CHAPTER XII

SHOP PRODUCTION. THE FACTORY AND ITS FORE-RUNNERS ¹

Shop production, which implies separation between household and industry, in contrast with home work, appears in the most varied forms in the course of history. The forms are as follows: 1. Isolated small shops. These are found everywhere and always; the bazaar system especially, with its grouping together of a number of work shops to facilitate working together, rests on this separation. 2. The ergasterion. This also is universal; its medieval designation was fabrica, a term which is very ambiguous and may designate the cellar den leased by a group of workers and used as a shop, or a manorial institution for wage work with a banalité requiring its utilization by the workers. 3. Unfree shop industry on a large scale. This is a frequent occurrence in economic history generally, and seems to have been especially developed in later Egypt. It undoubtedly sprang from the gigantic estate of the Pharaoh; out of this seem to have developed separate shops with wage labor. Certain cotton working shops in upper Egypt in the late Hellenistic period were perhaps the first establishments of the kind, but this can not be finally asserted until the Byzantine and Islamic sources are made available. Probably such shops existed in India and China also, and they are typical for Russia, though here they appear as imitations of the west European factory.

Among earlier scholars, including Karl Marx, a distinction was current between factory and manufactory. The manufactory was described as shop industry, with free labor, without the use of any mechanical power but with the workers grouped and disciplined. This distinction is casuistical and of doubtful value. A factory is a shop industry with free labor and fixed capital. The composition of the fixed capital is indifferent; it may consist of a very expensive horse-power, or water-mill. The crucial fact is that the entrepreneur operates with fixed capital, in which connection capital accounting is indispensable. Hence a factory in this sense signifies a capitalistic organ-zation of the process of production, i. e., an organization of specialized and co-ordinated work within a work shop, with utilization of fixed capital and capitalistic accounting.

An economic prerequisite for the appearance and existence of a factory in this sense is mass demand, and also steady demand,—that is, a certain organization of the market. An irregular market is fatal to the entrepreneur because the conjuncture risk rests on his shoulders. For example, if the loom belongs to him he must take it into account before he can discharge the weaver when conditions are unfavorable. The market on which he reckons must be both sufficiently large and also relatively constant; hence a certain mass of pecuniary purchasing power is necessary, and the development of money economy must have reached the corresponding stage, so that a certain demand can be depended upon. A further requisite is a relatively inexpensive technical production process. This requirement is implied in the fact of a fixed capital which requires the entrepreneur to keep his establishment going even when conditions are unfavorable; if he utilizes hired labor only, the danger is shifted to the worker, if the loom, for example, is left idle. In order to find a steady market, again, he must produce more cheaply than under the traditional technique of house industry and the putting-out system.

Finally, the development of the factory is conditioned by a special social prerequisite in the presence of a sufficient supply of free laborers; it is impossible on a basis of slave labor. The free labor force necessary for conducting a modern factory is available only in the west in the necessary quantity, so that here only could the factory system develop. This mass of labor was created in England, the classical land of the later factory capitalism, by the eviction of the peasants. Thanks to its insular position England was not dependent on a great national army, but could rely upon a small highly trained professional army and emergency forces. Hence the policy of peasant protection was unknown in England and it became the classical land of peasant eviction. The labor force thus thrown on the market made possible the development first of the domestic small master system and later of the industrial or factory system. As early as the 16th century there was such an army of unemployed that England had to deal with the problem of poor relief.

Thus, while in England shop industry arose, so to speak, of itself, on the continent it had to be deliberately cultivated by the state,—a fact which partly explains the relative meagreness of information regarding the beginnings of workshops in English records as compared with continental. With the end of the 15th century the monopolization of industrial opportunities in Germany caused a narrowing of the field of livelihood policy and the problem of the poor became urgent. As a result the first factories arose as institutions for poor relief and for providing work. Thugs the rise of shop industry was a function of the capacity of the economic order of the time to support population. When the guild was no longer able to provide the people with the necessary opportunity to earn a living, the possibility of transition to shop industry was at hand.

