At this point we may conveniently distinguish between internal specialism and specialism of businesses. Just as the former is determined by the size of the factory, so the latter is determined by the size of the industry. The condition that a process in a works completely specialise is that it shall occupy the full time of one person at least ; and the condition that a business shall specialise in making one thing, or one part of a thing, is that the demand of the market shall be suffident to absorb its product. Thus, in a textile industry, the use made by the weavers of very fine yarn, say, front 100's to 150's counts, might not be sufficient to afford full occupation to a spinning mill of the normal magnitude. Hence the range of its work would have to be greater ; but as the industry expanded this range would tend to contract.
Now specialism of businesses is of two kinds, which need to be sharply differentiated. Businesses may specialise—(a) by products, or (b) by pro cesses. An example of specialism by products is afforded by the engineering industry. There is probably no business in England to-day like the old Soho works of Boulton & Watt. These are days of a confined range of output. Galloway's build chiefly boilers ; Platts of Oldham and Dobson and Marlow of Bolton are famous for their cotton machinery ; another firm constructs chiefly pumps; another agricultural machinery ; another— like the enormous Baldwin works in America locomotives; another— like the famous American Pencoyd works—bridges. Examples might be indefinitely multiplied. Of specialisation by process no better example can be solicited than the cotton industry in England, in which also specialism by products has proceeded far. Most spinning is conducted apart from weaving, or " manufacturing," as it is technically termed, and bleaching, dyeing, and printing are also, as a rule, carried on in separate establishments under independent management.
This specialisation by processes in the cotton industry has been carried to a much further extent than in other countries, and from an international comparison, therefore, something may be learnt of the causes. The first condition is evidently that products can be generalised, and that the generali sation can be carried back to processes. Infinite variety in the product is likely to be fatal to specialisation by processes, for it may be, though it need not be, that every stage of manufacture will be affected in some degree by the particular character required in the finished product. It is further essential that it should be simple to assign qualities to unfinished commodities at each stage. These conditions are indispensable; but even if they exist, specialisation by processes need not succeed. Thus, in the New England States of North America the product is quite as highly generalised as in England; but there, nevertheless, a cotton factory is an industry in minia ture, raw cotton being the sole material taken into the works, and much of the product being finished prints and dyed goods. There is this additional requirement, if business specialisation by processes is to appear, that the marketing of the unfinished goods should be easy. A convenient central place must be found, and arrangements whereby buyers and sellers are brought together easily and enabled to do business conveniently must be designed. Now in the New England States the industry is so scattered that there is no central spot where a market can be periodically attended by those engaged in the manufacture without much trouble. This explains the differences between the cotton industries in Lancashiro.and the New England States, but it does not account for the fact that specialisation by processes has not appeared in certain other manufactures which, being localised, are grouped round a convenient spot for marketing, and in the case of which the indispensable conditions laid down above unquestionably exist. The reason
in these cases will be found to lie either (a) in the high cost of transport of the unfinished commodities, which would counteract the economies of special ised businesses; or (b) in the ungradability of the unfinished commodities, lvhereby inspection before purchase is rendered essential, united with bulkiness which makes it awkward to conduct a multitude of sales or inspection in the same place; or (c) in sheer lack of organisation of marketing and of the development of commercial functions.
To the last reason we may now with profit devote sonic attention. Specialism is not only applicable to industrial operations but also to com mercial operations, the increasing specialisation of commercial functions has been at least as noticeable as the specialisation of manufacture throughout the course of the nineteenth century. Ily " industrial functions" are meant the activities involved in making things; by the " commercial functions " are meant buying and selling. The latter may differentiate within the works ; thus, many businesses will have their " buyers " and " sellers," and each in each class may devote himself to a narrow range of work. In certain circumstances these commercial functions may be thrown olf from the parent stock to exist as independent businesses; thus, there are cotton-brokers, stockbrokers, dealers in iron, yarn agents, shippers, wholesale houses, and so forth. Indeed, a whole chain of specialised commercial functions may lie between the final producer and ultimate consumer. The middleman stands between the final producer and the ultimate consumer, or the string of middlemen which links the two together, is easily to be accounted for. Expert knowledge is required to get in touch with buyers, and it may be a convenience that a seller to consumers or retailers should sell a greater variety of things than any producer makes. For export in particular a special knowledge is requisite, and in consequence many English exporting houses have been established by foreigners to direct trade to their own countries. Much marketing is, however, still done by producers without the aid of dealers, and this system is said to be spreading in certain industries. Here we have an example of the de-specialisation to which reference was made at the beginning of this article. The cause is speciality of product which is brought in competition with other specialities, or novelty in the product which must fight its way into use. In these cases where the commodity is a mechanical contrivance manufacturers will sometimes select their smartest operatives to push the machine by travelling about explaining its peculiari ties and advantages to those who could use it. In such a case as this direct marketing is obviously superior to the approach to the buyer through the avenue of independent dealers. As regards the intermediary in the market ing of unfinished goods, he is obviously of value (a) in bringing many producers on the one hand and many buyers on the other to a head when the market is large, and (b) as an expert adviser. A business needing regular supplies of a certain material might not be able to give buying work enough fully to occupy the time of a highly-salaried expert buyer. As the subject of this article is specialisation in manufacture and not in dealing, this is not the place to trace from such a state ,of affairs the development whereby " grading " is brought about and sales into the future at prices fixed in the present take place ; but something must be said of the manner in which the developed market reacts upon manufacturing specialism.