Exceptions to law of diminishing returns.—Exceptions to this law are easy to find, as where the first selection [pg 081] of land in a new country has had reference rather to safety from wild beasts and savages or malarial diseases than actual store of fertility. Another exception is found in any new country, where imperfect adjustment of labor to conditions of soil and climate are liable at the outset to prevent the full use of natural powers of the soil. So evident are these two exceptions in imperfectly developed agriculture that some have disputed the general fact, yet all must admit the certainty of diminished returns from multiplication of the same kind of efforts upon the same space, and general proof is abundant in all long settled communities.
Effect of improved farming.—Counteracting this tendency to diminishing returns, and in many instances more than overcoming the difficulty, is a tendency toward improved methods in farming by more perfect application of labor to the soil, better developed crops, better adaptation of live stock to culture, improved machinery of every sort, and more extended range of operations in farming, reducing the restraints of space by improved transportation and more economical use of natural fertilizers; in short, by any improvement through which labor is made more directly effective in either quantity or quality of agricultural products. The whole story of the development of agriculture in all these ways furnishes abundant illustration of this counteracting tendency. In some regions it has more than counter-balanced the tendency to diminishing returns. Various staple products, like wheat, show in their diminishing value the advance in methods of culture and adjustment of labor to production.
Diminishing values.—The above is only a particular illustration of the general tendency of all values to diminish with every improvement in tools, machinery, economy of materials and saving of time, as the world gains wisdom in applying labor to the meeting of material wants. With every discovery of more perfect power or better use of natural forces, like electricity, or easier ways of handling raw materials, as in developing aluminum from crude clay, the value of the product quickly diminishes.
A familiar illustration is found in the manufacture of steel. The so-called Bessemer process, introduced some thirty years ago, reduced the actual labor of making steel from iron by more than one-half. Improved furnaces and greatly enlarged operations have reduced still further the labor involved, until now steel often takes the place of iron, and the value of all such products is greatly diminished. This is easily illustrated by comparison of prices during a series of years, as shown in chart No. [14]. That this reduction in price is not the result of poorly paid labor, but of better returns for labor expended, is evident to any one investigating the tendency of wages or of living among wage-earners, or of the general improvement in welfare of communities where these labor-saving methods are applied. Any hardship connected with these diminished values falls chiefly upon the laborers who fail to adjust their work to the improved method. But even they gain for the diminished value of their product a larger return on the whole through exchanges than the higher values had brought them before.
Chart IV. Comparison of the numbers of live stock with increases in population and mileage of railroad, 1860-1898.
CHART NO. 4
Numbers of live stock compared with increase of population and mileage of railroad, 1860 to 1898, in the United States
Explanation.—This chart exhibits to the eyes a comparative increase of (1) population, (2) sheep, (3) hogs, (4) railroad mileage, (5) beef cattle, (6) cows, (7) horses, (8) mules. The figures followed in making this chart are taken from the best estimates available, chiefly from the reports of the United States Department of Agriculture. It shows that railroad mileage has increased faster than the population, with some slight exceptions, and its fluctuations mark quite distinctly the periods of financial speculation and distress. The great fluctuations in the line of sheep raising may be seen to have some correspondence with special tariff legislation. The striking opposition of hog raising to sheep raising is in accord with the universal experience that farmers easily turn from one to the other. The rapid development immediately following the civil war represents the restocking of farms and the great expansion in farm industry so noticeable during that period. The falling off in numbers of live stock during the last five years is evidently a reaction from a very apparent over-production in many directions during the previous ten years. The miles of railroad are shown in thousands, the population and live stock in millions.