The production of wealth means the bringing of wealth into existence. It does not mean the creation of matter, for that is beyond the power of finite man. The production of wealth is rather the creation of utilities. It is the creation of capacities to gratify wants. Not all creation of utilities, however, is production of wealth. The creation of utilities in free goods is not the production of wealth. Only the creation of utilities in economic goods is production of wealth.

38. Kinds Of Production

Utilities may be produced in wealth in four ways: by changes in form, by transportation, by keeping wealth through a period of time, and by changes of ownership. The utilities produced in these different ways are referred to respectively as, form utilities (sometimes called material utilities), place utilities, time utilities, and possession utilities. An example of the creation of form utilities is the freezing of ice, where the material appears in a new form. The transportation of the ice from the lake to the heart of the city is an example of production of place utilities. By this transportation the capacity of the ice to gratify wants has been increased many fold. Keeping ice which has been secured in the winter from melting until summer is an example of the production of time utilities. The ice has a greater capacity to gratify wants in the summer than in the winter. Again the selling of the ice to the ultimate consumer results in further increase in utility, for the reason that his want for the ice is greater than is that of the dealer. Or to take another illustration the transportation of a tree from the forest to the sawmill and to the furniture factory is the creation of place utilities. The fashioning of the chair from the lumber is the creation of form utilities. The keeping of the chair until it is wanted is creating time utilities, and the selling of the chair to the consumer may be considered a creation of possession utilities.