ods and in carrying them, to extend
production, though the further returns which are in this way gained do
not cover all costs. First, the producer must have an unused capacity
for making or carrying goods. In such a case it is possible to make or
carry an _increment_ of goods without entailing on himself an
increment of cost that is proportionate to the amount carried. In his
bookkeeping his original business is charged with costs amounting to a
certain sum per unit of goods produced or carried. His further
business is charged with a smaller outlay per unit.

Secondly, it must be possible to demand separate and independent
returns for the different increments of goods, so that cutting the
rate charged for one part of the traffic does not entail cutting the
rate charged for the other. In the case of a manufacturer this is
secured, either by carrying some goods to a remote and entirely
independent market, or by producing some new kind of goods the low
price of which will have no effect on the sales or the prices of the
other kinds. In the case of the carrier it is accomplished in a
variety of similar ways. He can take return cargoes at a low rate. If
he stops at different ports along his route he can charge less for
goods landed at certain ports than for those landed at others. He can
classify his freight and carry some of it at a rate at which he could
not afford to carry the whole. With the growth of traffic, however,
this condition tends to disappear. Its existence requires that the
carrier should have facilities only partially used. As the ship
acquires fuller and fuller cargoes, it ceases to be advantageous to
fill the hold with goods which pay lower rates than others; just as a
mill, which may have run for a time partly on goods that yield a large
return and partly on those which yield a small one, gradually discards
the making of the cheaper goods as the demand for the dearer kind
increases. The vessel which can get full cargoes of profitable
merchandise will cease to devote any space to what is less profitable.
In the end the ship in our illustration will be transporting in both
directions all the first-class freight it can take, and will accept
neither the stone nor the merchandise consigned to ports to which it
can be carried only at the cheap rates.

_Result of Effective Competition throughout the Carrier's Route._--The
condition just described--that of full cargoes of profitable
goods--inevitably attracts a