ORGANIZATION OF THE AGRICULTURAL ENTERPRISE 319 



poorer grades of wealth, even of those things that are relatively fixed 

 in quantity, lie unused. Great areas on the edge of civilization still 

 await the pioneer, the prospector, and the miner. Here is a source 

 of wealth and a field for enterprise, to take these unused things or 

 things imperfectly used and convert them into effective agents. 



100. DIMINISHING RETURNS FROM EACH OF THE FACTORS 

 OF PRODUCTION 1 



BY T. N. CARVER 



To say that the farmer knows better than to concentrate all his 

 energies on his best land is the same as saying that he knows and acts 

 upon one of the fundamental laws of economics, viz., the law of 

 diminishing returns, though, like the Bourgeois Gentilhomme who was 

 astonished to find that he had been talking prose all his life, our 

 farmer might be surprised to learn that he was acting upon an eco- 

 nomic law. This law of diminishing returns is simply a part of the 

 general observation that the product of any given piece of land does 

 not, even under the same conditions of soil and season, bear a constant 

 ratio to the amount of labor and capital used in producing it. That is 

 to say, the product does not vary in the same proportion as the labor 

 and capital, increasing in proportion as they increase, and decreasing 

 in proportion as they decrease. This simply means that there are 

 several factors in the production of any crop, including labor, capital, 

 and land, and that the amount of the crop is not determined by any 

 one or any two of these factors, but by all of them combined. Labor 

 and capital, being only a part of the factors, cannot alone determine 

 the crop. It is well known to practical men that a niggardly applica- 

 tion of labor and capital to a piece of land in the cultivation of any 

 crop is little better than wasted, because it will produce so little in 

 proportion to itself; whereas a more generous application will yield 

 a crop not only larger, but larger in proportion to the amount of labor 

 and capital employed. Up to this point the land is said to yield 

 increasing returns to the labor and capital employed in its cultivation. 

 But if the amount of these factors used in cultivating a given piece 

 of land is still further increased, a point will eventually be reached 

 where the product will no longer increase as fast as these factors are 

 increased. Beyond this point the land is said to yield diminish-' 

 ing returns to the labor and capital employed. Though larger 



1 Adapted from The Distribution of Wealth, pp. 55-7?. (Copyright by the 

 Macmillan Co.) 



