The Localization of Industry JSTOR 1919

American Association for the Advancement of Science
The Localization of Industry. How It Starts; Why It Grows and Persists

Author(s): Malcolm Keir
Source: The Scientific Monthly, Vol. 8, No. 1 (Jan., 1919), pp. 32-48
Published by: American Association for the Advancement of Science
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32 THE SCIENTIFIC MONTHLY
THE LOCALIZATION OF INDUSTRY

How IT STARTS; WHY IT GROWS AND PERSISTS
By Dr. MALCOLM KEIR

ASSISTANT PROFESSOR OF INDUSTRY, UNIVERSITY OF PENNSYLVANI
-J7jILL-ALLEY" is the college slang for a certain stately

elm-archedstreet lined with colonial mansions. The
name " Pill-Alley" is a recognitionof the large numberof doc-
tors who live along that one avenue. The old college town is
by no means the onlyplace that shows evidenceof the singular
tendencyforprofessionalmen to hang theirshinglesone beside
the other. Nor is this peculiarityconfinedto the professions,
fora similarlikingfortheneighborhood of theirrivals is shown
by retailers,wholesalersand even by manufacturers. Dentists
as a rule hive in one officebuilding,opticiansopen theirshops
along the same thoroughfare,departmentstores crowd about
some one vantage point,wholesale leather dealers jostle each
other in their neighboringwarehouses, and wholesale wool
merchantscongregatenear a commonmarketplace. Manufac-
turers,too, show the same tendency. More than threefourths
of the collars and cuffsmade in the United States come from
Troy,New York; silver plate to a like degreeis manufactured
at Meriden, Connecticut;tanning is centered at Milwaukee,
Wisconsin; and Paterson,New Jersey,is thehomeofsilkmanu-
facturing. So the storygoes; a large numberof the great and
small industriesof the United States are not scatteredbroad-
cast over the entire country,but are confinedto one narrow
locality. This fact is contraryto what commonsense would
seem to dictate,for apparentlya business would be most as-
sured of success where it had no competitionin the immediate
neighborhood,but in reality industryseems to thrive best
whereit throngsmost. It is worthwhile,then,to findout how
localization starts and grows, and what advantages it offers.
Some localized industrieshave started as a responseto re-
sources either in raw materials and power, or in unskilled
labor. Others originated in particular places because they
were near to theirmarket,while a few by virtueof a monopoly
controlwere permittedthe choice of a desirablestrategicloca-
tion.
The presenceof raw materialshas been a potentfactorin
giving rise to localization. For example, Chesapeake Bay is
LOCALIZATION OF INDUSTRY 33
the greatestbed for oystersto be foundin America,and, as a

result,the metropolisof the Bay, Baltimore,does more than
two thirdsof the oyster-canning business of the United States.
One mightgeneralize and say that, as a rule, the preserving
industrieslocalize near the source of their materials. This
explains the salmon canneriesof the Columbia River,the wine
plants of California, the grape-juice factories of northeast
Pennsylvaniaor northwestNew York,the sweet-corncanneries
of Maine, the tomatocanneriesof New Jerseyand the slaugh-
terhousesof Chicago.1
Not only perishableraw materials,but also those that are
bulky,heavy or fragile,tend to collectfactoriesnear the point
of originof the crudestock. Thus Pittsburgh,near the fragile
coke of Connellsville,manufactureswith this fuel eight per
cent. of America's rolled steel; likewise in the Lehigh Valley
heavy rock is transformedinto the Portland cementused to
build skyscrapersin New York and Philadelphia and other
cities along the Atlantic coast. Similarly Muncie, Indiana,
near to abundantsupplies of natural gas for fuel,is one of the
largestnationalcentersof glass-making. The fruitjars known
byhousewivesall overtheUnitedStatesare manufacturedthere.
Accordingly,in many different places raw materialsof various
kinds have been responsiblefor the fame of a localityin the
industrythat reshapesthose raw materialsintoa moreservice-
able form.
It has frequentlyhappenedthat industriescalled to particu-
lar places by resourcesin materialshave remainedwhere they
started long after the local supply of crude stock has disap-
peared. The rubber-usingfactoriesof Massachusetts,Rhode
Island and Connecticutmay be taken to illustratethe point.
In youngAmerica,when commercewas a sourceof large profit,
many curious products from out-of-the-way regions of the
worldwere carriedto New England ports. Amongothercom-
modities,rubberfromthe Amazon enteredBoston, Massachu-
setts; Providence,Rhode Island; and New Haven, Connecticut.
The presenceof this raw materialgave rise to rubber-usingin-
dustriesin or around all three of these cities,the goods made
rangingfromovershoesto fountainpens. Yet crude rubberis
seldom seen to-dayon the docks of these maritimecities, for
most of it now comes into the United States by way of New
York. Despite the fact,nearlyall the rubberovershoes,boots
or arcticsmade in the UnitedStates are producedin the locality
betweenProvidenceand Boston,because this was the original
1 Thirty-threeand one third per cent. of the nation's slaughteringis
done at Chicago.
VOL. VUL-3.
region of import. A half-dozenplants now belongingto the

