losses on the poorer against its gains on the better pits, is it
likely it would do so? Why should it dissipate its profits in this
way? It is clearly more reasonable to suppose that it would close down
the poorer pits (unless it could advance the price of coal), and
thereby maintain its profits at a higher figure. If, indeed, the
mines were nationalized the deliberate policy might be pursued of
selling coal at a price which left the industry no more than
self-supporting as a whole. Some coal might thus be sold at less than
its cost price, and the selling price would conform roughly to the
_average_ cost. But such a policy, though in special circumstances it
might be justified, would represent a very dangerous principle, which
could not be applied widely without the most serious results. Nothing
could be more fatal to any enterprise, whether it be in the hands of
an individual, a joint-stock company, a State department, or a Guild,
than that the management should content themselves with results which
in the lump seem satisfactory, and regard losses here or there with an
indifferent eye. That way lies stagnation, waste, progressive
inefficiency and ultimate disaster. To inquire searchingly into every
nook and cranny of the business, to construct, as it were, for each
part a separate balance-sheet of profit and loss, to expand in those
directions where further development promises good results, and to
curtail activity where loss is already evident, is the very essence of
good management. Here, it will be observed, we are using language very
similar to that in which we described the principles which govern a
business man's expenditure. The resemblance is inevitable and
significant, for we are dealing here with what is essentially another
aspect of the same thing. The object is to secure that nowhere does
expenditure fail to yield a commensurate return. This we express, when
we consider a business in its aspect as a consumer, by saying that its
consumption of anything will not be carried beyond the point at which