18 H. STANLEY JEON$ IV. ECONOMIC PRINCIPLES to remember the interdependence industries and commercial farming. 1. Mutual d?utenee of Industries and Commercial Agriculture.--In outlining a policy of economic develop- ment of any country or territory it is highly important of manufacturing Neitt?her can exist without the other. It is the surplus produce o! agricul- ture beyond what the rural population needs for subsis- tence, which provides it with the purchasing power which, if wants be stimulated, cre&ges & demand for the manufactured products, and thus calls factories into existence. Secondly, it is the surplus produce of agri- culture which provides, either in itself directly, or by exchange, the raw material of industry. The indispensi&ble links are good communications and organized markets. t Thus in planning roads and railways to provide an outle? for surplus agricultural produce from any district it should be remembered that a demand to impor? into that district manufactured products will be created, and the question of whether it is better to facilitate the growth of & new manufacturing centre, or to provide easy communication with an existing mannf&cturing town, must be considered.. Owing to the external economies of the market being far more important in some industries than in others, no general answer ?o this question can be given. Every case has to be considered on its merits on the basis of the probable demand for, and present location of the sources of supply of, the principal kinds of manufactured goods, and the location of such sources of supply relatively to markets for the chief sorts of agricultural produce coming from the district. 2. Laws of Increasing and Diminishing Returns.--A very important economic principle to be made between industries I For a full statement of the foregoing theory see in the .Report o! the Eleventh Indian 1916; Pm H, Papers, pp. is the distinction according as they the Author's paper published Industrial Conference, Bombay,, Deeem!?r,
