94 



ROYAL COMMISSION ON AGKICULTUKE. 



M Srplrmbrr, 1919.] 



MR. JAMES WYI.UE. 



[Continued. 



11,894. You take the contrary view; you Bay it is a 

 fair chargeF I do. 



1 1, -'.'">. Woulil Mm mi ml elaborating; your grounds 

 for that belief if' it u not too big a task!' It is rather 

 big tank to exulain in any detail. I dp not know 

 whether I should be in order in attempting to doal 

 with that. 



11,836. 1 think it would be desirable. I personally 

 hold the contrary view. 



II. --.'7. r/niirni'in : If it i-un b answered shortly? 

 I would like to say, in the first place, in answer to the 

 question, that I "know perfectly well the views of 

 ordinary accountants on this subject, but I would also 

 liko to say that, from what f have read of accounting 

 in America, there are two distinct schools of thought 

 in that country even aa regards industrial costings. 

 I hen- is otic M-hool which holds strongly that interest 

 on capital should be included. The larger school, I 

 admit, holds that interest on capital should not be 

 included in costs. On the other hand, if you take 

 agricultural cost accounting, you will find, I think, 

 that so far as America is concerned and so far as 

 Germany is concerned the majority of the authorities 

 agree that interest on capital is a fair charge. If 

 necessary, I could quote the authorities here. 



11.828. Mr. Thomas Henderson: Of course, you 

 admit that it is very largely a debatable point:-' 

 Yes, I admit that, but what I was going on to say M 

 this: I want to make it quite clear Unit I do not 

 include interest on capital with a view to increasing 

 the eoste with the object of demanding a higher price. 



11.829. Of course, we can make the adjustment our- 

 selves? What I want to make quite clear is whether 

 we include or exclude interest on capital it will not 

 affect the selling price. There is an impression that 

 we want to put in interest on capital in order to make 

 the costs as high as possible with the object of making 

 out a demand for a higher price. That is not our 

 object at all that is not my object. 



11.830. I see also you include a proportion of the 

 cost of management P Yes. 



11.831. Do you think that is in the same position? 



No, I do not; I hold most emphatically to the view 



that YOU do not get the full cost of production unless 

 you include a proportion for management. I quite 

 agree that the question of interest is a debatable 

 point, but I will not go so far with regard to manage- 

 ment; I do not hold that that is debatable at all. 



11.832. You know that is not the orthodox economic 

 view I am not on agricultural economics just now, 

 but on ordinary economics. You are aware of that 

 of course? In a general way, I am. 



11.833. If a man is a particularly skilful manager 

 he will get a larger proportion of profit as the remit 

 of his industry. You are putting a certain dofinite 

 charge to i*. What would you call the extra due to 

 his management? So far as I can see on this ques- 

 tion of management the farmer is entitled to get 

 in manager of the farm a reasonable salary, meaning 

 by that such a sum as he would require to pay to a 

 competent manager. You must keep in mind in 

 this connection that you have a certain number of 

 farms in this country which are run hy salaried 

 managers, and it seems to me that if you want to 

 pnt all farms on a common basis you must allow the 

 farmer something as manager. Apart from that par- 

 ticular question I do not think that you can say that 

 you have included the whole cost of production in 

 your cost unless you make some allowance for the 

 farmer's management. 



11.834. You are simply taking an element of equali- 

 sation over farms generally. How dn you charge the 

 oeta and the hay? I have consistently charged thorn 

 at mnrket price lew the cost of marketing. 



11.835. Of course, that is another debatable point '- 



I admit that 



11.83B. Take the analogy- T do not know whether 

 vow will admit it is a close one or not : Say an iron 

 firm take* over a roal mine. doe it charge itself 

 with coal at the market price in HR amount*?- T do 

 not know. 



11.837 Do you think it u likely that they doP I 

 do not know. 



11.838. Would such a firm not he getting a yrry 

 important raw material at a lower price than the 



.market rate, and would it not thereby be itn-t. 

 its profit? It is very immaterial so far as the 

 farmer is concerned whether he charges these things 

 .irket price or at the cost of production ; it will 

 not affect his total profit. But a farmer to my mind 

 wants to know which system of farming is going to 

 bo the best from a financial point of view. 



11.839. Mr, Prosier Jones: I did not quite catch 

 whether you said with regard to the cost of labour 

 that 40 per cent, went to labour in 1918? No. What 

 I said was that we hoped in the second stnge of 

 our inquiry to bring out clearly what proportion of 

 the total cost of running a farm belongs to la'our. 

 But I would point out that in these analyses of the 

 cost of production of crops it so happens that man 

 and horse labour together constitute about 4<> per 

 eent. of the cost, taking it roughly. 



11.840. Would there be any difficulty when you 

 tabulate these figures, in giving us the proportion 

 paid to labour in the year 1914 as well? You mean 

 in connection with the balance sheets? 



11.841. Yes. When you are comparing thes* 

 figures of the cost of labour in 1918 could you also 

 give us the cost of labour in 1914? Yes, we intend 

 to do that, certainly. 



11.842. In connection with the variation in the 

 rents could you tell us from your observance of the 

 accounts whether the higher rented farms yield pro- 

 portionately higher crops? No. 



11.843. You have not got that information ? I 

 have not seen any direct relation between the rent of 

 the land and the yield of the crops at all. 



11.844. That would be very useful to us if you 

 could get it, and to know whether landlords are 

 justified in charging 2 or 3 an acre more rent 

 unless the yield also is proportionately high ? Of 

 course, rents depend not altogether upon the yields 

 hut also upon the money value of the fi-np. 



11.845. Mr. Lennard: In arriving at your charges 

 for horse labour I notice you charge for the oats the 

 horses consume at market price less cost of market- 

 ing? Yes. 



11.846. Supposing the selling price of cereals in 

 general fell 20 per cent., what difference would a 

 2-1 per cent, fall in the price of oats make in the cost 

 of growing wheat? I would not like to say off-hand, 

 but I should say that it would be quite possible to 

 make such an analysis from the figures which we 

 have on the cost of horse labour. What I mean is, 

 we have a good many statements showing the cost 

 of horse labour, and these statements show the 

 amount of oats which are included in that cost. It 

 would also be possible in our analyses to show vhatt 

 percentage of the labour consists of horse la) our and 

 what percentage consists of man labour. It would be 

 possible, but I have not done it. 



11 .847. The some consideration of course- applies to 

 seed ? Exactly. 



11.848. Then there i also the question of imported 

 fertilisers and imported feeding stuff's. Of course 

 the relation is not so direct there, but if any fall in 

 freight rates brought down the price of imported 

 cereals you would expect it also, would you not, to 

 bring down the price of imported fertilisers and im- 

 ported feeding stuffs? Naturally. 



11.8.10. Can vou tell us whether the freight forms a 

 larger or snmller proportion of the cost of fertilisers 

 and feeding stuffs than it does of cereals? No, I am 

 afraid I rould not tell yon. 



11.860. Supposing fertilisers and feeding stuffs fell 

 in price that would obviously red wo the cost of grow- 

 ing cereals? Obviously. 



11, 851. Would it he possible for you to work these 

 figures out for us and give us an estimate of the 

 percentage decline in the cost of product ion of wheat 

 which would follow from a given percentage decline 

 in the world selling price of ceronls both in regard to 

 the directly affected requirements, such as oait* and 

 . M and those less direetlv affected, such as feeding 

 stuffs and fertilisers? I should be only too glad <<> 

 try to do tha*. I may say I thought of making MI--II 

 .in estimate for the future, but T rather thought that 

 that was not my business. 



