128 Introduction 



consumers may be found. On account of the seasonal activity of 

 both production and carriage, warehousing during a part of the year 

 is necessary. Where such conditions exist a middleman may assume 

 the function of buying from the many producers, warehousing the 

 collected purchases, specializing in knowing the mutual wants of 

 consumers and producers, and carrying to the distant consumers. 

 Add to these conditions, the circumstance that foreign trade was 

 practically limited to a few ports and was there concentrated in the 

 hands of a few privileged merchants, and you have a presentment of 

 the conditions existent under which the orthodox middleman class 

 arose. As a functionary the middleman was necessary and useful: 

 he effected economies that reduced prices to consumers and justified 

 his intervention. As the century progressed this class increased in 

 numbers, efficiency, and degree of specialization. The increase in 

 the volume of trade was both cause and effect in respect to this 

 increase. 



But the middleman tends, by the development of his own efficiency, 

 to eliminate himself from trade. He does this in several ways: as a 

 speculator, the risks of trade are assumed by him and he specializes 

 at reducing the very ignorance upon which speculation rears itself. 

 He introduces better communication and cheaper transport; but this 

 enables the producer to discover his consumers and carry his pro- 

 duce himself. These improvements make possible mass-production 

 and quantity buying, traveUing salesmen and mail-order business. 

 Business is done on a bigger scale, capital is concentrated in fewer 

 hands, and industries are integrated. The economic dependence 

 of the producer on the middleman comes to jeopardize the pro- 

 ducer's business by separating him from the market. The producer 

 seizes the opportunity of dealing directly with the consumer, appealing 

 to him by trade-marks and trade connections, learning more truly 

 the nature of the demand for his goods, and gauging better the pro- 

 duction of his mill. But it is apparent that the system of integrated 

 industries was not possible until the domestic workshop had given 

 way to the factory and production was done on a massive scale. 

 That era was introduced by the Industrial Revolution. Until that 

 time the tendency was for the middlemen to increase in numbers, 

 efficiency and specialization. Since that time the economics of large 

 production and wide distribution and the improved means of pro- 

 duction and communication have caused a counter movement and 

 tended to break down the orthodox system of middlemen. 



The introduction of the middleman into economic life had a most 



