F— ECONOMIC SCIENCE AND STATISTICS 137 



facts in Britain, the U.S.A., and Germany seem to justify the generalisa- 

 tion that the higher the mechanisation of an industry, the larger is the size 

 of its constituent plants or factories. 



An explanation that may serve as a working hypothesis is that the more 

 powerful and more costly the engines and equipment, the more it pays to 

 congregate men round them in a single plant ; also that mechanisation 

 involves specialisation of processes and that the necessary co-ordinating 

 of transport and communication costs arising from such specialisation are 

 at a minimum when the specialists are all under one roof.^^ In fact, most 

 of the economic advantages of localisation can be seen at their optimum 

 inside a single large works. 



The particular index of size used — number of employees per plant ^^ — 

 weighs against my generalisation as to the relation of size and mechanisa- 

 tion, since the actual process of mechanising involves employing fewer 

 persons. That the more mechanised industries should on the whole be 

 the larger-scale industries in the sense of containing plants employing the 

 larger number of persons is therefore all the more significant. But there 

 is one large group of factory industries forming an exception to this rule, 

 those where the coefficient of localisation is low. An industry in this 

 group may well consist typically of small plants and yet have a high horse- 

 power and overhead cost per man. The explanation is not far to seek. 

 Industries with a low coefficient of localisation are scattered among the 

 population largely because of the high transport costs of a raw material 

 that is scattered (e.g. timber for saw-milling or grain for grain-milling) or 

 of a product required fairly universally by a population that is scattered 

 (e.g. aerated waters or beer). Some of these industries are highly mechan- 

 ised, but their plants cannot be large because production must be carried 

 on in so many plants situated in scattered localities. Where the costs 

 of transporting material or product are much greater than the economies 

 of mechanised concentration, there a fortiori of plants will be scattered 

 (i.e. unlocalised) and small. Among the costs of transport are liability 

 to putrescence and need for communication between producer and con- 

 sumer. It is these conditions that probably keep industries like furniture, 

 baking, printing, and clothing small scale, i.e. small-plant, industries. 

 Though close-to-consumer unlocalised industries are usually small-scale, 

 it does not follow that highly localised industries are large-scale as some 

 economists assume. ^^ Inductive investigation based on all the principal 

 British industries shows that the highly localised industries, such as tin- 

 plate, hosiery, cotton and wool textiles, pottery, cutlery, boots and shoes 

 are predominantly medium-scale in size of plant. 



Industrial policy requires that economic research look ahead so that 

 the plans made to-day may not run counter to the forces of to-morrow. 

 Is the large manufacturing plant likely to flourish under future conditions } 

 Are industries likely to become large-scale yet ? 



" Florence, Logic of Industrial Organisation, p. 14. 



*" This index is chosen as being free from the difficulty of comparing economic 

 values between different countries and periods. Some of the difficulties in using 

 this index to measure size are given in Florence, Statistical Methods in Economics 

 and Political Science, pp. 154-155. 



" E.g., A. R. and E. M. Burns, The Economic World, p. 43. 



F2 



