meade, Trust Finance, pp. 204-217. Report of the Industrial Commission, vol. XIII., "Review of Evidence," pp. v-vii, with the testimony relating to this topic. The pressure which brings about a new adjustment (coalition) is commonly spoken of as "excessive competition."
20Cf., e.g., the accounts of the formation of the United States Steel Corporation or the Shipbuilding Company.
21Witness the rate wars and the duplications of inefficient track and terminal equipment among the railways, and the similar duplications in the iron and steel industry. The system of railway terminals in Chicago, e.g., is an illuminated object-lesson of systematic ineptitude.
22The splendid reach of this inhibitory work of the captain of industry, as well as of his aggressive work of consolidation, is well shown, for instance, in the history and present position of the railway industry in America. It is and has for a long term of years been obvious that a very comprehensive unification or consolidation, in respect of the mechanical work to be done by the railway system, is eminently desirable and feasible, - consolidation of a scope not only equalling, but far out reaching, the coalitions which have lately been effected or attempted. There is no hazard in venturing the assertion that several hundreds of men who are engaged in the mechanical work of railroading, in one capacity and another, are conversant with feasible plans for economizing work and improving the service by more comprehensive and closer correlation of the work; and it is equally obvious that nothing but the diverging interests of the business men concerned hinders these closer and larger feasible correlations from being put into effect. It is easily within the mark to say that the delay which railway consolidation has suffered up to the present, from business exigencies as distinct from the mechanical circumstances of the case, amounts to an average of at least twenty years. Ever since railroading began in this country there has been going on a process of reluctant consolidation, in which the movements of the business men in control have tardily followed up the opportunities for economy and efficient service which the railroad industry has offered. And their latest and boldest achievements along this line, as seen from the standpoint of mechanical advisability, have been foregone conclusions since a date so far in the past as to be forgotten, and taken at their best they fall short to-day by not less than some fifty per cent. of their opportunities. Cf. Report of the Industrial Commission, vol. XIX., "Transportation," especially pp. 304-348. Like other competitive business, but more particularly such business as has to do with the interstitial adjustments of the industrial system, the business of railway consolidation is of the nature of a game, in which the end sought by the players is their own pecuniary gain and to which the industrial serviceability of the outcome is incidental only. This is recognized by popular opinion and is made much of by popular agitators, who take the view that when once the game between the competing business interests has been played to a finish, in the definitive coalition of the competitors under one management, then the game will go on as a somewhat one-sided conflict between the resulting monopoly and the community at large. So again, as a further illustration, it is and from the outset has been evident that the iron-ore beds of northern Wisconsin, Michigan, and Minnesota ought, industrially speaking, to have been worked as one collective enterprise. There are also none but business reasons why practically all the ore beds and iron and steel works in the country are not worked as one collective enterprise. It is equally evident that such correlations of work as are permitted by the business coalitions already effected in this field have resulted in a great economy of production, and that the failure to carry these coalitions farther means an annual waste running up into the millions. Both the economies so effected and the waste so incurred are to