ABSTRACT
AMONG the causes which led to the introduction of new methods of organisation, the expiration of Watt's patent in 1800 (and the consequent abrupt transformation of a state of monopoly into one of keen competition) has been assigned an important place. The business policy of the firm was equally profoundly affected ; for the disappearance of the legal basis of the royalty system raised the problem of a new price policy. The change in this respect was, however, less sudden than might be expected. For some years previous to the lapse of the patent it had become quite frequent to compound the premium payments into one lump sum, a practice which was both caused and facilitated by the small number of years which remained of the patent privilege and by the fact that the premiums amounted now to a fixed sum, determined beforehand on the basis of horse-power. The capitalist enterprises, such as the cotton mills, which were now the principal buyers of the Boulton & Watt engines, were quite willing to agree to this procedure since the compounded premium for five or six years did not amount to a very large sum. On the other hand, the firm, finding the call on its capital resources increasing as a result of the development of the manufacturing side at Soho, would prefer to have their revenue in the form of single
E A R L Y INDUSTRIAL ORGANISATION
payments rather than in small annual premiums. The fact that this practice became frequent at the time of the entry of the two sons into the business may, also, show their anxiety to obtain greater resources for their ambitious schemes of reorganisation and capital expansion.
