self primarily a manager, he could hardly have the
training, ability or time, even if he had the inclination, to
concentrate special attention on financial gains unconnected with, or
opposed to, progress in the arts of production, and there was some
justification for the conventional picture which represented "the
manufacturer" as the guardian of the interests of the consumer. With
the drawing apart of the financial and technical departments of
industry--with the separation of "business" from "production"--the link
which bound profits to productive efficiency is tending to be snapped.
There are more ways than formerly of securing the former without
achieving the latter; and when it is pleaded that the interests of the
captain of industry stimulate the adoption of the most "economical"
methods and thus secure industrial progress, it is necessary to ask
"economical for whom"? Though the organization of industry which is
most efficient, in the sense of offering the consumer the best service
at the lowest real cost, may be that which is most profitable to the
firm, it is also true that profits are constantly made in ways which
have nothing to do with efficient production, and which sometimes,
indeed, impede it.

The manner in which "business" may find that the methods which pay
itself best are those which a truly {173} scientific "management" would
condemn may be illustrated by three examples. In the first place, the
whole mass of profits which are obtained by the adroit capitalization
of a new business, or the reconstruction of one which already exists,
have hardly any connection with production at all. When, for instance,
a Lancashire cotton mill capitalized at L100,000 is bought by a London
syndicate which re-floats it with a capital of L500,000--not at all an
extravagant case--what exactly has happened? In many cases the
equipment of the mill for production remains, after the process, what
it was before it. It is, however, valued at a different figure,
because it is anticipated that the product of the mill will sell at a
price which will pay a reasonable profit not only upon the lower, but
upon the higher, capitalization. If the apparent state of the market
and prospects of the industry are such that the public can be induced
to believe this, the promoters of the reconstruction find it worth
while to recapitalize the mill on the new basis. They make their
profit not as manufacturers, but as financiers. They do