United States Rubber Co., as well as the factorythat turnsout
Waterman'sfountainpens,are all in one narrowvalleyadjacent
to New Haven. The WoonsocketRubberCompanyis withinhail-
ing distanceof Providence,whilethe Hood Rubber Companyis
representativeof scores of othersthat girdleBoston. Likewise
the plated-jewelryindustrycenteredin the Attleboroughsof
Massachusetts,just outside of Providence, Rhode Island, is
there in responseto the fact that gold and silver fromSpain,
Portugal and the West Indies once were borne into Providence
by home-boundcommercecarriers. Since the European war
opened, attentionhas been called to the predominancein fire-
arms manufactureof threeConnecticutcities; namely,Bridge-
port,New Haven and Hartford. These cities are now famous
for riflesand revolversbecause at one time western Connec-
ticut produceda grade of iron fromlocal ores that was better
fittedthan that found anywhereelse for making weapons or
edge tools. In all of these cases, the rubbermills,the jewelry
factoriesor the firearmsplants, the present-daygreatness of
the industriesentirelyovershadowsthe fact that they came to
theregionsoriginallybecause raw materialswere easily secured
at those points.
Water power is a resourcethat is responsiblefor drawing
many industries into compact units around desirable power
sites. Accordingly,we findthat one third of the knit under-
wear made in the United States is furnishedby a string of
townsin the MohawkValley fromCohoesto Utica. This is due
to thecircumstancethatthefirstknittingmachinerunby power
was set up at Cohoes to take advantage of the large amountof
power available at that place. Americanwriting-papermanu-
facturecentersat Holyoke,Massachusetts,because the reduc-
tion of rags to pulp requiresa large amountof power,and the
ConnecticutRiver at Holyoke furnishes the greatest water
powerin New England. The falls and canal systemsat IHolyoke
fixed the attentionof engineers upon water-propelledmech-
anisms, and out of their studies improvedturbinesarose. As
a consequence,Holyokeenteredthe fieldof machinerymanufac-
ture,so thatlater whenNiagara was bridled,the great turbines
that turn Niagara's energy into usable power were made at
Holyoke.
The large numberof rapids and falls in the MerrimacRiver
attractedto its banks the largest cottonmill in the world at
Manchester,New Hampshire,the largestwool millin the world
at Lawrence and one of the principal cotton manufacturing
cities of the United States at Lowell; no other stream in the

worldturns so manytextilespindlesas the Merrimac. Power
then,as well as raw materials,is responsiblefor the origin of
many localized industries.
An unused labor supply also frequentlycalls togethera
group of mills to take advantage of the opportunityto exploit
this labor. Whereveran industryhas collecteda large work-
ing force of men, a situation favorable to industries using
femalelabor is createdbecause the wives,sisters,daughtersor
cousins of the male workersare glad of the chanceto get a job
wherebythey may increase the familybudget or attain indi-
vidual economicindependence. Hence silk mills have invaded
the coal-miningdistrictsto such an extentthat Scranton,Penn-
sylvania,is second onlyto Paterson,New Jersey,in the manu-
factureof silk. Allentown,Pennsylvania,in the Lehigh Valley
cementdistrict,ranks abreast of Scrantonin the silk industry
because cement-making employsthe men of the familywhilethe
silk mills give occupationto the women or girls. Industries
of this sort are called parasitic because they utilize a labor
forcecollectedby some otheractivity.
It is apparentthat some localized industriesoriginatedin a
resource,or in an unused labor supply. Others have started
because a large market near at hand gave the necessary in-
centive. The potencyof a marketin establishinga localized
industryis seen in the case of the manufactureof agricultural
implements. This industryhas followedthe grain belt west-
ward; once along the Atlantic,then in interiorNew York and
now in the middlewest,manufactureand markethave always
coincided. Starting in Chicago, because that city has easier
access to all the great agriculturalstates of the upper Missis-
sippi valley,the industryhas so expandedthat to-dayChicago
can claim a fourthof the entirenation's product.
But morethan resources,more than labor, more than mar-
kets,more than any othercause for the start of a localized in-
dustry,we must recognizethe power of chance. Fortuitous
accidenthas been responsiblefor the feeblebeginningof now
stronglyintrenchedindustriesmore than any otherreason we
may assign. Westfield, Massachusetts,now manufacturesover
two thirdsof our whips because one irate farmer,incensedby
his neighbors' pillage of his willow hedge to belabor their
horses,cut the willowshimself,boundthemwithtwineand sold
them to the erstwhileplunderers. That started an industry
that has since made the town conspicuous. The position of
Lynnin the shoe industry,the centerof a circleof townsmanu-
facturinga fourthof the shoes worn in the United States, is

