Following consumption comes the notion of production. Primitive man soon found that nature did not supply a sufficient amount or variety of goods to satisfy his wants. Then and only then did he turn to productive labor. Gradually his wants drove him to extend his productive operations. Stone utensils and tools appeared.' Later he discovered how to make bronze, which was followed by iron and steel. Long, however, after the discovery of the process of making iron and steel, production continued to be characterized by direct, hand methods. Not in fact until well after the middle of the eighteenth century did machinery play an important part in industry. Marvelous as have been the developments of productive processes, important as they are in the history of the progress of mankind, we must not forget that they have followed closely after an increased desire on the part of human beings to consume goods.

We speak in a general way of the production and consumption of goods. It would be nearer correct to speak of the production and consumption of the utilities embodied in goods. It is a well-known fact that man cannot create matter. We may go a step further and say that man cannot create goods. He can, however, by processes of rearrangement, create utilities, which after all are the objects of human desire. These we may call form utilities. He can, for example, with the assistance of nature and natural laws, change raw cotton into cloth, thereby creating the various utilities embodied in the finished product. Each step in the process tends to destroy utilities as well as to create them. Spinning the cotton into thread destroys any utility the cotton may have had as a material for stuffing mattresses, but it creates a new utility in the form of sewing material. Likewise, the weaving of the thread into cloth destroys the utility of the thread for sewing purposes and creates a new utility which cloth alone possesses.

All the processes necessary to raise the cotton and then to turn it into cloth are productive. Yet additional processes - that is, the further creation of utilities - are usually necessary before the cloth can be consumed. No one would think of going to a cotton mill for the purpose of getting cloth for personal consumption. Rather he depends on his local merchant to get it for him. Nor does the merchant go personally to the factory for his cotton cloth. He gets it by freight or express either from the factory direct or from a wholesale dry-goods house. Thus, we see that at least two productive processes stand between the consumer who desires to utilize the cloth, and the weaver who, like the cotton farmer, has created form utilities. The railroad, or some other method of transportation, carries it to the retail merchant, thereby creating place utilities, while the retail merchant, in turn, by keeping the cloth until it is needed by his customers creates time and possession utilities. As our modern civilization has developed, all of these workers, and often a great many more, are usually necessary to create the total bundle of utilities embodied in finished products ready for consumption.

Not all work, however, results in the creation of utilities desired by man, or even in the creation of any utilities at all. One might exert all his strength in an effort to overturn one of the pyramids and yet produce nothing. Even if he should overturn it, no utilities would be created as a result. He would be much like the boy whose father made him build a rail fence and then tear it down on the plea that the work would keep him out of mischief. These are extreme illustrations, yet on every hand men labor without positive results, either because of ignorance or because of misdirected energy. We may conclude, then, that production is the creation of utilities by labor wisely and efficiently directed.