On the Economy of Machinery and Manufactures

On Combinations of Masters against the public 376. A species of combination occasionally takes place amongst manufacturers against persons having patents: and these combinations are always injurious to the public, as well as unjust to the inventors. Some years since, a gentleman invented a machine, by which modellings and carvings were cut in mahogany, and other fine woods. The machine resembled, in some measure, the drilling apparatus employed in ornamental lathes; it produced beautiful work at a very moderate expense: but the cabinetmakers met together, and combined against it, and the patent has consequently never been worked. A similar fate awaited a machine for cutting veneers by means of a species of knife. In this instance, the wood could be cut thinner than by the circular saw, and no waste was incurred; but 'the trade' set themselves against it, and after a heavy expense, it was given up. The excuse alleged for this kind of combination, was the fear entertained by the cabinetmakers that when the public became acquainted with the article, the patentee would raise the price. Similar examples of combination seem not to be unfrequent, as appears by the Report of the Committee of the House of Commons on Patents for Inventions, June, 1829. See the evidence of Mr Holdsworth. 377. There occurs another kind of combination against the public, with which it is difficult to deal. It usually ends in a monopoly, and the public are then left to the discretion of the monopolists not to charge them above the growling point—that is, not to make them pay so much as to induce them actually to combine against the imposition. This occurs when two companies supply water or gas to consumers by means of pipes laid down under the pavement in the street of cities: it may possibly occur also in docks, canals, railroads, etc., and in other cases where the capital required is very large, and the competition very limited. If water or gas companies combine, the public immediately loses all the advantage of competition, and it has generally happened, that at the end of a period during which they have undersold each other, the several companies have agreed to divide the whole district supplied, into two or more parts, each company then removing its pipes from all the streets except those in its own portion. This removal causes great injury to the pavement, and when the pressure of increased rates induces a new company to start, the same inconvenience is again produced. Perhaps one remedy against evils of this kind might be, when a charter is granted to such companies, to restrict, to a certain amount, the rate of profit on the shares, and to direct that any profits beyond, shall accumulate for the repayment of the original capital. This has been done in several late Acts of Parliament establishing companies. The maximum rate of profit allowed ought to be liberal, to compensate for the risk; the public ought to have auditors on their part, and the accounts should be annually published, for the purpose of preventing the limitations from being exceeded. It must however be admitted, that this would be an interference with capital, which, if allowed, should, in the present state of our knowledge, be. examined with great circumspection in each individual case, until some general principle is established on well-admitted grounds. 378. An instrument called a gas-meter, which ascertains the quantity of gas used by each consumer, has been introduced, and furnishes a satisfactory mode of determining the payments to be made by individuals to the gas companies. A contrivance somewhat similar in its nature, might be used for the sale of water; but in that case some public inconvenience might be apprehended, from the diminished quantity which would then run to waste: the streams of water running through the sewers in London, are largely supplied from this source; and if this supply were diminished, the drainage of the metropolis might be injuriously affected. 379. In the north of England a powerful combination has long existed among the coal-owners, by which the public has suffered in the payment of increased price. The late examination of evidence before a Committee of the House of Commons, has explained its mode of operation, and the Committee have recommended, that for the present the sale of coal should be left to the competition of other districts. 380. A combination, of another kind, exists at this moment to a great extent, and operates upon the price of the very pages which are now communicating information respecting it. A subject so interesting to every reader, and still more so to every manufacturer ofthe article which the reader consumes, deserves an attentive examination. We have shown in Chapter XXI, p. 144, the component parts of the expense of each copy of the present work; and we have seen that the total amount of the cost of its production, exclusive of any payment to the author for his labour, is 2s. 3d.(1*) Another fact, with which the reader is more practically familiar, is that he has paid, or is to pay, to his bookseller, six shillings for the volume. Let us now examine into the distribution of these six shillings, and then, having the facts ofthe case before us, we shall be better able to judgeofthe meritsofthe combinationjust mentioned, andtoexplainits effects. Distribution of the profits on a six shilling book Buys at; Sells at; Profit on capital expended s. d.; s. d. No. I—The publisher who accounts to the author for every copy received; 3 10; 4 2; 10 per cent No. II—The bookseller who retails to the public; 4 2; 6 0; 44 Or, 4 6; 6 0; 33 1/3 No. I, the publisher, is a bookseller; he is, in fact, the author's agent. His duties are, to receive and take charge of the stock, for which he supplies warehouse room; to advise the author about the times and methods of advertising; and to insert the advertisements. As he publishes other books, he will advertise lists