The fore-runners of factory system in the west.—The industry of the craft guilds was carried on without fixed capital and hence required no large initial cost. But even in the middle ages there were branches of production which required an investment; industries were organized either through the provision of capital by the guild communally, or by the town, or feudally by an overlord. Before the middle ages, and outside of Europe, they were auxiliary to estate economy. Among establishments of the work shop type which existed alongside craft work organized in the guilds, were included the following:

1. The various kinds of mills. Flour mills were originally built by the lords, either lords of the land or judicial lords; this applies especially to water mills, control of which fell to the lord by virtue of his right to the water. They were typically a subject of banalités or legally compulsory utilization (Mühlenbann), without which they could not have existed. The majority of them were in the possession of territorial rulers; the Margraves of Brandenburg possessed no less than 56 mills in Neumark in 1337. The mills were small, but their construction was none the less beyond the financial capacity of the individual miller. In part they were acquired by the towns. Regularly they were leased by the prince or town, the lease often being hereditary; the operation was always on a retail basis. All this applies to saw mills, oil presses, fulling mills, etc., as well as grain mills. It sometimes happened that the territorial lord or the town leased the mill to urban families, giving rise to a mill-patriciate. Toward the end of the 13th century, the partician families of Cologne who held 13 mills organized an association distributing the profit in fixed shares; the organization was distinguished from a joint stock company by the fact that the mills were hired out for use, that is, exploited as a source of rent.

2. Ovens. In this connection again only those belonging to feudal landlords, monasteries, towns or princes; could produce revenue sufficient to perfect them technically. Originally they were built for the household requirements of the owners, but later their use was let for a fee and a banalité (Backofenbann) again arose.

3. Breweries. A great majority of breweries were originally built by feudal landlords and made subject to a banalité (Braubann) though destined particularly to supply the needs of the estate itself. Later the princes established breweries as fiefs and in general they made the conduct of such establishments a subject for concession. This development followed as soon as the sale of beer on a large scale began and there came to be a danger that too large a number of breweries in close proximity would fail to yield tax revenue. In the towns arose a municipal Braubann—aside from the preparation of the drink for a household—contemplating from the beginning an hereditary industry; thus the brewery was established on the basis of production for the market. Compulsory utilization of the brewery was an important right of the patricians. With the technical progress in the manufacture of beer, the addition of hops and the preparation of “thick beer” by stronger brewing, the brewery right became specialized, different types falling to different individual patrician burghers. Thus the right to brew attached only to individual patrician houses which had developed the most perfect technical methods. On the other hand there existed a right of free brewing, every citizen who possessed this right being entitled to brew at will in the established brewery. Thus in the brewing industry also we find enterprise possessing no fixed capital but operating on a communal basis.

4. Iron foundries. These became of great importance after the introduction of cannon. Italy preceded other occidental countries with its bombardieri. To begin with the foundries were municipal establishments, since the towns were the first to use artillery, Florence, as we know heading the procession. From them the armies of the territorial princes took over the use of artillery, and state foundries arose. However, neither municipal nor state foundries were capitalistic establishments but produced directly for the military-political requirements of the owner, without fixed capital.

5. Hammer Mills. These arose with the rationalization of the working of iron. But far the most important of all such establishments worked in the field of mining, smelting, and salt production.

All the industries thus far considered are communally and not capitalistically operated. Establishments of a private economic character corresponding to the first stage of capitalism,—that is the possession of the work place, tools, and raw materials by a single owner, so that for the picture of a modern factory, only large machinery and mechanical power are wanting,—are found occasionally in the 16th century, perhaps even in the 15th century, but apparently none existed in the 14th. First arose establishments with the concentration of the workers in a single room, either without specialization of work or with limited specialization. Such industries, which are quite like the ergasterion, have existed at all times. Those in question here are distinguished from the ergasterion through working with “free” labor, although the compulsion of poverty is never absent. The workers who bound themselves to such establishments had no other choice in view of the absolute impossibility of finding for themselves work and tools, and later, in connection with poor relief, the measure was adopted of pressing people into them by force.

