CHAPTER XV THE BALANCING OF THE FACTORS OF PRODUCTION Balanced rations, fertilizers, etc. Every farmer nowadays is familiar with the idea of a balanced ration for his live stock and a balanced fertilizer for his soil. Students of human dietetics are also familiar with the idea of a balanced ration for man. By a balanced ration is meant one which contains the different food elements in the proportion in which the body needs them. By a balanced fertilizer is meant a fertilizer which contains the different elements of plant food in the proportion in which plants need them. Sometimes, however, a balanced fertilizer may mean a fertilizer which will balance up the soil and put into it the elements of plant food which it lacks, in order that it may possess those elements in the proportion in which plants need them. Thus, a soil that is rich in nitrogen but deficient in potash would need a fertilizer that was particularly rich in potash. Not long ago the writer was at the home of a professor of agriculture in one of our leading agricultural colleges. The grass was growing up between the bricks in the sidewalk in front of the agriculturist's house. As a demonstration he was using fertilizer to kill the grass. It was excellent fertilizer, and in the proper relation it would have made the grass grow more luxuriantly. He simply put on too much. The result of this bad balance was to kill the grass. In addition to those elements of plant food which ordinarily go into the fertilizer, moisture and other factors are required. If there is too much of one and too little of another factor, plants will not grow. Everyone is familiar with the fact that on swampy land plants will not grow because there is too much water, and that on desert land they will not grow because there is too little. Balanced ingredients. All these facts are mentioned to make it perfectly clear to the student that in almost any line of production the question of the balance of the factors of production is a very important one. All the factors may be present, but if they are not in the right proportions, production will be reduced or even destroyed. This is true not only of the elements of plant and animal growth, which are agents of production, but of tools, implements, raw materials, and other things which enter into a mechanical industry. In the manufacture of old-fashioned gunpowder, for example, charcoal, saltpeter, and sulphur were required, and they had to be combined in fairly definite proportions. If it happened that there was more charcoal on the market than would combine with the limited supply of one of the other ingredients, say saltpeter, the production of gunpowder was limited by the small supply of saltpeter and not by the supply of charcoal. Only as much gunpowder could be manufactured as the small supply of saltpeter would permit. In the making of old-fashioned mortar, lime and sand were required. Too much of either one or too little of the other would spoil the mortar. If in any given situation there should happen to be a scarcity of sand, very little lime could be used, because only as much mortar could be made as the limited supply of sand would permit. Again, however abundant both lime and sand might be for the making of mortar, if brick and stone were scarce, very little mortar could be used, and there would therefore be very little productive demand for sand and lime. Balanced agents of production. This principle applies not only to the raw materials which are used in various lines of production, but to the active agents themselves, such as labor. However numerous the hodcarriers might be, if there were a great scarcity of brick and stone masons, not many hodcarriers could be used. The farmer who had plenty of land and tools, but no horses, oxen, or tractors, would not be able to use either his land or his tools effectively. If he could not raise the money other way, it would pay him to sell some of his tools or in any some of his land and buy horses, in order to restore the balance. At bottom this is much the same problem as that of balancing rations or fertilizers. Again, however much land he might possess, if he lacked equipment, his farm would not be very productive. It would pay him, if he could not raise the money in any other way, to sell some of his land in order to buy equipment of various kinds. Some of our frontier farmers found themselves in possession of a soil which was very rich in plant food. They lacked, however, other forms of capital, or the money wherewith to purchase building materials, machinery, live stock, etc. Many of them virtually sold their surplus soil; that is, they grew such crops as they could, sold them off, and took no pains to replace the fertility which was used up in the growing of the crops. They are said to have "mined the soil"; that is to say, as the miner extracts his mineral and puts nothing back, so many of these frontier farmers extracted plant food and put nothing back. Whatever may be said of this from the point of view of national policy, it was, under the circumstances, undoubtedly good business from the point of view of the farmer. He was trying to balance up his establishment. Having an abundance of plant food in his soil, but very little of anything else, he found it to his advantage to sell some of his plant food in order to put up houses, barns, and fences and purchase machinery and live stock. He was doing virtually the same thing that another farmer would do who found himself in the possession of a large number of horses and no plows or harrows to which to hitch his teams. It would pay him to sell off some of his horses and buy enough equipment to make the remaining horses productive. A balanced nation. This principle of balancing up the factors of production is just as important for the nation as a whole as it is for the individual farmer or manufacturer. The country which possesses a surplus of land and a scarcity of labor will find that its land is very ineffectively used. What it needs is more labor. It cannot very well sell its land, but it will in all probability pursue a policy which will increase its labor supply. Labor under such conditions will be in great demand, and for the same reason that, in dietetics, protein will be in great demand if it is scarce while the other food elements are abundant. In such a community land is certain to be cheap and labor dear. The high price of labor, the ease with which men can establish themselves on the land as independent farmers, or get remunerative work, encourages early marriages and large families. This is especially true on the farms, where labor is scarce and land abundant. Every additional child is money in the farmer's pocket, because as soon as the child is old enough to work he helps to solve the ever-present problem of scarcity of labor. Immigration is also likely to be encouraged by such a country. And thus from two sources the labor supply is increased in response to the effort to balance up the factors of production. But tools and equipment of all kinds, which are generally included under the word capital, are almost, though not quite, as essential as either labor or land. If capital is scarce while one or both of the other factors are abundant, it will be in great demand, for the same reason that labor is in great demand where it is scarce and land abundant, or that water is in great demand where there is an abundance of land with all the elements of chemical fertility, but a scarcity of water. An overpopulated country, on the other hand, finds itself with a badly balanced industrial system, but the balance is in this case disturbed in the opposite direction. Land being the scarce factor, every acre that can possibly be used is of the utmost importance. Labor, on the other hand, is cheap. It can easily be spared. If it sees fit to migrate to other countries, no great effort is made to prevent it, and no high price is offered it as a reward for staying at home. Under such circumstances, to hold an acre of land out of use would seriously reduce the total production of the community. Balanced capital. As on the farm or in the factory we saw that different kinds of tools have to be combined, so we should find that different kinds of capital, or tools, have to be combined in the nation at large. If, for any reason, the country should find an oversupply of one class of tools, say agricultural implements, and an undersupply of another class of tools, say railroads and rolling stock, the productive power of the whole nation would be limited by the deficiency of transportation facilities. However much might be produced with the agricultural implements, if it could not be transported to market, it would be of little use. This would be a case of badly balanced national capital. The result would be that the industrial system, if it were a good system, would find some way to restore the balance. It would be poor economy, under such circumstances, to increase the production of agricultural machinery. That would add very little to the total producing power of the nation. If something could be added to the transportation facilities, that would add considerably to the productive power of the nation. Under a well-organized industrial system the readjustment takes place automatically. Farm implements become cheap. Farmers do not care to buy any more, and the manufacturers are discouraged from production. Railroad-building, however, is stimulated by the high earnings of the existing railroads, and the productive energy of the community is diverted from the manufacture of agricultural implements to the building of railroads and the manufacture of railroad equipment. If we reverse the supposition, of course we get the opposite results, but the same principles will be at work. If we should find an overabundance of railroad facilities and a scarcity of agricultural implements, then it would be to the interest of the country to have more agricultural implements. If the existing transportation facilities could easily carry all that the farms produce, and more too, little would be added to the national product by building more railroads, and much could be added by manufacturing more farm equipment and increasing the growth of crops. The low earnings of railroads and the increased demand for farm machinery would tend to divert the productive |