THE FARMER AND THE CURRENCY. 377 



accounted for by decreased costs of production. Even if this 

 could not be demonstrated as to some particular articles, as to 

 large classes of products something more than decreased costs 

 is certainly needed to account for the low prices. This is 

 especially the case in regard to agricultural products. The 

 decreased cost of manufactured articles depends largely upon 

 what economists call the "law of increasing returns," which is 

 that as capital is increased and concentrated upon the manu- 

 facture of single articles in great quantities, costs are decreased 

 and returns per unit of capital increased. While this, how- 

 ever, is recognized as true in respect to many industries, 

 economists are equally agreed that it does not apply to 

 agricultural operations, but that, on the contrary, they are 

 governed by the "law of diminishing returns," which means 

 that after passing a point easily reached, costs can not be 

 decreased by the application of additional capital, but, on the 

 contrary, will tend to increase with decreasing returns per 

 unit of invested capital. As a matter of fact, costs of agricul- 

 tural products have not decreased in any important degree; 

 the apparent reduction at points of consumption is mainly 

 due to decreased costs of transportation, the farm costs 

 remaining very much as they formerly were; interest is not 

 less;* land did not fall until forced down by continued low 

 prices of produce; the cost of living has not decreased, by 

 reason of the advancing standard of life; farm wages have not 

 fallen in any important degree, or much more than in other 

 avocations, in which, in fact, wages have not fallen at all, 

 except by irregularity of employment, but have tended to an 

 actual rise, and their purchasing power has increased enor- 

 mously; tlie alleged low costs of the so-called "bonanza" 

 grain farms are assumed; these assumptions rest on no 



* Interest On farm, loans is not less. Interest on money in large amounts, 

 upon security believed to be unimpeachable, has fallen, and a few economists 

 have insisted that conceding the appreciation of gold, the appreciation has been 

 made good by the foil in interest. There is a monograph by Prof. Irving 

 Fisher, of Yale Univei-sity, taking this view, among the publications of the 

 American Economic Society. I can find little or no trace of any fall in the 

 retail price of money — that is, in the interest on small loans. 



