20'-i COST OF PKODICTION OF MAIZE. 



allowed at a reasonable assumed rate — about that at wliicli 

 capital for farming may be borrowed on <>ood security, and a 

 depreciation allowance made, based on the estimated life of 

 the goods considered. That is, an allowance such as, 

 accumulating at the assumed rate of interest, will pay for 

 renewal of the capital goods at the end of their life. In the 

 case of outlay which lasts a few yearo the principle is the 

 same, but it may resolve itself in practice into an arbitrary 

 rule. Thus, if a field be well manured, perhaps 50 per cent, 

 of the cost may be charged against the current crop and smaller 

 portions against the second, third and possibly fourth year's 

 crops. A ilight arbitrariness in the rule is of no consequence, 

 provided it is a sensible one and is carried out consistently. 



(b) SupyJementary Expenses, sucli as the salary of a 

 manager, or tlie use of a horse and cart, have to be distributed 

 over the varioiis crops (or live stock business) according* to 

 some reasonable principle. Again, it is not diiiicult to arrive 

 at a working rule based on common sense. But there is some 

 danger of supplementary costs being overlooked altogetlier; 

 farmers often think the cost of production of a particular croj) 

 less than it is, because they overlook certain expenses which 

 are not directly associated witli it, but which nevertheless 

 have got to be met out of some resource or other. 



{c) Farming, even more than manufacturing, yields 

 " joint products," such as m'OoI and mutton, wheat and straw. 

 Much care is needed in dividing up outlay that is incurred in 

 producing the two tilings together. For a discussion of this 

 matter I must refer to more lengthy articles or books. 



When all the money outlay has been correctly allocated, 

 there are still two important points to be dealt with in 

 estimating profits (or loss). First, the farmer's own capital 

 must be treated precisely as if it were borroAved — that is, it 

 is just as much entitled to interest. One cannot say that 

 farming yields a profit until it has at least paid what the 

 farmer could have earned by lending out his capital instead 

 of using it himself. Second, the farmer's own time must be 

 treated with similar consideratio-i. If he does the managerial 

 work himself, he is entitled to an income for it corresponding 

 with what he Avoidd have to pay another man to manage his 

 fann. 



Accordingly the proper estimate of profits is only that 

 amount which is left after working expenses in the ordinary 

 sense, interest on the farmer's capital, and payment for his 

 own time and skill have been deducted from the proceeds. 



These principles may be illustrated by some figures which 

 the author lias collected. They are sketchy and imperfect, for 

 it was not practicable to complete the investigation; they are, 

 moreover, out of date, on account of the extraordinary rise in 

 prices since the date they refer to. Conseqiicntly the intrinsic 

 interest of the figures given is slight; they are put forward 

 chiefly as examples of method, and to draw attention to the 

 im])0]tanee of further and systematic studies. 



