The Internal or Administrative Organization of Mercantile Concerns. -The development of the large mercantile or manufacturing concern has given rise to new fields of economic study, the internal or administrative organization of business. In the larger plants the leaders have seen the necessity for and the advantage of a thorough-going organization of the work. An army of employees needs to be thoroughly organized. There must be a careful differentiation of structure and functions of the organization with authority and responsibility resting in heads of the different divisions and subdivisions. In such an organization the advantage gained in the use of experts, or men of great ability at the head of divisions or sub-divisions is almost immeasurable. What is said here of the mercantile concern will apply with equal force to all other large industrial enterprises.

In traditional economic theory the subject of economics was divided into four divisions: production, exchange, distribution, and consumption, and of these exchange and distribution have received most attention. The discussion has centered very largely upon the politico-economic point of view, and the scientific work was frequently submerged in the endorsement of governmental policies. Very important topics were the tariff, the money question, ship subsidies, the justification of interest, and so forth. Economics seemed intended to reach conclusions which would influence legislation along certain lines. (Much of the prejudice against it in the past has been due to its political bearings.) The investigation of phenomena first-hand and their classification regardless of influence of the results was never thought of very seriously.

In the department of production only the general aspects received consideration. The treatment centered about the problems of the division of labor and territorial specialization. Even here the conclusions were long-range deductions. In the discussion of the division of labor but little improvement was made upon Plato's analysis. The current economic texts of today improve but little on the theory of the division of labor of Adam Smith. But little investigation was made into the internal organization of business concerns. Until the latter half of the nineteenth century there was perhaps some reason for this absence of data. With the appearance of the large industrial units, however, we have a considerable body of new economic data subject to analysis and classification.

In the current treatment of the division of labor, two important elements, the coördination of the various phases of industrial concerns, and the unification of work, have been neglected.

In the internal organization of industrial concerns we have at present a great mass of data. Every business house employs a staff of experts to record accurately every transaction of financial significance to the management. This information puts the manager in

possession of all the facts with reference to the efficiency of the organization at every stage of the enterprise. In the determination of the efficiency of the organization the profits of the concern are the guiding force. All this data is kept in permanent form by the system of bookkeeping.

We have also the generalizations of business men, taking the form of policies which are of scientific significance. These generalizations have weight when approved by the business experience of others. Business principles are thus formulated by the greater captains of industry, based upon practical experience and stimulated by the desire for gain. These results are of great validity as they are tested by success or failure.

Within recent years great advancement has been made in the development of machinery for the preservation and advancement of this class of scientific knoweldge. Our accountancy and bookkeeping systems have almost attained the dignity of sciences themselves. They preserve past experience, analyze and classify facts, and make easy the understanding of problems very difficult of comprehension in their absence. They put the man at the head of affairs in control of the industrial machinery so that errors can be discovered and adjustment made.

Our larger industrial enterprises are divided and subdivided into various groups. In some of our department stores, for instance, the number of departments range from fifty to one hundred. At the head of the various divisions and subdivisions under which the departments are organized, there are expert leaders who have definite functions to perform with corresponding responsibility, and at the heads of the departments themselves are competent superintendents. In the larger concerns only the most general control is exercised by the superintendent or manager. The details are to be carried out under the orders of the superintendents of the different divisions and subdivisions.

It is generally assumed that competition takes place only between rival concerns. In the larger business enterprises competition is almost as active within as without. Within competition is an active, progressive force, and managements avail themselves of its service. There is a rivalry between different departments, and between different groups and individuals, which is often just as active as the rivalry between different institutions. Here the organization puts the limits to competition and controls it where competition would be unprogressive, and provides the circumstances for its active work where it is most progressive. Competitive conditions, on the other hand, determine frequently the form of organization. We think of competition usually in connection with the making of prices. Competition plays just as important a rôle in rendering excellent service, or in

seeking customers, or, from an individual point of view, in doing efficient work as a basis of advancement. Through organization business men have learned to shape competition and secure the best results of which it is capable.

The Facilities for Presenting the Data of Mercantile Institutions in our Higher Educational Schools. Assuming that there is a body of knowledge in mercantile and industrial organization which may be analyzed, classified, and which may serve as the basis for generalization, this question arises: Is it procurable? Is it available for the teacher's purpose? The literature in these fields at the preset time is decidedly limited. What would be the attitude of the business man in making the facts of his business common knowledge? In recent years business men have assumed an attitude favorable to the scientific development of economics. They are becoming much more communicable among themselves. In trade organizations they have discovered a consciousness of kind, and have abandoned the idea of cornering all trade secrets. Among the larger houses there is a tendency to compare systems, and often to put competitors in possession of their methods of business. They have come to feel that free trade in business methods is a safer guarantee to business success than high tariff walls. They believe that a more thorough knowledge of business. principles by the public would not be detrimental to their business. Mr. Frank A. Vanderlip, vice-president of the National City Bank of New York City, in an article in the Business World for August, 1905, on "A New College Degree," says: "If we had in our universities professors capable of a thorough scientific understanding of the principles underlying many of the problems of finance and commerce, these men would help us to see distinctly and to think clearly in regard to some of our everyday practices and tendencies. The dissemination. of such knowledge would surely be of great value.""

