3i8 AGRICULTURAL ECONOMICS 



small undertakings, the owner-manager must personally embody 

 these qualities, but in more complex organizations the chief executive 

 may do without all but the broadest knowledge and ability to judge 

 of the results of different processes, and to compare different plans. 

 The technical knowledge of details must be supplied by numerous 

 specialists, working under his direction engineers, draftsmen, 

 pattern-makers, chemists, mechanics, efficiency experts, cost- 

 accountants, etc. 



The management must, with whatever aid it can get, choose the 

 general processes to be used, the kind of machinery, the order and 

 arrangement of it, the kinds of material, etc., and the various technical 

 processes, chemical and mechanical, by which these are to be manipu- 

 lated. Not less important, the management must choose and direct 

 the corps of workers. Workmen must be selected with a due degree 

 of skill, but not of a grade of skill, and therefore of wage, higher than 

 is needed for the task. In a small business a manager's tact in handling 

 men is one of the most important qualities, and, as the organization 

 grows, foremen with managing tact must be hired. 



The right proportioning and skilful substitution of the factors is 

 a delicate technical task for the management. The enterpriser must 

 constantly study the question whether the application of another 

 unit of any one factor at the price will, following the principle of pro- 

 portionality, add to value of the product as much or more than the 

 cost. This calculation is made for every one of the minor factors 

 entering into the business, and for the business as a whole. The 

 proper proportion varies at different prices, or costs. If wages rise, 

 "it pays" to get machinery; if wages fall, it pays to let some of the 

 machinery deteriorate and to do more by hand labor. Likewise there 

 is constant substitution of the various materials. The right propor- 

 tions change constantly with inventions. A model factory is so pro- 

 portioned that the buildings hold the right number of machines, with 

 the right amount of space for the workmen, and the right amount of 

 power. If there is more of a single factor than the ideal proportion, 

 it is an unnecessary cost. 



In the adjustment of processes to changing market conditions, 

 many opportunities for business judgment are presented. The agents 

 employed in any industry range from the more valuable down to the 

 less valuable grades in a more or less regular scries. A <;rcal mass 

 of unused agents lie just below the margin of utilization in every 

 industry. Many agents not actually earning an income may do so 

 through a change in business conditions. Great quantities of the 



