38 QUESTIONS OF PRINCIPLE 



market prices is an illustration of the misconception of facts 

 which may arise, in connexion with farm management, 

 owing to the absence of proper records. A valuation of live 

 and dead stock and of tenant-right may be needed, and 

 there are no figures on the farm from which to extract it. 

 An inventory is easily made, and when it becomes necessary 

 to assign a price to each of the items composing it the obvious 

 and natural thing is to apply the only known values, namely, 

 those current at the time in the market, regardless of the 

 fact that these represent that which the articles are worth 

 to other people rather than their value to the individual 

 most concerned. Indeed, in the absence of accounts it is 

 almost impossible to make a valuation except on the basis 

 of market prices, for these, at least, can be ascertained and 

 applied, whereas there is nothing to indicate to the farmer 

 what his actual outlay has been on the various subjects of 

 the valuation. Where an adequate system of records 

 exists, the process of valuation is quite mechanical. The 

 departmental accounts will show, at the moment when the 

 valuation is to be made, the cost of every item at that date, 

 and this cost is the measure of their value to the farmer. 

 If the cost proves subsequently to be above the market 

 value, the farmer makes a loss on his product ; if it be below 

 the market price he makes a profit. In the former case he 

 will review the figures, and the circumstances attending 

 the production, to determine whether the loss is due to 

 causes beyond his control which are not likely to recur, or 

 whether the probability of a repetition makes it undesirable 

 to continue along this particular line ; in the latter case 

 he can contrast one profitable venture with another with 

 the object of narrowing down his system of management, 

 so as to concentrate his efforts on those which are most 

 profitable with a view to developing them still further by 

 a reduction of the unit cost. 



It is of importance to remember that an unusually high 

 final cost may be due to the use by the farmer of home- 

 grown products at a higher price than that at which their 

 equivalent could have been purchased in the market. In 



