This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 1. Transportation. § 2. Location as an element in value. § 3. Relation of time to value. § 4. Indirect agents for hastening the uses of goods. § 5. Agencies for postponing the uses of goods. § 6. Increasing control of man over nature. § 7. Natural diversity both of direct and indirect goods. § 8. The improvement of technical processes and methods. § 9. The economic test of technical improvements. § 10. The psychology of indirect valuation. § 11. The element of time in the valuation of indirect agents.
§ 1. Transportation. The third way in which change can be effected by the indirect use of agents to bring objects nearer to the state of fitness to be direct goods, is by moving them from place to place. Indeed, it has been said that all of man's part in stuff- and in form-change can be reduced to the changing of the place of things so that they may be acted upon by each other. Yet there is a distinction between the changes in form and in stuff, just considered, and the change in place, here indicated. Change of stuff is arranging things so that there is a readjustment in their internal composition; change of form is applying tools and forces to alter the shape of the objects (often by combining them with other objects); and change of place is the movement of an object, as a whole, in space to bring it to a different location. Two or more of these changes may be combined. Felling a tree is both a form and a place change, sawing it into boards is a form change, hauling it to market is a place change, carving it into furniture is a form change. "When the thing thus moved, or enabled to move, is the man himself, the object that aids is a direct good. Such is the fallen tree bridging the stream, the floating log which saves the man from drowning, the boat on which he rides on the water, the horse carrying its rider, the sled drawn by dogs or by reindeer. When the agents are used to aid in the movement of other goods their uses are indirect.
The means of transportation have had a long and complex development. They compose to-day a mass of equipment comparable in extent and importance with the agencies that are used to effect changes in stuff and in form. The floating log has been replaced in turn by raft, canoe, sail boat, and steamship. The natural waterway has, where necessary, been deepened and widened, or has been artificially extended by canals, some to connect rivers and others to unite the waters of the oceans. The early trails through the woods have given place to wagon roads and to railways. The heavy ox carts have been succeeded by wagons, railway cars, locomotives, automobiles, and flying-machines.
§ 2. Location as an element in value. From the first, of course, all these agencies must have been more or less vaguely recognized as useful and their results as valuable. The relation between location and value, however, tho obvious and simple in many concrete cases, has as a matter of general theory proved difficult of comprehension to a great many minds. Even careful thinkers long found it easy to attribute great importance to operations such as those of agriculture which appear to bring something physical into existence, yet to misconceive the nature of the changes made in value through manufacturing and transportation. This was the error of the eighteenth century economists of France - known as the Physiocrats - and it has been a recurrent error ever since. It seems to be naturally easy for men to conceive of value as inherent in things rather than as resulting from a relation between things and men. Yet the truth is so obvious that physical proximity is a very significant element in value. The treasure chest which is lost forever in the depths of the ocean has become and will remain utterly worthless to man. Brought to shore, where the treasure could be used, it might be worth a fabulous amount. So anything, to be of the greatest value, must at a certain moment be close at hand or at the right place. Clearly then those various agencies which move things from one place to another the better to meet the consumer's desires, must be regarded as contributing factors in the value of the direct use obtained.
The logic of the matter is quite plain in the light of biologic evolution. Movement is necessary to the existence of animals. The animal, in the order of evolution a higher form of life than the plants, which are more fixed, goes to seek food and in so doing opens up a wider range of choices in life. With few exceptions the only way in which animals can better their economic environment is by moving themselves to a place where goods are more plentiful. In this matter of locomotion the birds have attained the highest point in evolution. Man, while he has by mechanical means greatly added to his own powers of locomotion, has also developed to a very high degree of perfection his ability to move other things. He trans-ports them to the places where they can best serve his purposes, and by this means he adds enormously to his income. Transportation is thus one of the earliest and most natural of the ways in which man increases his income, and the elaborate equipment which he has developed for the transportation of goods finds its economic uses in the gratification of human desires. The subject of transportation, with its various ramifications, furnishes some of the most interesting problems of valuation with which the student of economics has to deal.
§ 3. Relation of time to value. As the days and hours succeed each other in the life of man, they bring with them a constant succession of desires, forming an endless stream as long as life itself endures. To meet and satisfy these desires a corresponding stream of goods is necessary. (See Chapter 3, section 10.) Nature furnishes man with the raw material for this stream of goods, and even to a limited extent provides fruits and other things all ready for direct use. But in combining and using the agents at his command, man must give much thought and effort to the end that the direct goods may ripen at the particular time when the need for them arises. All desire is related to a particular point of time, and man, in a variety of ways, controls the time at which the uses of goods become available.
One way in which this control is exerted is through the simple process of saving goods for future use. If the goods are durable, a present surplus, or even things which answer to strong present desires, may, if the claims of the future make a sufficient appeal, be reserved for use at some later time. Choices of this sort between present and future are constantly being made, and constitute an important aspect of our economic activity. A new machine may be driven twenty thousand miles in the first year, with a large resulting depreciation, and large expense for upkeep. Or its use may with care be extended over a number of years. The family may spend its full yearly income, or lay aside something for the future. The business man may work long hours to accumulate a fortune in his early years, or he may take more leisure and enjoyment as he goes along.
All the decisions in such cases depend on one's mental attitude, one's habit of life, toward present and future. Men differ greatly in this respect, ranging all the way from the spendthrift to the miser. At a later point in our study we shall have occasion to inquire more deeply into this matter.