passage-4">Passage 4

In the last half of the nineteenth century “capital” and "labour” were enlarging and perfecting their rival organizations on modern lines. Many an old firm was replaced by a limited liability company with a bureaucracy of salaried managers. The change met the technical requirements of the new age by engaging a large professional element and prevented the decline in efficiency that so commonly spoiled the fortunes of family firms in the second and third generation after the energetic founders. It was moreover a step away from individual initiative, towards collectivism and municipal and state-owned business. The railway companies, though still private business managed for the benefit of shareholders, were very unlike old family business. At the same time the great municipalities went into business to supply lighting, trams and other services to the taxpayers.
The growth of the limited liability company and municipal business had important consequences. Such large, impersonal manipulation of capital and industry greatly increased the numbers and importance of shareholders as a class, an element in national life representing irresponsible wealth detached from the land and the duties of the landowners; and almost equally detached from the responsible management of business. All through the nineteenth century, America, Africa, India, Australia and parts of Europe were being developed by British capital, and British shareholders were thus enriched by the world's movement towards industrialization. Towns like Bournemouth and Eastbourne sprang up to house large “comfortable” classes who had retired on their incomes, and who had no relation to the rest of the community except that of drawing dividends and occasionally attending a shareholders' meeting to dictate their orders to the management. On the other hand “Shareholding” meant leisure and freedom which was used by many of the later Victorians for the highest purpose of a great civilization.
The “shareholders” as such had no knowledge of the lives, thoughts or needs of the workmen employed by the company in which he held shares, and his influence on the relations of capital and labour was not good. The paid manager acting for the company was in more direct relation with the men and their demands, but even he had seldom that familiar personal knowledge of the workmen which the employer had often had under the more patriarchal system of the old family business now passing away. Indeed the mere size of operations and the numbers of workmen involved rendered such personal relations impossible. Fortunately, however, the increasing power and organization of the trade unions, at least in all skilled trades, enabled the workmen to meet on equal terms the managers of the companies who employed them. The cruel discipline of the strike and lockout taught the two parties to respect each other's strength and understand the value of fair negotiation.
The author says that old family firms
were ruined by the younger generations
failed for lack of individual initiative
lacked efficiency compared with modern companies
were able to supply adequate services to taxpayers
The growth of limited liability companies resulted in
the separation of capital from management
the ownership of capital by managers
the emergence of capital and labour as two classes
the participation of shareholders as land ownership
The text indicates that
some countries developed quickly because of their limited liability companies
the tide of industrialisation benefited British shareholders greatly
shareholders contributed a lot to the fast growth of the British economy
the system of shareholding impaired the management of modern companies
We learn from the text that
shareholders often cast negative influence on the well-being of workers
owners of traditional firm enjoyed a good relationship with their employees
limited liability companies were too large to run smoothly
trade unions had a positive role between workers and the management
The author appears to be very critical of
family firm owners
shareholder
managers
landowners