partlydue to the chancesettlement thereof a Welshmannamed
Dagys, the most skillfulshoemakerin the colonies. If Dagys
had happened to go to Providence or New Haven, doubtless
one of these cities rather than Lynn would now have Lynn's
honorablestation. GermanPalatinates,fleeingto America,but
skilled in the art of knitting,by chance found congenialreli-
gious refugein Penn's settlementof Philadelphia. Once estab-
lished on our soil, they set about their accustomedtrade and
soonmade Germantown(part of Philadelphia) famousthrough-
out the coloniesforits stockings. To-day,as a result,Philadel-
phia manufacturesmore hosierythan any other place in the
country. So the list of illustrationsmightbe lengthened,but
it would prove onlymore conclusivelythat accidentis the most
influentialfactorin determining wherea localized industrywill
come into being.
One other factor, however,must be mentioned; namely,
monopoly. In modernindustrywe are familiarwiththe spec-
tacle of one corporationor group of allied companiesgaining
such ascendancyover the whole trade that arbitrarydecisions
replace the usual give-and-takeof competition. The will of
one compactunit becomesthe law for the whole industry. It
is obviousthat such a monopolisticcontrolmay choosethe most
desirable locationsfor its plants,and concentrateits effortsin
a few most advantageous places. The limitation upon the
numberof factoriesand the large outputin a fewselectedtowns
or cities bears a close resemblanceto localizationof industry.
For instance,all of the oil-refining done in America is carried
on in a half-dozengreatplants,someon the Atlanticcoast, some
in the Central West, and some along the Pacific. Similarly,
sugar-refining is confinedto a few strategicpoints. The manu-
facture of shoe machineryis likewise confinedto one town
(Beverly,Mass.) in the heart of the greatestshoemakingdis-
trict. In every case, the localizationis entirelyartificialand
could be annihilatedby an adverse courtdecisionor the expira-
tion of patents. Before the Standard Oil Companygained its
supremacy,there was no localizationof refineries;the Amer-
ican Sugar RefiningCompanyis responsiblefor the localiza-
tion of its industry,and if there were no United States Shoe
Machinery Company, every machine-toolcenter in United
States would have the possibilityof enteringthat trade. So
localizationinduced by monopolyis only as permanentas the
parent corporationthat gives it birth. It is undoubtedlyeco-
nomic and profitable,but if competitionwere given full sway,
monopoly-localization could not endure.
Whateverwas the cause of their inception-raw material,

power,unused labor, a nearbymarket,accidentor monopoly-
all localized industrieshave shown similarmethodsof growth,
have profitedby like advantages and sufferedby reason of
analogous handicaps. How a localized industrygrows is a
more importantconsiderationthan hiowit starts.
Many industries have become localized because they are
familyaffairs,and the familyhas remainedin one section of
the country. A fatherin business with several sons oftenes-
tablishesthosesons in branchplants or associatedlines,which,
growingto prominencearound the originalplant,give a repu-
tation to the localityfor that particularbusiness. The cotton
industryof southeasternNew England has always been asso-
ciated with the names of Slater, Borden, Sprague or Knight;
the cottonmanufacturingof the MerrimacRiver is intimately
connectedwiththe Lawrence family,while at the presenttime
Chattanooga, Tenn., is developing into a cotton-millcenter
under the leadership of the Thatcher brothersand sons. In
colonial America,no iron-makingproject was said to be com-
plete unless a Leonard was in control,and the great brass in-
dustryof westernConnecticutis the outgrowthof the Scoville,
Benedict and Burnham families.
By means of shop association as well as through blood
bonds, an industryincreases in importancein the town where
it firststarts. Superintendentsor foremenmay be considered
as membersof an " industrialfamily" just as sons are the heirs
of theirfathers. When an experiencedsuperintendent decides
to becomehis own boss, oftentimeshe findsit impossibleto go
to a strange place in which he is unknown; but in the town
where he has workedfor years, the bankers know and trust
him,and the business he purposesto enteris a testedproposi-
tion. Consequentlythe superintendent can best succeedby es-
tablishinghimselfin the shadow of the plant where he was
once an employee. It has been stated that every cottonmill
startedbetween1790 and 1814 was by menwho themselveshad
been trained by Samuel Slater, at Pawtucket,Rhode Island.
Growthof this kind,throughformerworkmen,has made Attle-
boroughthe seat of plated jewelry,and the MohawkValley the
chiefcenterforthe manufactureof knit underwear.
Timidityof local capitalists is anothercause for an indus-
try'senlargementin a particularplace. Many men with small
amountsofmoneyto investare afraidto risktheirfundsin any
project unless they can keep it under daily observation.
Hence, theyencouragenew venturesin theirown town as long
as there is promise of profit. When New Bedford whaling

