Mention the princ.i.p.al seats of this manufacture in England; and if it flourishes abroad, the places where it is established.

The duty, excise. or bounty, if any, should be stated, and any alterations in past years; and also the amount exported or imported for a series of years.

Whether the same article, but of superior, equal, or inferior make, is imported?

Does the manufacturer export, or sell, to a middleman, who supplies the merchant?

To what countries is it chiefly sent? and in what goods are the returns made?

161. Each process requires a separate skeleton, and the following outline will be sufficient for many different manufactories:

Process ( ) Manufacture ( ) Place ( ) Name ( ) date 183

The mode of executing it, with sketches of the tools or machine if necessary.

The number of persons necessary to attend the machine. Are the operatives men. ( ) women, ( ) or children? ( ) If mixed, what are the proportions?

What is the pay of each? (s. d.) (s. d. ) (s. d.) per ( )

What number ( ) of hours do they work per day?

Is it usual, or necessary, to work night and day without stopping? Is the labour performed by piece--or by day-work?

Who provide tools? Master, or men? Who repair tools? Master, or men? What degree of skill is required, and how many years" ( ) apprenticeship?

The number of times ( ) the operation is repeated per day or per hour?

The number of failures ( ) in a thousand?

Whether the workmen or the master loses by the broken or damaged articles?

What is done with them?

If the same process is repeated several times, state the diminution or increase of measure, and the loss, if any, at each repet.i.tion.

162. In this skeleton, the answers to the questions are in some cases printed, as "Who repair the tools?--Masters, Men"; in order that the proper answer may be underlined with a pencil. In filling up the answers which require numbers, some care should be taken: for instance, if the observer stands with his watch in his hand before a person heading a pin, the workman will almost certainly increase his speed, and the estimate will be too large.

A much better average will result from enquiring what quant.i.ty is considered a fair day"s work. When this cannot be ascertained, the number of operations performed in a given time may frequently be counted when the workman is quite unconscious that any person is observing him. Thus the sound made by the motion of a loom may enable the observer to count the number of strokes per minute, even though he is outside the building in which it is contained.

M. Coulomb, who had great experience in making such observations, cautions those who may repeat his experiments against being deceived by such circ.u.mstances: "Je prie" (says he) "ceux qui voudront les repeter, s"ils n"ont pas le temps de mesurer les resultats apres plusiers jours d"un travail continu, d"observer les ouvriers a differentes reprises dans la journee, sans qu"ils sachent qu"ils sont observes. L"on ne peut trop avertir combien l"on risque de se tromper en calculant, soit la vitesse, soit le temps effectif du travail, d"apres une observation de quelques minutes." Memoires de l"Inst.i.tut. vol. II, p. 247. It frequently happens, that in a series of answers to such questions, there are some which, although given directly, may also be deduced by a short calculation from others that are given or known; and advantage should always be taken of these verifications, in order to confirm the accuracy of the statements; or, in case they are discordant, to correct the apparent anomalies. In putting lists of questions into the hands of a person undertaking to give information upon any subject, it is in some cases desirable to have an estimate of the soundness of his judgement. The questions can frequently be so shaped, that some of them may indirectly depend on others; and one or two may be inserted whose answers can be obtained by other methods: nor is this process without its advantages in enabling us to determine the value of our own judgement. The habit of forming an estimate of the magnitude of any object or the frequency of any occurrence, immediately previous to our applying to it measure or number, tends materially to fix the attention and to improve the judgement.

Section II

On the domestic and political economy of manufactures

Chapter 13

Distinction Between Making and Manufacturing

163. The economical principles which regulate the application of machinery, and which govern the interior of all our great factories, are quite as essential to the prosperity of a great commercial country, as are those mechanical principles, the operation of which has been ill.u.s.trated in the preceding section.