The organization of such a workshop, specifically one in the textile industry, is described for us by an English poem of the 16th century. Two hundred looms are collected in the work room; they belong to the enterpriser owning the establishment, who also furnishes the raw material and to whom the product belongs. The weavers work for wages, children being also employed as workers and helpers. This is the first appearance of combined labor. For feeding the workers, the entrepreneur maintained a complete staff of provision workers, butchers, bakers, etc. People marveled at the industry as a world wonder, and even the king visited it. But in 1555 at the urgent behest of the guilds, the king forbade such concentration. That such a prohibition should issue was characteristic of the economic conditions of the time. As early as the 18th century the possibility of suppressing a large industrial establishment was no longer to be thought of, on grounds of industrial policy and fiscal conditions alone. But in this earlier time it was still possible, for externally the whole distinction between the industry described and the domestic system was that the looms were brought together in the house of the owner. This fact represented a considerable advantage to the entrepreneur; for the first time disciplined work appeared, making possible control over the uniformity of the product and the quantity of output. For the worker there was the disadvantage—which still constitutes the odious feature of factory work—that he worked under the compulsion of external conditions. To the advantage for the entrepreneur of control of the work, was opposed the increased risk. If he put the looms out, as a clothier, the chance of their being all destroyed at a single stroke through some natural catastrophe or human violence was much less than with their concentration in one room; moreover, sabotage and labor revolt could not easily be employed against him. In sum, the arrangement as a whole represented only an accumulation of small industrial units within a single shop; wherefore it was so easy, in England in 1543, to issue a prohibition against maintaining more than two looms; for at most ergasteria were destroyed, not organizations of specialized and co-shop and free worker.

New evolutionary tendencies first appeared with the technical specialization and organization of work and the simultaneous utilization of non-human sources of power. Establishments which internally represented specialization and co-ordination were still an exception in the 16th century; in the 17th and 18th, the effort toward founding such establishments is already typical. As non-human sources of power, the first to be considered is animal power, the capstan horse-power; natural forces came later, first water and then air; the Dutch windmills were first used to pump out the polders. Where labor discipline within the shop is combined with technical specialization and co-ordination and the application of non-human sources of power, we are face to face with the modern factory. The impetus to this development came from mining, which first used water as a source of power; it was mining which set the process of capitalistic development in motion.

As we have already seen, a prerequisite for the transition from work shop industry to specialization and co-ordination of labor with the application of fixed capital, was, along with other conditions, the presence of a secure market of minimum extent. Thus is explained the fact that we first meet with such specialized industry, with internal division of labor and fixed capital, working for political requirements. Its earliest forerunners were the minting works of the medieval princes; in the interests of control these had to be operated as closed establishments. The coiners, called “house associates” (Hausgenossen) worked with very simple implements but the arrangement was one of workshop industry with intensive internal specialization of labor. Thus we find here isolated examples of the later factories. With the increase in technical and organizational scope, such establishments were set up to a large extent in the manufacture of weapons, including the making of uniforms, as soon as it became gradually established that the political ruler provided the clothing for the army. Introduction of the uniform presupposes a mass demand for military clothing, as conversely, factory industry can only arise for this purpose after war has created the market. In the same category, finally, and in the first rank sometimes, belong still other industries producing for war requirements, especially powder factories.

Alongside the requirements for the army in furnishing a secure market, was the luxury demand. This required factories for gobelins and tapestries, which began to be common in princely courts after the crusades, as decorations for the originally bare walls and floors, in imitation of oriental usage. There were also goldsmith goods and porcelain,—the factories of western princes being patterned after the ergasterion of the Chinese emperors; window glass and mirrors, silk, and velvet and fine cloth generally; soap—which is of relatively recent origin, antiquity using oils for the purpose—and sugar, all for the use of the highest strata of society.

A second class of such industries works for the democratization of luxury and the satisfaction of the luxury requirements of broader masses through imitation of the produce destined for the rich. Those who could not have gobelins or buy works of art had a wall covering of paper, and thus wall-paper factories arose in the early days. Here belong also the manufacture of bluing, starch for stiffening, and chicory. The masses obtain in substitutes something to take the place of the luxuries of the upper strata. For all these products, with the exception of the last named, the market was at first very limited, being restricted to the nobility who were in possession of castles or castle-like establishments. Consequently none of these industries was capable of survival on any other basis than that of monopoly and governmental concession.

The legal position of the new industries in relation to the guilds was very insecure. They were antagonistic to the guild spirit and consequently suspect to the guilds. Insofar as they were not maintained or subsidized by the state, they at least sought to secure express privileges and concessions from the latter. The state granted these on various grounds—to guarantee provision for the requirements of noble households, to provide for the existence of the population which could no longer find support within the guilds, and finally for fiscal ends, to increase the tax paying power of the country.

