Market development is characterised by tw.o main features. On the one hand it means the satisfaction of detailed needs with more minute complete ness, the field of products being more carefully swept with a view to the exact requirements of each would-be buyer being found and net at the least possible cost. On the other hand, it means a shifting of risk from the producers to dealers. This shifting of risk is brought about by dealers taking upon themselves some part of the risk of anticipating which is involved in all production for persons who buy from a display of goods, and do not place orders for everything. healers, of course, other things being equal, would prefer that the producer took as many of the risks as possible, but competition saddles the commercial man with a heavy share of them, and the commercial man is in a better position than the producer to read the market signs of the times, because his attention is not distracted by industrial problems. The producer, if left alone without guidance, is not only in a difficulty as regards what to make, but also as regards what to charge in the case of orders for deliveries at stated intervals, because the price of his material may fluctuate. If he buy all the material he wants at once in every instance, it can be proved that the commu pity would suffer—it is evident that it must, for instance, when the existing stock of material is temporarily scanty, could be adequately added to if such time were given as the producers' orders enabled him to allow—and no producers who always acted on this rule would prosper, because others would underbid them when the prices of material were expected to fall. But if the producer allows for an expected drop in the price of material he is speculating, and perhaps without sufficient knowledge, and may thereby be brought to disaster. In certain highly developed produce markets these risks are taken over by specialists, who will sell for a present price any quantities in the future whether they are already in existence or not. Now, the important bearing of these facts relating to commercial specialism on the subject of this article is threefold. In the first place, we notice that industrial specialism by processes is helped by specialiSm in the commercial links whereby the processes are united. In the second place, we notice that internal factory specialism is assisted by the specialism of commercial functions. For scope, for division of labour varies as the magnitude of a works, and the magnitude of a works varies as the amount of attention which the head of a business can devote to industrial problems. When the man at the head of affairs is liberated from sonic commercial anxieties, it is clear that he can include more industrial factors within his intellectual grasp. The third advantage is a matter of even greater moment. When an employer is compelled to perform both industrial and commercial tasks survival is determined by average ability at the two tasks taken together, not by excellence at one of them. A man might continue to produce by virtue of clever dealing, though as an industrial manager he might be of insignificant account. When differentiation of the two functions takes place the average ability left surviving at the head of production should be significantly raised, as should also the average capYicity shown in dealing. It is evident from the foregoing, that the character of a manufacturer and the type of man required to undertake it are closely dependent upon the degree in which the flanking markets can develop.
We shall make more clear the various directions which industrial specialism may take if we now sum up the foregoing analysis in certain formulae. Let an industry produce several kinds of product, namely, Let the processes by which each are produced be A and 13. Let commercial operations be indicated by small letters and Greek letters. Then the units of the industry may fit any of the following formula, the sign = being written to mean and brackets being used to show Or:: boundaries of the individual business:— These formulae are intended to show generally the form which business specialism may take, and are not put forward as exhaustive of all possible cases. Variations between the types given are possible, and we have said nothing of form, in which a central business is surrounded by what we may term " process businesses," to which the commodity is sent in turn. As regards the formulm given, examples 5 and 6 stand for specialisation by processes only, while 3 and 4 stand for specialism by product only, and 7 and 8 represent specialism by product and process.
There remain now one or two points to be brought out in connection with the above treatment. We may raise then' by asking the question whether any limits can be laid down to the degree of specialism? In answering, we may take two cases—the one in which the size of the industry is constant, the other in which it may be taken as growing. In the first case specialism is steadily augmented as knowledge increases, and improvement is thereby affected in machinery and processes. In the second case the answer is also in the negative. Possibilities of specialism are illimitable.
When the individual business has readied its size of maximum economy, and the industry gets bigger, specialism in business advances, and for both reasons, i.e. because the industry gets larger, and its constituents get more specialised, specialism is carried a stage further in the subsidiary industries, and by virtue of this also the cost of production in the main industry is lowered. The next point to which the reader's attention most be drawn is that specialism is not a function only of the magnitude of an industry in a particular locality or country, but in so far as world markets are fed, it is a function also of the magnitude of the totality of industries in touch with that world market. International specialism is as possible as business specialism in one country, and dactually exists.
De-specialism must not be forgotten. This is sometimes occasioned by new inventions. Thus, the practice of liquid conversion discouraged the disunion of iron smelting and steel production. Again, it is occasioned by the worry associated sometimes with the working of the commercial connections between processes, the feeling of insecurity engendered by a knowledge that provision of materials is in other hands, and a growing power to unite capitals in large pools. Hence the emergence of late sears of the so-called vertical trust, that is a combination backwards and forwards by which, for instance, a steel producer engages in smelting, and acquires coal and ore mines on the one hand, and rolls rails and makes steel wire and other commodities on the other hand. The chief cause of the vertical combination is no doubt recent developments in the financing of large corporations. See ORGANISATION; MANUFACTURERS' ACCOUNTS; COST ACCOUNTS; STOCK AND STORES ACCOUNTS.