The first object of every person who attempts to make any article of consumption, is, or ought to be, to produce it in a perfect form; but in order to secure to himself the greatest and most permanent profit, he must endeavour, by every means in his power, to render the new luxury or want which he has created, cheap to those who consume it. The larger number of purchasers thus obtained will, in some measure, secure him from the caprices of fashion, whilst it furnishes a far greater amount of profit, although the contribution of each individual is diminished. The importance of collecting data, for the purpose of enabling the manufacturer to ascertain how many additional customers he will acquire by a given reduction in the price of the article he makes, cannot be too strongly pressed upon the attention of those who employ themselves in statistical enquiries. In some ranks of society, no diminution of price can bring forward a great additional number of customers; whilst, amongst other cla.s.ses, a very small reduction will so enlarge the sale, as to yield a considerable increase of profit. Materials calculated to a.s.sist in forming a table of the numbers of persons who possess incomes of different amount, occur in the 14th Report of the Commissioners of Revenue Inquiry, which includes a statement of the amount of personal property proved at the legacy office during one year; the number of the various cla.s.ses of testators; and an account of the number of persons receiving dividends from funded property, distributed into cla.s.ses. Such a table, formed even approximately, and exhibited in the form of a curve, might be of service.

164. A considerable difference exists between the terms making and manufacturing. The former refers to the production of a small, the latter to that of a very large number of individuals; and the difference is well ill.u.s.trated in the evidence, given before the Committee of the House of Commons, on the Export of Tools and Machinery. On that occasion Mr Maudslay stated, that he had been applied to by the Navy Board to make iron tanks for ships, and that he was rather unwilling to do so, as he considered it to be out of his line of business; however, he undertook to make one as a trial. The holes for the rivets were punched by hand-punching with presses, and the 1680 holes which each tank required cost seven shillings. The Navy Board, who required a large number, proposed that he should supply forty tanks a week for many months. The magnitude of the order made it worth his while to commence manufacture, and to make tools for the express business. Mr Maudslay therefore offered, if the Board would give him an order for two thousand tanks, to supply them at the rate of eighty per week. The order was given: he made tools, by which the expense of punching the rivet-holes of each tank was reduced from seven shillings to ninepence; he supplied ninety-eight tanks a week for six months, and the price charged for each was reduced from seventeen pounds to fifteen.

165. If, therefore, the maker of an article wish to become a manufacturer, in the more extended sense of the term, he must attend to other principles besides those mechanical ones on which the successful execution of his work depends; and he must carefully arrange the whole system of his factory in such a manner, that the article he sells to the public may be produced at as small a cost as possible. Should he not be actuated at first by motives so remote, he will, in every highly civilized country, be compelled, by the powerful stimulus of compet.i.tion, to attend to the principles of the domestic economy of manufactures. At every reduction in price of the commodity he makes, he will be driven to seek compensation in a saving of expense in some of the processes; and his ingenuity will be sharpened in this enquiry by the hope of being able in his turn to undersell his rivals. The benefit of the improvements thus engendered is, for a short time, confined to those from whose ingenuity they derive their origin; but when a sufficient experience has proved their value, they become generally adopted, until in their turn they are superseded by other more economical methods.

Chapter 14

Of Money as a Medium of Exchange

166. In the earlier stages of societies the interchange of the few commodities required was conducted by barter, but as soon as their wants became more varied and extensive, the necessity of having some common measure of the value of all commodities-- itself capable of subdivision--became apparent: thus money was introduced. In some countries sh.e.l.ls have been employed for this purpose; but civilized nations have, by common consent, adopted the precious metals.(1*) The sovereign power has, in most countries, a.s.sumed the right of coining; or, in other words, the right of stamping with distinguishing marks, pieces of metal having certain forms and weights and a certain degree of fineness: the marks becoming a guarantee, to the people amongst whom the money circulates, that each piece is of the required weight and quality.

The expense of manufacturing gold into coin, and that of the loss arising from wear, as well as of interest on the capital invested in it, must either be defrayed by the State, or be compensated by a small reduction in its weight, and is a far less cost to the nation than the loss of time and inconvenience which would arise from a system of exchange or barter.

167. These coins are liable to two inconveniences: they may be manufactured privately by individuals, of the same quality, and similarly stamped; or imitations may be made of inferior metal, or of diminished weight. The first of these inconveniences would be easily remedied by making the current value of the coin nearly equal to that of the same weight of the metal; and the second would be obviated by the caution of individuals in examining the external characters of each coin, and partly by the punishment inflicted by the State on the perpetrators of such frauds.

168. The subdivisions of money vary in different countries, and much time may be lost by an inconvenient system of division.

The effect is felt in keeping extensive accounts, and particularly in calculating the interest on loans, or the discount upon bills of exchange. The decimal system is the best adapted to facilitate all such calculations; and it becomes an interesting question to consider whether our own currency might not be converted into one decimally divided. The great step, that of abolishing the guinea, has already been taken without any inconvenience, and but little is now required to render the change complete.

