第4章

Theoutcomeofthismanagementofindustrialaffairsthroughpecuniarytransactions，therefore，hasbeentodissociatetheinterestsofthosemenwhoexercisethediscretionfromtheinterestsofthecommunity。Thisistrueinapeculiardegreeandincreasinglysincethefullerdevelopmentofthemachineindustryhasbroughtaboutacloseknitandwide-reachingarticulationofindustrialprocesses，andhasatthesametimegivenrisetoaclassofpecuniaryexpertswhosebusinessisthestrategicmanagementoftheinterstitialrelationsofthesystem。Broadly，thisclassofbusinessmen，insofarastheyhavenoulteriorstrategicendstoserve，haveaninterestinmakingthedisturbancesofthesystemlargeandfrequent，sinceitisintheconjuncturesofchangethattheirgainemerges。Qualificationsofthispropositionmaybeneeded，anditwillbenecessarytoreturntothispointpresently。

Itis，asabusinessproposition，amatterofindifferencetothemanoflargeaffairswhetherthedisturbanceswhichhistransactionssetupintheindustrialsystemhelporhinderthesystematlarge，exceptinsofarashehasulteriorstrategicendstoserve。Butmostofthemoderncaptainsofindustryhavesuchulteriorends，andofthegreateronesamongthemthisispeculiarlytrue。Indeed，itisthisworkoffar-reachingbusinessstrategythatgivesthemfulltitletothedesignation，“CaptainsofIndustry。“Thislargebusinessstrategyisthemostadmirabletraitofthegreatbusinessmenwhowithforceandinsightswingthefortunesofcivilizedmankind。Andduequalificationisaccordinglytobeenteredinthebroadstatementmadeabove。Thecaptain’sstrategyiscommonlydirectedtogainingcontrolofsomelargeportionoftheindustrialsystem。Whensuchcontrolhasbeenachieved，itmaybetohisinteresttomakeandmaintainbusinessconditionswhichshallfacilitatethesmoothandefficientworkingofwhathascomeunderhiscontrol，incasehecontinuestoholdalargeinterestinitasaninvestor；for，otherthingsequal，thegainsfromwhathascomeunderhishandspermanentlyinthewayofindustrialplantaregreaterthehigherandmoreuninterrupteditsindustrialefficiency。

Anappreciableportionofthelargertransactionsinrailwayand“industrial“properties，e。g。，arecarriedoutwithaviewtothepermanentownershipofthepropertiesbythebusinessmenintowhosehandstheypass。Butalsoinalargeproportionofthesetransactionsthebusinessmen’sendeavorsaredirectedtoatemporarycontrolofthepropertiesinordertocloseoutatanadvanceortogainsomeindirectadvantage；thatistosay，thetransactionshaveastrategicpurpose。Thebusinessmanaimstogaincontrolofagivenblockofindustrialequipment-as，e。g。，givenrailwaylinesorironmillsthatarestrategicallyimportant-asabasisforfurthertransactionsoutofwhichgainisexpected。Insuchacasehiseffortsaredirected，nottomaintainingthepermanentefficiencyoftheindustrialequipment，buttoinfluencingthetoneofthemarketforthetimebeing，theapprehensionsofotherlargeoperators，orthetransientfaithofinvestors。(8*)Hisinterestintheparticularblockofindustrialequipmentis，then，altogethertransient，andwhileitlastsitisofafactitiouscharacter。

Theexigenciesofthisbusinessofinterstitialdisturbancedecidethatinthecommonrunofcasestheproximateaimofthebusinessmanistoupsetorblocktheindustrialprocessatsomeoneormorepoints。Hisstrategyiscommonlydirectedagainstotherbusinessinterestsandhisendsarecommonlyaccomplishedbythehelpofsomeformofpecuniarycoercion。Thisisnotuniformlytrue，butitseemstobetrueinappreciablymorethanhalfofthetransactionsinquestion。Ingeneral，transactionswhichaimtobringacoalitionofindustrialplantsorprocessesunderthecontrolofagivenbusinessmanaredirectedtomakingitdifficultfortheplantsorprocessesinquestiontobecarriedoninseveraltybytheirpreviousownersormanagers。(9*)

Itiscommonlyastrugglebetweenrivalbusinessmen，andmoreoftenthannottheoutcomeofthestruggledependsonwhichsidecaninflictorendurethegreaterpecuniarydamage。Andpecuniarydamageinsuchacasenotuncommonlyinvolvesasetbacktotheindustrialplantsconcernedandaderangement，moreorlessextensive，oftheindustrialsystematlarge。

