Chapter 24
On Over Manufacturing
284. One of the natural and almost inevitable consequences of
competition is the production of a supply much larger than the
demand requires. This result usually arises periodically; and it
is equally important, both to the masters and to the workmen, to
prevent its occurrence, or to foresee its arrival. In situations
where a great number of very small capitalists exist--where each
master works himself and is assisted by his own family, or by a
few journeymen--and where a variety of different articles is
produced, a curious system of compensation has arisen which in
some measure diminishes the extent to which fluctuations of wages
would otherwise reach. This is accomplished by a species of
middlemen or factors, persons possessing some capital, who,
whenever the price of any of the articles in which they deal is
greatly reduced, purchase it on their own account, in the hopes
of selling at a profit when the market is better. These persons,
in ordinary times, act as salesmen or agents, and make up
assortments of goods at the market price, for the use of the home
or foreign dealer.
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