38

ECONOMIC PRINCIPLES

production the position of which corresponds with that of
invested capital, but which illustrates the conditions just
described in a more extreme fashion than capital. The
supply of capital can, in time, be adjusted to the need for it,
as a result of the relation of return to cost. A high return
on cost leads to greater supply of the form of capital concerned,
 a low return on cost leads to a decrease of supply.
We have now to give attention to the case where no response
 of supply to the rate of return is possible. This
condition may conveniently be assumed as a means of
examining some of the features of the capital problem, but
it has to be put aside to enable the examination to be
completed. In the case of land, it cannot be put aside, it is
a fundamental feature of the problem to be discussed. Some
of the language used in regard to land, and some of the
results attained, may be usefully applied to certain aspects
of problems relating to other factors in production. There
must remain a fundamental difference, preventing any
complete analogy between such problems and corresponding
problems dealing with land, and arising out of the difference
between a supply which is, and one which is not, in the
long run, responsive to price.
In its relation to production, land is seen to present very
varying facilities to the cultivator. Different portions of
land will yield very different returns to equal labour and
capital expended on them. Differences in fertility, and in
situation relative to the market for the produce of the soil,
=nable different plots to be graded in accordance with their
relative superiority or inferiority.
But a second feature is of an importance equal to, or
greater than, the fertility, or convenience of situation, of any
plot of land, and that is the response to additional cultivating
effort which can be secured from it. Increase of labour and
capital devoted to the cultivation of a given piece of land
will, at any rate after a certain degree of thoroughness of
cultivation is exceeded, result in increased product, indeed,
but that increase will be in constantly decreasing proportion
 to the labour and capital to which it is due.
The increase of outlay in cultivation. then, produces a