captains saw their own business declining,they looked for a
new openingfor their financialresources. Their close neigh-
bor, Fall River, was making great strides in cottonmanufac-
ture but the old whalers absolutelybalked at furtheringenter-
prises in another town. Instead they put their money into
cottonfactories in New Bedford with the result that to-day
New Bedfordstandssecondin thisindustryand holdsfirstplace
for quality.
Sons, superintendents or local capitalistspromotethe early
growthof an industrialcenter,but the matureadvance is occa-
sioned by the multiplicationof allied industries,the increase
in the numberof supply houses or by the presence of plants
utilizingwastes.
Instead of attemptingto manufacturean entireshoe, many
plants in Lynn or Brocktonconfinethemselvesto makingheels,
clounters, box-toesor soles; similarlyin Lowell, New Bedford,
Philadelphia and other textile centers,there are enterprises
that specialize in originatingpatternsor designs,otherswhich
prepare warps for looms and yet othersthat producespools or
cops to holdthreads. Venturesof thesekindswould meetwith
little success if they were attemptedanywherebut in a com-
munitywherethe main industrywas localized,because the ex-
pense of reachinga marketwould exhaust all profits. On the
otherhand, the presenceof shops specializingin parts of the
main productaids the larger factories,for it enables them to
purchase supplies right at hand. The way in which a sub-
sidiary industryis correlatedto the principal one is familiar
to everyone in the case of automobilemanufacture.
The greatest source of automobileaccessories is Detroit,
which is also the largest producerof automobiles. The asso-
ciation of major and minor plants may also be seen in the
textileindustry. Philadelphia,one of the chieftextilecenters
of United States, has more dye-housesthan any othercity. In
fact the close union of independentand dependentmills is one
of the most strikingfeaturesof our manufacturingindustry.
About two thirds of the needles and pins of Americanmanu-
facturecomefromConnecticut, the state that suppliesthe brass
of whichneedles and pins are made. The home of the sewing
machine is Bridgeport,Connecticut;corsets,almost entirelya
sewing-machineproduct, come from Bridgeport,2'and New
2 Twenty per cent. of the United States total.

3 Twelve per cent. of the United States total.
The large and small enterprisesat the chief seat of an in-

dustryare a benefitto each other because by subdivision of
productand by greater specialization,the costs of production
are reduced,so that outside competitionis easily met. Partly
finishedmaterialis also producedat the very doors of the fac-
tory that will completeit for market; hence transportation
charges are reducedand annoyingdelays in deliveryobviated.
Therefore,an industryonce establishedin a localityis assured
of a steady advance.
Localization, furthermore,attracts to itself plants whose
businessis the utilizationofwaste products. In orderto insure
a plentifulsupply of raw material upon which to work,these
shopsmustbe wherethereare manyfactoriescreatingthe same
sort of waste. For the factories,the presence of the waste-
using shops turnsa loss into profit,a charge into a creditor a
liabilityinto an asset.
An instance of this formof economymay be witnessedin
the ironand steelindustry. The largeststeelmillin the United
States at Gary,Indiana, has its complementin a great cement
plant at Buffington, Indiana. The cement is manufactured
fromthe slag that the steel mills throwout. Slag is the scum
of impuritiestaken fromthe ore when iron is smelted. Ordi-
narily it has no value, but is one of the greatestnuisances to
clear out of the way. It so happens,however,that slag usually
containssand, clay and lime,the threematerialsthat compose
cement,so that by grindingthe slag and mixingthe threecon-
stituentsin the correctproportionscementmay be manufac-
tured. A cementplant corollaryto a steel works,therefore,
is a great boon to the steel concern,because by makingcement
of slag the premisesof the steelmillare rid of the accumulation
and at the same timewhat would otherwisebe morethan a loss
is turned into a revenueproducer.
Anotherillustrationof the utilizationof waste is seen in
New York City,the nation's tailor shop. The short ends of
clothare carriedto the cap shops that are usuallynext door to
clothingfactories. If there were no adjoining cap factories,
the only marketfor remnantswould be a shoddy-mill, but as
a raw material for caps, the scrap clothis more valuable than
in the formof rags destinedto shoddy. The arrangementis
advantageous to cap makers, too, because it saves a large
amountof cutting,and allows a wider range of clothpatterns
than the manufacturercould affordif clothwere purchasedin
the whole piece.
Again, the city of Gloucester,Massachusetts,is one of the
most famousfishingports in the world. In preparingfishfor

sale, the heads and tails are removed. These are not thrown
back into the sea, but are carriedby the dray-loadto a factory
that is famous all over the countryas a producerof glue and
mucilage.
Waterbury,Connecticut,also, around which city a half of
America's brass is made, has a "brass laundry" where small
pieces of scrap and shavingsare washed to recoverthe machine
shop oil, to separate brass fromothermetals and to make the
recoveredbrass available as raw materialfor recasting. This
"laundry" handles twentymillion pounds of brass shavings
per year and adds a value of fiveto fifteencentsper pound.
Wheneversuch waste-usingplants appear, they add an in-
crementto the importanceof a localityas the centerof an in-
dustry;for by transforming liabilitiesinto assets, and turning
costs into profits,they aid in the defense of the community
against the onslaughts of outside competition. Hence they
augmentthe growthof the industryin the locationwhere it is
alreadyrooted.
Frequentlyit happens that after a town has become thor-
oughlyidentified with an industry,its name has such an adver-
tising value that new concerns seek it instinctivelyin order
that the weightof the prestigeof the place may bolstertheir
own reputation. Detroitis the Mecca for incipientautomobile
manufacturers;the name Brocktonlends quality to a shoe be-
cause Brocktonhas the reputationfor men's high-gradefoot-
wear; New Bedford likewise stands for high-qualitycotton;
indeed the name of some of her mills is the recognizedsymbol
of certaingrades, for example Wamsutta sheeting. The mul
tiplicationof small plants attracted by the mere name of a
town adds to the renown already attained by the community.
But what is the secretfor the success of plants that swarm
intoone place, fiercelycompetingwitheach otherand watching,
hawklike,for each advantage? How can they profitin such
close union?
One of the principaloutstandingfactsin regardto localized
industriesis that almost withoutexceptionthey depend upon
highly skilled labor. This circumstancehelps to account for
the paradoxical prosperitythat attachesto the place wherethe
large numberof plants makes trade rivalrymost vigorous.
An adequate supplyof labor especiallytrainedforthe work
to be done is the foremostadvantage enjoyedby the individual
units that comprisea localized industry. If one plant desires
to expand it can draw upon the reservoir of labor already
created. All the factories in the town are constantlyfilling

