One reason why investors like to place their money in manufac turing enterprises near home is that this increases the value of their other business. In proportion to the capital, the expenditures in manu facturing are far greater than in agriculture because all the labor must be hired, and all raw materials must be purchased. In 1919 the wages and salaries of manufacturing establishments in the United States amounted to the huge sum of $13,439,000,000, the cost of raw materials to $37,380,100,000, and interest at. 6 per cent on the invested capital, to $2,680,000,000. Such expenditures stimulate the growth of the regions where they are made and thus tend to produce more wealth, more savings, and new lines of business. This again leads to further concentration of manufacturing in the places where it is once estab lished. The spending of these great sums of money also causes the regions of complex manufacturing constantly to draw to themselves capable men from other regions. It takes men of ability not only to run the factories but to handle the intricate problems of cost accounting, and to judge just where, when, and of what quality and at what price to purchase raw materials.
E. The Marketing Problem of Complex Manufacturing.—So far as marketing is concerned there is an important difference between un manufactured or semi-manufactured articles like wood or coal and highly manufactured goods like typewriters. Almost everyone must have wood and coal, and if these commodities were not offered in the market people would promptly go in search of them. Their quality cannot be greatly altered no matter how keen the competition, and they cannot be driven out of the market except by some revolutionary change. Hence, the problem of marketing them is relatively easy, we rarely see them advertised, and they do not need a large force of traveling sales men, or of experts in the home office devising means of bringing the product before the public. Therefore they can be profitably produced in regions where the degree of business activity is relatively slight.
On the other hand the use of manufactured articles may change at any moment almost without warning. A new law may render a given type of automobile headlight worthless; a new fashion may make it necessary to dispose of a large lot of dresses at a merely nominal price; or a new invention may make certain kinds of cotton machinery worth no more than scrap iron. Moreover, the manufacturer is vastly more dependent on his sales than is the farmer. If the farmer cannot sell his potatoes or milk, he at least has something on which he and his family can live. But if the manufacturer of screws cannot sell his prod uct at a price sufficient to pay for the cost of manufacture, he and his employees have no means of getting a living. Thus success in manu facturing demands the presence of men with high ability in salesmanship. F. The Inventiveness Demanded by Man the sim plest kinds of manufacturing demand a considerable degree of inventive ness. As industries become more complex and competition keener, the necessity of ingenuity and inventiveness become greater. At the same time the possible rewards of a new invention increase, for the extent to which a new product can be marketed increases steadily with the degree to which people become accustomed to innovations.
This is in harmony with the extraordinary way in which the number of patents issued by the United States Patent Office has increased. According to the following table, the rate is about two and a half times as fast as that of the population.
These figures illustrate the highly important fact that continued suc cess in the higher types of manufacturing demands a constant stream of new inventions. The leading place is bound to go to those regions where the people have the ability, energy, leisure, and capital to make and apply the greatest number of successful inventions. Take a city like Waterbury, Connecticut, for example. That one city with almost no natural resources, with far less waterpower than it needs, and little except rugged hills for farmland round about it, has been the home of hundreds of inventions. One of the machines credited to Waterbury makes hair springs so small and delicate that a pound is worth nearly $50,000. Another machine carries on a hundred forty-one operations automatically, and still another turns out screws so tiny that thousands arc needed to fill a thimble.
The Geographic Conditions of Manufacturing.—From the fore going discussion it is evident that while simple forms of manufacturing are possible wherever man lives, the evolution of manufacturing puts stricter and stricter limits on the regions where the highest types can be practiced. When wool and cotton thread were spun only by hand, and when the products were woven into cloth by the simple process of passing the woof threads hack and forth across the warp by hand, the quality of the cloth made in the various parts of the world was almost the same. Today, when the finest cloths demand extremely complex machinery and great skill in organizing and financing the industry, the higher grades of textiles are manufactured only in a very limited area, chiefly in the northeastern United States, Great Britain, and a small part of continental Europe including Belgium, northern France, part of Germany, and Switzerland, together with a few neigh boring regions such as Sweden and southeastern Canada, and one or two other areas, including the Pacific coast of the United States, Japan, Australia, and New Zealand. In the same way, although pig iron and the coarser steel products are being manufactured more widely now than ever before, the making of high grades of steel goods, such as complex machines, is strictly limited to the areas just mentioned. The most notable fact is that the complex type of manufacturing flourishes only (1) where natural selection and migration have given the inhabi tants a racial inheritance of high mental activity and capacity; (2) where the present climate is so healthful and stimulating that people possess great energy and perseverance; and (3) where a certain degree of skill has been acquired and each generation is able to teach its suc cessor. By improving natural conditions and selecting and training the right kind of people, the areas where the highest grades of manufac turing are possible may perhaps be greatly extended, but at present they are strictly limited.