THE GRADES OF THE FACTORS OF PRODUCTION 119 



the usefulness of all the factors, but failed to recognize the 

 distinction between differences in capacity and differences in 

 efficiency, apparently assuming no differences except differ- 

 ences in capacity. Capacity and efficiency, under given condi- 

 tions, are concepts as different as length and breadth. For 

 example, if the capacity of a cow is measured in terms of the 

 land, labor, feed, and other equipment properly associated 

 with her, and if her efficiency is measured in terms of the value 

 of her product per dollar of expense for the other factors, it 

 becomes obvious that while two other cows of half the capacity 

 and the same efficiency might be equally useful, because the 

 product per unit of outlay would be the same, two other cows 

 with the same capacity each as the one in question but possess- 

 ing only half the efficiency could not be substituted for her 

 without loss, for they would cost twice as much to keep and 

 would yield only the same total product or only one-half as 

 much per unit of expenditure. 



A few facts may help to make clear the ideas in mind. In 

 recent years a great deal of first-hand study has been made of 

 the conditions of productivity in agriculture. The census 

 method and the accounting method have been largely used in 

 this work. In Table V are found the results of a careful census 

 of the farmers centering about Dallas, Barron County, Wiscon- 

 sin. There were fifty-one farmers in the community. The 

 returns which these farmers secured per dollar of annual outlay 

 varied from 77 cents to $3.05. In this calculation the annual 

 outlay included all operating expenses, including depreciation 

 and interest. A glance at the second column of figures in 

 Table V shows a variation from $1734 to $293 in the annual 

 outlay with which these farmers associated themselves. The 

 former are termed variations in efficiency ; the latter are desig- 

 nated differences in capacity. (Though the writer would 

 recognize that perfect adjustments may not exist with regard 

 to the amount of land, labor, and equipment associated with 

 some of the men, yet these men are probably striving for the 

 optimum.) The variations in total product per man range 

 from $3644 to $686. The farmers, as the residual claimants, 