Thus in France, Francis I founded the arms factory of St. Étienne and the tapestry works of Fontainebleau. With these begins a series of privileged manufactures royales for public requirements and for the luxury demand of the upper strata. The industrial development of France thus given a start takes on another form in the time of Colbert. The procedure of the state was simplified here as in England, through the granting of exemptions from the guilds in view of the fact that the privilege of a guild did not always extend over the whole town in which it was settled; for example, a considerable part of Paris lay outside the guild jurisdiction, and the fore-runners of the modern factories could be established in this “milieu privilégié” without arousing opposition.

In England the guilds were purely municipal corporations; guild law had no validity outside a town. Hence the factory industry could be established, in harmony with the procedure under the domestic system and workshop industry, in places which were not towns—with the result that down to the reform bill of 1832 the new industry could not send representatives to Parliament. In general, we have almost no record of such factories down to the end of the 17th century, but it is impossible that they were entirely absent. The reason is rather that in England manufacturing could get along without the support of the state because the guild power had so far disintegrated that it no longer held any privilege which was a bar to such industry. In addition, it may undoubtedly be assumed that the development in the direction of shop production would have gone on more rapidly if conditions such as those of Germany had existed and the possibility had not been present of producing under a small master system.

In the Netherlands likewise we hear almost nothing of governmental grants of privileges. None the less, many factories were founded by Huguenots at a relatively early date in Amsterdam, Haarlem, and Utrecht, for the making of mirrors, silks, and velvet.

In Austria in the 17th century the state endeavored to attract factories into the country by granting privileges which would be a protection against the guilds. On the other hand, we also meet with the founding of factories by the great feudal lords; of these the first is perhaps the silk weaving works of the Counts of Sinzendorff in Bohemia,

In Germany the first manufactories were founded on municipal soil, and specifically in Zurich in the 16th century, when Huguenot exiles founded the silk and brocade industry here. They then spread rapidly among the German cities. In 1573 we find the manufacture of sugar and in 1592 that of brocade in Augsburg, that of soap in Nuremburg 1593; dye works in Annaberg in 1649, manufacture of fine cloth in Saxony in 1676, cloth manufacture in Halle and Magdeburg in 1686, the gold wire industry in Augsburg in 1698, and finally at the end of the 18th century, widely scattered porcelain manufacture, partly conducted and partly subsidized by the princes.

To sum up, it must be held at present, first, that the factory did not develop out of hand work or at the expense of the latter but to begin with alongside of and in addition to it. It seized upon new forms of production or new products, as for example cotton, porcelain, colored brocade, substitute goods, or products which were not made by the craft guilds, and with which the factories could compete with the latter. The extensive inroads by the factories in the sphere of guild work really belongs to the 19th century at the earliest, just as in the 18th century, especially in the English textile industry, progress was made at the expense of the domestic system. None the less the guilds combated the factories and closed workshops growing out of them, especially on grounds of principle; they felt themselves threatened by the new method of production.

As little as out of craft work did the factories develop out of the domestic system, rather they grew up alongside the latter. As between the domestic system and the factory the volume of fixed capital was decisive. Where fixed capital was not necessary the domestic system has endured down to the present; where it was necessary, factories arose, though not out of the domestic system; an originally feudal or communal establishment would be taken over by an entrepreneur and used for the production of goods for the market under private initiative.

Finally, it is to be observed that the modern factory was not in the first instance called into being by machines but rather there is a correlation between the two. Machine industry made use originally of animal power; even Arkwright’s first spinning machines in 1768 were driven by horses. The specialization of work and labor discipline within the workshop, however, formed a predisposing condition, even an impetus toward the increased application and improvement of machines. Premiums were offered for the construction of the new engines. Their principle—the lifting of water by fire—arose in the mining industry and rested upon the application of steam as a motive force. Economically, the significance of the machines lay in the introduction of systematic calculation.

