Era of consolidations;

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VOL. X I NEW YORK, NOVEMBER, 1928 No. 11
The Era of Consolidations
COMPETITION, traditionally referred
to as "the life of trade," today fre­quently
finds itself branded as a "menace
to business."
In that ideal state which economists
assume as an hypothesis upon which to
base their reasoning, free competition is
held not only to be a boon to consumers,
but to regulate production so that it is
confined to a profitable basis.
In that practical world with which
business enterprise actually has to deal,
free competition may be advantageous to
the buying public, but statistics show that
it does not always keep production within
the bounds of profit.
Boarding houses spring up in a city like
New York, not because compiled data show
that there is a profitable demand for more
and better boarding houses, but frequently
because some uninformed widow must seek
a means of economic existence, and she de­termines
to "try her luck" at accepting pay­ing
guests. The result usually is a short­lived
experiment, continuing until the
meagre capital has been exhausted.
Business ventures, too often, are like
city boarding houses. They are likely to
be begun without adequate survey of the
field and scientific planning of the opera­tion.
Frequently, they are continued, re­gardless
of demand, without knowledge of
costs, and with intermittent, if not con­tinuous,
losses of capital.
The facts, if they could be developed,
probably would show that many businesses
are started without a possible chance of
economic success. They are continued in
the face of certain failure. They battle
with competition which is sure to be fatal.
The entrepreneurs "try their luck" when
there is no luck to be had. The outcome
is preordained.
Such is the condition of thousands of
small enterprises today. The business in
their respective fields is so organized that
they cannot compete and survive. High
costs which go with small volume of pro­duction
sap their capital and leave them,
sooner or later, stranded in the bank­ruptcy
courts.
The day of small business in this country
probably is past. Consolidation is the
order of the day. Every industry seems
to be headed toward the formation of
larger units, working on a basis of sound
and sane competition. The economists
may yet realize their ideal state.
In the meantime, the accountant must
understand what should be his part when
business units are brought together. He
must furnish, in consolidated form, the
results of past performances of the units.
He should not undertake to prophesy what