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 The transformation of industrial organisation from the domestic to the large-scale system of production was by no means completed in the year 1840. It is even doubtful whether the large-scale system was as yet the predominant one. The weaving trade, the hosiery trade, and the hardware industry as a whole were carried on under systems which were either domestic or at least occupied a transitional position between the old and the new systems. Even in the mining industry the influence of large capitalists was by no means universal, as an examination of the Reports of the inquiries into the Truck System and into the employment of children in 1842 and 1843 will show. It was in these as yet unrevolutionised or only partially revolutionised industries that the worst abuses and the most oppressive conditions prevailed—abuses which are erroneously supposed to be the outcome of the developed "capitalistic" system.

By the eighteenth century domestic industry was in general under capitalistic control. Whilst maintaining outwardly the organisation as it flourished in the heyday of the gilds, the system had really undergone a radical change. The small, independent, but associated producers of the Middle Ages had been able to maintain themselves because they had only to satisfy the demands of a fairly well known and only slowly developing market. Custom was strong and regulated largely the relations between producer and consumer, and between master, journeymen, and apprentices. Rates of pay, prices, hours of labour, qualities, and kinds of output were all fixed by custom and tradition which often received the sanction of the law of the land. Gradually the market grew and demand became less easy to gauge. This caused a new factor to enter the organisation—the merchant manufacturer, whose function it was to attend to the marketing of goods produced in each one particular industry. The wider the distance in point of time and place between producers and consumers, the more important did the functions of the merchant manufacturer become, until he, in fact, controlled the industry by virtue of his possession of capital. Without capital the gap between producer and consumer could not be bridged. Goods might now be produced many months before they were consumed, and sold long before the purchase money was handed over. Furthermore, the exhaustion of local supplies of raw material in some industries and the introduction of industries dependent