astating floods, the earthquakes, and the hurricanes, which are so frequent.

2. The facilities of communication. England owes much of her commercial supremacy to her insular position, and the North and South Americas are favored by the large navigable rivers which course through them.

3. The fertility of the land.

4. The stock of minerals.

5. The supply of natural forces, such as water power for mills. 6. The abundance of fish to be found in the surrounding and inland waters.

7. The freedom from destructive agencies, as from tornadoes, floods, and earthquakes. This is a negative quality.

The more the land of a nation is possessed of these advantages, the greater will be the productive capacity of the nation, since production depends on the factors which conduce to it.

And again, the more generous nature is to a country in land, land products, and forces, the greater will be the number of objects possible of production and the greater will be the possible wealth of the country.

We can here understand the immense wealth that lies within our own country. It has a temperate climate, countless waterways, great fertility of soil, stores of minerals, great natural forces in its rivers and mill streams, rich fisheries, and comparative freedom from destructive agencies.

Production, as we said, will depend on the factors of production. Whatever limit there is in production will come from a limit existing in its factors. Now when we study nature as a factor of production, we find that it has its limitations.

Law of Diminishing Returns. — Land, the first offering of nature, with all its secret stores of wealth and its forces, with all its abundance of raw materials, is not equally extensive in all countries.

Again, in any one country, a considerable portion of the land is occupied by cities, towns, and villages, furnishing dwelling places for the inhabitants. Acres are devoted to streets, high

ways, and parks. All this portion must be deducted from the quantity of land, when we would compute the productive land contained in a country. It is the first great limitation to nature.

But the productive land that remains and that supplies land products for food, raw material for manufacture, minerals, and forces, is itself subject to limitation. It is true that the productiveness of land may be increased by the application of more labor and capital to it. The more labor and capital there are put into the land, the greater will be the returns from the land, and every increase of labor and capital will mean an increase in the returns. Hence is derived what is called by some the law of Increasing Returns. Yet there will come a time when an equilibrium will be established between the forces applied and the product yielded, and when it will not be profitable to add another increment of labor and capital. "After a certain point is reached in the cultivation of every piece of land, it is found that doubling the laborers and doubling the capital put upon the land will not double the number of bushels which the land will yield." (Laughlin, Political Economy, p. 37.)

This fact has given rise to the formulation of the Law of Diminishing Returns, and indicates a further limitation of nature as a factor of production.

Before explaining the law, we should know what is meant by Intensive and Extensive production.

Intensive and Extensive Production. - Intensive production is the application of improved methods to a small area in order to secure the greatest possible results. Extensive production is the cultivation of large tracts of land by the ordinary means readily at hand.

In order to satisfy an increased demand for a product, the first step ordinarily is to seek out new fields for cultivation. This is extensive production. When at length all the land capable of cultivation has been turned to use, the increased demand will have to be supplied by intensive production.

It is to this latter kind of production that the law of diminishing returns applies.

Intensive production is carried on in the neighborhood of cities, and is an especial feature in countries long civilized, as in France and Belgium. Extensive production may be seen, for example, on the immense farms of our Western states. The accompanying diagram will explain the matter:

с

а

α

с

Let O, the center of the figure, represent a city. The inhabitants of the city will require for subsistence a certain amount of produce. At first, when the number of inhabitants is small, the lands marked a a a a will be used and will suffice for the produce needed. As the number increases, the lands marked b b b b will be put under cultivation. A still greater increase of inhabitants will bring the lands c c c c into use. This is extensive production.

Now when all the available lands have been made use of, the farms a a a a will, through the application of more capital and labor, be made to increase the product to satisfy a still further demand owing to a still further increase of population. The lands b b b b and c c c c will be treated in the same way on still further demand. This is intensive production.

Law of Diminishing Returns Illustrated. The law of diminishing returns may be illustrated in the following manner:

A certain piece of land produces potatoes under different conditions (A, B, C, D, etc.). The price of potatoes is 60 cents per bushel.

Column A, B, C, etc., represents a piece of cultivated land under different conditions of labor and capital. The labor and capital columns indicate the gradual new additions of labor and capital put into the land. As a result of the additions of labor and capital, the bushels returned by the land will continually increase, but while they will increase at first considerably, they will gradually diminish relatively to the amount of labor and capital. The same gradual relative diminution will be seen in the total gain column. If the land were cultivated by individuals, each one supplying the new addition of labor and capital and receiving equal shares of the returns, it will be seen, by consulting the individual gain column, that there will come about a condition (E) where the gain will be the greatest and beyond which it would not be profitable to add more labor and capital.

The law applies equally to mines. Here, as in the former case, every increase of product is attained by an increase of outlay in labor and capital, and there comes a moment when the smaller increase of product will not warrant the greater increase of outlay, and thus the profitable productiveness of the mine is arrested.

It will be noticed that the law of diminishing returns will

not bring about a total cessation of production, but there may come a time when, through the working out of the law, production will be retarded relatively to the amount of labor and capital employed in it, and a limit may be reached beyond which the increase of profitable production will cease.

The law may apply to local production from land. It may apply to the production of certain lines of commodities. But, if there is question of the world's production from land and mines, the limit is yet very distant, and it is rendered still more distant by new inventions in machinery which reduce the expenses of labor, and by the opening up of new lands for cultivation and of new mines for exploiting. Still it is a difficulty which will have to be met and settled by future generations.

III. LABOR

Definition of Labor. The second factor in the production of wealth is labor.

Labor means the mental or physical acts of man applied to the materials and forces offered by nature. Devas defines labor as "human action of which the proper end or natural purpose is some good external to itself."

This factor, like the former, is essential to all production. There can be no production without it. Even those things which are produced spontaneously by nature require, in order to become wealth, that man shall make them his own by at least some mental or physical act.

Requisites of Labor. (1) Movement. Labor in its last. analysis is reduced to movement, a change of place, whether of the entire object which is produced, or of the different parts which compose it. Thus a husbandman plows the earth and places in the furrow the seed, which is acted upon by the forces of nature and from which is evolved by their agency the perfect grain. The manufacturer places in position the several parts of an object, and steam or electricity operating a machine unites them and makes the completed object. The transporter