Theworkofthegreatermodernbusinessmen，insofarastheyhavetodowiththeorderingoftheschemeofindustriallife，isofthisstrategiccharacter。Thedispositionswhichtheymakearebusinesstransactions，“deals，“astheyarecalledinthebusinessjargonborrowedfromgamingslang。Thesedonotalwaysinvolvecoercionoftheopposinginterests；itisnotalwaysnecessaryto“putamaninahole“beforeheiswillingto“comeinon“a“deal。“Itmayoftenbethattheseveralpartieswhosebusinessintereststouchoneanotherwilleachseehisinterestinreachinganamicableandspeedyarrangement；buttheintervalthatelapsesbetweenthetimewhenagiven“deal“isseentobeadvantageoustooneofthepartiesconcernedandthetimewhenthetermsarefinallyarrangediscommonlyoccupiedwithbusinessmanoeuvresonbothorallsides，intendedto“bringtheotherstoterms。“Insoplayingforpositionandendeavoringtosecurethelargestadvantagepossible，themanagerofsuchacampaignofreorganizationnotinfrequentlyaimsto“freezeout“

arivalortoputarival’sindustrialenterpriseundersuspicionofinsolvencyand“unsoundmethods，“atthesametimethathe“putsupabluff“andmanageshisownconcernwithaviewtoatransienteffectontheopinionsofthebusinesscommunity。Wheretheseendeavorsoccur，directedtoatransientderangementofarival’sbusinessortoatransient，perhapsspecious，exhibitionofindustrialcapacityandearningpoweronthepartofone’sownconcern，theyarecommonlydetrimentaltotheindustrialsystematlarge；theyacttemporarilytolowertheaggregateserviceabilityofthecomprehensiveindustrialprocesswithinwhichtheireffectsrun，andtomakethelivelihoodandthepeaceofmindofthoseinvolvedintheseindustriesmoreprecariousthantheywouldbeintheabsenceofsuchdisturbances。Ifoneistobelieveanyappreciableproportionofwhatpassescurrentasinformationonthishead，inprintandbywordofmouth，businessmenwhoseworkisnotsimplyroutineconstantlygivesomeattentiontomanoeuvringofthiskindandtothediscoveryofnewopportunitiesforputtingtheircompetitorsatadisadvantage。

Thisseemstoapplyinapeculiardegree，ifnotchiefly，tothoseclassesofbusinessmenwhoseoperationshavetodowithrailwaysandtheclassofsecuritiescalled“industrials。“Takingtheindustrialprocessasawhole，itissafetosaythatatnotimeisitfreefromderangementsofthischaracterinanyofthemainbranchesofmodernindustry。Thischronicstateofperturbationisincidenttothemanagementofindustrybybusinessmethodsandisunavoidableunderexistingconditions。Sosoonasthemachineindustryhaddevelopedtolargeproportions，itbecameunavoidable，inthenatureofthecase，thatthebusinessmeninwhosehandsliestheconductofaffairsshouldplayatcross-purposesandendeavortoderangeindustry。Butchronicperturbationissomuchamatterofcourseandprevailswithsorareinterruptions，that，beingthenormalstateofaffairs，itdoesnotattractparticularnotice。

Incurrentdiscussionofbusiness，indeedeversincetherelationofbusinessmentotheindustrialsystemhasseriouslyengagedtheattentionofeconomists，thepointtowhichattentionhaschieflybeendirectedisthebusinessman’sworkasanorganizerofcomprehensiveindustrialprocesses。Duringthelaterdecadesofthenineteenthcentury，particularly，hasmuchinterestcentred，astherehasbeenmuchprovocationforitsdoing，ontheformationoflargeindustrialconsolidations；andtheevidentgoodeffectsofthisworkinthewayofheightenedserviceabilityandeconomiesofproductionarepointedtoasthechiefandcharacteristicendofthisworkofreorganization。Soobviousarethesegoodresultsandsowellandwidelyhasthematterbeenexpounded，theoretically，thatitisnotonlypermissible，butitisapointofconscience，toshortenthistalebypassingoverthesegoodeffectsasamatterofcommonnotoriety。Butthereareotherfeaturesofthecase，lessobtrusiveandlessattractivetothetheoreticians，whichneedmoredetailedattentionthantheyhavecommonlyreceived。

