392 APPENDIX 



does not benefit the farmer in the least. All that he pets is 

 the 10 cents net profit as shown in the analysis above. When 

 he sells it to "Mr. Hog'* instead of to the elevator man, he 

 still gets his 10 cents net profit by selling it at market price 

 minus the cost of marketing, 5 cents. In other words he can 

 sell it to "Mr. Hog" at 65 cents a bushel and still make 10 

 cents net profit on the corn because of the saving of the 5 

 cents for cost of marketing. 



He prefers, perhaps, to sell it to "Mr. Hog" because in 

 selling to the elevator man he has no opportunity of deriving 

 a benefit from the subsequent transactions in which his corn 

 is interested. When he sells it to "Mr. Hog," he as a bene- 

 ficiary expects to receive any profits that may accrue as a 

 result of "Mr. Hog's" subsequent transactions with the corn. 



Thus, by paying 65 cents (market price minus cost of mar- 

 keting) "Mr. Hog" allows the farmer just as great a profit 

 on the corn as does the elevator man. In addition, he allows 

 the farmer the benefit of profits resulting from subsequent use 

 of the corn. 



Assume, on the other hand, a rather extreme case, that the 

 farmer raises hogs, but buys all his feed on the market say 

 corn only, for the sake of simplicity. In this case the 

 are charged with market price 1 plus the cost of 

 the corn from market. This is approximately equivalent to 

 market price plus the cost of marketing or 75 cents (70 plus 5). 



From the foregoing statements it is apparent that 10 cents 

 a bushel more is charged to hogs for feed when it is bought 

 on the market than when it is bought from the corn crib at 

 market price minus the cost of marketing. In other words, 

 while the corn is not benefited at all the hogs are benefited 

 ten cents a bushel when com is fed at market price minus 

 cost of marketing (65 cents in this case). 



Is this fair and reasonable that one productive element 

 should receive all the benefit from the juxtaposition of two 



1 In this caae the market price is not quite the same as when the 

 farmer sells the product The term as used here includes a slight 

 profit for the dealer. This is ignored in the theoretical case at hand, 

 however. 



