IHtbrarg MATERIALS FOR THE STUDY OF BUSINESS ALFRED WEBER'S THEORY OF THE LOCATION OF INDUSTRIES THE UNIVERSITY OF CHICAGO PRESS CHICAGO, ILLINOIS THE BAKER & TAYLOR COMPANY NEW YORK THE MACMILLAN COMPANY OF CANADA, LIMITED TORONTO THE CAMBRIDGE UNIVERSITY PRESS LONDON THE MARUZEN-KABUSHIKI-KAISHA TOKYO, OSAK.\, KYOTO, FUKUOKA, SENDAI THE COMMERCIAL PRESS, LIMITED SHANGHAI ENGLISH EDITION, WITH INTRODUCTION AND NOTES BY CARL JOACHIM FRIEDRICH, Ph.D. ASSISTANT PROFESSOR AT HARVARD UNIVERSITY ALFRED WEBER'S THEORY OF THE LOCATION OF INDUSTRIES THE UNIVERSITY OF CHICAGO PRESS CHICAGO • ILLINOIS T COPYRIGHT 1929 BY THE UNIVERSITY OF CHICAGO ALL RIGHTS RESERVED. PUBLISHED JULY 19iJ9 COMPOSED AND PRINTED BY THE UNIVERSITY OF CHICAGO PRESS CHICAGO, ILLINOIS, U.S.A. PREFACE In presenting this book to the public I am spared an embar- rassment that many writers encounter ; I do not need to give an apology for the topic with which it deals. Alfred Weber's treat- ise is a pioneering venture. He attempts to master by theoreti- cal analysis a complete wilderness of facts which has grown up around us during the last two centuries concerning the location of our modern manufacturing industries. To be sure, others have ventured upon the task of describing and classifying the phenomena of geographical distribution; but, as Weber points out, previous writers did not get beyond a mere enumeration of various factors which played a part in determining the location of industries. While I am quite impressed with the importance of Weber's work itself, if clearly understood, it is precisely this task of mak- ing it understood about which I feel very apologetic. In spite of the help and advice which Professors Leon C. Marshall and Frank W. Taussig, as well as Drs. E. H. Chamberlin, William Y. Elliot, Edward Mason, Talcott Parsons, and Andreas Pre- döhl have so generously afforded me, I do not feel confident that I have succeeded in conquering the difficulties which con- front the translator of such a highly abstract treatise. Had not Professor Marshall and Dr. Mason read the entire manuscript through and made numerous suggestions for its improvement, I fear I should not have found the courage to let it see the light of day. It will be conceded by those who have embarked on the hazardous adventure of translating abstract thought from one language into another that nothing is more perplexing. It is in such thought that the Sprachgeist develops its subtlest distinc- tions, successfully defying either translating, transcribing, or vii viii PREFACE paraphrasing. For this reason the paging of the German edition of Weber's book has been inserted as marginal notes through- out. These notes are usually inserted at the end of a sentence, even though that sentence overlaps the page in the original. The interested reader will consult the German text wherever the English translation becomes too obscure. Had space per- mitted, I should have included the German text itself. But, after all, the greatest usefulness of such a translation is the as- sistance it may give to the student who knows the original lan- guage, but does not know it sufficiently well to enable him to make the entire translation himself. Comparison with the German text will show that Weber's preface to the first and second (unaltered) edition, as well as his two notes (Exkurse) have been omitted. We should have been glad to include Weber's contribution to the Grundriss der So- zialökonomik^ could it have been arranged. I can only refer to this treatise all readers who are particularly interested in those aspects of location which Weber touches upon in his introduc- tion and in his last chapter as well as in the paragraphs through- out the book on tendencies of development. It seemed impor- tant to include the mathematical appendix by Georg Pick. I sin- cerely hope that the indulgent reader will not feel as did that stu- dent who wrote on top of Alfred Marshall's mathematical ap- pendix to his Principles: ''A bad case of appendicitis—cut it out." In translating this mathematical appendix I have had the valuable advice of Mr. Paul S. Bauer. This study would probably not have been possible without the constant encouragement of Professor Leon C. Marshall. I wish to thank him and all others who have helped me. C. J. F. ^"Industrielle Standortslehre (Reine und kapitalistische Theorie des Stand- orts)," in Grundriss, Abteilung VI, B, particularly the second part dealing with capitalistic theory. TABLE OF CONTENTS PAGE Editor's Introduction: The Theory of Location in Relation to THE Theory of Land Rent xiii 1. In John Stuart Mill xiii " 2. In Alfred Marshall . xv 3. In J. H. von Thiinen xix 4. In Alfred Weber xxii 5. Significance for a Theory of Monopoly, Transportation Rates, and International Trade . xxix Author's Introduction i 1. Importance of an Economic Theory of Location .... i 2. Limitation to a Theory of the Location of Manufacturing Industry; Reasons Therefor 4 3. Method Employed 8 4. Limitations of the Results 12 Chapter I. LocATioNAL Factors and LocATiONAL Dynamics 17 I. The Terms "Locational Factor" and "Locational Unit" . 