We have already noted in passing one or two of the conditions upon which depend the efficiency of organization of production. It may be well to bring them together at this point and to speak at the same time of an even more important factor which conditions all production, no matter how organized.

1.Extent and Character of the Population. Perhaps first in logical importance is the size and character of the population. The more numerous the consumers, the greater must be the supply of goods; and the greater the supply of goods, as a general rule, the more minute will be the organization which will be found economically profitable. This idea is often expressed in the statement that division of labor is conditioned by the extent of the market.

2. Growth of Capital. The second great condition of the organization of industry is the growth of capital, whether in the form of machinery or in the form of means of transportation and communication and exchange. Improvements in machinery have made increased specialization and organization technically possible, while railways, telegraph and cable lines, and banks have widened the markets and have thus made such organization economically possible, that is, profitable.

3.The Character of the Industry. Not all industries lend themselves equally to some of the kinds of organization that we have described, no matter what the population or the extent of capitalization. Agriculture has hitherto in the main defied all attempts at minute division of labor. Manufacturing lends itself to division of labor in the highest degree. Without entering into a discussion of all the technical reasons for this difference, we may say that the main requirement, within the industry itself, for minute organization is that the different processes shall permit of being carried on simultaneously. We all know that this feature of industry is characteristic of manufacturing, and that, on the contrary, it is almost entirely lacking in the case of farming.

4. The Character of the Government. A fourth condition of efficiency of organization is the character of the government. Even the most advanced States differ in many ways in structure and in the legal conditions which they enforce, but all civilized States secure at least the following conditions of efficient organization: they all (1) maintain the institution of private property; (2) protect life and property from enemies without and within the nation's borders; (3) create and maintain the institution of contract; and (4) participate directly in industry in cases in which it has been clearly proved that individuals will not act at all or will not act for the best interests of industry as a whole. Thus, all civilized governments maintain coinage systems, regulate weights and measures, establish and care for docks, lighthouses, and roads, and maintain a consular service in foreign lands.