SUMMARY

interest affair and contains other ingredients, the rate issubject to variation with the extent of the operation andso is to be called a rate of return over cost. We are hereinterested in those other ingredients which produce thevariability and thus differentiate such a rate from themarket rate of interest. They are the non-commercial ornon-trading ingredients; they concern production andtechnique rather than trade. They deal not with themarket place, but with nature, environment, and the re-fractory conditions which surround and hamper us in ourefforts to secure income. They exist even when no marketexists, when a Robinson Crusoe, a hermit, or an isolatedranchman battles with soil and the elements for hisdaily bread.

The rate of return over cost, under the law of dimin-ishing returns, is thus far more elementary and primevalthan the rate of interest, and however incrusted that rateof return may become with other elements which growout of modem market conditions it is still the basicobjective condition underlying our problem.

Thus the rate of return over cost is distinguished fromthe rate of interest (1) by varying with the extent ofthe individual’s investment; (2) by being consciouslyrecognized, as thus variable 1 and controllable, by theindividual; (3) by being, therefore, a personal and indi- -vidual matter and not altogether a public market matter;(4) by being directly related to producing as contrastedwith trading.

’It is true that in the hard-tack case and some other extreme andhypothetical cases considered, it was assumed that for a certain intervalthe O curve was assumed to be straight. To include such a theoreticalcase, the statements in the text need a slight modification. But suchextreme cases are not typical even in the theory and are probablynever exemplified in practice.

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