this reservoirbecaus3 each mill is a training school for the
others. The youngboysupon leavingschoolfollowin the steps
oftheirfathers. They learn by actual experiencein the factory
the movespeculiar to the particularindustry;and at home,on
the streetsor at recreation,imbibethe secret" rules of thumb"
currentamong the workmenand known only to them. The
very atmosphereseems chargedwith a mysteriouspower that
the men draw upon to furtherthe efficiency of their labor, a
forcewhichis lost in a citywhoseindustriesare largelydiversi-
fied. The wholeaccumulationof skill is at the beck of the firm
whichneeds it, and in an industrywhere trained men are re-
quired, its value is beyond estimate. The greatest resource,
forexample,thatthe commonwealth of Massachusettspossesses
is her abundantsupplyof skilledmen and women,collectedin
various localitieswhere special work is being performed. The
contrastwitha state like Pennsylvaniais made plain if we sup-
pose some awful catastropheto sweep away all the people of
both states. Aftersuch a calamityPennsylvaniawould arise
again in power,forher coal, her natural gas, her iron,and her
agriculturalsections-such as Lancaster County,famous for
its farms-would bringa new populationto workthesenatural
resources;but Massachusettswouldbe dealt a blow fromwhich
she would never recover,because her greatest asset would be
wiped out of existence,and instead of being a commanding
industrialstate,she wouldprobablybe knownonlyas a summer
resort. Skilled labor, then, is the basis for her wealth, and
this resource is nursed and conservedby localized industries.
Inasmuch as trade secrets and tricks of manipulation are
handed down fromfatherto son, and fromfriendto friend,
there is a social heredityof skill transmittedfromgeneration
to generation. Newcomersare easily absorbed in the all-en-
velopingtrade in its home place, but manufacturerswho have
attemptedto draw away even the most highlytrained indi-
viduals to act as teachersin anotherremotecityhave met with
failureafterfailurebecause the groupwas not skilledand had
not knownthe trade fromchildhood. The group skill foundin
a localized industryis the reason why the industryclings to
one small section of the country;it is the greatestsingle ad-
vantagethatemployersfindwhentheyset up theirplantswhere
othershave thrivenfor years.
Skilled labor differsradicallyfromunskilledin its mobility.
Skilled men and women dislike to move fromthe town where
they have settled. They have made many social or economic
ties that are hard to break; their friendsand relativeslive in

