When various industrial groups are associated, direction be comes still more important and the need grows for high ability to manage and direct the great units of industry. In the single group it is an internal harmony alone that is needed. The work of a dozen men must be so arranged that each is in his fitting place. But as this group comes into contact with others, the relationship becomes twofold, and there must be both internal and external harmony. Outlook upon business conditions and commercial ability become necessary. The more complex the economic organization of society, the greater the chance of mistake and the more injurious are the mistakes to a wide range of interests. Large amounts of wealth and labor can be rapidly lost through lack of wise direction of an associated group.
§ 3. Selection of managed and of managers. Ever since the beginning of human society some degree of organization of industry has existed. In every community by some method, however crude, a practical way has been found of determining who shall organize and manage the factors of production, and who shall work under direction. Economic organization has always been more or less connected with and affected by political organization, and in many ages has had a distinctly political character through the institutions of slavery, serfdom, caste, and heredity in politics. But in mod ern times, under conditions of political freedom, this classi fying of men so that those less capable of managing indus try come under the direction of those who on the whole are more capable, has grown more and more economic and competitive. This selection is often unsatisfactorily done no doubt, through the quips of chance and through many influ ences of personal favor and political injustice. In most cases, however, the selection is of a very exact and effective sort. The need of organizing industrial forces is so great that any method that works at all is better than no method. The man who shovels dirt must do it at the right time and place if, in this complex society, it is to count for something and give the effort value. If he can not choose well for himself, he comes under direction. The average man can not decide nearly as well here as he could on a desert island where and when to put in his spade. There it would be to raise food for the current year; here it may be to dig a canal or a tunnel whose uses will not become actual for many years. The more distant the end sought, the more difficult is the choice. To every worker, according to his personal skill, is left some de gree of choice in the method of his work, but in a large part of industry the range of choice is very narrow. The man with the shovel and the man with the hoe come under direction.
Likewise there is a constant process of selecting and ad vancing the efficient managers. There is, to be sure, an element of chance in this selection. The process in gen eral is a rude one. Accidents and unforeseen changes, indus trial crises, failure of health at a critical moment, fraud and crime, may defeat men of ability and they may never regain their foothold. Men that have worked their way up from the
ranks bequeath their business positions to their sons and grandsons. Lack of experience may lead to disaster a nat urally able but youthful heir, too suddenly burdened with the responsibilities of a business. On the other hand, men of limited ability may inherit fortunes and preserve them by caution, without much energy or ability. Often they retain the investment while delegating the management to more capable hands. It is not always true, even in America, that "it is but three generations from shirt-sleeves to shirt sleeves," altho many fortunes slip away from the sons of rich fathers. In general, success in retaining either the con trol or the active management of a business is an evidence of considerable ability. By loss of fortune unwisely risked, through unforeseen changes in methods, and after manifold blunders, the less capable drop out. Thus, by the ceaseless working of competition, the higher places are taken by those fairly capable of filling them, and the efficiency of the man agement of business as a whole is maintained or increased.
§ 4. Division of labor in management. The management of industry does not usually show itself in entirely simple forms. The directing power in an establishment is not always exercised by one person, but usually by a number of persons. When there is a single owner, he most often is the manager. (See Chapter 26.) There is a virtue in this union of financial responsibility with practical control that favors its survival despite various limitations. But men are constantly failing in health, advancing in years, or becoming unfitted to meet new conditions after acquiring fixed habits of business. Partner ships often are formed by an older man taking into the busi ness a younger man who might assume duties of active man agement. Yet the frequent difficulty of partnerships is an old story. "We went into partnership. I supplied the money and he supplied the experience. When we quit he had the money and I had the experience." Some minor functions of direction must be given to fore men when there are even a few employees; in larger estab lishments the men are constantly being tested and promoted to higher positions, becoming partners, or, in a corporation, officials. The "indoor man" and the "outdoor man" are clearly marked types. Many a man succeeds admirably in minor tasks of direction, but has his limitations whether due to natural endowment or to defects of education. A man may have just the qualities fitting him to manage a small gang of men whom he can see, know, and direct personally, but be unable to succeed where some power of imagination and some ability at constructive planning is required. A good depart mental head may be a poor general manager.