146 SECTIONAL ADDRESSES 



the paint industry has adopted or proposed a lateral disintegration each 

 plant specialising on a few varieties. Such schemes often combine a 

 policy of increased size and scope for the firm or combine, together 

 with diminished scope for the constituent plants. This seems the 

 deliberate policy of Imperial Chemical Industries. The Economic 

 Advisory Council advocated amalgamations in the Cotton Industry both 

 to get spinning and weaving more closely related, and to secure the 

 maximum economies from bulk production. Automatic machinery to 

 be justified in any plant must, in their view, work ' upon a narrow range 

 of products.' 



Economists have become accustomed to the notion bi an optimum size 

 of firm or plant ; a notion that implies a pessimum or rather a pejus size 

 on either side, and rejects the idea that the minimum or the maximum is 

 necessarily the most efficient size. Similarly we must get accustomed to 

 an optimum scope or degree of integration for individual industries that 

 is somewhere between minimum and maximum integration. But the 

 problem remains, for research to solve, how to find this optimum of scope 

 for any industry. There is ap obstacle at the very outset in the difficulty 

 of measuring scope by any one statistical index. The direct index would 

 be the variety of lines produced or sold or, conversely, average number 

 of units produced or sold in any given line or process. Unfortunately 

 one line or process is inclined to merge into another and this proposed 

 index would depend too much on arbitrary classifications. A less direct 

 measure suggests itself in the rate of turnover of an industry's, a firm's or 

 a plant's output or sales, since the fewer the lines selected the faster they 

 might be expected to sell relatively to stock-in-trade held. This is, in 

 fact, one of the purposes of standardisation. The index may be accepted 

 with the important reservation of fashionable and perishable goods. 

 These are far from narrow in scope but to avoid obsolescence and putres- 

 cence they are sold fast enough. 



Though the degree of integration or width of industrial scope is not 

 easily measurable in figures, it is often possible to show graphically how 

 one plant or firm has a wider or narrower scope than another. A series 

 of superimposed charts on transparent paper can be adopted, like the 

 ' Popular Mannikins or Models of the Human Body ' used by medical 

 students. Where the technical processes of production, diverging from 

 raw material or converging on the market, are fairly fixed, this may form, 

 like models of the human skeleton, a common base upon which to super- 

 impose, like charts of the nervous or muscular system, various patterns 

 of integration. Thus, to take a simple case, petroleum is produced from 

 oil wells, refined into petrol and other substances and then marketed. 

 But these three vertical stages forming the fixed technical skeleton can be 

 integrated into four patterns graphically shown by super-imposing en- 

 closing circles, (i) Each stage by a separate organisation ; (2) producing 

 and refining integrated and enclosed in one circle ; (3) refining and 

 marketing integrated and enclosed in one circle ; (4) all stages integrated 

 and enclosed in one circle. 



This may well seem rather elementary and childish, but I can assure 

 you that when it comes to tackling the ramifications of the Birmingham 



