94 UNIVERSITY OF ILLINOIS 



than pay for itself, he will be losing that profit. If he goes too far, 

 so that this last unit does not add enough to the total product of the 

 business to quite pay the additional cost, in short, if it does not quite 

 pay for itself, he loses money on it and reduces his free income. 



BALANCING THE DIFFERENT FACTORS OF PRODUCTION 



As to the balancing of the different factors of production in his 

 business, the rule is that the last unit added to each factor must add 

 exactly as much to the product of the whole as the last unit added to 

 each of the other factors. This would be a perfectly balanced farm 

 business. If, for example, a farmer has so much land and so little 

 equipment that the last forty acres of land adds less to the total crop 

 than would have been added if the price of that land had been spent 

 on tools and labor, the farm is not well balanced the farmer is 

 land poor. It would pay him to sell some of his land and put the 

 money into labor, equipment, etc., if he cannot otherwise balance his 

 farm. This illustration could be multiplied or repeated with respect 

 to each and every item in the farmer's business inventory. "Nothing 

 in excess" must be his ideal; but that ideal is not realized until the 

 last unit in each part of his business has exactly as great marginal pro- 

 ductivity as the last unit of each and every other part. 



THE COMMERCIAL PROBLEMS OF THE FARMER EFFICIENCY 

 IN BARGAINING 



The commercial problems of the farmer are all summarized in 

 the question, how to increase his efficiency in bargaining so as to buy 

 and sell to better advantage. More and more the economic world is 

 realizing that there is a distinct difference between efficiency in pro- 

 duction and efficiency in bargaining. Efficiency in production consists 

 in turning out the largest product in porportion to the sum of human 

 energy expended in the work of production. Efficiency in bargaining 

 consists in buying a given quality at the lowest possible price, or selling 

 a given quality at the highest possible price. In many industries the 

 size of the business unit is determined quite as much by the question 

 of efficiency in bargaining as by the question of efficiency in production. 

 Many of the supposed economies of the trust were not economies in 

 production at all, but mere advantages in bargaining. Later ex- 

 perience has demonstrated that there were few, if any, real economies 

 in production in the trust form of organization. This is not saying, 

 of course, that there were not many economies in fairly large-scale 



