centralizing the manufacturing process comes
in part from the increased size of the particular establishments; but
that requires that every part of the plants, land included, should be
increased. As the whole of an establishment becomes larger its product
becomes cheaper; but, in the enlargement, there should be no undue
stinting in the amount of land used. In both agriculture and
manufacturing, then, there is a loss of productive power when areas of
land are disproportionately small, as compared with amounts of labor
and artificial capital; but in the realm of manufacturing large
establishments under single _entrepreneurs combining the agents of
production in the right proportion increase the productive power of
men and instruments_ as they do not in agriculture. Great farms show
no such economy as great mills.

_Basis of the Law of Increasing Returns in Manufacturing._--There
would be some increase of returns in manufacturing from making the
establishments large even if the work were done by hand; but by far
the greater part of the advantage is due to machinery. The invention
of the steam engine was the beginning of it, and that of textile
machinery afforded a quick continuation of the revolutionary change.
In nearly all lines of production, outside of agriculture, machinery
is far too elaborate to be used in household industry. One may say
that the transformation of the world into one enormous farm dotted
over with great workshops, with all the social and political changes
which that involves, was brewing in the tea-kettle which the boy Watt
is said to have watched, as the lid was raised by puffs of steam and
the possibility of a steam engine suggested itself. The mechanical
force of steam began at once to centralize manufacturing. That made
increased transporting necessary, and it was not long before the same
element, steam, provided the means of this extensive transportation.
It is necessary, of course, to carry the products of the farm to the
mill, and also to carry manufactured goods back to the farm; and
neither of these things would have been required on any large scale
under a system of household industry. The economy which leads to this
lies altogether in the greater cheapness of the manufacturing. The
difference between the cost of fashioning materials in the home and
that of doing it in the mill is so large that it would have brought
about the building of mills and the creation of manufacturing centers,
wi