Thecircumstanceswhichconditiontheworkofconsolidationinindustryandwhichdecidewhetheragivenmoveinthedirectionofacloserandwiderorganizationofindustrialprocesseswillbepracticableandwillresultineconomiesofproduction，——thesecircumstancesareofamechanicalnature。

Theyarefactsofthecomprehensivemachineprocess。Theconditionsfavorabletoindustrialconsolidationonthesegroundsarenotcreatedbythebusinessmen。Theyaremattersof“thestateofindustrialarts，“andaretheoutcomeoftheworkofthosemenwhoareengagedintheindustrialemploymentsratherthanofthosewhoareoccupiedwithbusinessaffairs。Theinventors，engineers，experts，orwhatevernamebeappliedtothecomprehensiveclassthatdoestheintellectualworkinvolvedinthemodernmachineindustry，mustpreparethewayforthemanofpecuniaryaffairsbymakingpossibleandpittinginevidencetheeconomiesandotheradvantagesthatwillfollowfromaprospectiveconsolidation。

Butitisnotenoughthatthebusinessmanshouldseeachancetoeffecteconomiesofproductionandtoheightentheefficiencyof。industrybyanewcombination。Conditionsfavorabletoconsolidationonthesegroundsmustbevisibletohimbeforehecanmakethedecisivebusinessarrangements；buttheseconditions，takenbythemselves，donotmovehim。Themotivesofthebusinessmanarepecuniarymotives，inducementsinthewayofpecuniarygaintohimortothebusinessenterprisewithwhichheisidentified。Theendofhisendeavorsis，notsimplytoeffectanindustriallyadvantageousconsolidation，buttoeffectitundersuchcircumstancesofownershipaswillgivehimcontroloflargebusinessforcesorbringhimthelargestpossiblegain。Theulteriorendsoughtisanincreaseofownership，notindustrialserviceability。Hisaimistocontriveaconsolidationinwhichhewillbeatanadvantage，andtoeffectitonthetermsmostfavorabletohisowninterest。

Butitisnotcommonlyevidentattheoutsetwhatarethemostfavorabletermsthathecangetinhisdealingswithotherbusinessmenwhoseinterestsaretouchedbytheproposedconsolidation，orwhoareambitioustoeffectsomesimilarconsolidationofthesameorofcompetingindustrialelementsfortheirownprofit。Itrarelyhappensthattheinterestsofthebusinessmenwhomtheprospectiveconsolidationtouchesallconvergetoacoalitiononthesamebasisandunderthesamemanagement。Theconsequenceisnegotiationanddelay。Itcommonlyalsohappensthatsomeofthebusinessmenaffectedseetheiradvantageinstavingoffthecoalitionuntilatimemorepropitioustotheirowninterest，oruntilthosewhohavetheworkofconsolidationinhandcanbebroughttocompoundwiththemforthewithdrawalofwhateverobstructiontheyareabletooffer。(10*)Suchacoalitioninvolvesalossofindependentstanding，orevenalossofoccupation，tomanyofthebusinessmeninterestedinthedeal。Ifaprospectiveindustrialconsolidationisofsuchscopeastorequiretheconcurrenceorconsentofmanybusinessinterests，amongwhichnooneisverydecidedlypreponderantinpecuniarystrengthorinstrategicposition，alongtimewillbeconsumedinthenegotiationsandstrategynecessarytodefinethetermsonwhichtheseveralbusinessinterestswillconsenttocomeinandthedegreeofsolidarityandcentralcontroltowhichtheywillsubmit。

Itisnotorious，beyondtheneedofspecificcitation，thatthegreatbusinesscoalitionsandindustrialcombinationswhichhavecharacterizedthesituationofthelastfewyearshavecommonlybeentheoutcomeofalong-drawnstruggle，inwhichtheindustrialends，ascontrastedwithbusinessends，havenotbeenseriouslyconsidered，andinwhichgreatshrewdnessandtenacityhavecommonlybeenshowninthestavingoffofasettlementforyearsinthehopeofmoreadvantageousterms。Thelikeistrueasregardsfurthercoalitions，furtherconsolidationsofindustrialprocesseswhichhavenotbeeneffectcd，butwhichareknowntobefeasibleanddesirablesofarasregardsthemechanicalcircumstancesofthecase。Thedifficultiesinthewayaredifficultiesofownership，ofbusinessinterest，notofmechanicalfeasibility。