You allude to Milton Friedman's example in the PBS and BBC-TV series on "Free To Choose".
He sat in a lecture theatre at Glasgow University and illustrated Adam Smith's principle
of the division of labour with the example of a lead pencil. You can see the video of this
free at
  
http://www.freetochoose.net/tv_1980_video.html  
  
You also mention Henry George's little book, _Protection and Free Trade_. But the best
example is in his _The Science of Political Economy_ (1897), Book III, Ch. IX,
"Cooperation -- Its Two Ways", where he illustrates the principle with reference to a
sailing ship as well as the baking of bread.
  
Roger Sandilands