326 AGRICULTURAL ECONOMICS 



the quantity producible without any material change in cost would 

 be so considerable that, during periods sufficiently long to make the 

 matter of much practical importance, we should be getting the 

 necessary increases in output with only a proportional increase in 

 expenditure. 



The above paragraph has dogmatically asserted for every industry 

 the existence of three different stages in which it might be found under 

 a perfectly rational procedure. Let us take a moment to confirm this, 

 statement. In respect to the first stage, diminishing cost, we should 

 expect its existence for two or three reasons. First, the moment we 

 come to deal with industries as wholes we strike the matter of possible 

 increase in specialization. Thus, if the amount of product which we 

 must get from an industry is large enough, we can carry very far geo- 

 graphical specialization raising potatoes or apples or watermelons 

 from the lands pre-eminently adapted for raising them; and this, of 

 course, means more than proportionally increased returns for our 

 expenditure and, therefore, diminishing costs. A second reason for 

 this result is to be found in the fact that calling on a given industry 

 for an enlarged output means that increasing resort may be had to 

 large-scale methods. We can make more use of machinery, can have 

 greater specialization within each plant, and so on. All this means 

 diminishing costs. 



But again, it surely cannot be questioned that every industry 

 would sooner or later get into the diminishing returns or increasing 

 cost stage. One fundamental factor of industry, land, is absolutely 

 limited in amount. Every single piece of it is surely subject to the 

 instrumental law of diminishing returns, and so, of course, the total 

 is subject to that same law. It follows that, even if all the land were 

 equally good for the purposes of a given industry and we could afford 

 to put all of it to the service of that industry, there would surely come 

 a time when increased expenditure was not followed by proportionally 

 increased reward when increase in product meant more than pro- 

 portional increase in cost. But we hardly need say that not all lands 

 are equally good for the uses of any particular industry. Whether 

 because of location or of qualities which could be altered only at an 

 impossible expenditure, they differ greatly in fitness for a given pur- 

 pose. In consequence land as such comes under the dominion of the 

 law of diminishing returns (returns increasable at diminishing rate) 

 much sooner than it would under the former hypothesis. 



But, it may be asked, would not the considerations adduced above 

 to show that we may have a condition of increasing returns prove that 



