§ 2. Time-preference showing in care and repairs. If Crusoe's time-preference (for the present) were very high it would show in his use both of his stock of enjoyable goods and of his stock of indirect durative agents. (See Chapter 11, section 11, on the economy of repairs.) When he landed in his canoe he would let it lie on the beach at the risk of its being filled with water or dashed against the rocks, or carried out to sea. This act necessarily implies that at that moment he values his own effort to pull it up more than he values the dimly seen necessity of bailing it out to-morrow, or of repair ing the injury done by the rocks, or of making a new one when this is lost. When his house leaks he would do as the proverbial Arkansas farmer (not peculiar to that state), who couldn't mend his roof when there was rain and saw no need to mend it when there wasn't. Crusoe's use and management of his garden, of his fowls, and of his goats, their feeding, breeding and care, all would involve and express a certain comparison between. present and future vegetables, grain, eggs, milk, cheese, goat meat and skins, his own labor, etc. In every economy, whether in Crusoe's or in a larger com munity, the practice of each individual as to repairs and the efforts made by him to offset depreciation, inevitably embody that individual's rate of time-preference in a thousand ways, tho it varies more or less with his mood, health, fatigue, etc., and tho he is quite unconscious of any arithmetic expression of it.
A rate would show itself among other ways, in the need of more labor and more materials later, than would suffice now. A handful of earth may stop a hole in a dyke, whereas a trainload would be insufficient later. Whenever it is true that a stitch in time (now) saves nine (next year) and the stitch is not taken, then the neglect involves a rate of 800 per cent in terms of present stitches (one now, increment next year eight). If one day's labor now on the canoe is found by experience to save two days' labor a year later and it is not taken, then the rate is over 100 per cent a year (one now, two next year; increment one, or 100 per cent of quantity). Plainly, however, two greatly diverse rates if recog nized, could not long continue to exist side by side. For if the rate were even 99 per cent, not only would the canoe be mended but the stitch would be taken in time wherever it would save two or more stitches next year. And so, it would be if there were a thousand different kinds of repairs to be done. There would not be a thousand dif ferent actual rates of physical increments; for so far as there is any normal habit or consistency in the individual's conduct these different rates of increments will be brought more or less into conformity with a prevailing rate of time-prefer ence. Whatever that rate be, there is good reason to make the possible repairs that involve a greater rate. But those re * The bars of different length represent repairs involving different rates of time-preference. If the rate is nine per cent, all the kinds of repairs here shown would be made. The same illustration applies to the choice of indirect processes, discussed in sec. 3.
pairs, the neglect of which involve a smaller increment, ought not to be made. The rate of time-preference, like an iso thermal line, marks off the repairs that hypothetically would involve a greater increment (and which now are made) from those which involve a less rate (which now are left undone).
Repair is nothing but a particular case of production pre senting the peculiar problems of complementary agents. Even where time-preference is very great, repairs will be promptly made when the whole agent with all its usance value may be put back into running order by replacing a single part (as by mending a hole in a canoe, putting a new string on a bow, etc.). It is the anticipatory repairs, the ounce of prevention that is most likely to be neglected in an improvident economy. When many repairs are needed, the repair becomes as difficult as the making of a new agent, or more difficult, and presents practically the case of new pro duction.
§ 3. Time-preference showing in production of indirect agents. A rate of time-preference is reflected in the physical increment of goods in many cases. Suppose one hundred days of labor this year will produce one thousand fish, caught by wading the streams or will make a canoe which will enable one hundred days of labor next year to yield 1100 fish; and suppose that one day's labor will obtain one thousand apples in the wild forest, and will plant a tree that will yield 1100 apples next year; then the choice of the relativeldirect method results in a physical excess of products at the rate of 10 per cent. But the direct method is chosen and will con tinue only when the rate of time-preference is over 10 pet cent, and is abandoned as soon as the rate of time-preference is less than 10 per cent. Whenever a Crusoe "gets ahead far enough" in his equipment to have a canoe, he no longer gets his fish by wading the streams (except at unusually favorable moments), and when he has got to the point of having an orchard he no longer plans to gather fruits in the forest (tho he will pick the few that are easiest to get). He continues this choice among all the possible present and future uses of his present labor and resources, till he has included all the time-consuming methods, whether direct or indirect, that involve increments as great as his rate of time-preference. That rate, as it falls to 9, 8, 7, etc., dominates the choice of technical processes. A man's prevailing attitude of mind and habit of choice between present and future, in the use he makes of his present economic agents (labor and goods) marks, so to speak, an isothermal line between those savings which he makes (all tending to the same rate by the marginal law) and those which he fails to make (the excluded choices). Time-preference (a purely psychological fact) involves a rate of discount or of premium which thus would show itself here and there in a certain quantitative surplus or increment each year over the yield possible by the alternative methods. When, however, a better technical method is in use, and is warranted by the rate of time-preference, it is possible only at a loss to go back to the older method. For lack of a saving that involves but 5 per cent discount on next year's goods, one might reduce production to an amount involving 100 per cent discount. Evidently this would be a maladjusted economy, and would call for a new adjustment of agents for present and future uses.