169. If, whenever it becomes necessary to call in the half-crowns, a new coin of the value of two shillings were issued, which should be called by some name implying a unit (a prince, for instance), we should have the tenth part of a sovereign. A few years after, when the public were familiar with this coin, it might be divided into one hundred instead of ninety-six farthings; and it would then consist of twenty-five pence, each of which would be four per cent. less in value than the former penny. The shillings and six-pences being then withdrawn from circulation, their place might be supplied with silver coins each worth five of the new pence, and by others of ten-pence, and of twopence halfpenny; the latter coin, having a distinct name, would be the tenth part of a prince.

170. The various manufactured commodities, and the various property possessed by the inhabitants of a country, all become measured by the standard thus introduced. But it must be observed that the value of gold is itself variable; and that, like all other commodities, its price depends on the extent of the demand compared with that of the supply.

171. As transactions multiply, and the sums to be paid become large, the actual transfer of the precious metals from one individual to another is attended with inconvenience and difficulty, and it is found more convenient to subst.i.tute written promises to pay on demand specified quant.i.ties of gold. These promises are called bank-notes; and when the person or body issuing them is known to be able to fulfil the pledge, the note will circulate for a long time before it gets into the hands of any person who may wish to make use of the gold it represents.

These paper representatives supply the place of a certain quant.i.ty of gold; and, being much cheaper, a large portion of the expense of a metallic circulation is saved by their employment.

172. As commercial transactions increase, the transfer of bank-notes is, to a considerable extent, superseded by shorter processes. Banks are established, into which all monies are paid, and out of which all payments are made, through written orders called checks, drawn by those who keep accounts with them. In a large capital, each bank receives, through its numerous customers, checks payable by every other; and if clerks were sent round to receive the amount in banknotes due from each, it would occupy much time, and be attended with some risk and inconvenience.

173. Clearing house. In London this is avoided, by making all checks paid in to bankers pa.s.s through what is technically called The Clearing House. In a large room in Lombard Street, about thirty clerks from the several London bankers take their stations, in alphabetical order, at desks placed round the room; each having a small open box by his side, and the name of the firm to which he belongs in large characters on the wall above his head. From time to time other clerks from every house enter the room, and, pa.s.sing along, drop into the box the checks due by that firm to the house from which this distributor is sent. The clerk at the table enters the amount of the several checks in a book previously prepared, under the name of the bank to which they are respectively due.

Four o"clock in the afternoon is the latest hour to which the boxes are open to receive checks; and at a few minutes before that time, some signs of increased activity begin to appear in this previously quiet and business-like scene. Numerous clerks then arrive, anxious to distribute, up to the latest possible moment, the checks which have been paid into the houses of their employers.

At four o"clock all the boxes are removed, and each clerk adds up the amount of the checks put into his box and payable by his own to other houses. He also receives another book from his own house, containing the amounts of the checks which their distributing clerk has put into the box of every other banker.

Having compared these, he writes out the balances due to or from his own house, opposite the name of each of the other banks; and having verified this statement by a comparison with the similar list made by the clerks of those houses, he sends to his own bank the general balance resulting from this sheet, the amount of which, if it is due from that to other houses, is sent back in bank-notes.

At five o"clock the Inspector takes his seat; when each clerk, who has upon the result of all the transactions a balance to pay to various other houses, pays it to the inspector, who gives a ticket for the amount. The clerks of those houses to whom money is due, then receive the several sums from the inspector, who takes from them a ticket for the amount. Thus the whole of these payments are made by a double system of balance, a very small amount of bank-notes pa.s.sing from hand to hand, and scarcely any coin.

174. It is difficult to form a satisfactory estimate of the sums which daily pa.s.s through this operation: they fluctuate from two millions to perhaps fifteen. About two millions and a half may possibly be considered as something like an average, requiring for its adjustment, perhaps, L200,000 in bank notes and L20 in specie. By an agreement between the different bankers, all checks which have the name of any firm written across them must pa.s.s through the clearing house: consequently, if any such check should be lost, the firm on which it is drawn would refuse to pay it at the counter; a circ.u.mstance which adds greatly to the convenience of commerce.