g commercial risks, and so is the spinner who produces for
stock, trusting that the class of yarn that he is making will continue
in demand. These two instances will suffice to indicate what is meant by
the carrying of commercial risks. To make the rest of our argument clear
it will be well to write down formulae. Let A and B represent
respectively the industrial operations of spinning and manufacturing.
Let a and [alpha] represent respectively the commercial operations
implied by the separate existence of A, that is, the buying of cotton
and the selling of yarn; and let b and [Greek: beta] stand for the
commercial operations associated with manufacturing, that is, the buying
of yarn on the one hand, and the finding of customers and arranging for
their purchases on the other hand. Then, A and B being distinct
businesses, it is obvious that a range of schemes is possible of which
the extremes may be roughly represented as follows:--

1. (aA[alpha]), (bB[beta])
2. (a), (A), ([alpha]b), (B), ([beta]),

where the brackets signify independent businesses. In case 1 each
spinning business would be engaged with three problems, namely, (i.)
buying material at the most favourable time, (ii.) producing at the
lowest cost, and (iii.) finding buyers and selling at the highest price,
including the arranging for the performance of the most remunerative
work. But in case 2 the spinner would confine his attention to purely
industrial matters, while the problem of finding cotton and arranging
for the bearing of the risks as to future prices would rest with other
persons, and the business of bringing spinner and manufacturer together
and taking such risks as may be involved in ordering or disposing of
yarn would be the function of yet others. In case 2 the commercial
functions may be said to have differentiated completely from the main
body of the industry. We need hardly give illustrations of the
intermediate arrangements that formally lie between cases 1 and 2. A may
retain commercial risks but find customers through intermediaries; in
such an event there would be only partial differentiation of the
commercial functions. The reader must be reminded also that for the sake
of simplicity in the formulae we have overlooked different classes of A
and of B, omitted bleaching, dyeing, printing and finishing, and drawn
no distinction between the various classes of commercial work covered by
one letter, for instance, selling in the home mar