the town; theirfathersand mothersperhaps are buried there,
they own their homes there, and have small investmentsin
otherland or maybe in the industriesof the town. Hence, it
means uprootinga whole life to wrencha skilled laborer away
fromhis hometown. Since so manylocalizedindustriesemploy
skilledlaborers,and inasmuchas the industriesare vitallyde-
pendent upon that labor, they perforcemust stay where the
labor has becomeknittedto the locality. Quite a contrarycase
exists in regard to unskilled labor. This kind has no deep
roots in the soil of a place; theirinterestis primarilyfinancial
-the pay envelope-and not social. Hence unskilled labor
may be shiftedfromtownto town withthe utmostease. This
helps to explain why industriesemployingunskilledlabor are
not localized, while skilled industriesare highlyconcentrated
in particularcommunities.
The visible supply of labor at work in the factoriesis not
the only advantage a localized industryoffersto mill owners,
for there is a secret benefitwhich grows out of localization,
namely,the ready rapid expansion of the labor force during
rush seasons by means of home work. We talk about our
times as the "Factory Era," yet one half of the people4 em-
ployedin producingwearingapparel,jewelry,silverware,paper
articles, sportinggoods and celluloidware, are never housed
withinfactorywalls, but do the work in their own rooms. In
Massachusetts,for illustration,home work is not confinedto
large cities,to tenementsor to foreigners,nor is it an unofficial
pittanceto the poverty-stricken; on the contrary,the greatest
numberof homeworkershave a familyincomerangingbetween
$750 and $1,500 a year. The tasks are performedlargely by
women about thirtyyears old who have formerlybeen wage-
earners,but are now married and tied to theirhomes by chil-
dren,yet glad to do littlejobs to earn "pin money"5 at times
whentheirhands would otherwisebe idle. Manufacturersare
delightedto avail themselvesof this labor force,foritmakes no
extra demandsontheemployers, neverthelessenablesthemto get
out orders on time. It is their safetyvalve6since the factory
forcemay be kept intact while the numberof operativesout-
side the walls swells and contractswith the demand for the
products. Whereverthe home work necessitatessome skill or
previoustraining,the manufactureris well nigh compelledto
4Mass. Labor Bulletin No. 101, Industrial Home Work.
5 They earn about $100 a year.
6 Or the " marginal elementin labor force," to use economicterms.
locate his plant where the labor lives, if his productis subject
to the whims of fashion or to seasonal variations. We can
appreciatewhy fourteenof the twenty-eight comb factoriesin
Leominster,Massachusetts,give out homework; why it is that
in jewelrymanufacture74 per cent.of all employeesare outside
the factoryroof; why almostall women'sneckwearis made in
homes,and why,even in so thoroughlymechanicalan industry
as shoe-making, the bows forshoes and the beadingforslippers
are made and attached in private dwellings. A large amount
ofhomeworkis also carriedon in connectionwiththecollarfac-
toriesofTroy,New York; and glovemanufacturein all its stages,
in Gloversville,New York, is frequentlyconductedupon the
workers' own premises. Hence in all localized industrieswe
must add the invisibletrained labor forceto that which is in
plain sight in the factories;the two togetherforma combina-
tion whose advantage no employercan overlook. Yet there
are otheradvantages to be foundin a communitywhose ener-
gies are devotedto one product. Amongthemare the facilities
offeredforbuyingand selling.
In a localizedindustrysmall concernsmay buy togetherand
thus gain the advantageof bulk shipments,whichin the course
of a year would representconsiderablesaving. Freight rates
are apt to be lowertoo,wherethereare manyconcernspurchas-
ing the same sort of raw material,because the railroad will
equip itselfto handle the variety of freightin which its cus-
tomersdeal. By cooperation,the cottonmanufacturersof New
England have been able to secure such low commodityrates
on cottonshipmentthat whereas formerlymuch of their raw
materialwas shippedto themby water, it now comes entirely
by railroad.
In selling,it is easier to dispose of wares in the vicinityof
otherswho are doingthe same thing,because a marketis estab-
lished to which prospectivebuyers come. This is the reason
doctors,dentistsand departmentstores locate where there are
otherdoctors,dentistsand departmentstores. A new concern
can not affordto forsakethe involuntaryaid extendedby its
neighborsin the same business. Together they constitutea
center to which purchasers come; separated, each concern
wouldbe forcedto put fortha strenuouseffort to attractbuyers
to its doors.
The creationof a marketwithina localized industryleads
logicallyto the resultthat some portionof the communityde-
votes itself more and more exclusivelyto the marketingside
of the business. In England, Manchesteris less a cotton-mill
town than it is a warehousecity,where raw materialsare col-

lected for the cotton mills in nearby Bolton or Oldham, and
where the cloth fromthose mill towns is sold. Leeds holds a
similar position in respect to the iron trade of England. In
Massachusettswe see a liketendencyin thatBostonis theware-
house forthe shoe industryon its border,arndin New Bedford,
the old city at the centeris taking over the commercialbusi-
ness of the cottonmillsin the new developingcities at each end
of the township. New Bedford really contains three cities
under one name, two devoted to manufacture,one to trade.
Worcesterholds an analogous positionfor the textile mills of
the BlackstoneRiver valley,and Providence,Rhode Island, for
the jewelry industryof the Attleboroughs. The cause for the
segregationof the market is two-fold;on the one hand it is
due to unusual transportationfacilitiesat one part of the dis-
trictin whichan industryis localized,and uponthe otherto in-
creasingrentsat a centerdrivingfactoriesto the rim and leav-
ing theheartto offices whichtake up littlespace. These central
places, too, offeradvantages for buyersto congregate. Aside
fromrailway or hotel accommodations,it is easier for buyers
to visit a series of wareroomsclose togetherthan it is to travel
frommill to mill,althoughthe mills may all be in one district.
Whereveran industryhas becomesufficiently developedin one
localityto bringfortha centralmarketfor buyingand selling,
the advantages of the localizationare greatlyincreased,since
a well-defined place of bargain and sale securesmoretrade than
would a numberof scatteredoffices.
Not all the advantages of localizationare on the side of the
employers,for the employeestoo gain by dwellingin a city
wherethereare manyfactorieswheremen of one trade are em-
ployed. For instance,a man who is a cottonweaverstayswhere
weaving is done in several factories,because if he loses his job
in one he maybe able to get a place in another. Likewiseimmi-
grants or weavers fromotherstates will seek the town where
weavingis a well-knownoccupation,because theyhave a chance
of obtainingemploymentat the thingtheyknow best. Conse-
quentlyin a localized industrythere is greater securityof job
for laborersthan in a town wherethere is only one factoryof
a kind.
Where there are many people engaged in the same tasks, a
labor union is much easier to form than in a communityin
whichthereis onlyone factoryof any one particulartype,un-
less that one plant is exceptionallylarge. A skilled man or
womanfaresbetterin a place wherethereare manyotherswho
possess the same kindof skill,since all can make theirdemands
felt by acting in agreement. The cotton-millworkersof Fall