of those sold by himself; and thus, by combining many in one advertisement, diminish the expense to each of his principals. He pays the author only for the books actually sold; consequently, he makes no outlav of capital, except that which he pays for advertisements: but he is answerable for any bad debts he may contract in disposing of them. His charge is usually ten per cent on the returns. No. II is the bookseller who retails the work to the public. On the publication of a new book, the publisher sends round to the trade, to receive 'subscriptions' from them for any number of copies not less than two. These copies are usually charged to the 'subscribers', on an average, at about four or five per cent less than the wholesale price of the book: in the present case the subscription price is 4s. 2d. for each copy. After the day of publication, the price charged by the publisher to the booksellers is 4s. 6d. With some works it is the custom to deliver twenty-five copies to those who order twenty-four, thus allowing a reduction of about four per cent. Such was the case with the present volume. Different publishers offer different terms to the subscribers; and it is usual, after intervals of about six months, for the publisher again to open a subscription list, so that if the work be one for which there is a steady sale, the trade avail themselves of these opportunities of purchasing, at the reduced rate, enough to supply their probable demand.(2*) 381. The volume thus purchased of the publisher at 4s. 2d. or 4s. 6d. is retailed by the bookseller to the public at 6s. In the first case he makes a profit of forty-four, in the second of thirty-three per cent. Even the smaller of these two rates of profit on the capital employed, appears to be much too large. It may sometimes happen, that when a book is enquired for, the retail dealer sends across the street to the wholesale agent, and receives, for this trifling service, one fourth part of the money paid by the purchaser; and perhaps the retail dealer takes also six months' credit for the price which the volume actually cost him. 382. In section 256, the price of each process in manufacturing the present volume was stated: we shall now give an analysis of the whole expense of conveying it into the hands of the public. The retail price 6s. on 3052 produces 915 12 0 1. Total expense of printing and paper 207 5 8 7/11 2. Taxes on paper and advertisements 40 0 11 3. Commission to publisher as agent between author and printer 18 14 4 4/11 4 Commission to publisher as agent for sale of the book 63 11 8 5. Profit—the difference between subscription price and trade price, 4d. per vol. 50 17 4 6. Profit the difference between trade price and retail price, 1s. 6d. per vol. 228 18 0 362 1 4 7. Remains for authorship 306 4 0 Total 915 12 0 This account appears to disagree with that in page 146. but it will be observed that the three first articles amount to L266 1s., the sum there stated. The apparent difference arises from a circumstance which was not noticed in the first edition of this work. The bill amounting to L205 18s., as there given, and as reprinted in the present volume, included an additional charge of ten per cent upon the real charges of the printer and paper-maker. 383. It is usual for the publisher, when he is employed as agent between the author and printer, to charge a commission of ten per cent on all payments he makes. If the author is informed of this custom previously to his commencing the work, as was the case in the present instance, he can have no just cause of complaint; for it is optional whether he himself employs the printer, or communicates with him through the intervention of his publisher. The services rendered for this payment are, the making arrangements with the printer, the wood-cutter, and the engraver, if required. There is a convenience in having some intermediate person between the author and printer, in case the former should consider any of the charges made by the latter as too high. When the author himself is quite unacquainted with the details of the art of printing, he may object to charges which, on a better acquaintance with the subject, he might be convinced were very moderate; and in such cases he ought to depend on the judgement of his publisher, who is generally conversant with the art. This is particularly the case in the charge for alterations and corrections, some of which, although apparently trivial, occupy the compositors much time in making. It should also be observed that the publisher, in this case, becomes responsible for the payments to those persons. 384. It is not necessary that the author should avail himself of this intervention, although it is the interest of the publisher that he should; and booksellers usually maintain that the author cannot procure his paper or printing at a cheaper rate if he go at once to the producers. This appears from the evidence given before the Committee of the House of Commons in the Copyright Acts, 8 May, 1818. Mr O. Rees, bookseller, of the house of Longman and Co., Paternoster Row, examined: Q. Suppose a gentleman to publish a work on his own account, and to incur all the various expenses; could he get the paper at 30s. a ream? A. I presume not; I presume a stationer would not sell the paper at the same price to an indifferent gentleman as to the trade. Q. The Committee asked you if a private gentleman was to publish a work on his own account, if he would not pay more for the paper than persons in the trade; the Committee wish to be informed whether a printer does not charge a gentleman a higher rate than to a publisher. A. I conceive they generally charge a profit on the paper. Q. Do not the printers charge a higher price also for printing, than they do to the trade? A. I always understood that they do. 385. There appears to be little reason for this distinction in charging for printing a larger price to the author than to the publisher, provided the former is