Economic factors in the choice of an early form of capital: draught animals in early twentieth century South Africa

Abstract

The most important capital choice decision in a pre-mechanized agricultural economy was that of which type of draught animal to use. This paper provides an economic explanation for the varied use of draught animals in early twentieth century South Africa. It is argued that the abuse-resistant mule was used primarily on large white-owned farms by the hired workers to mitigate the inherent principalagent problem. This suggests that at least the allocation of draught animals in South African agriculture was efficient similar to what has been found for the US and Italy.