River have formedunions,with the result that, althoughthey
constitutebut a small fractionof the total numberof wage-
earnersin the industry,neverthelesstheyset the wages forthe
whole group in New England. In concertedaction there is
strength.
To bothemployerand employee,therefore, localizationoffers
many advantages, but it also has deterrentfeatures that de-
tract from the favorable picture we have drawn; there are
shadows as well as high lights.
Chief among the disadvantages is the distance separating
the industrialcenterfromthe consumingmarket. As we have
mentionedbefore,buyerstend to seek the communityin which
an industryis localized, but these men representwholesale
houses, jobbers or large mercantileestablishments,most of
whichof necessitymustbe far fromthe town wherethe goods
they purchase are produced; consequentlythe public to which
the wholesalemen cater is a long way fromthe factories. For
illustration,productsmanufacturedin Massachusettsmust be
transportedoftenhalf the lengthor the breadthof the country
beforetheyreach the individualswho actuallyuse them. This
long carriage adds freightcharges to the cost of the articles
that become so burdensomethat an effortis made to produce
the thingsneedednearerthe pointof consumption. It was for
this reason that shoe factorieswere firstset up in St. Louis,
and the advantage of being nearer the market than Massa-
chusettshas fosteredits growthas a shoe centeruntilit ranks
as thethirdmostimportantone in the UnitedStates, onlyLynn
and Brocktonsurpassingit, and Haverhilltrailingin its wake.
All the otherrecognizedwholesale cities tend to establishshoe
factories for the same reason that St. Louis secured them;
thustheyare becomingfamiliarsightsin Philadelphia,Chicago
and Cincinnati. For the mostpart,however,the disadvantage
of distancefromconsumersis easily borne by the localized in-
dustries because their productsare either small and of light
weight,or have such a highvalue that theycan bear long ship-
ment. In every case the labor charge is a large item in the
costs of production,so that if a manufacturermust choose
between cheap transportationand cheaper labor cost, he un-
hesitatinglyvotesforthe labor. To locate near the marketbut
away fromthe recognizedcenterof productionadds greatlyto
the wage list,formen can be inducedto leave homeonlyby the
lure of more money in their pay envelope,and, furthermore,
transplantedfactoryoperativeslose in group efficiency, as we
have pointed out. As a result,the distance separating pro-
ducer and consumer,althougha disadvantage,is notthegreatest

of evils when goods are relativelyeasy to transport.
In like mannermany localized industriesare remotefrom
theirsourceof raw material,and thereforemustface a freight
charge upon every unit of stock they use. Here again the
actual amountsto be paid are more startlingthan the relative,
for the cost of cottonfromthe south,leather fromall around
the world,steel fromSweden, and rags fromEurope, all form
so small a portionof the value of the finishedarticle that the
mere freightcharges on these commoditiesis a burden on the
business that is scarcelyrecognizablestatistically. So long as
labor representsthe largest single item in the total cost of
production,localized industriesas a whole will not be likelyto
seek a positionnearer raw materials in order to save freight
charges.
From the employers'point of view, the strengthof labor
unions in a localized industryis a thing that is abhorrent.
Labor organizationsare strongestin industrieswhose labor
forceis mosthighlyskilledand collectedin the narrowestarea.
In the grip of such unions,employersare helpless,and when
pinchedthey wriggle,squirm and cry out just like any other
weak thing in the grasp of power; their only relief is to run
away. The unions of Lynn became so dictatorialin the mat-
ters of " closed shops," wages and hours of work,that several
shoe firms,employingmany hands, moved outrightto Lowell,
Massachusetts; or Manchester, New Hampshire. In these
places,theyhave gained a temporaryrelief,but bothtownsare
becomingshoe centers,so thatin the courseof timethesemanu-
facturersmust submitto labor or seek a newer asylum. The
power of unions in localized industries,therefore,is a strong
force workingtoward decentralization,at least until unions
cover the whole industryover the entirenation. Then there
would be no escape anywhereand one place would be under
the same conditionsas another.
Competitionis mostseverewherethe competitorsare closest
together. In a localized industry,therefore,every manufac-
turermustacceptthetermsofferedby any one of theirnumber,
otherwiseall buyerswould flockto the firmoffering the lowest
prices. Frequentlyin a localized industrythe whole trade is
demoralizedby the presence of some beginnerwho, although
skilledin his work,neverthelessis a poorbusinessman,because
he can not calculate costs accurately,and consequentlybids for
business by selling his goods below the actual cost of produc-
tion. Of coursehe meetsruin eventuallyor changeshis policy,
but so long as he maintainshis low price level,all othermanu-
facturersmustsacrificeprofitsin orderto conformto it. Com-