With reference to the value of business knowledge in a good, liberal education, he has this to say: "I believe that in a proper education, the highest work in commercial life might be so outlined as to be entirely in harmony in its practical application with the ideals of those who conceive that a university should be a place for scientific research, a place where the scientific habit of mind should be sought purely for the love of truth."

Business men are coming to believe that a knowledge of the general principles of business is of value to the young man beginning a business career. They do not believe, nor does the college man believe that this knowledge of general principles of business, which may be presented in a university, will afford to the student a "short cut" to a business career. The training to fit into a certain place or department of business can be acquired only by meeting and solving the everyday problems which arise in that specific line of work; but a

thorough-going knowledge of the general principles will give the apprentice an imagination and a point of view which will lift him in efficiency above the individuals who lack this training.

The economist has been following too long traditional methods. His work is even today too largely deductive. In geology, the data of science is in the soil and rock; in botany, the data is in the plant kingdom; in economics, if we are to be scientific, the data should be in the business world, and ought to be procured first hand.

TRAINING FOR GOVERNMENT SERVICE

By DR. E. DANA DURAND

Special Examiner in the Bureau of Corporations

It may doubtless be assumed that in discussing training for government service, we are here chiefly interested in that training which would fall within the scope of a school of commerce and economics. There are, of course, many branches of the government service which require technical training in altogether different lines.

It has seemed to me that, if I could contribute anything of value today, it would be in the way of indicating the extent of the opportunities for men of special economic education in the government employ, and of describing the nature of the work to be performed, rather than in the way of discussing courses of study and methods of instruction. The latter task may be left chiefly to the faculties of the departments of economics and commerce in the universities. The suggestions with reference to instruction are ventured in a very diffident manner.

There is possibly some danger of overestimating the number of government positions for which special education in economic and kindred subjects is or ever will be effectively demanded-to use an economic phrase. Much the greater part of the work of our national, state and municipal governments has little to do with economics. It is either concerned with other arts or sciences, or it is of essentially routine character. For many of the higher administrative positions even in government services not connected with economic matters, there would perhaps be some advantage in having men with a good general knowledge of economics, political science and sociology, though I would by no means advocate making the academic element a dominant one. But the legislators and appointing officers in the various grades of government do not now recognize and probably will not within a reasonable time in the future recognize the need of any high degree of education in economic and allied sciences as a qualification for positions of this character.

The national, state and local governments do, however, undertake

an enormous amount of work that is essentially economic, and the the scope and extent of work of this character is growing apace. For proper performance of this work it is desirable that there be, in the more responsible positions, a large number of men who have been. thoroughly trained in schools of commerce and economics. I do not mean that only men so educated should hold these positions. It may be that a man who has gained his ideas on economic matters from experience in law, journalism or business, coupled with general reading and observation, has made conspicuous success in public service of a technical economic character. But in general the man who has thoroughly and systematically studied the various social, economic and political branches of science will obviously be better fitted for such public service.

More important than the question what is desirable is the question what is desired by those in authority. What are the chances that the student who has specialized with a view to the government service will find his training helpful in getting a job? I think one may answer that the chances are fair, and that they are increasing every year. The importance of having specially trained and thoroughly competent men for the more responsible positions in the economic work of the government is not yet by any means sufficiently appreciated by lawmakers, executive officers or the general public. But the desirability of having them is more appreciated today than ever before, and the trend is distinctly and rapidly in the right direction. This is, to be sure, far more true of the federal government than of the state and local governments, but the influence of the former is bound to react upon the lower grades of government.

The opinion is still widely prevalent that men who have studied economics in the universities are mere theorists, unfitted to deal with practical problems. This opinion, which was always an exaggerated one, is gradually giving way as our universities are more and more emphasizing the study of practical economic conditions. If those in. charge of our educational institutions will lay still greater stress on such practical study, they will, we may trust, still more break down the distrust of the academic economist.

With this introduction, let us pass to a brief enumeration of the leading government departments and bureaus which are largely concerned with economic and related problems.

The Department of Commerce and Labor doubtless offers the broadest field. Its bureaus of the Census, Labor, Corporations and Statistics, which together include some thousands of employees, are or should be, in large measure scientific investigators of economic conditions. Somewhat similar fields are covered, though usually much less efficiently, by the many bureaus of labor or of industrial statistics in the several states, by state bureaus for the inspection of