The consequences which accompanied the introduction of the modern factory are extraordinarily far reaching, both for the entrepreneur and for the worker. Even before the application of machinery, workshop industry meant the employment of the worker in a place which was separate both from the dwelling of the consumer and from his own. There has always been concentration of work in some form or other. In antiquity it was the Pharaoh or the territorial lord who had products made to supply his political or large-household needs. Now, however, the proprietor of the workshop became the master of the workman, an entrepreneur producing for the market. The concentration of workers within the shop was at the beginning of the modern era partly compulsory; the poor and homeless and criminals were pressed into factories, and in the mines of Newcastle the laborers wore iron collars down into the 18th century. But in the 18th century itself the labor contract everywhere took the place of unfree work. It meant a saving in capital, since the capital requirement for purchasing the slaves disappeared; also a shifting of the capital risk onto the worker, since his death had previously meant a capital loss for the master. Again, it removed responsibility for the reproduction of the working class, whereas slave manned industry was wrecked on the question of the family life and reproduction of the slaves. It made possible the rational division of labor on the basis of technical efficiency alone, and although precedents existed, still freedom of contract first made concentration of labor in the shop the general rule. Finally, it created the possibility of exact calculation, which again could only be carried out in connection with a combination of workshop and free worker.

In spite of all these conditions favoring its development, the workshop industry was and remained in the early period insecure; in various places it disappeared again, as in Italy, and especially in Spain, where a famous painting of Velasquez portrays it to us although later it is absent. Down into the first half of the 18th century it did not form an unreplaceable, necessary, or indispensable part of the provision for the general needs. One thing is always certain; before the age of machinery, workshop industry with free labor was nowhere else developed to the extent that it was in the western world at the beginning of the modern era. The reasons for the fact that elsewhere the development did not take the same course will be explained in what follows.

India once possessed a highly developed industrial technique, but here the caste stood in the way of development of the occidental workshop, the castes being “impure” to one another. It is true that the caste ritual of India did not go to the extent of forbidding members of different castes to work together in the same shop; there was a saying—“ the workshop is pure.” However, if the workshop system could not here develop into the factory, the exclusiveness of the caste is certainly in part responsible. Such a workshop must have appeared extraordinarily anomalous. Down into the 19th century, all attempts to introduce factory organization even in the jute industry, encountered great difficulties. Even after the rigor of caste law had decayed, the lack of labor discipline in the people stood in the way. Every caste had a different ritual and different rest pauses, and demanded different holidays.

In China, the cohesion of the clans in villages was extraordinarily strong. Workshop industry is there communal clan economy. Beyond this, China developed only the domestic system. Centralized establishments were founded only by the emperor and great feudal lords, especially in the manufacture of porcelain by servile hand workers for the requirements of the maker and only to a limited extent for the market, and generally on an unvarying scale of operation.

For antiquity, the political uncertainty of slave capital is characteristic. The slave ergasterion was known, but it was a difficult and risky enterprise. The lord preferred to utilize the slave as a source of rent rather than as labor power. On scrutinizing the slave property of antiquity, one observes that slaves of the most diverse types were intermingled to such a degree that a modern shop industry could produce nothing by their use. However, this is not so incomprehensible; today one invests his wealth in assorted securities, and in antiquity the owner of men was compelled to acquire the most diverse sorts of hand workers in order to distribute his risk. The final result, however, was that the possession of slaves militated against the establishment of large scale industry.

In the early middle ages, unfree labor was lacking or became notably more scarce; new supplies did indeed come on the market, but not in considerable volume. In addition there was an extraordinary dearth of capital, and money wealth could not be converted into capital. Finally, there were extensive independent opportunities for peasants and industrially trained free workers, on grounds opposite to the condition of antiquity; that is, the free worker had a chance, thanks to the continual colonization in the east of Europe, of securing a position and finding protection against his erstwhile master. Consequently, it was hardly possible in the early middle ages to establish large workshop industries. A further influence was the increasing strength of social bonds due to industrial law, especially guild law. But even if these obstacles had not existed, a sufficiently extended market for the product would not have been at hand. Even where large establishments had originally existed, we find them in a state of retrogression, like the rural large industries in the Carolingian period. There were also beginnings of industrial shop labor within the royal fisci and the monasteries, but these also decayed. Everywhere work shop industry remained still more sporadic than at the beginning of the modern era, when at best it could reach its full development only as a royal establishment or on the basis of royal privileges. In every case a specific workshop technique was wanting; this first arose gradually in the 16th and 17th centuries and first definitely with the mechanization of the production process. The impulse to this mechanization came, however, from mining.