petitionis also made a strenuousstruggleby the constantstrain
for improvedprocesses. No matterhow carefullyguardedthe
secretof a new devicemaybe or how securelyit maybe thought
to be protectedby patents,neverthelessin a localized industry
such a secret device soon becomesknown,and everymanufac-
turer installs it in some more or less modifiedform. One
manufacturer'sadvance is immediatelyimitatedby all others,
withtheresultthatno man can longenjoy exclusivelythe fruits
of his own inventiveness. The study of processes is a daily
grind and the race for improvementsis swift indeed,yet the
prize is barely attained when its value is snatchedaway by a
new race for a new prize. This situationis highlydesirable
froma social viewpoint,for it tends to lower prices and widen
consumption, butto themanufacturers who mustbear thebrunt
of the business struggle,it is extremelydiscouraging.
From the employers'viewpoint,consequently,a localizedin-
dustryhas these distinctdisadvantages: it is remotefromits
market,it strengthensthe arm of labor and it promotesbitter
competition. To the whole populationof the town,a localized
industrybringsanothersource of dread. If, in additionto the
localization7 of the industry,
the community has specializedin it
also, then the fear of hard times is alway hoveringover the
people. To take an illustration-as long as the United States
is prosperousthere is hardly a better place in which to live
than Attleborough,Massachusetts,for everyone has plentyof
moneyand does not stintthe spending,but Attleborough, manu-
facturinga luxury (jewelry), earlyfeels a fall in the industrial
barometer,and duringa periodof financialstormthereare few
places more hard hit or in which people look more anxiously
for a returnof betterconditions. This is true of everytown
whose industriesare not diversified.
From the pointof view of employees,localizationis bad be-
cause it also tends toward narrowingthe minds of the towns-
people. A youngman broughtup in Fall River, say, has but
littlechoice of occupation;he mustbecomea weaver or a loom-
fixeror some otherartisan connectedwith cottonmanufacture,
because by upbringing,educationand examplehe is forcedinto
that path, and furthermore he goes to work at an early age.
It may happen that manya square peg is rammedinto a round
7Philadelphia is the center where carpet manufacture is localized,
but Philadelphia has not specialized in that branch of business. Her
industriesare widely diversified. On the other hand, Trenton is not only
the seat of the potteryindustry,but the townhas specialized in that trade.
Little else is manufacturedthere except pottery. It is that kind of town
we have in mind here.
hole in this way, or a life constrictedwhichmightunderbetter

conditionshave expanded. There is somethingdeadening to
the humanmind in uniformity;progresscomesthroughvaria-
tion,thereforein a townof one industrya youngman loses the
stimulusfor self-advancement.In such a town there is little
difference in social position,with the resultthat youngpeople
do not have the force of example prodding them to aspire
toward heightsabove theirpresentstation. Discontenttrans-
lated into action is a blessingin disguise,but in a community
whereall are equal, contentment withone's lot begetslethargy,
because there is no contrasturging toward betterment. This
contentment tends toward the creationof a laboringclass that
is self-perpetuating, a conditioninimicalto Americanideals.
Indifferencetoward education is one of the results that
flowsfromthe creationof a labor class, for a desire forknowl-
edge is one of the characteristicsattachedto progress,inasmuch
as aspiration feeds on inspiration. Lowell, containingmore
than 100,000 people, and Lawrence, with nearly that number,
each have but one high school. On the otherhand, Springfield,
whose populationnumbers about the same as Lawrence, but
whose industriesare highlydiversified, has no less than three
high schools. Worcesteralso has many unlikeindustries,and
fourhighschoolsare in proportionto populationthreetimesas
numerousas Lowell's, for she has one to 36,000 people, while
Lowell has one to 106,000. It is a disadvantage,therefore,for
a youngman to grow up in a community whose industriesare
all alike. The chancesof his gettinga sound educationare slim
indeed.
The disadvantagesof a localized industry,namely,the dis-
tance frommarketsfor raw materials and finishedgoods, the
strengthof labor unions,the multiplicationof plants,the suf-
feringin hard times and the creationof a labor class, are out-
weighed by the advantages. The ability to secure the right
labor, the ease of sellingand advantages in buyingrecommend
to an employerthe place already establishedin an industry.
On the part of the employees,securityof jobs and opportunity
for organizationamong the workers are strong lures toward
a centerrecognizedfor a particularclass of work. Therefore
an industrystartedby a local resourceor by accidentcontinues
to grow in one spot throughthe branchingof new plants from
old ones, throughnew concernsorganizedby sons or superin-
tendents,throughthe advancementthat comes by subdivision
of productand throughthe accumulationof small factoriesthat
make use of waste products. Localization is thereforea per-
sistentfeatureof industry.

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American Association for the Advancement of Science

The Localization of Industry. How It Starts; Why It Grows and Persists

THE LOCALIZATION OF INDUSTRY

By Dr. MALCOLM KEIR

-J7jILL-ALLEY" is the college slang for a certain stately

the greatestbed for oystersto be foundin America,and, as a

region of import. A half-dozenplants now belongingto the

cities of the United States at Lowell; no other stream in the

facturinga fourthof the shoes worn in the United States, is

Whateverwas the cause of their inception-raw material,

as there is promise of profit. When New Bedford whaling

2 Twenty per cent. of the United States total.

The large and small enterprisesat the chief seat of an in-

most famousfishingports in the world. In preparingfishfor

created. All the factories in the town are constantlyfilling

ties that are hard to break; their friendsand relativeslive in

town than it is a warehousecity,where raw materialsare col-

felt by acting in agreement. The cotton-millworkersof Fall

ducer and consumer,althougha disadvantage,is notthegreatest

facturersmustsacrificeprofitsin orderto conformto it. Com-

hole in this way, or a life constrictedwhichmightunderbetter

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