CAPITAL-GOODS AS A FACTOR IN PRODUCTION 305 



The results of the calculation are somewhat surprising and the 

 figures for different regions vary widely. While Chester County shows 

 an average annual depreciation in value of 11.82 per cent, a similar 

 calculation for an important dairy center in southern Michigan 

 showed only 4 . 07 per cent. This remarkable difference is due mainly 

 to the difference in prices at which cows are bought and sold in the 

 two localities. In the Michigan locality the average price paid for 

 cows by dairy farmers was $48 . 48. The average price at which these 

 same farmer's sold their discarded cows was $42, a difference of only 

 $6 . 48. In the Pennsylvania locality the average purchase price was 

 $63 . 84 while the average sale price was $37 . 36, a difference of $26 . 48. 

 The Pennsylvania farmer thus loses $20 more per cow bought and 

 sold than does the Michigan farmer. This accounts for the much 

 larger annual charge for depreciation on the Pennsylvania farms. 



The rate of depreciation of farm work horses in these same 

 localities was also calculated by methods similar to those used in the 

 foregoing table for cattle. In both cases the annual rate is very 

 close to 5 per cent, being 5 . 09 in Chester County, Pennsylvania, and 

 4.87 for the 300 farm-owners of Lena wee County, Michigan. The 

 rate is largely determined by the practice of farmers of disposing of 

 horses while they are still salable at a fairly satisfactory price. If all 

 farm horses were kept until their usefulness was at an end, the depre- 

 ciation on them would undoubtedly be much greater than the results 

 here found. The death-rate would also be much greater. On the 

 average, the farmers of the Michigan locality keep a horse 8 . 5 years 

 and sell him then for $18 . 68 less than they paid for him. The Penn- 

 sylvania farmer, on the other hand, keeps his horses an average of 

 12. i years, and then sells them for $29.34 less than they cost 

 originally. 



NOTE. Bulletin 295 of the Cornell Experiment Station says 

 (p. 494): "The loss from decrease in value of sheep sold is greater 

 than the losses from deaths. .... This loss due to selling old sheep, 

 together with the deaths of sheep, would give a depreciation and loss 

 of 10 per cent as contrasted with 4 per cent for cows. The deaths 

 among sheep averaged 39 per thousand, while the deaths among cows 

 averaged only 12 per thousand." Professor Warren mentions else- 

 where (Farm Management, p. 235) that "hogs grow enough so that 

 old ones are worth more than young ones, but the losses from death 



are very heavy On the average, two-year-old horses may be 



expected to live about 12 more years. The average depreciation on 

 a large number of horses would, therefore, be a little over 8 per cent. 