17 IL Classification of Locational Factors 20 a) General and Special 20 b) Regional and Agglomerative 20 c) Natural and Technical, Social and Cultural .... 21 III. Ascertaining the General Factors of Location .... 23 a) Ascertaining the Individual Regional Factors ... 23 b) Costs of Transportation and Labor Costs Are the Only Regional Factors 29 IV. Theory of the Locational Factors 34 Chapter II. Simplifying Assumptions 37 I. The Assumption of a Separate Basis of Material Supply, Con- sumption, and Labor . 37 II. The Consideration of the "Forces of Nature" 39 Chapter I^I. Transport Orientation (Transportorientierung) Section I. Analysis of Transportation Costs 41 I. Weight and Distance the Only Elements of Cost in Our Theoretical Analysis 41 ix X TABLE OF CONTENTS PAGE 2. The Type of the Transportation Sj^stem and the Extent of Its Use 43 3. The Nature of the Locality and Its Kinds of Roads . 45 4. The Nature of the Goods 45 5. Relation to Reality 46 Section IL The Laws of Transport Orientation 48 1. The Locational Figures and the Kinds of Industrial Materials 48 2. Mathematical Solution 53 3. Material Index, Locational Weight, and Theoretical Conclusion 59 4. Cases 61 5. The Orientation of an Entire Industry 67 a) The Creation of the Individual Figures .... 67 b) Co-operation of the Individual Figures .... 70 6. The Factors of Transport Orientation 72 7. Tendencies of Development 73 Section III. Approximations to Reality 76 1. The Existing System of Transportation Rates ... 76 A. Deviations from the Pure Calculation of Rates According to Mileage 77 A. Deviation from the Pure Calculation of Rates Accord- ing to Weight 78 2. The Real Nature of the Transportation System ... 81 A. A Divided System of Transportation 81 B. Different Kinds of Transportation Systems Working Together 82 a) The Effect of the Waterways 84 b) The Effect of the Net of Highways 86 3. Further Applications of the Theory to Reality ... 88 A. The Price Differences of Materials and Their Effect . 88 B. The Use of Water Power . 89 a) The Use of Waterfalls 89 b) Transmissible Water Power 91 Chapter IV. Labor Orientation 95 Section L The Analysis of Labor Costs 95 1. The Geographical Differences in Labor Costs 95 2. Their "Forms of Occurrence"; Differences Accordini7 to Area 97 3. Simplifying Assumptions 100 TABLE OF CONTENTS xi PAGE Section II. The Law of Labor Orientation 102 1. Theoretical Solution; Isodapanes 102 2. The Conditions of Labor Orientation 105 3. The Character of the Industries and Labor Orientation 107 A. Orientation of an Individual Plant: Index of Labor Costs and Coefficient of Labor 107 B. Orientation of an Entire Industry: Elimination of Labor Locations and Replacement of Deposits . 112 4. The Environmental Conditions of the Labor Orientation 117 5. Tendencies of Development 120 Chapter V. Agglomeration 124 Section I. Analysis of Agglomerative and Deglomerative Factors 1. Object of the Analysis 124 2. Definitions: Function of Economy and Function of Agglomeration 126 3. Agglomerative and Deglomerative Factors . 127 A. Agglomerative Factors 127 a) Development of the Technical Equipment . 128 b) Development of the Labor Organization 129 c) Marketing Factors 130 d) General Overhead Costs 130 B. Deglomerative Factors 131 Section IL The Laws of Agglomeration 134 A. Agglomeration within Transport Orientation 135 1. Agglomeration with Fixed Index 135 a) When Does Agglomeration Take Place, and How Much? 135 b) Where Will Agglomeration Take Place? .... 138 c) The Size of the Unit of Agglomeration 139 d) Modifications 141 2. Agglomeration in the Case of an Increasing Index . 143 3. The Conditions of Agglomeration 147 4. The Formula of Agglomeration 153 B. Agglomeration and Labor Orientation 156 Section HI. Reintroducing the Realities 162 1. Coefficient of (Value Added through) Manufacture (Formkoeffizient) 162 2. The Forms of Agglomeration in Reality 166 3. Tendencies of Development 168 xii TABLE OF CONTENTS PAGE Chapter VI. The Total Orientation 173 Section I. The Organization of the Stages of a Given Productive Process 174 A. The Stages of Production and Transport Orientation 174 1. When Does a Split Occur in the Production? . 174 2. Where Will the Locations of the Productive Stages Be When Production Is Split? 178 3. A More Precise Answer to the Question: When Does a Split in the Production Occur? 182 4. Complications (Replacement of Material Deposits) . 183 B. The Stages of Production and Labor Orientation . 184 C. The Stages of Production and Agglomeration .... 186 D. Reintroducing the Realities 187 1. General Observations 187 2. Tendencies of Actual Development 190 Section II. The Interaction of the Independent Productive Processes 196 1.